Introduction
Entering the fifth year of the Russian full-scale invasion of Ukraine, the Ukrainian aviation sector continues to operate under unprecedented circumstances, including the ongoing closure of Ukrainian airspace to civil aviation. Notwithstanding these constraints, Ukraine has preserved the legal, regulatory and institutional foundations governing aviation operations, aircraft registration, airworthiness and aviation finance. Ukrainian aircraft operators remain active in international markets, operating aircraft exclusively outside Ukraine while remaining subject to Ukrainian jurisdiction for regulatory and oversight purposes.
Despite these unprecedented circumstances, Ukraine safeguards the rights and interests of international aircraft lessors and legal owners. To an extent that is unchanged since the commencement of hostilities, Ukraine continues to recognise and protect ownership, leasing and security interests in aircraft operated by Ukrainian airlines. This includes maintaining aircraft registration and airworthiness oversight in Ukraine (notwithstanding the suspension of domestic flight operations), as well as the continued recognition of cross-border leasing structures customary in the global aviation finance market.
The State Aviation Administration of Ukraine (SAAU), which acts as the chief civil aviation authority, continues to exercise regulatory oversight over Ukrainian operators and registered aircraft. This oversight encompasses compliance with applicable safety requirements, continuing airworthiness standards and international aviation obligations, notwithstanding the practical limitations imposed by the armed conflict. The preservation of regulatory supervision has been central to maintaining the legal continuity and international credibility of Ukrainian-registered aircraft and operators during wartime conditions.
Despite the heightened legal, operational and political risks associated with the ongoing hostilities, a number of foreign lessors have continued to engage with Ukrainian operators and lease aircraft to them. Ukraine presents a distinctive case study of the interaction between aviation finance, regulatory continuity and risk allocation in the context of an active armed conflict.
Year in review
As the Russian full-scale invasion of Ukraine enters its fifth year, one of the most persistent and complex issues in the Ukrainian aviation finance landscape remains the status of aircraft stranded within Ukraine following the closure of Ukrainian airspace on 24 February 2022 in response to Russian military aggression. It is estimated that approximately 24 civil aircraft remain in Ukraine, which cannot be recovered by their lessors and owners due to significant and ongoing safety risks to both equipment and personnel arising from active hostilities, missile strikes and general security instability. In addition, there is no straightforward and practicable procedure currently in place for evacuating aircraft from Ukraine, whether by ferry flight or other means. Although the applicable regulation provides for this possibility, it depends upon a number of permits that must be received from the SAAU and the General Staff of the Armed Forces of Ukraine, the granting of which is rather exceptional and heavily depends on the security circumstances (which remain difficult in all Ukrainian airports, except for those located closer to the western border). These constraints have also been compounded by the fact that most of the stranded aircraft are no longer airworthy, as ongoing airworthiness management and scheduled maintenance have not been performed for an extended period. Furthermore, certain aircraft have sustained damage as a direct result of hostilities. In a number of cases, the extent of this damage renders repair commercially or technically infeasible.
In light of the ongoing inability to recover aircraft stranded in Ukraine, certain aircraft owners and operators have sought to make insurance claims under the applicable aviation insurance policies, including war risk policies governed by standard market wordings such as LSW555D. However, there is no publicly available information indicating that insurers or reinsurers have conclusively accepted or paid any claims relating to aircraft stranded in Ukraine. Coverage determinations remain subject to complex questions of policy interpretation, including the concept of non-destructive total loss and the validity of a last-minute change to geographical limits that implied Ukraine's exclusion from insurance coverage before the first Russian missiles hit the Ukrainian airports targeted on the first day of the Russian invasion.
Nonetheless, a number of Ukrainian aircraft operators have continued commercial aircraft operations outside Ukraine. Airlines such as SkyUp Airlines, Wind Rose Aviation Company and Skyline Express Airlines operate internationally with aircraft registered in Ukraine despite the closure of Ukrainian airspace. These operations demonstrate the continued viability of Ukrainian operators in international markets and the ongoing relevance of Ukraine as a state of registry for civil aircraft during wartime conditions. At the same time, the largest Ukrainian airline has ceased its operations and was subjected to insolvency proceedings due to the vast majority of its fleet being stranded in Ukraine since the start of the Russian invasion, with no possibility to relocate them.
