GERMANY Law and Practice Contributed by: Konrad Schott, Jan Brinkmann and Johannes Vogel, Freshfields
of choice of applicable law under contracts between commercial parties, including lease assignments and novations. In respect of security, the law governing the collateral (eg, a claim or tangible item) will typically determine the law applicable to any security interest over such asset. The submission to the jurisdiction of a foreign court or arbitration tribunal is generally permissible between commercial parties. As regards in rem rights over aircraft (such as legal title or a mortgage), German conflict of law rules do not allow for a choice of law and German law would generally apply to in rem rights over an aircraft reg - istered in Germany. Therefore, the transfer of title to an aircraft registered in Germany to the new owner is governed by German law regardless of the chosen law in the documents. 2.7.3 Enforceability of Lease Assignments/ Novations It is not necessary for an aircraft or engine lease assignment or novation agreement to be translat - ed, certified, notarised or apostilled/legalised to be enforceable against a domestic party. The operator will have to submit a copy of the lease assignment or novation agreement to the LBA, but this is not a condition to its effectiveness. As a matter of practice, the LBA accepts the submission of leases in German or English. If the lease is not in German or English, the LBA may require that the lease or excerpts thereof be translated, and such translations certified by a regis - tered translator. Upon request of the competent Ger - man court, foreign language documents have to be translated into German to be admissible in evidence in legal proceedings. 2.7.4 Filing/Registration of Lease Assignments/ Novations An aircraft or engine lease assignment and assump - tion/novation does not require registration in the Ger - man aircraft register. The operator must submit a copy of the lease assignment or novation agreement to the LBA, but this is not a condition to its effectiveness. 2.7.5 Taxes/Duties Payable on Assignment/ Novation Depending on the specific circumstances, an assign - ment and assumption/novation agreement may result
in income taxation if the lessor is tax resident in Ger - many or subject to limited income tax (subject to dou - ble taxation treaties). VAT is triggered if the assignment constitutes a VAT - able supply or service and if no exemption applies. Usually, subject to the specific circumstances at hand, a customary novation of an aircraft or engine lease upon the sale and transfer of the relevant aircraft or engine can be structured to the effect that the nova - tion itself does not trigger any German transfer or income tax. 2.7.6 Recognition of Transfer of Ownership Interests In Germany, the transfer of a legal entity does not require or involve a transfer of the legal title to the assets held by such legal entity. 2.8 Aircraft Deregistration and Export 2.8.1 Deregistering Aircraft in This Jurisdiction The German aircraft register is an owner register. The owner is entitled to apply for the deregistration of the aircraft. A form must be completed, signed and sub - mitted to the LBA, which maintains the aircraft regis - ter, together with certain ancillary documents. 2.8.2 Lessee’s/Operator’s Consent The aircraft owner’s application for the deregistration of the aircraft does not require the lessee’s consent. It is untested, however, if a lessee could take preven - tive action to hinder deregistration in the case that that deregistration would constitute a breach of the owner’s obligations (eg, the quiet enjoyment under - taking in favour of the lessee under a lease). A lessee, operator or mortgagee on its own is not entitled to deregister the aircraft. 2.8.3 Required Documentation For the deregistration, the owner or the owner’s legal counsel (if acting under a power of attorney) will have to submit the completed deregistration application form, the original certificate of registration ( Eintra- gungsschein ), the certificate of airworthiness and the noise certificate ( Lärmzeugnis ). The Eintragungsschein is to be kept on board the aircraft. Therefore, taking possession of the aircraft or at least of the certificate
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