Aviation Finance & Leasing 2020

Last Updated July 30, 2020

Sweden

Law and Practice

Authors



IUNO is an international law firm with offices in Denmark, Sweden and Norway. Using the latest technology and an untraditional approach, the firm provides specialised advice to meet the needs of companies in the Nordic region. The team focuses on five specific areas: HR legal, corporate, transport, insurance, and IT and technology. The aim at IUNO is to break from conventional thinking and provide new solutions that create better value for the firm's clients. Professional standards are not an issue at IUNO. The attorneys believe in specialisation and do not engage in areas of practice that fall outside their expertise, ensuring that their clients have ready access to top-notch professional advice.

For sellers and buyers with no physical or permanent presence in Sweden, there are, as a rule, no taxes or duties payable following the execution of an aircraft or engine sale agreement.

For sellers and buyers with a physical and/or permanent presence in Sweden, there might be taxes and duties payable depending on whether the transaction is covered by a Swedish double tax treaty.

Sale of an aircraft to carriers where the aircraft is mainly meant for operating outside Sweden is exempt from value added tax.

It is advisable for a sale agreement to be in writing and in Swedish, but it is not necessary for sale agreements to be translated, certified, notarised or legalised in Sweden in order to be enforceable against a domestic party, even though it is recommended.

Transfer of title is governed by general Swedish rules. The transfer is generally made through a bill of sale. A request must be submitted to the Swedish Civil Aviation Authority (CAA), Transportstyrelsen, for registration of the ownership, since the aircraft must be registered in the Swedish Civil Aircraft Register, SFS 1986:172 Förordning (1986:172) om luftfartygsregistret m.m. A transfer as such will in general apply to the whole aircraft, including all parts.

Sweden ratified the Cape Town Convention on 1 April 2016 and therefore it is also possible to transfer the title to an engine separately.

In Sweden, sale of the ownership interest in a limited liability company does not constitute sale of the entity’s assets. However, a sale of ownership interest may trigger any change-of-control clauses.

A bill of sale governed by English or New York law will apply within the Swedish jurisdiction. However, in relation to third parties, mandatory rules apply and must be handled initially, at the stage where transfer of title is agreed. This applies regardless of what the parties may have agreed inter partes in relation to transfer of title.

There are no minimum substantive requirements that must be satisfied for a bill of sale to be recognised. However, when registering the ownership of the aircraft, the bill of sale must be included in original form or a certified copy.

If the bill of sale is in a language other than Swedish, Norwegian, Danish or English, a certified translation to one of these languages must be provided.

Ownership of aircraft used for commercial air transport, commercial operations other than air transport and for private flights must be registered in the Swedish Civil Aircraft Register if the aircraft is not registered in another EU member state or any European Free Trade Association (EFTA) state. Thus, the Swedish CAA should be given notice of a change of ownership as soon as possible.

The Swedish CAA must consent to the registration.

In order to register the aircraft in the Swedish Civil Aircraft Register, the bill of sale must be sent in original form or as a certified copy thereof. The bill of sale alone is not sufficient to register the aircraft. Several other documents must be presented.

The application for registration is only available in Swedish and the document’s name is ansökan om registrering, L1356. There are other requirements, such as a certificate of insurance according to Regulation (EC) No 785/2004, an ELT406 MHz Distress Beacon Registration and a photo of the aircraft's manufacturing plate. Please visit the Transportstyrelsen website for the full list of documents required for the application.

It is also important that the company sends documents of authority that have been registered at the Swedish Companies Registration Office or foreign documents equivalent to the certificate of registration.

The processing time for a case handled by the Transport Agency depends on what the matter is and how complete the application is.

The processing time for registration is about two weeks.

There are no government applications or consents required as a prerequisite to the execution and delivery of a bill of sale in relation to an aircraft or engine registered in Sweden, but – as mentioned above – the ownership must be registered in the Swedish Civil Aircraft Register to ensure that the aircraft can be used commercially.

As a general rule, there are no taxes payable for executing and/or delivering a bill of sale or transferring the ownership interest to an entity that owns an aircraft or engine when the seller is not subject to Swedish taxation.

Executing and/or delivering a bill of sale or transferring the ownership interest to an entity that owns an aircraft or engine is not subject to special duties.

Operational, wet and financial leasing as well as leases of engines only or other parts are allowed and recognised in Sweden.

