INDONESIA Law and Practice Contributed by: Enny Purnomo Widhya, Nugrahani Astiyanti and I Gusti Ngurah Oka Anantajaya, Mochtar Karuwin Komar
3.2.12 “Parallel Debt” Structures In general, Indonesian law does not recognise the concept of trust except in capital market matters and in the banking industry. Therefore, parallel debt struc - tures are not recognised. 3.2.13 Effect of Security Assignments on Residence of Secured Parties The security assignment should not of itself create a permanent establishment (PE) obligation on the secured party in Indonesia. For any tax advice, please consult with an Indonesian tax consultant on this matter. 3.2.14 Perfection of Domestic Law Mortgages As mentioned above, the DGCA no longer maintains records of mortgages on aircraft registered in Indo - nesia. 3.2.15 Differences Between Security Over Aircraft and Spare Engines Under Law No 42 of 1999 on Fiduciary Security, an air - craft cannot be subject to fiduciary security. However, a spare engine secured separately from the airframe can be subject to fiduciary security. 3.2.16 Form and Perfection of Security Over Bank Accounts The most common form of security over a bank account is fiduciary security, which is governed under Indonesian law, drawn up before a notary in Indone - sian language and registered with the Fiduciary Reg - The creditors of the lessee are generally not entitled to attach an aircraft that is not owned by the lessee and they must therefore be classed as unsecured credi - tors. In general, Indonesian law provides retention rights in relation to repair costs, salvage costs and craftsman costs. Further, the Indonesian government may detain an aircraft for unpaid taxes or charges related to the use of the aircraft and the airport authorities may also istry Office. 3.3 Liens 3.3.1 Third-Party Liens
detain an aircraft for unpaid charges related to the use of the aircraft. Specifically for aircraft subject to the Cape Town Con - vention, pursuant to the declarations of the govern - ment of the Republic of Indonesia under the Cape Town Convention, the government declares that noth - ing in the Cape Town Convention shall affect its right or that of any entity thereof, or any intergovernmental organisation in which Indonesia is a member, or other private or public services in Indonesia, to arrest or detain an aircraft object under its laws for payment of amounts owed to the government of Indonesia, any such entity, organisation or provider directly relating to the service or services provided by it in respect of that or another aircraft object. Therefore, the existence of any outstanding liens in respect of unpaid airport charges may prevent the lessor or the lender from repossessing the aircraft. Further, the rights of the repairers of the aircraft in their possession and rights of the Indonesian government for unpaid taxes or charges related to the use of the aircraft may also prevent the lessor or the lender from repossessing the aircraft. 3.3.2 Timeframe to Discharge a Lien or Mortgage It may take up to two weeks to complete the cancella - tion of the mortgage recordation with the DGCA. Upon the review of the application, the DGCA will usually issue a statement letter confirming the cancellation of the mortgage recordation. This is only applicable to already existing mortgage recordation. 3.3.3 Register of Mortgages and Charges In the past the DGCA maintained a special registry book (the “Special Registry”) in relation to any mort - gage on aircraft registered in Indonesia and having an Indonesian nationality mark (PK). The effect of such registration was more of a public notice. However, such Special Registry is no longer maintained by the DGCA. Based on recent experience, the DGCA would reject any application to record a mortgage on aircraft registered in Indonesia.
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