MADAGASCAR Law and Practice Contributed by: Claudy Monja and Sarah Razafindrafito, John W Ffooks & Co
2.1.2 Application of Foreign Laws It is permitted for a lease involving either a domestic party or an asset in Madagascar to be governed by a foreign law. Malagasy law allows the parties to a contract to choose the governing law of their con - tract freely. Note that the lease can be governed by foreign law as long as the provisions of the lease do not breach Malagasy public order and good morals. 2.1.3 Restrictions Concerning Payments in US Dollars No material restrictions are imposed on domestic les - sees making rent payments to foreign lessors in US dollars, as long as this arrangement is established in the lease agreement. 2.1.4 Exchange Controls There are no exchange controls that could prevent rent payments under a lease or any repatriation of realisation proceeds, if the lease is enforced by a for - eign lessor. Payments of rents are considered as oper- ations courantes , or current operations, and are not subject to any specific exchange control procedure. 2.1.5 Taxes/Duties Payable for Physical Execution of a Lease The fee payable to the CAA when registering a lease is MGA408,000 (approximately USD92). Other than this, no additional fees are foreseen. 2.1.6 Licensing/Qualification of Lessors A lessor does not need to be licensed or otherwise qualified in Madagascar to do business with a domes - tic lessee. 2.2 Lease Terms 2.2.1 Mandatory Terms for Leases Governed by English or New York Law Any lease must contain the following terms and con - ditions: • effective date and date of expiry of the lease; • details of the lessor and the lessee; • a description and details of the aircraft (type, manufacturer, serial number); • a statement specifying that the aircraft is under the care and custody of the lessee for the duration of the lease;
• a statement specifying the party liable for the ongoing airworthiness of the aircraft as well as for the maintenance of the aircraft for the duration of the lease; • a statement specifying if a sublease is permitted; and • the termination provisions of the lease. Most of the time, the foregoing are already contained in a lease (or ancillary documents thereto) governed by English or New York law. 2.2.2 Tax and Withholding Gross-Up Provisions Tax and other withholding gross-up provisions are permissible and enforceable under Malagasy law. 2.2.3 Parts Installed or Replaced After a Lease’s Execution A lease may cover parts that are installed or replaced on an aircraft or engine after its execution. For this purpose, it is necessary to sign an addendum to the initial lease agreement. 2.2.4 Risk of Title Annexation The aircraft engines installed on an airframe should be indicated and legally separated from the aircraft in order to avoid the risk of title annexation; otherwise, the engines will not be considered as separate assets from the aircraft, legally speaking. The use of name - plates is recommended, to clearly identify the actual owner of the aircraft engines installed on an airframe. 2.2.5 Recognition of the Concepts of Trust/Trustee The concept of a trust is not expressly provided for in any legal provision in Madagascar. However, the Malagasy Contract Law gives free rein to the parties to establish the terms and conditions of their contract. This includes the right to appoint an entity or an indi - vidual to represent and act on behalf of several parties driven by the same interest. 2.3 Lease Registration 2.3.1 Notation of Owner’s/Lessor’s Interests on Aircraft Register The concept of legal or beneficial ownership does not exist under Malagasy law. However, the identity of the lessor of an aircraft can be noted on the aircraft reg -
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