Aviation Q&A – 20 things to think about for aviation deals in France14 June 2021

4.  Who is responsible for registering an aircraft in France?

The DGAC is an owner (or “title”) registry, and the owner is responsible for registering the aircraft. In practice, WFW Paris can arrange the relevant filings (registration of aircraft, lease and/or sublease / mortgage) with the DGAC on behalf of the owner and/or the mortgagee, as relevant, under a power of attorney. Although a “F-W” registration mark (used by, for example, manufacturers) is often thought to be a “temporary” registration mark, there is no such thing as a “temporary” registration of an aircraft in France and the registration is permanent (although the aircraft can at any time be de-registered at the owner’s request).

5.  How is deregistration effected in France?

Just as registration of an aircraft in France can only be made by (or on behalf of) the owner, deregistration of an aircraft from the DGAC can only be completed by (or on behalf of) the registered owner (with, in practice, the consent of any registered mortgagee to release its registered mortgage). Deregistration cannot be blocked by the lessee and no power of attorney is required from the lessee.  However, cooperation from the lessee is, to a certain extent, required, as the original certificate of registration (certificat d’immatriculation) of the aircraft (which is carried onboard the aircraft) shall have to be provided to the DGAC.  Of course, if the deregistration is in the context of a repossession of an aircraft by the lessor, the latter will presumably be in a position to recover the original certificate of registration.

It will not be possible to file any Deregistration Power of Attorney (or IDERA, see below) with the DGAC (and in any event the DGAC would require a fresh set of powers of attorney at the time of deregistration).

6.  Has France ratified and brought into force any of the following aviation related conventions: 1944 Chicago Convention, 1948 Geneva Convention and 2001 Cape Town Convention?

France is a party to and has ratified the 1944 Chicago Convention and the 1948 Geneva Convention on the International Recognition of Rights in Aircraft. However, regarding the 2001 Cape Town Convention, whilst the EU has ratified the Convention, France has signed the Convention and the Aircraft Equipment Protocol but has not ratified either of them (and has not expressed an intention to do so).

Mortgage registration and enforcement

7.  Would a mortgage governed by a foreign law over aircraft and/or engines be recognised in France?

No. Only French law aircraft mortgages (hypothèques aériennes) in French language can be registered with the DGAC.  The registration of the mortgage with the DGAC is made at the mortgagee’s request and will ensure its enforceability against third parties for a duration of 10 years (subject to renewal prior to this deadline). See below re priority liens.

8.  Does a registered mortgage extend to engines and other removable equipment attached to the aircraft?

Yes. The mortgage registration extends to the aircraft as a whole, including (if owned by the owner) the engines and parts. In case of total loss of the aircraft, the mortgagee is by operation of law subrogated in the rights to the insurance proceeds.

French law would not treat an engine owned by a third party as being subject to the same ownership as the aircraft itself. It is however generally recommended to affix a nameplate on such engine in order to give notice to third parties (in particular in the context of seizure of the aircraft). Where such engine is subject to a separate lease to a French lessee, it would also be prudent to record the lease with the Greffe of the commercial court of the jurisdiction of the lessee.

9.  Do certain rights have priority over those of the mortgagee?

Yes. Certain liens (privileges) arise by operation of law and enable the arrest of the aircraft. Such liens (relating to court costs incurred in respect of the sale of the aircraft and the distribution of the sale price, remuneration due for the salvage of the aircraft and indispensable costs incurred for the preservation of the aircraft) take priority over a registered mortgage.

10.  What is the procedure for a lender (as mortgagee) to enforce a mortgage over the aircraft in France? Can the lender enforce the mortgage by taking physical possession of the aircraft?

It is important to note that French law, like many civil law jurisdictions, does not recognise “self-help” remedies over aircraft, and enforcement of a mortgage in France can only take place via a judicial sale of the aircraft. The enforcement of a mortgage over an aircraft starts with the arrest of the aircraft (by way of attachment order (saisie conservatoire) or enforcement order (saisie execution), leading up to the sale of the aircraft through a court-supervised process.

Lease registration and enforcemenT

11.  Is registration of lease agreements with the DGAC mandatory under French law?

No, it is not strictly mandatory. However, it is highly recommended to register leases with the DGAC, otherwise the owner and the lessee/operator of the aircraft will be deemed jointly and severally liable for damage caused by the aircraft. Where a lease is so registered, the owner will only liable if the third party to whom the damage is caused can prove actual fault on the part of the owner. Such registration will be valid for the (initial) duration of the lease.
Sub-leases shall also be registered with the DGAC although they will not expressly appear on the registry extract (only the head lessor (as owner) and the operator (as sublessee) will be mentioned). The DGAC will however require a summary of lease agreements for such purposes.

12.  How can lessors further strengthen their rights in respect of a lease agreement toward third parties?

Operating lessors can (and finance lessors must) also publish leases involving French lessees with the Greffe of the commercial court where the lessee has its registered office. It will give them the right (other than in an insolvency situation) to apply for the aircraft subject to the published lease, to be returned to it by a relatively simple action en restitution before the French courts. The registration of the lease with the Greffe has to be renewed every five  years.

13.  On the occurrence of an event of default under the lease or any termination of the leasing of the aircraft under the lease, assuming that the owner is permitted to do so under the terms of the lease, can the owner enforce the lease by taking physical possession of the aircraft?

No. Generally speaking, the French courts are very adverse to “self-help” repossession of assets (i.e. repossession by taking physical possession upon the occurrence of an event of default under a lease of the asset). In a repossession scenario (and subject to the rights of lien holders), the lessor shall apply for the aircraft to be returned by following certain proceedings before the French courts (action en restitution or action en revendication).

Other keys points for lessors and financiers

14.  Is it necessary for the lessor or the mortgagee to have a place of business, or be domiciled, in France in order to enforce any provisions of the lease or mortgage in France?

There is no specific domiciliation requirement to enforce provisions of a lease agreement. However, aircraft mortgages shall contain an élection de domicile clause whereby the mortgagee appoints, for the sole purpose of registration of the mortgage, a territorially competent huissier (bailiff) who will be the primary point of contact with the DGAC and the French courts in the event of enforcement of the mortgage. WFW Paris can arrange the relevant appointment.

15.  In the event that the French lessee become insolvent, what would be the lessor’s rights?

The lease is an on-going contract (contrat en cours) and can therefore either be continued or terminated by the judicial administrator appointed by the court. In a nutshell, if the judicial administrator decides to continue the terms of the lease, payment of rentals due prior to the opening of the insolvency proceedings will be suspended, rentals due and payable following the opening of the insolvency proceedings must be paid as they fall due and the lessee will be able to use the aircraft until the lease termination date.

Of course, in the event of non-payment of any post-insolvency rental, the lessor will be entitled to terminate the lease immediately and repossess the aircraft. Any sum due pursuant to the termination of an on-going contract during insolvency proceedings shall be filed as a claim as part of the insolvency proceedings of the debtor during the month following the termination of the on-going contract.