Aviation Finance & Leasing 2019 Comparisons

Last Updated July 29, 2019

Contributed By IUNO Law Firm

Law and Practice

Authors



IUNO Law Firm is based in the heart of Copenhagen, Stockholm and Oslo. Focusing solely on the practice areas of employment law, transport/aviation, corporate and insurance, the firm aims to offer a specialist service in eyesight. It represents some of the largest international airlines and is constantly expanding, having seen a 78% increase in pending aviation court cases since October 2018.

As a main rule, for sellers and buyers with no physical or permanent presence in Denmark there are 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 Denmark, there may be taxes and duties payable depending on whether or not the transaction is covered by a Danish-double tax treaty.

Sales of aircraft to carriers mainly intending to operate the aircraft outside of Denmark are VAT-exempt.

It is advisable for a sale agreement to be in writing and for it to be in Danish, but it is not necessary for sale agreements to be either translated, certified, notarised nor legalised in Denmark in order for them to be enforceable against a domestic party.

Transfer of title is governed by the general rules in Danish law, whereby transfer takes place through a bill of sale or by exercising third-party rights, leading to a transfer of ownership.

A transfer of title will, in general, include all installed parts. As of 1 February 2016 Denmark is subject to the Cape Town Convention. It is therefore possible to transfer the title to an engine separately.

In Denmark, 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.

Recognition of transfer of title to an aircraft or engine inter partes between sellers and buyers in Denmark, if the bill of sale is governed by either English or New York law, will depend on the terms of the bill of sale. In relation to third parties, mandatory rules apply whereby transfer of title is recognised when the parties enter into binding agreement. 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.

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

The Danish CAA should be given notice of a change in ownership as soon as possible, as ownership of aircraft used either in commercial air transport, other commercial operations or privately must be registered in the Register of Danish Aircraft if the aircraft is not registered in another EU member state or an EFTA state.

An applicant for a registration in the Register of Danish Aircraft must fill out the form 'Application for registration of aircraft in the Register of Danish Aircraft. Owner resident or domiciled abroad' which must, amongst other things, contain the bill of sale, information regarding the value of the aircraft, the latest state of registration as well as a certificate of airworthiness.

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

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 Denmark, but – as mentioned above – the ownership must be registered in the Register of Danish Aircraft in order to ensure that it can be used commercially.

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

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

Operational, wet and financial leasing, as well as leases concerning only engines or parts, are allowed and recognised in Denmark.

Parties are free to specify which law is applicable.

There are no Danish restrictions  preventing lessees from making rent payments to foreign lessors in US dollars. However, the transaction may become subject to US jurisdiction and associated restrictions.

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

For lessors and lessees with no physical or permanent presence in Denmark, there are no taxes or duties payable as a consequence of the execution of a lease in Denmark.

For lessors and lessees with a physical and/or permanent presence in Denmark, taxes and duties may be payable depending on whether the transaction is covered by a Danish double-tax treaty.

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

A lessor does not have to be licensed or otherwise qualified in order to do business with a domestic lessee in Denmark, but all financial lessors must, according to the Act on Measures to Prevent Money Laundering and Financing of Terrorism, be registered with the Danish FSA.

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

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

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

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

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

Owner trustees, as they are known in other jurisdictions, work differently in Denmark and are not recognised as such.

For rights established after 1 February 2016 it is, as according to the Cape Town Convention, possible to register ownership interests in the International Registry of Mobile Assets.

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

Notation creates priority and protection against third parties from the day the application for registration of the document is made. It is a prerequisite for registration of an aircraft in the Danish Rights Register that said aircraft is registered in the Register of Danish Aircraft. Applications for registration of documents made the same day are given equal rights.

It is possible to register an aircraft in the Register of Danish Aircraft in the name of its owner, 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 for a copy of the leasing agreement to accompany the application. The operator is registered separately.

In Denmark, rights concerning aircraft and engines (which are covered by the Cape Town Convention) are registered in the International Registry of Mobile Assets. Rights that fall outside the scope of the Cape Town Convention are registered in the Danish Rights Register. There is no specific register for registering leasing rights.

It is possible to register leasing agreements with a duration of more than six months in the Danish Rights Register, but it is only possible to register rights over aircraft that fall outside the scope of the Cape Town Convention in this registry.