The SAAU continues to play a pivotal role in supporting these operations and the broader aviation finance framework. As the chief civil aviation authority in Ukraine, it provides extensive regulatory and administrative support including the registration, reregistration and deregistration of aircraft. The SAAU also issues authorisation entry point codes for the International Registry under the Cape Town Convention, acknowledges and processes Irrevocable Deregistration and Export Request Authorisations (IDERAs), and maintains ongoing aviation safety and airworthiness oversight over Ukrainian operators and registered aircraft. This consistent regulatory engagement has been instrumental in sustaining cooperation between Ukrainian operators and foreign lessors.
Legislative framework
International treaties
Ukraine is a party to the principal international conventions governing civil aviation and aviation finance: the Convention on International Civil Aviation (the Chicago Convention 1944), the Convention on International Financial Leasing (the Ottawa Convention 1988), the Convention for the Unification of Certain Rules for International Carriage by Air (the Montreal Convention 1999) and the Convention on International Interests in Mobile Equipment and the Protocol thereto on Matters Specific to Aircraft Equipment (the Cape Town Convention and the Aircraft Protocol 2001).
However, Ukraine is not a party to the Convention for the Unification of Certain Rules Relating to Damage Caused by Foreign Aircraft to Third Parties on the Surface (the Rome Convention 1933), nor to the Convention on the International Recognition of Rights in Aircraft (the Geneva Convention 1948). Consequently, matters concerning third-party surface damage and the recognition of rights in aircraft are governed by Ukrainian domestic law and applicable conflict-of-law principles, rather than by these conventions.
Domestic legal framework
The principal domestic legislation regulating aviation and aviation finance in Ukraine includes the Civil Code of Ukraine, the Air Code of Ukraine, the Customs Code of Ukraine, the Law of Ukraine on Foreign Economic Activity and the Law of Ukraine on Private International Law. These legislative acts are supplemented by a substantial amount of subordinate legislation including aviation rules and regulations adopted by the SAAU, which, among other matters, regulate the procedures for registration, operation and deregistration of civil aircraft in Ukraine.
Ukrainian law does not impose restrictions on the inclusion of choice-of-law clauses in contracts relating to the transfer of interests in aircraft, the creation of security over aircraft or lease agreements. Parties are generally free to determine the law governing their contractual relations. Nonetheless, this freedom is subject to mandatory provisions of Ukrainian law governing matters of public order including, among other things, currency regulation, taxation, customs clearance, and certain regulatory and administrative requirements, which apply irrespective of the law chosen by the parties.
Transfer of title and sale documentation
Ukraine acknowledges the transfer of title to an aircraft pursuant to a sale and purchase agreement governed by the law chosen by the parties. This agreement is typically accompanied by a bill of sale, which serves as formal evidence of the actual title transfer. While the concept of a bill of sale is not commonly employed under Ukrainian law, Ukrainian legislation does not prohibit the execution of a bill of sale outside Ukraine. Consequently, a bill of sale governed by foreign law is enforceable in Ukraine and sufficient to confirm the transfer of title to an aircraft.
Ukrainian law does not prescribe specific substantive requirements for aircraft transfer documents other than the requirement that they must be executed in written form (which may include electronic form). Neither notarisation, registration nor any other form of public acknowledgement is mandatory for the validity of such documents.
For the purposes of aircraft registration in Ukraine, the SAAU requires an apostilled bill of sale or sale and purchase agreement in conjunction with a certified Ukrainian translation, particularly when the aircraft is leased by a Ukrainian operator from a foreign lessor.
Aircraft registration
The Civil Aircraft Register of Ukraine (the Aircraft Register) is maintained by the SAAU and is publicly accessible through the SAAU's official website. Registering an aircraft in the Aircraft Register designates it as Ukrainian and assigns the SAAU responsibility for overseeing its airworthiness and operation. Ukrainian entities or individuals and foreign lessors leasing aircraft to Ukrainian operators can register their aircraft in Ukraine. While the aircraft are registered in the owner's name, Ukrainian law stipulates that a record in the Aircraft Register does not establish ownership rights to the aircraft. Additionally, Ukraine does not maintain a separate register for recording ownership, lease or security interests in aircraft engines.
