Sale of Aircraft

For foreign aircraft, ie, those not registered with the Moroccan civil aviation authority, no specific taxes or duties are applicable to sales agreements. This holds true even when the asset is physically located in Morocco, or when an original or copy of the agreement is executed locally or electronically.

However, if the sales agreement pertains to an aircraft duly registered in Morocco, the applicable taxes and fees are as follows:

• registration fees of MAD200 payable to the tax administrations (1MAD is approximatively equal to USD0.10);
• stamp duty of MAD20 per contract page; and
• registration fees payable to the Moroccan aviation authority as follows –
1. for the issuance of a new registration certificate: MAD100;
2. for the registration of a newly registered aircraft:
1. MAD500 per tonne for the first ten tonnes based on the aircraft’s empty weight; and
2. MAD100 per tonne beyond the first ten tonnes based on the aircraft’s empty weight; and
3. for registration of an aircraft already registered with the Moroccan aviation authority: MAD100 per tonne based on the aircraft’s empty weight.

Sale of an Ownership Interest in an Entity

There are no specific taxes or duties applicable to the sale of an ownership interest in an entity (ie, a company) other than the standard applicable taxes (eg, registration duties and capital gains tax). The taxes apply where the company is located in Morocco.

The Sale of a Foreign Aircraft

There are no legal provisions committing the parties to translate, certify, notarise or legalise an aircraft sale agreement in case of the sale of a non-Moroccan aircraft. However, in case of litigation before a Moroccan jurisdiction, the latter would require an Arabic translation of all supporting documents.

The Sale of a Moroccan Aircraft

The Moroccan Aviation Code dated 24 May 2016 (the “Moroccan Law”) requires that any sale of an aircraft be documented in an authenticated deed (acte authentique) for its validity. Authenticated deeds are drafted by a Moroccan notary and executed by the parties in the presence of the notary. Since the notarised aircraft sale agreement is to be filed with the Moroccan Tax Authority, it is advisable to choose either Arabic or French as the drafting language of the aforesaid agreement.

Transferring Title to an Aircraft

Ownership is transferred via registration on the aircraft registry, which includes all installed parts unless otherwise specified in the sale agreement.

Transferring Title to an Engine

The Moroccan Law does not have specific provisions for the sale of aircraft engines, nor is there a registration regime for the ownership of engines that are separate from aircraft. The registration and recording provisions that do exist apply only to the aircraft themselves.

However, the sale agreement for a Moroccan-registered aircraft engine should be established in compliance with the mandatory provisions that apply to the sale of aircraft. The agreement should also be notified to the Moroccan Civil Aviation Authority.

The sale of the ownership interest in an entity (ie, a company) is not recognised as a sale of the aircraft or engine itself.

A bill of sale governed by English or New York law would be recognised as long as the aircraft is not registered with the Moroccan Civil Aviation Authority.

There are no specific substantive requirements that must be satisfied for such a bill of sale to be recognised in Morocco.

There are no requirements for a bill of sale to be translated, certified, notarised or legalised to be enforceable against a domestic party. However, if the aircraft is registered with the Moroccan authority, the notarisation requirement explained in1.1.2 Enforceability Against Domestic Parties applies.

For Moroccan aircraft, the notarised aircraft sale agreement should be filed with the Moroccan civil aviation authority.

There is no specific required consent from any government entity.

Regarding Moroccan aircraft, the notarised aircraft sale agreement should be filed with the Moroccan civil aviation authority, along with specific documentation. Registration fees also apply. Once the registration file is reviewed and approved by the Moroccan Civil Aviation Authority, it will proceed with the registration of the aircraft sale agreement in the official aircraft register.

Following this, the title transfer will be published in the Official Gazette.

Generally, there are no specific 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 Morocco.

There are no specific taxes or duties payable for executing and/or delivering a bill of sale or consummating the sale of the ownership interest in an entity that owns a non-Moroccan aircraft or engine, including where title to such aircraft or engine is transferred while it is (i) located in Moroccan jurisdiction, (ii) over international waters, or (iii) in transit to/from Morocco.

Under the Moroccan Law, standard aircraft leasing is provided for, wherein an aircraft’s owner or lessor, in exchange for periodic payments, grants the lessee the right to use and operate the aircraft for a specified duration.

This standard lease may take the form of either a charter party or a location contract. A charter party refers to a lease where the aircraft is leased along with a crew (commonly referred to as a wet lease). On the other hand, a location contract is a lease where the lessor provides the lessee with an aircraft without a crew (known as a dry lease).

In Morocco, all types of leases – operating, wet, finance leases, or leases that specifically concern engines or parts – are generally permissible.

Leases involving either a domestic party or an asset situated in Moroccan jurisdiction can be governed by a foreign law.

