Overview

Conventions

To which major air law treaties is your state a party?

We list the conventions signed and in effect chronologically:

  • the Warsaw Convention for the Unification of certain rules relating to international carriage by air 1929;
  • the Rome Convention for the Unification of Certain Rules relating to the Precautionary Attachment of Aircraft 1933;
  • the Chicago Convention on International Civil Aviation;
  • the Geneva Convention on the International Recognition of Rights in Aircraft 1948;
  • the Rome Convention on Damage Caused by Foreign Aircraft to Third Parties on the Surface 1952;
  • the Warsaw Convention as amended by the Hague Protocol 1955;
  • the Hague Convention for the Suppression of Unlawful Seizure of Aircraft 1970;
  • the Montreal Convention for the Suppression of Unlawful Acts against the Safety of Civil Aviation 1971;
  • the four Montreal protocols to amend the Warsaw Convention 1975;
  • the Montreal Convention for the Unification of Certain Rules for International Carriage by Air 1999; and
  • the Cape Town Protocol to the Convention on International Interests in Mobile Equipment on matters specific to aircraft equipment 2001.

Domestic legislation

What is the principal domestic legislation applicable to aviation finance and leasing?

  • The Argentine Aeronautical Code (Law No. 17,285);
  • the Argentine National Civil and Commercial Code (Law No. 26.994); and
  • the Leasing Law No. 25.248.

Governing law

Are there any restrictions on choice-of-law clauses in contracts to the transfer of interests in or creation of security over aircraft? If parties are not free to specify the applicable law, is the law of the place where the aircraft is located or where it is registered the relevant applicable law?

There are no restrictions on choice-of-law clauses in contracts to the transfer of interest in or creation of security over aircraft. However, in the case of the creation of a local security over the aircraft, it may be advisable to apply the local law to facilitate the enforcement in court.

It should be noted that an aircraft mortgage or the registration of a leasing must be effected in Argentina for enforcement purposes and be effective as regards third parties.

Title transfer

Transfer of aircraft

How is title in an aircraft transferred?

A bill of sale is effective to transfer title but to be effective as regards third parties it must be registered with the Aircraft Registry at the National Administration of Civil Aviation (ANAC).

Transfer document requirements

What are the formalities for creating an enforceable transfer document for an aircraft?

The bill of sale or an equivalent agreement shall be in writing and count with certified signatures (by a notary public or other public officer), and apostilled (Argentina is a signatory of the Hague Apostille Convention) or legalised before foreign Argentine consulates when executed abroad. If it is not written in Spanish then a public translation of the document by a public translator will be required. The transfer document must indicate the fuselage, engine and propeller of the aircraft with their respective trademark, model and serial number.

Registration of aircraft ownership and lease interests

Aircraft registry

Identify and describe the aircraft registry.

The Aircraft Registry is a public registry within the ANAC, which is the national aviation authority. There is no specific engine register; the Aircraft Registry is entitled to register both the aircraft and the engine. The Aircraft Registry is the owner and operator registry, given that it is entitled to register:

  • acts, contracts and resolutions proving the ownership of the aircraft or the transfer, modification or extinction of such ownership;
  • aircraft and engine mortgages;
  • seizures and interim measures over the aircraft;
  • enrolment certificates with the specifications required to individualise the aircraft and the airworthiness certificates;
  • the cessation of activities, unusability or loss of the aircraft and the substantial modifications over them;
  • lease agreements (either rental or leasing agreements, as explained in question 10);
  • by-laws and personal data of the management of the companies that own Argentine aircraft; and
  • any other fact or legal act that may modify or be related to the legal situation of the aircraft.

There is no well-used ICAO 83-bis arrangement in place between Argentina and other jurisdictions.

Registrability of ownership of aircraft and lease interests

Can an ownership or lease interest in, or lease agreement over, aircraft be registered with the aircraft registry? Are there limitations on who can be recorded as owner? Can an ownership interest be registered with any other registry? Can owners’, operators’ and lessees’ interests in aircraft engines be registered?

Yes, an ownership or lease interest in, or lease agreement over, aircraft can be registered with the aircraft registry.

