EGYPT Law and Practice Contributed by: Sherif El Hosseny, Malak El Amiry and Farida Degheidy, Matouk Bassiouny & Hennawy
If the security trustee or agent changes, such change shall be reflected and filed, if such security was filed. 3.2.12 “Parallel Debt” Structures A parallel debt concept has not been tested. Accord - ingly, it is not possible to say how an Egyptian court or tax authorities would respond to it. 3.2.13 Effect of Security Assignments on Residence of Secured Parties A secured party under a security assignment will not be deemed to be resident, domiciled, or carrying on business as result of enforcing such assignment. 3.2.14 Perfection of Domestic Law Mortgages A domestic law mortgage over an aircraft is perfected through filing it with the ECAA. Enforcement thereon shall follow Egyptian law. To perfect a mortgage over an engine under Egyptian law, the engine must be either in the possession of a trustee or a creditor. Since the possession by the creditor cannot be perceived and is impractical, the engine mortgage agreement would include a trustee, having the trustee as a party thereto. Usually, the trus - tee is an affiliate to the lessee to simplify the posses - sion process. 3.2.15 Differences Between Security Over Aircraft and Spare Engines There are various differences between the perfec - tion process taken over an aircraft when compared to engines. To date, the regime governing security over engines is not under the auspices of the ECAA (unlike aircraft) and so security over engines is treated differently – eg, a mortgage over an engine requires the appointment of a trustee or the engine being kept with the creditor. The charges to perfect a mortgage over an engine are minimal. For an aircraft mortgage to be filed with the ECAA involves a charge of EGP135,000. 3.2.16 Form and Perfection of Security Over Bank Accounts Security over bank accounts is recognisable.
For perfection, the bank account pledge over an account held locally is filed with the Egyptian Col - lateral Registry. 3.3 Liens 3.3.1 Third-Party Liens A third party can register a lien over an aircraft or engine. Nevertheless, this must be done through a court order. In practice, such third party detains the aircraft or engine without a court order as leverage for payment or settlement of the outstanding dues. A lien should cover only the work done on the asset in question. A fleet lien may not be exercised. 3.3.2 Timeframe to Discharge a Lien or Mortgage There is no mandatory timeframe to discharge a lien or mortgage. Nevertheless, an Egyptian registered air - craft mortgage needs to be renewed every ten years. 3.3.3 Register of Mortgages and Charges There is no specific mortgage register. Mortgages are reflected in what is called the “Aircraft Register” and the mortgage is filed in what is called the ”Documents Register”. Registration of a mortgage gives a priority and will ensure continuous perfection. A registered mortgage affords the mortgagee preference over all subsequent registered secured debts, regardless of the dates on which such debts were created, as well as all unse - cured debts. 3.3.4 Statutory Rights of Detention or Non- Consensual Preferential Liens Statutory rights of detention or non-consensual pref - erential liens arise over an aircraft but not on a fleet- wide basis. 3.3.5 Verification of an Aircraft’s Freedom From Encumbrances A potential purchaser of an aircraft will not be able to verify that an aircraft is free of encumbrances as the Aircraft Register is not publicly accessible. The only method of verification is through an application by the owner, lessor, lessee or mortgagee.
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