Aviation Finance & Leasing 2021 Comparisons

Last Updated July 30, 2021

Contributed By John W Ffooks & Co

Law and Practice

Authors



John W Ffooks & Co is a full-service corporate, commercial law firm with offices in Madagascar, Mauritius and Senegal, providing support to business and industry across French-speaking Africa. The firm's multilingual legal team, comprised of six resident partners and 20 associates, is the only legal practice in the region with a combination of Napoleonic and English law expertise – making the firm the obvious choice when it comes to international transactions in Francophone Africa. Its particular strengths are in assisting inward investors into the region and in reconciling their common law understanding of business with the realities of working under legal systems derived from the Napoleonic Code. The firm's expertise in advising local and international clients has earned the trust of listed and unlisted domestic, as well as international, corporations, banks and financial institutions, light and heavy industrial firms, state-owned enterprises, and government departments.

The execution of an aircraft or engine sale agreement could potentially be subject to the payment of VAT and registration fees.

Under Senegalese law, a lease agreement or other type of agreement is subject to the prior approval of the director of the Agence Nationale de l’Aviation Civile et de la Métérologie (National Agency of Civil Aviation and Meteorology) or ANACIM (ie, the authority responsible for civil aviation in Senegal), before being signed by the parties concerned. On another note, as the official language in Senegal is French, it would be advisable for a sale agreement to be translated, certified, notarised or legalised to be enforceable against a domestic party.

It should be noted that the ANACIM may accept the submission of documents in English.

The transfer of title is constituted by a sale agreement (ie, must be evidenced in writing) and is only effective against third parties that are registered with the Aircraft Register (registre d’immatriculation). It is understood that it would not extend to include installed parts, such as an auxiliary power unit (APU), unless expressly agreed between the parties.

In general, the sale of the ownership interest in an entity that owns an aircraft or engine does not itself constitute a sale of the aircraft or engine, since this does not change the direct ownership of the aircraft. In other words, the registered owner of the aircraft remains unchanged.

The bill of sale may be governed by a foreign law (eg, English or New York law).

Without being exhaustive, the bill of sale must include information about the aircraft, and the name and signature of the parties, accompanied by a filed form of SN-SEC-AIR-FORM-46.

As the official language of Senegal is French, it would be advisable for the bill of sale to be translated.

It is also advisable for the bill of sale to be notarised or legalised in order to be enforceable against a domestic party.

The letter of the law is not entirely clear. However, the understanding is that registration with the tax authority and the ANACIM is required.

As this is a commercial act, the bill of sale is subject to the payment of VAT and the contract will be registered with the tax authorities.

The registration of the bill of sale with the tax office could be subject to the payment of registration fees.

The types of operating/wet/finance leases or leases concerning only engines or parts are permissible. Senegal adheres to the Cape Town Convention and Protocol and also to international good practice.

A lease involving either a domestic party or an asset situated in Senegal may be governed by a foreign law. In matters of contract, it is the law of the parties that governs, subject to compliance with the mandatory rules laid down by the local laws in force.

There are no known material restrictions imposed on domestic lessees making rent payments to foreign lessors in US dollars. It is understood that this should be mutually agreed by the parties under the lease agreement, subject to compliance with exchange control requirements and payment offshore.

Pursuant to the West African Economic and Monetary Union (WAEMU), regulation on the external financial relations of the member states of the West African Economic and Monetary Union, and transfers and/or receipt of funds outside of WAEMU member states, can only be carried out through the central bank, the administration or an approved intermediary or a manual exchange-licensed agent.

There are no taxes/duties payable for executing a lease physically in Senegal and/or by or to a domestic party, or as a consequence of an original or copy of a lease being brought into Senegal, either physically or electronically.

There is no such requirement under local law. However, in order to use a foreign registered aircraft, a prior authorisation should be obtained by the Civil Aviation Authority.

Under the letter of the law of Senegal, the lease agreement must include at least the following:

  • the effective date and expiry date of the lease agreement;
  • the names of the parties to the lease agreement;
  • a description of the aircraft, including its make, manufacturer, model designation and serial number; and
  • a clause indicating the person responsible for the continuing airworthiness for the duration of the lease.

Tax and other withholding gross-up provisions are permissible and enforceable in Senegal.