Parties are free to specify the applicable law.

There are no Swedish restrictions that prevent the lessee from making rent payments to foreign lessors in US dollars. Thereby, the transaction may become subject to US jurisdiction and American restrictions.

There are no exchange controls in Sweden – except for those restricting money laundering – that could prevent rent payments under a lease or any repatriation of realisation of proceeds. Nevertheless, payments to foreign companies that are currently subject to United Nations or EU sanctions may be subject to exchange control or currency restrictions.

The Organisation for Economic Co-operation and Development (OECD) Model Tax Convention is used as a model for the Swedish double tax treaties. Profits generated from leasing and trading of aircraft operating in international traffic are taxable in the contracting state in which the place of effective management of the enterprise is situated.

Some Swedish double tax treaties may have a provision stating that the above-mentioned rule only applies to the Swedish shares of the Nordic airline SAS.

For lessors and lessees with a physical and/or permanent presence in Sweden, there might be taxes and duties payable, depending on whether the transaction is covered by a Swedish double tax treaty.

Depending on the structure of the leasing agreement, Swedish tax regulation might be applicable to sublessors that are Swedish entities.

A lessor does not have to be licensed or otherwise qualified to do business with a domestic lessee in Sweden. However, all leasing, except wet lease-out, requires the permission of the licensing authorities concerned, pursuant to Article 13 of Regulation (EC) No 1008/2008. Wet lease-out should be notified to the competent authority.

Each holder of an operating licence (OL) shall have a valid operating licence (AOC) in order to exercise the traffic rights regarding the activity covered by the operating licence, in accordance with Article 6 of Regulation (EC) No 1008/2008.

Standard lease forms used for leases under English or New York law will normally also be applicable in Sweden.

Provided they have been properly agreed upon, tax and other withholding gross-up provisions are permissible and enforceable.

Installed or replaced parts on an aircraft or an engine are, as a rule, covered by the lease.

Rights established after 1 April 2016 are regulated by the Cape Town Convention, under which it is possible to register separate rights on aircraft engines.

Rights established before 1 April 2016 are subject to the previous regime found in the Geneva Convention. Under this regime, ownership and mortgage rights regarding aircraft also cover attached components, including engines. For rights established before 1 April 2016, the attached engine is at risk of transferring mortgage and ownership rights to an aircraft to which it is more than temporarily attached.

Owner trustees as known in other jurisdictions work differently in Sweden and are not recognised as such.

For rights established after 1 April 2016, it is possible to register ownership interests on the International Registry of Mobile Assets in accordance with the Cape Town Convention.

For ownership rights falling outside the scope of the Cape Town Convention, it is possible to register the interests of the owner or lessor of an aircraft in the Swedish Aviation Rights Register, which is administered by the Swedish CAA.

The notation creates priority and protection against third parties from the date of the application for registration. It is a prerequisite for registration of an aircraft in the registry that the aircraft in question is registered in the Swedish Civil Aircraft Register. Applications for registrations made the same day are given equal rights.

It is possible to register an aircraft in the name of the aircraft owner in the Swedish Civil Aircraft Register, even if the owner is not the operator of the aircraft. It is not possible for the operator to register a lease without the consent of the owner.

If a leased flight is to be registered in the registry, it is mandatory to provide a copy of the leasing agreement for the application. The operator is registered separately.

There is no separate engine registry in Sweden. However, further to the ratification of the Cape Town Convention in Sweden, rights regarding aircraft and engines can be registered in the International Registry of Mobile Assets.

It is also possible to legally protect rights – such as acquisition, right of use or a mortgage on an aircraft – through the Swedish Aviation Rights Register, Inskrivningsregistret.

Rights registered in international registers will nevertheless have priority over rights in the Swedish Aviation Rights Register, unless the rights were submitted to the Swedish Aviation Rights Register before the ratification of the Cape Town Convention on 1 April 2016.

There is no specific register for registering leasing rights, although the lease must be noted in the Swedish Civil Aircraft register.

The lease agreement can be submitted to the Swedish Aviation Rights Register. If it is not submitted there, the lease must immediately be registered in the Swedish Civil Aviation Rights Register if the lease is for an unspecified period of time or for a specified period of at least one month. If such registration is made, the lessor or user of the aircraft may also request that a note is made to the Swedish Civil Aircraft register.

