Aicraft Title & Registrations
26. Please outline the applicable repossession rules under the national laws of this location (and the Cape Town Convention, if applicable) following an event of default under a mortgage or a lease, including registration issues with the national registry in this location.
Austria
In order to repossess an aircraft in the event of default, it would be required to obtain a respective court order. The use of self-help repossession is not possible in Austria.
The first instance procedure to repossess an aircraft may take between six months and one year.
The second instance procedure may take four to eight months. In such case, it would be advisable to obtain a preliminary decision first from the court enjoining the defendant from making any disposition in respect of the aircraft. Such preliminary decision can be obtained quickly and is immediately enforceable.
The costs for the proceedings would depend on the length of the proceedings. However, Austrian law provides for full reimbursement of law costs, including lawyers’ fees from the losing party to the winning party. Usually, 70% to 80% of the actual costs will therefore be adjudicated. The court fees depend on the amount of litigation, so it is impossible to give you an abstract estimate in advance.
In order to prevent the aircraft to be flown out of Austria, it is recommendable to request the court grant an interim injunction. The injunction can be obtained within some days.
The court will most likely require the applicant to put up a security for any damages the lessee may suffer as a result of the injunction. The security can be in cash or a signature bond with a surety; the form of the security is at the discretion of the judge.
In addition, a deregistration power of attorney deregistration of the aircraft can be applied for at Austro Control.
Colombia
It will depend on each case. There is no way possible to give an exact time in this case.
Germany
There are no self-help remedies available to the owner. In order to repossess the aircraft, the owner must proceed in accordance with the German laws of debt enforcement. That necessitates obtaining an enforceable title (court order or judgement) for the repossession claim from the German civil court having jurisdiction. The title must contain the necessary enforcement clause and needs to be duly served on the debtor. The owner can then apply for the enforcement of the court order or judgement with a bailiff, who will put the owner in possession of the aircraft.
Alternatively, confronting the pilot in the cockpit with a bailiff serving the termination notice of the lease has proven to be successful.
India
The owner/lessor may repossess the aircraft on the basis of a duly stamped and notarised IDERA if such an instrument has been issued by the lessee in its favour. If the DGCA fails or refuses to deregister the aircraft, the owner/lessor may initiate legal action to repossess the aircraft. As the DGCA is a government body, the lessor can file a writ petition in the High Court, within whose jurisdiction the DGCA’s order was passed, seeking to quash the DGCA’s order and asking for a direction to be issued to the DGCA to rehear the application for deregistration and repossession.
Israel
The applicant for registration of a foreclosure in the register will pay the prescribed fee and issue the Aircraft Registrar the Certificate of Registration of the aircraft, if it is in his possession. The Aircraft Registrar will indicate on the Certificate of Registration the record of the foreclosure in the register.
An applicant for registration of a foreclosure in the register with respect to an aircraft shall deliver to the Aircraft Registrar, together with his request, a certified copy of one of the following:
- A notice of pledge of the aircraft in respect of which the provisions of the Israeli Pledge Regulations have been complied with.
- A certificate signed by the Israeli Registrar of Companies regarding the registration of mortgages or pledged over the aircraft, registered under the Israeli Companies Ordinance.
- A certificate signed by a registrar under law regarding the registration of mortgages or pledges over the aircraft under such law.
- An order by any court, tribunal or head of enforcement regarding the imposition of a pledge or foreclosure on their behalf.
Kenya
Upon an event of default, the lessor may peacefully take possession of the aircraft provided that this is a stipulated term of the lease or the lessee otherwise agrees. The lessor will be required to write to KCAA to ground the aircraft to enable it to take possession of the aircraft. KCAA usually requires that all the charges that have accrued in respect of the aircraft to KCAA and any other government entity be paid first before it grounds the aircraft. The lessor must also have obtained an Irrevocable Deregistration and Export Request Authorisation (IDERA) signed by the lessee and recorded with KCAA for KCAA to agree to ground the aircraft.
A lessee can accede to a lessor’s request to return or surrender the aircraft. Alternatively, if the lessor can gain access to the aircraft, the lessor can proceed with repossession. In the event that the lessee is not cooperative, the lessor can apply to the High Court for an order to repossess or sell the aircraft.
The lessor’s rights to repossess can be impeded by a lessee by applying to the courts for injunctive orders to prevent repossession of the aircraft by a lessor or orders for the restoration of the repossessed aircraft.
