SPAIN Law and Practice Contributed by: Alfonso López-Ibor and Olivia López-Ibor, Lopez-Ibor Abogados
2.5.2 Mandatory Insurance Coverage Requirements
relevant lease may contain clauses that are prejudicial to the lessors. 2.4.4 Damage or Loss Caused by an Asset The general rule of Spanish law is liability by fault or negligence ( culpa o negligencia ). However, the Law on Air Navigation (Law 48/1960) is based on strict liability, which arises even if the liable party has acted with all proper due diligence, but in such an event the amount of recoverable damages is limited by the Law on Air Navigation in accordance with the weight of the aircraft. The Law on Air Navigation and the Montreal Conven - tion of 28 May 1999 state that the lessee is liable for damages caused during a flight. Although Spanish law only refers expressly to the air - craft operator and any other party as being directly responsible for injury, the lessor may also be consid - ered vicariously liable ( responsabilidad subsidiaria ), either due to the broad application of the rules of the Civil Code (Article 1908 CC: “the owner is responsi - ble for damages caused by machines which have not been serviced with due diligence”) or the application of the analogy criteria of the Convention of Rome of 7 October 1952. The Rome Convention is applicable to international flights. 2.4.5 Attachment by Creditors An aircraft is the property of the owner, not the lessee. 2.4.6 Priority of Third Parties’ Rights No third party is entitled to seize an aircraft or engine due to debts incurred by the lessee, except where the seizure is declared in line with administrative, tax, labour, or social security rules. A mortgage beneficiary’s right will take priority over a lessor’s right. 2.5 Insurance and Reinsurance 2.5.1 Requirement to Engage Domestic Insurance Companies Insurances can be placed with Spanish insurance companies and EU or European Economic Space (EEA) insurance companies.
Insurances must comply with the requirements set forth by European Regulation (EC) No 785/2004 of 21 April 2004, as amended by the European Regulation (EU) No 285/2010 of 6 April 2010 and the Regulation (EU) 2020/1118 of 27 April 2020 and, at national level, Articles 126 et seq. and the Third Final Provision of the Air Navigation Law 48/1960 of 21 July 1960 ( Ley sobre Navegación Aérea ). 2.5.3 Placement of Insurance Outside of Jurisdiction Reinsurances can be placed outside Spain up to 100% coverage since the Spanish insurer does not need to retain a minimum percentage of coverage. 2.5.4 Enforceability of “Cut-Through” Clauses Regarding reinsurances, cut-through clauses are not permitted by virtue of Article 78 of the Law on Insur - ance Contracts ( Ley del Contrato de Seguro ), which prohibits direct claims by the insured against the rein - surer. Therefore, these clauses are unenforceable in Spain if the insurance contract is governed by Span - ish law. 2.5.5 Assignment of Insurance/Reinsurance Assignments of insurances/reinsurances are permit - ted. 2.6 Lease Enforcement 2.6.1 Restrictions on Lessors’ Abilities If the lessor seeks to repossess an aircraft before the expiration of the lease, and the lessee consents, the parties must sign a lease termination agreement that authorises the lessor to appear as the legal holder of the aircraft before the Spanish Air Safety Agency and the Aircraft Registry. This agreement (i) must bear the notarised signatures of the parties (and be apos - tilled if applicable) and (ii) be submitted to the Spanish Aircraft Matriculation Registry, if deregistration of the aircraft is required. If the lessee does not consent, the lessor, aiming to deregister the aircraft, can enforce an irrevoca - ble deregistration and export request authorisation (IDERA) if it is properly recorded with the Spanish Air - craft Register. Following an event of default the lessor
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