Aviation Finance & Leasing In Malta

1. What international aviation conventions has your jurisdiction signed and/or ratified?

The 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention); The Convention on International Interests in Mobile Equipment and The Protocol to the Convention on Matters Specific to Aircraft Equipment (the Cape Town Convention); The 1985 Convention on the Law Applicable to Trusts and on their Recognition (Hague Convention); The 2007 Convention on Jurisdiction and the Recognition and Enforcement of Judgements in Civil and Commercial (the Lugano Convention); the 2005 Convention on Choice of Court Agreements (the Hague Choice of Court Convention); the 2019 Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (the Hague Judgments Convention); The Chicago Convention of 1944 on International Civil Aviation (the Chicago Convention);

2. If your jurisdiction has signed and ratified the Cape Town Convention: a. Which qualifying declarations (opt-in and opt-out) has your jurisdiction made under the Cape Town Convention? b. Does the Cape Town Convention take priority over conflicting national law?

a. Which qualifying declarations (opt-in and opt-out) has your jurisdiction made under the Cape Town Convention:

I. Article 39

(1) Pursuant to Article 39 l(a) of the Convention, it is declared that the following categories of non-consensual right or interest:

1. Judicial costs incurred in respect of the sale of the aircraft and the distribution of the proceeds thereof pursuant to the enforcement of any mortgage or other executive title;
2. Fees and other charges due to the Director General arising under applicable law of Malta in respect of the aircraft;
3. Wages due to crew in respect of their employment on the aircraft;
4. Any debt due to the holder of a possessory lien for the repair, preservation of the aircraft to the extent of the service performed on and value added to the aircraft;
5. The expenses incurred for the repair, preservation of the aircraft to the extent of the service performed on and value added to the aircraft; and
6. Wages and expenses for salvage in respect of the aircraft,

have priority under the laws of Malta over an interest in an object equivalent to that of the holder of certain registered international interests and shall have priority over such registered international interests whether in or outside insolvency.

(2) Pursuant to Article 39 (4) of the Convention, it is declared that all categories of non-consensual rights or interests which under Maltese law constitute a special privilege on an aircraft shall have priority over an international interest registered prior to the date of its deposit of its instrument of accession.

II. Article 40

Pursuant to Article 40 of the Convention, it is declared that the following categories of non-consensual right or interest;

1. taxes, duties and/or levies due to the Government of Malta in respect of the aircraft; and
2. wages and expenses for assistance or recovery in respect of the aircraft,

shall be registrable under the Convention as regards aircraft objects as if the right or interest were an international interest and shall be regulated accordingly.

III. Article 53

Pursuant to Article 53 of the Convention, it is declared that the First Hall of the Civil Court is the relevant court for the purposes of Article 1 and Chapter XII of the Convention.

IV. Article 54

Pursuant to Article 54 (2) of the Convention, it is declared that all remedies available to the creditor under the Convention or Protocol which are not expressed under the provision thereof to require application to the court, may be exercised without leave of the court or other court action.

b. Does the Cape Town Convention take priority over conflicting national law?

The Cape Town Convention and Aircraft Protocol was acceded to by Malta and came into effect on the 1st February, 2011. The National Implementing Legislation, proposed by AWG / Unidroit, is part of Maltese law and will prevail over the domestic provisions in case of absence of a rule or conflict.

The consolidated text of the Convention and Protocol have been reproduced in the First Schedule of the Aircraft Registration Act (Chapter 503 of the laws of Malta), and have the force of law in Malta in relation to matters to which they apply and shall prevail over any other law, in a case of conflict.

3. Will a court uphold the choice of a foreign governing law in respect of the following contracts and if so, please also state any conditions or formality requirements to this recognition a. Lease and b. Security document (for example, mortgage)?

a. Lease

The choice of the laws of a foreign country to govern the lease or security agreement would be recognised and given effect to as a valid choice of law in any action in the courts of Malta in accordance with the provisions of Regulation 593/2008/EC of the European Parliament and of the Council on the law applicable to contractual obligations {Rome I) of 17 June 2008 {"Rome I Regulation"). The Rome I Regulation applies to contracts concluded after 17 December 2009. It should be noted, however, that:

1. in terms of the said Regulation there are certain instances where other laws may prevail irrespective of the choice of governing law {including in the case of overriding mandatory provisions or the public policy of the forum). In particular {i) where all other elements relevant to the situation at the time of the choice are located in a country other than the country whose law has been chosen, the choice of the parties does not prejudice the application of provisions of the law of that other country which cannot be derogated from by agreement; and {ii) where all other elements relevant to the situation at the time of choice are located in one or more Member States of the European Communities, the parties' choice of applicable law other than that of a Member State shall not prejudice the application of provisions of Community law, where appropriate as implemented in the Member State of the forum, which cannot be derogated from by agreement;
2. in certain instances the Rome I Regulation also imposes limits on the autonomy of the will of the parties to select the applicable law in contract.

b. Security document {for example, mortgage)

See above reply.

