Aicraft Title & Registrations
17. Do the laws of this location provide for possessory rights and/or rights of detention over aircraft in favor of third parties (such as airport taxes, customs duties, air navigation charges, crew’s wages, MRO’s receivables)?
Austria
Basically, the laws of Austria provide for the right of a creditor to retain an aircraft as security in respect of unpaid airport taxes, customs duties and air navigation charges or other unpaid debts caused by the respective aircraft (detention right) in favour of third parties.
The respective creditor has to obtain an enforceable judgement with which it may initiate enforcement proceedings. The Austrian Enforcement Act contains provisions according to which a judicial pledge of the aircraft may be obtained. However, since the use of e.g., airport facilities and airport services are matters of private law, an airport may refuse to provide services to operators in case they have outstanding airport charges.
Please note that the Austrian state will not seize an aircraft if there is not a suspicion of a criminal act for which the aircraft was used (e.g., smuggling of drugs into Austria).
Colombia
According to article X of Act 834 of 2003 and article 1904 of Colombian Commercial Code, the mortgage extends to spare parts, engines, electronic equipment, and other parts permanently incorporated and essential to the aircraft operation. Those mortgage particularities have to be registered in the same registration sheet of the aircraft issued by the National Aeronautic Registry of Colombia.
Germany
No. Even the mortgagee may not take possession when enforcing its mortgage but must get it detained by a bailiff through court proceedings and have it sold by public auction.
India
Indian laws permit the Central Government to empower any authority to detain an aircraft if such detention is necessary to secure compliance with a domestic legislation or when such detention is necessary to prevent the contravention of any legislation or to implement any order made by any court. For instance, the Airports Authority of India has been authorised to detain an aircraft until all fees owed to it by the operator have been paid.
Israel
The Airports Authority (Fees) Regulations, 1991 stipulate that the Israel Airport Authority may refuse to permit the departure of an aircraft, if fees owed to the Authority have not been paid on time by the owner and/or the lessee and/or the captain of the aircraft. The Regulation practically allows the Authority to delay / ground the aircraft until the fee is paid.
Kenya
Section 35 (5) of the Civil Aviation Act gives the KCAA’s Director General powers to seize and detain an aircraft where an operator has failed to pay any fees payable to the KCAA. The KCAA may also detain an aircraft if serious safety and security concerns are identified.
Malta
Yes, for judicial costs, registration dues, crew wages, repairs and possessory lien holders and salvage (as set forth in Article 42(1) of the ARA).
Any debt secured by a mortgage registered in the NARor a charge in the International Registry or secured by a foreign mortgage recognised under the ARA shall rank after the debts secured by possessory liens and, special privileges on aircraft (as specified above) and in preference to other hypothecary and privileged claims.
The debts mentioned below shall, on registration in the International Registry, rank after the debts referred to above (special privileges) but after all debts secured by mortgages and charges in the International Registry registered prior to the date of the registration of the relevant privilege.
The debts mentioned in the following paragraph are secured by a special privilege upon the aircraft, as well as any proceeds from any indemnity arising from any mishaps as well as any insurance proceeds, other than from a liability policy, if registered in the International Registry after the effective date:
(a) taxes, duties and, or levies due to the Government of Malta in respect of the aircraft; and
(b) wages and expenses for assistance or recovery in respect of the aircraft.
Mexico
No. Self-help remedies cannot be exercised and are not available in Mexico.
Norway
Yes, Norwegian law provides for detention rights for e.g., charges in connection with use of airports (seethe Aviation Act section 13-2, and salvage claims, cf. section 12-5). Subject to legal proceedings and certain legal requirements, any creditor including the above–mentioned may additionally request a court order for seizure/arrest of the aircraft as security for a claim against the owner of the aircraft.
Pakistan
While the PCAA is required to cooperate and assist with the deregistration and export of an aircraft if and when requested by an authorized party under the IDERA, Rule 46 of the Implementation Rules appears to empower state entities, including the PCAA, to detain an aircraft object for violation of law, including safety-related or criminal law or for payment of any amounts owed to any such person and directly relating to the services provided by it in respect of that aircraft object, and thereby impeding the enforcement of the IDERA by the authorized party, enabling it to deregister and physically export the aircraft from Pakistan.
Rule 46(1) of the Implementation Rules provides that “[a] priority nonconsensual right or interest, to the extent it had priority over an interest in an aircraft object equivalent to that of the holder of a registered international interest prior to the effective date of these Rules, shall retain that priority over a registered international interest hereunder, whether in or outside of insolvency proceedings”.
Additionally, Rule 46(2) of the Implementation Rules, states that “[n]othing in these Rules shall affect the exercise by any person including any state entity of powers conferred by any other law for the time being in force, to arrest or detain an aircraft object for violation of law, including safety-related or criminal law or for payment of any amounts owed to any such person and directly relating to the services provided by it in respect of that aircraft object but no such arrest or detention shall adversely affect the priority of an international interest held by a party not violating such law”.