The Danish CAA must consent to registration.

The registration application for a registration in the Danish Rights Register must include the leasing agreement between the lessor and the lessee. The lease must be signed by both the owner and the operator of the aircraft.

The processing is required by law not to exceed ten days from entry.

The aircraft must be registered in the Register of Danish Aircraft.

For a lease to be registered in a Danish register, it must be in either Danish, Norwegian or Swedish; if the lease is in a different language, it must be translated into either of these languages by an authorised translator. The signature, the authority and the date of signature must be verified by either a notary 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.

Previously, a fee of 1.5% of the value of the aircraft (for aircraft weighing more than 5,700 kilos or registered to carry more than 10 passenger) and a fee of 1‰ (a thousandth) of the value of the aircraft (for aircraft weighing less than 5,700 kilos or registered to carry no more than 10 passengers) was payable when registering a lease in the Register of Danish Aircraft, but as of 1 April 2019 this is no longer the case.

For leases registered in the International Registry of Mobile Assets, a fee of USD100 must be paid.

There is no official information available in this respect.

Documentation required to register ownership of an aircraft in a Danish registry includes either:

  • a declaration of transfer of ownership (which can be found on the homepage of the Danish CAA);
  • an original contract of sale;
  • the bill of sale; or
  • a similar document exchanged between the latest registered owner in the aircraft registry and the applicant.

Documentation of the power of the signer/signers to make arrangements on behalf of the company must be enclosed with the application. If the company is not registered with the Danish Business Authority, or if it is a firm, a union or a club, etc, 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 Denmark are generally not subject to Danish tax. 

Foreign lessors’ leasing income is – as a main rule – not seen as a source of income and therefore the lessor will not be liable to pay tax in Denmark, unless they are subject to Danish tax for other reasons.

Failure to maintain an aircraft and/or engine may bring about risk of third-party liability.

The doctrine of strict liability for foreign owners applies in Denmark.

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

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

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

In Denmark, third-party liability insurances for aircrafts must fulfil minimum coverage requirements. The minimum requirements are found in EC Regulation No 785/2004 of 21 April 2004 on insurance requirements for air carriers and aircraft operators. The minimum coverage per accident depends on the maximum take-off mass (MTOM) and is as follows:

  • MTOM below 500kg: 0.75 million SDR
  • MTOM between 500kg and 1 tonne: 1.5 million SDR
  • MTOM between 1 tonne and 2.7 tonnes: 3 million SDR
  • MTOM between 2.7 tonnes and 6 tonnes: 7 million SDR
  • MTOM between 6 tonnes and 12 tonnes: 18 million SDR
  • MTOM between 12 tonnes and 25 tonnes: 80 million SDR
  • MTOM between 25 tonnes and 50 tonnes: 150 million SDR
  • MTOM between 50 tonnes and 200 tonnes: 300 million SDR
  • MTOM between 200 tonnes and 500 tonnes: 500 million SDR
  • MTOM of or above 500 tonnes: 700 million SDR

For passenger insurances, the minimum insurance coverage is 250,000 SDR per passenger seat. For luggage and freight the coverage must be at least 1,000 SDR per piece of luggage and 17 SDR per freight kilo.

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

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

An 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, this would be subject to any enforceable third-party rights.

It is not possible for a lessor to take physical possession of an aircraft without either 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.

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

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

Whether a waiver of immunity will be upheld by the courts depends on the wording of the waiver. Typically, national courts will not accept waivers unless they are covered by the waiver (see the Administration of Justice Act Sections 160-172). The rules in the Administration of Justice Act regulate cases of self-incrimination, certain confidential information and certain professions.

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

As for arbitral awards, Denmark is a party to the New York Convention. Therefore, arbitral awards rendered under this convention are enforceable in Denmark.

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

In Denmark 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 Danish Criminal Code and the Danish 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 Denmark. 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 10-days’ notice period stipulated in EU law, no mandatory notice period applies.

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

Denmark has adopted the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention). Therefore, as mentioned in Domestic Courts' Recognition of Foreign Judgments/Awards above, arbitral awards rendered under this convention are enforceable in Denmark.

Lessors should be aware that timely notice must always be observed in order to avoid potential loss of rights.

