MALTA Law and Practice Contributed by: Joseph Ghio, Fenech & Fenech Advocates
• Unless the aircraft has not yet been registered in the Register or if another recorded IDERA for that aircraft has not been revoked, the Authority will: (a) record the IDERA within two working days of receipt; (b) promptly confirm that recordation is complete; and (c) issue a declaration stating that pursuant to the recordation of the IDERA the Authority undertakes not to deregister the aircraft, unless consented to by the Authorised Party or their Certified Designee if so recorded. 2.10.4 Enforcement of Conventions The Maltese courts have had very little experience in enforcing the Convention since its ratification in 2010. In one case, the courts were asked to consider whether the arrest of an aircraft by an Italian creditor in terms of detention rights provided under Italian law and enforced in Malta in virtue of Regulation 44/2001 EC (predecessor of the Brussels Recast Regulation) was incompatible with the rights of a lessor who was in the process of repossessing the aircraft in terms of his rights under the Convention. While the matter was resolved amicably pending final judicial determination of the issue, it appeared that the courts were inclined to give precedence to European Union law over the provisions of the Convention in this case. 2.10.5 Other Conventions Malta is not a party to the 1948 Geneva Convention on the International Recognition of Rights in Aircraft and neither is it a party to the 1933 Rome Conven - tion on the Unification of Certain Rules relating to the Precautionary Attachment of Aircraft. 3. Aircraft Debt Finance 3.1 Structuring 3.1.1 Restrictions on Lending and Borrowing There are no restrictions on foreign lenders financ - ing an aircraft locally or on borrowers using the loan proceeds, provided that the lender is not carrying out the business of a credit or financial institution in Malta
through any form of physical presence in the Maltese territory. 3.1.2 Effect of Exchange Controls or Government Consents There are no exchange controls or government con - sents that would be material to any financing or repa - triation of realisation proceeds under a loan, guaran - tee or security document. 3.1.3 Granting of Security to Foreign Lenders Borrowers are permitted to grant security to foreign lenders. 3.1.4 Downstream, Upstream and Cross-Stream Guarantees In terms of Article 136 of the CA, a company is allowed to guarantee the obligations of a third party provided this is not prohibited by its memorandum and articles of association. 3.1.5 Lenders’ Share in Security Over Domestic SPVs It is advisable for a lender to take share security over a domestic special purpose vehicle (SPV) that owns the financed aircraft. Article 122 of the CA provides for the pledging of securities. In the case of a private company, the right to pledge is excluded unless spe - cifically allowed by its memorandum and articles of association. 3.1.6 Negative Pledges A negative pledge is recognised under Maltese law as an undertaking not to perform specific actions. 3.1.7 Intercreditor Arrangements An intercreditor arrangement shall be valid and enforceable between the relevant parties if made in writing without the need of any other formality or reg - istration. However, in order to have effect in relation to third parties, such arrangement must be registered: • at the ship registry by means of an annotation; • at the Register by means of an annotation; and • in all other cases, at the Public Registry by means of a note.
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