To fulfil the formalities required to get a lease approved by the Swedish CAA, the following documents need to be presented: an original application form, signed by the lessee; the original lease agreement, alongside two certified copies thereof; a certified copy of the lessee’s birth certificate, or if the lessee is a corporate entity, a certified copy of the certificate of registration not older than six months; and a document proving that the person acting on behalf of the lessee is an authorised signatory of the lessee.

The aircraft must be registered in the Swedish Civil Aircraft Register as a prerequisite to the execution and delivery of an aircraft and/or engine lease.

For a lease to be registered in a Swedish register, the written language must be Swedish, Norwegian, Danish or English; otherwise a certified translation to one of these languages must be provided.

The signature, the authority as well as the date of signature must be made in front of a notary public or two attesting witnesses.

If a document is signed by a foreign company, the signatory's power to bind the company shall be certified by a notary public.

The final submission fee for registration at the Swedish Aviation Rights Register is normally around SEK6,500 and if proof of registration is requested from the Swedish Aviation Rights Register, the fee is SEK8,000.

To remain in the Swedish Aviation Rights Register, a fee of SEK500 a year per aircraft must be submitted.

There is no official information available in this respect.

To register the aircraft in the Swedish Civil Aircraft Register, the bill of sale must be sent in original form or as a certified copy thereof. The bill of sale alone is not sufficient to register the aircraft. Several other documents must be presented.

The application for registration is only available in Swedish and the document’s name is ansökan om registrering, L1356. There are other requirements, such as a certificate of insurance according to Regulation (EC) No 785/2004, an ELT406 MHz Distress Beacon Registration and a photo of the aircraft's manufacturing plate. Please visit the Transportstyrelsen’s website for the full application list.

It is acceptable to submit the registration in Swedish, Norwegian, Danish or English; otherwise a certified translation to one of these languages must be provided.

It is also important that the company provides documents of authority that have been registered at the Swedish Companies Registration Office or foreign documents equivalent to the certificate of registration.

If the company is not registered with the Swedish Business Authority, or if it is a firm, a union or a club, the articles and signed minutes from the latest general meeting or certification by a notary shall be enclosed.

Foreign lessors with no physical or permanent presence in Sweden are generally not subject to Swedish tax.

Foreign lessors’ leasing income is – as a rule – not seen as a source of income and therefore the lessor will not be tax liable in Sweden, unless the lessor is subject to Swedish tax for other reasons.

Failure to maintain the aircraft and/or the engine may cause risk of third-party liability.

The doctrine of strict liability for owners applies in Sweden.

The creditors of a domestic lessee of an aircraft cannot attach claims to the aircraft.

Fees due under public law and expenses relating to salvage operations take priority over a lessor’s rights regardless of whether the lease/lessor is registered in the Swedish Aviation Rights Register.

There is no requirement for insurances – neither in part nor in whole – to be placed within a domestic insurance company.

There are mandatory insurance coverage requirements imposed according to Regulation (EC) No 785/2004 of the European Parliament and the Council. The regulation provides insurance requirements with reference to passengers, baggage, cargo and third parties.

Other situations that must be insured are acts of war, terrorism, hijacking, acts of sabotage, unlawful seizure of aircraft and civil commotion.

Regarding insurance for risks in connection with acts of war and terrorism, the regulation makes an exception for some aircraft; for example, state aircraft, aircraft (including gliders) with a maximum take-off mass (MTOM) of less than 500 kg and microlights (Article 2.2 in the Regulation).

Reinsurances can be placed outside Swedish jurisdiction up to a 100% coverage. Certain jurisdictions may be subject to international embargoes.

Cut-through clauses are generally considered enforceable under Swedish law.

The insurance agreement may provide for assignment of the insurance proceeds to the lessor.

Termination and re-export and/or sale may be carried out subject to the terms of the lease agreement; however, it is subject to any enforceable third-party rights.

It is not possible for a lessor to take physical possession of the aircraft without the lessee’s consent or a court order from the bailiff’s court.

There is no specific court competent to decide aviation disputes. All aviation disputes are, as a main rule, commenced in the city courts.

Swedish law provides for summary judgments.

The lessor can apply for a summary judgment at the bailiff authority and must specify how large the claimed amount is in the application.

The ruling is an enforcement order and valid as a court judgment. Should the defendant dispute the applicant's claim, the case may, at the applicant's request, proceed to the district court.

