Mexico: Registration Of Rights "In Rem" On Foreign Aircraft In Mexico

Last Updated: 15 June 2015
Article by Misael Arellano

Departing from the fact that Rights In Rem on any aircraft must be registered before the authority of the state of its registration marks, and taking into account that any interest in an aircraft asset can be registered before the International Registry of Mobile Assets; in this edition we will make a short analysis of the legal frame, regulations and figures stated in Mexican legislation for the registration of rights in rem over foreign civil aircraft and engines; aiming to define where it must be registered and to confirm if it ensures publicity, enforceability and preferential rights.

Article 47 of the Civil Aviation Law states the obligation for the registration of all documents that entail the acquisition, transmission, amendment, encumbrance or cancellation of property, possession and any other right in rem over Mexican civil aircraft and engines; as well as the lease of national and foreign aircraft before the Mexican Aviation Registry (Registro Aeronáutico Méxicano).

Thus bringing up the fact that under the Civil Aviation Law the registration of rights, aside from leases, in regards to foreign aircraft is not a legal requirement; the first step is to define if, additionally to leases, other rights in rem over foreign aircraft can be registered before the Mexican Aviation Registry (RAM).

Mexican Aviation Registry (RAM) and rights in rem over foreign aircraft.

The Civil Aviation Law in its Chapter X "About Mexican Aviation Registry", article 47, section I; states the existence of the Mexican Aviation Registry, a public entity that amongst other attributions, is entitled to register all rights in rem over Mexican civil aircraft and engines; as well as the lease of Mexican and foreign aircraft.

"Article 47. The Mexican Aviation Registry is public, it will be undertaken by the Ministry of Communications and Transportation, and it shall register:

I. The documents that entail the acquisition, transmission, amendment, encumbrance or cancellation of property, possession and any other right in rem over Mexican civil aircraft and engines; as well as the lease of national and foreign aircraft;

..."

As previously noted, the abovementioned Article 47 clearly overlooks the obligation or prerogative for the registration of rights in rem over foreign aircraft before the Mexican Aviation Registry.

Furthermore, Article 11 of the Regulation of the Mexican Aviation Registry, narrows down the acts subject to registration before the Mexican Aviation Registry, waiving the possibility of registering leases over foreign aircraft and engines; extending the viability for the registration of foreign engines, as follows:

"Article 11. The documents that evidence acts subject to registration, shall be registered in the following Subsection of the Aviation Section:

In Aviation Subsection, those in regards to the acquisition, transmission, amendment, encumbrance or cancellation of property, possession and other rights in rem on Mexican civil aircraft and engines, as well as the lease agreements for Mexican and foreign aircraft and engines;

..."

In that sense, and bearing in mind that the Civil Aviation Law does not state the obligation; and confirming that the Regulation of the Mexican Aviation Registry does not states a subsection of the Aviation Section of the RAM for its registration; rights in rem over foreign aircraft or engines cannot be registered before the Mexican Aviation Registry.

So, if rights in rem over foreign aircraft or engines cannot be registered before the Mexican Aviation Registry; the second issue is to define if these acts can be registered before a Mexican entity.

Movable Guarantees Sole Registry (RUG) and rights in rem over foreign aircraft.

The Movable Guarantees Sole Registry (Registro Único de Garantías Mobiliarias) was designed by the Mexican Government to stimulate the use of movable assets as securities; and established by the Secretariat of Economy "Secretaría de Economía" through the amendments to the Regulation of the Public Registry of Commerce published in the official gazette on September 23, 2010. In that sense the RUG is a section of the Public Registry of Commerce operated by the Secretariat of Economy.

The RUG has the authority to register, as per requested by any interested party, any Movable Guarantee, defined as the effect of any commercial legal act through which is constituted, modified, transmitted or cancelled a guarantee or special privilege or a retention right in favor to the creditor, over a movable asset or group, to guarantee the observance of an obligation1.

Article 32 of the Regulation of the Public Registry of Commerce states the classification of Movable Guarantees and movable assets than can be subject of a Movable Guarantee. Based on these classifications, we can confirm that a guarantee or right in rem over a foreign aircraft fit within both of listed classifications for Movable Guarantees and movable assets because section A, subsection IV states Movable Guarantees constituted on aircraft and vessel; and section B, subsection II states that "engine vehicles" are subject to Movable Guarantees to be registered before the RUG.

On the other hand, and apart to the analysis made in precedent paragraphs; it is also relevant to refer to the article 31 Bis of the Regulation of the Public Registry of Commerce, which anticipates the existence of specialized registries to certain movable guarantees, stating the obligation of the specialized registry to replicate its registrations before the RUG in order to create a harmonized system. Nevertheless, and as we have analyzed, a guarantee over a foreign aircraft or engine is not subject to registry before the RAM as a specialized registry in aviation matters; so this rule is just applicable to guarantees registered before the RAM over Mexican civil aircraft.

As a result of the analysis made to the stated in Civil Aviation Law, Regulation of the Mexican Aviation Registry and the Regulation of the Public Registry of Commerce; rights in rem over foreign aircraft cannot be registered before the RAM; however as a sole discretion of the interested party its registration can be conducted before the RUG. The aforesaid, regardless of the legal principle stating that special provisions overrule general provisions, in this case applicable in regards to the specialized registry in aviation affairs (RAM) against the registry for Movable Guarantees (RUG) because the specialized registry does not states the registration of rights in rem over foreign aircraft and engines; just the registry of its leases.

Finally, this author can conclude that even when a Movable Guarantee over a foreign aircraft can be registered before the RUG; a domestic registry has not jurisdiction in regards to a foreign aircraft, therefore its registration would not cause any legal effect in regards to any other right in rem duly registered before the authority of the state of registry.

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Footnotes

* In colaboration with Juan Manuel Estrada

1.- Article 1, section II of the Regulation of the Public Registry of Commerce

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