The letter of the law does not, in particular, state whether the lease may cover parts that are installed or replaced on an aircraft or engine after its execution, and which steps should be taken to ensure that those parts are captured under the lease. In practice, the lease may cover the whole aircraft or just a component of the aircraft.

The letter of the law does not provide the concept of title annexation.

Engines could be registered in a system for the registration of documents affecting title to, or ownership of, any civil aircraft to be considered as separate assets from the aircraft.

Under the Organisation for the Harmonisation of Business Law in Africa (Organisation pour l'Harmonisation en Afrique du Droit des Affaires, or OHADA) Uniform Act Organising Securities, there is the concept of fiduciary transfer of money, or transfert fiduciaire de somme d’argent, under which a sum of money shall represent the agreement whereby a settlor transfers funds as security for the performance of an obligation. These funds shall be entered into a blocked account opened in the name of the creditor in the books of an approved finance company.

The letter of the law is silent on this point. However, the understanding is that the interests of the owner (legal or beneficial) or a lessor of an aircraft may be noted on the Aircraft Register. All interests taken on an aircraft or part of an aircraft registered in Senegal are registered in the local registry. Registration allows the beneficiary's interest to be enforceable against third parties.

Under Senegalese law, the aircraft should be registered in the name of the owner. In the case of a lease, the name and address of the operator can be added to the registration certificate.

The lease of the aircraft or engines by the owner is subject to the submission of an application to the Civil Aviation Authority in order to be registered with the registre d’immatriculation.

The registration of leases is optional. However, in practice, registration seems to be mandatory. In addition, when the term of the lease is higher than 12 months, the aircraft should be registered with the aircraft in the Senegalese register d’immatriculation. The law is silent when it comes to the consequences for failing to do so.

The lease agreement and other types of agreement are subject to the prior approval of the director of the Civil Aviation Authority before being signed by the parties concerned, if the aircraft is to be integrated into the fleet of an air transport company holding a Senegalese air-operating permit.

Without being exhaustive, the lease agreement must include at least the following:

  • the effective date;
  • the expiry date and terms and conditions for termination of the lease agreement;
  • the names of the parties to the lease agreement;
  • a description of the aircraft; and
  • a clause indicating the person responsible for the aircraft's continuing airworthiness for the duration of the lease.

The registration of a lease is made upon presentation of the original deed or a certified copy thereof; subject to the payment of fees, the application is made in a form prescribed by the Civil Aviation Authority.

As the official language of Senegal is French, it would be advisable for the lease to be translated into French. However, in practice, the ANACIM allows the filing of documents in English. Certification or authentication is only required if the legislation of the country governing the lease agreement requires it.

The registration of the lease with the tax office is subject to the payment of a registration fee.

As Senegal is a member state of the West African Economic and Monetary Union, any natural or legal person of the nationality of Senegal shall be entitled to register its aircraft in another member state.

See 2.3.5 Requirements for a Lease to Be Valid and Registrable.

Profits from businesses operated in Senegal are taxable under the General Tax Code. Therefore, if the lessor is incorporated in Senegal, it will be subject to the payment of income tax.

A foreign lessor would not be deemed to be resident or domiciled in Senegal as a result of it being a party to, or its enforcement of, the lease.

For a foreign aircraft leased by a Senegalese operator, the state in which the aircraft is registered is responsible for approving maintenance organisations to carry out maintenance work on the aircraft and for accepting the Maintenance Control Manual describing the aircraft's continuing airworthiness-management procedures.

For the lease of a Senegalese aircraft by a foreign operator, the ANACIM accepts the Maintenance Control Manual describing the aircraft's continuing airworthiness-management procedures, and will take into account any comments from the state of operation, and any maintenance organisation required to carry out work on the aircraft shall be approved/validated by the Civil Aviation Authority.

Furthermore, for an aircraft registered in Senegal and operated under a leasing agreement by an operator whose principal place of business is in another contracting state, the state of Senegal may transfer to the contracting state all or part of the functions and duties in respect of the leased aircraft in its capacity as the state of registry. The state of Senegal shall be relieved of all liability in respect of the functions and duties transferred.

The registration of a lease or charter with the ANACIM remains an optional operation. However, it is in the interest of the owner (eg, a lessor) of the aircraft to have this operation registered, since registration in the Register releases the owner from liability to third parties.