To be recorded as owner it is necessary to comply with the following requirements:

  • if it is an individual, it must have its real domicile in Argentina;
  • if there are several individuals as co-owners, the majority of them must have a real domicile in Argentina;
  • if it is a legal entity, it must be duly incorporated in accordance with Argentine law and it must have its legal domicile in Argentina.

There are no other registries to register an ownership interest over an aircraft other than the Aircraft Registry; owners’, operators’ and lessees’ interests in aircraft engines can also be registered.

Registration of ownership interests

Summarise the process to register an ownership interest.

To register an ownership interest over an aircraft with the Aircraft Registry at the ANAC, it is necessary to file the following documentation:

  • transfer document with certified signatures, and legalised or apostilled and translated by a public translator when applicable (see question 5);
  • Form 101-A;
  • registration fee receipt;
  • cease of flag status granted by the respective foreign aircraft registry;
  • tax registration form of the buyer;
  • form with the individual or corporate data of the buyer;
  • domicile certificate of the buyer;
  • Customs certificates evidencing the release and nationalisation (or temporary importation) of the aircraft, indicating the fuselage, engine and propeller of the aircraft with their respective trademark, model and serial number; and
  • the Money Laundering and Terrorist Financing Prevention Form.

If the buyer is a legal entity, what is also needed is a:

  • certified copy of the registered by-laws;
  • certified copy of the minute approving the acquisition; and
  • filing note detailing the attached documentation (this is a document that must be filed either if the buyer is a legal entity or an individual).

The forms must count with certified signatures and legalisation or apostille if executed abroad.

Registration of ownership interests at the Aircraft Registry usually takes between one and two months of the filing of the foregoing documents. The registration fee to be paid to the Aircraft Registry is 1 per cent of the purchase price (although if the latter is too low the Registry would collect another standardised fee in accordance with the weight of the aircraft).

Title to an engine does not automatically vest in the owner of a host aircraft.

Title and third parties

What is the effect of registration of an ownership interest as to proof of title and third parties?

Yes, registration constitutes proof of title. In fact, it is required to register ownership interests with the Aircraft Registry so that they can be effective as regards third parties. Third parties can rely on the accuracy of the public registration of the ownership interests.

The Aircraft Registry should deny the registration of ownership interest if the new owner has no title or a defective one.

The registration of an ownership interest with the Aircraft Registry grants Argentine nationality to the aircraft and cancel any prior registration.

Registration of lease interests

Summarise the process to register a lease interest.

Argentine law provides a distinction between ‘leasing’, which is the term used by Argentine law for those leases that includes a purchase option, and ordinary rental leases. With respect to foreign aircraft, a leasing structure can only be used for aircraft with a weight above six tons of maximum weight while a rental lease agreement can be used for aircraft disregarding any weight limitation.

To register a leasing or a rental lease agreement with the Aircraft Registry at ANAC, it is necessary to file the following documentation:

  • leasing agreement (in compliance with article 42 of the Aeronautical Code in the case of foreign aircraft, or in accordance with Leasing Law No. 25,248 in case of a national aircraft) or rental lease agreement with certified signatures, and legalised or apostilled and translated by a public translator when applicable;
  • Form 101-A;
  • registration fee receipt;
  • tax registration form of the buyer;
  • money laundering and terrorist financing prevention form; and
  • filing note detailing the attached documentation.

The forms must include certified signatures and legalisation or apostille if executed abroad.

The registration fee to be paid to the Aircraft Registry is 0.3 per cent of the amount of the agreement, and the estimated time for completion is one month from the filing.

Certificate of registration

What is the regime for certification of registered aviation interests in your jurisdiction?

The Aircraft Registry issues domain certificates, which are copies of the annotations conducted in the registration books of the Registry with respect to the individualised aircraft, including any ownership and lease interests over it and liens, including mortgages or judicial orders.

The domain certificate shows a track record of all the annotations made since the first registration conducted with the Aircraft Registry.