There are no material restrictions imposed on domestic lessees making rent payments to foreign lessors in US dollars since US dollars are a currency listed by the Moroccan central bank.

The payment of rentals is not subject to authorisation by the Moroccan exchange authority. However, any repatriation of realisation proceeds when such lease is enforced by a foreign lessor should be fully documented with an enforceable Moroccan court order.

With respect to non-Moroccan aircraft, there are no specific taxes/duties payable for executing a lease physically in the Moroccan jurisdiction and/or by or to a domestic party, or as a consequence of an original or copy of a lease being brought into Moroccan jurisdiction either physically or electronically.

A foreign lessor does not have to be licensed or otherwise qualified in Morocco to do business with a domestic lessee.

There are no mandatory terms required to be in a lease (or ancillary documents thereto) governed by English or New York law that would not typically already be included. Overall, the aircraft lease should refer to the designated contracting parties, to the lease period, to the rent and to the reciprocal rights and duties of the contracting parties. When the aircraft lease is a finance lease it should refer to the terms of the purchase option at the end of the lease period. Moreover, the lease should specify the terms and conditions for the termination or renewal of the lease.

Gross-up provisions are permissible and enforceable.

There are no specific provisions provided for by the Moroccan Law with respect to the leasing of spare parts. However, there is no express prohibition on a lease covering parts that are installed or replaced on an aircraft or engine after its execution.

However, if the spare part lease is not registered with the Moroccan authority, the said lease would not be binding on third parties (see 2.3.3 Aircraft/Engine-Specific Registers). 

To ensure that such parts are covered under the lease, it would be necessary to renew the lease registration for each new part.

There is a risk of title annexation in respect of aircraft engines installed on an airframe.

The concept of a trust and the role of an owner trustee under a lease is not recognised under Moroccan law.

The interests of the owner (legal or beneficial) or a lessor of an aircraft should be noted on the aircraft register. The aircraft is registered in the name of its owner.

The notation of the lease on the aircraft register has a binding effect on third persons.

An aircraft is registered in the name of the owner even if the latter is not also the operator.

The leases of aircraft are registered in the aircraft register (registre d’immatriculation).

With respect to engines, there are no specific filing or registration requirements provided for by the Moroccan Law. However, under the Moroccan commercial code, lease transactions are subject to publication/registration in the national electronic registry of securities, to maintain the lessor’s rights on the registered leased asset (which may include engines) against any third party. Any registration/publication of a leased asset expires after five years and should therefore be renewed every five years to remain valid and enforceable.

Any aircraft lease agreement for a rental period exceeding 30 days must be registered in the aircraft register maintained by the Moroccan Civil Aviation Authority through its submission to the said authority. Furthermore, a notice of the lease registration should be published in the Moroccan Official Gazette.

With respect to an engine lease, the Moroccan Law does not provide for a particular registration/recording regime in Morocco for engine leases. Article 9 of the Moroccan Law provides for a general registration/recording regime for all the conveyance and transfer of the ownership or possession of aircraft.

Unregistered leases are not binding on the Moroccan authorities or third parties. In addition, the owner/lessor could be jointly liable with the operator/lessee for all the damages caused by the latter.

There are no specific government applications or consents required as a prerequisite to the execution and delivery of an aircraft and/or engine lease in relation to an aircraft registered in Morocco.

The lease agreement should be in writing, and duly executed and legalised/apostilled.

Registration fees for aircraft leases with the Moroccan Tax Authority are fixed at MAD200. There is also stamp duty, charged at MAD20 per page. For registration with the Moroccan Civil Aviation Authority, there is a fee of MAD100 per tonne based on the aircraft’s empty weight.

A Moroccan aircraft duly registered with the Moroccan Civil Aviation Authority is not allowed to be registered in other aircraft registers.

The documents that need to be filed with the Moroccan Aviation Authority are as follows:

• original copies of the PoAs (each copy to be legalised/apostilled) to be granted to the representatives of the seller and buyer, who will carry out the transfer procedure at the Moroccan Civil Aviation Authority;
• an original copy of the ownership transfer form to be duly filled and signed by both the new and former owners (form DSA-705-AIR) (the PoAs mentioned above may include the execution of the ownership transfer form or any documents required in connection with the registration of the aircraft ownership transfer);
• an original copy of the application for an aircraft certification registration duly filled and signed by the new owner (form DSA-701-AIR) (the execution of such document may be covered by the PoAs mentioned above); 
• an original copy of the notarised aircraft sale agreement;
• a certified copy duly notarised and apostilled of –
1. the certificate of incorporation of the new owner dated within the last three months; and
2. the current version of the articles of association of the new owner;
• an original copy of a duly legalised/apostilled declaration from the new owner attesting that the aircraft will be based in Morocco;
• should the aircraft be imported –
1. a certificate of payment of customs and other taxes, subject to certain special customs exemptions; and
2. an official statement that the aircraft is not registered in a foreign aircraft register or that such a foreign registration has been cancelled;
• an original copy of the registration certificate of the former owner;
• a valid Moroccan Certificate of Airworthiness (the permanent and renewed certificate) – a certified copy for each may be sufficient;
• a copy of the weighing sheet of the empty aircraft less than four years old; and
• a registration fees receipt.