Swedish courts will typically uphold foreign law as the governing law of an aircraft lease and will typically also uphold the submission to a foreign jurisdiction.

Whether a waiver of immunity will be upheld by the courts depends on the wording of the waiver.

Foreign court decisions are enforceable in Sweden, provided the decision has been handed down by a court in a country where Sweden recognises enforceability. Court decisions by EU member states are recognised in Sweden.

With regard to arbitral awards, Sweden is a party to the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the "New York Convention"). Therefore, arbitral awards issued under the New York Convention are enforceable in Sweden.

In general, re-examination of the matter is only allowed to a very limited extent to check whether the decision is contrary to ordre public.

In Sweden it is possible for a lessor under an aircraft lease to obtain a judgment in a foreign currency.

The only limitations applicable are the general prohibitions in the Swedish Criminal Code and the Swedish Interest Act.

Lessors under an aircraft lease are only required to pay a limited court fee in connection with the enforcement of a lease in Sweden. Part of the court fee depends on the actual amount claimed.

Except for the notice periods set out in the Cape Town Convention and the general ten days’ notice in EU law, no mandatory notice period applies.

It is not possible for a lessee to claim sovereign immunity or other immunity from suit in Sweden.

Sweden has adopted the New York Convention. Therefore, as mentioned above, arbitral awards rendered under the New York Convention are enforceable in Sweden.

Timely notice must always be observed to avoid potential loss of rights.

Swedish law recognises the concept of novation and the concept of contractual assignment. For contractual assignment, it is important that the assignee ensures that the other party is properly notified. For novation, it must be accepted by the creditor in order for it to be enforceable.

Under an aircraft lease, the lessor may assign or novate its rights under such lease to a new lessor pursuant to a New York or English law-governed assignment and assumption agreement or novation agreement (or deed). Such an assignment or novation will normally be held valid by the Swedish courts, provided proper and fulfilling evidence is submitted.

There are no mandatory terms or similar requirements that must be included in the agreement or deed in this respect.

It is advisable for an aircraft and/or engine lease assignment and for an assumption/novation to be in writing and in Swedish, but it is not necessary that they are translated, certified, notarised or legalised in Sweden in order to be enforceable against a domestic party.

It is possible to register an aircraft and/or engine lease assignment and assumption/novation in the Swedish Aviation Rights Register, provided that such registration falls outside the scope of the Cape Town Convention.

The Swedish CAA must consent to the registration.

In order to register such a right, a form must be filled in and filed for registration in accordance with the guidelines issued by the Swedish CAA.

The time for the procedure may vary, but it is possible to apply for urgent processing.

It is a prerequisite for registration of an aircraft in the Swedish Rights Registry that the said aircraft is registered in the Swedish Civil Aircraft Register.

No fees apply for the registration of an assumption/novation agreement or as a consequence of an original or a copy of it being brought into Sweden.

In Sweden, the sale of the ownership interest in a limited liability company does not constitute the sale of the entity’s assets. However, a sale of ownership interest may trigger any change-of-control clauses.

Aircraft may be deregistered by the flight’s registered owner and if any other registrations have been cancelled or deleted. The following steps are required for deregistration.

The application for deregistration is called "L1684". The application must be filled in and sent in original form to Transportstyrelsen. In the application, the applicant must state whether there is a registration in the aircraft and state whose benefit the registration applies to. If there is a registration in the aircraft, the beneficiary must have approved the deregistration.

The registered owner of the aircraft also needs to provide the company’s registration certificate to Transportstyrelsen. The document must not be older than six months and must be issued by Bolagsverket, The Swedish Companies Registration Office.

Foreign companies need to hand in a certificate equivalent to Bolagsverket’s company registration certificate. A notarised document where a national notarius publicus confirms the company’s existence and authorised signatory may also be acceptable. The document must not be older than six months and must be in original form.

If the flight is owned by a flight club, the following documents must be sent to Transportstyrelsen: an original or certified copy of the document stating the club’s authorised signatory and the original statutes of the flight club.

In the case of deregistration, the Swedish Post and Telecom Authority (Post- och telestyrelsen) must be informed in order to revoke the licence to use radio transmitters on board the aircraft.

Only the owner of an aircraft may apply for the deregistration of that aircraft. The owner must ensure it receives the lessee or operator’s consent, as otherwise the deregistration may be considered as a breach of contract.

