The execution of an aircraft or engine sale agreement by a domestic party or where the asset is located in the Republic of Congo could be subject to registration at the local tax authority. The registration of the sale agreement could be subject to a registration fee and stamp duty.
The official language in the Republic of Congo is French. Therefore, it is advisable for a sale agreement to be in the official language to be enforceable against a domestic party. That said, where the sale agreement is in a foreign language, it should be accompanied by a French translation made by a Congolese sworn translator.
The Civil Aviation Code of the Economic and Monetary Community of Central Africa (Communauté économique et monétaire de l’Afrique centrale or CEMAC), which is applicable in the Republic of Congo, is silent on the requirement to notarise the sale agreement. However, in practice, some entities do notarise the sale agreement.
A sale agreement duly executed by the parties could constitute a transfer of ownership.
Pursuant to the Civil Aviation Code, the transfer must be recorded in writing. It is enforceable against third parties only after the registration of the transfer with the Aircraft Register (registre d’immatriculation) held by the Civil Aviation Authority of the Republic of Congo (l’Autorité Nationale de l’Aviation Civile or ANAC).
It is understood that the transfer does not automatically extend to include installed parts, such as an auxiliary power unit (APU). It is also understood that parties must expressly provide that the transfer is extended to include all installed parts.
Court judgments transferring an aircraft/engine in favour of an entity or an individual may also be considered as proof of ownership of an aircraft.
The bill of sale may be governed by a foreign law (eg, English or New York law).
The bill of sale must be dated, executed by the parties (may be notarised) and should provide the following information:
By virtue of the will of the parties to a contract, a contract is duly binding and enforceable among those parties once duly executed by them. In other words, a bill of sale is enforceable against a domestic party once duly executed by it. There is no legal requirement to notarise a bill of sale. In practice, parties are free to notarise it.
The authors are not aware of any requirement for consent from any government entity regarding a bill of sale. However, the bill of sale is subject to registration at (i) the tax authority, and (ii) the ANAC.
The registration at the tax authority and the ANAC must be made within three months from the execution of the bill of sale.
Regarding the registration at the ANAC, the applicant must submit the bill of sale and the initial registration certificate of the aircraft/engine, along with an application request, stating the following:
A registration fee could be payable regarding the registration of the bill of sale at the tax office and the ANAC.
The authors are not aware of any laws that would prevent entering into an agreement relating to the operating/wet/finance leases or leases concerning only engines or parts.
The authors are not aware of any law that restricts the conclusion of a lease involving a domestic party or an asset to be governed by a foreign law.
The authors are not aware of any material restrictions imposed on domestic lessees making rental payments to foreign lessors in US dollars. In general, as long as (i) it is duly agreed by the parties in the lease agreement, and (ii) the requirements under the exchange regulations are respected, no material restrictions are imposed on domestic lessees making rent payments to foreign lessors in US dollars.
The authors understand that transfers and/or receipt of funds outside CEMAC member states can only be carried out through the central bank, an approved intermediary or a manual exchange licensed agent. This should not cause any issue, provided that rent payments are carried out by approved banks.
The leasing of an aircraft could be subject to a registration fee of 5% to 10% of the total value of the lease.
A licence or other qualification of the lessor is not required to do business with a domestic lessee.
No mandatory terms are required to be in a lease or ancillary documents thereto governed by English or New York law that would not typically already be included.
Pursuant to the Civil Aviation Code, the lease needs to be written. If the lease is concluded for a period of more than 30 days, the agreement must be registered on the Aircraft Register of the ANAC.
Furthermore, in practice, the lease should provide, among other things, the following information:
Tax and other withholding gross-up provisions are recognised under Congolese law.
The authors are not aware of any laws that would prevent a lease from covering parts that are installed or replaced on an aircraft or engine after its execution, as long as the lessor is the owner of the parts. No specific steps need be taken, but the initial lease may be amended to cover the parts.
There is only a risk of title annexation if the aircraft engines are not indicated/considered as separate assets from the aircraft itself.