The certificates state the owner’s, operator’s and any mortgagees’ interest over aircraft. There is also a separate engine certificate of registration that can be issued. Rental and lease agreements over the aircraft or the engines are recorded on them.

Deregistration and export

Is an owner or mortgagee required to consent to any deregistration or export of the aircraft? Must the aviation authority give notice? Can the operator block any proposed deregistration or export by an owner or mortgagee?

Any deregistration or export cannot be conducted by a creditor mortgagee if the mortgage has not been judicially enforced.

A mortgagee must always consent to any deregistration or export of the aircraft of the aircraft by an owner, but the consent of the owner is not required if the deregistration or export is conducted by the mortgagee once the mortgage has been judicially enforced.

There is no rule providing that the operator is entitled to block any deregistration or export by an owner, but it is usual to include provisions entitling operator to do so within the agreements entered between operator and owner. If deregistration or export is conducted by the mortgagee once the mortgage has been judicially enforced then the operator will not be entitled to object to such deregistration.

Powers of attorney

What are the principal characteristics of deregistration and export powers of attorney?

Deregistration and export powers of attorney are usually granted as irrevocable and appointing one or more attorneys. Irrevocability of a power requires that this power was granted for specific purposes and limited in time. In addition, it is always revocable in the case of fair cause. An attorney acting on behalf of an owner will be empowered to freely deregister and export the aircraft. It is not possible to register these powers of attorney. They survive the grantor’s insolvency but if a bankruptcy proceeding is initiated, the attorneys would not be entitled to make use of such power of attorney without due authorisation from a court.

In the case of a power of attorney with deregistration and export powers in a mortgage, it will not enable a mortgagee to freely deregister and export the aircraft. In practice, when this power of attorney is filed by a mortgagee asking for deregistration or export of the aircraft before the Aircraft Registry, the mortgagor will eventually oppose it and the Aircraft Registry will order the airports to refrain from authorising the aircraft to fly. Deregistration or export will only be possible once the mortgage is judicially enforced.

Cape Town Convention and IDERA

If the Cape Town Convention is in effect in the jurisdiction, describe any notable features of the irrevocable deregistration and export request authorisation (IDERA) process.

The Cape Town Protocol to the Convention on International Interests in Mobile Equipment on matters specific to aircraft equipment 2001 has been in effect in Argentina since 1 August 2018. When filing an irrevocable deregistration and export request authorisation (IDERA) before the Aircraft Registry, the latter only takes notice of it with an entry in the respective registration records, but they do not countersign it nor are there any particular registration requirements other than submitting a form to notify the execution of an IDERA to the Aircraft Registry.

As the Cape Town Convention has been in force for less than a year to date, there are no precedents with respect to an IDERA process conducted in Argentina. However, the Aircraft Registry takes notice of it and grants it a code, so parties can register it before the International Registry incorporated by the Cape Town Convention. But the Aircraft Registry will not proceed to deregister or export the aircraft by virtue of an IDERA certificate unless it is so ordered by a court.

Security

Security document (mortgage) form and content

What is the typical form of a security document over the aircraft and what must it contain?

In Argentina mortgages must be granted by a public deed issued by a notary public. There is no specific form, although the provisions of the mortgages contain standard language. It shall be drafted in Spanish and it can either provide a maximum secured amount or a fixed amount. Mortgages are required to be self-sufficient for enforcement purposes, and thus it shall contain all the relevant terms of the deal (principal, interest, repayment dates). In this sense, a mortgage public deed tends to incorporate within the text a transcription of the loan agreement secured by the mortgage.

Security documentary requirements and costs

What are the documentary formalities for creation of an enforceable security over an aircraft? What are the documentary costs?

As indicated in question 15, to create an enforceable security over an aircraft it is necessary to execute a mortgage public deed, with the intervention of a notary public. The costs involved in the granting of a mortgage are the fees of the notary public, which are usually between 0.5 per cent and 1 per cent of the amount secured by the mortgage.

The granting of a mortgage also requires that the notary public obtains ownership certificates of the aircraft concerned before executing the respective public deed.

Security registration requirements

Must the security document be filed with the aviation authority or any other registry as a condition to its effective creation or perfection against the debtor and third parties? Summarise the process to register a mortgagee interest.

