Although China signed the Cape Town Convention and protocols in 2001, they were finally ratified by the National People's Congress in 2008. It was not until July 17 2009 that the Civil Aviation Administration of China (CAAC) issued rules for the recordation of irrevocable deregistration and export request authorisations (IDERAs) and the deregistration of aircraft by IDERA holders. Thereafter, Chinese airlines were given training by the CAAC to familiarise them with IDERAs and the recordation process before the CAAC agreed to entertain their applications for recordation. As a matter of practice, the CAAC considers such applications only from Chinese airlines; foreign lessors and financiers (and their legal counsel) are not permitted to apply.
The CAAC has designated its Aircraft Airworthiness Department as the competent authority for recordation of IDERAs. To apply for recordation, a Chinese airline must submit:
- two original copies of the IDERA, signed and validated with the airline's corporate seal;
- a copy of its business licence and its air operator's certificate;
- a copy of the certificate of nationality registration for the aircraft for which the IDERA is to be issued;
- a letter explaining the grounds for the recordation;
- a copy of the airline's internal rules on applying for recordation of IDERAs - this is believed to have been included on the checklist to ensure that the airline fully understands how IDERAs work and the legal consequences of executing them;
- a document certifying power of attorney in favour of the employees who are mandated to record IDERAs at the department, together with the employees' identification documents;
- the identification documents of the foreign creditors. (Normally, they should be lessors of the relevant aircraft. However, in the event that the lessor has authorised its financiers to be the beneficiaries of the IDERA, the department requires this to be reflected in specific language in the lease agreement or in a specific tripartite agreement); and
- a structural diagram of the transaction and the relevant transaction documents. These constitute evidence of the right of the foreign lessor or financier to benefit from the IDERA, and of the parties' agreement that the IDERA should be recorded with the department.
The department has 20 working days from receipt of the application documents to examine them. If it is satisfied with the documents, it will countersign the IDERA, retain an original for its records and return a countersigned copy to the airline as evidence of recordation.
The department is considered to take a relatively strict approach to the requirements for supporting documents for recordation applications. Therefore, it is advisable for Chinese airlines and their foreign lessors and financiers to consult with Chinese counsel who have experience of dealing with the recordation of IDERAs.
For further information on this topic please contact Yi Liu at Run Ming Law Office by telephone (+86 10 6569 3511), fax (+86 10 6569 3512) or email ([email protected]).