I INTRODUCTION

The Isle of Man aviation sector is firmly established in the industry. The Isle of Man Civil Aviation Administration (CAA) is the division of the government's Department of Economic Development (DED) that is responsible for regulating aviation on the Isle of Man. The CAA's role is to administer the Isle of Man Aircraft Registry (the Registry) and regulate the Isle of Man airport. The CAA is responsible for ensuring aviation legislation on the Isle of Man meets International Civil Aviation Organization (ICAO) Standards and Recommended Practices and other relevant European aviation standards.

The Registry was created in May 2007 and it is specifically aimed at private and corporate business jets and helicopters. Isle of Man registered aircraft cannot be used for Commercial Air Transport. It is the largest dedicated corporate aircraft register in Europe, with a policy to accept only aircraft with a maximum take-off mass (MTOM) of over 5,700kg and twin turbine helicopters. Aircraft with a MTOM of between 2,730kg and 5,700kg may be considered for registration only if supported by evidence of significant economic benefit to the Isle of Man. There is no MTOM restriction for aircraft registered for Isle of Man residents. The Registry has proven to be an unqualified success, having registered over 1,000 aircraft since its inception.

The Air Navigation (Isle of Man) Order 2007 (which came into force on 1 May 2007) was the governing legislation for the aircraft industry on the Isle of Man and because of the success of the Registry and the continuing development of the industry on the island it has been updated and replaced by the Air Navigation (Isle of Man) Order 2015 (as amended by the Air Navigation (Isle of Man) (Amendment) Order 2016) (ANO). This chapter will cover the main aspects and developments introduced by the new ANO.

i About the Isle of Man

The Isle of Man is one of the most politically and economically stable jurisdictions in the world. It is not part of the United Kingdom but conveniently lies within the British Isles. The island is politically and constitutionally separate from the United Kingdom. It has its own political system and its own parliament (Tynwald), which is independent and is the oldest continuous parliament in the world, with over 1,000 years of unbroken parliamentary rule. Tynwald is responsible for setting the island's laws, including matters of taxation. The island has one of the highest credit ratings of any offshore financial centre and has never entered recession. It has benefited from year-on-year economic growth, is on the Organisation for Economic Co-operation and Development's (OECD) 'whitelist' and is one of the few countries in the world to be awarded the top 'compliant' rating for transparency by the OECD Global Forum.

II LEGAL FRAMEWORK FOR LIABILITY

The Isle of Man aviation industry is governed by the following pieces of legislation: the ANO; the Civil Aviation (Subordinate Legislation) (Application) Orders 2006 and 2008; and the Airports and Civil Aviation Act 1987.

In addition to the above pieces of legislation, the CAA has adopted the content of UK CAA Civil Aviation Publications (CAPs) to address issues or topics not covered by the Isle of Man regulations and instructions for continued airworthiness. Examples of the UK CAA CAPs adopted by the CAA include the following:

CAP Title
032 UK Aeronautical Information Publication
168 Listing of Aerodromes
382 Mandatory Occurrence Reporting Scheme
584 Air Traffic Controllers Training
642 Airside Safety Requirements
694 The UK Flight Planning Guide
740 UK Airspace Management Policy
757 Occupational Health and Safety on board Aircraft Guidance on Good Practice

The ANO came into force on 1 May 2015 and revoked the Air Navigation (Isle of Man) Order 2007 and the Air Navigation (Isle of Man) (Amendment) Order 2008. The ANO is effectively the guiding legislation for the Isle of Man aircraft industry, covering the many practicalities of registering and operating an aircraft on the Isle of Man as further detailed in this chapter.

The Civil Aviation (Subordinate Legislation) (Application) Orders 2006 and 2008 applied a number of pieces of UK legislation to the Isle of Man, including:

  1. Mortgaging of Aircraft Order 1972;
  2. Mortgaging of Aircraft (Amendment) Order 1972;
  3. Civil Aviation Authority Regulations 1991;
  4. Civil Aviation (Investigation of Air Accidents and Incidents) Regulations 1996;
  5. EC/Swiss Air Transport Agreement (Consequential Amendments) Regulations 2004;
  6. Civil Aviation (Insurance) Regulations 2005;
  7. Civil Aviation (Safety of Third Country Aircraft) Regulations 2006;
  8. Rules of the Air Regulations 2007; and
  9. Rules of the Air (Amendment) Regulations 2007.