Registration of an aircraft in Ukraine is initiated by the owner or a person acting under the owner's authority. Where the aircraft is owned by a foreign lessor, the registration application is typically submitted by the Ukrainian lessee. Aircraft registration is always subject to the allocation of nationality and registration marks, which is confirmed by a notification issued by the SAAU and on-site technical inspection of the aircraft by SAAU officers.
The registration fee for an aircraft amounts to US$4 per 100 kilograms of maximum take-off weight, subject to a minimum fee of US$70 and a maximum fee of US$4,000.
Upon completion of registration, the SAAU issues a certificate of registration indicating the nationality and registration marks, manufacturer, aircraft model and serial number, owner's name and address, date of issuance and expiry, and lessee details. The certificate has administrative effect only and does not confirm title to the aircraft.
Aircraft deregistration
Ukrainian law provides for three primary types of aircraft deregistration procedure: consensual deregistration, non-consensual deregistration and mandatory deregistration. Each procedure is carried out by the SAAU in accordance with the Air Code of Ukraine and applicable aviation regulations.
Consensual deregistration
Consensual deregistration can be initiated by the aircraft owner or a person acting on the owner's behalf. In practice, when the aircraft is owned by a foreign lessor, the Ukrainian lessee typically procures deregistration.
To deregister an aircraft consensually, the lessee must submit an application to the SAAU along with the following documents (each accompanied by a certified Ukrainian translation if executed in a foreign language):
- consent from the aviation authority of the state where the aircraft will be registered confirming its readiness to register the aircraft after deregistration from Ukraine (can be provided electronically);
- a lease termination agreement or an equivalent document that clearly states the termination of the lease;
- a redelivery certificate or equivalent document;
- the original aircraft registration certificate;
- the original notification on allocation of nationality and registration marks;
- the original IDERA; and
- confirmation of payment of the applicable deregistration fee.
Aircraft deregistration is subject to technical inspection to confirm the removal of Ukrainian nationality and registration marks from the aircraft's surface and certain internal equipment.
Non-consensual deregistration
Non-consensual deregistration may be initiated by the aircraft owner on the basis of a valid IDERA. In such cases, the owner submits a deregistration application to the SAAU, along with the following documents:
- evidence confirming that all interested parties (within the meaning of the Cape Town Convention) have been duly notified in advance of the contemplated deregistration;
- consent of the creditors whose registered international interests have priority over the international interest of the aircraft owner, or a priority search certificate evidencing the absence of such interests;
- the original IDERA;
- the original aircraft registration certificate; and
- confirmation of payment of the applicable deregistration fee.
As a matter of practice, it is also advisable to provide a lease termination notice and the aviation documents (notices and certificates) issued by the SAAU regarding the aircraft. If the SAAU needs any further documents, it usually requests that the aircraft operator provide them.
In both consensual and non-consensual deregistration scenarios, the deregistration fee amounts to 200% of the applicable aircraft registration fee but does not exceed US$8,000. Upon submission of the deregistration application, the aircraft must be made available for inspection by authorised officers of the SAAU. The deregistration procedure generally does not exceed 10 business days.
Upon completion of deregistration, the SAAU issues a certificate confirming the aircraft's removal from the Aircraft Register. They can also provide an export certificate of airworthiness upon request.
Mandatory deregistration
The SAAU is empowered by law to deregister an aircraft from the Aircraft Register on a mandatory basis if:
- the operation of the relevant aircraft type has ceased;
- the aircraft has not been presented for an airworthiness inspection conducted by SAAU officers for a continuous period of 24 months; or
- the operating lease has been terminated, and neither the aircraft owner nor the lessee has applied for deregistration.
In such cases, deregistration is effected by the issuance of a formal decree by the SAAU that excludes the aircraft from the Aircraft Register.
In practice, Ukrainian operators have limited legal mechanisms to obstruct the deregistration process. Even if an operator refuses or fails to provide the aircraft owner with the original documentation required for deregistration, the SAAU is entitled to request the documentation directly from the operator.
Import and export of aircraft
Although not applicable while Ukrainian airspace remains closed, in normal circumstances an aircraft can be imported into Ukraine either before or after its registration in the Aircraft Register. Under Ukrainian customs legislation, aircraft imported into Ukraine under operating lease agreements (except for certain limited exceptions) are subject to conditional release from import taxes and duties.
Similarly, in ordinary circumstances an aircraft may be exported from Ukraine either before or after its deregistration from the Aircraft Register. Under Ukrainian customs legislation, the Ukrainian lessee is obligated to terminate the temporary import customs regime applicable to the aircraft, under which customs and tax benefits are typically granted for the duration of the lease. Export of the aircraft is not possible if Ukrainian airspace is closed.
Nonetheless, aircraft equipment such as engines (subject to certain exceptions) can be exported from and imported into Ukraine by ground transportation if this is practically feasible given the equipment's size.
Financial regulation
During the period of martial law, which has been in effect since 24 February 2022, the National Bank of Ukraine (NBU) has introduced a general prohibition on cross-border payments. These measures are intended to preserve macro-financial stability, safeguard foreign currency reserves and ensure the stability of the national currency. Despite this general prohibition, however, payments under aircraft lease agreements and payments of aviation insurance premiums are expressly permitted, provided that they comply with standard know your customer and anti-money laundering procedures implemented by Ukrainian banks.
In the context of international financing, currency restrictions may affect payments made under security guarantees issued by Ukrainian entities to secure the obligations of Ukrainian lessees. Where a Ukrainian guarantor does not maintain bank accounts outside Ukraine, cross-border payments under such guarantees are generally restricted. However, Ukrainian law provides for a mechanism whereby a servicing bank may seek an individual authorisation from the NBU to process a specific cross-border transaction. Nonetheless, it is unlikely that the NBU will grant authorisation for transactions between private entities.
Considering Ukraine’s bilateral double tax treaties with major international aviation leasing countries (such as Ireland and the United States), lease payments are not subject to withholding tax in Ukraine if an apostilled tax residence certificate is provided confirming the lessor's (and, occasionally, the aircraft owner's) registration in a state with a double tax treaty in force with Ukraine. Given that Ukrainian tax authorities may treat the aircraft owner as a beneficiary of lease payments even if they are made to the sublessor, it is advisable to structure the lease in such a manner that both the lessor and the aircraft owner are incorporated in a state with a double tax treaty in force with Ukraine.
Overall, while the wartime financial regulatory environment in Ukraine imposes heightened currency control and compliance requirements, the existing framework continues to accommodate core aviation finance transactions. In particular, the continued permissibility of lease and insurance payments remains critical for sustaining cross-border aircraft leasing and financing involving Ukrainian operators.
Types of aviation financing
Ukrainian law generally recognises and accommodates the most common aircraft leasing and financing transaction structures used in the international aviation finance market. This includes structures involving syndicated lending, secured lending, operating leases and cross-border financing arrangements in which an international bank or financial institution acts as lender or security trustee on behalf of a borrower under a facility agreement.
Although Ukrainian law does not recognise the concept of a trust as such, the rights of a security trustee acting for the benefit of one or more lenders are recognised, protected and enforceable in Ukraine, including in the context of security enforcement and insolvency.
Aircraft finance transactions involving Ukrainian operators are typically structured through a loan advanced to the aircraft owner by an international financial institution, either directly or through a security trustee. The aircraft is then leased to a Ukrainian airline under an operating lease, reflecting the preferential tax treatment afforded to operating leases under Ukrainian law. Leasing arrangements may involve direct leasing from the owner or an intermediary through a chain of leasing entities.
As security for the loan obligations, the aircraft owner and the lender or security trustee usually enter into a mortgage governed by foreign law, together with a security assignment of lease rentals and related contractual rights. In addition, local-law security may be created over the aircraft in Ukraine to enhance enforceability and protect the interests of financiers within the Ukrainian jurisdiction.
Enforcement and foreclosure
Creation of security interests
While Ukraine recognises securities created under US or English law, if the parties elect to create security over an aircraft under Ukrainian law in addition to the one under the foreign law, this security is most commonly structured in the form of an aircraft mortgage. In this arrangement, the aircraft owner acts as the mortgagor (borrower), while the lender or security trustee acts as the mortgagee.
