Panama

The Civil Aeronautics Authority (Autoridad Aeronáutica Civil, herein referred to as AAC), an autonomous government agency of the Republic of Panama, is required to maintain an administrative registry of aircraft in Panama by means of the National Aeronautical Registry. AAC’s functions include, inter alia, the licensing and control of air crews and related administrative and technical personnel, the regulation of aircraft, airports and air services and the supervision of air traffic and auxiliary services. 

In addition, there is an aeronautical section at the Public Registry Office, wherein all matters concerning the juridical status of aircraft are registered; namely proof of ownership, leases and encumbrances on aircraft, etc. in order to make them effective against third parties.3 

Both registries are owner and operator registries. Title, leases, subleases and mortgages are registered with the Public Registry Office and filed with the AAC. 

The interested party is required to file, along with the application: 

1. the contract of purchase or bill of sale; 
2. official evidence that the aircraft is not registered in another country (i.e. certificate of termination of previous registration); and, 
3. a certificate from the Public Registry showing that the interested party is a valid legal entity in existence together with the name of its legal representative in respect of companies organised in accordance with the laws of Panama. In this case, the registration of the aircraft must be effected by the legal representative. 

Once the information provided by the applicant has been verified by AAC the aircraft will be assigned its registration marks. Thereafter, the interested party should complete various technical and legal requirements to obtain its certificate of enrolment. 

Requirements to be observed in order to obtain the certificate of enrolment include registration of proof of ownership at the Public Registry, the issuance of a certificate of appraisal by AAC, and the issuance or validation of a Certificate of Airworthiness, as well as the payment of the relevant enrolment charges that will allow AAC to issue a tax clearance certificate for the aircraft.  

In some cases, the AAC may issue a provisional certificate of enrolment if the owner of the aircraft demonstrates that proceedings have been initiated in order to conduct registration of ownership at the Public Registry Office, or when dealing with the purchase of foreign aircraft during their flight to Panama in order to be registered. 

Public Registry Registration Fees: 

Registration fees in respect of the Bill of Sale are $100.00 USD for review by the Public Registry, plus $250.00 USD for each $100,000.00 USD, or fraction thereof, with a cap of $4,200.00 USD.  

Plus, $50.00 USD for each document contained in the Public Deed which are the certificate of existence of the buyer, Power of Attorney of the buyer and Power of Attorney of the Seller. 

Civil Aeronautics Authority registration fees: 

Fees payable to the AAC for aircraft registration are the following: 

AAC fees for issuance of the appraisal are as follows: 

There are no weight and/or maximum age restrictions to register an aircraft in the Republic of Panama. 

Registration of the title on the aircraft at the Aircraft Section of the Public Registry of the Republic of Panama constitutes proof of ownership. 

Transfer of title is achieved through the execution of a bill of sale and registration at the Public Registry Office. If the bill of sale is executed outside Panama, the signature of the parties must be certified by a Notary Public and the signature of the Notary Public must be certified by a Panamanian consul or the 1961 Hague Convention on the Apostille.  If the bill of sale is in a foreign language it must be translated by an official translator in Panama. 

The Certificate of Registration issued by the Civil Aeronautics Authority (“AAC”), (“Certificado de Matrícula”), lists the registration number, manufacturer, model, serial number, owner, operator, operator’s address, date of assignment of operation license, date of issuance and signature of AAC authorized officer and AAC official seal.  

The entries of the aircraft at the Public Registry records are available to the public.  No fees are charged for consultation. The information on the Public Registry is available to the general public. 

Panamanian law allows private and commercial use of aircraft subject to compliance with regulations and obtention of the AAC license. 

The Civil Aeronautics Authority currently does not maintain any bilateral agreement to operate foreign registered aircraft on the basis of article 83-bis of the ICAO Chicago Convention for the delegation of regulatory oversight. Even though there is currently no outstanding agreement, Panama has previously undersigned in three of such agreements, them being: 

• Operational Agreement undersigned between Panama and Costa Rica in 2003; 
• Operational Agreement undersigned between Panama and Guatemala in 2006;  
• Operational Agreement undersigned between Panama and Colombia in 2008; modified in 2016. 