The term ‘priority non-consensual right or interest’ is defined in Rule 2(xl) of the Implementation Rules to mean “a non-consensual right or interest relating to an aircraft object conferred under the law of Pakistan without any requirement for registration of the following types:
a right or interest in respect of an aircraft which, if the aircraft had been a vessel, would have resulted in a maritime lien on the aircraft and its equipment for (A) salvage and (B) damage done by that aircraft;
liens in favour of any state entity relating to unpaid taxes or other charges directly related to the use of that aircraft and owed by the owner of the aircraft”
In view of the foregoing provisions in the Implementation Rules, the issue that requires examination is whether the authorized party named under the IDERA who seeks to deregister and export the aircraft from Pakistan may be impeded by a state entity (e.g. the PCAA) through detention of the aircraft object on account of non-payment of any amounts owed to any such person and directly relating to the services provided by it in respect of that aircraft object despite a duly registered international interest held by the authorized party not violating applicable laws.
In this context, it is relevant to consider the specific declaration made by the Government of Pakistan pursuant to Article 39(1)(a) of the Cape Town Convention which states that:
Pakistan declares that the following categories of non-consensual right or interest:
a right or interest in respect of an aircraft which, if the aircraft had been a vessel, would have resulted in a maritime lien on the aircraft and its equipment for (A) salvage and (B) damage done by that aircraft;
liens in favour of any state entity relating to unpaid taxes or other charges directly related to the use of that aircraft and owed by the owner of the aircraft; have priority under its law over an interest in an object equivalent to that of the holder of a registered international interest and shall have priority over a registered international interest, whether in or outside insolvency proceedings.
Additionally, the Government of Pakistan has made the following declaration pursuant to Article 39(1)(b) of the Cape Town Convention:
Pakistan declares that nothing in the [Cape Town] Convention shall affect its rights or that of that State, any intergovernmental Organization or other private provider of public services to arrest or detain an object under its laws for payment of amounts owed to Pakistan, any such entity, Organization or provider directly relating to the services provided by it in respect of that object or another object.
Given that any state entity exercising or purporting to exercise a right of detention or arrest of an aircraft may only do so if it has been conferred by the laws of Pakistan. It is important to consider the applicable laws to determine if the PCAA is empowered to detain an aircraft on account of non-payment of taxes and other charges relating to the use of that aircraft. It may be noted that the Civil Aviation Ordinance 1960 (the “CAA Ordinance”) read with the CAA Rules empowers the PCAA to detain an aircraft for, inter alia, breach of the requirements of the CAA Ordinance read with the CAA Rules (which include non-payment of amounts owed to the PCAA (such as, but not limited to, airport landing charges)).
Therefore, it seems apparent that the priority non-consensual right or interest resulting in a lien in favour of the PCAA in respect of unpaid taxes or other charges directly related to the use of that aircraft and owed by the owner of the aircraft (or the right of the PCAA to detain the aircraft for non-payment of any amounts owed to it and directly relating to the services provided by it in respect of that aircraft object) shall rank above the registered international interest, albeit that the priority of an international interest held by a party not violating such law shall not be adversely affected pursuant to Rule 46(2) of the Implementation Rules.
However, to understand the practical application of Rule 46 of the Implementation Rules from the PCAA’s perspective, we held a meeting with the relevant officials at the Airworthiness Department of the PCAA at their office to discuss this issue on a no-names basis. We understand from them that in an enforcement situation where the authorized party intends to enforce the IDERA to deregister and export the aircraft from Pakistan, the PCAA would assist the authorized party without requiring any payment of the dues owed by the local operator in respect of airport charges relating to that aircraft in line with the true spirit and objective of IDERA under the Cape Town Convention. However, this was revealed to us in an off-the-record discussion. Given that this issue has not been tested in our courts and the fact that the information was disclosed to us without context or reference to a specific case, it is unlikely that we will be able to get an opinion to the same effect in writing from the PCAA despite our request to them. Our past experience with officers of regulators in our jurisdiction reveals them to be extremely reluctant to offer a binding written response.
Panama
Under Panamanian law, a possessory lien would be granted to the holder of a pledge (the pledgee) who maintains possession of the property handed to him as security for a debt or other obligation, until the debt or obligation is met. The pledge of an aircraft is possible under Panamanian law. However, it will be rare, given that the usual intention of the pledge is that the debtor (the owner of the aircraft) will retain possession of the aircraft and utilise it in order to pay off the debt.
A possessory lien is also granted to the person that has executed work over a movable, giving such person the right to retain such movable in pledge until he receives payment. Accordingly, a possessory lien will arise in favour of a repair and maintenance shop for unpaid services to the aircraft.
In the case of a mortgage, as opposed to a pledge, the property is not handed to the creditor. Instead, the debtor (or a third party designated by him) will maintain possession and control of the property. Therefore, in the case of an aircraft mortgage, the mortgagee will not acquire a possessory lien.