Danish law recognises the concepts of novation and contractual assignment. In the case of contractual assignment, it is important for the assignee to ensure that the other party is properly notified. In the case of novation, the novation must be accepted by the creditor in order for it to be enforceable.

In the case of a lessor assigning or novating its rights under an aircraft 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 Danish courts, provided proper and fulfilling evidence is submitted.

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

Although it is advisable for an aircraft and/or engine lease assignment and for an assumption/novation to be in writing and in Danish, it is not necessary that they are either translated, certified, notarised or legalised in Denmark in order for them to be enforceable against a domestic party.

It is possible to register an aircraft and/or engine lease assignment, and an assumption/novation must be registered in the Danish Rights Register, but it is only possible to register rights over aircraft that fall outside the scope of the Cape Town Convention in the registry.

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

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

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

No fees apply when registering an assumption/novation agreement, or as a consequence of an original or copy of it being brought into Denmark.

In Denmark, 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.

As a starting point, deregistration is carried out by means of an application made by the owner of the aircraft in accordance with the guidelines issued by the Danish CAA. The official form concerning application for removal must be filled in.

Only the owner of an aircraft may apply for its deregistration. The owner must have the lessee or operator’s consent; otherwise, deregistration may be considered a breach of contract.

In order to apply for deregistration, an 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 or taxes are chargeable in respect of the deregistration of an aircraft.

The owner of an aircraft always has the possibility to give another person power of attorney to sign the various documents to be used in connection with the registration of the aircraft. It must be clearly apparent from the power of attorney that the person in question may sign the particular 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 Danish CAA upon request.

Documentation of the powers of the signer/signers to make arrangements on behalf of the company shall be enclosed in the form of an extract from the Danish Business Authority (not more than one year old). If the company is not registered with the Danish Business Authority, the articles and signed minutes from the latest general meeting or certification by a notary shall be enclosed.

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

A power of attorney can normally be made irrevocable, but Danish courts may set an irrevocability clause aside under the general terms applicable for unfair contracts.

Export of an aircraft requires consent from the lessee and other parties with properly protected third-party rights; otherwise, the export may incur claims for damages. During negotiations it is advisable to obtain a properly signed IDERA as 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 a reasonable time.

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

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

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 Danish law, a bankruptcy estate is entitled to decide whether to accede to any agreements which they entered into before the bankruptcy and exercise the same rights as would have applied without the agreement. 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 applied for as an alternative to insolvency proceedings. This will typically last for around seven months and no longer than 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 Danish 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 decided not to accede to the pre-bankruptcy agreement.

Denmark has ratified the Convention on International Interests in Mobile Equipment and the related Protocol on Matters specific to Aircraft Equipment. No 'authorised entry point' (AEP) regime applies.

Denmark has made the following declarations under the Convention:

  • Pursuant to Article 39 of the Convention, the Kingdom of Denmark has declared that:
    1. all categories of non-consensual rights or interests which, under Danish law, have priority over an interest in an object equivalent to that of the holder of a registered international interest shall to that extent have priority over a registered international interest, whether in or outside insolvency proceedings; and
    2. nothing in the Convention shall affect the right of the Kingdom of Denmark or that of any entity thereof, any intergovernmental organisation of which the Kingdom of Denmark is a member state, or other private provider of public services in the Kingdom of Denmark to arrest or detain an object under Danish law for payment of amounts owed to any such entity, organisation, or provider directly relating to the services provided by it in respect of that object or any other object.
  • Pursuant to Article 40 of the Convention, the Kingdom of Denmark has declared that the following categories of non-consensual rights or interests shall be registrable under the Convention as if the right or interest was an international interest and shall be regulated accordingly, including:
    1. rights stemming from a court order permitting attachment of an object covered by the Convention in partial or full satisfaction or of a legal judgment; and
    2. notifications of bankruptcy orders when the bankruptcy estate includes objects covered by the Convention in order to protect the rights of the bankruptcy estate. 
  • Pursuant to Article 52 of the Convention, the Kingdom of Denmark has declared that until further decision, the Convention will not apply to the Faroe Islands and Greenland.
  • Pursuant to Article 54(2) of the Convention, the Kingdom of Denmark has declared that any remedy available to the creditor under any provision of this Convention, which is not therein stated as requiring application to the court, may be exercised without leave of the court.
  • Pursuant to Article 55 of the Cape Town Convention, where the debtor is domiciled in the territory of a member state of the EU, the Kingdom of Denmark will apply Articles 13 and 43 of the Convention for the interim relief only in accordance with Article 35 of Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, as interpreted by Court of Justice of the European Union in the context of Article 24 of the Brussels Convention of 27 September 1968 on jurisdiction and the enforcement of judgments in civil and commercial matters.