According the Moroccan tax code, rental rights and similar remunerations relating to the leasing of aircraft assigned to international transport, benefit from a permanent exemption from withholding corporate income tax.

As such, any provisions of the lease relating to an obligation on the part of the lessee to gross-up any rent payments for withholding corporate income tax may not be applicable in Morocco.

The Moroccan tax code does not provide for a definition of the term “permanent establishment”. However, the tax guidelines (the “Guidelines”) of the Moroccan tax authorities provide for a definition like that found in most of the double tax treaties concluded by Morocco.

Moreover, the Guidelines provide for a particular case. A non-resident entity that conducts business in Morocco under a complete commercial cycle (typically, buy-and-sell operations) is deemed to have a permanent establishment in the country.

When the owner is also the operator of the aircraft, they are liable unless they can prove that another person is the operator of the aircraft.

As such, the operator is liable to third parties for any loss or damage caused by the aircraft. They are also responsible for taking out insurance.

Moreover, when an operator of an aircraft, in their capacity as charterer or lessee of the aircraft, does not have exclusive disposal of the aircraft for a period of more than 14 days, the owner, charterer or lessee shall be jointly and severally liable with the operator for damages that occur during that period.

Under Moroccan law, there is no such doctrine of strict liability (or any other similar doctrine). However, if the aircraft lease is duly registered with the Moroccan Civil Aviation Authority, the aircraft operator would be liable for damages or loss caused by the asset.

Creditors of a domestic lessee may attach an aircraft leased to it but owned by a different entity.

There are third-party rights that will take priority over a lessor’s rights under an aircraft or engine lease, whether or not such lease/lessor is registered in the national aircraft register. Generally, the lessor is the owner of the aircraft and it can repossess the leased aircraft in case of an event of default by the lessee. However, the lessor cannot repossess its aircraft if such an aircraft is detained by the Moroccan authorities (such as the customs administration, tax administration, civil aviation administration, etc) for unpaid charges, taxes or customs duties. In this case, the aircraft cannot be repossessed by the lessor until the payment of all the lessee’s claims before the aforementioned authorities.

It is not mandatory that either all or part of the insurances be placed with domestic insurance companies. The Moroccan insurance code allows all or part of the insurance to be placed with foreign insurance companies in the following cases:

• when an international convention ratified by the Moroccan State permits aviation insurance with foreign insurance companies; or
• when it proves impossible to secure insurance coverage for the associated risks from insurance and reinsurance companies licensed in Morocco.

Moroccan law provides that the aircraft operator must have insurance for damages caused to third parties on the ground. The terms and conditions and the limits of the aircraft operator liability is fixed by the Rome convention dated 7 October 1952.

Besides, under the Moroccan Law, air carriers should also have insurance for damages caused to third parties on the ground and passengers carried. The insurance coverage should meet or exceed the limits of liability of the operator provided for by the Montreal Convention.

Reinsurances can be placed outside of the jurisdiction up to 100% coverage subject (for more details, see 2.5.1 Requirement to Engage Domestic Insurance Companies).

A “cut-through” clause would be enforceable, subject to certain conditions.

The assignments of insurances/reinsurances are not prohibited under Moroccan law.

There are no specific restrictions provided for by the law on a lessor’s ability to (i) terminate an aircraft lease, and/or (ii) sell the aircraft following such termination, unless charges/mortgages have been registered on the aircraft register.

For export purposes, the following documents are required for an aircraft registered in Morocco:

• an export permit to be obtained from the Moroccan Customs Authority; and
• the owner should apply for a certificate of airworthiness for export (certificat de navigabilité export) from the Moroccan Civil Aviation Authority before issuing the deregistration certificate from the aircraft register – this is necessary if required by the exporting country and the aircraft must be physically located in Morocco to obtain such a certificate.

The lessor may not physically take possession of the aircraft without obtaining a final court order if the lessee refuses to deliver the aircraft.

There are no specific courts that are competent to decide aviation disputes. The jurisdiction of the court would be determined by the nature of the litigation (eg, commercial, civil, etc).

The lessor could obtain a summary judgment in order to enforce an aircraft lease. The common conditions of judicial summary apply:

• the judicial application must be of an urgent nature; and
• the court decision should not alter the rights of the parties or the merits of the ligation.