See 2.4.3 Engine Maintenance and Operations.

Seizure in a private interest is carried out for the benefit of a creditor of either the owner or the holder of an interest in the aircraft.

Under the local law, creditors with mortgages on aircraft exercise their right of pursuit of whosever hands they pass through to be registered and paid in the order of their registration. The debtor against which the mortgage is taken must be registered with the Register as the owner of the aircraft. If this is not the case, it is necessary to transfer the aircraft to the debtor prior to the registration of the mortgage.

The Civil Aviation Authority will inform the applicant by email or by letter in the event of non-compliance.

Under the letter of the law, every aircraft operator is required to maintain an insurance policy; however, it does not specify whether the insurance should be placed with domestic insurance companies.

Under the letter of the law, the aircraft operator is required to maintain an insurance policy covering civil liability for accidents or damage to passengers, flight crew, baggage, cargo, mail and third parties on the surface, in accordance with the provisions of international conventions.

The letter of the law is silent on this point.

The letter of the law is silent on this point. The prevailing view is that it is allowed in practice.

Assignment of insurances/reinsurances is permitted.

There are no known restrictions on a lessor’s ability to (i) terminate an aircraft lease, (ii) re-export the aircraft and/or (iii) sell the aircraft following that termination; however, for a lease registered with the register d’immatriculation, an application for deregistration of the lease must be made.

The letter of the law does not specify whether the aircraft needs to be physically located in Senegal at the time of any such action(s).

The lessee’s consent or a court order is required for the possession of the aircraft.

There are no specific courts in Senegal; general courts are competent to decide aviation disputes. It should be noted that two major matters of which the Senegalese courts are aware are the liquidation of the national company Air Afrique and the company Groupe Air Sénégal SA.

No issues are foreseen for a lessor to obtain a summary judgment, or equitable or other injunctive relief pending final resolution of judicial proceedings to enforce an aircraft lease. The lessor has only to file an application called "référé" with the competent Commercial Court. The procedure will take one to three months (there is a possibility to appeal against the judgment of the Commercial Court).

The domestic courts could potentially uphold (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 to that lease.

In order for a foreign judgment (either a foreign court judgment or an arbitral award) to be enforceable in Senegal, an exequatur order will be issued by the domestic court without re-examination of the matter. For a judgment relating to the enforcement of an international interest (registered in the International Registry in Cape Town), an exequatur will not be required.

The letter of the law is silent on this point. Generally, a judgment is left to the discretion of the judge. An equivalent amount in foreign currency may be granted in local currency. This is more common with local practice.

A lessor under an aircraft lease is not required to pay taxes or fees in a significant (ie, non-nominal) amount in connection with the enforcement of an aircraft lease in Senegal.

A lessor under an aircraft lease is not required to pay taxes or fees in a significant (ie, non-nominal) amount in connection with the enforcement of an aircraft lease in Senegal.

The lessor should comply with notice periods for termination of the aircraft lease that are established in the lease agreement.

The lessee cannot claim any sovereign or other immunity from suit, except in the case of the Republic of Senegal or any of its entities.

The following may not be subject to precautionary seizure:

  • aircraft assigned exclusively to a state service, in particular military, customs or police services, including the public postal service, and all other exemptions provided for by the laws and regulations;
  • aircraft actually in service on a regular public transport route and essential reserve aircraft;
  • any other aircraft assigned to transport persons or goods for remuneration when it is ready to leave for that transport, except in the case of a debt contracted for the journey it is to make, a claim arising during the journey or a claim relating to sums owed by the owner by reason of the acquisition of this aircraft or of training or maintenance contracts connected with its operation, in which cases the bond may prevent seizure.

However, the aforementioned provisions shall not apply to the seizure by the owner of their aircraft by an unlawful act or in the case of non-payment of the route fee as provided for in Article 101 of the Civil Aviation Code.

Senegal has adopted the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the "New York Convention").

There are no other relevant issues that a lessor should be aware of in relation to the enforcement of its rights.

Senegal has recognised the concepts of contractual assignment and novation.

Agreements governed by New York or English law would be held valid by a Senegalese court. The consent of the lessee depends on the governing law of the lease agreement and the assignment or novation agreement. Under Senegalese law, the consent is required in such circumstances. There are no known mandatory terms that Senegal requires to be included in such an agreement or deed.

