British Virgin Islands: Aviation Law 2019

Last Updated: 5 February 2019
Article by Michael Gagie and Mary Dunne

1 GENERAL

1.1 Please list and briefly describe the principal legislation and regulatory bodies which apply to and/ or regulate aviation in your jurisdiction.

The Department of Transport, Tourism and Sport ("DOTTS"), is the Government department responsible for aviation policy in Ireland. It has established the following entities to assist it in carrying out its functions:

  • The Commission for Aviation Regulation ("CAR").
  • The Irish Aviation Authority ("IAA").
  • The Air Accident Investigation Unit ("AAIU"), which is responsible for air accidents that take place in Ireland and air accidents that occur outside Ireland involving Irish registered aircraft.
  • The Environmental Protection Agency ("EPA"), which is responsible for the implementation of the EU emissions trading scheme.

CAR

The key functions performed by the CAR are:

  1. regulation of airport charges at Dublin airport and air traffic control charges at airports with more than 1 million passengers per year;
  2. licensing of air carriers under EU Regulations;
  3. regulation of tour operators and travel agents;
  4. approval of ground handlers;
  5. overseeing slot allocation at Dublin airport; and
  6. overseeing the application of EU Air Passenger Rights and Reduced Mobility.

IAA

The key functions performed by the IAA are:

  1. provision of air traffic management and related services in Irish controlled airspace and on the North Atlantic;
  2. the safety regulation of the civil aviation industry in Ireland;
  3. the oversight of civil aviation security in Ireland; and
  4. the registration of aircraft in Ireland.
  1. The principal aviation legislation applicable in Ireland is as follows:
  2. the Air Navigation and Transport Acts 1936–1998;
  3. the Irish Aviation Authority Act 1993;
  4. the Package Holidays and Travel Trade Act 1995;
  5. the Aviation Regulation Act 2001;
  6. the Air Navigation and Transport (International Conventions) Act 2004;
  7. the International Interests in Mobile Equipment (Cape Town Convention) Act 2005;
  8. the Aviation Act 2006;
  9. the Air Navigation (Notification and Investigation of Accidents, Serious Incidents and Incidents) Regulations 2009;
  10. the State Airports Act 2004;
  11. the State Airports (Shannon Group) Act 2014;
  12. EC (Access to the Ground Handling Market at Community Airports) Regulations 1998 (S.I.505/1998);
  13. EC (Common Rules for the Operation of Air Services in the Community) Regulations (S.I.426/2008);
  14. EC (Rights of Disabled Persons and Persons with Reduced Mobility when Travelling by Air) Regulations 2008 (S.I.299/2008);
  15. Regulation EC/95/93 on common rules for the allocation of slots at community airports;
  16. Regulation EC/261/2004 establishes common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights;
  17. Regulation EC/1107/2006 concerning the rights of disabled persons and persons with reduced mobility when travelling by air;
  18. Regulation EC/1008/2008 on common rules for the operation of air services in the community; and
  19. Regulation EU/373/2017 – the Air Traffic Management Common Requirements Implementing Regulation (ATM/IR) – effective 2 January 2020.

1.2 What are the steps which air carriers need to take in order to obtain an operating licence?

An aircraft operator involved in commercial air transport must be the holder of a valid Air Operator Certificate ("AOC") issued by the IAA and a valid Air Carrier Operating Licence ("ACOL") issued by CAR.

In order to qualify for an ACOL, an applicant must satisfy all of the conditions for granting an operating licence set out in Article 4 of principal regulation EC1008/2008.

ACOLs are divided into two categories related to capacity and maximum take-off weight being category A and category B licences. Category A licence holders are permitted to carry passengers, cargo and/or mail on aircraft with 20 seats or more. Category B licence holders are permitted to take passengers, cargo and/or mail on aircraft with fewer than 20 seats and/or less than 10 tonnes of maximum take-off weight.

1.3 What are the principal pieces of legislation in your jurisdiction which govern air safety, and who administers air safety?

The IAA is responsible for administrating Ireland's international aviation safety obligations and agreements in accordance with standards set by the International Civil Aviation Organisation ("ICAO") and the European Aviation Safety Agency ("EASA").