The Airports and Civil Aviation Act 1987 also, inter alia, applied a number of pieces of UK legislation to the Isle of Man, namely:

  1. the Carriage by Air Act 1961;
  2. the Carriage by Air (Supplementary Provisions) Act 1962;
  3. the Tokyo Convention Act 1967;
  4. the Civil Aviation Act 1982;
  5. the Aviation Security Act 1982;
  6. the Airports Act 1986; and
  7. any provision of an Act of Parliament that relates to civil aviation, air navigation or airports.

The Air Navigation (Isle of Man) (Amendment) Order 2016 came into force on the 1 May 2016. It implements recent changes to the International Civil Aviation Organisation (ICAO) Standards and Recommended Practices (SARPs).

The Isle of Man is not a signatory to any of the Warsaw, Chicago or Montreal Conventions, but the United Kingdom is, and through its Department for Transport it has accountable oversight responsibility for the United Kingdom, Crown dependencies and Overseas Territories, which includes the Isle of Man.

III LICENSING OF OPERATIONS

i Licensed activities
Certificate of airworthiness

All Isle of Man registered aircraft must be issued with a certificate of airworthiness (COA) before they are able to fly. The COA must specify the category 'Private', meaning that the aircraft is not an aerial work aircraft or a commercial air transport aircraft, and must be issued subject to the condition that the aircraft may not be flown except for the purposes (which may not include commercial air transport or aerial work) specified in the certificate (ANO Article 16(3)). Each Isle of Man registered aircraft is required to submit to an annual survey to confirm conformity with the Isle of Man aviation legislation requirements to renew its COA. A Registry airworthiness surveyor attends the aircraft wherever in the world it is based, and conducts a sample review of the aircraft records for the past 12 months, since its previous COA, together with a physical check of the aircraft itself. When the surveyor is satisfied that the aircraft remains compliant to its Type Certificate Data Sheet, a recommendation is made by the surveyor to renew the COA. The Registry will then consider the recommendation and subsequently issue the new COA.

The normal practice for an aircraft to apply for a COA is that its nominated airworthiness technical representative, who will be the Registry's single point of contact with the operator of the aircraft regarding all matters of airworthiness, completes his or her own inspection of the aircraft and records and satisfies him or herself that he or she is in a position to demonstrate that each of the applicable items to be inspected has reached a full level of compliance and that he or she has all of the requisite documents. A survey will be carried out by one of the Registry's surveyors, and these surveys do not have to be carried out on the Isle of Man as the Registry has 20 accredited surveyors resident in central Europe, the United Kingdom, the United States and the Isle of Man and they can be flown to various locations as necessary. A maintenance programme must be submitted for approval that identifies the location of the aircraft manufacturer's recommended aircraft actions, and that has been customised to reflect the aircraft's operational and emergency equipment and scope of operations and it must include 'instructions for continued airworthiness' in relation to any modifications embodied on the aircraft.

Modification and repair data approved in accordance with European Aviation Safety Agency (EASA) regulations are acceptable to the Registry and this includes countries with bilateral agreements with EASA for such activities (e.g., Brazil, Canada, Switzerland and the United States).

As the Registry can only register aircraft for private or corporate use and not aircraft that are operating for commercial air transport with airlines or air charter operations, the Isle of Man does not issue air operator certificates, unlike the majority of countries with an aviation industry.