The Republic of Congo is a member state of the regional Organisation for the Harmonisation of Business Law in Africa (l’Organisation pour l’Harmonisation en Afrique du Droit des Affaires, or OHADA). Under the OHADA Uniform Act organising securities (the “Uniform Act on Securities”), there is the concept of fiduciary transfer of money, or transfert fiduciaire de somme d’argent, which is an agreement whereby a settlor transfers funds as a guarantee for the performance of an obligation. The funds must be deposited into a blocked account opened in the name of the creditor in the books of an approved finance company.
The interests of the owner (legal or beneficial) or a lessor of an aircraft may be noted on the Aircraft Register. The main effect of such notation would be making the interests public, which could reduce their effectiveness against third parties.
An aircraft will be registered domestically only if it is at least 51% owned by (i) a natural person who is a national of the Republic of Congo, or (ii) a legal person incorporated under Congolese law.
However, exemptions may be granted in exceptional cases by the ANAC.
Leases concerning aircraft or engines must be registered on the Aircraft Register.
A lease should be registered on the domestic Aircraft Register when the duration of the lease is more than 30 days.
The Civil Aviation Code is silent on the consequences of failing to do so.
There does not appear to be any requirement for consent from any government entity.
For the registration of the lease, the applicant must submit the lease and an application request containing the following information to the ANAC:
In addition, any change to the type or design of an aircraft must be notified to the ANAC within three months.
The official language in the Republic of Congo is French. Therefore, it would be advisable for a lease to be in the official language or to have it translated into French by a Congolese sworn translator.
The registration of the lease agreement at the tax authority could be subject to a registration fee of 3% to 10% of the total value of the rent during the lease. A stamp duty of XAF1,000 (approximately USD1.60) per page of the lease agreement could also be payable.
The Civil Aviation Code refers to the CEMAC member states. The Republic of Congo is a member state of CEMAC. As such, it seems that the aircraft could potentially be registered in another member country of the CEMAC region.
The official language in the Republic of Congo is French. Therefore, it would be advisable that a lease be in the official language or translated into French by a Congolese sworn translator.
Assuming that the lessor is located/incorporated/domiciled in the Republic of Congo, it may be subject to the payment of income tax for any profits from businesses operated in the Republic of Congo.
A foreign lessor would not be deemed to be a resident as a result of its being a party to, or its enforcement of, the lease.
Under Congolese law, to the extent that the foreign lessor retains technical control of the aircraft and direction of the crew over which it retains authority, the lessor will be considered as the operator of the aircraft. As such, the lessor may be held responsible for the operation of the aircraft (eg, liability for damages caused to persons and the property of third parties by the movement of the aircraft or by persons or objects falling from it) and should be insured for this liability in a manner satisfactory to the ANAC in relation to the category of aircraft operated.
See 2.4.3 Engine Maintenance and Operations.
Seizure in private interest can only be carried out for the benefit of a creditor of the owner or the holder of an interest in the aircraft.
Creditors and beneficiaries of mortgages over aircraft may take priority over a lessor’s rights under an aircraft or engine lease in accordance with the rank of registration of the mortgage on the Aircraft Register.
Any aircraft that carries out services within, or flies over, the territory of the Republic of Congo is required to take out an insurance policy against damages that could be caused to third parties, passengers, luggage and cargo, regardless of whether the aircraft is registered in the Republic of Congo or abroad.
The Civil Aviation Code further provides that insurance must be taken out from an approved insurance company located in the Republic of Congo when the aircraft is registered in the Republic of Congo. However, when the aircraft is registered outside the Republic of Congo, the insurance can be taken with a foreign insurance company duly approved in its country of origin.
Based on the above, either all or part of the insurance should be placed with domestic insurance companies when the aircraft is registered in the Republic of Congo.
Under Congolese legislation, an aircraft must be insured with respect to the operator’s liability for damages caused to third parties, passengers, luggage and cargo.
The insurance covering liability of the operator must not be less than the operator’s limits of liability provided under the Civil Aviation Code.
The law is silent on whether reinsurances can be placed outside the Republic of Congo for up to 100% coverage.
The law is silent on the enforceability of “cut-through” clauses; however, it is understood that they are allowed in practice.
Assignments of insurances/reinsurances are permitted.