The article 83-bis of the ICAO Chicago Convention for the delegation or regulatory oversight has been enforceable in Panama since June 20, 1997, and there are currently no impediments or limitations for any State Party wishing to pursue this bilateral agreement. 

Aircraft mortgages, leases and sublease are executed through a public deed and recorded at the Aircraft Section of the Public Registry of Panama, and thereafter, these are filed with the AAC. The mortgage becomes effective as of the date of registration at the Public Registry. Leases and Subleases are effective as of the time of execution. Their registration with the Public Registry is for third parties notice purposes. 

Mortgages, leases and subleases must be executed through a Public Deed and registered with the Public Registry of the Republic of Panama.  If any of the parties is outside Panama, a Power of Attorney is issued to a representative in Panama to arrange for execution of the documents in Panama.  The signatures on documents executed outside the Republic of Panama must be certified by a Notary Public and the signature of the Notary Public must be legalized by a Panamanian consul in the place of issuance or according to the 1961 Hague Convention on the Apostille.  Documents in foreign language must be translated into Spanish by an official translator in the Republic of Panama. 

Registration charges are:  

Lease Agreement: 

Registration fees in respect of the lease are $100.00 USD for review by the Public Registry plus $1.50 USD for each $1,000.00 USD or fraction thereof. 

Plus, $50.00 USD for each document contained in the Public Deed which are the certificate of existence of the Lessor, Power of Attorney of Lessor and Power of Attorney of Lessee. 

Sublease Agreement: 

Registration fees in respect of the sublease are $100.00 USD for review by the Public Registry plus $1.50 USD for each $1,000.00 USD or fraction thereof. 

Plus, $50.00 USD for each document contained in the Public Deed which are the certificate of existence of the Sublessor, Power of Attorney of Sublessor and Power of Attorney of Sublessee (COPA generally executes the documents through a Power of Attorney which is registered at the Public Registry and therefor there is no need to pay $50.00 USD for COPA’s POA).  

Mortgage:  

Registration fees in respect of a mortgage are $100.00 USD for review by the Public Registry plus $2.50 USD for each $1000.00 USD or fraction with a cap of $51,250.00 USD. 

Fast Track registration fees: 

Fast track registration fees in the amount of $300.00 USD per document may be paid to guarantee registration in 48-72 hours. 

The aircraft mortgage is an available security instrument for aircraft financiers in the Republic of Panama and is commonly used.

Generally, a mortgage on an aircraft will cover its accessories and improvements, such as parts and engines incorporated therein, whether they are present or future accessories and improvements. In addition, engines and other parts capable of individualisation and determination and able to be sufficiently described, could also be mortgaged separately from the aircraft. 

According to Law 21 of January 29, 2003 (the “Panamanian Aeronautical Law”), the following claims have priority over all other claims against the aircraft: 

1. National taxes over the aircraft 
2. Aircraft Mortgage 
3. The salaries and other social benefits due to the crew. 
4. The amounts owed to the air transport sector on account of the operations of the aircraft in the last flight. 

Furthermore, the Republic of Panama has made the following declaration in respect of article 39 of the Cape Town Convention: 

“In respect of Article 39 of the Convention, the following non-consensual rights and interests shall prevail over an international interest registered in accordance with the Convention: 

d.1) any sums due from or capable of being demanded from the debtor by way of salaries, pensions and other social security benefits and employment allowances owed in respect of employees of that debtor; 

d.2) any sums due from or capable of being levied from the debtor by way of fiscal and parafiscal contributions owed in respect of employees of that debtor; 

d.3) any sums due or capable of being levied from the debtor, by way of taxes, duties or contributions payable to the Panamanian State or to the decentralized bodies that collect such revenue, in accordance with Panama’s internal laws;  

d.4) the right of the Republic of Panama to arrest, attach or confiscate mobile equipment and aircraft equipment in the event of breach of the customs or criminal laws of the Republic of Panama; and, 

d.5) court costs in connection with the foreclosure of the Aircraft Mortgage, and national taxes over the Aircraft. 