It would be advisable for an aircraft and/or engine lease assignment and assumption/novation to be translated, notarised or legalised to be enforceable against a domestic party. It is worth noting that the ANACIM may accept the filing of documents in English.

The lease assignment must be evidenced in writing and is only effective against third parties by a registration with the registre d’immatriculation. The application on the registration must be made in a form prescribed by the ANACIM. The letter of the law is silent when it comes to the estimated period for completion.

See 2.3.4 Registration of Leases with the Domestic Aircraft Registry.

Any such assignment and assumption/novation agreement could potentially be subject to a registration fee with the tax authority.

The letter of the law does not provide for such a case.

In Senegal, only these people can deregister an aircraft: (i) the managing director of the ANACIM and (ii) the owner (if the applicant is different from the owner, they should provide proof of the mandate).

In order to achieve this deregistration, (i) the application must be made in a form prescribed by the ANACIM and (ii) the applicant must pay the prescribed fees.

The consent of the lessee or operator would be required for the deregistration of the aircraft.

The documents that the owner has to provide to deregister the aircraft are the following: an application made on a form prescribed by the ANACIM, the original certificates to the certificate of registration, a certificate of airworthiness, an aircraft station licence, and a noise certificate if applicable.

The letter of the law is silent on this point.

It is not known whether or not the authority provides advance assurances to an aircraft owner, mortgagee or lessor as to the prompt deregistration of the aircraft.

The deregistration of an aircraft is subject to the payment of the following fees:

  • for an aircraft under 2.25 T (metric tonne), fees are XOF200,000 (approximately USD370);
  • for an aircraft from 2.25 to under 5.7 T, XOF500,000 (approximately USD925);
  • for an aircraft from 5.7 to less than 20 T, XOF1 million (approximately USD1,849); and
  • for an aircraft over 20 T, XOF2 million (approximately USD3,697).

A deregistration power of attorney is recognised in Senegal. It would be advisable for a deregistration power of attorney to be translated, notarised, and legalised to be enforceable against a domestic party.

There are no additional documents required to enforce a deregistration power of attorney.

A deregistration power of attorney should be governed by Senegalese law.

It would be difficult to revoke an irrevocable power of attorney in practice.

It would be advisable to get the lessee’s consent in order for an aircraft owner, mortgagee or lessor to export the aircraft without the lessee’s consent, or for a mortgagee to export the aircraft without the owner’s or lessor’s consent. The letter of the law does not provide whether or not the asset needs to be located in Senegal at the time of deregistration and/or export or whether an owner, mortgagee or lessor, at the time of negotiating the lease or mortgage (as applicable), can take any steps to increase the likelihood that it will be able to export the aircraft without the lessee’s consent.

Aircraft export permits/licences are issued in Senegal. The owner of an aircraft or their representative shall submit an application for a certificate in a form prescribed by the ANACIM with the following documents: airframe, engine and propeller logbooks and clearance certificates, logbooks, export certificate of airworthiness.

The letter of the law is silent on this point.

There are no known significant practical issues that an aircraft owner or mortgagee or lessor should be aware of in respect of the deregistration of aircraft.

A lessee domiciled in Senegal should acknowledge the following pertinent laws and statutory regimes.

Senegal is a member of the regional organisations WEAMU and OHADA, and some regulations of those organisations are applicable on a principal or accessory basis, in compliance with national legislation on leases. The types of lease contracts used in Senegal and within the WAEMU are chartering (Affrètement), lease (Location) and Leasing (Crédit Bail).

These contracts are governed by:

  • the OHADA Uniform Act on General Commercial Law (adopted in 2010);
  • Regulation No 01/2007/CM/UEMO, adopting the WAEMU Civil Aviation Code;
  • Law No 63-62 of 10 July 1963 on the General Code of Obligations (General Theory of Obligations);
  • Law No 2012-02 of 3 January 2012 on Leasing (the reference law on local leasing); and
  • Law No 2015-10 on the Civil Aviation Code.

Leasing contracts are subject to the prior approval of the ANACIM and must be registered in the trade and credit register. The rights and obligations of the parties (the lessor and the lessee) are generally defined in the lease agreement, and particularly by the regulations in force.

