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?

To complete a repossession procedure it is necessary to count with a court order. The owner of the aircraft may file a request of deregistration and export with the Aircraft Registry but if the lessee alleges that the requirements for a lease termination are not met then the matter will continue in court. The Aircraft Registry can order the airports to refrain from authorising the aircraft to fly. In addition, precautionary measures can be requested in court for the same purpose such as seizure over the aircraft to put it under judicial custody.

Enforcement of security

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

To enforce a security interest it is necessary to obtain a court order. The mortgagee may file a request of deregistration and export with the Aircraft Registry if it obtains a power of attorney to that end granted by the mortgagor, but the Aircraft Registry will only order the airports to refrain from authorising the aircraft to fly.

It is important to note that under Argentine law, a mortgage does not grant the mortgagee the right to recover the aircraft, but instead in the case of enforcement, the mortgagee is obliged to request an auction of the aircraft to recover his or her credit.

In the case of insolvency of the mortgagor, the mortgage grants a privilege to the mortgagee for the enforcement of his or her security interest.

It should be noted that the privilege of the mortgagee extends to the insurance compensation in the case of loss or damage to the good (aircraft or engines), and the compensation due by third parties owing to the damage caused to the good.

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 credits that have priority over an aircraft security interest (mortgage) are:

  • fees and trial expenses benefiting the mortgagee;
  • credits due for airport services or accessorial services associated with the flight, as of one year prior to the filing of the claim for the mortgage privilege;
  • credits due for searching, assistance or rescue of the aircraft;
  • credits due for provisioning and repairs performed outside the destination, to be able to continue a flight; and
  • last monthly salary of the crew.

In addition, it must be noted that, within a bankruptcy proceeding, before the collection of the credit arising from a security interest over an aircraft or engine (mortgage), it is necessary to cover first the amount corresponding to the expenditure related to the conservation, custody, administration and auction of the aircraft, and the fees owing to the bankruptcy officers who intervene with respect to the aircraft or engine.

In the case of a leasing, the lessor will always hold a right to repossess the aircraft in the event of non-compliance until the purchase option is exercised. However, it should be noted that if a lessee files for a judicial restructuring or bankruptcy proceeding then repossession is conditional on a specific process under which the lessee (business reorganisation) or the judge (bankruptcy) may opt to continue with the leasing and even exercise the purchase option.

Enforcement of foreign judgments and arbitral awards

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

Foreign judgments can be enforced in Argentina if rendered by a competent court in accordance with Argentina’s private international rules of law and if it constitutes the final decision in its jurisdiction. The rights of defence of the defendant must have been duly guaranteed during the procedure and the judgment must meet the requirements provided in its own jurisdiction to be considered as such. It must also comply with the authenticity requirements of the Argentine law. The judgment cannot affect Argentine public policy principles and it shall not be incompatible with another Argentine judgment rendered previously or simultaneously.

The competent courts in Argentina to request the enforcement of a foreign judgment are first instance courts. It is necessary to file a testimony of the judgment duly legalised (apostilled if applicable) and translated into Spanish, and a testimony of the proceedings evidencing that the judgment is a final decision and that the foregoing requirements are met.

With respect to foreign arbitral awards, Argentina is a party to the 1958 New York Convention on Enforcement and Recognition of Foreign Arbitral Awards.