Aviation Finance & Leasing 2023 Comparisons

No taxes or duties are payable solely as a consequence of the execution of an aircraft or engine sale agreement where the asset is located in Canada or by a Canadian party.

It is not necessary or advisable for a sale agreement to be translated, certified, notarised or legalised to be enforceable against a domestic party.

Generally, the delivery of an executed and dated bill of sale is used to constitute the transfer of title to an aircraft or engine, which would extend to include all installed parts.

A sale of shares of a corporation owning an aircraft or engine would not be treated as a sale of the assets of such corporation. A sale of beneficial interest in a bare trust may be treated as a sale of assets.

The delivery of a bill of sale by the seller is recognised under the laws of Canada as an effective method, as between the seller and the buyer, to transfer to the transferee such title in and to an aircraft or engine as the transferor had immediately prior to such transfer, provided that such mode would be effective under the laws chosen to govern the bill of sale and all formalities required under the laws of the lex situs of the aircraft or engine on delivery have been observed, and no further instrument or act is necessary under the laws of Canada to effect or ensure such transfer.

There are no minimum substantive requirements for a bill of sale to be recognised in Canada, other than standard contract requirements similar to those in the USA and the UK, including proper identification of the transferred asset.

A bill of sale does not need to be translated, certified, notarised or legalised to be enforceable against a domestic party.

No filings are required in respect of the validity of a bill of sale. However, an International Registry (IR) registration is advisable. In respect of a sale between lessors, where the aircraft registration is to remain unchanged, a notice to Transport Canada confirming that the basis of the lessee’s legal custody and control has changed (a “TCA Notice”) is required to be filed within seven days of such change to preserve the validity of the Certificate of Registration for that aircraft. While not strictly required to maintain perfection, it is advisable that an amendment to the applicable provincial security filings in respect of any lease also be made.

It is also advisable that the bill of sale be filed with the IR for aircraft and engines that are “aircraft objects” under the Cape Town Convention (the “Convention”) and the Aircraft Protocol (the “Protocol”), which together with the Convention is known as the CTC.

No formalities are required for such registration or filing or government consent for a bill of sale. A TCA Notice for an aircraft can only be filed by the registered owner of the aircraft (typically a domestic lessee). The bill of sale and TCA Notice must be in English or French.

No government applications or consents are required as a prerequisite to the execution and delivery of a bill of sale in relation to an aircraft or engine registered in Canada.

Canada imposes a federal sales tax called goods and services tax (GST) under the Excise Tax Act (Canada) (ETA). In many provinces, GST is combined with provincial sales tax (PST) and the combined tax is called harmonised sales tax (HST). Supplies of goods and services made in Canada are generally subject to such taxes. There are exemptions for some supplies and some supplies are zero-rated. A taxpayer carrying on a commercial activity is required to collect taxes (unless the supplies are zero-rated) and taxes paid in the course of carrying on a commercial activity can generally be recovered by claiming an input tax credit (refund) (ITC).

If title to an aircraft passes and delivery occurs outside Canada, there will be no supply made in Canada, even if the seller is resident in Canada or is a non-resident carrying on business in Canada. If title passes and delivery occurs in Canada, the supply will be made in Canada and tax will be payable, unless the non-resident seller is not carrying on business in Canada for the purposes of the ETA, and is not registered or required to be registered for tax purposes. Whether a non-resident person is carrying on business in Canada for purposes of the ETA often raises difficult factual issues and it is therefore generally preferable for title to pass and delivery to be made outside Canada.

The tax authority regards the re-entry of the aircraft into Canada after such a sale as a “re-import” for tax purposes, requiring the payment of taxes in respect of the fair market value of the aircraft. Such transactions, therefore, usually occur in the airline’s filing window at the end of a calendar month in which most Canadian airlines can obtain an immediate tax credit and not have to make an actual out-of-pocket payment.

In addition, as of 1 September 2022, subject to certain exemptions, a luxury tax is applicable on, among other things, sales or leases of aircraft (airplanes, helicopters and gliders) priced or valued over CAD100,000 and manufactured after 2018 that meet any of the following conditions (“Specified Aircraft”):

• is equipped only with one or more pilot seats and cannot have any other seating configuration;
• is equipped only with one or more pilot seats, or is not equipped with any seats, and cannot have a seating configuration of 40 seats or greater (excluding pilot seats); or
• is equipped with one or more pilot seats and one or more passenger seats and has a seating configuration of 39 seats or fewer (excluding pilot seats).

The tax is calculated at 20% of the total price or import value of the Specified Aircraft that is above CAD100,000 and 10% of the sale price or import value of the Specified Aircraft and is payable by the vendor or importer.

There are no restrictions on types of operating/wet/finance leases or leases concerning only engines or parts.

The choice of foreign law to govern a lease will be upheld as a valid choice of law by the courts of the applicable Canadian province or territory (the “Province”), provided that the choice of law is bona fide (in that it was not made with a view to avoiding the consequences of the law of any other jurisdiction) and is not contrary to public policy. Although the parties may have made a valid choice of law, the courts of the Province will not apply those laws that:

• they characterise as being of a revenue, penal or public law nature;
• relate to matters of a procedural nature; or
• the application of which would be inconsistent with public policy, as that term is applied by the courts in the Province.

No approvals will be necessary in Canada in connection with the remittance by a lessee to a lessor/lender of payments in US dollars. However, a judgment given by a Canadian court to enforce a lease may only be expressed in Canadian dollars, subject to the right of the relevant court to convert the sum awarded by a foreign decision into Canadian currency at the rate of exchange prevailing on the day the decision became enforceable at the place where it was rendered. Customary gross-up provisions, in respect of such a judgment that results in a payment to a lessor/lender less than that required by the applicable lease, as a result of exchange rate fluctuations, should be enforceable.

There are no exchange controls in Canada that would prevent rent payments under a lease or any repatriation of realisation proceeds.

No taxes/duties are payable solely as a consequence of executing a lease physically in Canada or by a domestic party, or as a consequence of an original or copy of a lease being brought into Canada physically or electronically.

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

Aside from terms that would typically already be included in an English or New York law-governed lease, there are no other mandatory terms required to be in a lease (or ancillary documents thereto) under Canadian law. There are a number of provisions that would be recommended in the event of a lease to a Canadian airline.

Canada would recognise and enforce gross-up provisions set forth in a lease, subject to typical qualifications on enforceability applicable to all contractual agreements and provisions (including restrictions relating to criminal rates of interest).