The authors are not aware of any restrictions on a lessor’s liability to:
The authors understand that the consent of the lessee or a court order would be required to take physical possession of the aircraft.
There are no specific courts for aviation disputes in the Republic of Congo. The general courts are competent to decide aviation disputes.
The authors are not aware of historic examples of cases where specific courts have adjudicated on aviation disputes.
A lessor may obtain a summary judgment or equitable or other injunctive relief pending final resolution of judicial proceedings to enforce an aircraft lease. The estimated period to obtain such a court order could be immediate or up to 30 days, depending on the specific injunctive relief requested to the court. The court order may be subject to appeal within 15 days from the date of issuance.
The domestic courts can uphold:
In order for a foreign judgment (either a foreign court judgment or an arbitral award) to be enforceable in the Republic of Congo, an exequatur order will need to be issued by the domestic court. The domestic court will not reassess the merit of the case; ie, there is no re-examination of the matter.
The law is silent on whether a lessor under an aircraft lease can obtain a judgment in a foreign currency. Generally, Congolese courts pronounce judgment in local currency. However, a judgment is left at the discretion of the judge and the authors understand that the equivalent amount in foreign currency may be granted in local currency.
The Civil Aviation Code is silent on whether there are limitations on a lessor’s ability to recover default interest or to charge additional rent following termination of the lease for default.
There are no legal requirements regarding the payment of taxes or fees in a significant (ie, non-nominal) amount by a lessor under an aircraft lease in connection with the enforcement of such lease.
Aside from the notice period indicated in the lease agreement, the lessor is not required to comply with any other mandatory notice periods for the termination of an aircraft lease.
A lessee is not entitled to claim sovereign or other immunity from suit. In all cases, immunities can be waived.
The Republic of Congo has not adopted the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”).
There are no additional issues that a lessor should be aware of in relation to the enforcement of its rights.
The Republic of Congo recognises the concept of contractual assignment and novation.
From a practical perspective, it is understood that an assignment/novation of an aircraft and/or an engine lease agreement under foreign laws would be held valid by a domestic court. The requirement of the lessee’s consent would depend on the governing law of the lease agreement. Under Congolese law, consent is required in such circumstances. The authors are not aware of any mandatory terms under Congolese law to be included in such agreement/deed.
It would be advisable for an aircraft and/or engine lease assignment and assumption/novation to be translated into French and notarised or legalised in order to be enforceable against a domestic party.
See 2.3.4 Registration of Leases With the Domestic Aircraft Registry.
Such assignment and assumption/novation agreement could potentially be subject to registration at the tax authority.
The law is silent on the recognition of transfer of ownership.
An aircraft may be deregistered by its owner or the ANAC. The deregistration is achieved before the ANAC and consists of filing an application form at the ANAC.
The consent of the lessee or the operator would be required for the deregistration of the aircraft.
The registration certificate as well as the identity plate/card of the aircraft are required for deregistration. The following documents may also be required:
The law is silent on how long the deregistration process would typically take. Note that administrative delays are not uncommon in the Republic of Congo.
The authors are not aware of any advance assurances to an aircraft owner, mortgagee or lessor as to the prompt deregistration of the aircraft provided by the Civil Aviation Authority.
The deregistration of an aircraft may be subject to the payment of the following fees:
A deregistration power of attorney should be recognised in the Republic of Congo. It would be advisable to have such power translated and notarised or legalised, to be enforceable against a domestic party.
No additional documents are required to enforce deregistration of a power of attorney.
It is understood that a deregistration power of attorney should be governed by Congolese law.
If a deregistration power of attorney is said to be irrevocable, it could be difficult to revoke it.
It would be advisable to get the lessee’s consent. The letter of the law does not set forth whether or not the asset needs to be located in the Republic of Congo at the time of deregistration and/or export.
An aircraft export certificate can be issued by the ANAC. Generally, this is subject to the filing of an application form at the ANAC along with information regarding the aircraft. It cannot be issued in advance.
The law is silent on the costs, fees and taxes in respect of the export of an aircraft. However, a fee may be payable.
There are no significant practical issues that an aircraft owner, mortgagee or lessor should be aware of in respect of the deregistration of an aircraft in the Republic of Congo.