The relevant rules or laws applicable to the types of voluntary and involuntary restructurings, reorganisations, insolvencies and receivership relating to a lessee domiciled in Senegal are protective seizures (i) by an administrative authority (ANACIM) in the case of violation of regulations of civil aviation, or (ii) by a judge, following a petition filed by a private individual to claim rights against the tenant (eg, debts) and insolvency proceedings (the lessee as a company may be subject in case of financial difficulties to a judgment of judicial reorganisation or liquidation if the lessee is completely bankrupt). The bankruptcy of the lessee will lead to the withdrawal of their approval. The decision to restructure or reorganise belongs to the partners of the lessee’s company, as it is an internal management decision of the company.

As indicated in 2.9.2 Overview of Relevant Types of Voluntary and Involuntary Restructurings, Reorganisations, Insolvencies and Receivership, the OHADA Uniform Act on Insolvency and Bankruptcy Proceedings 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, they may apply all the good practices applicable in this matter, in particular from adopting 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), and implement the UNCITRAL Model Law on Cross-Border Insolvency or any other relevant international principles or rules.

Irrevocable powers of attorney regarding the assets that integrate the patrimony of the party insolvent will not survive its insolvency. However, taking into account that the aircraft is not owned by the lessee/insolvent, the aircraft is not part of the patrimony of the insolvency, for that 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.

In Senegal, the declaration of the insolvency of a lessee does not suspend a lease agreement automatically. Under Article 14 of Regulation No 07/2002/CM/WAEMU relating to the licensing of air carriers within the WAEMU, "An air carrier against which Insolvency proceedings have been instituted shall not be authorised by the Civil Aviation Authority to retain its licence if there is no concrete possibility of satisfactory financial restructuring within a reasonable delay”. Furthermore, Senegal has adhered to the Cape Town Convention and the Protocol and has the option to choose one of the alternatives of Article XI of the Cape Town Protocol.

The lack of sufficient assets to provide for the payments due to creditors as a result of insolvency, including the lender, if they do not have a guarantee of their own (eg, a mortgage) will be deemed as any other common creditor who should be paid equally in accordance with the debtor’s existing assets.

A moratorium can be imposed in connection with insolvency proceedings in accordance with the provisions of the OHADA Uniform Act Organising Insolvencies and Liquidations procedure.

Moreover, the Article 54 of Law No 2012-02 of 3 January 2012 on leasing in Senegal provides that: "in the event of preventive settlement, legal redress or liquidation of the lessee's assets, the leased asset shall escape all proceedings by the lessee's creditors, whether unsecured or secured, regardless of their legal status and rank, and whether considered individually or as a whole in the context of collective legal proceedings.

The liquidator (expert) in charge of the liquidation may, within 60 days of the date of his appointment, choose to continue the leasing contract under the agreed conditions, or to terminate it.

At the end of this 60-day period, and if no decision is received by the lessor, the leasing contract under the agreed conditions is returned to the lessor.

If the liquidator, after having been informed by the lessor, decides to continue the execution of the contract until its term and if, at the time of its occurrence, the purchase option has not been exercised, the contract shall be deemed to have been terminated by operation of law; the asset shall then be immediately returned to the lessor.

Without prejudice to the foregoing, the lessor shall be entitled to claim the rentals and all other sums resulting from the leasing agreement, payable until the goods are returned."

In addition, a two-year moratorium on the payment of rents may be granted to the lessee in accordance with the provisions of Articles 9, 75 and following of the OHADA Uniform Act Organising Insolvencies and Liquidations procedure.

The methods by which a domestic lessee can be liquidated or placed in administration or receivership are conciliation, preventive settlement, legal redress and liquidation of property. All these procedures are provided for and organised by the OHADA Uniform Act Organising Insolvencies and Liquidations procedure.

In the case of provisional administration, it is pronounced by a judge in summary proceedings when the normal functioning of the company is rendered impossible, either because of the management, executive or administrative bodies, or because of the partners. The legal regime is organised by Articles 160-1 to 160-8 of the OHADA Uniform Act on companies.

Performance defaults are also required to repossess an aircraft during a lessee insolvency proceeding. For more information, see 2.9.7 Imposition of Moratoria in Connection with Insolvency Proceedings.

See 2.9.7 Imposition of Moratoria in Connection with Insolvency Proceedings.