Malta
In the event of default under a mortgage or a lease agreement, the holder of a security interest formally registered in Malta (and in the international registry) in terms of the First Schedule shall upon giving notice in writing to the debtor, have the power to terminate the agreement that stands between them and take possession of the aircraft to which the agreement relates. If faced with registration issues, this will be tantamount to an event of default under the agreement, thus should the deregistration not materialise, the creditor (holder of the security interest) shall be permitted to take possession of the aircraft identified in the agreement.
The Cape Town Convention has introduced self-help remedies to Maltese law, which remedies can be obtained by a Secured Party/ Lessor without the need of judicial recourse.
Upon there being an event of default, the creditor may, inter alia, take possession or control of an aircraft (Article 12 Schedule 1 of the Aircraft Registration Act). Should the operator refuse to give possession of the aircraft to the owner, the owner can apply to the Court for the help of the authorities to obtain possession of the aircraft. An event of default can be constituted by virtue of an agreement in writing made between the debtor and the creditor; or if a creditor is substantially deprived of what he is entitled to expect under an agreement with the debtor (Article 17 Schedule 1 to the Aircraft Registration Act).
Mexico
Under Mexican laws, a mortgagee/creditor can request the repossession of the aircraft on the occurrence of an event of default or upon termination of the underlying agreement secured by the mortgage; however, if the debtor does not voluntarily return the aircraft, the mortgagee will need to seek court action in order to enforce its rights and to repossess the aircraft.
Self-help remedies cannot be exercised and are not available in Mexico. Therefore, the repossession of an aircraft requires an order from a competent court. It will be necessary to terminate the title under which a lessee has obtained possession of the aircraft.
In principle, there are two types of proceedings to obtain an order for repossession of an aircraft:
- The ordinary commercial proceeding (juicio ordinario mercantil).
- The executive commercial proceeding (juicio ejecutivo mercantil).
The main difference between the two types of proceedings is that an executive commercial proceeding resolution is issued within shorter statutory periods and the creditor can obtain a cautionary order to guarantee the value of its claim from the commencement of the proceeding. In principle, this ensures that the debtor will meet its obligations in full on the issuance of a final judgment in favor of the creditor.
Norway
According to the Enforcement Act § 11-1 (1) a creditor with a mortgage duly registered over an aircraft, has, in the event of default, the right to demand compulsory sale or compulsory use of the aircraft if certain legal conditions are met. In essence: The creditor must have a valid mortgage and can only demand enforcement when he has a legal basis for enforcement, i.e., that the claim is due for payment and in default. Regarding repossession under a lease, the Norwegian Enforcement Act § 13-2 stipulates that if a valid written agreement on lease (of movable property such as an aircraft) contains a clause that gives the creditor the right to demand repossession if the rent is not paid, this constitutes legal basis for enforcement. In the case of default, the lessor will therefore have the right to demand repossession of the aircraft. However, the debtor has a right to be notified (see paragraph directly below) that repossession can be avoided if the rent, cost of recovery, legal expenses and rent due at the time of payment, with interest, is paid in full before the repossession is completed.
In addition to having a legal basis for enforcement, the creditor needs to send a written notice to the debtor at least 14 days before enforcement, cf. the Norwegian Enforcement Act § 4-18. Creditor must submit his claim to the relevant district court, cf. § 11-3.
However, according to the Enforcement Act § 11-1 (3) a creditor who has a registered security in accordance with the Cape Town Convention, can demand enforcement in accordance with the rules and regulations stipulated in the convention.
The Cape Town Convention contains enforcement provisions which deviates substantially from the procedures laid down in the Enforcement Act. The enforcement of international interests being security is facilitated, and the repossession of an aircraft is made considerably simpler for a financier or lessor.
Legal basis:
- Norwegian regulation of aviation:
- “Civil Aviation Act”: Lov om luftfart (luftfartsloven) (LOV-1993-06-11-101)
- “Regulations on Registration of Aircraft” (administrative regulation): Forskrift om registrering av luftfartøy m.m. (FOR-2004-02-05-393).
- “Regulations on Fees to the Civil Aviation Authority” (administrative regulation): Forskrift om gebyr til Luftfartstilsynet mv. (FOR-2020-12-21-3089).
- Other legislation of significance:
- “Public Administration Act”: Lov om behandlingsmåten i forvaltningssaker (forvaltningsloven) (LOV-1967-02-10)
- “Mortgages and Pledges Act”: Lov om pant (panteloven) (LOV-1980-02-08-2).
- “Enforcement Act”: Lov om tvangsfullbyrdelse (tvangsfullbyrdelsesloven (LOV-1992-06-26-86).