Notwithstanding the fact that any aircraft registered in the Isle of Man Registry cannot be used for commercial air transport, commercial airliners that are between leases or parked at the end of a lease and not operating commercially may be registered in the Isle of Man as private aircraft. The Isle of Man Registry is attractive to such commercial airliners because there is no minimum time that an aircraft has to remain on the register; any EASA Part 145 maintenance organisation with the appropriate approvals can conduct work on Isle of Man registered aircraft without requiring further approval from the Registry, thus providing flexibility when choosing an end-of-lease maintenance organisation; and type-rated ICAO flight crew licences can be validated for flight crew of Isle of Man registered aircraft, so local pilots with appropriate licences can operate the aircraft at the end of the lease.

ii Ownership rules

In accordance with Part 1, Article 5 of the ANO, only the following persons are qualified to hold a legal or beneficial interest by way of ownership in either an aircraft registered in the Isle of Man or a share in such an aircraft:

  1. the Crown in right of the Isle of Man, the United Kingdom or any part of the United Kingdom;
  2. Commonwealth citizens;
  3. nationals of any EEA Member State or Switzerland;
  4. British protected persons;
  5. bodies incorporated in some part of the Commonwealth or having their registered office, central administration or principal place of business in a part of the Commonwealth; or
  6. Undertakings formed in accordance with the law of the Isle of Man, an EEA Member State or Switzerland and having their registered office, central administration or principal place of business within the Isle of Man, an EEA Member State or Switzerland.

Notwithstanding the above qualification requirements, under the terms of the ANO there are instances wherein the rules may be relaxed somewhat, namely:

  1. if an unqualified person resides or has a place of business in the Isle of Man and holds a legal or beneficial interest by way of ownership in an aircraft or a share in an aircraft, the CAA/DED may register the aircraft if it is satisfied that the aircraft may otherwise be properly registered; and
  2. if an aircraft is chartered by demise to a person qualified under the list above, the CAA/DED may, whether or not an unqualified person is entitled as owner to a legal or beneficial interest in the aircraft, register the aircraft in the Isle of Man in the name of the charterer by demise if it is satisfied that the aircraft may otherwise be properly so registered and the aircraft may remain registered during the continuation of the charter.

Under the terms of Article 4 of the ANO, an aircraft may not be registered or continue to be registered in the Isle of Man if it appears to the CAA/DED that:

  1. the aircraft is registered outside the Isle of Man and that the registration would not cease by operation of law were the aircraft to be registered, or continue to be registered, in the Isle of Man;
  2. an unqualified person holds a legal or beneficial interest by way of ownership in the aircraft or in a share in the aircraft;
  3. the aircraft could more suitably be registered in some other part of the Commonwealth or in an EEA state or Switzerland; or
  4. it would not be in the public interest for the aircraft to be or continue to be registered in the Isle of Man.

IV SAFETY

As set out in Section II, the Isle of Man has implemented a number of pieces of UK legislation and regulations and these include those relating to and covering safety issues.

EASA has no involvement with Isle of Man registered aircraft or directive responsibilities and all Isle of Man aircraft are required to follow any national aviation authority directives while operating in its national airspace, but as the Registry meets the recommendations set by ICAO, there are no regulatory aspects in relation to safety from any other state.

In relation to the licensing of aircrew and engineers, the Registry is not a signatory state, but it is able to validate other ICAO states' licences to be effective in relation to Isle of Man registered aircraft, so long as the licence meets the ICAO Annex 1 standard.

Following the implementation of the ANO the Registry has notified owners of registered aircraft that it may from time to time issue Air Worthiness Directives to address an urgent safety concern or vary the requirements of a State of Design Airworthiness Directive and in such circumstances the Isle of Man directive will take precedence.

V INSURANCE

By virtue of the application of the Civil Aviation (Insurance) Regulations 2005 to the island by way of the Civil Aviation (Subordinate Legislation) (Application) Orders 2006 and 2008, the Isle of Man is subject to EC regulations relating to insurance requirements. Section 12 of the Regulations on penalties is amended to reflect Isle of Man criminal law and procedures for convictions, otherwise the island is subject to the same rules as the United Kingdom on what must be insured and to what level. Regulation (EC) No. 785/2004 (as amended by Regulation (EU) No. 285/2010) sets out the insurance requirements for all air carriers flying within, into, out of or over the territory of a Member State (this is covered in more detail in the UK chapter). The CAA is the competent authority on the island for enforcement and this mirrors the position in the United Kingdom.

