LITHUANIA Law and Practice Contributed by: Gintautas Šulija and Eduard Plešak, Šulija & Partners
2.2 Lease Terms 2.2.1 Mandatory Terms for Leases Governed by English or New York Law The laws of Lithuania do not provide for any man - datory terms to be included in the lease (or ancillary documents thereto) governed by English or New York law that would not typically already be included. 2.2.2 Tax and Withholding Gross-Up Provisions Tax and other withholding gross-up provisions are permissible and should be enforceable in Lithuania. 2.2.3 Parts Installed or Replaced After a Lease’s Execution A lease in Lithuania covers parts that are installed or replaced on an aircraft or engine after its execu - tion. For the avoidance of doubt, it is advisable for the parties to sign an amendment to the lease once parts of an aircraft or engine are replaced to ensure the replaced parts are properly identified and captured under the lease. 2.2.4 Risk of Title Annexation The risk of title annexation depends on whether the engine is properly identified and separated from the airframe. It is possible to argue that an engine may be considered a part of an aircraft, and title to such an engine may be transferred together with the transfer of title to the aircraft. However, the authors are not aware of any practical cases where an engine owned by a third party has been annexed because it is attached to a third-party aircraft. 2.2.5 Recognition of the Concepts of Trust/Trustee Lithuanian law does not distinguish between legal and beneficial interests. Similarly, the concept of a trust is not recognised in the Lithuanian jurisdiction in the same way as in common law countries. 2.3 Lease Registration 2.3.1 Notation of Owner’s/Lessor’s Interests on Aircraft Register The Lithuanian civil aircraft register is an owner reg - ister. Lithuanian law does not distinguish between legal and beneficial interests; only the legal owners are registered. An aircraft is registered in the name of the owner and the owner is indicated in the aircraft certificate of registration.
However, from a local law perspective, the aircraft cer - tificate of registration is not a proof of ownership over the aircraft. The main effect of registering the owner’s interest is that the aircraft owner, or a person acting on behalf of the aircraft owner, must submit an appli - cation for registration or deregistration of an aircraft. The register records both the owners and operators of an aircraft, but lessor interests (specifically, if it is an intermediate lessor) are not noted on the aircraft register. 2.3.2 Registration If the Owner Is Different From the Operator An aircraft may be registered in the Lithuanian Civil Aircraft Registry if the aircraft owner is different from the operator ‒ although, in either case, only if there is a link with Lithuania. Thus, it is not possible to register an aircraft in Lithuania based on lease-in, lease-out structures, unless the aircraft is operated by a Lith - uanian person. A civil aircraft may be registered in Lithuania if: • the owner of the aircraft is a citizen of Lithuania, a citizen of another EU state, another natural person entitled to exercise freedom of movement within the EU, or a legal entity registered in Lithuania, a Lithuanian state, or a Lithuanian municipality; • the aircraft belongs to a legal or natural person of a foreign state if more than half of its flights are performed from an airport in Lithuania; and • the aircraft will be operated by a Lithuanian legal or natural person, or a citizen of another EU state, or another natural person exercising the right to freedom of movement within the EU. 2.3.3 Aircraft/Engine-Specific Registers There are no specific registers in Lithuania for leases concerning aircraft or engines. 2.3.4 Registration of Leases With the Domestic Aircraft Registry The lease of an aircraft is not registered in Lithuania, but the civil aircraft register does record the operator of an aircraft and requires evidence of the link between the aircraft owner and its operator. For this reason, a lease agreement or equivalent documents translated into Lithuanian (in practice, the translation of the entire
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