In order to apply for a deregistration, the applicant must enclose the existing certificate of registration as well as the flight time and landing summary.

The processing time will vary, but it is possible to apply for urgent processing.

Only one procedure for deregistration is available.

No significant costs/fees/taxes are chargeable in respect of the deregistration of an aircraft.

The owner of the aircraft always has the possibility to give another person power of attorney to sign the different documents to be used in connection with the registration of the aircraft. It must clearly appear from the power of attorney that the person in question can sign the specific document in question. The power of attorney shall be signed by the owner of the aircraft. If the owner is a company, the document shall be signed by the person or persons who, according to the company's provisions regulating the power to bind the company, can make arrangements on behalf of the company. The original power of attorney shall always be shown to the Swedish CAA upon request.

Documentation for the powers of the signatories to decide on behalf of the company shall be enclosed in the form of an extract from the Swedish Business Authority. If the company is not registered in the Swedish Business Authority, the articles and signed minutes from the latest general meeting or certification by a notary shall be enclosed.

There is no requirement that a deregistration power of attorney has to be governed by the laws of Sweden; however, it is advisable that the power is issued in writing.

As a principle, a power of attorney can be made irrevocable, but Swedish courts may set aside an irrevocability clause under the general terms applicable for unfair contracts.

Export of the aircraft requires consent from the lessee and other parties with property-protected third-party rights as otherwise the export may incur claims for damages. During negotiations it is advisable to obtain a properly signed irrevocable de-registration and export request authorisation (IDERA) according to the Cape Town Convention. There is no specific requirement as to the physical location of the aircraft at the time of deregistration and/or export.

Export licences may be required, depending on the exported product. Aircraft or parts thereof may be subject to export control. An application may be filed in advance and will be processed within reasonable processing time.

No significant costs or fees are charged in respect of the exported aircraft. Export in connection with a sale may be subject to taxation.

Deregistration of the aircraft is subject to the standard procedures followed by the Swedish CAA. Swedish registration marks presuppose proper registration in the Swedish Civil Aircraft Register.

The bankruptcy estate is bound by a deregistration power of attorney or an IDERA to a lessor, owner or mortgagee, provided that the lessor, owner or mortgagee is not in breach of contract.

Under Swedish law, a bankruptcy estate is entitled to decide whether to accede into any agreements that the debtor has entered into before the bankruptcy and exercise the same rights as would have applied otherwise. As long as the bankruptcy estate complies with the terms of the leasing agreement, the lessor must accept the bankruptcy estate as the new lessee. The bankruptcy estate will not gain title to the aircraft. The bankruptcy estate must respect any other creditor with better priority than the lessors; however, the costs in connection with the bankruptcy have first priority.

If a borrower, a guarantor or an entity providing security becomes insolvent, this may constitute a breach of the obligations of the lender under the loan agreement.

A moratorium may be imposed in connection with insolvency proceedings. However, it is not often granted unless the lender gives his or her acceptance.

If the lender is the state, the bailiff can approve a moratorium if it can be assumed to be beneficial to the public, whether it is required for the debtor's personal circumstances, or if the question about moratorium has been tried by a competent authority.

The time for an imposed moratorium varies but it may not exceed a year.

A domestic lessee can be liquidated or placed in administration or receivership through an application filed with the relevant district court. A fee may be incurred. The application may be filed by the lessee or by the lessee’s creditors.

Ipso facto default clauses are not binding for the bankruptcy estate under Swedish law. Provided that the bankruptcy estate complies with the terms of the lease agreement, repossession may not take place.

If a domestic lessee is wound up by a court or administration proceeding, the bankruptcy estate adopts all rights and obligations applicable for the lessee, unless the receiver in bankruptcy has decided not to accede to the pre-bankruptcy agreement.

Sweden has ratified the Convention on International Interests in Mobile Equipment (the “Cape Town Convention”) and the Protocol to the Convention on International Interests in Mobile Equipment on Matters specific to Aircraft Equipment (the “Aircraft Protocol”). The Cape Town Convention and the Aircraft Protocol became effective in Sweden on 1 April 2016. No authorised entry point (AEP) regime applies.

Sweden has made the following declarations under the Cape Town Convention.

