AUSTRIA Law and Practice Contributed by: Farid Sigari-Majd and Mathias Lehner, Freshfields
3.2.2 Types of Security Not Available Austrian law does not know the concept of an aircraft mortgage registered in a public register. Pledges over moveable assets must be perfected in accordance with Austrian (property) law requirements (see 3.2.14 Perfection of Domestic Law Mortgages ). Further, where the debtor does not already own the aircraft, the seller/finance provider may retain the title to it until the satisfaction of the outstanding purchase price. 3.2.3 Trust/Trustee Concepts Austrian law does not normally permit a person to enforce another person’s claim in court. Nevertheless, the concept of a security trustee is widely used in syndicated loan transactions in the Austrian market. In order to put the security trustee in a position to enforce the security interest, parties typically use par - allel debt language. 3.2.4 Assignment of Rights to an Aircraft by a Borrower to a Security Trustee Austrian law recognises the concept of a trans - fer of ownership in an asset for security purposes ( Sicherungsübereignung ), provided that Austrian courts would apply the same perfection requirements required for the valid creation of a pledge (see 3.2.14 Perfection of Domestic Law Mortgages ). (Contractual) rights under a lease agreement or an insurance policy may be pledged or assigned for security purposes, provided that perfection require - ments (eg, notification of the relevant third-party debt - or and/or recording the security interest in the books of the pledgor) would apply. 3.2.5 Assignment of Rights and Benefits Without Attendant Obligations Subject to any contractual prohibitions, an assign - ment of rights would result in an assignment from the assignor to the assignee of the assignor’s rights only. The obligations under the underlying agreement would generally remain with the assignor. If it is intended to transfer the entire contractual position (rights and obli - gations) of a party, this would have to be done by way of a transfer ( Vertragsübernahme ) which requires the consent of the debtor.
3.2.6 Choice of Foreign Law Austrian conflict of laws rules would look to the law applicable to the underlying agreement to determine the validity of an assignment or pledge thereof. It is, therefore, recommended that a receivables assign - ment or pledge agreement follows the law of the underlying agreement. If that is not the case (eg, because receivables from different jurisdictions are pledged under a master security agreement), the per - fection mechanism in that master agreement should also be tested against the minimum requirements applicable in each relevant jurisdiction. 3.2.7 Formalities/Mandatory Terms to Create and Perfect Security Assignments The perfection requirements applicable to Austrian law-governed security assignments ( Sicherungszes- sionen ) and receivables pledges ( Forderungspfand- verträge ) may take the form of: • notification to the debtor of the receivables ( Dritts- chuldnerverständigung ); and/or • recording the security interest in the books and accounts of the pledgor by way of a book entry referring to the assignment or pledge ( Buchver- merk ). An Austrian law-governed security assignment/ receivables pledge is not required to be translated, certified, notarised or apostilled/legalised in order to be enforceable (see 1.1.2 Enforceability against Domestic Parties for language requirements in legal proceedings). Austrian law security assignments should specify the assigned receivables (ie, they must be determined or capable of being determined based on the agreement) and describe the secured obligation. In addition, the security document would commonly include provi - sions allowing for out-of-court enforcement by the pledgee. 3.2.8 Domestic Law Security Instruments If the parties enter into an English or New York law- governed security document with respect to an air - craft registered in Austria, an Austrian court will test the perfection of such security interest against the requirements imposed under Austrian law (see 1.2.1
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