The court may render its decision within two or three weeks depending on the complexity and the urgency of the litigation.

Moroccan courts would recognise (i) a foreign law as the governing law of an aircraft lease, (ii) the submission to a foreign jurisdiction, and (iii) a waiver of immunity by the parties of such lease, subject to the applicable Moroccan public order provisions. 

For a foreign court decision to be recognised and enforced, an exequatur must be sought from the competent Moroccan court. While deciding on the exequatur, the court will ensure that the foreign court decision complies with the following requirements: 

• the foreign judgment has been issued by a court with jurisdiction in the country in which the decision was rendered;
• the foreign judgment is final and enforceable in the country in which the decision was rendered;
• the defendant was properly served, and due process was observed in the proceedings;
• the foreign judgment must not disrupt or distort Moroccan public order; and
• no final judgment in the same case between the same parties has been rendered by a Moroccan court to avoid double jeopardy.

A lessor under an aircraft lease could obtain a judgment in a foreign currency.

There are no specific limitations on a lessor’s ability to recover default interest (or the compounding thereof) or to charge additional rent following termination of the lease for default, including where the lessee fails to return the aircraft.

The lessor could be required to pay the judicial expenses in case of judicial trial in connection with the enforcement of such lease. The judicial expenses are set between 0.5% and 1% of the claimed amount. 

There are no legal mandatory notice periods provided for by the law that relate to an aircraft (i) operated domestically, or (ii) leased by a domestic operator.

However, the Moroccan court could decide that the notice period under the contract is too short and could award the lessee damages.

When the lessee is not a governmental body, it may not be entitled to claim sovereign immunity. However, when the lessee is a governmental body, it may claim sovereign immunity except when the aircraft lease agreements provide for the waiver of such immunity. 

Morocco has adopted and ratified the New York Convention.

This means that Moroccan courts recognise and enforce arbitral decisions that have been granted exequatur by a competent Moroccan court.

The penalty clause provided for in the lease contract should not be excessive since the Moroccan jurisdictions could consider it as an abusive clause and it may decide to lower the abusive penalty clause amount. 

Moroccan jurisdiction recognises the concepts of contractual assignment and novation.

The assignment (of debt/receivables) and assumption agreement or novation agreement would be considered valid by a domestic court as far as the domestic lessee has been notified of such novation or assignment agreement. The lessee’s consent is required for the novation.

The lease assignment/novation should be legalised/apostilled for filing purposes.

Any amendment to the lease agreement should be filed with the aircraft register. The registration fees are fixed at MAD100 per tonne. The amendment should also be published in the Official Gazette.

Further, when the assignment of a right or claim is performed by way of security, such an assignment should be registered in the national electronic register of securities over movable assets (registre national électronique des sûretés mobilières) to be binding on third parties. The registration fees are fixed at MAD100.

An unregistered novation agreement/lease assignment would not be binding on third parties or the Moroccan authorities.

No governmental consent is required to sign an assignment/novation agreement.

There are no specific taxes/duties in respect of such assignment and assumption/novation agreement, or as a consequence of an original or copy of it being brought into the jurisdiction physically or electronically.

Since the owner of the legal title of the asset remains the same, no filing would be required.

Deregistration is requested by the registered owner or systematically by the Moroccan Civil Aviation Authority in the following cases:

• if the owner no longer satisfies the registration requirements provided for by the Moroccan Law;
• if the aircraft is totally destroyed or is presumed lost three months after the date of the last news about it;
• if the new owner does not apply for the registration transfer; and
• in the case of an aircraft acquired by a foreigner, the continued registration has not been applied for or such continued registration is refused.

Deregistration is requested by filing an application using a specific form (F-DSA-715-AIR), along with the certificate of registration. Should the aircraft be intended for export, the Moroccan Civil Aviation Authority may issue an export airworthiness certificate upon request made prior to the aircraft deregistration.

The Moroccan Civil Aviation Authority ensures that the aircraft is free of any mortgage or seizure or any other rights before proceeding with the deregistration.

Once the deregistration process is completed, a deregistration certificate is issued to the owner or its representative.

In practice, the Moroccan Civil Aviation Authority would liaise with the aviation authority of the country where the aircraft is to be registered once it has been deregistered in Morocco.

The consent of the lessee is not required for deregistration by the owner/lessor. However, when the lessee challenges such a deregistration, the Moroccan Civil Aviation Authority would at least suspend or reject the deregistration application.

In addition to the deregistration application form mentioned in 2.8.1 Deregistering Aircraft in This Jurisdiction, the owner/lessor (in case they are also the owner) should deliver to the Moroccan civil aviation authority:

• the registration certification with respect to the aircraft; and
• documentation indicating the release of any mortgages/liens against the aircraft.

