Security Rights and Aircraft Liens in Finland
Security Rights and Aircraft Liens in Finland
Under Finnish law, aircraft-related security is structured through a combination of statutory priority claims, rights of retention, and registered aircraft mortgages. Understanding how these mechanisms operate in practice is essential for airlines, lessors, MRO providers and financiers when structuring financing, managing maintenance receivables, and preparing for enforcement or insolvency scenarios in Finland. This article provides a practical overview of the key concepts, priority rules and enforcement mechanisms applicable to aircraft-related security interests in Finland.
Lien Rights Under Finnish Law
The exact equivalent of a “lien” under Finnish law is not always straightforward. In Finland, the term is often used in practice to describe security rights arising from (i) rights of retention, (ii) explicit statutory provisions, or (iii) hypothecation/pledge-type arrangements. In this article, an “aircraft lien” refers to a statutory priority right that entitles a creditor to a preferred claim over the value of a specific object and remains protected against title changes without requiring any separate declaration of intent by the parties. If you need practical support in structuring aircraft security or assessing enforcement options, our Transport, Maritime & Logistics team advises on aviation and transport-related security rights under Finnish law.
Distinction Between Lien and Right of Retention
Conceptually, a lien and a right of retention differ. A right of retention allows a party to retain possession of an object as security for payment of claims connected to that object. Similar to a lien, a retention right is generally unaffected by changes in title and, under certain conditions, may enable the sale of the retained property to satisfy the secured claim. In practice, this often produces effects comparable to statutory lien-like priority.
Aircraft Liens in Finland
Definition of Aircraft and Registration Requirements
Under the Finnish Aviation Act (864/2014), an aircraft is defined as a device deriving lift from air reactions rather than from ground or water surfaces. Aircraft with Finnish nationality must be registered in the Finnish Transport Register, maintained by Traficom. Registration requires clear identification, and registration may also be relevant for aircraft under construction.
Priority Claims and Security Rights
The Aircraft Mortgage Act (211/1928) establishes a priority order for certain claims, including:
- Claims secured by a creditor’s right of retention.
- Damage claims under the Aviation Act.
These rights may not always match a strict “lien” definition in comparative terminology, but they produce lien-like effects in terms of priority and protection against title changes. For cross-border aircraft operations, it is therefore important to analyse Finnish priority rules carefully in addition to contractual security documentation.
Registration of Aircraft Liens
Finland does not provide a separate registration mechanism for “aircraft liens” as such. However, certain rights (for example, specific unpaid service charges in relevant contexts) may be recorded in the Aircraft Register. Importantly, the priority rights under the Aircraft Mortgage Act can outrank registered mortgages without requiring separate registration of the priority claim.
Salvage Liens on Aircraft
The Aviation Act provides a framework for search and rescue, and the state may compensate participants for injury or damage under the Damages Act (412/1974). Legislative updates over time have created inconsistencies, and salvage-related costs do not necessarily benefit from a statutory lien under the current framework. This can materially affect risk allocation for parties involved in aircraft salvage and recovery operations.
Contractual Liens and Hypothecation
Finnish law does not generally recognise purely contractual “liens” in the same way as some common-law jurisdictions. Instead, comparable outcomes are typically achieved through registered mortgages (hypothecation-type security). Aircraft mortgages become effective security only when registered in the Aircraft Register with the aircraft owner’s written consent. In practice, registered aircraft mortgages remain a central tool in aircraft financing structures governed by Finnish law.
For transaction planning, we often assess the combined effect of statutory priority rights, retention scenarios (including maintenance receivables), and registered aircraft mortgages as part of the overall security package. If your matter involves leasing, repossession planning or distressed enforcement, see our aviation and transport security advisory services.
Enforcement and Priority of Aircraft Liens
Priority Order of Claims
The Aircraft Mortgage Act sets the following priority order for claims:
- Retention rights, including accrued interest where applicable.
- Damage claims under the Aviation Act.
- Registered mortgages, ranked by the order in which they are filed.
This hierarchy is particularly important in insolvency scenarios and distressed enforcement, where multiple creditors seek recovery from the same aircraft or from proceeds of sale.
Enforcement Mechanisms
Retention rights can often be enforced through a public auction without court intervention, provided statutory requirements are met. For damage-based priority claims or enforcement of a registered aircraft mortgage, a court judgment is typically required before the aircraft can be sold through public auction or voluntary sale. Proceeds are distributed according to the statutory priority rules.
Unpaid Airport Charges and Detention Rights
Airport operators may detain aircraft for unpaid airport fees and charges, but they generally cannot sell the aircraft without a court order. While departure on scheduled international flights cannot necessarily be prevented solely due to non-payment, detention rights are a practical leverage tool to secure outstanding fees and encourage settlement.
When to Contact an Aircraft Lien Specialist in Finland
The interaction between statutory priority rights, retention rights, registered aircraft mortgages and contractual security arrangements requires careful legal analysis. Early input is particularly important in cross-border transactions, repossession scenarios, and insolvency situations involving aircraft or aircraft components located in Finland.
Our Transport, Maritime & Logistics service supports airlines, financiers, lessors, operators and service providers in structuring robust security, assessing enforcement options and managing aviation-related risk under Finnish law.
Our team provides tailored advice to safeguard your interests and optimise your legal strategy. Contact us for case-specific support.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. For advice relating to your specific circumstances, please contact our lawyers.
Responsible lawyer: Oscari Seppälä