Although there is no express provision of Panamanian law affording airport and navigation fees the status of a lien, in practice, these are deemed to be a form of charge over the aircraft (and not a charge against its operator or owner as such). Thus, these will be charged against the aircraft regardless of who is its owner or operator.
Peru
According to Aeronautical Peruvian Law, the mortgage extends only to engines.
Philippines
The CAAP Law provides that the Director General of CAAP shall have the power to impose a lien on personal and real properties, and other assets of persons, corporations, partnerships, and such other entities that shall be in default, or fail to perform their obligations, or fail to pay the fines, and other penalties imposed for violations of the law, rules, and regulations of CAAP.
Properties and assets levied upon may be sold and the proceeds applied to the satisfaction of the obligation after due notice and hearing.
The Civil Code provides that an unpaid seller of goods has a lien on the goods or right to retain them. It also recognizes possessory liens in respect of credits for the making, repair, safekeeping, or preservation of personal property
The Tax Code also authorizes the distraint or the sale of personal property to pay any tax due within the time required.
The CMTA further provides that liability for duties, taxes, fees, and other charges attached to importation constitute a lien on the imported goods which may be enforced while such goods are under customs’ custody.
In addition, Executive Order No. 903 provides for remedies for non-payment of any charges on the aircraft. It provides that the Manila International Airport Authority, in addition to any other remedy provided by law, detain, on its own, such aircraft equipment or furniture belonging to the owner or agent of the aircraft, until the amounts due have been paid
Poland
Rules do exist concerning airport fees and air navigation charges but as Poland is a party to the Rome Convention on the Precautionary Arrest of Aircraft, it is unclear whether detention is allowable or enforceable on aircraft used for the regular transport of passengers.
Portugal
For unpaid airport charges, the airport operator may detain any asset of the debtor located in the airport premises, including aircraft, to secure payment of the debt and accrued interest. The said airport Authority also has special security over the property of the said assets for the payment of the debt (i.e., the credit has priority over other debts).
Portugal is part of Eurocontrol and the Multilateral Agreement relating to Route Charges. As such, proceedings for recovery of the amount due to Eurocontrol could be instituted by Eurocontrol or at Eurocontrol’s request by the Portuguese Air Navigation Authority.
MROs have the right to detain the aircraft and/or engines to secure payment for any work performed in those assets.
Romania
Directly, or at the request of the air navigation services provider, the airport administrator has the right to detain a civil aircraft on the ground if the aircraft operator fails to pay, respectively, to guarantee, the airport charges and the air navigation services.
The detention remains in place until this debt is paid off or until sufficient guarantees concerning this debt are set up and accepted by the airport administrator, with due observance of the regulations in force. If the detention exceeds 30 calendar days, the airport administrator has the right to reposition the respective aircraft subject to five days prior notice to the aircraft operator.
Serbia
No, laws of Serbia do not provide possessory rights and/or rights of detention over aircraft in favour of third parties.
But please note that the Air traffic control in Serbia (Kontrola letenja Srbije i Crne Gore SMATSA d.o.o.) (hereinafter referred to as the „Air Traffic Control”) could ground the aircraft until payment of outstanding charges. According to the applicable regulations, the Air Traffic Control is authorized to deny further providing of its services towards the airline operator which failed to pay the outstanding charges after receipt of the payment instructions and after expiration of the additionally granted payment term. The Air Traffic Control could suspend its services towards the airline operator temporarily or permanently, partially or in total.
In any case, each third party is entitled to initiate an enforcement proceeding against the debtor in accordance with local regulations for the recovery of outstanding payments.
Slovenia
Yes, Slovenian law provides for aircraft privilege (as described above), holders of aircraft privilege may demand the sale of the aircraft.
South Africa
Yes, these are typically imposed in contract.
Sweden
Regarding the first question, it depends on the lien. If the lien is registered in accordance with the Cape Town Convention and it is a right to reposse lien, a creditor can take possession of the aircraft. However, such a lien is not possible to register in Sweden, only liens which give the right to a part of the value of the aircraft can be subject to registration. If in that case the debtor defaults, the asset will be sold on auction and the creditor will receive a proportional amount against the creditor’s outstanding amount.
The aircraft can be detained by the decision of the Authority to secure a third party right.
Switzerland
Other than the claims specified in Section 16 above, Swiss law does not recognise any other preferred interest that ranks in priority to mortgages on aircraft recorded in the Swiss Aircraft Record.
The Bahamas
The statutory right of detention over aircraft was recently repealed by the CAA, which repealed the Civil Aviation Act, 2016, which contained such provisions. Provisions providing for the statutory right of detention were not returned in the new Civil Aviation Act which came into effect 16th February 2021.
USA – Miami
FAA will record security agreements governed by non-US law.
USA – Oklahoma City
As a general matter, non-consensual liens are a matter of local (e.g., state) law. Subject to state recording requirements, non-consensual liens may be eligible for recording with the FAA.