The Safety Regulation Division of the IAA ensures specific compliance with safety objectives set down under section 14 of the Irish Aviation Authority Act 1993 and the annexes to the Chicago Convention which are implemented through a combination of EU and domestic Irish legislation.

The IAA's remit with respect to safety includes certification and registration of aircraft airworthiness, licensing personnel and organisations involved in aircraft maintenance, incident reporting and management, the protection, storage and collection of information, licensing pilots, air traffic controllers and aerodromes and approving and monitoring air carrier operating standards.

There are EU safety regulations relating to initial and continuing aircraft airworthiness that are directly effective in the EU (including Ireland), for example, Regulation (EU) No 748/2012 regarding the implementation of essential requirements for environmental protection and Regulation (EU) No 1321/2014 relating to the continuing airworthiness of aircraft and aeronautical products, parts and appliances, and on the approval of organisations and personnel involved in these tasks.

1.4 Is air safety regulated separately for commercial, cargo and private carriers?

No, the IAA regulates commercial cargo and private carriers.

1.5 Are air charters regulated separately for commercial, cargo and private carriers?

No, the IAA regulates air charters.

1.6 As regards international air carriers operating in your jurisdiction, are there any particular limitations to be aware of, in particular when compared with 'domestic' or local operators? By way of example only, restrictions and taxes which apply to international but not domestic carriers.

The creation of the EU single market for aviation in the 1990s removed all commercial restrictions on airlines flying within the EU. Under the single market, all EU carriers can operate services on any intra-EU route.

Outside the EU single market, access to the air transport market is still heavily regulated under the framework set down in the Chicago Convention. Under the Chicago Convention, Ireland has negotiated bilaterally with a wide range of States to agree market access rights for both passenger and cargo services. A list of States with which Ireland has a bilateral air transport agreement is available on DOTTS' website: www.dttas.ie. Following the "Open Skies" judgment in the European Court of Justice in 2002, all market access rights negotiated by each of the EU Member States in their bilateral agreements must be equally available to all EU carriers.

Furthermore, under the EU's external aviation policy, the European Commission has been mandated to negotiate air transport agreements on behalf of the EU and its Member States with certain third countries. Under this process, so-called "Open Skies" agreements have been negotiated, removing restrictions on capacity, routing and other limits, creating a free market for services between the parties to that agreement.

Most bilateral air transport agreements require that substantial ownership and effective control be maintained by nationals of each party to the agreement. Within the EU, community airlines are required to be at least 50% owned by EU nationals. The EU has indicated its willingness to negotiate these current ownership and control limitations with States prepared to similarly waive the requirement on a reciprocal basis. However, progress on this matter has been slow.

1.7 Are airports state or privately owned?

The three main airports, Dublin, Cork and Shannon, are 100% Stateowned. Dublin and Cork airports are owned by daa plc. Shannon Airport is owned by Shannon Airport Authority.

The regional airports, the largest of which are Donegal, Knock, Kerry and Waterford, are privately owned.

1.8 Do the airports impose requirements on carriers flying to and from the airports in your jurisdiction?

Dublin Airport is the only Irish airport currently subject to economic regulation of its charges. Economic regulation of charges at Dublin Airport is based on the Aviation Regulation Act 2001 and is implemented by CAR.

Terminal charges are levied by the IAA at Dublin, Cork and Shannon airports and until 2015 were regulated by CAR.

Under the Single European Sky ("SES") initiative, economic regulation of en route over-flights was introduced by way of performance and charging schemes to drive performance by setting binding targets on Member States Regulation 2017/373, which came into force in March 2017, sets out the requirements for improving air traffic management and air navigation services within Europe which will apply to Member States from 2020.

All airlines must comply with EU legislation on reduced mobility and consumer protection.

1.9 What legislative and/or regulatory regime applies to air accidents? For example, are there any particular rules, regulations, systems and procedures in place which need to be adhered to?

The AAIU is responsible for conducting technical investigations into air accidents in Ireland, as well as incidents outside of Ireland involving Irish-registered aircraft.

