AUSTRIA Law and Practice Contributed by: Farid Sigari-Majd and Mathias Lehner, Freshfields
3.2.16 Form and Perfection of Security Over Bank Accounts A security interest over bank accounts in Austria would typically be created in the form of an account pledge ( Kontopfandrecht ). An account pledge may qualify as financial security under Austrian law, allow - ing for quick enforcement by appropriation or set-off. Austrian law account pledges are generally perfected by way of notification to the account bank and record - ing the security interests in the books and accounts of the pledgor. 3.3 Liens 3.3.1 Third-Party Liens Third-party creditors of the owner of the aircraft may attempt to enforce their claims against it by obtaining a statutory pledge ( Pfändungspfandrecht ) in enforce - ment proceedings, followed by a sale of the aircraft by a court bailiff. 3.3.2 Timeframe to Discharge a Lien or Mortgage A contractually agreed and validly perfected pledge is normally discharged automatically upon payment of the secured obligation ( Akzessorietät ), although in practice, it is commonly agreed that the pledgee will issue a release (confirmation) letter. 3.3.3 Register of Mortgages and Charges There is no register of mortgages or charges over air - craft available in Austria, and neither are the interests of a pledgee or security trustee in an aircraft registered in the Austrian aircraft register. 3.3.4 Statutory Rights of Detention or Non- Consensual Preferential Liens Austrian law generally recognises a retention right ( Zurückbehaltungsrecht ) of a creditor in respect of the assets of the debtor. Thus, an airport may retain an aircraft operated by the owner for unpaid charges and a maintenance facility for unpaid work, in each case followed by enforcement proceedings against the owner and its aircraft (see 3.3.1 Third-Party Liens ). The retention right does not normally extend to the assets of third parties.
Further, Austrian tax or customs authorities may seize and take enforcement measures against an aircraft to enforce the tax liabilities of the owner. In the case of (alleged) involvement of the aircraft and/ or its owner in criminal activity, the police or public prosecution service may seize and/or confiscate an aircraft. 3.3.5 Verification of an Aircraft’s Freedom From Encumbrances There is no public register available in Austria that provides conclusive evidence that an aircraft is free of encumbrances. 3.4 Enforcement 3.4.1 Differences Between Enforcing Security Assignments, Loans and Guarantees Austrian security assignments typically include terms permitting the assignee to enforce upon default with - out the involvement of a court by instructing the third- party debtor to make payment to the assignee or by way of a sale or auction of the assigned rights. Loans or guarantees are contractual obligations. If a dispute arises, the lender/beneficiary would have to obtain a judgment against the debtor, which could then be enforced against the assets of the creditor in enforcement proceedings. 3.4.2 Security Trustees’ Enforcement of Their Rights If a lessor assigns the rights under a lease to a security trustee under a market standard Austrian law security assignment, the security trustee could usually enforce the security interest by way of giving notice to the les - see and without the involvement of the courts. 3.4.3 Application of Foreign Laws Austrian courts would generally uphold a choice of law in a finance document or a security document in accordance with and subject to the limitations of the Rome I Regulation. Any property rights created under a security document (and the relevant perfec - tion requirements, respectively) would, however, be tested against the law applicable to property rights under Austrian conflict of laws rules (see 1.2.2 Sales Governed by English or New York Law ).
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