Deregistration takes an average of two months starting from the date the completed deregistration application form is submitted to the Moroccan Civil Aviation Authority.

The Moroccan Civil Aviation Authority does not provide any prior assurance to the owner or lessor (in case the lessor is the owner) as to the prompt deregistration of the aircraft.

In general, the deregistration fees are fixed at MAD100. In addition, any power of attorney granted for deregistration purposes should be registered with the Moroccan tax administration at a cost of MAD200. Stamp duty of MAD20 per page also applies.

In practice, the costs associated with deregistration may also include airport fees, where applicable, or the cost of the crew responsible for flying the aircraft to the country where it will be registered.

A deregistration power of attorney (DPOA) would be recognised. The DPOA should be issued by a person with legal capacity and be in writing. In addition, the DPOA must be prepared at least in French. It is also required to be notarised and/or apostilled and then registered with the tax administration. The registration incurs a fee of MAD200 and stamp duty amounting to MAD20 per page.

The Moroccan Civil Aviation Authority may require additional corporate documentation, such as the certificate of incorporation of the principal and agent, the current version of the articles of association, and the secretary certificate (list of authorised signatories), etc.

The DPOA may be subject to foreign law. However, the Moroccan Civil Aviation Authority generally requires that such DPOA be governed by Moroccan law.

The DPOA cannot be expressed as irrevocable under Moroccan law.

When a lease is terminated, the owner can repossess the aircraft and export it without the lessee’s consent. It is not necessary for the aircraft to be located in Morocco at the time of deregistration, However, prior to any deregistration or export, the applicant must have an export certificate of airworthiness issued by the Moroccan Civil Aviation Authority. In order for an export certificate of airworthiness to be issued, the asset must be located in Morocco.

However, it should be noted that an aircraft can only be deregistered once all mortgages, seizures and other registrations have been lifted (a mortgagee cannot deregister or export a registered aircraft).

Aircraft Export Certificates

The Moroccan Civil Aviation Authority issues an export certificate of airworthiness prior to export.

The customs authority also issues an export permit for the aircraft.

Timeframe

There is no timeframe regarding the issuance of the aforementioned export certificates and permits. The process could take up to two months.

Formalities

An application for an export certificate of airworthiness must be made using form DAC No F-DSA-805-AIR and accompanied by the documents listed in Annex 3 of this form.

The application must be signed by either the registered owner or the registered lessee or by a duly authorised person or body able to provide proof of its powers.

The transfer of ownership is tax exempted should the transaction be registered as an export with the customs administration.

Proof of removal of registration marks from the aircraft does not need to be made prior to deregistration under the Moroccan Law but it is advisable.

The law applicable to a lessee domiciled in Morocco with respect to judicial restructurings, reorganisations, insolvencies and liquidations is: Law 15-95 dated 1 August 1996 enacting the commercial code, as amended and supplemented.

Insolvency proceedings are provided for by the Moroccan commercial code. When a company is experiencing legal, economic, financial or social difficulties, certain proceedings (internal and external prevention and the safeguard procedure) are implemented.

If the company fails to meet its commitments under the safeguard procedure, the court steps in to decide on the appropriate course of action. This could involve one of two plans:

• the reorganisation plan, initiated only when the company is insolvent, ie, when it is incapable of meeting its existing debt obligations; or
• the liquidation plan, initiated when the company is unable to meet its commitments under the reorganisation plan or if its situation is irremediably compromised.

Both reorganisation and liquidation plans are implemented under the supervision of a judicial receivership subject to court control.

Cross-border proceedings are provided for by the Moroccan Law in order to facilitate co-operation between Moroccan courts and foreign courts involved in proceedings relating to business Insolvency or difficulties, and also to enhance legal protection for cross-border trade and investment.

Morocco also recognises foreign proceedings relating to the insolvency process. A foreign representative could request the competent Moroccan court to recognise foreign proceedings relating to insolvency for which said representative has been appointed.

Moreover, Moroccan law also provides for co-operation with foreign courts and foreign representatives with respect to foreign insolvency proceedings. The Moroccan court is required to assist and to co-operate with foreign courts and foreign representatives either directly or through the liquidator.

When two foreign proceedings are taking place concurrently against the same insolvent person, the Moroccan court shall endeavour to ensure co-operation and coordination. The same applies when foreign proceedings and domestic proceedings are held concurrently against the same debtor.

Thus, any other foreign insolvency or other judgment that does not fall within the scope of the aforementioned procedure may be recognised in Morocco by the ordinary exequatur procedure, provided that the relevant judicial decision does not contain provisions that jeopardise Moroccan public order.

