GERMANY Law and Practice Contributed by: Konrad Schott, Jan Brinkmann and Johannes Vogel, Freshfields
it. No such minimum insurance requirements exist for property insurance with respect to an aircraft (or any part thereof). 2.5.3 Placement of Insurance Outside of Jurisdiction German law does not restrict the portion of reinsur - ance coverage that can be taken out abroad. Ger - man operators usually do not take out reinsurance but rather place the primary insurance with established insurers permitted to conduct business in Germany. 2.5.4 Enforceability of “Cut-Through” Clauses Regarding cut-through clauses in insurance contracts, no known regulatory or judicial restrictions exist. How - ever, the enforceability of such clauses in German law- governed contracts remains untested in court. In par - ticular, it is uncertain whether customary cut-through clauses would be upheld and honoured following the insolvency of the insurer. 2.5.5 Assignment of Insurance/Reinsurance Assignments of insurances and reinsurances are gen - erally permitted under German law. However, payment claims under liability insurance contracts cannot be assigned by the insured party, as it is the purpose of liability insurance to cover the affected person’s dam - age and, therefore, the affected person is the creditor of the claim against the insurer. 2.6 Lease Enforcement 2.6.1 Restrictions on Lessors’ Abilities The lessor (as owner) retains legal title to the aircraft. Pursuant to the lease agreement, the lessee has the right of use and quiet enjoyment of the aircraft, pro - vided there is no default under the lease. During the lease term, the lessor’s repossession claim would be unjustified. If the lease is governed by German law, the lessor has a statutory right to terminate without a notice period for good cause ( wichtiger Grund ), such as payment delays or a material breach of contract, and otherwise a contractual right to terminate accord - ing to the terms of the lease. Pursuant to German insolvency law, the lessor may not terminate a lease after a petition for insolvency against the lessee has been filed with the insolvency court on the grounds of a payment default or a general
deterioration of the commercial situation and credit - worthiness of the lessee prior to the insolvency filing, and any such termination rights of the lessor in a lease would be unenforceable. The aircraft does not have to be located in Germany at the time of the lease termination. In general, there are no restrictions on a lessor′s ability to export an aircraft from Germany, except for exports to prohibited countries. However, for certain aircraft containing parts and specific technical components which could be used for military purposes (so-called dual-use goods), an export approval will be required pursuant to the German Foreign Trade Act ( Außen- wirtschaftsgesetz ) in connection with the German For - eign Trade Ordinance ( Außenwirtschaftsverordnung or AWV). Export requirements are tighter for export to countries outside the EU and especially restricted for certain countries listed in the AWV. The lessor will usually obtain an export certificate of airworthiness to simplify the aircraft registration in the new jurisdiction. That certificate is obtained from the LBA and requires inspection of the aircraft. Additional consents, approvals or licences may be required from the LBA, and the LBA will have to approve the ferry flight out of Germany. The termination of the lease is not a prerequisite for the sale of an aircraft. The aircraft is not required to be in Germany in case or at the time of its sale. 2.6.2 Lessor Taking Possession of the Aircraft The lessor has no right to self-help under German law should the lessee not surrender possession of the air - craft following the termination of the leasing of the aircraft. So long as the aircraft is located in Germany, non-consensual repossession must be accomplished by filing a suit in a court and the subsequent enforce - ment of the court ruling through a bailiff ( Gerichtsvoll- zieher ). No further permissions beyond an enforceable copy of the ruling of a German court are needed to repossess the aircraft in Germany, while all customary requirements will apply for operating the aircraft. Any party with a legitimate in rem or security interest in the aircraft may intervene in the repossession proceed -
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