Yes, the mortgage public deed must filed with the Aircraft Registry to be effective as regards third parties.

To register a mortgage with the Aircraft Registry at ANAC, it is necessary to file the following documentation:

  • mortgage public deed (testimony issued by a notary public);
  • Form 101-A;
  • registration fee receipt;
  • tax registration form of the buyer;
  • money laundering and terrorist financing prevention form; and
  • filing note detailing the attached documentation.

The forms must include certified signatures and legalisation or apostille if executed abroad.

The registration fee to be paid to the Aircraft Registry is 0.3 per cent of the amount of the loan, and the estimated time for completion is one month.

Registration of security

How is registration of a security interest certified?

Once the process to register a mortgage is complete, the Aircraft Registry returns a copy of the mortgage public deed with an extract attached to it, certifying the registration. It is also possible to request domain certificates (see question 11) evidencing all the security interest annotated over the aircraft and their priority rank.

Effect of registration of a security interest

What is the effect of registration as to third parties?

Once registered, a mortgage is effective with regard to third parties. The priority is established in the public mortgage deed, since it is possible to grant a mortgage in first grade (highest priority), second grade, etc. Third parties can rely on the accuracy of the public registration of the security interest, either through the original registration certificate or in subsequent domain certificates requests. In general, the priority is granted by the date of registration of the mortgage deed.

Security structure and alteration

How is security over aircraft and leases typically structured? What are the consequences of changes to the security or its beneficiaries?

The most extended security structure in Argentina is the mortgage over the aircraft, notwithstanding that in lease agreements (both the financial leasing with a purchase option or a rental agreement) the aircraft still belongs to the creditor, and, therefore, it is not possible for the debtor to grant a mortgage over the aircraft. The concept of trusts is recognised under Argentine law, and in the case of a mortgage, a trust can be registered as the mortgagee or the mortgagor.

Any change over the security, its beneficiaries, and its assignment or transfer must be expressly allowed within the provisions of the mortgage, and the necessary amendments over the public mortgage deed will have to be registered with the Aircraft Registry (changes with respect to the parties, amount, etc).

A mortgage is a right in rem, which is enforced over the aircraft. According to Argentine law, a mortgagor does not recover the aircraft when enforcing a mortgage, but instead must obtain a judicial order to conduct an auction of the aircraft. A mortgagee is entitled to participate as a bidder in the auction to acquire the aircraft, compensating the purchase price with its credit against the owner of the aircraft.

Security over spare engines

What form does security over spare engines typically take and how does it operate?

Mortgages can be granted over spare engines, in the same terms referred to under question 15. Usually, a mortgage public deed over an aircraft also identifies the security over its spare engines but it can be granted in a separate deed, particularly if the engine is not installed on a host aircraft.

If a mortgage comprises both the aircraft and the engine, then it is likely that both will be treated as a single item of property in the auction, but it is possible to enforce them separately as well. An encumbered engine would not cease to be encumbered on another aircraft, and the security interest over it would remain effective.

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.

Taxes and payment restrictions

Taxes

What taxes may apply to aviation-related lease payments, loan repayments and transfers of aircraft? How may tax liability be lawfully minimised?

Income tax: if seller is a legal entity, the profit will be subject to income tax in accordance with the applicable corporate rate (35 per cent for fiscal years initiated prior to December 2017; 30 per cent for fiscal years initiated between January 2018 and December 2019; and 25 per cent for fiscal years initiated after January 2020).

VAT: The sale of aircraft is subject to VAT (21 per cent) if it is conducted by a legal entity or if it is part of a regular activity.

Internal taxes: aircraft are subject to a 20 per cent tax on their first sale or import.

The same taxes apply in the case of a rental agreement or a leasing, except for internal taxes. Gross-up provisions are effective.

Exchange control

Are there any restrictions on international payments and exchange controls in effect in your jurisdiction?

No, since December 2015 Argentina eliminated prior exchange control restrictions implemented by the prior administration since 2011.

Default interest

Are there any limitations on the amount of default interest that can be charged on lease or loan payments?

