MADAGASCAR Law and Practice Contributed by: Claudy Monja and Sarah Razafindrafito, John W Ffooks & Co
3.1.9 Debt Subordination There is no specific method of debt subordination that is expressly permissible and recognised by Malagasy law. However, in practice, subordination agreements are permissible and recognised. 3.1.10 Transfer/Assignment of Debts Under Foreign Laws It is permissible to transfer or assign all or part of an outstanding debt under an English or New York law- governed loan. 3.1.11 Usury/Interest Limitation Laws There are usury or interest limitation laws in Madagas - car. For instance, in commercial contracts, any inter - est beyond 6% is considered usurious. 3.2 Security 3.2.1 Typical Forms of Security and Recourse The typical form of security and recourse granted in an aviation finance transaction domestically is a mort - gage. 3.2.2 Types of Security Not Available It is not possible to set up pledges over aircraft or related collateral such as engines, as they are subject only to mortgages. 3.2.3 Trust/Trustee Concepts Under Malagasy law, the concept of a trust and of a security trustee are not expressly provided for in any legal provision. However, 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 individual to represent and act on behalf of several parties driven by the same interest. 3.2.4 Assignment of Rights to an Aircraft by a Borrower to a Security Trustee It is permitted for a borrower to assign to a third party, including a security trustee, its rights to the aircraft or under an aircraft lease, pursuant to a security assign - ment or a mortgage.
3.2.5 Assignment of Rights and Benefits Without Attendant Obligations Under Malagasy law, it is possible to assign the rights and benefits only, without also assigning the attendant obligations of the lessor under an aircraft lease. 3.2.6 Choice of Foreign Law It is permitted and enforceable for security assign - ments or guarantees to be governed by English or New York law. 3.2.7 Formalities/Mandatory Terms to Create and Perfect Security Assignments It is a requirement to have a written contract duly signed by the authorised signatories of the parties to that contract. The registration of such an assignment with the CAA is also advisable in order to be enforce - able. While this is not mandatory, it is advisable for a security assignment written in a foreign language to be accompanied by a French translation made by a Malagasy sworn translator. Sometimes, local courts accept English documents, but this is not always the case. Whether they are accepted mainly depends on the decision of the judge in charge of the matter (if the matter goes to court). 3.2.8 Domestic Law Security Instruments If an English or New York law-governed security assignment were to be taken in respect of an aircraft registered in Madagascar, there would be no need to take an additional specific domestic security instru - ment. It is permissible to register an English or New York law-governed security assignment or a domestic law security instrument domestically. The registration is made at the CAA. 3.2.10 Transfer of Security Interests Over Aircraft/ Engines The transfer of such security interests is recognised. 3.2.11 Effect of Changes in the Identity of Secured Parties If the identity of the secured parties under a security assignment changes after its execution, the security 3.2.9 Domestic Registration of Security Assignments Governed by Foreign Laws
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