A lease can cover parts that are installed or replaced on an aircraft or engine after its execution. In order to ensure that such parts are captured, the lease should contain specific provisions with respect to inclusion of replacement parts, and personal property security register (PPSR) filings should be sufficiently broad to capture such parts.

Canada, and each of its 13 provinces and territories, have passed legislation implementing the CTC, under which any concept of title accession is essentially eliminated for engines meeting the CTC size thresholds, as engines are independent assets irrespective of whether they are installed on another aircraft.

Canada is a party to the Hague Convention, which has been in force in Canada since 1992. The Hague Convention has not, however, been made applicable in, among other jurisdictions, the provinces of Québec and Ontario. Nevertheless, the key common law principles in respect of trusts are law in Ontario and have been accepted into the civil law of Québec.

The Canadian Civil Aircraft Register (CCAR) was established under the Aeronautics Act (Canada) (the “Act”) and is maintained by Transport Canada Aviation (“Transport Canada”) as Canada’s nationality register pursuant to the Chicago Convention of 1944 on International Civil Aviation. No provision is made for the registration of aircraft title or security interests, mortgages, liens or other interests in the CCAR, except for an irrevocable deregistration and export request authorisation (IDERA) registered pursuant to the CTC. There is no separate federal register for aircraft title or mortgages or other interests. However, the quasi-title registration provisions for aircraft bills of sale afforded under the IR do have effect in Canada following its adoption of the CTC.

There are, however, PPSRs on which personal property interests other than aircraft (including lease interests, spare parts and insurance proceeds) can and should be registered.

The CCAR is a register of aircraft operators only. Accordingly, provided that the person with “legal custody and control” (generally either pursuant to a bill of sale or lease agreement) of an aircraft is Canadian, such aircraft may be registered on the CCAR by submission of an Application for Registration of Aircraft, evidence of such “legal custody and control” (normally a copy of the bill of sale or lease – and, if by lease, with a copy of the bill(s) of sale by which the lessor obtained title) and payment of the required application fee. “Legal custody and control” is defined in the Canadian Aviation Regulations (CARS) as having “complete responsibility for the operation and maintenance of the aircraft”.

The lessor’s interest (and/or the interest of any superior lessor and any lender) in an aircraft may no longer be recorded publicly in the CCAR or on an aircraft’s Certificate of Registration of Aircraft. The Application for Registration for each aircraft must, however, indicate whether legal custody and control is given to the applicant through a bill of sale or a lease, a copy of which must be filed with the Application for Registration. Lessors should ensure that the Application for Registration is made pursuant to their lease.

Lease interests can and should be registered on the applicable provincial PPSR.

The Application for Registration for each aircraft must indicate whether legal custody and control is given to the applicant through a bill of sale or a lease, a copy of which must be filed with the Application for Registration. A certificate of registration cannot be obtained without such filing. Registration pursuant to a lease will expire on the expiry date of the lease (or short-form lease) as registered, unless the term is renewed prior to that date. Failing to renew within seven days (by filing a lease extension or short-form lease extension agreement) will result in cancellation of the Certificate of Registration for that aircraft (although Transport Canada normally provides several warnings before taking such a step). In the event of a sale of the aircraft to a new lessor and a lease assignment/novation, the bill of sale and lease assignment/novation must also be registered as evidence of the revised basis for the lessee’s custody and control of the aircraft.

Lease interests can and should be registered on the applicable provincial PPSR.

Leases are not subject to consent from any government entity.

There are no formalities or government consents required for such registration. Only the registered owner (the lessee) may apply for such registration. The stated lead time is seven days, but the typical timing between application and issuance is one to two days, and can often be expedited on a same-day basis.

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

A “lease” is defined in the applicable regulations as an agreement in respect of the operation of an aircraft for hire or reward that specifies a commencement and termination date, and, during the term of which, the lessee has legal custody and control, and the right to exclusive possession and use of the aircraft. In addition to meeting the foregoing definition, responsibility for the airworthiness and maintenance of the aircraft must be clearly vested in the lessee during the term of the lease and the lease must be a dry lease (ie, that the lessor of the aircraft does not provide, or control directly or indirectly, the flight crew to operate the aircraft).

It has been accepted practice, for confidentiality reasons, to file short-form versions of the actual lease (or novation or assignment thereof), only containing the above minimal requirements, with Transport Canada. Current regulations, for the most part, simply codify the foregoing and require that the parties certify that no other documents (ie, the actual or long-form lease) exist that would contradict the conditions contained in the lease as filed (ie, the short-form lease) and provide a statement specifying whether subleasing is permitted, and describing the requirements and procedures for cancelling the lease prior to the termination date. This should not provide a problem to lessors, provided that the long form contains a provision stating that it shall govern in the event of a conflict.

It is not necessary or advisable that an equipment lease be translated, notarised, legalised or apostilled for filing or presentation to any governmental entity in Canada; however, it should be noted that if the filing jurisdiction is located in the province of Quebec, then as of 1 September 2022, all such registrations must be prepared in the French language only.

There are no taxes/duties payable for registering a lease, although there are nominal filing fees payable to the CCAR and applicable provincial PPSRs.

Aircraft based in Canada are typically registered in Canada, although sometimes aircraft based in Canada are registered in the USA.

The bill of sale and/or TCA Notice must be in English or French. No other formalities are applicable.

Leases are structured so that foreign lessors are not deemed to be carrying on business in Canada and therefore not subject to Canadian income tax or capital gains.

While it is unlikely that simply entering into an aircraft lease or enforcing under an equipment lease would constitute carrying on business or result in a permanent establishment in Canada, the lease, in conjunction with the lessor’s other interests in Canada and where the aircraft was acquired, may result in such a determination. Purchasing an aircraft in Canada will be an important factor in determining whether the lessor is carrying on business in Canada. A review of a lessor’s activities in Canada to make such a determination could be a fairly complex exercise and may not be necessary if the lessee agrees to gross up any payments for taxes that may be or become necessary as a result of such a determination being made by the relevant taxation authorities.

The lessor will not normally assume any liability in respect of operation, maintenance or insurance of an aircraft unless it takes over or influences the charge, management or control of the aircraft at the time that damage occurs or has caused or permitted damage to occur.

The Carriage by Air Act (Canada) (CAA) imposes liability on the carrier in respect of accidents and incidents occurring on international flights. No liability is imposed on a lessor or lender of an aircraft for the actions or inactions of a lessee/carrier.

