Aviation Arbitration Center with Global Reach Launches In The Hague

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A new court of arbitration and center for mediation for the global aviation sector has been established in The Hague, a longstanding seat of arbitration and international dispute resolution, including the Permanent Court of Arbitration. The new center will be administered by the Netherlands Arbitration Institute.

While they do not always draw headlines, aviation sector disputes are everywhere, worldwide – from financing and leasing litigation to investment disputes over airport concessions.1 There have even been multi-faceted arbitration matters under contracts and treaties related to cross-border investment in the aviation sector. At the same time, like some other sectors that involve complex financing, the aviation sector long seemed slower than others in adopting arbitration as a preferred mechanism for dispute resolution. A new arbitration court may help change that.

The non-profit The Hague Court of Arbitration for Aviation (the "CAA") officially launched on July 21, 2022, at the Farnborough International Airshow in Hampshire, England. The CAA aims to provide the aviation sector with, in its words, "specialized arbitration as a fast, fair, flexible and final form of binding dispute resolution conducted before an expert neutral tribunal, in private, pursuant to arbitration rules and procedures specifically tailored to the unique needs of a unique industry."2 In particular, it will focus on disputes related to commercial and private aircraft operating, trading, leasing, and financing-related contractual disputes, as well as disputes relating to maintenance, repair and overhaul.

International mediator Gary Birnberg chairs the Advisory Board of the CAA and was present at the launch. According to Birnberg, in an interview with the authors, "the CAA has been designed, from conception to inception, to be neutral and impartial so that the aviation industry can rely on it for safe and dependable commercial dispute resolution solutions."

Key features of the CAA include:

  • An aviation specific forum created through consultations with experts from the aviation market from all over the world.
  • To balance aviation expertise and market awareness while maintaining strict industry independence to provide a genuinely neutral forum for confidential dispute resolution processes through discrete consensual arbitration and/or voluntary mediation.
  • Administration by the Netherlands Arbitration Institute, which aims to provide practical and flexible arbitration and mediation solutions in accordance with international best practices, tailored to the needs of the commercial and private aviation sectors.
  • To provide time and cost effective binding arbitral awards on ensuring enforceability in over 160 countries pursuant to the New York Convention, as well as for the private conciliation-focused settlement of aviation contractual disputes by impartial specialised facilitators.
  • A focus on technical expertise in key components of the aviation sector, including among the potential mediators and arbitrators, as well as to assist the parties.
  • Comprehensive arbitration rules that provide the procedural framework for the efficient and expedient resolution of disputes. (The Hague CAA Arbitration Rules can be accessed here).
  • Flexibility and autonomy with respect to the choice and structure of the mediating body, such as the possibility of multiple mediators and including mediators with relevant technical expertise that will allow the Parties to adapt to meet their specific needs.
  • Available expedited and emergency procedures as well as interim and conservatory measures designed to respond to industry needs and facilitate the quick and efficient resolution of disputes.3

While the CAA is not the first court of arbitration focused on civil aviation, it aims to enhance significantly the breadth of adoption of its procedures across the sector. The Shanghai International Aviation Court of Arbitration has been in operation since 2014.4 The CAA seeks to distinguish itself by virtue of its location at The Hague and focus on neutrality aimed at reaching a broad range of sector participants.

As with other arbitration centers, the CAA provides draft arbitration clauses that can be adopted for the resolution of future or existing disputes. The available clauses include different requirements and/or conditions that must be completed before a claim can be submitted to arbitration, such as an initial "cooling off" period or mandatory mediation, consultations, or negotiations to resolve the dispute before advancing to an arbitration phase. They can establish the scope of potential disputes that can be brought to arbitration.

Over time, the CAA portends continued expansion of the use of arbitration and mediation in the global aviation sector.

1 See, e.g., Jonathan C. Hamilton, "The Mythical Legends of Latin American Investment Arbitration," in International Council for Commercial Arbitration, Legitimacy: Myths, Realities, Challenges, ICCA Congress Series No. 18, Wolters Kluwer, 2015, pp. 915-920.
2 The Hague Court of Arbitration for Aviation, available at www.haguecaa.org/arbitration.html.
3 Id.
4 The Shanghai International Aviation Court of Arbitration, available at www.shiac.org.

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