When a lessee has granted a DPOA or an irrevocable deregistration and export request authorisation (IDERA) to a lessor, owner or mortgagee of an aircraft,  the lessee’s liquidation might result in the termination or voiding of such power of attorney. The decision to proceed in such a manner lies at the discretion of the receiver and the relevant court. As a general rule, the DPOA or IDERA cease to operate when the lessee becomes insolvent.

When a lessee is subject to a reorganisation plan or liquidation proceedings, all ongoing contracts with the lessee, including lease agreements, do not terminate automatically Only the receiver is entitled to decide the continuation or termination of the ongoing agreements. The creditor/lessor can only proceed with the declaration of its claims. The receiver assesses whether the continuation of the contract is likely to improve the financial situation of the company.

As a result, the lessor may be delayed or prevented from taking possession of the aircraft at the end of the lease where the termination occurs after the judgment opening the liquidation proceeding.

The aircraft cannot be considered as part of the lessee’s property. Indeed, if the lessor has registered the lease agreement in the aircraft register, the lessor could request the liquidator to recover the aircraft. If the lease has not been registered prior to the date of the court decision opening the insolvency proceedings, the lessor must assert their rights within three months following the publication of the judgment that launched the relevant insolvency proceeding. Once their rights have been validated, the lessor can demand that the liquidator returns the aircraft.

If the lessor has a security over any asset of the lessee, the lessor would be paid first among secured creditors according to each secured creditor rank. If not, the lessor would be considered an unsecured creditor and would be paid after the secured creditors. In any case, it should be noted that any creditor, whether secured or unsecured (including the lessor), who has claims (in this case rentals) that arose before the judgment initiating the reorganisation plan and/or liquidation proceedings, is required to make a declaration of their claims to the liquidator within a maximum period of four months from the start of the liquidation.

The risks for a lender if a borrower, a guarantor or an entity providing security becomes insolvent include:

• difficulties in recovering debt/receivables: the lender may have to bear additional costs and allocate significant time and resources towards recovering the owed sums, given that the insolvency process could span several years;
• decrease in the value of collateral/securities: in the event of the borrower’s insolvency, the value of any securities provided to secure the loan might decrease; or
• legal proceedings: the lender could get embroiled in lengthy and complex legal proceedings such as the debt declaration process.

The decision to initiate insolvency proceedings suspends and prohibits any legal action implemented by creditors whose claims arose prior to the date of the decision to initiate insolvency proceedings. This includes payments of claims that arose prior to the decision and that are not necessary for the continuation of the debtor’s business, as well as the accrual of legal and contractual interest, late payment interest, and penalties.

The lessee could be liquidated or undergo reorganisation either at the initiative of the lessee, interested creditor, court, or at the request of the public prosecutor or the president of the court.

Ipso facto clauses are not recognised in Morocco. Performance defaults could be required to repossess the aircraft during a lessee insolvency proceeding.

The liquidator could decide not to terminate the lease if such decision is necessary for the company’s survival.

During the winding-up of the domestic lessee, the court may order the aircraft to be returned to its owner.

The lease rentals declared to the court would be paid, along with all other debts of the lessee, following the judicial auction and liquidation of the lessee’s assets. Any payments will be made from the proceeds of the asset liquidation, if any.

The rental deposit and the maintenance reserves should be returned to the court.

Morocco is not yet a party to the Convention on International Interests in Mobile Equipment (the “Convention”) or the related Protocol on Matters specific to Aircraft Equipment (the “Protocol”).

There is no applicable information in this jurisdiction.

There is no applicable information in this jurisdiction.

There is no applicable information in this jurisdiction.

Morocco is a party to the 1948 Geneva Convention on the International Recognition of Rights in Aircraft, but not to the 1933 Rome Convention on the Unification of Certain Rules Relating to the Precautionary Attachment of Aircraft.

There are no specific restrictions on foreign lenders financing an aircraft locally or on borrowers using the loan proceeds as far as such lenders are duly licensed in their country.

Under Moroccan exchange regulations, the realisation of proceeds or other payments under a loan, guarantee or security should be authorised by the Moroccan exchange authority.

Borrowers are permitted to grant security to foreign lenders provided they obtain  the foreign exchange office authorisation.

Downstream, upstream and/or cross-stream guarantees granted by group companies (legal person) are permitted. Such guarantee should be authorised by the board of the said companies and approved by the shareholders’ general assembly.

It is advisable for a lender to take security over the shares of a national special-purpose vehicle that owns the aircraft being financed. The pledge of shares is recognised.

A negative pledge is recognised under Moroccan law but it must be registered in order to be binding on third parties.

There is no material restriction or requirement imposed on intercreditor agreements.

The concept of agency and the role of an agent (such as the facility agent) under a syndicated loan is recognised under Moroccan law.

Although debt subordination is not commonly used in Morocco, parties can agree to such an arrangement in a contract if necessary.