Otherwise, liability for the operation of a Canadian aircraft would generally be derived from common law principles of tort law, generally with reference to the standards required by the CAA and related regulations (which are similar to International Civil Aviation Organization and US standards). Based on such principles, the primary responsibility for legal liability resulting from the operation of the aircraft would fall upon the lessee/operator, who has custody and control of the aircraft. This firm is not aware of any cases in Canada where liability was successfully imposed upon a lessor or financier of an aircraft. Notwithstanding the foregoing, if a lessor leases an aircraft on a “wet lease” basis, thereby maintaining legal custody and control of the aircraft, it may be held responsible for any action or inaction of the lessee in respect of the operation of the aircraft.

Although the CAA refers to the liability of the owner for an offence in respect of the aircraft, the context strongly implies that liability is imposed on the “registered owner” (ie, operator). In this firm’s experience, Transport Canada has restricted its enforcement activities to the registered owners/operators of aircraft.

The lessor will not normally assume any liability in respect of operation, maintenance or insurance of an aircraft unless it takes over or influences the charge, management or control of the aircraft at the time that damage occurs or has caused or permitted damage to occur.

The ownership rights of a lessor under a true lease will take priority over all other consensual interests in the aircraft, including other leases, if properly perfected under the CTC and applicable provincial PPSRs. However, there are certain “super-priority” exceptions to this rule and other rights that may take priority over ownership rights.

The laws of Canada provide for certain liens and/or possessory rights or rights of seizure or detention in favour of third parties, including air authorities, airports, customs authorities, tax authorities, repairers/mechanics, providers of storage services and public safety authorities.

It is not mandatory that all or part of the insurances be placed with domestic insurance companies, but all Canadian airlines are required to obtain their insurance from insurers licensed and/or registered in Canada or licensed or approved by a foreign government to issue aircraft insurance policies.

There are varying minimum coverage requirements for various types of aircraft. Most commercial lease agreements will have requirements that far exceed such statutory minimums.

Reinsurance is not generally used in the Canadian aviation market.

“Cut-through” clauses in other reinsurance contracts are viewed as being enforceable provided that they are drafted properly.

A foreign lessor may assign its rights and benefits under a lease to a foreign security trustee without any constraints under Canadian law. It is, however, not common under Canadian law to assign insurances. It is accepted as effective, under Canadian law, simply to add the security trustee and/or lessor as loss payee for the hull policy.

There are no restrictions on a lessor’s ability to:

• terminate an aircraft lease;
• re-export the aircraft; and/or
• sell the aircraft following such termination, subject to limited court discretion in a lessee insolvency.

The aircraft does not need to be physically located in Canada at the time of any such actions.

Pursuant to the provisions of the CTC, a lessor may, following a default, take possession or control of the leased aircraft. This right to take possession may be exercised without the need for court proceedings but must be exercised in a commercially reasonable manner in conformity with the lease.

There are no specified courts in Canada with particular competence/jurisdiction to decide aviation disputes.

Summary judgment is normally only available for a claim for undisputed liquidated damages. The form of the lease itself is irrelevant. The concept of summary judgment as it is generally understood in the common law provinces is unavailable under Québec civil procedure. There are instances where a plaintiff may upon application to the court obtain the summary dismissal of frivolous or abusive grounds of defence, but the applicant’s threshold in this regard is very high and such applications are rarely granted.

For CTC transaction documents, Canada has declared that parties to an agreement may agree on the law that is to govern their contractual rights and obligations, wholly or in part. For other documents, choice of foreign law to govern the documents and submission to foreign jurisdiction are generally enforceable in Canadian courts provided that such selections are bona fide and not contrary to public policy. No Canadian air carrier is entitled to claim sovereign immunity.

In proceedings in the courts of the Provinces of Ontario or Québec, any final and conclusive judgment in personam for a sum certain, obtained in a foreign court would be recognised and enforced in Ontario if:

• the court rendering judgment had jurisdiction, according to the conflict of laws rules of Ontario, over the judgment debtor and the subject matter of the proceedings has some real and substantial connection to Ontario;
• the judgment was not obtained by fraud or in a manner contrary to natural justice and its enforcement would not otherwise be contrary to public policy;
• the enforcement of the judgment would not constitute the enforcement of foreign revenue, expropriatory or penal laws; and
• the action to enforce the judgment is commenced within the applicable limitation period.

The same can be enforced in Québec if:

• the court rendering judgment had jurisdiction, according to the conflict of jurisdiction rules of the Province of Québec;
• the judgment is subject to ordinary remedy or is final or enforceable at the place where it was rendered;
• the decision was not rendered in contravention of the fundamental principles of procedures;

• a dispute between the same parties, based on the same facts and having the same object, has not given rise to a decision rendered in the Province of Québec, whether it has acquired the authority of a final judgment or not, or is not pending between a Québec authority, in first instance, or has not been decided in a third country whereby such decision would meet the necessary conditions for recognition in the Province of Québec;
• the outcome of the foreign decision is not manifestly inconsistent with public order as understood in international relations;
• the decision does not enforce obligations arising from the taxation laws of a foreign country (unless there is reciprocity); and
• the action to enforce the judgment is commenced within the application limitation period.

A decision rendered by default may not be recognised or declared enforceable in Québec unless the plaintiff proves that there was proper service on the defaulting party in accordance with the law of the place where the decision was rendered. However, the authority in Québec may refuse recognition or enforcement if the defaulting party proves that, owing to the circumstances, such party was unable to learn of the act of procedure initiating the proceedings or was not given sufficient time to offer its defence.

Canada is a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards and all the provinces and territories have adopted the UNCITRAL Model Law into domestic legislation. In addition, British Columbia and Ontario have adopted the 2006 UNCITRAL amendments that allow for the recognition and enforcement of interim measures.

A judgment given by a Canadian court to enforce a lease may only be expressed in Canadian dollars, subject to the right of the relevant court to convert the sum awarded by a foreign decision into Canadian currency at the rate of exchange prevailing on the day the decision became enforceable at the place where it was rendered.

Payment obligations under a lease, including the payment of default interest, may not be enforceable if they contravene the interest provisions of the Criminal Code (Canada) (interest rate above approximately 60%), or are considered to be a penalty.

There are no significant taxes or fees payable in connection with the enforcement of aircraft leases in Canada.

There are mandatory notice periods for the termination of aircraft leases.

No Canadian air carrier is entitled to claim sovereign immunity.