The OHADA Uniform Act dated 10 September 2015 (the “Uniform Act on Insolvency”) governs insolvency and restructuring in the Republic of Congo. The Uniform Act on Insolvency regulates all matters relating to insolvency law in all OHADA member states. Its purpose is:
To summarise, insolvency proceedings are under the control of the judge (juge commissaire) and the assets of the company are placed under the supervision of a judicial trustee (syndic), whose main responsibility is to act in the overall interests of the creditors as a whole (masse des créanciers).
A judgment from the commercial court confirms the starting of insolvency proceedings (jugement d’ouverture). Such judgment is published in the Companies Registry (Registre du commerce et du crédit mobilier, or RCCM) and in the newspapers. A second publication should be made 15 days after the first publication. The two publications must contain a warning to creditors to produce their claims to the syndic. Creditors’ claims against the company must be declared to the syndic within two months following the second publication of the insolvency judgment. This period is extended to three months for creditors residing outside the national territory.
In principle, the declaration must contain the amount of the claim and its due date. The declaration must also specify the type of security attached to the claim (if any). Creditors should also provide the syndic (to the extent possible) with any evidence of the existence of their claims. The syndic will provide a receipt to the creditors confirming that their declarations have been duly received by the syndic.
Note that insolvency proceedings suspend and prohibit any individual claim initiated by a creditor. Two situations may occur, as set out below.
See 2.9.1 Overview of Relevant Laws and Statutory Regimes Governing Restructurings, Reorganisations, Insolvencies and Liquidations.
The Uniform Act on Insolvency is applicable in principle when the local tenant is in financial difficulty. Nevertheless, if the international leasing agreement so provides or the liquidator deems it relevant, all the good practices applicable in this matter may be applied, in particular the adoption of co-ordination principles (most notably, the American Law Institute and International Insolvency Institute Guidelines Applicable to Court-to-Court Communications in Cross-Border Cases 2001, the INSOL International (International Association of Restructuring, Insolvency and Bankruptcy Professionals) Global Principles for Multi-Creditor Workouts 2000, the UNCITRAL Model Law on Cross-Border Insolvency, or any other relevant international principles or rules).
The Recognition of Proceedings Opened Within the OHADA Area
The Uniform Act on Insolvency is applicable for the recognition of foreign proceedings.
It is understood that judgments opening and closing insolvency proceedings, as well as those that settle disputes arising from such proceedings in an OHADA member state (eg, the Republic of Congo), are recognised and enforceable in the territory of the other member states.
The Recognition of Decisions Pronounced Outside the OHADA Area
Under the Uniform Act on Insolvency, a foreign representative may apply to the competent domestic court to recognise and oversee proceedings for which they have been appointed as a representative. As such, an application for recognition will be submitted with the following documents:
The application for recognition will also be accompanied by a statement identifying all foreign collective proceedings concerning the debtor that are known by the foreign representative.
All documents provided in support of an application for recognition will have to be drafted or translated into French.
Irrevocable powers of attorney regarding the assets that make up the estate of the insolvent party will not survive its insolvency. However, and taking into account that the aircraft is not owned by the lessee/insolvent, the aircraft is not part of the insolvency estate, for which reason the deregistration power of attorney will survive. If the amounts regarding the lease are not paid, the lessor may invoke an event of default to terminate the agreement, requesting the repossession and deregistration of the aircraft through a deregistration power of attorney.
The opening of insolvency proceedings against a lessee (ie, legal redress or liquidation of assets) neither suspends nor terminates a lease agreement. However, as the Republic of Congo has adhered to the Cape Town Convention and the Protocol (see 2.10 Cape Town Convention and Others), the following options may be considered as per Article XI of the Convention.
If the lessee is declared insolvent, the receiver(s) must give back the aircraft within a maximum waiting period of 60 calendar days unless the lessee executes the outstanding obligations and commits to execute all its future contractual obligations. The aircraft must be immediately returned to the lessor upon the occurrence of a new event of default and the lessee cannot claim any further delay.
Any attempt to delay or prevent the repossession of the aircraft by the lessor after the expiry of the waiting period of 60 days is prohibited.
