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?

Following the lease’s termination or in the event of a default under the lease, if the lessee does not voluntarily hand over control of the aircraft, the lessor cannot take possession of it without judicial intervention. To obtain possession, the lessor must procure a judgment for the delivery of the aircraft in question pursuant to the corresponding lease agreement. It must then issue a writ for specific delivery once the term established in the judgment for delivery has expired.

Enforcement of security

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

Enforcement requires the mortgagee to perform the immovable asset seizure process provided for under article 673 et seq of the Civil Procedure Code. The courts of the Dominican Republic will be involved in this execution process.

Where the mortgagee’s credit is additionally guaranteed by collateral guaranties such as authentic promissory notes, drafted by and before notary public, which are of an executive nature, then an ex parte proceeding is technically available via executive seizure, pursuing the collection of debt owed in respect of the debtor’s assets in general, including the mortgaged aircraft. This procedure is much less tedious than an immovable asset seizure and (in principle) only one judicial officer is involved (the bailiff), without the need for court intervention.

The aircraft is the asset in respect of which the guaranteed credit will be collected - through its sale pursuant to a public auction, both in the immovable assets seizure process as well as in the executive seizure process. These processes, once executed, do not automatically authorise the mortgagee to retain the property of the seized asset (ie, the aircraft), but to recover the amount of its debt from the auction. That said, sometimes, if at the auction there are no interested parties who submit a bid for the initial price, the auction will be declared ‘not awarded’ and, consequently, the mortgagee may keep the property of the seized asset for the time being.

It is also useful to highlight that, at the auction of the asset given as collateral - either through executive seizure or immovable assets seizure - the awarding of the mortgaged property will be made to the highest bidder paying in cash. In principle, it is not possible to pay the bid in the auction by way of compensation.

Insolvency proceedings as currently provided for under Dominican law only suspend the enforcement of unsecured debt; all forms of secured debt are unaffected. The debtor may only impede the mortgagee’s right to enforce by either paying the amounts due in their entirety or challenging the foreclosure by evidencing technical errors or omissions in terms of due process. The debtor may also attempt to delay the foreclosure by requesting that the court modify the conditions of the public auction as a result of detected inconsistencies.

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?

Liens as a result of due and unpaid taxes or unpaid salaries and severance benefits shall have priority over all other security interests.

Enforcement of foreign judgments and arbitral awards

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

The Dominican Republic is a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards adopted by the United Nations Conference on International Commercial Arbitration in New York on 10 June 1958 (the New York Convention), and in that sense the courts of Dominican Republic should recognise, accept and enforce an arbitral award obtained from and in accordance with any valid arbitration forum (including but not limited to English and New York forum), if due process is observed. We are not aware of any existing circumstances that would indicate that generally an arbitral award related to a security interest would not be recognised or enforced by the Dominican Republic.