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 Senegal. The authorised entry point codes (AEP) are not required for registering international interests. In Senegal, only the ANACIM is authorised to register international interests. It is up to the lessor to carry out the formalities of registration of the interests in Cape Town and, if the aircraft is registered in Senegal, the lessor will carry out the formalities of registration in the local register in Senegal.

The fees to be paid are defined by Decree No 2019-1120, fixing the basis and rate of fees and products due for services rendered by the Civil Aviation Authority (ANACIM). These are XOF200,000 (for aircraft of less than 2.25 T), XOF500,000 (for aircraft of 2.25 T to less than 5.7 T), XOF1 million (for aircraft of 5.7 T to less than 20 T) and XOF2 million (for aircraft of 20 T and over). There are no fixed deadlines for the processing of applications, but it does not take long to register in practice. Filing of documents in English is allowed.

It was under the 1944 Chicago Convention and the Cape Town Convention and its Protocol that Senegal drew inspiration for its 2015 Civil Aviation Code. Any act or legal fact concerning an aircraft registered in Senegal must be registered in the national register of registrations (eg, the leasing or charter of an aircraft or a component of an aircraft, transfer of ownership of an aircraft, and registration and deletion of a mortgage).

Article XIII of the Protocol is applied domestically. An irrevocable deregistration and export request authorisation (IDERA) is attached to the interests-registration form. This allows the ANACIM to prevent the aircraft from leaving Senegal.

Senegalese courts have little experience with the application of the Cape Town Convention or Protocol because the parties to the international leasing contract insert a clause-conferring jurisdiction on the courts of foreign countries.

Senegal is a party to the 1948 Geneva Convention on the International Recognition of Rights in Aircraft and the 1933 Rome Convention on the Unification of Certain Rules relating to the Precautionary Arrest of Aircraft.

There are no particular restrictions on foreign lenders financing an aircraft locally or on borrowers using the loan proceeds.

There are no exchange controls or government consents required in respect of financing or repatriation of realisation proceeds under a loan, guarantee or security document. Payment or debt repayment operations abroad are freely carried and are subject to certain restrictions set out in the foreign exchange regulations.

Borrowers are permitted to grant security to foreign lenders in accordance with the provisions of the OHADA Uniform Act on Security Interests, adopted in 2010.

Downstream, upstream and/or cross-stream guarantees are permitted under OHADA law. The registration is normally done in the Companies Registry, or RCCM, except as otherwise specifically provided for aircraft (the register within the ANACIM).

It is not 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 permitted.

A negative pledge is not recognised under OHADA Law. However, the parties are free to organise it under the lease agreement.

Under the local law, there are no material restrictions or requirements imposed on intercreditor arrangements.

The concept of agency and the role of an agent under a syndicated loan has been recognised since 2010, by the reform of the OHADA Uniform Act on Security Interests.

The method of debt subordination is permissible and recognised, debts contracted by the liquidator at the time of the liquidation of the bankrupt company.

The transfer of such security interests is permitted. However, the air transport licence (eg, held by the lessee) is neither assignable nor transferable.

The contracts for the assignment of receivables are registered in Senegal with the tax authorities at 1% of the contract amount.

The legal interest rate is set each year by the minister of finance and budget, which is 4.2391% for 2021.

The typical forms of security and recourse that would be granted in an aviation finance transaction domestically are mortgages and guarantees in accordance with the OHADA Uniform Act and national law.

It is not possible to set up pledges over aircraft or related movable assets such as engines, as they are only subject to mortgages.

The concept of a trust and the role of a security trustee is recognised under OHADA law.

The law is silent on this point; however, it is believed that it is possible because of the risk of conflict of interest. However, the borrower is permitted to assign its rights of the aircraft or under an aircraft lease to a third party, pursuant to a security assignment or a mortgage.

It is possible for someone to assign a credit that they own, including the credits that a lessor is entitled to under an aircraft lease, such as the rents resulting from that agreement. However, during the term of the leasing contract, the lessor may only transfer all or part of its rights under the lease agreement to another undertaking engaged in lease or debt-collection activities. The lessor is obliged to notify the lessee of the transaction by a deed with a definite date. The transferee is obliged to respect the contract concluded by the transferor.

The lessee may not assign their contractual right of use and may not sublet the leased asset without the written consent of the lessor.

