In brief: insurance considerations for aircraft financing and leasing in France

Insurance and reinsurance

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

There are no captive insurance regimes applicable to aviation in France, and there is no minimum or maximum percentage of insurance that must be retained in France. Generally, insurances for French airlines are placed on the international aviation insurance markets.

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

Yes, generally, cut-through clauses under insurance and reinsurance documentation are legally effective in France.

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

Any assignment of rights against a French debtor must be perfected by notification of the assignment to the French debtor by a French bailiff or process server in accordance with French procedural rules. Assignments of insurance and reinsurance, if any, are often used in aviation leasing and finance transactions in France.

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

French law will not impose responsibilities with respect to the operation, maintenance or insurance on a lessor or financier. Such responsibilities stay with the operator. However, there is a presumption of liability on both the owner and the operator of an aircraft, provided that where the lease has been registered with the French Aircraft Register (the Register) the presumption of liability is shifted to the operator, and the owner could only be held liable where the claimant can prove fault on the part of the owner.

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

The concepts of strict liability and vicarious liability do exist under the laws of France. Pursuant to article L6131-4 of the Transport Code, where an aircraft is leased, the owner and operator are jointly liable as regards third parties. However, if the lease is registered with the Register, the owner will only be responsible if the third party can prove fault on the part of the owner. Hence, registration of the lease shifts the presumption of liability to the operator. There would be no presumption of liability in respect of financiers and others with no operational interest in the aircraft, and they would not be liable under the regime of strict liability.

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

The European Parliament has put in place certain minimum insurance requirements for air carriers and aircraft operators. Regulation (EC) No. 785/2004 of the European Parliament and of the Council of 21 April 2004 sets forth the relevant minimum passenger, baggage, cargo and third-party liability requirements for air carriers and aircraft operators flying within, into, out of, or over the territory of a member state of the European Union. There are no further or more stringent minimum insurance requirements in place in France.