The Air Navigation (notification and investigation of accidents, serious incidents and incidents) Regulations 2009 ("2009 Regulations") give effect to the requirements of Annex 13 of the Chicago Convention and gives the AAIU the powers it needs to carry out full and detailed technical investigations.

EU Regulation 996/2010 on the Investigation and Prevention of Accidents and Incidents in Civil Aviation is directly applicable in Ireland.

Following an investigation, the AAIU will issue safety recommendations to the appropriate aviation authority. The AAIU does not purport to apportion blame or liability in respect of an accident.

1.10 Have there been any recent cases of note or other notable developments in your jurisdiction involving air operators and/or airports?

Belair Holdings Limited v. Etole Holdings limited & Anor 2015 IEHC 569 – the Irish High Court discharged a non-consensual interest registered on the International Register under the Cape Town Convention.

DOTTS published a Request for Tenders in November 2016 for a Review of Future Capacity Needs at Ireland's State Airports. A key feature of this review will be the timing and financing of a third terminal at Dublin Airport as well as an analysis of future expansion requirements at the three airports.

DOTTS published a policy statement on airport charges in September 2017 which sets about reforming the prices charged by Dublin Airport to airlines, with the purpose of ultimately benefitting customers.

In an unreported judgment in 2017, the Irish Commercial Court made an order to discharge a validly created and registered international interest relating to a terminated sub-lease agreement on the International Register under the Cape Town Convention.

2 AIRCRAFT TRADING, FINANCE AND LEASING

2.1 Does registration of ownership in the aircraft register constitute proof of ownership?

The Irish aircraft register is operated and maintained by the IAA. It is a registry of nationality and not of title. Registration of an aircraft in the name of a person does not establish that person's title to the aircraft and it cannot be regarded as giving notice (whether actual or constructive) of a person's interest in an aircraft.

In order to register an aircraft in Ireland, the aircraft must have a connection to Ireland and, save in the rare case where the IAA grants a specific exemption, the applicant must demonstrate that the aircraft is either wholly owned by an Irish citizen or EU citizen having a place of residence or business in Ireland or owned by a company registered in and having its principal place of business in Ireland or the EU with not less than two thirds of the directors also being Irish or EU citizens. Notwithstanding the foregoing, an aircraft may also be registered in Ireland if it is "chartered by demise, leased or on hire to, or is in the course of being acquired under a lease-purchase or hire-purchase agreement by a citizen or company" where such charter, lease or hire is to an individual or corporate satisfying the requirements set out above with respect to Irish or EU citizenship. When relying on the operator as a connection to Ireland, the IAA may impose any conditions of such registration as it deems fit.

The IAA has concluded a number of arrangements with foreign civil aviation authorities which serve to delegate the responsibility for regulation and safety oversight for Irish registered aircraft from the IAA to the aviation authority in the operator's home state. These agreements are entered into pursuant to Article 83bis of the Chicago Convention which permits bilateral agreements between two aviation authorities located in the Chicago Convention contracting States.

2.2 Is there a register of aircraft mortgages and charges? Broadly speaking, what are the rules around the operation of this register?

The IAA does not operate a register of aircraft mortgages or thirdparty rights or interests in aircraft or engines and will not agree to requests to note a mortgage or third-party interest on the aircraft register or related file. The IAA acknowledges the Irrevocable De- Registration and Export Request Authorisation Register ("IDERA") pursuant to its obligations under the Cape Town Convention as enacted by the International Interests in Mobile Equipment (Cape Town Convention) Act 2005 (the "CTC Act 2005"), but this does not serve to notify third parties or perfect any security interest in an aircraft.

Aircraft mortgages and other "charges" (as defined in the Companies Act 2014 (the "CA2014") over aircraft granted by Irish companies and Irish registered branches of foreign companies) are registrable with the Companies Registration Office (the "CRO") in Ireland within 21 days of the creation of the charge. The register maintained by the CRO operates as a priority register with priority based on the time of filing, not the time of the interest being granted. Under the CA2014, priority interests can be filed up to 21 days prior to the date on which the charge is actually granted with a full filing being made upon the charge actually being granted. Parties may elect to make a single filing upon the charge actually being entered into. If the charge is not registered within 21 days of the date on which it is granted, the charge becomes void against a liquidator and any creditor of the party granting the charge.