The assignor shall guarantee the lessor the performance by the assignee of its duties as provided in the law and stipulated in the lease agreement.

The duration of the sublease agreement shall not exceed the duration of the lease agreement.

Security assignments or guarantees governed by English or New York law are permitted and enforceable. The parties are free to choose the law governing their contract.

It is a requirement to have a written contract or document, including in particular the designation of the secured claims and the assigned claims with their accessions and future claims; their individualisation and identification must be made possible in the assignment deed. The registration of such an assignment is also advisable in order to be enforceable. Taking into account that, under Senegalese law, rights may be fully enforced against parties via judicial proceedings and that, according to the Senegalese Civil Procedure Code, all documents filed with courts, if demanded by the judge, should be translated into French, in such a circumstance it is necessary to file a translation of those documents duly certified by a translator registered in the list of experts.

Assignments of security interests governed by English or New York law over an aircraft registered in Senegal are permitted, especially where the lease is international and the lessor is a foreigner not domiciled in Senegal. The ANACIM does not currently transfer any registration to the Cape Town International Registry. Therefore, it is the responsibility of the parties or the lessor to deposit their international guarantee in Cape Town. If the aircraft is registered in Senegal, it is up to them to make the same registration locally. For the execution of the guarantees carried on the international register of the Cape in Senegal is simple, it will only be necessary to bring to the ANACIM an official act delivered by Cape Town and, if the document is in conformity, the Civil Aviation Authority will proceed to the execution of the international guarantee. For the guarantees registered on the national register, it will be necessary to look for an enforceable title delivered by a judge.

Senegal does not have a register for the registration of assignments of security interests made under the rules of a foreign law. Therefore, no registration will be made in Senegal. Furthermore, if the assignments of interests concern an aircraft registered in Senegal, it is obvious that an entry must be made in the local register.

The transfer of such security interests is not recognised. However, if the parties' leasing agreement so provides, there will be no problem.

The regime of assignment of securities is not recognised by Senegalese law (for more details, refer to the Cape Town Convention).

The concept of "parallel debt" can be used by the domestic structures. However, its legal regime is not organised, so parties may refer to New York law.

A secured party under a security assignment would not be deemed to be resident or domiciled in Senegal and would only be subject to taxes if it received any income in Senegal.

It is necessary to file a domestic law mortgage over an aircraft or engine with the registry to produce legal effects.

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

The security used to take security over a bank account is an on-first-demand bank guarantee, by which the bank, at the request of its beneficiary, should immediately make payment of the secured amount or a pledge account.

A third party can take or register a lien over an aircraft and its accessories. The holders of the liens under Article 52 of the Civil Aviation Code are:

  • the legal costs incurred in order to achieve the sale of the aircraft and the distribution of its price in the common interest of the creditors;
  • the remuneration due for the salvage of the aircraft;
  • the indispensable expenses incurred for its preservation;
  • claims resulting from the contract of employment of the members of the flight crew and other persons assigned to the onboard service but with regard to pledges for a period of six months at the most; and
  • the fees due for the use of devices and aids to air navigation and landing.

The aforementioned liens are on the aircraft or on the insurance indemnity provided for in Article 50 of the Civil Aviation Code. The liens follow the aircraft through whosever hands it passes.

These privileges relate only to maintenance work and costs performed on the aircraft. However, it cannot cover the value of work done on other assets.

The rights of recourse of a third-party lien holder are the same as those of a creditor.

In the event of the sale in Senegal of an aircraft encumbered in a state party to the Convention on the International Recognition of Rights in Aircraft signed in Geneva on 19 June 1948, the rights provided for in Article 1 of that Convention and encumbering the aircraft may only be exercised without prejudice to the rights recognised to the victims of damage caused to the surface by virtue of Article 7 of the Convention.

The liens expire three months after the event that gave rise to them, unless the creditor has previously entered their claim in the registers, after having had the amount acknowledged amicably, or, failing that, has brought legal proceedings in respect of it.

In addition, liens are extinguished, independently of the normal methods of extinguishing liens:

  • by the sale of the aircraft in court in the manner provided for by decree; and
  • in the case of a voluntary transfer duly entered in the register of registrations, at the latest one month after publication of the transfer in a legal gazette of the seller's domicile, unless, before the expiry of this period, the creditor has notified their claim to the purchaser at the domicile elected by them in the publications.