Canada is a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards and all the provinces and territories have adopted the UNCITRAL Model Law into domestic legislation. In addition, British Columbia and Ontario have adopted the 2006 UNCITRAL amendments that allow for the recognition and enforcement of interim measures.

Some foreign corporations must have appointed an agent for service to bring an action in some provinces.

In general, Canada recognises the concepts of contractual assignment and novation, subject to court discretion as to general principles of equity and laws affecting the enforcement of creditors’ rights generally.

Provided that the lease assignment or novation is valid under the law of its governing jurisdiction (either in New York or the UK), it will be valid and enforceable in Canadian courts. To be valid, an assignment and assumption requires the mutual consent of the existing parties to the lease. Without such consent, the assignment and assumption may not be enforceable against the lessee.

There are no mandatory terms that would not be already included in a standard New York or English law-governed agreement.

It is not required or advisable for an aircraft and/or engine lease assignment and assumption/novation to be translated, certified, notarised or legalised to be enforceable against a domestic party in Canada.

A bill of sale and a short form of the lease assignment and assumption/novation must be registered with Transport Canada together with a TCA Notice confirming that the basis of the lessee’s legal custody and control has changed. The TCA Notice is required to be filed within seven days of such change to preserve the validity of the Certificate of Registration for that aircraft. Provided that such filing is made, no separate government consent is required.

There are no special formalities required for such registration or filing or government consent, although filings can only be made by the registered owner. Filing typically occurs on a same-day basis.

No government applications or consents are required as a prerequisite to the execution and delivery of an aircraft and/or engine lease assignment and assumption/novation in relation to an aircraft registered.

Typically, lease novations constitute a new supply for Canadian tax purposes.

A sale of shares of a corporation owning an aircraft or engine would not be treated as a sale of the assets of such corporation. A sale of beneficial interest in a bare trust may be treated as a sale of assets.

Normally, only the registered owner/lessee can apply for deregistration. An owner or security trustee would be entitled to deregister an aircraft without the consent of the lessee or borrower. Where a Canadian aircraft is sold or leased to (or repossessed by) a person who is not qualified to be the registered owner of a Canadian aircraft and the aircraft is not in Canada or it is understood by the registered owner that the aircraft is to be exported, the registered owner (or the legal owner in circumstances outlined below) shall:

• remove the Canadian marks and, if applicable, the Mode S transponder address from the aircraft at the time of the sale or lease (or repossession);
• notify Transport Canada, within seven days of such conveyance, of the date of:
1. the conveyance;
2. the exportation, if applicable;
3. the removal of the Canadian marks; and
• the removal of the Mode S transponder address, if applicable;
• provide Transport Canada with a copy of all agreements that relate to the transfer of any part of the legal custody and control of the aircraft resulting from such conveyance; and
• return to Transport Canada the original Certificate of Registration.

An aircraft will automatically be deregistered upon the termination of a lease filed with Transport Canada, usually on the same day as it receives a completed notification.

A lessor or mortgagee would be entitled to deregister an aircraft without the consent of the lessee or borrower. Where the lease or mortgage provides for the termination and repossession of the aircraft in the event of a default, Transport Canada will accept notice of such termination and repossession with evidence and particulars of default (usually in the form of a demand letter and/or affidavit from the secured party), notwithstanding any objections by the lessee or borrower, and deregister the aircraft. Otherwise, the lessor or mortgagee must provide Transport Canada with evidence of proper repossession, a court order or the lessee’s/borrower’s consent.

Further, an authorised party who has an IDERA signed by the operator and filed with Transport Canada shall be the sole person entitled to apply for deregistration of the aircraft from the CCAR. The IDERA cannot be revoked without the consent of the authorised party and consent of the operator need not be sought before the authorised party exercises its rights thereunder. A lessor/mortgagor may be prevented from deregistering an aircraft if an IDERA is filed with Transport Canada in favour of another party.

Accordingly, an aircraft will automatically be deregistered by Transport Canada upon the termination of a lease and/or repossession of such aircraft by a non-Canadian lessor/lender.

Where the lease or mortgage provides for the termination and repossession of the aircraft in the event of a default, Transport Canada will accept notice of such termination and repossession with evidence and particulars of default, notwithstanding any objections by the lessee or borrower, and deregister the aircraft with an IDERA. Otherwise, the lessor or mortgagee must provide Transport Canada with evidence of proper repossession, a court order or the lessee’s/borrower’s consent.

Pursuant to an IDERA, or in the absence of a validly filed IDERA but with the operator’s co-operation, deregistration can often be obtained the same day. In the absence of a validly filed IDERA, deregistrations in the face of objections from the operator can still normally be obtained within a few days of filing proper evidence of default, or a court order if necessary. A court order can normally be obtained on an accelerated basis, if required.

Pursuant to the terms of the CTC, Transport Canada is obliged to co-operate expeditiously with the creditor/IDERA holder in exercising deregistration remedies.

Normally, there are no significant costs associated with a deregistration (unless, upon a lessee or borrower objection, a court order is required). No taxes or fees are payable upon deregistration of an aircraft.

A deregistration power of attorney is not required in Canada – an IDERA conforming to the CTC requirements is sufficient.

See 2.8.7 Deregistration Power of Attorney.

See 2.8.7 Deregistration Power of Attorney.

See 2.8.7 Deregistration Power of Attorney.

An aircraft owner, mortgagee or lessor can export the aircraft without the lessee’s consent and a mortgagee can export the aircraft without the owner or lessor’s consent, subject to the rights of any IDERA holder. This firm would recommend that the lease contain a requirement for a lease termination agreement, executed in blank, to be delivered to the lessor so that it can be dated and provided to Transport Canada to assist in deregistration and export if needed in the case of a repossession where prompt termination is critical.

The asset does not need to be physically located in Canada at the time of deregistration.

An export licence or permit is not required for commercial aircraft, except where, in certain very limited cases, the Export and Import Permits Act (Canada) prevents, or requires a permit for, the export of certain sensitive restricted aircraft equipment to certain designated countries.

If a Certificate of Airworthiness for Export (CAE) is desired, Transport Canada technically requires 90 days to process the application. As a practical matter, it is a function of how busy local Transport Canada airworthiness inspectors are. In many cases, Transport Canada will process and issue a CAE, provided that the aircraft qualifies for one, on a more urgent basis (for example, as a result of repossession).

No fee or tax is payable by a lessor, unless a customs broker is used. A lessee may be subject to tax if a debt is settled or extinguished for less than the face amount as part of the repossession process.