The transfer or assignment of all or part of an outstanding debt under an English or New York law-governed loan would be recognised provided that the formalities required by law are fulfilled (ie, the debtor is duly notified, etc).

There are specific laws that set the maximum standard interest rates, and standard bank interest applicable to each loan category.

The typical forms of security and recourse granted in an aviation finance transaction domestically are the mortgage; security assignment of debt/receivables (if any); insurance assignment; and share pledge.

The only security permitted over an aircraft under Moroccan law is a mortgage.

The Moroccan Civil Aviation Authority does not recognise the concept of a “trust” as an independent entity able to receive rights or properties as a trustee for other persons. The alternative mechanism under the Moroccan Civil Code relates to a “proxy”, whereby a third person is authorised to hold and manage any existing securities on behalf and for the benefit of the beneficiaries of such securities.

Furthermore, a law on security over movables was enacted on 17 April 2019, introducing the concept of a “security agent”. The security agent is a natural or legal person appointed by secured creditors to undertake measures relating to the creation of security on their behalf, the registration of the security as well as the management and enforcement of the security.

Moroccan law allows any person/lessor to assign its rights (which could be rental rights under a lease agreement) under an agreement, by way of a guarantee, to a third party/security agent, provided that the formalities required by law are met. These formalities consist of:

• sending a notification to the debtor/lessee to inform him/her of the assignment; and 
• establishing the assignment by means of a written deed.

This assignment results in a transfer of rights to the new creditor/security agent who will benefit from all accessory rights of the assigned contract, as well as any related securities, provided that such securities are expressly referred to in the assignment agreement. 

It is possible to assign the rights and benefits only without also assigning the obligations of the lessor under the lease.

A security assignment can be governed by English or New York law.

The formalities consist of:

• sending a notification to the debtor to inform him/her of the assignment (otherwise it may be declared void); and
• establishing the assignment by means of a written deed with express acceptance of the assignment by the debtor when the assigned rights relate to a lease.

In addition, when the assignment of a right or claim is performed by way of a security, such an assignment should be registered in the national electronic register of securities over movable assets to be binding on third parties.

Furthermore, the assignment of security must be in French or Arabic, or in two languages (for example, English/French, as long as one of the languages is French). The document should be duly executed and apostilled/legalised.

The security assignment should be registered in the national electronic register of securities over movable assets to be binding on third parties. Morocco is not a party to the Cape Town Convention.

An English or New York law-governed security assignment or a domestic law security instrument can be registered domestically.

The transfer of security interests over an aircraft and/or engines can be recognised in Morocco.

If the identity of the secured parties under a security assignment changes after its execution, the security interests will be jeopardised. Therefore, any change in the identity of the secured party should be notified to the debtor/lessee and amended in the assignment agreement.

In Morocco, “parallel debt” structures are not commonly used.

A secured party under a security assignment would not be deemed to be resident, domiciled, carrying on business or subject to any taxes as a result of its being a party to, or its enforcement of, such security assignment.

The mortgage deed should be established in the form of an authenticated deed (ie, a deed established by a Moroccan notary).

The mortgage over an aircraft or engine is perfected through:

• its registration in the aircraft register; and
• its publication in the Official Gazette.

The mortgage covers the engines, the propellers, the aircraft appliances and all the parts required for the operation of the aircraft provided they belong to the aircraft owner. These components are covered by the mortgage, whether they are currently a part of the aircraft or temporarily separated from it.

In order to inform third parties about the existence and extent of the rights encumbering these assets, a clearly visible notice must be posted in a relevant location. This notice should indicate that the mortgage is registered in the appropriate register and should also provide the name and address of the mortgage holder.

Spare aircraft engines used by air transport operators and not attached to a specific aircraft may also be mortgaged.

An aircraft mortgage may also be extended to cover spare parts corresponding to the type of the relevant mortgaged aircraft, provided that they are individualised in the aircraft mortgage. An inventory indicating their nature and number should be annexed to the mortgage deed.

The spare parts must be stored in one or more locations that have been subject to public notice. When used on the aircraft to which they are assigned, they should be replaced immediately and the mortgagee must be informed of this use.

The spare parts mentioned above include all parts of an aircraft, eg, engines, propellers, radio apparatus, instruments, equipment, fittings, and other items kept on hand for replacement of any part of the aircraft.

Public notice, which is given by means of plates attached to the spare parts, shall inform third persons of the nature and extent of the rights existing over the spare parts as well as indicate that the aircraft mortgage is registered in the Moroccan aircraft register, together with the name and address of the mortgagee.

The pledge is typically used as security over a bank account. The pledge of a bank account should be:

• in writing and legalised/apostilled;
• registered within the national electronic register of securities over movables; and
• notified to the relevant bank holding the pledged account.