4. Please confirm whether it is (i) customary and (ii) necessary to also take a local law mortgage and if so, why?

Where the transaction involves a financier, it is general practice that a mortgage be granted by the Lessor as the owner/mortgagor and registered in favour of the financier as the mortgagee. The mortgage takes effect from the date of its registration by the registry, and it secures debt obligations with preference over other creditors in case of the owner's bankruptcy. Generally, collateral to the mortgage there is also a security agreement which is collateral to the Maltese mortgage. Such agreement need not be governed by Maltese law and customarily (depending on the nationality of the parties involved) either an English law mortgage or a NY law security agreement

5.Are foreign judgments recognized and enforceable by courts of your jurisdiction and if so, please also state any conditions or formality requirements to this recognition (for example, do you require a local court order confirming such recognition)?

A judgement awarded by a competent court outside Malta would be recognised as a valid judgement and enforceable in the courts of Malta, subject to the following:

1. in the case of judgements falling within the scope of the EC Regulation 44/2001 on Jurisdiction and the Recognition and Enforcement of Judgements in Civil and Commercial Matters (the "European Judgements Regulation"), the recognition and enforcement would be subject to the provisions contained in the European Judgements Regulation. Regulation 215/2012 on Jurisdiction and the Recognition and Enforcement of Judgements in Civil and Commercial Matters (the "Recast European Judgements Regulation") then applies to judgements arising out of proceedings instituted on or after 10 January 2015 in terms of article 66(1) of the said Recast European Judgements Regulation;
2. in the case of judgements falling within the scope of the Convention on Jurisdiction and the Recognition and Enforcement of Judgements in Civil and Commercial Matters signed in Lugano on the 30th October 2007 between the European Community, the Kingdom of Denmark, the Republic of Iceland, the Kingdom of Norway and the Swiss Federation (the "Lugano Convention"), the recognition and enforcement of judgements delivered in states bound by the Lugano Convention, other than judgements which fall within the European Judgements Regulation or the Recast European Judgements Regulation, would be subject to the provisions contained in the Lugano Convention;
3. in the case of judgements not falling within the scope of the European Judgements Regulation, the Recast European Judgements Regulation or the Lugano Convention, the recognition and enforcement would be subject to the procedure established in internal law, namely the Code of Organization and Civil Procedure (Chapter 12 of the Laws of Malta), which requires recognition proceedings to be initiated before the First Hall of the Civil Court of Malta. An application for registration of a foreign judgment can be objected to on a number of grounds, including (i) that it contains dispositions contrary to public policy and (ii) that any of the grounds for re-trial subsist as contemplated in the law of Malta on civil procedure;
4. in the case of judgements not falling within the scope of the Recast European Judgements Regulation or the Lugano Convention, which would otherwise be enforceable in accordance with internal law, however which do fall within the scope of the Convention on Choice of Court Agreements, concluded on 30 June 2005 under the auspices of the Hague Conference on Private International Law (the "Hague Choice of Court Convention") having been delivered by the courts of a Contracting State pursuant to an exclusive choice of court agreement, the judgment creditor may alternatively opt to enforce the judgment in Malta in accordance with the procedure laid down in that convention. The Hague Choice of Court Convention entered into force on 1 October 2015 for the Member States of the European Union (excluding Denmark); and
5. in the case of judgements not falling within the scope of the Recast European Judgements Regulation or the Lugano Convention, which would otherwise be enforceable in accordance with internal law, however which do fall within the scope of the Hague Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (the "Hague Judgments Convention"), having been delivered by the courts of a Contracting State, the judgment creditor may alternatively opt to enforce the judgment in Malta in accordance with the procedure laid down in that convention. The

Hague Judgments Convention entered into force on 1 September 2023 for the Member States of the European Union (excluding Denmark).

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Originally published in Legal500

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