Pakistan
The repossession remedies available are set out under Rules 13, 15 and 21 of the Implementation Rules. Pursuant to Rule 13(1) of the Implementation Rules, in the event of default as provided in Rule 18 of the Implementation Rules, the chargee may, inter alia, to the extent that the chargor has at any time so agreed, without the necessity of applying to a court for an order, take possession or control of any aircraft object charged to it and the chargor shall be under a legal duty to give such possession or control in the manner and within the time the chargor has so agreed. Additionally, Rule 15 of the Implementation Rules provides that in the event of default under a title reservation agreement or under a leasing agreement as provided in Rule 18, the conditional seller or the lessor, as the case may be, may: (a) terminate the agreement and take possession or control of any aircraft object to which the agreement relates; or (b) apply for a court order authorising or directing either of these acts. Further, under Rule 21 of the Implementation Rules a creditor who adduces evidence of default by the debtor shall, pending final determination of its claim and to the extent that the debtor has at any time so agreed, be entitled to obtain from a court speedy relief in the form of, inter alia, possession, control or custody of the aircraft object.
Panama
There are no self-help remedies under the laws of the Republic of Panama. Upon an event of default and failure of the operator to deliver the aircraft, the mortgagee or lessor would have to initiate judicial proceedings to repossess the aircraft and to recover damages.
Peru
A deregistration procedure at the Peruvian Public Registry normally takes seven days but could be delayed seven to 10 days if there is no cooperation among the parties. In the opposite case, it could be delayed longer.
Philippines
The rightful owner of the aircraft should file for an action in court to repossess the aircraft. Under Rule 60 of the Philippine Rules of Court, a party praying for the recovery of a personal property may, at the commencement of the action or at any time before answer, apply for an order for the delivery of the personal property. The applicant shall file an affidavit providing that (1) he is the owner of the property claimed, or entitled to possession thereof, particularly describing the property; (2) that the property is wrongfully detained by the adverse party, alleging the cause of detention thereof; (3) that the property has not been distrained or taken for a tax assessment or a fine pursuant to law, or seized under a writ of execution or preliminary attachment, otherwise placed under custodial egis, of if so seized, that it is exempt from such seizure or custody; and (4) the actual market value of the property.
A bond shall be posted by the applicant, executed to the adverse party amounting to double the value of the property as stated by the applicant in its affidavit, for the return of the property to the adverse party if that return be adjudged, and for the payment to the adverse party of such a sum as he or she may recover from the lessor in the action.
Once the affidavit is filed and the bond is approved, the court shall issue a writ of replevin and require the sheriff to take such property into his custody.
Poland
It must be stressed that with a few exceptions that are not relevant here, Polish law does not allow self-help enforcement of civil claims, including repossession. Of course, if the debtor (lessee/operator/mortgagor) willingly hands over the aircraft, or at least tacitly accepts the fact of repossession and no force is required, repossession may be carried out without the involvement of government authorities.
However, if enforcement proper is required (i.e., there is a dispute and/or lack of cooperation of the aircraft’s possessor), it may be conducted only using the court enforcement system. Normally, this requires litigation until there is a final and enforceable judgment, which is then presented for enforcement to a court bailiff.
In order to expedite the process and forego the need for lengthy litigation, the lessee/operator/mortgagor may be asked to issue a security in the form of a so-called deed of voluntary submission to enforcement. This acts as an enforceable judgment once a writ of enforceability has been attached by a court in very short and purely formal proceedings.
Portugal
Self-remedies are generally not allowed under Portuguese law. However, the lessee is usually required to grant an irrevocable power of attorney to the lessor/owner as a precondition for the lease agreement. With said irrevocable power of attorney, the lessor shall be entitled to act on behalf of the lessee in order to have access to the aircraft, logbooks, and other technical documents and cancel the lease with the National Aircraft Registry and apply for the deregistration and export of the aircraft.
If the lessee does not cooperate and/or challenges the validity of the irrevocable power of attorney, repossession must be effected by order of the court. As mentioned in the answer to the previous question, urgent injunction proceedings are available to seek immediate repossession of the aircraft (provisional possession). The main court claim for effective possession must be filed within 30 days after provisional repossession is granted by the court in the prior injunction proceedings.
Romania
Under the Romanian Civil Code, the repossession of goods is expressly regulated for creditors with a mortgage constituted on the good, in this case the aircraft. The aircraft may be repossessed by the creditor through its own means or with the help of the bailiff.
The repossession by the creditor using its own means must be expressly provided for in the mortgage deed and must be preceded by a notice filed through the bailiff. When using its own means to repossess the good, the mortgagor cannot disturb the public order and is not allowed to use coercion, directly or indirectly. Basically, in the absence of the debtor’s cooperation, the aircraft cannot be repossessed using own means.
