In the 2022 Chambers and Partners Global Aviation Finance &
Leasing Guide for Guernsey, our aviation experts provide a
comprehensive overview of the latest legal information regarding
aircraft and engine purchase and sale, aircraft and engine leasing
and aircraft debt finance.
This year's chapter was authored by Guernsey partners Kim
Paiva, Sarah Brehaut and Chris Hutley-Hurst.
1 . AIRCRAFT AND ENGINE PURCHASE AND SALE
1.1 Sales Agreements
1.1.1 Taxes/Duties Payable Upon Execution of the Sales Agreement
There are no Guernsey taxes or duties payable upon executing an aircraft or engine sale agreement (including for the sale of an ownership interest in an entity) where the asset is either located physically in Guernsey or owned by a domestic party.
1.1.2 Enforceability Against Domestic Parties
Guernsey law has no formal legal requirement that a sale agreement must be translated, certified, notarised or legalised to be valid or enforceable against a domestic party; however, taking such steps is advisable to reduce the likelihood of an attempt to have the sale agreement set aside. To that end, at the least, witnessing of signatures is generally advisable.
1.2 Transfer of Ownership
1.2.1 Transferring Title
Guernsey′s legislation does not set out formalities for the transfer of title to an aircraft or engine. It is customary for a bill of sale to be used, but this is not a Guernsey law requirement. Whether such a title transfer includes all installed parts (such as an AMD Accelerated Processing Unit (APU)) would depend on the terms of the contract.
If following the sale of the relevant ownership interest, the entity owning the legal title remains the same, no sale of the physical asset would occur. It should be noted that if the aircraft is registered on the Guernsey Aircraft Register (as defined in 1.2.4 Registration, Filing and/ or Consent from Government Entities), any change in particulars of the aircraft (including any change in beneficial or legal ownership) furnished to the Registrar (as defined in 1.2.4 Registration, Filing and/or Consent from Government Entities) at the time of first registration should be notified to the Registrar.
1.2.2 Sales Governed by English or New York Law
There is no formal legal requirement under Guernsey law that a bill of sale needs to be governed by Guernsey law for the Guernsey courts to recognise the transfer of title. There are no known specific requirements other than the general requirements for any contract to be substantively valid as a contract.
1.2.3 Enforceability Against Domestic Parties
There is no formal legal requirement under Guernsey law that the bill of sale must be translated, certified, notarised or legalised to be valid or enforceable against a domestic party; however, taking such steps will reduce the prospect of any subsequent challenge to the bill of sale.
1.2.4 Registration, Filing and/or Consent From Government Entities
There is no formal Guernsey law requirement to register or file a bill of sale with any Guernsey government entity or requirement to obtain consent from any government entity, except that a copy of the bill of sale will need to be provided to the Guernsey Aircraft Registry (the Registry) in respect of an aircraft registered or to be registered on the Guernsey Aircraft Register (the Aircraft Register).
For a new registration, registration commences by way of an initial application form completed via the Registry website. Thereafter, further information is provided to the Registry electronically and should include a copy of the bill of sale for the aircraft in favour of the registering owner.
If there is a change in ownership of a Guernseyregistered aircraft, the Registry must be notified within 21 days, and a copy of the bill of sale for the aircraft should be provided as evidence of that change in ownership.
In each case, once all information has been provided to the Registry, the Aircraft Register can often be updated on the same day.
If a document is not provided in English, a translation of it in English must be provided unless waived by the Registrar of Aircraft (the Registrar).
No government applications or consents are required as a prerequisite to executing and delivering a bill of sale in relation to an aircraft or engine registered in Guernsey.
Originally published in the 2022 Chambers and Partners Global Aviation Finance & Leasing Guide for Guernsey
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