An aircraft mortgage agreement governed by Ukrainian law must be executed in the Ukrainian language or accompanied by a certified Ukrainian translation, and must also be notarised by a Ukrainian notary. In addition to notarisation, the mortgage interest must be registered in a public register to be effective against third parties.
The mortgage agreement must comply with statutory formal requirements that customarily include, among others, identification of the parties, a detailed description of the mortgaged aircraft, the secured obligations, the value of the mortgaged property, the total and maximum amount of secured claims, as well as agreed enforcement and settlement mechanisms. The mortgage becomes valid and binding between the parties upon execution and notarisation.
Following notarisation, the mortgage interest is registered by the notary in the Ukrainian Register of Encumbrances over Movable Property (the Encumbrances Register). The security interest becomes effective against third parties upon its registration in the Encumbrances Register. In practice, execution of the mortgage agreement and registration of the security interest are typically completed on the same business day.
Registered security interests rank in priority according to the chronological order of their registration. Encumbrances registered earlier take priority over subsequently registered security interests, and secured claims are satisfied in the order of registration upon enforcement. Third parties are entitled to rely on the accuracy and completeness of the information recorded in the Encumbrances Register.
International interests
Ukraine is a contracting state to the Cape Town Convention on International Interests in Mobile Equipment and the Aircraft Protocol. Thus, it is customary and advisable to register international interests in aircraft with the International Registry in order to obtain priority protection on a global basis.
Registration of international interests is subject to the issuance of authorisation entry point codes by the SAAU, since Ukraine has made a declaration under article XIX of the Aircraft Protocol designating the SAAU as the authorising entry point.
Aircraft repossession
Repossession of an aircraft following lease termination is primarily governed by the lease agreement. The lease agreement typically provides for contractual self-help remedies, including a deregistration power of attorney that is usually provided by the lessee as a condition precedent or subsequent.
In addition, the Cape Town Convention affords lessors non-judicial remedies that may be exercised without a court order, subject to compliance with applicable procedural requirements. Ukraine recognises the rights of the authorised party under the IDERA issued pursuant to the Cape Town Convention and Aircraft Protocol, provided that the IDERA is issued for the benefit of the legal owner of the aircraft and is recorded with the SAAU.
Under Ukrainian law, certain administrative steps are required following lease termination, namely deregistration of the aircraft from the Aircraft Register and customs clearance, and export of the aircraft if it is located in Ukraine. Deregistration may be carried out under either a consensual or non-consensual procedure, and is generally straightforward in practice (see "Legislative framework", above).
With respect to customs matters, the Ukrainian lessee is required to terminate the temporary import regime under which customs and tax benefits were enjoyed during the lease term. While failure by the lessee to cancel the temporary import regime does not affect the owner’s legal right to repossess the aircraft, in practice it may delay or complicate the physical export of the aircraft from Ukraine. Ukrainian law does not provide the lessee with legal mechanisms to prevent the owner from exercising default remedies.
Enforcement of mortgage security
A mortgagee is entitled to enforce its security interest upon the occurrence of a default by the mortgagor. Ukrainian law permits out-of-court enforcement, provided that the relevant enforcement mechanism is expressly agreed by the parties in the mortgage agreement.
Subject to compliance with local legal requirements, out-of-court enforcement may be effected by either transfer of title to the aircraft to the mortgagee or sale of the aircraft by the mortgagee. In the event of insolvency proceedings against the debtor, the secured creditor is entitled to seek satisfaction of its secured claims irrespective of the maturity date of the secured obligation, unless otherwise agreed by the parties.
Recognition and enforcement of foreign judgments and awards
Foreign court judgments (including those from England or the US) may be recognised and enforced in Ukraine. This is carried out through applicable bilateral or multilateral treaties or on the basis of reciprocity. Generally, these judgments are enforceable without re-examining the merits, provided that certain statutory requirements are met. These requirements include the finality of the judgment, proper notice, absence of conflicting Ukrainian judgments, jurisdictional competence and compliance with Ukrainian public order.
Ukraine is a party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. As a result, foreign arbitral awards are recognised and enforced in Ukraine without retrial on the merits, except for the limited grounds for refusal outlined in the Convention.