  • General declaration under Article 39(1)(a) – Sweden has declared that all categories of non-consensual rights or interests that, under its laws, have and will in the future have priority over an interest in an object equivalent to that of the holder of a registered international interest shall have priority over a registered international interest. This applies whether in or outside insolvency proceedings and whether registered before or after the Kingdom of Sweden’s accession.
  • General declaration under Article 39(1)(b) – Sweden has declared that nothing in the Convention shall affect its right, or that of any state entity, any intergovernmental organisation or other private provider of public services to arrest or detain an object under its laws for payment of amounts owed to it or to any such state entity, organisation or provider directly relating to the services provided by it in respect of that object or another object.
  • Declaration under Article 39(4) – Sweden has declared that pursuant to Article 39(4) of the Convention, a right or interest in a category referred to in sub-paragraph (1)(a) above shall have priority over an international interest registered prior to the date of deposit of the Swedish instrument of accession.
  • Declaration under Article 40 – Sweden has declared that for the purposes of Article 40 of the Convention, a non-consensual right or interest arising under Swedish law, in which an object is subject to attachment or seizure (including provisionally), shall be registrable under the Convention as regards any category of object as if the right or interest were an international interest and shall be regulated accordingly.
  • Mandatory declaration under Article 54(2) applicable to all relevant remedies – Sweden has declared that all remedies available to the creditor under the Convention that are not expressed under the relevant provision thereof to require application to the court may be exercised without court action and without leave of the court.

Sweden has made the following declarations under the Aircraft Protocol:

  • a declaration under Article XXX(1) in respect of Article XII;
  • the Kingdom of Sweden declares that it will apply Article XII;
  • a declaration under Article XXX(1) in respect of Article XIII; and
  • the Kingdom of Sweden declares that it will apply Article XIII.

Article XIII of the Aircraft Protocol applies in Sweden. The IDERA must be in the form specified in the Cape Town Convention and must be signed by the registered owner of the aircraft. After receiving an IDERA, the Swedish CAA will register the IDERA accordingly in the Swedish Civil Aircraft Register.

So far, the experience of the Swedish courts regarding the Cape Town Convention and the Aircraft Protocol is very limited. No leading court decisions have yet been handed down.

Sweden is a party to the 1948 Geneva Convention on the International Recognition of Rights in Aircraft (the “Geneva Convention"). Sweden is not a party to the 1933 Rome Convention on the Unification of Certain Rules relating to the Precautionary Attachment of Aircraft.

All transactions in connection with the financing of an aircraft must comply with Swedish law, particularly including the Act on Measures to Prevent Money Laundering and Financing of Terrorism.

There are no exchange controls or equivalent rules in Sweden – except for those restricting money laundering – that could prevent rent payments under a lease or any repatriation of realisation of proceeds. Nevertheless, payments to foreign companies that are currently the subject of United Nations or EU sanctions may be subject to exchange control or currency restrictions.

Borrowers are permitted to grant security to foreign lenders; however, the security might be subject to United Nations or EU sanctions.

Downstream and cross-stream guarantees are generally permitted. Upstream guarantees may constitute a violation of Swedish corporate law. In order to be valid, any guarantees should be issued in accordance with the articles of association of the guarantor.

It is advisable for a lender to take share security over a domestic SPV that owns a financed aircraft. Pledge of share should be noted in the shareholders' ledger.

Swedish law recognises negative pledge.

Intercreditor arrangements are valid and enforceable.

Swedish law recognises the concept of agency and the role of an agent under a syndicated loan.

The widely recognised methods of debt subordination are also applicable in Sweden.

Outstanding debt may be transferred, subject to prior approval from the creditor(s).

The only applicable limitations are the general prohibitions in the Swedish Criminal Code on usury and the interest limits in the Swedish Interest Act.

All generally accepted forms of security and recourse are accepted under Swedish law, such as bank guarantees or similar security arrangements.

All generally accepted types of security are applicable under Swedish law.

The concept of a security trustee is recognised under Swedish law.

A borrower may assign to a security trustee its rights to the aircraft or under an aircraft lease, pursuant to a security assignment or a mortgage, unless it is otherwise specified in the lease agreement.

Assignment of the rights and benefits of the lessee requires consent from the lessor and will normally also incur assignment of the obligations.

A security assignment or a guarantee may be governed by English or New York law.

