Insurance and reinsurance

Captive insurance

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

Article 3(1) of the Civil Aviation (Insurance Requirements for Air carriers and Aircraft Operators) Order (SL 499.41) (the Order) lays down that no aircraft shall be flown in Malta without having insurance cover that meets the requirements of Regulation EC 785/2004 on insurance requirements for air carriers and aircraft operators. The Order does not require the insurance to be placed with a domestic insurer, and as a matter of fact there is no common practice to place the insurance of aircraft in the local market.

Cut-through clauses

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

Cut-through clauses under the insurance and reinsurance documentation are legally effective since it is possible under Maltese law to stipulate for the benefit of a third party. Article 1000 of the Civil Code lays down that it is lawful for a person to stipulate for the benefit of a third party when such a stipulation constitutes the mode or condition of a stipulation made by that person for their own benefit, or of a donation or grant made by that person to others; and the person who has made any such stipulation may not revoke it if the third party has signified the intention to avail him or herself thereof.

Reinsurance

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

Assignments of reinsurance are legally effective in Malta. In the general terms of article 1469 of the Civil Code, the assignment or sale of a debt, or of a right or of a cause of action is complete, and the ownership is ipso jure acquired by the assignee as soon as the debt, the right or the cause of action, and the price have been agreed upon, and, except in the case of a right transferable by the delivery of the respective document of title, the deed of assignment is made. Moreover, the assignment must be made in writing ad validitatem and the assignee may not, in regard to third parties, exercise the rights assigned to him or her except after due notice of the assignment has been given to the debtor, by means of a judicial act, by the assignee him or herself or by the assignor.

Liability

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

Article 13 of the Civil Aviation Act, Chapter 232 of the Laws of Malta, lays down that where an aircraft has been bona fide demised, let or hired out for any period exceeding 14 days to any other person by the owner thereof, and no pilot, commander, navigator or operative member of the crew of the aircraft is in the employment of the owner, the relevant articles of the Civil Aviation Act which attach liability to the owner of the aircraft would apply instead to the person to whom the aircraft has been so demised, let or hired out.

Strict liability

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

Malta does not adopt a regime of strict liability for owners, lessors, financiers or others with no operational interest in the aircraft. If they prove to the satisfaction of the court that the aircraft was not flown with their actual fault or privity, then liability would attach to the person having the operational interest in the aircraft.

Third-party liability insurance

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

In accordance with article 3 of the Civil Aviation (Insurance Requirements for Air carriers and Aircraft Operators) Order (SL 499.41), aircraft, including gliders, with a maximum take-off mass of less than 500kg, and microlights that are used for non-commercial purposes, or are used for local flight instruction that does not entail the crossing of international borders, are required to have, in respect of liability for third parties, a minimum insurance cover per accident of 0.75 million special drawing rights (SDR). In respect of non-commercial operation of aircraft with a maximum take-off mass of less than 2,700kg, the minimum insurance cover must be 100,000 SDR per passenger. The insurance requirements with respect to all other aircraft are set out in Regulation EC 785/2004 on insurance requirements for air carriers and aircraft operators.