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?

The Civil Code of Ukraine applies in respect of parties’ agreements. Thus, the aircraft repossession procedure contained in the lease should be followed. The Cape Town Convention contains self-help remedies for a lessor if a lessee has agreed. They may be enforced by the lessor without a court order. Ukrainian law does not provide any lawful grounds for a lessee to impede the owner’s rights to exercise default remedies.

Enforcement of security

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

Ukrainian law provides that the creditor may enforce a security interest if a secured obligation is not performed in time. There is no any special local law requirement, thus parties may apply those self-help remedies that are provided by the security agreement or by the Cape Town Convention if the debtor has agreed to them. There is no necessity for leave of court. If the debtor is impeded by the creditor’s self-help remedies, the latter may receive the right to detain the aircraft by way of an ex parte application. If the creditor lawfully possesses the aircraft while the debtor fails to pay its indebtedness (maintenance, repair, etc), the creditor has right to detain the aircraft, even without a court order, up to the full settlement of its claims. In the case of a debtor’s insolvency, the creditor has the right to enforce its security rights irrespective of maturity of the secured obligation. The owner may not lawfully impede the mortgagee’s right to enforce.

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?

Ukrainian law (the Constitution of Ukraine article 41) guarantees the protection of property from expropriation without fair compensation. The laws of Ukraine stipulate cases in which the aircraft may be seized by a government entity subject to payment of fair compensation. The Civil Code of Ukraine (article 353) provides for the possibility of requisition of the property from its owner in emergency circumstances and public needs. Such emergency circumstances may be natural disasters, accidents or catastrophes, epidemics or epizootics that endanger human life or health. Requisition may be carried out by state authorities with full compensation in cases of natural or man-made disasters, epidemics or epizootics.

Confiscation is possible by the decision of a court or another competent body as punishment for an unlawful act of the owner or lessee (article 354 of the Civil Code of Ukraine). In accordance with the Ukrainian Customs Code of 11 July 2002 (with corresponding amendments and additions), the aircraft may be confiscated by the customs authorities in Ukraine under a Ukrainian court judgment in the case of violation of customs rules (drug trafficking).

The liens for repairs have priority over aircraft ownership or an aircraft security interest if the aircraft is detained by the repairer.

The rest of liens and rights (taxes, landing and navigation charges, customs and tax liabilities, employee rights) may not have priority over aircraft ownership or an aircraft security interest.

Enforcement of foreign judgments and arbitral awards

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

Any judgment obtained in an English, New York or any other court should be recognised and accepted for execution by the courts of Ukraine without retrial or examination of the merits of the case under the principle of reciprocity.

To obtain an allowance to recognise and enforce the judgment an interested party shall submit to an appropriate court at the place debtor’s location the following documents:

  • plea to fulfil the judgment;
  • copy of the judgment, confirmed by the court, and official document that the judgment took effect, in case it is not arisen out of the judgment;
  • document which proves that the respondent was duly served with summons. Ukraine is a party to the Hague Convention On The Service Abroad Of Judicial And Extrajudicial Documents In Civil Or Commercial Matters of 1965. Within its ratification Ukraine has refused to apply article 10 of the Convention that allows to use process Agent Service and stated that due notification is made through the Ministry of Justice of Ukraine only. So, the due notification shall be made according to the form found at www.hcch.net/upload/act_form14efu.pdf; and
  • certified translation of the documents mentioned above in subparagraphs 2 and 3.

The recognition and enforcement may be refused on the following grounds:

  • a debtor (respondent) did not represent its case as he or she was not duly served with a summons;
  • if a judgment between the same persons and on the same matter has been already issued on the territory of Ukraine and took effect, or if corresponding body of Ukraine initiated the proceedings between the same persons and on the same matter earlier; or
  • if a matter in which the judgment to be recognised and enforced shall be exclusively decided by the Ukrainian courts.

The foreign arbitral awards will be recognised and accepted for execution by the courts of Ukraine as it has been a party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards since 1960. Thus, any award received at arbitration tribunal will be enforced in Ukraine without the need to reconsider the case on the merits.

Recognition and enforcement of an arbitral award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that:

  • the parties to the arbitration agreement were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made;
  • the party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his or her case; the award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognised and enforced;
  • the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, if such agreement does not exist, was not in accordance with the law of the country where the arbitration took place; or
  • the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.

Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that:

  • the subject matter of the dispute is not capable of settlement by arbitration under the laws of Ukraine; or
  • the recognition or enforcement of the award would be contrary to the public policy of Ukraine.