The CTC Act 2005 provides for the registration of certain interests in airframes and engines with the International Registry of Mobile Assets to ensure priority. Aircraft mortgages are amongst the interests which constitute "International Interests" (as defined in the Cape Town Convention) to the extent the mortgage is granted by an owner in a contracting State or the aircraft is registered in a contracting State. The International Registry is an online register but, due to it being located in Dublin, disputes over registrations are heard or enforced in the Irish High Court regardless of the country in which the claim originates.

In the English law case of Blue Sky One and Ors v. Mahan Air the court considered the impact on perfection of an English law aircraft mortgage when the asset was located outside of England and Wales at the time the mortgage interest was granted and concluded that a mortgage granted in such circumstances would not serve to create a right in rem in the aircraft. Although this is an English law judgment, unless or until the Irish courts hand down a judgment which takes a different position, the decision of the English court will be considered as persuasive by the Irish court should the same issue be considered by the Irish courts where an Irish law mortgage is involved.

2.3 Are there any particular regulatory requirements which a lessor or a financier needs to be aware of as regards aircraft operation?

Strict liability is imposed on owners under section 21 of the Air Navigation and Transport Act 1936 (as amended) where material damage or loss is caused by any item falling from an aircraft inflight. Lessors and financiers, unless holding an interest akin to an owner, will be unlikely to be held to be liable under section 21 and in any event owners can be indemnified against the risks under section 21 by a third party. Section 21(2) of the Air Navigation and Transport Act 1936 (as amended) also provides that an owner will not be liable where the aircraft is subject to a charter or lease arrangement for 14 days or more and the pilot and crew are not in the employ of the owner.

Save as set out above, liability for financiers, owners and lessors is based in negligence and a failure on the part of the relevant party to discharge a duty of care. Thus, lessors, owners and financiers are unlikely to be held to be responsible for losses resulting from the operation of an aircraft, unless they are actually aware of a defect or issue and failed to take reasonable action in respect of such defect or issue in order to prevent loss.

2.4 As a matter of local law, is there any concept of title annexation, whereby ownership or security interests in a single engine are at risk of automatic transfer or other prejudice when installed 'on-wing' on an aircraft owned by another party? If so, what are the conditions to such title annexation and can owners and financiers of engines take pre-emptive steps to mitigate the risks?

Under Irish law, there is no concept of title annexation, therefore title to an engine remains with the engine owner, even where such engine is installed temporarily or otherwise on another aircraft. Title to such engine needs to be expressly transferred by the owner.

2.5 What (if any) are the tax implications in your jurisdiction for aircraft trading as regards a) valueadded tax (VAT) and/or goods and services tax (GST), and b) documentary taxes such as stamp duty; and (to the extent applicable) do exemptions exist as regards non-domestic purchasers and sellers of aircraft and/or particular aircraft types or operations?

Ireland is an EU Member State and, as such, EU VAT rules are relevant to the sale/purchase and leasing of aircraft. The VAT treatment of the sale of an aircraft will depend on the location of the aircraft at the time of sale and the intended use. If the aircraft were supplied while within the territory of Ireland, Irish VAT the standard rate (23%) would apply. However, the supply of aircraft can be zero rated for VAT purposes where either (i) the aircraft is used by an airline operating for reward chiefly on international routes, or (ii) the aircraft is used and enjoyed outside the EU. VAT could arise in another EU jurisdiction if the aircraft was imported into that jurisdiction by an Irish purchaser.

Where an Irish-based lessor is leasing aircraft to an entity outside Ireland, no Irish VAT should arise on the basis that the place of supply under a lease arrangement is the jurisdiction where the lessee is located. VAT may be chargeable in the jurisdiction of the lessee. Where the lessee is located in Ireland, the supply may be zero rated for Irish VAT purposes where the lessee is operating chiefly on international routes. Where the supply is zero rated, the lessor should be entitled to a credit for any VAT incurred on the acquisition of the aircraft and any related costs.