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

In Canada, insolvency proceedings are governed principally by two federal statutes: the Companies’ Creditors Arrangement Act (CCAA) and the Bankruptcy and Insolvency Act (BIA). The federal insolvency laws in Canada apply across the country and allow for either liquidations or restructurings.

Under federal insolvency laws, most provincial personal property security legislation and rules of the applicable court, secured creditors may seek the appointment by a court of what is known as a “receiver” over the property of the debtor, in order to sell the debtor’s assets or manage the debtor’s business or otherwise realise on collateral. In addition, secured creditors may have recourse to self-help remedies, including the appointment, in some provinces, of a private receiver under their security documents, or other court supervised proceedings.

The BIA provides for liquidations, called bankruptcies, and restructurings, called proposals. The CCAA provides for both liquidations and restructurings. Receiverships, which may occur under the BIA or under provincial legislation, is a liquidation. It is also possible to restructure a company under applicable federal or provincial corporate law.

Liquidation

Bankruptcy proceedings in Canada can be either voluntarily commenced by a debtor or commenced against the debtor by any creditor or creditors of such debtor. In order for a bankruptcy filing to be valid, the debtor must meet one of the tests for bankruptcy set out in the BIA, including, among others, the inability or failure to meet obligations generally as they become due. Upon a bankruptcy occurring and subject to the rights of secured creditors, all of the assets of the bankrupt (subject to certain exceptions) vest in a trustee in bankruptcy, with the proceedings being subject to the oversight of both the Superintendent of Bankruptcy and the relevant court. Often, a trustee in bankruptcy proceeds to liquidate the assets of the bankrupt and distribute the proceeds to creditors in accordance with their legal priorities.

Upon the issuance of a bankruptcy order or the filing of a voluntary assignment in bankruptcy, the BIA imposes a stay of proceedings on unsecured creditors. The stay of proceedings generally does not apply to secured creditors. If no stay applies, secured creditors who have proven their security to the trustee are free to continue to enforce their security against the assets of the bankrupt.

A secured creditor may appoint a “receiver” over the assets of a debtor or may seek court appointment of a receiver or receiver and manager. The receiver is not typically appointed to restructure a business. A receivership is generally used as a mechanism for realising on collateral through a liquidation or a going-concern sale. The receiver will typically proceed to sell the debtor’s assets, manage the debtor’s business or otherwise realise on the collateral, with the proceeds from its activities payable in accordance with the established priorities. In the case of a court-appointed receivership, the powers of the receiver are in the discretion of the court. The appointment order typically includes a stay of proceedings.

Restructuring

Generally, restructuring proceedings of insolvent entities are commenced under one of the BIA or CCAA, although it is also possible to restructure an enterprise under the reorganisation or arrangement provisions of the applicable federal or provincial corporate statute. Restructuring proceedings are usually initiated and controlled by the debtor, but it is possible for a creditor to initiate proceedings under the CCAA in certain circumstances.

For large or complex restructurings, the most commonly used statute is the CCAA. The granting of an order for relief under the CCAA is in the discretion of the court, but if granted, a CCAA order typically involves a broad stay of proceedings (applying to secured and unsecured creditors), protection from the termination of contracts by third parties, authority to disclaim or repudiate executory contracts and, in certain cases, the granting of super-priority security interests or charges (which in almost all cases ranks in priority to the security of existing secured creditors).

CCAA proceedings are supervised by the court and a licensed trustee in bankruptcy called a “monitor”. The monitor does not take possession of, or have any control over, the assets of the applicant company unless specifically ordered by the court. The monitor is required to, among other things, oversee the business and financial affairs of the applicant debtor company and provide its views with respect to relief sought by the applicant debtor company from the court during the CCAA proceedings.

Under the CCAA, a company may, among other things, proceed to file a plan of compromise or arrangement, or seek court approval of a sale of some or all of its assets. In the case of a plan of compromise or arrangement, support of a requisite level of affected creditors and approval of the court is required. If the proceeding includes an asset sale, any sale out of the ordinary course is subject to approval of the court (but with no creditor vote) and the court is authorised to make an order transferring assets to a purchaser free and clear of all liens, claims and encumbrances.

Debtors in Canada may also proceed with a restructuring under the proposal provisions of the BIA, which provide for a process that is similar to restructuring proceedings under the CCAA, though subject to more formal requirements and deadlines. A restructuring under the BIA is typically undertaken where the proposed restructuring is small or relatively simple.

In the event of a foreign insolvency proceeding, both the CCAA and the BIA allow a representative, authorised in a foreign proceeding in respect of a debtor, to seek recognition of the foreign insolvency proceeding in Canada. The CCAA and the BIA each provide for a modified version of the UNCITRAL model insolvency law, which allow an authorised representative to apply for recognition of the foreign insolvency proceeding as either a “foreign main proceeding” or a “foreign non-main proceeding”.

Foreign Main Proceeding

If the court determines that the foreign proceeding is a “foreign main proceeding”, the court must grant a stay of proceedings in Canada, must prohibit the debtor from selling or otherwise disposing of any of its property in Canada outside the ordinary course of its business, and may grant additional relief permitted under the CCAA/BIA, including the recognition of relief granted in the foreign jurisdiction which may differ materially from the relief normally available in Canada.

Foreign Non-main Proceeding

If the court determines that the foreign proceeding is a “foreign non-main proceeding”, the court may, but is not required to, grant a stay of proceedings in Canada, prohibit the debtor from selling any of its property in Canada outside the ordinary course of business, and grant any other relief permitted under the CCAA/BIA, including the recognition of relief granted in the foreign jurisdiction which may differ materially from the relief normally available in Canada.

A deregistration power of attorney would not survive liquidation of the lessee, but a deregistration power of attorney is not required in Canada. An IDERA, pursuant to the CTC, survives an insolvency application, although secured creditors are stayed from pursuing their remedies until the expiry of the 60-day period under Alternative A of the CTC, pursuant to Canada’s declarations.

Pursuant to Canada’s declaration that it will apply Article XI, Alternative A of the Aircraft Protocol in its entirety, upon an insolvency event of the lessee:

• the lease will not be set aside;
• the lessor is stayed for 60 calendar days from exercising remedies, including termination of the lease and deregistration of the aircraft;
• the aircraft will not be deemed part of the lessee’s assets; and
• with respect to the aircraft, the bankruptcy administrator is not permitted to impose the rights of any other creditors in priority to the lessor other than any preferred non-consensual liens (such as for air navigation charges and taxes).

