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?

As a general rule, self-help is not allowed under Spanish law and is, in fact, considered to be against Spanish public order. Therefore, if the Spanish operator refuses to cooperate during the termination or deregistration, or repossession process, a lessor or owner would have to seek court assistance to enforce its rights. The specific procedure to be followed will depend on the type of remedy that the lessor is seeking. Only where self-help is expressly permitted by Spanish law or under international treaties can such remedies be used. When ratifying the Cape Town Convention, Spain expressly declared that all remedies contemplated under the Convention would require leave of court, with the exception of IDERAs.

Enforcement of security

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

In general terms, security interests can only be enforced by following the appropriate enforcement procedure in court. If no security interest is available, a lessor or owner may seek an interim measure consisting in the freezing of any of the debtor’s assets, including a grounding of the aircraft. Leaving aside costs and expenses that may arise from the technical aspects of repossessing an aircraft (review of return conditions, payment of outstanding repairer’s invoices, etc), the costs usually associated with a deregistration process are the following:

  • lawyers’ fees;
  • fees of the RMA and RBM;
  • translation costs of any documents that are not in the Spanish language; and
  • fees of a customs agency to fill in the relevant export document where the aircraft is to be exported outside Spain (single customs declaration or Instrastat, depending on whether the aircraft is sent outside or inside the European Union).

Although not mandatory in principle, lessors are often asked to pay any outstanding airport charges before the airport authorities provide full cooperation.

In practice, the difficulty most often encountered is that of timing: in situations where the lessee does not provide the cooperation needed, the administrative procedure to deregister an aircraft can take between four and 12 weeks. Otherwise, a period of one to two weeks should be allowed.

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?

In addition to secured debts ranking ahead of unsecured debts in an insolvency of the Spanish operator, article 133 of the Spanish Air Navigation Act states that the following debts shall qualify as preferred debts over the aircraft or over the amount of all compensations paid by the insurance company:

  • all taxes due over the previous and current year (we understand these are limited to taxes over the aircraft, not the air carrier itself) - Spanish air navigation charges, airport charges and Eurocontrol charges may be included in this category;
  • all salaries due to the crew over the last month;
  • all premiums due to insurance companies over the last two years;
  • all compensations established by the Air Navigation Act as damages for injury to person or property caused by the aircraft; and
  • all costs and expenses incurred in giving assistance to, or rescuing, the aircraft.

The terms of article 133 of the Spanish Air Navigation Act are far from being clear and should be read in conjunction with the declarations to article 39(1) to the Cape Town Convention made by Spain. In the absence of specific Supreme Court precedents, it is possible to argue that the described debts follow the relevant aircraft. In accordance with this argument, if any of such debts is not paid by the air carrier and the air carrier subsequently becomes insolvent, then the relevant creditors as holders of a sort of right in rem over the aircraft may require payment from the entity that takes possession of the aircraft (eg, the owner).

Furthermore, the preferential debts set out in article 133 of the Air Navigation Act must be interpreted in accordance with the order of preference set out in articles 89 to 93 of the Insolvency Act. These provisions establish criteria for creditors’ preferences in Spain in the event of bankruptcy. In this respect, credits for pending interest amounts (including interest for delayed payment) are considered as subordinated credits, with the exception of interest amounts secured with real securities (rights in rem).

Finally, aircraft can be detained and forfeited pursuant to court or administrative proceedings in any of the circumstances set out in the 1954 Expropriation Act and any orders or regulations issued pursuant thereto, other than those set out in the 1954 Expropriation Act, the 1981 Organic Act on State of Alarm, Emergency and Siege and in related Spanish legislation.

Enforcement of foreign judgments and arbitral awards

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

Spain regularly recognises and enforces foreign judgments and arbitral awards.

As a member of the European Union, judgments in civil and commercial matters given in the courts of another EU member state are generally enforceable in the courts of Spain without retrial or re-examination of the merits of the case subject to the requirements and restrictions of the Regulation 1215/2012 of 12 December 2012 on Jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (as amended). This applies in particular to United Kingdom judgments, although some uncertainties may arise in this connection due to the decision of the United Kingdom to exit the European Union and the ongoing negotiations between the European Union and the United Kingdom.

Judgments given in the courts of states with whom Spain does have a multilateral or bilateral treaty dealing with the mutual recognition and enforcement are recognised and enforced in Spain, subject to the requirements and restrictions of such treaties.

Judgments given in the courts of states with whom Spain does not have a multilateral or bilateral treaty that would contemplate a regime for recognition and enforcement are, in general, also recognised and enforced in Spain, subject to the requirements and restrictions of the Spanish 2000 Civil Proceedings Act and the 2015 International Legal Cooperation Act. These Spanish legal provisions and their interpretation by the Spanish Supreme Court:

Include a negative reciprocity requirement (ie, the Spanish government can decide not to grant such recognition if a certain state does not recognise Spanish judgments). Such decision requires express legislation to be passed, and so far no country has been excluded.

  • Allow the rejection of the recognition and enforcement of a foreign judgment if the contacts with the court of origin to the case submitted to such court were not sufficient. The test is normally satisfied when the foreign court of origin is the court to which the parties to a contract have voluntarily submitted;
  • allow the rejection of the recognition and enforcement of a foreign judgment contrary to forum public policy (public order). Damages granted by the court of origin when considered excessive from the point of view of Spanish law may be grounds for non-recognition or non-enforcement;
  • allow the rejection of the recognition and enforcement of a foreign judgment contrary to the due process clause of the Spanish law. Service of process in a manner not provided for in an international treaty when such a treaty is of application or with insufficient time to defend the claim may be grounds for non-recognition or non-enforcement; and
  • allow the rejection of the recognition and enforcement of a foreign judgment if such judgment is not contained in a solemn public document known as a writ of execution or the subject matter of the judgment is included in the matters over which Spanish courts have exclusive jurisdiction.

Spain is a state party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which in Spain has an erga omnes effect.