If the security assignments are in any language other than Swedish, Norwegian, Danish or English, a certified translation to one of these languages must be provided.

The security arrangements generally recognised are acceptable and sufficient for use in Sweden. Certain fees may apply and these are not excessive (see also 2.3.6 Taxes/Duties Payable for Registering a Lease).

An English or New York law-governed security assignment, or a domestic law security instrument may be registered in Sweden.

Security interests regarding an aircraft and/or engines may be transferred, subject to the general rules of Swedish law.

Provided that the security interest has been properly perfected, the security interest will not be jeopardised, even if the identity of the secured parties changes.

Parallel debt structures are generally not necessary to consider under Swedish law.

As a general rule, a secured party under a security assignment is not considered to be resident, domiciled or carrying out business and therefore it will not be tax liable in Sweden, unless the secured party is subject to Swedish tax for other reasons.

A domestic law mortgage over an aircraft or engine is perfected by registration in the Swedish Rights Registry.

There is no difference between the form of security (or perfection) taken over an aircraft and that taken over spare engines.

A security over a bank account (such as a lease receivables account) will normally be granted through a written agreement and is perfected by notification to the relevant bank.

A lien over an aircraft or an engine for all generally accepted debts and claims may be registered by third parties.

Repair costs and similar liens only cover the work done on the actual secured asset for the value of the work that has been done, unless otherwise agreed.

The concept of fleet lien as such is not recognised in Sweden.

Discharge of a lien or a mortgage may vary but is generally not subject to excessive timeframes.

There is no specific register only covering mortgages and charges. Mortgages and charges may be registered in the Swedish Aviation Rights Register. The effect of the notation in the registry is perfection.

The concept of fleet lien as such is not recognised in Sweden.

A potential purchaser of an aircraft should verify that an aircraft is free of encumbrances by searching the Swedish Aviation Rights Register and the International Register of Mobile Assets.

The enforcement of security assignments, as well as loans and guarantees, requires the assistance of the bailiff’s court. The same rules apply regardless of the form of security.

Where security is granted to a security trustee by a lessor in respect of its rights under an aircraft lease, the security trustee can enforce its rights under the security assignment.

Swedish courts will typically uphold foreign law as the governing law of a finance and/or security document and will typically also uphold the submission to a foreign jurisdiction.

Foreign court decisions are enforceable in Sweden, provided that the decision has been handed down by a court in a country where Sweden recognises enforceability. Court decisions by EU member states are recognised in Sweden.

As for arbitral awards, Sweden is a party to the New York Convention. Therefore, arbitral awards issued under the New York Convention are enforceable in Sweden.

In general, re-examination of the matter is only allowed to a very limited extent in order to check whether the decision is contrary to ordre public.

It is not possible for a secured party to take physical possession of the aircraft without either the lessee’s consent or a court order from the bailiff’s court.

The enforcement of security assignments and aircraft mortgages requires the assistance of the bailiff’s court.

Swedish law provides for summary judgments; however, if granted, a summary judgment must be followed by a regular civil lawsuit. A summary judgment may be obtained within a few days, depending on the circumstances. In connection with the summary judgment, the court may decide that adequate security must be provided.

In Sweden it is possible for a secured party under a security agreement/aircraft mortgage to obtain a judgment in a foreign currency.

Lessors under an aircraft lease are only required to pay a limited court fee in connection with the enforcement of a lease in Sweden. Part of the court fee depends on the actual amount claimed.

Timely notice must always be observed to avoid potential loss of rights.

There are no other material issues and/or material court judgments that are relevant to the purchase, sale, lease or debt finance of an aircraft registered domestically.

There are no current legislative proposals relating to any of the above statements.

IUNO Advokataktiebolag

Grev Turegatan
30114 38 Stockholm
Sweden

+46 760 050 600

iuno@iuno.law se.iuno.law
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IUNO is an international law firm with offices in Denmark, Sweden and Norway. Using the latest technology and an untraditional approach, the firm provides specialised advice to meet the needs of companies in the Nordic region. The team focuses on five specific areas: HR legal, corporate, transport, insurance, and IT and technology. The aim at IUNO is to break from conventional thinking and provide new solutions that create better value for the firm's clients. Professional standards are not an issue at IUNO. The attorneys believe in specialisation and do not engage in areas of practice that fall outside their expertise, ensuring that their clients have ready access to top-notch professional advice.

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