FRANCE Law and Practice Contributed by: Yves Hénaff d’Estrées, HENAFF D’ESTREES
3.2.14 Perfection of Domestic Law Mortgages A domestic law mortgage over an aircraft is perfected by its registration with the aircraft register. 3.2.15 Differences Between Security Over Aircraft and Spare Engines Pledges over spare engines may be taken and regis - tered with the national register of securities on mova - bles ( Registre national des sûretés mobilières ) and are perfected once registered. 3.2.16 Form and Perfection of Security Over Bank Accounts A pledge is typically used to take security over a bank account (such as a lease receivables account) and is simply perfected by notifying the bank holding the debtor’s account about the pledge. 3.3 Liens 3.3.1 Third-Party Liens Third-party liens for debts such as unpaid airport fees, navigation charges and repairers’ costs are not reg - istrable. Repairers’ Costs In the case of repairers’ costs and similar liens, a statutory right of retention permits the repairer to retain physical possession of an aircraft or an aircraft engine as long as the contractual debt to the repairer is not paid in full. The right to retention may not be used to cover the value of work done on other assets which are no longer in the physical possession of the repairer. No court order is necessary for the right to retention. Airport Fees Where airport charges are due, the airport authority may ask the court to be authorised to attach any of the aircraft operated or owned by the debtor. Navigation Charges In the case of default of payment of route charges, the civil aviation ministry may ask the court to be author - ised to attach any of the aircraft operated or owned by the debtor. The civil aviation ministry may also ground the entire fleet operated by the debtor until full pay - ment has been made. This administrative decision can be taken without a court order.
The transfer of a registered aircraft mortgage is per - fected when the mortgagor is notified and the new mortgage document is filed with the French aircraft bureau. 3.2.8 Domestic Law Security Instruments If an English or New York law-governed security assignment is taken in respect of an aircraft registered domestically, it may be advisable for the financier to take out and register a mortgage on the aircraft in addition to this. An English or New York law-governed security assign - ment may not be registered in France on the aircraft register. 3.2.10 Transfer of Security Interests Over Aircraft/ Engines 3.2.9 Domestic Registration of Security Assignments Governed by Foreign Laws The transfer of security interests over an aircraft and/ or engines is generally recognised under French law. 3.2.11 Effect of Changes in the Identity of Secured Parties If the identity of the secured parties under a security assignment changes after its execution, the secu - rity interests may be jeopardised when the required statutory notices, filings and registrations are not duly made. 3.2.12 “Parallel Debt” Structures The jurisprudence of the Supreme Court permits parallel debt structures to be used in France so that the security trustee has an independent right to the secured debt. 3.2.13 Effect of Security Assignments on Residence of Secured Parties A secured party under a security assignment will gen - erally not be deemed to be resident, domiciled or car - rying on business in France. In certain cases, it may however be subject to French taxes as a result of its being a party to, or its enforcement of, such secu - rity assignment, for example, when the secured party becomes the legal owner of the aircraft.
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