These different priorities may create a conflict of laws which will have to be resolved by the Panamanian Judicial Branch once a case of this nature is presented. 

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. 

A mortgage on an aircraft would be deemed to be an act of commerce under the laws of the Republic of Panama, and the parties thereto may choose the applicable law to govern the terms thereof. The Aeronautical law states that all foreign acts and contracts relating to foreign aircraft undertaken in accordance with local laws will be valid in Panama. However, the laws of the Republic of Panama would govern the aircraft mortgage in respect of particular requirements which should appear therein, as well as its registration and the effect thereof. 

The courts of the Republic of Panama will generally uphold a choice of law clause, save as stated above. However, a court may refuse to enforce any terms which are contrary to the public policy of the Republic of Panama. 

A lease on an aircraft would be deemed to be an act of commerce under the laws of the Republic of Panama, and the parties thereto may choose the applicable law to govern the terms thereof. The Aeronautical law states that all foreign acts and contracts relating to foreign aircraft undertaken in accordance with local laws will be valid in the Republic of Panama. However, the laws of the Republic of Panama would govern the aircraft lease in respect of particular requirements which should appear therein, as well as its registration and the effect thereof.  

The courts of the Republic of Panama will generally uphold a choice of law clause, save as stated above. However, a court may refuse to enforce any terms which are contrary to the public policy of the Republic of Panama. 

The Republic of Panama has adopted the Cape Town Convention and the Cape Town Protocol by means of Law No.29 of 2003 and no other action needs to take place for the Convention to be in effect in the Republic of Panama. Pursuant to the Declaration made by the Republic of Panama under Article XXX, paragraph I, with respect to Article XIII of the Cape Town Protocol, the IDERAs, once registered with the AAC, will be fully effective to authorise the party named therein to act in accordance with the terms set out therein and procure the deregistration of the aircraft from the AAC and procure the export and physical transfer of the aircraft from the Republic of Panama, provided that the terms of Article IX of Cape Town Protocol are observed. 

The registration of an aircraft will be deleted, upon request, by an interested party (i.e., the owner or operator) or as a matter of course by AAC whenever:  

1. it is required by the owner or operator of the aircraft; 
2. the ACC authorises registration of the aircraft in another country, which will occur whenever the aircraft is free of any limitation or encumbrance or given the consent of it registered creditors; 
3. it is required to set the aircraft out of services; 
4. the ownership of the aircraft is going to be transferred to a person who is not qualified to register an aircraft in Panama; 
5. there is a total loss of the aircraft or an assumed loss by operation of law (there is a presumption of loss 90 days after last notice in the event of an unexplained disappearance); 
6. the aircraft appears registered in another country. 

In order to deregister an aircraft from the Republic of Panama, the interested party must pay fees to the Public Registry of Panama and the Civil Aeronautics Authority.  

The fees payable to the Public Registry are $100.00 USD for the review (qualifying rights) of each aircraft and $100.00 USD for the aircraft´s deregistry. 

The fees payable to the AAC are $100.00 USD for each deregistered aircraft. 

The consent of the mortgagee /lessor is required in order to deregister and aircraft from the Republic of Panama.  

There are no difficulties in deregistering the aircraft from the AAC. The petition is filed by the interested party. Once the AAC has issued the certificate of deregistration, this is sent to the Aircraft Section of the Public Registry for cancellation. Difficulties will arise if the operator refuses to deliver the aircraft, in which case the owner will have to request judicial intervention. There are no self-help remedies in the Republic of Panama. 

When there is co-operation of all parties involved for the deregistration process, this may take from two to four weeks. When there is no co-operation from any of the parties the process may take years.

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.