Subject to the above, which is fully recognised and applicable in the Republic of Congo, the Cape Town Protocol does not prevent the lessor from using any remedy available in the local legislation.
The main risks for a lender if a borrower providing security becomes insolvent would be the lack of sufficient assets to provide for payments due to the lender, which, if it does not have a guarantee of its own, will be deemed as any other common creditor that should be equally paid in accordance with the debtor’s existing assets.
In the case of legal redress, the debtor must propose an arrangement with the creditors. This arrangement can usually impose moratoria. A two-year moratorium on the payment of rents may be granted to the lessee in accordance with the provisions of Articles 9 and 75 et seq of the Uniform Act on Insolvency.
The methods by which a domestic lessee can be liquidated or placed in administration or receivership are conciliation, preventative settlement, legal redress and liquidation of property as defined under the Uniform Act on Insolvency.
The lessee can lodge a declaration of cessation of payment with the commercial court and request the initiation of insolvency proceedings. The cessation of payment and the insolvency proceedings (ie, either a judicial restructuring or a winding-up) can also be requested by the creditors or the court itself. In theory, three scenarios are possible:
Performance defaults are required to repossess an aircraft during a lessee insolvency proceeding.
Please refer to 2.9.5 Other Effects of a Lessee’s Insolvency.
The Convention on International Interests in Mobile Equipment (the “Convention”) and the related Protocol on Matters Specific to Aircraft Equipment (the “Protocol”) are in force in the Republic of Congo. They have been applicable in the Republic of Congo since 1 May 2013. The “authorised entry point” codes are not required for registering international interests.
At the time of the Republic of Congo’s adherence to the Convention, the country made declarations in respect of Articles 39 (1) (a), 39 (1) (b), 40, 52, 53 and 54 (2).
Article XIII of the Protocol is applicable in the Republic of Congo. There is no specific procedure for the submission and recording of an irrevocable deregistration and export request authorisation (IDERA) with the Aircraft Register. The most important point is that the IDERA is filed with the ANAC.
The authors are not aware of any case law regarding the enforcement of the Convention and Protocol.
The Republic of Congo is 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 Arrest of Aircraft.
The authors are not aware of any particular restrictions on foreign lenders financing an aircraft locally or on borrowers using the loan proceeds.
The authors are not aware of any exchange controls or government consents that would be material to any financing or repatriation of realisation proceeds under a loan, guarantee or security document. Payment or debt repayment operations abroad are freely carried out and are subject to certain restrictions set out in the foreign exchange regulations.
Borrowers are permitted to grant security to foreign lenders.
Downstream, upstream and/or cross-stream guarantees are permitted under the Uniform Act on Securities. The registration is generally made at the Companies Registry.
It would not be advisable for a lender to take share security over a domestic special purpose vehicle (SPV) that owns the financed aircraft. A pledge of shares is recognised.
A negative pledge is not recognised in the Republic of Congo. However, parties are free to organise it under the lease agreement.
The authors are not aware of any material restriction or requirement imposed on intercreditor arrangements.
The concept of agency and the role of an agent are recognised in the Republic of Congo.
There is no specific method of debt subordination under Congolese law. However, in practice, subordination agreements are permissible and recognised.
It is permissible to transfer or assign all or part of an outstanding debt under an English or New York law-governed loan.
It is understood that usury or interest limitation is regulated in the Republic of Congo.
Mortgages and guarantees made in accordance with the Uniform Act on Securities are the typical forms of security and recourse that would be granted in an aviation finance transaction.
It is understood that pledges cannot be taken over an aircraft or related collateral such as engines, warranties or insurances.
The concept of a trust and the role of a security trustee are recognised under the Uniform Act on Securities.
The law is unclear on the assignment of rights to an aircraft by a borrower to a security trustee. However, the authors believe that a borrower may assign to a third party, including a security trustee (agent de sûreté, under the Uniform Act on Securities), its rights to the aircraft or under an aircraft lease, pursuant to a security assignment or a mortgage.
It is understood that it is possible to assign rights and benefits only, without also assigning the attendant obligations of the lessor. However, the lessor is required to notify the lessee of such agreement. The transferee is therefore required to comply with the lessor’s obligation under the lease agreement.
