Nigerian Court Allows Repossession of Arik Air’s CRJ1000

Nigeria’s Federal High Court has allowed Export Development Canada to repossess and tear down CRJ1000 5N-JEE (msn 19037) from Arik Air (W3, Lagos). 

According to a report monitored in ‘Ch-Aviation’, the November 27, 2024, judgement by Justice Alexander Oluseyi Owoeye is the first of its kind after Nigeria signed the Cape Town Convention.

The report stated that: “EDC has been exercising its contractual rights as a creditor through the sale of the aircraft by [former owner of the aircraft] JEM Leasing Limited and views the court ruling as a positive step,” Ch-Aviation quoted EDC spokesperson.

Midwest Herald gathered that, Nigeria’s Economic and Finan­cial Crimes Commission (EFCC), “whom some Arik shareholders enlisted to help prevent the repossession and export of the aircraft, opposed the EDC.”

It was reported also, that JEM Leasing’s sale of the aircraft to Alberta Aviation Capital in late 2022 was invalid. However, Justice Owoeye found that the transaction was legal, and there were no grounds for preventing the jet’s export.

The aircraft was removed from the Nigerian register in 2022, but the EFCC blocked an attempt to repossess it in June 2023. The court heard this was a violation of Cape Town Convention Article 14.

The applicants in the matter according to Ch-Aviation were Captain Samuel Caulcrick and Captain Isiaka Oyeshina Akinfenwa.

Caulcrick was the local repossession agent appointed by part-out firm Merchant Express Cargo, who had the CRJ teardown contract. Akinfenwa is the CEO of Merchant Express Cargo.

In previous court hearings, both men had criticised the tactics of the EFCC and Arik shareholder and founder Johnson Arumemi-Ikhide.

Among other things, Owoeye’s ruling found that EFCC officials had harassed, threatened, questioned, intimidated, detained, and threatened to detain the applicants who were attempting to repossess the aircraft.

In addition to granting the EDC the right to repossess and teardown the aircraft, Owoeye also issued an order preventing EFCC officials from interfering with this process. The CRJ remains in storage at Lagos airport.

The 2013-built regional jet was leased to Arik Air in 2014 by JEM Leasing Limited. The EDC helped finance the aircraft’s acquisition and, consequently, held a mortgage over it.

In December 2022, JEM moved to deregister and repossess the aircraft because Arik was in default. Around the same time, JEM entered into an agreement with Alberta Aviation Capital Corporation to sell the CRJ, with EDC retaining the mortgage.

Arik had stopped operating the aircraft in 2019.

According to the ch-aviation fleets module, the airline now has a fleet of 11 aircraft of which just two are active. Arik remains in receivership and under the control of Nigeria’s state-owned Asset Management Corporation of Nigeria (AMCON), which, as the airline’s largest creditor, took control of the ailing carrier in 2017.

Nigeria only signed the Cape Town Convention leasing practice direction in September and, until now, has had a relatively poor record of complying with leasing norms concerning the return of aircraft in disputes. Aviation minister Festus Keyamo recently blamed that non-compliance record on legal impediments in Nigeria’s judicial process.

An obviously pleased Minister of Aviation and Aerospace Development, @fkeyamo applauded the court decision via his ‘X’ handle said: “First victory in court in Nigeria courtesy of the Cape Town Convention. The courts applied the CTC to the fullest and allowed instant repossession of an aircraft.”