Filing procedures – past and present
RAB documentary formalities
Changes in aircraft certificates
The Brazilian Aeronautical Registry (RAB) is Brazil's national register for aircraft. To a limited but increasing degree, it also registers aircraft engines. The Aeronautical Code stipulates that the RAB is responsible for registering title to aircraft. Consequently, the RAB is an owner register. That said, the RAB has some characteristics of an operator register. For example, aircraft registered with the RAB must have Brazilian operators; thus, although the RAB is an owner register, in practice aircraft registration is almost always accomplished by an operator, usually a lessee. The RAB is a division of the Brazilian National Agency for Civil Aviation (ANAC).
In addition to registering objects, certain documents used in aircraft finance must be registered with the RAB. Until recently, virtually all documentary filings involved hard copies of signed documents and the filing of documents – in particular for aircraft sales and financings – required considerable logistical planning and coordination, in part due to the RAB's formality requirements for documents and the RAB's limited business hours. For the past few months, the RAB has experimented with a new electronic filing system that allows parties to file documents electronically 24 hours a day, seven days a week. This system has now passed its beta testing stage and has been operative for documents relating to commercial aircraft since May 5 2017. Documents relating to private aircraft, business aircraft and helicopters are still being filed physically. The new electronic system is expected to become available to them during the second half of 2017.
The code requires certain documents commonly used in aircraft finance to be registered with the RAB. If such documents are not registered with the RAB, they may be deemed ineffective or unenforceable. The most common examples are bills of sale, leases, mortgages and chattel mortgages (called fiduciary alienation agreements in Brazil). Although the code does not expressly refer to amendments to those documents, it is generally understood that amendments therein should be registered with the RAB. Some documents commonly found in transactions that do not require registration with the RAB are guarantees and charter agreements. The code provides that registration of charter agreements is optional.
The code does not mention security assignments; however, most security assignments include covenants of a Brazilian lessee relating to a lease and therefore constitute, directly or indirectly, lease amendments. On that basis, notices of assignment to Brazilian lessees and acknowledgements of assignment or lessee consents from Brazilian lessees should be registered with the RAB. When a notice of assignment, acknowledgment of assignment or lessee consent is filed with the RAB, the RAB usually requires registration of the underlying security assignment, even if the security assignment has no Brazilian parties to it. Thus, security assignments are also registered.
Since late 2013 the RAB has also required the submission of trust agreements in cases where aircraft are owned by owner trustees. This is a regulatory (as opposed to a statutory) requirement and the consequence of filing a trust agreement differs from the consequences of registering bills of sale, leases, mortgages and security assignments. Documents registered with the RAB fall into the public domain. Trust agreements are not registered with the RAB per se. The RAB requires submission of trust agreements for its internal records, so that it can determine the ultimate identity of the beneficial owner of any registered aircraft. This requirement was initiated to enable the RAB to maintain complete internal records. Hence, although the submission of owner trust agreements to the RAB is mandatory, trust agreements do not fall into the public domain.
Filing procedures – past and present
Until recently, all filings with the RAB were physical (ie, involved hard-copy originals or copies authenticated by a Brazilian notarial office). The RAB recently moved its headquarters to Brasilia; however, for decades the RAB was located in Rio de Janeiro. Consequently, the central filing location for the RAB has been and continues to be in Rio de Janeiro. While it is possible to file documents with the RAB in other cities such as Sao Paulo, the registration process has usually been slower for such documents since they must be transferred to the central facility in Rio de Janeiro for analysis and ultimate registration.
The RAB's system for document registration includes the issuance of a filing receipt at the time of filing. Such receipts are called protocols. A RAB filing receipt establishes priority over all documents subsequently filed with the RAB. For example, if two competing mortgages were to be filed at the RAB on different dates, the mortgage filed first would have priority over the other mortgage, irrespective of the dates of the mortgages. The filing of competing documents is extremely rare in Brazil and this is mentioned for purposes of illustration only. According to RAB regulations, in cases of title transfer the transfer date is deemed to be the date of the RAB protocol. Since RAB protocols establish title transfer dates and priority, the logistics for filing physical documents at the RAB has been an important part of any sale or financing transaction. The RAB's new electronic procedures will ease the logistical challenges and greatly facilitate the organisation of closings.