A security assignment or a guarantee can be governed by English or New York law. Parties are free to choose the governing law of their contract.
It would be advisable to have a security assignment translated (if not already in French) and certified, notarised or legalised to be enforceable against a domestic party.
It is a requirement to have a written contract duly signed by the authorised signatories of the parties to such contract. The assignment deed must provide information that allows individualisation and identification. The registration of the assignment deed is also advisable in order to be enforceable. While not mandatory, it is advisable for a security assignment written in a foreign language to be accompanied by a French translation made by a Congolese sworn translator.
Assignments of security interests governed by English or New York law over an aircraft registered in the Republic of Congo are permitted.
The law is silent regarding the transfer of security interests over an aircraft and/or engines. However, the authors believe that there should be no issue if the parties have so agreed.
The security interests should not be jeopardised if the identity of the secured parties under a security assignment changes after its execution.
The authors have not yet come across this type of structure in the Republic of Congo.
A secured party under a security assignment would not be deemed to be resident, domiciled, carrying on business in the Republic of Congo or subject to taxes as a result of its being a party to, or its enforcement of, such security assignment.
A domestic law mortgage over an aircraft or engine should be registered at the tax authority and the ANAC in order to be perfected/produce legal effect.
There is no difference between the form of security (or perfection) taken over an aircraft and that taken over spare engines.
Security over a bank account usually takes the form of a pledge over the account. A pledge over a bank account needs to be registered with the tax authority and the Companies Registry in the Republic of Congo.
A third party may take or register a lien over an aircraft or engine.
Liens may be registered under the Civil Aviation Code for:
The aforementioned liens are on the aircraft or on the insurance indemnity in the case of loss or damage. The liens follow the aircraft even when it passes into other hands.
The liens expire three months after the event that gave rise to them, unless the creditor has previously entered their claim in the registers, having had the amount acknowledged amicably or, failing that, bringing legal proceedings in respect of it.
The liens may also expire further to judicial sale of the aircraft or two months from the registration of the voluntary transfer of the liens on the Aircraft Register.
The Aircraft Register is the register for mortgages and charges. The interests of an aircraft mortgagee or security interest can be noted on the Aircraft Register. The registration is a mandatory requirement to ensure the enforceability in respect of third parties.
Statutory rights of detention would prevail over consensual liens.
A potential purchaser may check the Aircraft Register before the ANAC to verify that an aircraft is free of encumbrances.
There are no relevant differences between enforcing a security assignment and enforcing a loan or guarantee.
It is permitted for a third party (eg, a security trustee) to enforce its rights under a security assignment, by which a security is granted to it by a lessor in respect of its rights under an aircraft lease, pursuant to a notice and acknowledgement executed by the lessor and the lessee respectively in connection with that security assignment.
Courts in the Republic of Congo may uphold a foreign law as the governing law of a finance or security document and the submission to a foreign jurisdiction.
Congolese courts will recognise and enforce a final judgment of a foreign court or an arbitral award without re-examination of the matter, subject to an exequatur issued by said court.
It is possible for a secured party to take physical possession of an aircraft to enforce a security agreement/aircraft mortgage without the lessee’s or operator’s consent.
Congolese courts are generally competent to decide enforcement actions under a security agreement or aircraft mortgage when these (ie, the security agreement or aircraft mortgage) are registered in the Republic of Congo.
It is possible for a lessor to obtain a summary judgment or equitable or other injunctive relief pending final resolution of judicial proceedings, to enforce a security agreement/aircraft mortgage, generally in the case of an emergency.
The law is silent on whether a secured party under a security agreement/aircraft mortgage can obtain a judgment in a foreign currency. Generally, a Congolese court decision is in local currency. In other words, a secured party under a security agreement/aircraft mortgage may obtain a judgment in a foreign currency but its equivalence in Central African CFA franc (XAF) shall be indicated. Such judgment is generally at the discretion of the judge.
A secured party would not be required to pay taxes. However, it is liable to pay court fees, which are nominal.
There are no other relevant issues that a lender should be aware of in relation to the enforcement of its rights.
There are no other relevant issues.
There are no current proposals before the legislature that are worth mentioning in respect of the foregoing items.
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