No insurance premium tax is payable in the Isle of Man, as opposed to the 6 per cent payable in the United Kingdom.

VI COMPETITION

The primary legislation in relation to competition on the island is the Fair Trading Act 1996 (the FTA 1996). This legislation applies across all sectors of industry on the island, including the aviation sector, and gives the Isle of Man Office of Fair Trading (OFT) certain powers to enforce anticompetition regulations.

Anticompetitive practices are defined by Section 8(1) of the FTA 1996 as follows:

a person engages in an anticompetitive practice if, in the course of business, he pursues a course of conduct which, of itself or when taken together with a course of conduct pursued by another person or other persons, has or is intended to have or is likely to have the effect of restricting, distorting or preventing competition in connection with the production, supply or acquisition of goods in the Island or the supply or securing of services in the Island.

Under Section 8(8) of the FTA 1996, public authorities are also specifically brought under this provision, preventing anticompetitive practices by any such body.

If it appears to the Council of Ministers, the highest-level decision-making body of the Isle of Man government, that any person has in the past or is currently pursuing a practice that could be considered anticompetitive, they may refer such an individual to the OFT for investigation and for a report to be prepared as to whether the practice in question was actually anticompetitive under the legislation.

As an initial remedy the OFT may seek an undertaking from the individual, if such an undertaking 'would remedy or prevent effects adverse to the public interest which the practice may now or in future have'. The OFT is required to review the operation of any such undertakings and make decisions as to whether the individual can be released from the undertaking or whether the undertaking should be revised.

If no such undertaking is sought or given, then the OFT must submit its report to the Council of Ministers, who may then decide whether they think it should be referred to a 'Commission', which may be any appropriate statutory board or government department. The Commission must then make its own investigations and conclude whether the individual has in fact engaged in anticompetitive practices and whether such a practice did, or might be expected to, operate against the public interest. This report is submitted to the Council of Ministers with suggestions as to any actions that may need to be taken to ensure that the effects of the anticompetitive practice are remedied.

The Council of Ministers then has certain powers available to it in relation to the individual found to be engaging in anticompetitive practice. An order may be made prohibiting the individual from engaging in the practices identified in the report or any course of action of a similar form or effect. There are also further powers specified in Schedule 2 of the FTA 1996 in relation to the requirements that may be placed on the individual within an order, including a requirement to terminate any agreements involving practices identified in the report as anticompetitive (unless they relate to employment of workers or their physical working conditions).

VII WRONGFUL DEATH

The Isle of Man's laws concerning wrongful death claims largely mirror those in the UK. There are two key pieces of legislation: the Fatal Accidents Act 1981 (FAA) allows an action to be brought on behalf of the dependants of the deceased; and the Law Reform (Miscellaneous Provisions) Act 1938 allows an action to be brought on behalf of the deceased's estate.

In addition to damages for loss of dependency the FAA allows a claim for damages for bereavement, and for recovery of funeral expenses. The sum to be awarded for bereavement is £10,000. Damages in a claim by the estate under the Law Reform (Miscellaneous Provisions) Act 1938 are less certain as very few claims have been through the Isle of Man courts. It is expected that an estate would be able to recover damages for pain, suffering, loss and expense suffered by the deceased before death in a similar manner to the UK.

VIIi ESTABLISHING LIABILITY AND SETTLEMENT

There are no specific legal or procedural rules in operation on the Isle of Man in respect of claims brought in relation to aviation matters. Any and all legal proceedings that are related to the aviation sector (e.g., claims for a declaration of ownership of an aircraft, or personal injury claims against an airline) will proceed in the Isle of Man courts in accordance with the usual rules of procedure adopted by those courts.