The lessee remains responsible for rent and other lease payments due after the insolvency application as well as maintenance of the aircraft. At the end of the waiting period, the lessee may retain possession and use of the aircraft if it has cured all defaults other than the insolvency default and has agreed to perform all future obligations under the lease. A second waiting period would not apply if the lessee defaults again in the performance of such future obligations.

The main risks for a lender if a borrower, guarantor or other entity providing security becomes insolvent are:

• if, during the waiting period, the aircraft operator is unable or unwilling to maintain the aircraft properly, causing its value to deteriorate; and
• any non-consensual preferred liens that may take priority under Canada’s CTC declarations.

Pursuant to Canada’s CTC declarations, the application waiting period is 60 calendar days.

In Canada, the insolvency regime is centred on two federal statutes: the Bankruptcy and Insolvency Act Canada (BIA) and the Companies’ Creditors Arrangement Act (CCAA), both as modified by CTC Alternative A as it relates to aircraft objects.

Bankruptcy/Liquidation

Insolvency-related liquidations may be undertaken as bankruptcy proceedings under the BIA or by way of appointment of a receiver. A debtor can become bankrupt voluntarily by making an assignment in bankruptcy, involuntarily by the granting of a bankruptcy order by a court on the application of one or more of the debtor’s unsecured creditors (because the rights of secured creditors are not affected by a bankruptcy), or as a result of a failed restructuring under the BIA.

In bankruptcy, the debtor ceases to have legal capacity to dispose of its assets or otherwise deal with its property, which vests in the trustee in bankruptcy (other than property held in trust by the bankrupt for another party), subject to the rights of secured creditors.

Reorganisation

Insolvency-related reorganisations can be undertaken pursuant to the BIA or the CCAA. The CCAA has been the most common choice for airline reorganisations. There are also precedents of reorganisations taking place in the context of plans of arrangements pursuant to corporate statutes, in particular under the Canada Business Corporations Act (CBCA).

BIA

An insolvent debtor can initiate a BIA reorganisation by filing a notice of intention to make a proposal, a standard form document indicating that the debtor intends to make a proposal to its creditors (a Notice of Intention), or by filing a proposal, a document detailing the proposed reorganisation plan (a Proposal). After filing a Notice of Intention, a debtor has 30 days to file a Proposal, which time may be extended by the court at the request of the debtor in increments of up to 45 days, to a maximum of 6 months total.

During this period, the BIA imposes a comprehensive stay of proceedings on all creditors, which is intended to protect the debtor while a Proposal is being developed. The debtor continues to operate its business and remains in possession of its property during the restructuring and a licensed trustee in bankruptcy is appointed by the court as the proposal trustee (the Proposal Trustee). The Proposal Trustee’s role is to oversee the process and assist the debtor in preparing and administering its Proposal. Once a Proposal is filed, the stay continues until the Proposal is approved by creditors and the Proposal Trustee is discharged. The Proposal Trustee is required to report to creditors if the Proposal Trustee discovers any material adverse change in the debtor’s financial situation.

In the context of a BIA reorganisation, if the debtor fails to meet various deadlines to file a Proposal or the creditors refuse to accept the Proposal in a vote, the debtor is deemed to have made an assignment in bankruptcy and the debtor’s property vests in the trustee in bankruptcy. On approval of the Proposal by the requisite numbers of creditors and sanction by the court, a debtor can emerge from a BIA reorganisation as a solvent entity.

CCAA

Under the CCAA, an insolvent company can make an application to the courts for protection from its creditors while it formulates a plan for its reorganisation. The CCAA is intended for use by large corporations, which is reflected in the requirement that the company, either alone or with its affiliates, has at least CAD5 million of debt to initiate a CCAA proceeding. The essential difference between a restructuring under the CCAA and one conducted under the BIA is that a BIA procedure is primarily a statutory process with strict timeframes, rules and guidelines as set out in the BIA. A CCAA proceeding is more discretionary and judicially driven.

In a CCAA reorganisation, the debtor remains in possession of its property and may continue to operate its business in the ordinary course. However, a monitor (who must be a licensed bankruptcy trustee) is appointed by the court to oversee the process, report to the court and assist the debtor in formulating, presenting and administering a claims process and a plan of arrangement or compromise to the various classes of creditors. On approval by the requisite number of creditors of such a plan, a debtor can emerge from CCAA proceedings as a solvent entity.

CBCA

There are precedents in which companies in financial difficulty have reorganised their balance sheets through plans of arrangement that included the compromise of funded debt obligations (as opposed to trade or other debt) under corporate statutes such as the CBCA. The parties who typically vote on a CBCA plan of arrangement include all “security holders”, a term that includes not only the debtor’s shareholders, but also certain categories of creditors. CBCA restructurings are relatively uncommon but the process is similar to a restructuring under the CCAA, albeit with less court supervision (there is no monitor). In certain cases, courts have issued limited stays of proceedings or “no-default orders” to ensure that creditors do not exercise their rights against the debtor while the restructuring takes place. A CBCA plan of arrangement typically contains releases in favour of the debtor that are comparable to the releases contained in a CCAA plan of arrangement.

Receivership

A receiver may be appointed:

• privately by a secured creditor pursuant to the terms of a security agreement; or
• by court order.

Privately Appointed Receiver

A secured creditor may have the right to appoint a receiver under its security agreement. The receiver’s duties are primarily to the secured creditor that appointed it. It also has a general duty to act honestly, in good faith and in a commercially reasonable manner, including the duty to attempt to maximise recoveries and to obtain the best price for the debtor’s assets in the circumstances.

Court-Appointed Receiver

A receiver may also be appointed by a court order, typically on application by a secured creditor under the Rules of Court of the province where the debtor’s business is based. Generally, the courts of the common law provinces (ie, all provinces other than Québec) have the authority to appoint a receiver when the court is satisfied that it is “just or convenient” to do so, although the receiver’s authority over assets will be limited to the particular province. Courts also have the authority to appoint national receivers under the BIA, with authority across Canada. Court appointments usually occur in more complex cases, especially where there are significant disputes among creditors or between the creditor and the debtor, or in cases where it appears likely from the outset that the assistance of the court will be required on an ongoing basis.

