MALAYSIA Law and Practice Contributed by: Shelina Razaly Wahi and Vincent Chan Siew Onn, Abdullah Chan & Co
charged simultaneously with the registration of the new security interests over the aircraft and/or engines. 3.2.11 Effect of Changes in the Identity of Secured Parties The security interest of the secured parties may not necessarily be jeopardised if the identity of the secured parties changes, to the extent that the changes are then reflected in new/additional registrations. 3.2.12 “Parallel Debt” Structures Malaysian law accepts that security interests in favour of a security trustee may secure debts owed to lend - ers. 3.2.13 Effect of Security Assignments on Residence of Secured Parties A secured party under a security assignment will not be deemed to be resident, domiciled, carrying on business or subject to any taxes as a result of its being a party to, or its enforcement of, such security assignment. 3.2.14 Perfection of Domestic Law Mortgages A domestic law mortgage over an aircraft or engine would be perfected in accordance with the following: • the mortgage would be stamped in accordance with the Stamp Act 1949; • any power of attorney contained in the mortgage would be in accordance with the provisions of the Powers of Attorney Act 1949; • the charge created by the mortgage would be registered against the domestic party, at either the CCM or the LFSA, as the case may be; and • in relation to an aircraft mortgage – the mortgage would also be registered with CAAM. 3.2.15 Differences Between Security Over Aircraft and Spare Engines The Aircraft Register does not provide for registration of engines separately and independent from the reg - istration of aircraft. Therefore, it is not possible to reg - ister any off-wing engines with CAAM and hence no security over an engine is registrable with CAAM. All other perfection steps as provided in 3.2.14 Perfec- tion of Domestic Law Mortgages would apply equal -
ly to security over an aircraft and engines, save that security over engines is not registrable with CAAM. 3.2.16 Form and Perfection of Security Over Bank Accounts The usual form of security is a charge over the bank account. Such a charge is perfected in a similar man - ner as a mortgage, as provided in 3.2.14 Perfection of Domestic Law Mortgages , save that a charge over a bank account is not registrable with CAAM. 3.3 Liens 3.3.1 Third-Party Liens The following statutory liens may apply to aircraft: • liens in favour of airline employees for unpaid wages; • liens or other rights held by Malaysian authorities for unpaid taxes or charges related to the use of the aircraft, owed by the owner or operator; • liens in favour of repairers for services performed on and value added to the aircraft while it is in their possession; and • liens held by the Authority for unpaid fees or charg - es owed by the operator or owner of the aircraft, as per the Civil Aviation Regulations 2016. Malaysia recognises fleet liens (to cover all debts owed to the repairer) and the lienholder’s rights con - tinue even without possession of the aircraft. Rights of a lienholder include the following. • If a salvage lien exists on an aircraft, the lienholder (the salvor) is entitled to claim salvage expenses from the owner. • Possessory or contractual lien will take precedence over the terms of an aircraft lien; the lienholder’s rights will be governed by the terms of the con - tract. • Air navigation charges – If there is a default in the payment of air navigation charges, the Civil Avia - tion Authority of Malaysia (CAAM), acting on behalf of the government, may seize the aircraft until the charges are paid. It does not matter if the charges were incurred by a person who is no longer the operator of the aircraft at the time of seizure.
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