Before the introduction of the new electronic filing system, the only way to obtain a RAB protocol was by scheduling a closing during commercial hours, usually in Rio de Janeiro but occasionally in another city. This meant avoiding Brazilian national holidays and Rio de Janeiro's municipal holidays. Further, Rio de Janeiro's business hours are two to four hours behind Greenwich Mean Time and one to three hours ahead of New York time (depending on the season). The RAB's hours are completely different from Asian and Middle Eastern business hours. These factors made scheduling a complex international closing involving large financial transfers a challenge.
Under the new procedures, parties can now file documents at any time and on any day, including weekends and holidays. The system enables parties to generate the all-important protocol through their local counsel or representatives in Brazil at any time.
The new system, called 'SEI', requires a professional in Brazil to register with the RAB beforehand. Such persons, usually lawyers (although this is not restricted to lawyers), receive personal identification numbers that enable them to make filings with the RAB at any time and to generate RAB protocols. The filings must include scanned copies of the documents being filed for registration. The new electronic system, unlike the International Registry, does not enable parties to register interests without registering documents themselves.
A professional filing documents through the electronic system must still present hard copies of the documents to the RAB. The new system facilitates obtaining the all-important RAB protocol at any time of day or night. This represents a vast improvement over the older system, even if the physical presentation of documents is still required. There is no deadline set for the presentation of hard copies once the electronic filing is submitted; however, the RAB will not complete the registration of any document filed electronically before receipt of the hard copy, so parties have an interest in filing hard copies as soon as possible after an electronic filing has been made.
For deregistration applications, although an application can be initiated through the new electronic system, the RAB will not issue a deregistration message before receipt of the signed documents.
Through this new system it is also possible to request authorising entry point (AEP) codes to make filings on the International Registry and to request title and lien certificates. Unlike the filing of agreements, these requests no longer require the presentation of any hard copies of the request forms or powers of attorney that were filed. Under the new system, the issuance of AEP codes is faster and such codes are frequently issued on the day of application.
Documents filed with the RAB have always required compliance with certain formalities. These formalities were most recently restated in regulations published in November 2013. The new electronic system does not reduce or otherwise change the formality requirements. Briefly, the formalities are as follows:
- Documents signed in any language other than Portuguese must be accompanied by a sworn translation into Portuguese. A 'sworn' translation is a translation prepared by a licensed Brazilian translator.
- All signatures on filed documents must be notarised. If a document was signed outside Brazil in a Hague Convention state, the signatures must be notarised and apostilled. If a document was signed outside Brazil in non-Hague Convention state, the signatures must be notarised and consularised by a Brazilian consulate. There are a few exceptions to the consularisation rules based on bilateral treaties (eg, documents originating in France require notarisation by a French notary and do not require an apostille or consular stamp).
- All documents signed in Brazil must be signed by two witnesses, whose signatures should also be notarised.
These formalities apply to documents filed through the new electronic system. Thus, before scanning the documents, the person filing them should ensure that they have been signed, notarised, apostilled (if applicable), consularised (if applicable) and translated. The sworn translation should also be scanned and sent to the RAB electronically.
The RAB's notarisation requirements logistically restrict the ability of parties to pre-sign undated documents since notarisation stamps should not pre-date the date attributed to a document. This has not changed.
Changes in aircraft certificates
In addition to changing the way in which documents are signed, the RAB's new procedures also change the way that aircraft certificates are issued. ANAC, through the RAB, now issues certificates of airworthiness and certificates of registration electronically. Previously, such certificates were issued physically and the parties were required to deliver them to an ANAC office, usually the Rio de Janeiro headquarters.
The RAB has also announced its intention to create registration procedures for engines. For many years the RAB has accepted bills of sale, mortgages and leases relating to aircraft engines. Generally, these registrations have related to spare engines and not to engines associated with airframes. Therefore, to date, the RAB has registered engine documents more than engines themselves. The new features of the Engine Registry are still under consideration and will probably not become effective until 2018.
The RAB's directorship has been looking for ways to improve its procedures to the benefit of parties owning, financing and operating aircraft in Brazil. The new electronic filing system represents a considerable improvement over the traditional procedures and the new Engine Registry promises to further improve the RAB's service to the Brazilian aviation community.
For further information on this topic please contact Kenneth D Basch at Basch & Rameh by telephone (+55 11 3064 8599) or email ([email protected]). The Basch & Rameh website can be accessed at www.baschrameh.com.br.