The available alternative is the forced repossession through a bailiff. In this case the bailiff may take all the measures for repossessing the aircraft, including making an appeal to the law enforcement agents. The bailiff must repossess the aircraft and hand it over to the mortgagor within 48 hours from the receipt of mortgagor’s request.
In regards to the lease contracts, there is no express provision as to repossession using one’s own means in the Civil Code, but the lessor may use the enforcement procedure though the bailiff regulated by the Romanian Civil Procedure Code in order to take possession of the aircraft in accordance with the lease contract requirements. One of the obligations of a lessee is to return the good.
Serbia
Serbia didn’t ratify the Cape Town Convention, and therefore repossession rules prescribed under the said convention are not applicable in Serbia.
Under Serbian national laws, the repossession of an aircraft can be conducted with the consent of the counterparty. Otherwise, if there is no such consent, the competent court should be addressed in regular judicial proceedings in order to repossess the aircraft.
A creditor can submit a request to the Commercial Court to sell the aircraft in a court sale in order to settle the claims secured with the mortgage.
Slovenia
The repossession rules in the event of default are usually agreed upon in the mortgage or lease agreement.
The law does not prohibit taking physical possession of the aircraft in the event of default and termination of the lease agreement. However, if the opposite party is refusing to give the physical possession of the aircraft, a lawsuit must be filled. Owner can request the change of operator in the register, and a final decision of the competent court on the change of operator of aircraft must be submitted.
In case of a mortgage, the mortgagee is entitled to request the sale of the aircraft in the event of default. The mortgage agreement can also provide for the right of mortgagee to repay with the use of the aircraft.
South Africa
Generally, if the repossession is contested by the lessee, a court application will be required in order to deregister and export aircraft from South Africa. Currently, self-help clauses in leases are invalid in South Africa.
In a non-contested repossession, the South African lessee must follow the deregistration process in order to achieve the same.
Sweden
The creditor would have to apply for enforcement (if re-possession) or sue the debtor in court in order to obtain the asset or otherwise provoke an auction of the asset. The application for enforcement is submitted to the Swedish enforcement authority (Kronofogden).
Switzerland
As mentioned above, Switzerland is not a contracting state to the Cape Town Convention. In case of a default under a lease, the lessor may file a claim for repossession of the aircraft under the agreement or the relevant provisions of the Swiss Civil Code at the place of the location of the aircraft in Switzerland. The proceedings are governed by the Swiss Code of Civil Procedure and may be conducted under summary proceedings and, in the event of urgency, by preliminary ex parte injunctions.
In case of a mortgage, the mortgage must be enforced at the place of the domicile of the owner/mortgagor as recorded in the Swiss Aircraft Record. Foreclosure is governed by the Swiss Federal Act on Aircraft Record (and implementing ordinances) which, to a large extent, refers to the enforcement procedures applicable to real estate.
For completion’s sake the Swiss Aviation Act, in line with the Rome Convention of 1933, excludes seizure or aircraft currently in service on a regular line of public transportation. Also, self-help remedies are, as a rule, not permissible in Switzerland but enforcement requires intervention by courts or competent authorities.
The Bahamas
Please note our responses to questions 18 and 19 above. The liberty of a mortgagee to take possession of this security is only limited by the provisions of the relevant mortgage document. Customarily, in The Bahamas the possession of a mobile asset due to an event of default is affected by way of judicial intervention. In order to effect possession of security by way of judicial intervention, the original mortgage will be required to support the application. For the government or the lessee to prevent the repossession, such an entity would be required to be joined to the relevant action for repossession and show cause why such steps should not be ordered.
Judicial Intervention is effected by the filing of an Originating Summons (in the main) or a Writ of Summons, setting out the particulars of the relationship between the parties and the event(s) of default which give rise to the request. The security document will need to be adduced and the relevant portions which empower the steps of the mortgagee identified. This process can range anywhere from three to 11 months if protracted. All of the relevant correspondence passing between the parties in relation to the security document will be required to support the application.
USA – Miami
No response.USA – Oklahoma City
In the U.S., the laws governing repossession and foreclosure vary from state to state. The repossessing party should engage appropriate local counsel to ensure that the repossession or foreclosure is conducted in accordance with applicable local law.
Upon completion of repossession or foreclosure, the repossessing party may file documents with the FAA to register the aircraft in its name or evidence of the transfer of title to a subsequent buyer. The repossessing party should engage appropriate counsel to ensure that the proper documentation is filed with the FAA.