GERMANY Law and Practice Contributed by: Konrad Schott, Jan Brinkmann and Johannes Vogel, Freshfields
As Germany has not ratified the Cape Town Conven - tion or the related Protocol on Matters Specific to Aircraft Equipment, no international interests can be validly created over aircraft registered in the German aircraft register. 3.2.3 Trust/Trustee Concepts The concept of a security trustee ( Sicherheiten- treuhänder ) is generally recognised and frequently employed in Germany. With respect to accessory security instruments such as mortgages and pledg - es, it is customarily combined with a parallel debt arrangement in favour of the security trustee (eg, on the basis of an abstract acknowledgement of debt). 3.2.4 Assignment of Rights to an Aircraft by a Borrower to a Security Trustee A borrower can assign to a security trustee its rights under a lease agreement pursuant to a security assignment, and it may mortgage the aircraft to the benefit of the security trustee. A security transfer of title ( Sicherungsübereignung ) in an aircraft would require additional legal consideration. 3.2.5 Assignment of Rights and Benefits Without Attendant Obligations It would be usual for a borrower/lessor to assign to the security trustee the rights and benefits only – ie, without also transferring the related obligations of the lessor under an aircraft lease. Step-in arrangements, which are sometimes used in connection with other asset classes, are not customary in aviation finance in Germany. 3.2.6 Choice of Foreign Law A security assignment or guarantee can generally be governed by English or New York law. However, according to Article 14 paragraph 1 of the Rome I Regulation, the law governing the assigned claims will determine its assignability, the relationship between the assignee, the conditions under which the assign - ment can be invoked against the debtor and whether the debtor’s obligations have been discharged. Fur - ther, upon their enforcement, a German court may give effect to German public policy and overriding mandatory provisions of either German law or the laws of any other country pursuant to the Rome I Regula - tion. Finally, it must give effect to foreign exchange
regulations pursuant to Article VIII 2 (b) of the Articles of Agreement of the International Monetary Fund. It is generally recommendable that a security assignment be governed by the law governing the right that is assigned. 3.2.7 Formalities/Mandatory Terms to Create and Perfect Security Assignments In connection with any German law security assign - ment, a notification of the third-party debtor is neces - sary to prevent the third-party debtor from discharging its obligations by making payments to the assignor instead of the assignee. It is not necessary for a secu - rity assignment to be translated, certified, notarised or apostilled/legalised to be enforceable against a domestic party. However, if legal proceedings are instigated before a German court, upon request of the court, foreign language documents have to be translated into German to be admissible in evidence in such proceedings. 3.2.8 Domestic Law Security Instruments An aircraft registered in the German aircraft register should be encumbered with a German aircraft mort - gage; other security over the aircraft would generally not be enforced by German courts. Such mortgage needs to be notarised and registered with the German aircraft mortgage register ( Register für Pfandrechte an Luftfahrzeugen ), which is different from the German aircraft register. The costs for the notarisation and fil - ing depend on the amount of the secured obligations. As Germany has not ratified the Cape Town Conven - tion, no international interest can be registered against the aircraft on the basis of an aircraft mortgage. 3.2.9 Domestic Registration of Security Assignments Governed by Foreign Laws A security assignment of claims or rights cannot be registered in Germany. 3.2.10 Transfer of Security Interests Over Aircraft/ Engines A security interest over an aircraft pursuant to a Ger - man aircraft mortgage ( Registerpfandrecht ) can gen - erally be transferred. Due to its accessory nature, it can only be transferred together with the secured obligations and to the same person and requires reg -
206 CHAMBERS.COM
Powered by FlippingBook