ARMENIA Law and Practice Contributed by: Narine Beglaryan, Arianna Adamyan and Anahit Aloyan, Concern Dialog
2.1.3 Restrictions Concerning Payments in US Dollars According to the Armenian law on Currency regulation and currency control, the quotation of contract price and its payment may be in foreign currency only when: • the payment is made via wire transfer; and • the parties to the contracts are Armenian resident legal entities or private entrepreneurs, on one side, and the non-resident legal entities or private entre - preneurs, on the other side. 2.1.4 Exchange Controls Under Armenian law, there are no exchange control restrictions that would prevent a domestic lessee from making rent payments under a lease to a foreign les - sor or that would prevent the repatriation of realisation proceeds if a foreign lessor enforces such a lease. 2.1.5 Taxes/Duties Payable for Physical Execution of a Lease The execution of a lease agreement within the Repub - lic of Armenia, as well as the presence of the original or a copy of such an agreement in Armenia, whether in physical or electronic form, does not automatical - ly create any tax or duty obligations for the parties involved. State duty obligations may only arise if the parties choose not to notarise the lease agreement. However, it’s important to note that notarisation is not a manda - tory requirement under Armenian law for aircraft lease agreements. It should also be noted that the operator’s information must be registered in the Armenian aircraft registry. Consequently, any change relating to the operator, including based on the execution of a lease agree - ment, must be reflected in the official registry docu - ments, such as the aircraft registration certificate, the issuance of which requires the payment of a state duty. 2.1.6 Licensing/Qualification of Lessors As a matter of general rule, no special license or per - mission is required to be or become the owner of an aircraft, as well as to lease (rent) that aircraft.
Meanwhile, according to the Armenian Civil Code, leasing operations themselves may only be carried out by banks or specialised entities that have obtained the relevant permission (licence) from the Central Bank to conduct financial operations, such as leasing opera - tions. This means that the lessor, under the special type of financial tool specified in the Civil Code of Armenia as a leasing contract, needs to have a special license to finance the lease. 2.2 Lease Terms 2.2.1 Mandatory Terms for Leases Governed by English or New York Law If a contract is governed by foreign law and permitted under Armenian law, no mandatory terms are required in a lease under the latter. However, compliance with Armenian public order must be considered for any terms of contract or judgments to be enforced in Armenia. This is because both the recognition and enforcement of foreign court orders and foreign arbi - tration awards may be rejected if the underlying claim is based on a rule or principle that contradicts Arme - nia’s public order. 2.2.2 Tax and Withholding Gross-Up Provisions Under Armenian law, tax and other withholding gross- up provisions are permissible and enforceable. 2.2.3 Parts Installed or Replaced After a Lease’s Execution Under Armenian law, while leased property is gener - ally deemed to include its accessories unless other - wise agreed, parts installed or replaced on an aircraft or engine after the execution of the lease agreement may not automatically fall within the scope of the lease. Therefore, to ensure such parts are captured under the lease, it is advisable to include an express provision in the lease agreement or to execute a sub - sequent written agreement that extends the lease to cover such components. Improvements or modifications made during the lease term are subject to Article 626 of the Armenian Civil Code, which distinguishes between separable and inseparable improvements. Separable improve - ments typically belong to the lessee unless otherwise agreed. Inseparable improvements made with the lessor’s consent entitle the lessee to compensation
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