A court-appointed receiver derives its powers from the court order and any specific legislation governing its powers. The receiver is an officer of the court and has duties to all creditors of the debtor. It takes directions and instructions from the court, not the creditor that first sought its appointment. In most cases, the court order appointing the receiver gives the receiver broad powers similar to those normally granted to a privately appointed receiver under a security agreement, although certain actions, such as major asset sales or the distribution of proceeds derived from such sales, usually require specific court approval.

A performance default is required after the waiting period to repossess if the lessee has cured all other defaults and has expressly agreed to continue performing under the lease agreement.

Upon the winding-up of a Canadian airline by an insolvency proceeding, the aircraft would remain in the possession of the lessee for up to the 60-day waiting period under the CTC, during which time the airline would be permitted to continue to operate the aircraft but would also continue to be responsible for its maintenance. Lease rentals, any security deposit and maintenance reserves would not be impacted by the proceeding as obligations of the lessee may not be modified without the consent of the lessor under Alternative A.

The Convention and the Protocol have the force of law federally in Canada, and in all its provinces and territories. AEP codes are not required for registering international interests.

Canada has made the following declarations under the Convention:

• Article 39(1)(a) – any non-consensual right or interest under Canadian law, any legal hypothec under the laws of Québec or any prior claim to which the law of Québec attaches existing at the date of this declaration or created after that date, that has priority over an interest in an object equivalent to that of the holder of a registered international interest, shall have priority to the same extent over such registered international interest, whether in or outside insolvency proceedings.
• Article 39(4) – a right or interest referred to in a declaration made pursuant to Article 39(1)(a) of the Convention shall have priority over an international interest registered prior to the date of deposit of Canada’s instrument of ratification.
• Article 39 – nothing in the Convention shall affect the right of any governmental entity or other private provider of public services to arrest or detain an object for payment of amounts owed to such entity directly relating to services in respect of that object or another object.
• Article 52 – stating that the Convention applies to all of Canada’s provinces and territories.
• Article 53 – naming for the purposes of Article 1 and Chapter XII of the Convention the relevant courts for all matters within federal jurisdiction and provincial jurisdiction.
• Article 54 – any remedy available to a creditor under any provision of the Convention, the exercise of which does not thereby require application to the court, may be exercised without leave of the court.
• Article 60 – the Convention will apply to a pre-existing right or interest governed by Sections 426-36 of the Bank Act for the purpose of determining priority, including the protection of any existing priority, five years after the day on which the Aircraft Protocol comes into force for Canada. Until that time, that right or interest will remain governed by those Sections.

Canada has made the following declarations under the Protocol:

• Article XXIX – stating that the Protocol applies to all of Canada’s provinces and territories.
• Article XXX – Canada will apply Article VIII; paragraphs 3, 4 and 5 of Article X; Article X(6) consistent with Canada’s implementing legislation; Article XI, Alternative A of the Protocol in its entirety to all types of insolvency proceedings and all insolvency-related events, and that the waiting period for the purposes of Article XI(3), Alternative A shall be 60 calendar days; Article XII; and Article XIII of the Protocol.

Article XIII of the Protocol applies in Canada. There are no special steps required to file an IDERA but it must be submitted for recordation by the registered owner of the aircraft (typically the lessee/operator).

There was a 2015 case from Prince Edward Island, Dash 224, LLC v Vector Aerospace et or 2015 PESC 27, involving the interpretation of the Convention, including, without limitation, its application to pre-existing rights and interests. The decision applies the provisions of the Convention and international treaty law to reach its decision.

More recently, the Court of Queen’s Bench of Alberta examined the Convention in the context of a helicopter repossession (Third Eye Capital Corporation v Ranch Energy Corporation, 2019 ABQB 780). Following a default by the debtor on its loan agreement with a helicopter creditor, such creditor claimed to be entitled to repossess, among other things, a helicopter and its component parts, which included a power train that had been installed on the helicopter subsequent to the creditor’s international interest filing in respect of the helicopter pursuant to the Convention. The Court correctly applied the Convention and found that the helicopter creditor’s registered international interest did not include the power train, in reliance on Article 29(7)(a) of the Convention, which preserves national law rights any person may have in an item that is not an aircraft object and that such person held prior to the item’s installation on an aircraft object if under national law such rights continue to exist post-installation.

In addition, the helicopter creditor attempted to repossess the aircraft after the interim stay order was granted in favour of the debtor. Notwithstanding the Convention, the receiver prevented the helicopter creditor from repossessing the helicopter. The issue of whether the receiver should not have prevented the helicopter repossession was not directly considered by the Court.

Canada is not a party to the 1948 Geneva Convention on the International Recognition of Rights in Aircraft or the 1933 Rome Convention on the Unification of Certain Rules relating to the Precautionary Arrest of Aircraft.

There are certain restrictions on foreign lenders financing an aircraft locally.

There are no exchange controls or government consents that would be material to any financing or repatriation of realisation proceeds under a loan, guarantee or security document.

Borrowers are permitted to grant security to foreign lenders.

Downstream, upstream and cross-stream guarantees are generally permitted, although there are specific entities and situations for which statutory restrictions may apply. For example, an upstream guarantee made by a reporting issuer to a shareholder or other related party may be subject to securities law restrictions. Certain types of entities are restricted from providing financial assistance, including guarantees, for the purpose of or in connection with the purchase of such entity’s shares unless certain statutory financial tests are met.

It is advisable for a lender to take share security over a domestic SPV that owns financed aircraft.

A negative pledge is recognised in Canada.

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 is recognised.

Debt subordination can be achieved in Canada by way of contractual arrangements (ie, intercreditor/priority/subordination agreements) or structural arrangements. Security interests subordination can also be achieved by controlling the order in which perfection registrations are made.

A transfer or assignment of all or part of an outstanding debt under an English or New York law-governed loan is permissible and recognised.

Payment obligations under any loan, guaranty or security document may not be enforceable if they contravene the interest provisions of the Criminal Code (Canada) (interest rate above approximately 60%) or are considered to be a penalty.

A domestic aviation financing would typically include the following security package: a general security agreement charging all the borrower’s personal property and an aircraft security agreement charging all aircraft identified in an attached schedule, together with all related ancillary documents (eg, IDERAs and pre-signed lease termination agreements). Aviation finance transactions are typically full recourse.

Security can generally be taken over all aircraft and related collateral, including engines, parts, warranties and insurances, but note that it is not standard practice in Canada to assign insurances.

Canada is a party to the Hague Convention, which has been in force in Canada since 1992. The Hague Convention has not, however, been made applicable in, among other jurisdictions, the provinces of Québec and Ontario. Nevertheless, the key common law principles in respect of trusts are law in Ontario and have been accepted into the civil law of Québec.