No, there are not. However, Argentine judges are entitled to reduce the interest if the agreed rate or its capitalisation disproportionally exceeds, without due justification, the average cost charged over debtors in similar transactions in the same place of execution.

Customs, import and export

Are there any costs to bring the aircraft into the jurisdiction or take it out of the jurisdiction? Does the liability attach to the owner or mortgagee?

Yes, aircraft below two tons pay 7 per cent in import duties, and the export of aircraft in general bears a charge of 5 per cent.

Both the owner and the operator (airline) have a strict liability with respect to the aircraft. The mortgagee does not have any liability with respect to the aircraft in such a position.

Insurance and reinsurance

Captive insurance

Summarise any captive insurance regime in your jurisdiction as applicable to aviation.

Yes, all insurance requirements under the Aeronautical Code must be granted by an insurance carrier authorised by the Argentine National Insurance Superintendency, and the only entities that can obtain this authorisation are those incorporated in Argentina, either as a domestic company or as a branch of a foreign entity. The mandatory insurance regime for aircraft comprises: (i) damage to passengers, baggage or goods; (ii) damages to third parties on the surface; (iii) damage caused in free transport; and (iv) aircraft collision.

In addition, the operator is obliged to hire an occupational risks insurance for his or her personnel, with a company duly authorised by the Superintendency of Occupational Risks.

Cut-through clauses

Are cut-through clauses under the insurance and reinsurance documentation legally effective?

Yes.

Reinsurance

Are assignments of reinsurance (by domestic or captive insurers) legally effective? Are assignments of reinsurance typically provided on aviation leasing and finance transactions?

Yes. These provisions are usual, notwithstanding that the first insurer is the only one liable with respect to the insured. In the case of liquidation of the first insurer, the insured has a privilege over the outstanding amount owed by the reinsurers.

Liability

Can an owner, lessor or financier be liable for the operation of the aircraft or the activities of the operator?

If lessors or financiers do not hold any ownership title over the aircraft, they will not be liable for the operation of the aircraft or the activities of the operator, although in general, financial leasing implies that the lessor holds the title of the aircraft until the lessee exercises the purchase option. The owner of the aircraft always has strict liability with respect to the inherent risk of the aircraft unless it proves that the aircraft was used against the owner’s will. It should be noted that certain activities of the operator would be clearly outside the scope of the inherent risk of the aircraft, such as overbooking claims.

Strict liability

Does the jurisdiction adopt a regime of strict liability for owners, lessors, financiers or others with no operational interest in the aircraft?

Yes, as mentioned in question 33, the owner of the aircraft always has a strict liability with respect to the inherent risk of the aircraft unless it proves that the aircraft was used against its will. The same provision applies to the lessors, financiers or others if they hold an ownership title over the aircraft.

Third-party liability insurance

Are there minimum requirements for the amount of third-party liability cover that must be in place?

Yes, the Argentine Aeronautical Code contains certain limitations of liability in the case of damages, and it requires that the insurance must always guarantee the amounts arising from those limitations.

In particular, in the case of transportation of passengers, the operator liability is limited to the equivalent of 1,000 Gold Argentine.

With respect to the damages to third-parties on the surface, the following scale must be considered:

  • 2,000 Gold Argentine for aircraft below 1,000kg;
  • 2,000 Gold Argentine plus 1 ½ Gold Argentine for each kg over 1,000, for aircraft over 1,000kg and below 6,000kg;
  • 10,400 Gold Argentine plus 1 Gold Argentine for each kg over 6,000 for aircraft over 6,000kg and below 20,000kg;
  • 25,000 Gold Argentine plus ½ Gold Argentine for each kg over 20,000, for aircraft over 20,000kg and below 50,000kg; and
  • 43,600 Gold Argentine plus 0.37 Gold Argentine for each kg over 50,000kg, for aircraft over 50,000kg.

In the case of death or injuries, the operator liability will not be more than 2,000 Gold Argentine per individual.

Gold Argentine is a coin held by the Argentine Currency House, with a current value of around 11,300 pesos.