Enforcement measuresRepossession 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?
As a general rule, self-help remedies are not available in France, and in the event of non-cooperation of the lessee, a lessor would require the assistance of the courts. It is, however, possible to obtain an ex parte court order if a prima facie case can be demonstrated that by the terms of the lease agreement, the lessor is entitled to terminate the leasing of the relevant equipment owing to defaults or following the expiry of the lease. Such an action does not entitle the owner to repossess the equipment but rather it results in the equipment being arrested and placed under the control of the court. This is the first step of the process that must be followed by an action on the merits, which does not necessarily have to take place in France. At the subsequent litigation on the merits, the lessee would have the right to present its case in respect of any arguments it might make regarding the owner’s exercise of 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?
As with the termination of a lease, self-help remedies in respect of a security interest are not available. Similar to the procedure above, a court order authorising the arrest will be required, and the aircraft or other equipment, when arrested, would remain under the jurisdiction of the court.
As a prerequisite to enforcing a security interest such as a mortgage, it is necessary to make a formal demand for payment on the counterparty, which can only be made on the basis of an enforceable order to pay a sum of money, which means, in practice, a final judgment from a French court or a foreign judgment that has been made enforceable in France. Once the demand is made and sufficient time for payment has elapsed, the equipment can be arrested by a bailiff and the equipment would be subject to a judicial sale. The sale proceeds would then be applied to the debt of the counterparty to the lender in preference and priority, subject to any liens and mortgages having preference.
As there would be the need to obtain a court order, the debt counterparty would be entitled to raise any defences it might have in respect of the mortgagee’s right to enforce the security interest.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 certain statutory liens that can be attached to an aircraft with respect to compensation due:
- for court costs incurred in the forced sale of an aircraft;
- for the salvage of an aircraft; and
- for expenses necessary for preservation of the aircraft, which would have priority over other security interest and the rights to proceeds following the enforcement of a mortgage.
In addition, in certain situations, airport authorities and companies who have repaired the aircraft have the right to cause the aircraft to be detained if certain charges or costs of repairs are not paid. The possessory right of retention applicable to the provider of services is a powerful right that would be enforceable against the owner or lessor if the lessee has relinquished possession of the aircraft to the service provider, but such right does not give rise to sell the aircraft and ceases to exist once the aircraft or equipment is no longer in the possession of the service provider. Furthermore, there are a number of services for which airport authorities are entitled to charge including landing charges, aerial navigation service charges, parking fees, passenger and baggage installation charges, etc, which would give rise to retention rights in respect of an aircraft.
Although Paris Aéroport (formerly known as Aéroports de Paris (ADP)), the publicly owned company that runs Paris’ three main airports, regularly exercises its retention rights for unpaid airport charges, it should be noted that only charges with respect to a particular aircraft will give rise to the right of detention of that aircraft (ie, there is no right to detain one aircraft for charges with respect to another aircraft operated by the same airline). Furthermore, a decision rendered on 2 July 2003 by the State Council, France’s highest administrative court, and indirectly confirmed in a similar case before the Disputes Tribunal decided on 19 January 2004, held that after the termination of a lease of an aircraft, ADP cannot exercise its detention right against the owner of the aircraft for unpaid airport charges incurred by the operator.
There are provisions under French law relating to the requisition of title and requisition for use as codified in the French Code of Defence. Although the owner or lessee would be entitled to requisition indemnities, there is no set statutory amount, and the sufficiency of any such indemnities could be contested before the French civil courts.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 rules applicable will depend on whether the judgment is obtained in a court of the State of New York or any other US state, or in an English court.
A final and conclusive judgment rendered by an English court, for a debt or a definite sum of money, which is not capable of appeal and in respect of which enforcement has not been stayed, would be enforced by the courts of France without re-examination or re-litigation of the matters adjudicated subject to and in accordance with Council Regulation (EC) No. 1215/2012 of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. Please note that the situation is likely to change depending on the outcome of Brexit negotiations.
Subject to the rules governing international lis pendens under French private international law, a final judgment for a fixed and definite sum of money obtained after service of process in the required form and rendered by a court of the State of New York or any other US state, in respect of an action under a document (a US judgment), would be capable of recognition and enforcement in France, without a review of the substantive matters thereby adjudicated, through an action for exequatur brought before the competent French court, provided that the French court is furnished with the original and a translation into French (by a sworn translator) of the relevant document and the US judgment and determines that the requirements developed by jurisprudence for the enforcement of foreign judgments are satisfied, in particular that:
- the court that rendered the US judgment had jurisdiction over the matter under both its own rules of jurisdiction and French private international law;
- the court that rendered the US judgment applied either the law that is applicable in accordance with French private international law or a law that leads to an equivalent result;
- the procedure followed by the court that rendered the US judgment does not conflict with the principles of due process applied in France or with French international public policy; and
- the US judgment does not conflict with French international public policy, is not tainted with fraud and is not incompatible with an earlier judgment rendered by a French court in the same matter.
France is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Award (1958).