Special considerations
Sanctions regime applicable to aircraft
In 2025, the Ukrainian Parliament adopted amendments to the Law of Ukraine on Sanctions that expressly extended the scope of sanctions to aircraft. Under the amended framework, sanctions may be imposed where it is established that an aircraft is being used for activities that pose real or potential threats to Ukraine’s national interests, security, sovereignty or territorial integrity. Aircraft subject to sanctions are recorded in the State Sanctions Registry.
While the legislation does not exhaustively define the specific sanctions applicable to aircraft, it is anticipated that such measures may include, among others, freezing and confiscation of assets, and a prohibition on entering Ukrainian airspace. Ukrainian law provides for a non-exhaustive list of sanctions, and additional restrictive measures may therefore be imposed at the discretion of the competent authorities. The relevant amendments entered into force on 1 August 2025.
Expropriation mechanisms under Ukrainian law
Ukrainian law provides for several distinct expropriation regimes, each of which may be relevant in the aviation context: general expropriation, sanctioned expropriation and Russia-related expropriation.
General expropriation
Pursuant to the Law of Ukraine on the Transfer, Alienation or Expropriation of Property During Martial Law or State of Emergency, property privately owned by individuals or legal entities may be expropriated during martial law or a state of emergency for state needs.
General expropriation is subject to prior or subsequent full compensation for the value of the expropriated property. No court decision is required to effectuate such expropriation. Despite four years of ongoing hostilities, there have been no publicly reported cases of aircraft or aircraft equipment being expropriated under this mechanism.
Sanctioned expropriation
Property owned by individuals or legal entities subject to sanctions imposed by Ukraine may be expropriated pursuant to the Law of Ukraine on Sanctions. This form of expropriation is non-refundable and is implemented on the basis of a decision of the High Anti-Corruption Court of Ukraine. This type of expropriation has been applied in the aviation sector since the commencement of the Russian invasion on 24 February 2022; reported cases include the expropriation of two AN-148 aircraft belonging to joint stock company Ilyushin Finance (Russian Federation) and six D-18T aircraft engines belonging to the Volga-Dnepr Group (Russian Federation).
Russia-related expropriation
Ukrainian law also provides for the forced seizure of property of the Russian Federation and its residents (including legal entities) under the Law of Ukraine on Forced Seizure of Property of the Russian Federation and its Residents. This mechanism is non-refundable and does not require a court decision. While this instrument has been applied in practice, no publicly reported aviation-related cases have been identified to date.
The SAAU records unlawful violations of Ukrainian airspace by aircraft operators conducting flights to or over the territory of the Crimean Peninsula, which has been occupied by the Russian Federation since 2014. The authority routinely imposes administrative fines on aircraft operators for each unlawful flight over Crimea.
Outlook and conclusions
Despite the unprecedented challenges posed by the ongoing armed conflict and the prolonged application of martial law, Ukraine has largely preserved a coherent, creditor-oriented legal framework for aircraft financing, leasing and enforcement. Ukrainian law recognises and accommodates the most common international aircraft finance structures, including operating leases, cross-border secured lending, the use of security trustees, and the creation of both local-law and foreign-law security interests. In parallel, Ukraine’s continued adherence to the Cape Town Convention and the Aircraft Protocol provides an additional layer of predictability and international alignment, particularly with respect to priority rules, self-help remedies and the recognition of international interests.
At the regulatory level, the Ukrainian aviation authority has maintained operational continuity and regulatory oversight despite the closure of Ukrainian airspace. Aircraft registration, deregistration, IDERA acknowledgement and cooperation with the International Registry continue to be supported in practice, including for Ukrainian operators conducting aircraft operations outside Ukraine. This institutional continuity has been critical in sustaining the legal infrastructure required for cross-border aircraft operations and financing.
Looking ahead, Ukraine's aviation legal framework is likely to continue evolving in response to wartime realities, post-war reconstruction priorities, and deeper integration with international and European legal standards. While operational risks associated with airspace closure and asset evacuation remain significant in the short term, the underlying legal architecture governing aircraft ownership, security, enforcement and international recognition remains largely intact.
Authors: Anna Sisetska, Yevhenii Senchenko