Isle of Man law prescribes different limitation periods depending upon the nature of the claim. Pursuant to the Limitation Act 1984, claims for breach of contract and claims in tort must be brought within six years of the date on which the cause of action accrued. In respect of personal injury claims, the time limit is three years from the date on which the cause of action accrued (or the date on which the claimant became aware of the cause of action, if later). It must be noted, however, that the court retains discretion to relax the limitation period in respect of personal injury claims if there are equitable grounds justifying such a course of action.

Although the Isle of Man High Court Rules do not contain pre-action protocols (such as are found in the English Civil Procedure Rules), the Isle of Man courts nonetheless expect parties to litigation to correspond with each other and make some effort to resolve the dispute prior to launching court proceedings. To this end, it is advisable for litigants at least to attempt alternative dispute resolution procedures such as mediation and arbitration prior to involving the court in the dispute.

In respect of arbitration, in 1979 the Isle of Man ratified the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards (the Convention), meaning that awards made pursuant to the Convention will be recognised and enforced on the Isle of Man. The Isle of Man also has its own arbitration legislation in the form of the Arbitration Act 1976.

i Notable case law

The Isle of Man courts have not yet had cause to give judgment in any proceedings relating to passenger rights or claims brought by passengers against carriers. Most judgments (which are publicly available on the Isle of Man courts' website, www.judgments.im) concern applications for declaratory injunctions relating to the ownership of aircraft or freezing orders in respect of specific aircraft.

Ausco Oil Limited and others (CHP 2014/58)

Ausco Oil Limited and others (CHP 2014/58) concerned a dispute about the registration of an aircraft on the Isle of Man aircraft register. Concurrent proceedings had been commenced in Nigeria. The Isle of Man High Court initially granted an injunction restraining the respondents in the case from facilitating the deregistration of the aircraft on the Isle of Man, but the injunction was subsequently discharged on the grounds of material non-disclosure.

Salaam v. Takieddine and another (CP 2009/43)

Salaam v. Takieddine and another (CP 2009/43) was a dispute relating to the purchase of a special purpose vehicle (SPV) company, the sole asset of which was a Boeing Executive aircraft. The respondent in that case had paid a deposit of US$4 million to purchase the SPV, but then, having allegedly discovered that the sale of the SPV to him was a 'sham', obtained a freezing injunction restraining the applicant from dealing with the deposit. The applicant was subsequently successful in discharging the freezing injunction on the basis that the respondent had not given full and frank disclosure at the original court hearing.

Flexton v. Breeze (SUM 2012/08)

In Flexton v. Breeze (SUM 2012/08) the defendant had agreed to sell a Cessna 303 aircraft to the claimant. The claimant paid the purchase price and used the aircraft for a period, but subsequently the defendant breached the contract by failing to transfer legal title to the claimant. The case contains an interesting discussion in respect of the issue of the use of goods by one party after it has discovered that it does not have legal title to those goods.

IX VOLUNTARY REPORTING

Under Isle of Man law, it is mandatory to report to the Registry occurrences that endanger or that, if not corrected, would endanger an aircraft, its occupants or any other person. Where necessary, occurrences are investigated on the Isle of Man's behalf by the UK Air Accident Investigation Branch. All investigations are kept anonymised and confidential in compliance with ICAO recommendations. The Isle of Man Registry has yet to take steps to explicitly address voluntary reporting.

X THE YEAR IN REVIEW

The Aviation (Cape Town Convention) (No. 2) Order 2016 was approved by Tynwald on 21 July 2016. This was a crucial step towards bringing the Cape Town Convention into operation on the Isle of Man. The Order has brought the Convention into effect on the island following the UK's notification that its ratification is to be extended to the Isle of Man, which occurred on 1 January 2018.

xI OUTLOOK

The Registry continues to prove to be an unqualified success story and as a result the Isle of Man is seen as an industry leader for the registration of business jets and twin turbine engine helicopters. With the implementation of the ANO the Isle of Man can ensure that it is current and reflective of the changing face and development of the aviation industry, and this should help to ensure that its growth and reputation for high quality are maintained and continue in the future.