San Marino acceded to the Cape Town Convention and Aircraft Protocol on January 1 2015. The treaty reduces the risk for creditors by providing internationally recognised rights in the event of a debtor's default or insolvency and allows creditors to register the acquisition of high-value property in an electronic international register in order to guarantee the priority of their claims against other parties. By entering the Cape Town Convention, San Marino is fostering aircraft finance, providing security, protection and prioritisation for transactions, which will benefit from the convention's international rights.
Decree 133/2015 of August 4 2015 introduced a series of remedies which benefit mortgagees in a similar way to those provided by the Cape Town Convention, including the ability to:
- take possession of the mortgaged aircraft even if it is held by third parties (this remedy may also be exercised through persons specifically entrusted by the mortgagee);
- sell the mortgaged aircraft;
- carry out all operations required for the maintenance of airworthiness and validity of the aircraft registration in the event of the owner's inaction;
- lease the aircraft in order to apply the relevant profits against the amounts secured by the mortgage;
- collect profits generated by the use of the aircraft from the mortgagor; and
- request that the authority cancel the mortgage upon authorisation signed by the mortgagor.
These remedies may be exercised by the mortgagee without judicial intervention.
The import of aircraft registered in the San Marino Aircraft Registry is exempt from value added tax, which is likely to result in an increase in the number of aircraft registrations.
An aircraft can be registered for general aviation and aerial work as well as for commercial operations under a foreign air operator certificate by using an International Civil Aviation Organisation (ICAO) Article 83bis agreement, under which the state of registry may transfer all or part of its functions and duties to another state of the operator. Foreign citizens and companies may register or maintain the registration of their own aircraft in the registry by electing a domicile representative residing in San Marino. The domicile representative's address is required only for the transmission of notices and notifications from the Civil Aviation Authority (CAA) and the addressee will bear no responsibility or liability.
The latest ICAO Article 83bis agreement was executed by the director of the Civil Aviation Authority with Saudi Arabia (represented by the General Authority of Civil Aviation) on June 30 2015. This agreement allows aircraft registered in San Marino to be operated for commercial purposes by Saudi operators. The San Marino CAA also recently executed ICAO 83bis agreements with Nigeria and Lebanon.
There have also been significant developments regarding the San Marino air operator's certificate and the commercial sector. For aircraft to operate in the commercial sector, the operator must incorporate a company in San Marino and maintain its principal place of business there (ie, it must have a head office in San Marino which exercises the undertaking's management, financial functions and operational control).
In September 2014 the Dubai-based company Empire Aviation Group – through its subsidiary in San Marino – was the first company from the Middle East to obtain an air operator's certificate issued by the San Marino CAA.
For further information on this topic please contact Laura Pierallini at Studio Legale Pierallini e Associati by telephone (+39 06 88 41 713) or email (email@example.com). The Studio Legale Pierallini e Associati website can be accessed at www.studiopierallini.it.
This update was prepared with the assistance of Beccari Law Firm in the Republic of San Marino.
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