Across the globe, courts continue to grapple with the application of the Cape Town Convention and Aircraft Protocol. In the United States, the decision in In re SAS comes close but falls short of creating clear and binding precedent for future debtors filing for bankruptcy in the United States. This continues to create confusion for creditors, as they are not clear on what rights they can assert during an insolvency proceeding. There is simply not enough reliable precedent or application of the Convention to have strong confidence in the application of their rights under Alternative A. This can suggest to parties hoping to rely on Alternative A that they can be met with scrutiny over their declaration.
Nevertheless, In re SAS made great strides in bolstering the views scholars already had. The Independent Expert Opinion of the Aviation Working Group (“AWG”), issued in May 2024, expressed this position ahead of the SAS opinion. The AWG argues that U.S. courts are “obligated to apply Protocol Article XI Alternative A in conformity with the declaration of the debtor’s primary insolvency jurisdiction without further legislation or implementation by the United States.” Since the United States had the requisite intent and took the proper steps to become a party to the Convention and agreed to be bound by it, it must therefore apply the provisions to proceedings of foreign debtors in U.S. bankruptcy courts.
Legal precedent carries great weight in the U.S. judicial system, so great strides could even be achieved without changing the Bankruptcy Code or enacting new legislation. The legal framework has already established the supremacy of the Convention over domestic law, so what is left now is setting an example through legal precedent. There is no doubt that in the tumultuous aircraft financing market, more bankruptcies are bound to happen, both domestically and internationally. Therefore, there is an urgent need for a clear and binding authority to govern it. The Convention set out this framework, and now that it is ratified, it must be followed.
If this clarity is not reached soon, creditors and debtors alike will remain uncertain about their claims, which will have extensive impacts. If creditors find that they will not be able to recover on their claims, they will have no incentive to remain in the market or will have to increase rates to cover these margins. This could have devastating impacts on the entire airline market globally, increasing the risks of legal ambiguity and forum shopping. Such uncertainties lead to higher risk premiums, which in turn raise costs and decrease investment, which can constrain the entire market.
Clarity on this issue does not only benefit the creditor or the debtor, but is essential to the market as a whole. The U.S. Bankruptcy Code, specifically the globalization of Chapters 11 and 15, is designed to promote international cooperation. The ratification of the Convention and Aircraft Protocol advances these goals. However, noncompliance with the Convention, even in the form of neutrality, frustrates these goals and undermines the credibility of the United States as a Convention-ratifying state.
Therefore, either in the next proceeding brought before a U.S. bankruptcy court or through the enactment of legislation, the United States must complete the work begun in In re SAS and make it manifest that creditors can recover assets under the provisions of Alternative A if the debtor’s primary insolvency jurisdiction has made such an election.
Recommended Citation: Dasha Babaytseva, Jurisdictional Jet Lag: The Case for Greater Implementation of the Cape Town Convention in Cross-Border Airline Insolvency, 50 Fordham Int’l L.J. 227 (2026).