EGYPT Law and Practice Contributed by: Sherif El Hosseny, Malak El Amiry and Farida Degheidy, Matouk Bassiouny & Hennawy
2.3 Lease Registration 2.3.1 Notation of Owner’s/Lessor’s Interests on Aircraft Register The interests of the owner or a lessor of an aircraft are noted in the Aircraft Register held by the ECAA. All documents related to aircraft are registered with the ECAA. It is necessary and desirable to ensure the priority, validity and enforceability of the obligations of the Egyptian lessee under a relevant document – such as a lease, a conventional deregistration power of attor - ney (DPOA), a security assignment and an irrevoca - ble de-registration and export request authorisation (IDERA) – for that document to be notarised, filed, registered and recorded with the ECAA. 2.3.2 Registration If the Owner Is Different From the Operator The certificate of registration of an aircraft specifies the name of the aircraft owner as an owner and the Egyptian lessee/operator as the holder/possessor of the aircraft. 2.3.3 Aircraft/Engine-Specific Registers There is a specific register for leases concerning air - craft only, please see section 2.3.4 Registration of Leases With the Domestic Aircraft Registry . There is no engine register. To date, any transactions related to engines or spare parts, which are treated separately from an aircraft, have not been filed with the ECAA due to legislative restrictions. It is envisaged that the relevant Egyptian laws may be amended to accommodate transactions, such as sale, lease or mortgages over engines to be filed with the ECAA. 2.3.4 Registration of Leases With the Domestic Aircraft Registry Aircraft lease agreements must be registered with the ECAA. The ECAA reviews the leases in question before filing to provide its verbal sign-off. Also, the respective aircraft is inspected by the ECAA for compliance with applicable Egyptian laws and regulations. Moreover, the filing process involves the physical presence of the relevant ECAA officers to validate the lease filing pro -
There are also certain mandatory provisions that are not commonly seen in English or New York law leases, such as that the subleasing provisions must include the name of the sublessee and the duration of such sublease. 2.2.2 Tax and Withholding Gross-Up Provisions Tax and other withholding gross-up provisions are permissible and enforceable. Grossed-up payments may be considered, however, as taxable income by the Egyptian Tax Authority. 2.2.3 Parts Installed or Replaced After a Lease’s Execution A lease can cover parts that are installed or replaced on an aircraft or engine after its execution. For an aircraft lease that is filed with the ECAA, any significant changes must be reflected in an adden - dum/amendment/annex that is to be filed with the ECAA for perfection purposes. For an engine, please see 2.1.1 Non-Permissible Leases . 2.2.4 Risk of Title Annexation There is a risk of title annexation of aircraft engines installed on an airframe since the Egyptian Register is aircraft based. To mitigate such risk, an agreement could be entered into between the relevant parties recognising the right, title, and interest of the owner/lessor of an engine. Accordingly, such agreement may grant some protec - tion by confirming that the engine is not part of the aircraft. Such an agreement could also include a bill of sale evidencing engine title both of which shall be notarised and legalised as original/certified true cop - ies of same up to the level of the Egyptian Embassy/ Consulate at the country of issuance. 2.2.5 Recognition of the Concepts of Trust/Trustee The concept of trust is not recognised in Egypt. Accordingly, an owner trustee is treated as prima facie owner pursuant to the bill of sale.
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