The concept of trusts and role of security trustee are recognised in Canada.

A borrower can assign to a security trustee pursuant to a security assignment or a mortgage its rights to the aircraft or under an aircraft lease (including in relation to insurances).

It is possible to assign the rights and benefits only without also assigning the attendance obligations of the lessor under an aircraft lease, although if a security trustee does not have a commercial agreement to the contrary (eg, in a notice and acknowledgement of assignment from the lessee), then it may be responsible for certain obligations of the lessor under the applicable provincial legislation or CTC if the security trustee enforces against the lessor and assumes the rights and benefits of the lessor under the lease.

A security assignment or guarantee does not have to be governed by domestic law to be fully enforceable. Security assignments/guarantees governed by English or New York law are enforceable in Canada.

There are no special mandatory terms or formalities required and it is not required or advisable for a security assignment to be translated, certified, notarised or legalised to be enforceable in Canada. Security assignments must be registered with the IR and/or with the applicable provincial PPSRs to be perfected. It should be noted, however, that, if the filing jurisdiction is located in the province of Quebec, then as of September 1, 2022, all such registrations must be prepared in the French language only.

Apart from a deed of hypothec relating to a debtor located in the province of Quebec, there are no Canadian law security instruments that are required in addition to an English or New York law-governed security assignment to take security over a Canadian-registered aircraft. Filings with the IR and/or with applicable provincial PPSRs are required for perfection. There are nominal costs associated with such filings.

An English or New York law-governed security assignment can be registered in Canada.

The transfer of security interests over an aircraft and/or engines is recognised.

The identity of the secured parties, or even the security trustee, is not relevant to the validity of the assigned security interest unless, for some reason, failure to disclose such identity would be materially misleading to a searching party. Provincial PPSR searches are made against the debtor or aircraft only and IR searches are made against the aircraft object only. It would, however, still be advisable that registrations be amended to reflect the new secured party so that such party may receive all notices required to be given to secured parties with registered interests in applicable collateral.

The role of security trustee is well recognised in Canada so parallel debt structures are not standard in domestic transactions.

The test for whether a secured party is carrying on business in Canada is the same as that for a lessor.

Security interests in respect of “aircraft objects” (as defined in the CTC) created on or after 1 April 2013 can now only be perfected in the IR. Mortgages should also be filed on applicable provincial PPSRs to perfect over any assets other than “aircraft objects”, such as spare parts, lease rentals and insurance proceeds.

There is no difference between the form of security and perfection taken over an aircraft and that taken over spare engines, other than to note that because engines are not separately registered with Transport Canada, an IDERA is likely to have limited usefulness in the case of engines.

A general security agreement or account pledge is sufficient to take security over a bank account, which would then be perfected by filing with the applicable provincial PPSR. However, for a blocked account, a blocked account control agreement and notice to the account bank would be required. An acknowledgement from the account bank is typically requested as well.

A third party can take and register a lien over an aircraft or engine for certain non-consensual liens per Canada’s declaration under Article 39(a) of the Convention. Unpaid airport fees, navigation charges, customs duties and repairers’ costs are all permissible non-consensual liens.

The lien covers only the cost of unpaid repairs to the specific aircraft.

Fleet liens are recognised for certain types of overdue charges, including airport taxes, air navigation and landing charges, and unpaid taxes.

Typically, the remedy available is to seize and detain the aircraft until the applicable amounts are paid in full, effectively making the lessor or secured creditor of the aircraft liable for unpaid fees if it wishes to obtain the release of its aircraft.

Repairer liens normally only continue while the repairer or storer continues to maintain physical possession of the repaired and/or stored asset. However, if such lien is not discharged within the prescribed period, the repairer or storer has the authority to sell the aircraft.

Discharge filings can be made on a same-day basis on the IR and most applicable provincial PPSRs.

There is no national register of mortgages and charges. Pursuant to the CTC, international interests in aircraft objects must be registered on the IR. The only other systems for the registration of any interests affecting aircraft engines in Canada are the various provincial PPSRs. Mortgages should also be filed on applicable provincial PPSRs to perfect over any assets other than “aircraft objects”, such as spare parts, lease rentals and insurance proceeds.

Statutory rights of detention and non-consensual preferential liens can arise over an aircraft and on a “fleet-wide” basis. Repair/storage liens are limited to the applicable aircraft giving rise to the lien and only while there is possession by the lienholder. Taxes and other charges, such as air navigation charges, can give rise to liens on a fleet-wide basis.

A potential purchaser should search the IR and all relevant provincial PPSRs to verify that an aircraft is free of encumbrances.

There are no relevant differences in enforcing a security assignment as opposed to a loan or a guarantee.

A security trustee would be able to enforce its rights under a security assignment on the basis of a notice and acknowledgement executed by the granting lessor and relevant lessee respectively.

Canadian courts will enforce foreign law as the governing law of a finance or security document and the submission to a foreign jurisdiction provided that such selections are bona fide and not inconsistent with public policy.

See 2.6.6 Domestic Courts’ Recognition of Foreign Judgments/Awards.

Pursuant to the CTC, a secured party may, following a default, take possession or control of the aircraft without the lessee or operator’s consent. This right may be exercised without the need for court proceedings, but must be exercised in a commercially reasonable manner in conformity with the lease.

There are no specified courts that have special jurisdiction or competence to decide enforcement actions under a security agreement/aircraft mortgage. Canada’s CTC declarations name the courts for CTC matters under federal jurisdiction and under provincial jurisdiction.

Summary judgment is normally only available for a claim for undisputed liquidated damages. The form of the lease itself is irrelevant. The concept of summary judgment as it is generally understood in the common law provinces is unavailable under Québec civil procedure. There are instances where a plaintiff may upon application to the court obtain the summary dismissal of frivolous or abusive grounds of defence, but the applicant’s threshold in this regard is very high and such applications are rarely granted.

A judgment given by a Canadian court to enforce an aircraft security agreement/mortgage may only be expressed in Canadian dollars, subject to the right of the relevant court to convert the sum awarded by a foreign decision into Canadian currency at the rate of exchange prevailing on the day the decision became enforceable at the place where it was rendered.

A secured party is not required to pay taxes or fees in a non-nominal amount in connection with the enforcement of a security agreement/aircraft mortgage.

The foregoing analysis provides a comprehensive summary of issues impacting enforcement rights.