The registration shall preserve the mortgage for ten years from the date of its entry in the registers. Its effect ceases if the registration has not been renewed before the expiry of this period.

The mortgage shall guarantee, in the same rank as the capital, three years of interest in addition to the current year.

Creditors with mortgages on aircraft shall exercise their right to follow through whosever hands they pass in order to be registered and paid according to the order of their registration and after the preferential creditors, subject to the exceptions provided for by the local regulations in force.

A register for the registration of mortgages exists in Senegal. Registration in this register confers on the mortgagee a rank according to their order of registration, which allows them to be given priority over subsequent mortgagees and other unsecured creditors.

A mortgage registration can be ordered by a court on an aircraft and its accessories (on a “fleet-wide” basis).

The precautionary arrest of aircraft may be ordered following a decision of the Civil Aviation Authority (ANACIM), the police or customs, but not as a result of liens.

Verification of an aircraft’s freedom from encumbrances can be found in the register of mortgages held by the director general of the ANACIM.

There are no relevant differences between enforcing a security assignment and enforcing a loan or guarantee.

It would be permitted for a third party (a security trustee, etc), 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 acknowledgment executed by the lessor and the lessee respectively in connection with that security assignment.

Courts in Senegal will uphold a foreign law as the governing law of a finance or security document and the submission to a foreign jurisdiction. However, a Senegalese court will recognise a foreign law as the governing law after an exequatur order by a Senegalese court.

Courts in Senegal will uphold a foreign law as the governing law of a finance or security document and the submission to a foreign jurisdiction. However, a Senegalese court will recognise a foreign law as the governing law after an exequatur order by a Senegalese court.

However, as regards the enforcement of international guarantees registered in the Cape Town International Register, their application in Senegal does not require the intervention of a judge (to obtain the exequatur). Guarantees are automatically enforced by the ANACIM if the creditor has an official document delivered by the Cape Town International Register.

Senegalese courts will accept and enforce a final judgment of a foreign court or an arbitral award without re-examination of the matter, if the decision is in accordance with the prescriptions of the law.

It would be possible for a secured party to take physical possession of an aircraft to enforce a security agreement/aircraft mortgage without the lessee or operator’s consent.

The courts are competent to judge cases relating to a security agreement/aircraft mortgage if the registration is made in Senegal. However, in practice, it is very rare that a Senegalese court is seized to judge such cases. The creditor may bring an official document delivered by the Cape Town International Register as proof.

It is possible for a secured party to obtain a summary judgment pending a final resolution of judicial proceedings to enforce a security agreement/aircraft mortgage. However, this is only possible if there is urgency and that there is no possibility for the counterparty to challenge the request of the lessor.

It is not possible for a secured party under a security agreement/aircraft mortgage to obtain a judgment in a foreign currency unless it is a decision by a court abroad. However, the claimant may state in the application the foreign currency equivalent in XOF that they wish to obtain.

In order to enforce its claims, the secured party is liable to pay court fees. These fees are nominal in Senegalese courts. There is no tax to be paid.

There are no other relevant issues of which a lender should be aware in relation to the enforcement of its rights.

There are no other relevant issues or court judgments that are relevant to these matters.

No current proposals before the legislature are worthy of mention in respect of the information in 4.1 Issues Relevant to Domestic Purchase, Sale, Lease or Debt Finance of Aircraft.

John W Ffooks & Co

1st Floor, Immeuble Assist
Ivandry Antananarivo, 101
Madagascar

+261 20 224 3247

contact@jwflegal.com www.jwflegal.com
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Law and Practice in Senegal

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John W Ffooks & Co is a full-service corporate, commercial law firm with offices in Madagascar, Mauritius and Senegal, providing support to business and industry across French-speaking Africa. The firm's multilingual legal team, comprised of six resident partners and 20 associates, is the only legal practice in the region with a combination of Napoleonic and English law expertise – making the firm the obvious choice when it comes to international transactions in Francophone Africa. Its particular strengths are in assisting inward investors into the region and in reconciling their common law understanding of business with the realities of working under legal systems derived from the Napoleonic Code. The firm's expertise in advising local and international clients has earned the trust of listed and unlisted domestic, as well as international, corporations, banks and financial institutions, light and heavy industrial firms, state-owned enterprises, and government departments.