Enforcement measures

Repossession following lease termination

Outline the basic repossession procedures following lease termination. How may the lessee lawfully impede the owner’s rights to exercise default remedies?

For the repossession of the aircraft and its export from Portugal, it will be necessary for the registered owner to apply for deregistration with RAN.

The consent of the lessee or operator is not necessary, but it is necessary to submit evidence to RAN demonstrating that the lease agreement has been terminated.

With cooperation from the lessee or operator, the deregistration process should take five to seven days.

Without cooperation from the lessee or operator, and provided that the lessor has an irrevocable power of attorney granted by the lessee or operator and no injunction is filed with the court to prevent it, deregistration should take 10 to 15 days.

The lessee may file with the court for an interim measure that will effectively, albeit temporarily, prevent ANAC from deregistering the aircraft and authorising its exportation, pending the discussion in a lawsuit of the termination dispute.

Enforcement of security

Outline the basic measures to enforce a security interest. How may the owner lawfully impede the mortgagee’s right to enforce?

As mentioned above, a mortgage created under Portuguese law does not involve the transfer of ownership; nor does it grant the mortgagee any possession rights over the mortgaged assets. Any provisions purporting to grant the mortgagee the right to directly dispose of the mortgaged asset will be deemed null and void.

The mortgagee shall have a preferred interest to be repaid out of the proceeds of the sale of the mortgaged asset (the aircraft, in this case), prior to the mortgagor’s ordinary or common creditors, and to subsequently registered mortgages over the same aircraft, pursuant to specific court foreclosure proceedings.

The owner may not lawfully impede the mortgagee’s right to enforce.

In insolvency proceedings, secured claims, which are those with security in rem over assets in the estate, up to the value of such assets, are not affected and will cover the claims and also the interest on them.

Priority liens and rights

Which liens and rights will have priority over aircraft ownership or an aircraft security interest? If an aircraft can be taken, seized or detained, is any form of compensation available to an owner or mortgagee?

The following rights or interest will take precedence over aircraft ownership or an aircraft security interest:

  • any previously registered mortgage;
  • any possessory lien arising out of work done on the aircraft or in connection with expenses incurred to preserve and avoid deterioration of the aircraft; or
  • privileged credits in respect of taxes and duties owed to the state (including aircraft charges and air navigation charges) or the municipalities, and crews’ wages.

The airport authorities have a specific possessory lien of the aircraft in the case of lack of mandatory information or non-payment by the lessee or operator of the applicable airport fees. Notwithstanding, note that all the above-mentioned rights arise out of debts that are typically debts of the operator or lessee. In a lease situation, where the owner or lessor and the operator or lessee are separate entities, the lessee’s debts are not deemed guaranteed by an aircraft on lease, and only privileged credits arising from the owner or lessor’s debts, if any, will take precedence over the registered lease.

Public requisition of the aircraft may occur in time of war or serious national emergency. Compensation would then be due.

Enforcement of foreign judgments and arbitral awards

How are judgments of foreign courts enforced? Is your jurisdiction party to the 1958 New York Convention?

According to article 36 of Regulation (EU) no. 1215/2012 of the European Parliament and of the Council, of 21 December (Brussels I Regulation recast), the judgments rendered by the courts of another EU member state are automatically enforceable in Portugal, without any special procedure being required. Likewise, pursuant to article 39 of the same regulation, a judgment given in an EU member state, which is enforceable in that EU member state, shall be enforceable in Portugal without any declaration of enforceability being required.

In what concerns the decisions rendered by courts of non-EU countries - which is the case for New York court judgments - the Portuguese Code of Civil Procedure provides that their enforceability is dependent upon prior review and confirmation by the competent Portuguese court. This assessment is carried out in accordance with a specific procedure set forth in articles 978-985 of said Code. The party wishing to recognise a foreign judgment, namely to have it enforced in Portugal, shall provide the original of the judgment duly authenticated or a copy duly certified of the same. If the judgment is not in Portuguese, the requesting party shall also provide a duly-certified translation in this language. Once the application for recognition is filed, together with the documents identified above, the opposing party is summoned to, within 15 days, submit its opposition. The trial is conducted pursuant to the rules applicable to appeals.

Portugal ratified the 1958 New York Convention on 18 October 1994. However, pursuant to article 1 (3) of the Convention, Portugal entered a reservation stating that the same shall only apply in cases where the arbitral awards were rendered in the territory of States bound by the Convention.

Without prejudice to the mandatory provisions of the New York Convention as well as to other treaties or conventions that bind the Portuguese State, arbitral awards issued in arbitrations seated abroad shall only be effective in Portugal if they are recognised by the competent Portuguese state courts. Nevertheless, Portuguese courts are generally favourable to the recognition and enforcement of foreign arbitration awards.