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?

Where the lessee prevents the lessor from taking possession of the aircraft, the lessor will usually have no other choice but to apply to the relevant court for a declaration as to its right to take possession, its ownership of the aircraft or relief by way of court order for the return of the asset. Under Israeli law the parties to an agreement are not prevented from incorporating a clause into an agreement to allow for ‘self-help’ in certain circumstances. However, in practice, a lessor will typically turn to the police or the courts for assistance to recover the property. That said, it should be noted that the self-help provisions in the Movable Property Law 1971 limit the period of self-help to 30 days from the first day of unlawful possession.

Enforcement of security

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

Prior to the New Insolvency Law expected to come into effect in September 2019, a pledge or charge over an aircraft may generally be realised by court order or by the chief execution officer, the latter of which is considered as the more efficient means of realisation. The chief execution officer would attempt to sell the aircraft to the highest bidder, who must usually bid above the official appraised value previously sought by the chief execution officer. Self-help remedies are available to limited types of Israeli financial institutions expressly listed in the Pledges Law 1967 although in most cases such institutions would utilise the court or execution office to exercise their security. It is possible to attempt to detain the aircraft by means of an ex parte application for temporary injunction or attachment should there be compelling arguments to do so, for instance, if irreparable damages would otherwise be caused to the creditor. Insolvency proceedings are not intended to limit a secured creditor’s rights from exercising its security and commencing legal proceedings against a debtor. That said, recent amendments to Israeli law have limited the ability of secured creditors from exercising their security in certain restructuring proceedings unless it is demonstrated to the court that:

  • the secured asset does not afford the secured creditor appropriate protection and no other means of protection have been put in place; or
  • the realisation of the security is not required for the economic recovery of the debtor.

The New Insolvency Law provides that a bankruptcy trustee may at any time redeem the secured asset.

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 most cases the holder of a fixed charge or pledge over an aircraft would have priority over other creditors; however, there are certain limited creditors that may be granted priority over such secured creditors, including the following:

  • expenses of a receiver appointed to realise a debenture;
  • certain costs of the execution office;
  • holders of possessory liens such as mechanics’ liens or the like (a variety of different civil laws grant such possessory lien rights including to the Airports Authority); and
  • holders of set-off rights whose debt existed prior to the insolvency.

According to the New Insolvency Law, a holder of a possessory lien will be treated like a secured creditor.

The Registration and Mobilisation of Equipment to the Israeli Defence Forces Law 1987 grants the Minister of Defence authority to requisition any aircraft located in Israel with a reasonable payment made to the owner and additional compensation if any damages are suffered during such time.

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 enforcement and recognition of foreign judgments is regulated by the Israeli Enforcement of Foreign Judgments Law 1958, which provides a framework for which the Israeli courts may either recognise a foreign judgment or declare a foreign judgment to be enforceable. According to the Enforcement of Foreign Judgments Law, the Israeli courts may recognise or enforce a judgment of a foreign court if it is awarded in civil matters including awards for payment of compensation or damages for an injured party even if not awarded in a civil matter.

The provisions of the law distinguish between the enforcement of a foreign judgment and the recognition of a foreign judgment and set out different conditions for each.

Enforcement

Israeli courts may, in their discretion, declare a foreign judgment as enforceable if the judgment complies with the following conditions:

  • the judgment was obtained before a court of competent jurisdiction according to the laws of the state in which judgment is given;
  • the judgment is no longer appealable;
  • the obligations imposed by the judgment are enforceable under the Israel laws applicable to enforcement of judgments and the content of the judgment does not contradict the public policy, security or sovereignty of Israel; and
  • the judgment is enforceable in the country in which it was given.

The law provides that a judgment will not be declared enforceable if any of the following is proven before the court:

  • the judgment was obtained fraudulently;
  • the defendant was not given a reasonable opportunity to make its claims and provide its evidence before the judgment was given;
  • the judgment was made by a court that is not authorised to issue such judgement under the rules of international private law that apply in Israel;
  • the judgment conflicts with another valid judgement given in the same matter between the same parties; or
  • an action between the same parties in the same matter was not pending in any Israeli court at the time that the lawsuit was initiated in the foreign court.

The law further provides for a requirement of reciprocity whereby Israeli courts will not declare a judgment given in a particular country as enforceable in Israel if under the laws of such country, judgments given by Israeli courts are not enforced. This requirement may be waived at the request of the Attorney General of the State of Israel. The Enforcement of Foreign Judgments Law provides for a statute of limitations of five years from the date of the judgment being enforced.

A foreign judgment that was declared by the Israeli courts to be enforceable, shall be considered as a judgment awarded in Israel for execution purposes.

Recognition

The Enforcement of Foreign Judgments Law provides for the recognition of a foreign judgment if the following conditions are satisfied:

  • Israel has entered into an agreement with a foreign country applicable to the judgments of a court of such country;
  • Israel undertook in such agreement with such foreign country to recognise foreign judgments of the same nature, with such undertaking applying only to foreign judgments that would be enforceable under Israeli law; and
  • the foreign judgment meets the terms and conditions of set out in the agreement between Israel and such country.

Currently, Israel is a party to four treaties on the enforcement of foreign judgments, with Austria, Germany, the United Kingdom and Spain. It should be noted that the New Insolvency Law will provide a new legal framework for international collaboration and cooperation on cross-border insolvency proceeding, including the recognition in Israel of foreign insolvency proceedings, the provision of a wide range of remedies for administrators of such foreign insolvency proceedings, and exchange of information.