Irish stamp duty generally applies to the transfer or sale of immovable property, intangible assets and shares in Irish companies. However, transfers of direct ownership in an aircraft or part of an aircraft are expressly exempt from stamp duty and this exemption extends, on a concessionary basis, to transfers of shares in a company which owns aircraft.

2.6 Is your jurisdiction a signatory to the main international Conventions (Montreal, Geneva and Cape Town)?

Ireland is a signatory to the following conventions (as amended and updated) in relation to international airline operations:

  1. The 1929 Warsaw Convention for the Unification of Certain Rules Relating to International Carriage by Air, as amended by the Hague Protocol of 28 September 1955 – ratified 20 September 1935 and 12 October 1959.
  2. The 1944 Chicago Convention on International Civil Aviation – ratified 31 October 1946.
  3. The 1956 Geneva Agreements on the Joint Financing of Certain Air Navigation Services in Greenland/Iceland – ratified 3 June 1960.
  4. The 1962 Rome Protocol Relating to an Amendment to the Convention on International Civil Aviation – ratified 14 February 1963.
  5. The 1971 New York Protocol Relating to an Amendment to the Convention on International Civil Aviation – ratified 15 June 1971.
  6. The 1971 Vienna Protocol relating to an amendment to the Convention on International Civil Aviation – ratified 11 July 1972.
  7. The 1963 Tokyo Convention on Offences and Certain Other Acts Committed on Board Aircraft – ratified 14 November 1975.
  8. The 1970 Hague Convention for the Suppression of Unlawful Seizure of Aircraft – ratified 24 November 1975.
  9. The 1999 Montreal Convention for the Unification of Certain Rules for International Carriage by Air – ratified 29 April 2004.
  10. The 2001 Cape Town Convention on International Interests in Mobile Equipment – ratified 29 July 2005.
  11. The 2001 Protocol to the Convention on International Interests in Mobile Equipment on matters specific to Aircraft Equipment – ratified 23 August 2005.

Ireland has also signed, but has not yet ratified, the 1948 Geneva Convention on the International Recognition of Rights in Aircraft.

2.7 How are the Conventions applied in your jurisdiction?

The Cape Town Convention became law in Ireland on 1 March 2006, following the passing of the CTC Act 2005. The application of the Cape Town Convention was further extended to introduce a bespoke insolvency regime for assets covered by the Cape Town Convention following the granting of an order in May 2017 pursuant to the State Airports (Shannon Group) Act 2014. The court system, and in particular the Commercial Court in Ireland, is the appropriate means of enforcing the Cape Town Convention. The Commercial Court has exclusive jurisdiction to hear any proceedings in connection with any function of the International Registrar under the Cape Town Convention or the Aircraft Protocol as defined in the 2005 Act and the State Airport (Shannon Group) Act 2014.

The Montreal Convention was implemented in Ireland by the Air Navigation and Transport (International Convention) Act 2004. The court system in Ireland is the suitable forum for enforcement of the Montreal Convention. CAR, which has a significant consumer protection role, is the national enforcement body tasked with the monitoring and regulation of EU legislation covering air passenger rights and the provision of assistance to passengers with reduced mobility.

2.8 Does your jurisdiction make use of any taxation benefits which enhance aircraft trading and leasing (either in-bound or out-bound leasing), for example access to an extensive network of Double Tax Treaties or similar, or favourable tax treatment on the disposal of aircraft?

Ireland has a significant double tax treaty network which continues to grow every year. There are currently 74 agreements in place, of which 73 are in force.

The majority of Ireland's double tax treaties provide for reduced withholding tax rates on payments such as lease rental and interest payments and aircraft leasing is a focus when treaties are being negotiated. In terms of particular treaties and jurisdictions, the rate of withholding tax between Ireland and China can be reduced to as little as 5% under the relevant treaty which compares well with most other countries where the lowest rate achievable is between 10% and 15%. The treaties with the US and India also offer reduced withholding rates of between 0% and 15%. The terms of Irish domestic tax law and relevant double taxation agreements also generally provide credit relief to Irish lessors for foreign tax paid.

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