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?
Lease agreements entered into between a lessor and a lessee usually contain provisions relating to repossession of the aircraft following termination of the lease. Nonetheless, depending on the physical location of the aircraft and possible practical difficulties, obtaining a court order may be necessary in order for the lessor to bring back the aircraft in its possession. The lessor can file a claim for repossession with the competent court in summary proceedings or substantive proceedings. In summary proceedings, the urgency of the claims filed by the claimant is to be demonstrated to the court, but in claims regarding the repossession of aircraft this is generally fairly easy.
Often, prior to filing a repossession claim, the claimant requests the court’s approval for a precautionary arrest of the aircraft in accordance with the provisions of the Rome Convention (1933), which have been incorporated in Dutch law. The precautionary arrest must be recorded with the public register. It should be noted that certain aircraft cannot be made subject to a precautionary arrest (eg, aircraft that are actually used for scheduled public air transport services). Once the aircraft has been arrested, court proceedings will have to be initiated by the claimant within the time frame set by the court.
As soon as a judgment entitling the claimant to repossess the aircraft has been obtained from the court, an order to comply with the judgment within 24 hours is served on the defendant by the bailiff. If the judgment is not so complied with within 24 hours, an executory attachment is levied by the bailiff. The bailiff then takes possession of the aircraft and returns it to the claimant. With the court’s approval, the executory attachment can be levied without first serving on the defendant the order to comply with the judgment. If the aircraft is not registered with the public register held by the Land Registry and the court’s judgment has been declared provisionally enforceable, no 24-hour waiting period needs to be taken into account and the executory attachment can be levied immediately following service of the judgment and the order to comply with it.
A precautionary arrest is converted into an attachment in execution as soon as the judgment entitling the claimant to repossess the aircraft has been served on the defendant.Enforcement of security
Outline the basic measures to enforce a security interest. How may the owner lawfully impede the mortgagee’s right to enforce?
Enforcement of a mortgage requires the mortgagee to levy an executory attachment on the aircraft (see question 22), followed by a request to the court to set a date for the sale of the aircraft.
A right of pledge on an aircraft entitles the pledgee to summary execution and to sell the aircraft in a public sale pursuant to local customs and applicable standard terms and conditions. The pledgee and the pledgor may agree to another form of sale (such as a private sale), provided such agreement is reached after the pledgee has become entitled to summary execution (so that it cannot be agreed upon in advance in the deed of pledge). The president of the competent court can, at the pledgor’s or pledgee’s request, order that the aircraft be sold in a different manner than a public sale or, at the pledgee’s request, order that the aircraft remains with the pledgee for a price to be set by the president.
In case of bankruptcy or a suspension of payments of the mortgagor or pledgor, the mortgagee or pledgee may enforce its security right as if there was no insolvency. However, the court may order a freezing period of up to four months during which the mortgagee or pledgee may not, without the court’s consent, demand surrender of the aircraft if it is under the control of the mortgagor or pledgor or seek recourse against the aircraft. This effectively means that during such a period, repossession of the aircraft would not be possible without the court’s consent.
In addition, a trustee in bankruptcy may require the mortgagee or pledgee to enforce its security right within a reasonable period and, if the mortgagee or pledgee fails to do so, demand the surrender of, and sell, the aircraft, without prejudice to the mortgagee’s or pledgee’s right to the sale proceeds, subject to a pro rata contribution to the bankruptcy costs.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 the Netherlands, there are no specific rights to detain aircraft in respect of unpaid airport or air navigation charges. In general, the provisions of the Dutch Code of Civil Procedure on seizure of aircraft apply in respect of unpaid charges or other debts. Under Dutch law, an asset can be detained by a creditor holding the said asset (eg, a repairman) until the related amount owed to it is paid in full. In principle, this right of detention also exists in respect of aircraft, with the understanding that with respect to aircraft registered with the public register the Dutch Civil Code provides that a right of detention shall not entail a right of priority over such aircraft in relation to sale proceeds in case of execution, so that it merely serves as a pressure tool.
Claims in respect of salvage costs and extraordinary preservation costs have priority over all recorded liens and rights other than costs of the sale by execution.
The Aviation Act provides that if extraordinary circumstances so require, section 58 of the Aviation Act relating to requisition of aircraft can be made effective by Royal Decree following a proposal to that effect by the Dutch Prime Minister of the Netherlands. Pursuant to section 58 the Minister of Infrastructure and Water Management can requisition aircraft with the purpose to transport certain persons or objects. Such requisition will give rise to compensation, which in principle will be set at the amount of the lease rentals during the requisition period. In addition, any extraordinary loss of value as a result of the requisitioning will be compensated.Enforcement of foreign judgments and arbitral awards
How are judgments of foreign courts enforced? Is your jurisdiction party to the 1958 New York Convention?
This depends on whether or not an enforcement treaty between the Netherlands and the country involved applies. If not, the foreign court judgment cannot be enforced in the Netherlands. In such case, in order to obtain a judgment that can be enforced in the Netherlands, in principle the dispute will have to be relitigated before the competent Dutch court.
As to English and New York court judgments, the following applies.
A final and enforceable judgment of the English courts will be recognised and enforced in the Netherlands, without relitigation of the dispute in question. The recognition and the enforcement of judgments of the English courts in the Netherlands are subject to the provisions of Regulation (EU)No. 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters and the Dutch Code of Civil Procedure. More specifically, the Dutch courts will deny the recognition and the enforcement of such a judgment if:
- no proper service of process has been given, where it concerns a default judgment;
- the recognition and enforcement of that judgment is manifestly contrary to public policy in the Netherlands;
- that judgment is irreconcilable with a judgment of a Dutch court rendered in a dispute between the same parties; or
- that judgment is irreconcilable with an earlier judgment rendered in another EU member state or in a third state involving the same cause of action and between the same parties, provided that the earlier judgment fulfils the conditions necessary for its recognition by the Dutch courts.
If as a result of Brexit this EU Regulation would no longer apply, and no other treaty or arrangement is entered into, the Convention on the Enforcement of Judgments between the Netherlands and the United Kingdom dated 17 November 1967 would, in principle, revive. Said Convention provides for an enforcement procedure by means of an enforcement order (or exequatur) to be obtained from the Dutch courts.
As to New York court judgments, there is no enforcement treaty between the Netherlands and the United States. Consequently, a judgment of the New York courts cannot be enforced in the Netherlands. To obtain a judgment that can be enforced in the Netherlands, the dispute will have to be relitigated before the competent Dutch court. This court will have discretion to attach such weight to the judgment of New York courts as it deems appropriate. In principle, the court can be expected to give conclusive effect to a final and enforceable judgment of such court without re-examination or relitigation of the substantive matters adjudicated upon provided (i) proper service of process has been given, (ii) the proceedings before such court have complied with principles of proper procedure, (iii) the judgment is not contrary to the public policy of the Netherlands and (iv) the judgment is not irreconcilable with an earlier judgment between the parties in respect of the same dispute (if that earlier judgment is capable of being recognised in the Netherlands).
The Netherlands is a party to the New York Convention (1958).