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?

In terms of article 14 of the First Schedule of the Act, in the event of default under a leasing agreement, the lessor may:

  • terminate the agreement and take possession or control of any aircraft object to which the agreement relates; or
  • apply for a court order authorising or directing either of these acts.

In addition to these remedies, the lessor may, in line with article 15 of the First Schedule of the Act, to the extent that the lessee has at any time so agreed:

  • procure the deregistration of the aircraft; and
  • procure the export and physical transfer of the aircraft object from the territory in which it is situated.

However, the lessor cannot exercise these remedies without the prior consent in writing of the holder of any registered interest ranking in priority to that of the lessor.

The above remedies also apply to a conditional seller under a title reservation agreement.

Enforcement of security

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

The remedies of a lessor or a conditional seller have been dealt with in question 21. With regard to a chargee, in the event of default, the chargee may in terms of article 12 of the First Schedule of the Aircraft Registration Act, to the extent that the chargor has at any time so agreed, exercise any one or more of the following remedies:

  • take possession or control of any aircraft object charged to it;
  • sell or grant a lease of any such aircraft object; and
  • collect or receive any income or profits arising from the management or use of any such aircraft object.

Alternatively, the chargee may apply for a court order authorising or directing any of the acts referred to in the preceding paragraph.

One must note here that the chargee proposing to sell or grant a lease of an aircraft object must give reasonable prior notice in writing of the proposed sale or lease to the interested persons.

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 accordance with article 42 of the Aircraft Registration Act, the following debts are secured by a special privilege upon the aircraft, as well as any proceeds from any indemnity arising from any mishaps as well as any insurance proceeds, provided that the said privilege does not apply in relation to an indemnity payable under a liability policy:

  • judicial costs incurred in respect of the sale of the aircraft and the distribution of the proceeds thereof pursuant to the enforcement of any mortgage or other executive title;
  • fees and other charges due to the DGCA arising under applicable laws of Malta in respect of the aircraft;
  • wages due to crew in respect of their employment on the aircraft;
  • any debt due to the holder of a possessory lien for the repair, preservation of the aircraft to the extent of the service performed on and value added to the aircraft;
  • the expenses incurred for the repair, preservation of the aircraft to the extent of the service performed on and value added to the aircraft; and
  • wages and expenses for salvage in respect of the aircraft.

The following debts are also secured by a special privilege upon the aircraft, as well as any proceeds from any indemnity arising from any mishaps as well as any insurance proceeds, other than from a liability policy, but only if they are registered in the International Registry:

  • taxes, duties and, or levies due to the government of Malta in respect of the aircraft; and
  • wages and expenses for assistance or recovery in respect of the aircraft.
Enforcement of foreign judgments and arbitral awards

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

As Malta is a member of the European Union, Regulation (EU) No. 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters applies to Malta. This entails the filing of an application before the Maltese court requesting the court to make the judgment of a court in an EU member state enforceable in Malta. The only defences that can be raised by opponents are the defences under article 45 of Regulation (EU) No. 1215/2012. With regard to judgments emanating from non-EU countries, one has to commence a lawsuit requesting the court to enforce that judgment in Malta.

Malta is a party to the 1958 New York Convention. Foreign arbitral awards may be registered with the Malta Arbitration Centre in accordance with Rules 53 to 57 of the Arbitration Rules. Once registered with the Malta Arbitration Centre, the foreign arbitration award becomes enforceable in Malta.