CHAD Law and Practice Contributed by: Claudy Monja and Felana Ranaivoson, John W Ffooks & Co
between the lender and the borrower. In light of the above, usury is unlikely to occur, but any interested party can always contest the effective global rate that has been agreed if it can provide evidence that the rate is actually usurious. 3.2 Security 3.2.1 Typical Forms of Security and Recourse The typical forms of security and recourse that would be granted in an aviation finance transaction domesti - cally are mortgages. 3.2.2 Types of Security Not Available The authors understand that only the securities pro - vided in the Chadian Civil Aviation Code can be taken over an aircraft or related collateral such as engines. 3.2.3 Trust/Trustee Concepts The concept of a trust is not expressly set forth in any legal provision in Chad. However, the Chadian Civil Code gives free rein to the parties to establish the terms and conditions of their contract. This includes the right to appoint an entity or an individual to rep - resent and act on behalf of several parties driven by the same interest. 3.2.4 Assignment of Rights to an Aircraft by a Borrower to a Security Trustee The borrower can assign its rights to an aircraft or under an aircraft lease to a security trustee pursuant to a security assignment or a mortgage. 3.2.5 Assignment of Rights and Benefits Without Attendant Obligations The assignment of rights and benefits under a con - tract (eg, an aircraft lease), without also assigning the attendant obligations of the lessor, is possible. 3.2.6 Choice of Foreign Law As the parties are free to choose the law govern - ing their contract, it is permitted and enforceable for security assignments or guarantees to be governed by English or New York law. 3.2.7 Formalities/Mandatory Terms to Create and Perfect Security Assignments The security assignment must be executed by the les - sor (as assignor) and the security trustee (as assignee).
A separate notice and acknowledgement of the assignment will need to be executed by the assignor, the assignee and the assigned party (ie, the lessee). In addition, the Chadian Civil Aviation Code provides that any security (including a security assignment) must be notified to the ADAC for registration on the Aircraft Register. 3.2.8 Domestic Law Security Instruments If an English or New York law-governed security assignment were to be taken in respect of an aircraft registered in Chad, no specific domestic security instrument would need to be taken in addition by a financier. It is recommended, however, that the foreign law- governed security assignment be registered with the ADAC. It is possible for an English or New York law-governed security assignment or domestic law security instru - ment to be registered with the ADAC. This would result in the payment of a fee amounting to XAF50,000 (approximately USD89). 3.2.10 Transfer of Security Interests Over Aircraft/ Engines The transfer of security interests over an aircraft can be recognised. 3.2.11 Effect of Changes in the Identity of Secured Parties If the identity of the secured parties under a secu - rity assignment were changed after its execution, the authors are of the view that the security interests would not be jeopardised. 3.2.12 “Parallel Debt” Structures There is no specific provision on parallel debt struc - tures under Chadian law. 3.2.13 Effect of Security Assignments on Residence of Secured Parties A secured party under a security assignment would not be deemed to be resident or domiciled in Chad 3.2.9 Domestic Registration of Security Assignments Governed by Foreign Laws
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