Home Law Implementing the Cape Town Convention and the Domestic Laws on Secured Transactions
As far as the recognition of foreign [security] interests is concerned, it is the law of the State of reception that decides whether a certain form of publicity - here, the registration - constitutes a part of the international public order.
The following records, inter alia, are maintained with the CAA:
There is no separate register maintained in respect of spare parts.
According to article 1339 of the Civil Code, which is applied to aircraft by analogy (art. 73 of the Code of Aviation Law), it is provided that the mortgage registers are public and anyone may consult them. The mortgage should also be noticed in the aircraft’s Certificate of Registration (article 108 par. 3 of the Presidential Decree 7/1931).
A Presidential Decree should be issued concerning the manner of keeping the above records, but until now no such Decree has been issued. Consequently, the CAA currently does not keep a Register of Claims over aircraft and engines or a Register of Aircraft Leases. The relevant registrations are made in the general register.
The mortgage covers the aircraft, its engines and - if there is no agreement to the contrary - its accessories (article 51 Code of Aviation Law).
A mortgage may also be recorded over an aircraft under construction, on the condition that the aircraft has been registered in the appropriate register (article 52 Code of Aviation Law). An engine not attached to an aircraft may be subject to a separate mortgage, provided that it has been recorded with the appropriate registry (article 53 par. 1 Code of Aviation Law).
The mortgage may be of two types: a simple mortgage and a preferred mortgage. The simple mortgage is granted by unilateral declaration of the owner, written and registered in the Record of Mortgage (article 50 Code of Aviation Law). The preferred mortgage is granted by contract (article 58 Code of Aviation Law) and may be registered only over aircraft of a maximum take-off weight of over 5700 Kg (article 65 Code of Aviation Law).
The simple mortgage grants priority to the mortgagee over subsequent mortgagees, simple or preferred, and other simple creditors, but does not give a right to private sale or to the possession and management of the aircraft. The preferred mortgage gives the mortgage a right to the management of the aircraft as soon as his claim becomes due and payable or in any other case provided for by the terms of the preferred mortgage (article 57 Code of Aviation Law). Each and every detail must be noted in the Record of Mortgages.
Registration of a mortgage secures priority for the mortgagee over all other mortgages which will be registered later in time. In case more mortgages are registered on the same day, they will be considered of equal value and will rank in the same order - pari passu (article 1272 Civil Code).
A registered mortgage attaches the whole aircraft, its engines and any accessories - the latter, only if there is no agreement to the contrary (article 51 Code of Aviation Law).
Everything about an aircraft mortgage that is not regulated by the Code of Aviation Law, is governed by the provisions of the Civil Code, applied by analogy. According to article 973 of the Civil Code, the mortgage is a “real right”.
A big percentage of the investments of many industrial and commercial enterprises refer to such assets of professional equipment, as the aircrafts. It is well known, that in international commerce the aircrafts financing is very often taking place by leasing agreements.
According to the Greek law, the aircraft may constitute object of leasing (article 1 par. 3 Law 1665/1986, as amended by article 11 par. 2 Law 2367/1995).
Article 1 par. 1 Law 1665/1986 allows that the entrepreneur, who is interested in acquiring the use of the aircraft for his/her business’s equipment, is addressed to a leasing company, which buys in its name from the supplier or imports from abroad the aircraft in which the lessee is interested, pays the price and assigns its use to the entrepreneur - lessee.
The lessee pays a certain installment over the duration of the leasing contract and at the end of it, the lessee has the options either to extend unilaterally the leasing for a certain time period, at a certain rent, or to consider the leasing as terminated or to buy, on a unilateral declaration, the leased object, by paying the agreed amount.
According to article 1 par. 2 Law 1665/1986, the object of the leasing agreement may be a movable that the leasing company had previously bought from the lessee (lease-back). A lease-back agreement allows that a business owner of an asset, sells it to the leasing company, keeping it though in its possession and using it as a lessee, on paying its value.
The lessee obtains the possession of the aircraft in order to use and exploit it during the whole time of the leasing agreement. The lessee has the obligation to preserve the leased aircraft accordingly to the agreed use. He assumes the risk of the leased aircraft’s accidental destruction or deterioration and has the obligation, according to the article 5 par. 2 Law 1665/1986, to insure the aircraft for the risk of its accidental destruction or deterioration.
From the above, it follows that the lessee assumes not only the use of the aircraft but also its commercial exploitation.
In order that the ownership right of the leasing company is secured - as a security interest -, the leasing agreement must be in writing and the relevant document must be registered with the specific Records kept by the First Instance Courts (article 4 paragraphs 1 & 2 Law 1665/1986).
The leasing agreement will be null, according to the article 159 par. 1 Civil Code, if it is not in writing and if it is not registered.
Some commentators believe that the financing of mobile equipment suffers from the differences between the national laws and that adopting a uniform regulation would contribute to stop the increase of the cost of credit transactions for airline companies.
Nevertheless, things are not so simple and the differences between the various legal systems cannot be deleted just by forcing upon them a new, internationally agreed, regime.
(c) The Cape Town Convention, following the opinion of its initial drafters, common law lawyers, adopted the “notice-filing” system. It had been considered as the best possible one, since the “only aim” of the registration, according to the Cape Town Convention would be to assure the priority of an international interest on an object, over other international interests, of creditors who have acquired a preference (privilege) by judgment or by law and of insolvency administrators.
The legal system of Greece, as far as the registration of security interests is concerned, falls under the category of the “document-filing” systems. The advantages of this system are, among others, the following: the users of the national registries consider as very important the fact that they can have access to all documents gathered in one place. Furthermore, is also considered as very important the fact that whoever is interested to proceed in some transaction over an object, may be informed about previous transactions over the same object.
(d) As it was above mentioned, specific interests constituted by a security agreement, a title reservation agreement and a leasing agreement, “merge to form an autonomous international interest”. Or, according to another, very accurate, description, the “international interest” under the Convention is a property interest which derives its force from the Convention and not from national law, “it is an artificial concept”.
Nevertheless, it is rightly pointed out that the characterization of these legal devices which will constitute the basis of an international interest is of the utmost importance. In many civil law States, there is a clear distinction between proprietary and contractual rights, between real rights and personal rights. Under the national property laws of these States, the interests derived from a title reservation agreement and/or a leasing agreement are not treated the same as the interests derived by a security agreement. And that is the case for Greece, too.
Title reservation agreement’s definition by the Cape Town Convention is broader than the definition provided by Greek law, according to which title retention (reservation) only secures the purchase price payable by the buyer.
The term “security agreement” is very broad. It reflects the mentality of the USA’s Uniform Commercial Code and, although some commentators say that this fact should not impede the other States from adopting the Cape Town Convention, it really creates many difficulties.
The absence of exceptions to the ‘first in time to register’ principle may provide greater certainty to a creditor who registers its interest in the International Registry, nevertheless a dual, parallel system could be somewhat created in the States in which there are differences between the various agreements which constitute the basis for international interests according to the Cape Town Convention.
|< Prev||CONTENTS||Next >|