Over the past eight years, the Brazilian National Civil Aviation Agency has adopted several measures intended to modernize the aircraft registration process, by simplifying the requirements needed for aircraft transactions to be registered, facilitating the enforcement of remedies and generally promoting the growth of the sector.

Among such measures, the Agency has managed to achieve important milestones for the Aviation Industry, including the adoption of the electronic document processing by the Brazilian Aeronautic Registry (RAB), which allowed the electronic filing of documents – provided that hard copies (originals or certified copies) were delivered at a second stage –the issuance of digital airworthiness and aircraft registration certificates, among others. The issuance of ANAC’s Directive 309/2014, which regulated the effective application of several aspects of the Cape Town Convention in Brazil, was also very important to align the Country with international standards in terms of compliance with said Convention.

Notwithstanding the important steps pursued so far, the Aviation Industry has continued seeking additional measures from the Regulatory Agency to reduce the bureaucracy associated with the registration of transactional documents and the enforcement of remedies at the administrative level, especially with the utilization of IDERAs to deregister aircrafts.

As a result of a public consultation carried out by the Agency in 2020, ANAC has recently issued the Directive nr. 597, which entered into force on January 4, 2021. This directive brings structural improvements to the sector with a focus on simplifying procedures for the registration of agreements, based on the utilization of electronically signed documents.  It also aims to reduce the bureaucracy for the enforcement of IDERAs, as a tool to enhance the business environment but still keeping the high levels of security required in the formalization of aircraft transactions.

In this line, among other changes, ANAC has formally implemented the following modifications:

(a) Digital Signature: Generally, to improve efficiency and reduce costs, ANAC has expressly authorized the utilization of digital signatures on digital-born documents submitted for registration with the RAB, provided that an ICP-Brazil digital certificate is utilized, i.e., the digital signature is properly accredited by a local official certifying company.  Also, physical documents scanned by a notary public, with a notary-verified signature, may be utilized to authorize the completion of the registration with the RAB, based on a 100% electronic process.

This is an important development toward the modernization of the registration process, since it lifts some of the requirements associated with the filing of hard copies of documents, which tend to delay the registration process.  Further, even though the digital certificate needs to be accredited by a local official certifying company, which narrows the alternatives that might be utilized by the parties to a specific transaction, this still represents progress in reducing bureaucracy associated with the registration process.

(b) Interchange agreements: Local regulations were to some extent laconic and failed to clearly define the role of the Brazilian Aeronautic Registry for the registration of aircraft interchange agreements and its effects.  The new rules now limit the role of the RAB by defining that the Registry only formalizes the annotation of the interchange agreement for the purposes of fleet control, provided that such an annotation does not (i) replace the registration of the aircraft with the foreign State of Registration, (ii) constitute any sort of lien, and (iii) generate any right to have airworthiness or registration certificates issued by ANAC; and

(c) Utilization of IDERA: Since 2014, the RAB has consistently authorized foreign financiers to utilize IDERAs to deregister aircrafts on multiple occasions.  However, at that time ANAC’s regulations have not exempted foreign financiers from obtaining export authorizations/registration with customs authorities, in order to complete the deregistration process.  Since Brazilian customs authorities have not regulated how IDERAs should be used to allow the registration of exports, the Industry has been putting pressure on ANAC to formally exempt the foreign financiers from presenting customs export authorization/registration, when enforcing remedies based on the utilization of IDERAs.  The new rule has granted this long-awaited demand and formally exempted the obligation from presenting the customs export authorizations/registrations.

On the other hand, when the deregistration process is initiated based on the IDERA, the interested party is no longer authorized to request the suspension of the process – which was a common maneuver adopted during the Ocean Air/Avianca Brazil judicial reorganization in Brazil, while the parties were negotiating existing agreements and the voluntary return of the aircrafts.  The foreign creditor may still request the interruption and definitive cancellation of the deregistration process, but the suspension thereof is no longer authorized.

There were also other modifications, which clarified the terminology utilized in the previous directives issued by ANAC and lifted specific requirements associated with the registration process with the RAB, but which will not significantly impact the way the processes were completed.

We understand that the changes implemented by ANAC represent a considerable benefit for users of the RAB, as it formally sets the path for the utilization of digital certificates and the definitive implementation of the electronic registration process. Also, from the perspective of the enforcement of remedies under the Cape Town Convention, it certainly results in more legal certainty as to the requirements that will need to be complied with by foreign financiers, especially when utilizing the IDERA.

Although the Brazilian regulatory system is known for having a very bureaucratic and occasionally time-consuming registration process, ANAC is clearly showing its intention to implement measures for creating a more efficient and modern regulatory environment for the Aviation Industry.