Aircraft As Collateral In Kazakhstan: Movable Property With “Immovable” Registration

Aircrafts are increasingly used as collateral for loans, credit facilities, and other financial obligations. However, unlike ordinary movable property, a mortgage over an aircraft is subject to a special legal regime. Ignoring these legal nuances may significantly weaken a creditor’s security or render it ineffective.

Outlined below are the key legal considerations to be taken into account when structuring an aircraft mortgage in Kazakhstan.

Special legal status: movable property with “immovable” registration regime

Under Civil Code of the Republic of Kazakhstan (the “Civil Code”), aircrafts are treated similarly to immovable property and, as such, are subject to state registration. As a matter of law, rights to an aircraft as well as encumbrances over it (including mortgages) arise and are recognised only upon their registration in the State Aircraft Register. In practical terms, this means that: