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 owner would be required to pursue its claim through judicial procedures to repossess the aircraft, as self-help is not permitted under Swedish law. The judicial procedures available to the owner would be court proceedings or summary proceedings with the Swedish Enforcement Authority including enforcement assistance with repossession. The latter would generally entail submitting an application form, the lease agreement and any notices of termination as well as payment of a nominal application fee. Once the Swedish Enforcement Authority grants the application, the lessor will be informed of the date of repossession. The owner would be precluded from repossessing or foreclosing the aircraft in an insolvency situation and the repossession would have to be granted by the receiver in bankruptcy.

There are no sole legal steps to ensure successful repossession.

In relation to lease agreements falling within the scope of the Cape Town Convention and its Protocol on Matters Specific to Aircraft Equipment (2001), Sweden has, in relation to article 54.2 of the Cape Town Convention, declared that remedies available to a creditor (under, for example, articles 8 to 10 of the Cape Town Convention) may be taken without having to obtain approval from a court. Sweden’s declaration to this article entails that all remedies available to the creditor under the Cape Town Convention may be carried out without application to a court, unless otherwise specified under the relevant provision of the Cape Town Convention. 

Enforcement of security

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

Judicial procedures must be undertaken to enforce a security interest in the aircraft, as self-help is not permitted under Swedish law. If the mortgagee takes possession of the aircraft without the owner’s consent, the mortgagee is likely to commit a criminal offence under Swedish law and may also be liable for damages. The judicial procedures available would be court proceedings or summary proceedings with the Swedish Enforcement Authority. Summary proceedings entail submitting a written application to the Swedish Enforcement Authority stating the amount claimed and containing a request that the claim is to be satisfied by execution of the mortgaged aircraft. The mortgagor will be requested to respond to the claim in writing and, if the mortgagor fails to do so, the Swedish Enforcement Authority will issue an order that payment should be paid out of the mortgaged aircraft. However, if the mortgagor challenges the application and raises any defence to the claim, the application will, upon the mortgagee’s request, be forwarded for ordinary court proceedings. Ordinary court proceedings would entail that the mortgagee files a summons application (if the matter is not upon the mortgagee’s request forwarded from the Swedish Enforcement Authority). The court then issues a writ of summons, which is followed by service of the writ of summons, written submissions, one or more preparatory hearings and a main hearing. Should the mortgagor (or its representatives) not appear, the court may render judgment in default.

There exists a right to detain the aircraft by way of court application provided that:

  • the mortgagee has a legitimate claim on the mortgagor, being the owner of the aircraft;
  • there is a risk that the aircraft will be removed from Sweden or otherwise disposed of in a way that impedes the mortgagee’s possibilities to recover the claim; and
  • the mortgagee can provide security for damage that might be caused to the mortgagor (this may be disregarded in certain circumstances).

 

The mortgagor has a right to submit a response to the application, but an ex parte application is possible if the detention is urgent. However, pursuant to the Aircraft Exemption from Provisional Attachment Act (1939), special provisions may apply to, inter alia, aircraft assigned for government service and aircraft for transportation when ready for departure.

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?

There are some preferred creditors, which include secured creditors. Claims would generally rank as follows:

  • fees to the receiver of bankruptcy proceedings;
  • claims related to agreements entered into by the receiver (on behalf of the bankruptcy estate) during bankruptcy proceedings;
  • claims secured by a salvage lien (ie, compensation due as a result of salvage of the aircraft, parts thereof, or goods or people on board);
  • mortgagee’s (secured) claims, where claims secured by registration on the International Register will have priority over nationally registered rights unless registration on the Swedish Rights Register has been made prior to the Cape Town Convention’s entry into force;
  • claims secured by a repairman’s lien or other rights of retention;
  • taxes;
  • corporate mortgages;
  • salary claims; and
  • pension claims.

 

Enforcement of foreign judgments and arbitral awards

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

Sweden is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958), and will recognise and enforce such arbitral awards provided that the necessary conditions to do so are prevalent.

With respect to foreign court judgments, Sweden is a party to the Brussels Regulation (2012), the Hague Convention (2005) and the Lugano Convention (2007). Consequently, a court judgment in any contracting state to these international instruments would generally at the date thereof be recognised and enforceable in Sweden upon the satisfaction of the formal requirements of the respective convention or regulation without any declaration of enforceability being required. A New York court judgment would, in principle, not be recognised or enforceable in Sweden as a matter of right without a retrial on its merits (but will be of persuasive authority as a matter of evidence before the courts of law, administrative tribunals or executive, or other public authorities of Sweden).

As a general matter, judgments and arbitral awards as described above would not be recognised and enforced in Sweden if they are deemed to contravene Swedish public policy.