MALAYSIA Law and Practice Contributed by: Shelina Razaly Wahi and Vincent Chan Siew Onn, Abdullah Chan & Co
3.3.2 Timeframe to Discharge a Lien or Mortgage A lien on an aircraft can be discharged when the lien - holder repossesses the aircraft. Once the aircraft is repossessed, the lienholder may recover any out - standing debts or obligations secured by the lien. Once these debts or obligations are fully satisfied, the lien can be discharged. The time period required will depend on when the lienholder’s debts or obligations are satisfied. A mortgage over an aircraft, once settled by the domestic party, would be subject to the execution of a deed of release and revocation, as well as the filing of the statutory discharge forms with the CCM or the LFSA, as the case may be, as well as with CAAM. 3.3.3 Register of Mortgages and Charges Most security interests, including charges and mort - gages, are registrable at the CCM or the LFSA within 30 days and one month respectively, from their date of creation. Once a mortgage or charge is registered, a certificate of registration of charge would be issued by the CCM. The details of the registered charge will be disclosed in any company search conducted at the records of CCM or LFSA. The interests of an aircraft mortgagee may be noted on the Aircraft Register. The effect of such notation is that the aircraft may not be deregistered from the Aircraft Register until the mortgage is discharged and/ or until the aircraft mortgagee should consent to such deregistration. 3.3.4 Statutory Rights of Detention or Non- Consensual Preferential Liens A contractual lien may supersede the terms of an air - craft lien that may arise under common law. In par - ticular, the terms of the contract determine the extent of the lienholder’s rights: for example, if an aircraft repair or maintenance contract specifically provides for a fleet lien or provides that the lienholder’s rights continue to subsist even without having possession of the aircraft. From a statutory perspective, if an aircraft flies over or into European airspace, for example, the UK Civil Aviation Authority (CAA) monitors Eurocontrol charges on behalf of Eurocontrol and has authority to detain
aircraft on Eurocontrol’s behalf. The CAA has the authority to detain an aircraft for unpaid navigational charges. The aircraft may be detained in the United Kingdom for unpaid charges which relate to one spe - cific aircraft, or which relate to any other aircraft in the operator’s fleet. 3.3.5 Verification of an Aircraft’s Freedom From Encumbrances A potential purchaser could search the Aircraft Reg - ister as well as the International Registry of Mobile Assets (the “International Registry”) to verify that an aircraft is free of encumbrances. 3.4 Enforcement 3.4.1 Differences Between Enforcing Security Assignments, Loans and Guarantees In the event that the transaction documents are duly stamped, they would therefore be admissible in court and would be relied on for purposes of enforcement. There is no difference between enforcing a security assignment or loans or guarantees in that respect. 3.4.2 Security Trustees’ Enforcement of Their Rights So long as the assignment satisfies the requirements as set out in 2.7.2 Assignment/Novation of Leases Under Foreign Laws , then the assignment would be enforceable. 3.4.3 Application of Foreign Laws Please refer to 2.6.5 Domestic Courts’ Approach to Foreign Laws and Judgments . 3.4.4 Recognition and Enforcement of Foreign Judgments and Arbitral Awards Please refer to 2.6.6 Domestic Courts’ Recognition of Foreign Judgments/Awards . 3.4.5 Secured Parties’ Right to Take Possession of Aircraft In Malaysia, a lessor or lender might seek to reclaim the aircraft in a default. The lessor or lender could simply take delivery and possession of the aircraft if the agreement includes such remedies. However, there are several reasons for the lessor or lender to obtain a court order before taking posses -
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