Denmark has made the following declarations under the Protocol:

  • Pursuant to Article XXIX of the Aircraft Protocol, the Kingdom of Denmark has declared that until further decision, the Protocol will not apply to the Faroe Islands and Greenland.
  • Pursuant to Article XXX(1) of the Aircraft Protocol, the Kingdom of Denmark has declared that it will apply Article XII and Article XIII.
  • Pursuant to Article XXX(3) of the Aircraft Protocol, the Kingdom of Denmark has declared that it will apply in its entirety Alternative A of Article XI to all types of insolvency proceeding and that the waiting period for the purposes of Article XI(3) is 60 days.
  • In accordance with Article XXX(5) of the Aircraft Protocol, the Kingdom of Denmark will not apply Article XXI of that Protocol and Regulation (EU). No 1215/2012 will apply to this matter.

Article XIII of the Protocol applies in Denmark. 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 Danish CAA will record the IDERA accordingly in the Register of Danish Aircraft.

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

Denmark is a party to the 1948 Geneva Convention on the International Recognition of Rights in Aircraft. Denmark 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 Danish law, including in particular the Act on Measures to Prevent Money Laundering and Financing of Terrorism.

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

Borrowers are permitted to grant security to foreign lenders; however, the security may be subject to UN or EU sanctions.

Downstream and cross-stream guarantees are generally permitted. Upstream guarantees may constitute a violation of Danish corporate law. Any guarantees should, in order for them to be valid, 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 special purpose vehicle which owns a financed aircraft. Pledge of shares should be noted in the shareholder’s ledger.

Danish law recognises negative pledges.

Intercreditor arrangements are valid and enforceable.

Danish 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 Denmark.

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

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

All generally accepted forms of security and recourse are accepted under Danish law, for example bank guarantees or similar security arrangements.

All generally accepted types of security are available under Danish law.

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

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

Assignment of the rights and benefits of a 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 security assignments are in a language other than Swedish, Norwegian, Danish or English then a certified translation into one of these languages must be provided.

The generally recognised security arrangements are acceptable and sufficient to be used in Denmark. Certain, but not excessive, fees may apply (see also Taxes/Duties Payable for Registering a Lease, above).

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

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

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

It is not generally necessary to consider parallel debt structures under Danish law.

A secured party under a security assignment is – as a main rule – not considered to be resident, domiciled or carrying on business and will therefore not be tax liable in Denmark unless they are subject to Danish tax for other reasons.

A domestic law mortgage over an aircraft or engine is perfected by registration in the Danish 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 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 which has been done, unless otherwise agreed.

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

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 Danish Rights Register. The effect of the notation in the registry is perfection.

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

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

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.

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

As for arbitral awards, Denmark is a party to the New York Convention. Therefore, arbitral awards rendered under this convention are enforceable in Denmark.

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

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

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

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

In Denmark 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 Denmark. Part of the court fee depends on the actual amount claimed.

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

On 19 June 19 2015, the Danish High Court of Western Denmark ruled that a lessor, in the event of the lessee’s bankruptcy, could demand to be given possession not only of the leased aircraft, but also an installed engine. The judgment concerns the Geneva regime, but is nonetheless also relevant for leasing agreements that cannot be registered in the International Registry of Mobile Assets.

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

IUNO Advokatpartnerselskab

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2300, Copenhagen
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+45 5374 2702

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Law and Practice in Denmark

Authors



IUNO Law Firm is based in the heart of Copenhagen, Stockholm and Oslo. Focusing solely on the practice areas of employment law, transport/aviation, corporate and insurance, the firm aims to offer a specialist service in eyesight. It represents some of the largest international airlines and is constantly expanding, having seen a 78% increase in pending aviation court cases since October 2018.