The Moroccan Law provides for a limited number of rights that could be covered by a statutory lien over an aircraft, which are as follows:

• salaries and debt obligations arising from labour contracts of the crew members in respect of the aircraft as well as related social contributions;
• airport and air traffic charges;
• compensation arising from searching for, and salvaging, an aircraft; and
• necessary expenses incurred in respect of maintaining an aircraft.

Other liens may apply, for example:

• Moroccan tax;
• Moroccan customs duties; and
• judicial expenses.

When it comes to liens related to repair costs or other expenses associated with maintaining the aircraft, these liens only cover the actual cost of the work performed. Moreover, these liens would cover the value of the work done on other assets of the same debtor.

The liens should be registered in the aircraft register for each aircraft of the fleet.

A right of detention can be enforced only where Moroccan law so provides.

Moreover, the right of detention arises in respect of circumstances relating to the following:

• airport charges;
• air navigation charges;
• licensing;
• air navigation;
• customs;
• noise and aircraft emissions;
• patents;
• public health;
• unpaid tax;
• crimes; and
• war or national emergency.

In certain circumstances, the right of detention could also include an additional right to sell the detained aircraft.

The other lienholders could obtain a precautionary seizure, which allows them to immobilise the aircraft for a period not exceeding one month.

In order to enforce their liens, lienholders can resort to a judicial procedure in Morocco that permits the judicial auctioning of the aircraft. However, lienholders cannot gain possession of the aircraft under Moroccan law.

In such a procedure, a competent Moroccan court would order the judicial auction of the aircraft, defining the sale price and terms. The lienholder would then be reimbursed from the proceeds of the judicial sale.

The deregistration of a mortgage or liens from the aircraft register takes an average of two weeks from the date of (i) filing the completed dossier, including the application for deregistration, with the Moroccan Civil Aviation Authority; and (ii) paying the deregistration fees.

There is no distinct register for mortgages or charges over aircraft in Morocco. The mortgages are registered in the aircraft register. The interests of an aircraft mortgagee or security trustee must be registered in the Moroccan aircraft register.

The aircraft mortgage would become enforceable against third parties from the date of its registration in the aircraft register.

In addition, an aircraft mortgagee would enjoy preference over all unsecured creditors.

Finally, the mortgage registration would prohibit any property transfer of the aircraft.

See 3.3.1 Third-Party Liens.

A potential purchaser of an aircraft could search the aircraft register to verify that an aircraft is free of encumbrances.

There are no significant differences between the execution of a security assignment as opposed to a loan or guarantee.

For a debt security assignment, the security agent could enforce its rights pursuant to a notice validly served to the lessee informing them of the security assignment, and an acknowledgement executed by that lessor and the relevant lessee respectively in connection with such security assignment.

The domestic courts would uphold (i) a foreign law as the governing law of a finance or security document, and (ii) the submission to a foreign jurisdiction, subject to the public order provisions that are mandatorily applied by the said courts.

For a foreign court decision to be recognised and enforced, an exequatur must be sought from the competent Moroccan court. While deciding on the exequatur, the court will ensure that the foreign court decision complies with the following requirements: 

• the foreign judgment has been issued by a court with jurisdiction in the country in which the decision was rendered;
• the foreign judgment is final and enforceable in the country in which the decision was rendered;
• the defendant was properly served, and due process was observed in the proceedings;
• the foreign judgment must not disrupt or distort Moroccan public order; and
• no final judgment in the same case between the same parties has been rendered by a Moroccan court to avoid double jeopardy.

A secured party cannot take physical possession of an aircraft without the consent of the lessee or operator of the aircraft if the lease agreement is not yet terminated.

While there is not a specific court designated to decide enforcement actions under a security agreement or aircraft mortgage, these issues typically fall under the jurisdiction of the commercial courts in Morocco.

A lessor could obtain a summary judgment in order to enforce an aircraft lease. The common condition of judicial summary applies, ie:

• the application is urgent; and
• the decision should not alter the state of affairs of the parties.

The court may render its decision within two or three weeks depending on the urgency of the litigation.

With respect to summary proceedings aimed at obtaining a precautionary seizure over an aircraft, the court decision may require the secured party to post a bond or provide another form of guarantee.

A secured party under a security agreement/aircraft mortgage could obtain a judgment in a foreign currency.

Judicial fees between 0.5% to 1% of the claimed amount would be payable by the secured party in case of judicial proceedings ruling on the merits.

Following the judicial auction of the aircraft, the costs and fees incurred with respect to the precautionary seizure, the enforcement measures and the judicial auction of the aircraft shall be paid first, being deducted from the proceeds of the sale.

There is no applicable information in this jurisdiction.