Aviation Finance & Leasing 2024 Comparisons

Upon execution of an aircraft or engine sale agreement, the following taxes and fees will be payable.

• VAT at the rate of 18% is payable as a consequence of the execution of a sale agreement of an aircraft or an engine located in Rwanda at the time of transfer of title. VAT is invoiced by the seller to the buyer and is due by the seller to the Rwanda Revenue Authority.
• Registration or re-registration (applicable in the event of a change of ownership of an aircraft already registered in Rwanda) in the Rwanda aircraft register (the “Aircraft Register”) is subject to a fee ranging from USD250 to USD5,000.

Because a change in ownership is registered in the Aircraft Register (see 1.1.1 Taxes/Duties Payable Upon Execution of the Sales Agreement), a sale agreement does not need to be translated, certified, notarised or legalised to be enforceable against a domestic party.

However, all documents submitted to the Rwanda Civil Aviation Authority (RCAA) must be certified (ie, notarised) copied, and translated into English. In addition, a (partial) translation could be required by the Rwandan courts if the agreement is not written in Kinyarwanda.

Formalities Applicable to the Transferring Title

Transfer of ownership of an aircraft or engine registered in Rwanda is valid if the sale agreement meets the following criteria:

• it is in writing;
• it relates to an aircraft or engine which the seller has the power to dispose of; and
• it enables the aircraft or engine to be identified.

As the transfer of ownership is made in accordance with the terms of the sale agreement, it is advisable to explicitly state that the transfer extends to all installed parts, including the Auxiliary Power Unit (APU).

Registration of the Transfer

Registration of the transfer of ownership in the Aircraft Register is the only mean of establishing a priority of a right in an aircraft.

Sale of the Ownership Interest in an Entity

The sale of the ownership interest in an entity that owns an aircraft or engine will not be effectively recognised as a sale of the aircraft or engine itself, provided that entity remains the owner of the aircraft or engine.

The transfer of title to an aircraft or engine physically delivered in Rwanda will be recognised if the bill of sale is governed by English or New York Law.

To be recognised in Rwanda, the bill of sale must however include the following information:

• name of the manufacturer;
• manufacturer’s serial number (MSN); and
• model designation necessary and sufficient to identify the aircraft.

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

The person who becomes the owner of an aircraft in Rwanda must register it with the RCAA. The following applies to the registration process.

• The new owner must be either a citizen or a bona fide resident of Rwanda (or an East African Community partner state), a Rwandan legal entity or the government of Rwanda.
• The aircraft cannot be registered under the laws of any foreign country.
• The new owner must file an application to the RCAA including proof of ownership (eg, bill of sale).

Re-registration Process

The person who becomes the owner of an aircraft already registered in Rwanda must inform the RCAA in writing within five days after becoming the owner. The re-registration process is identical to the registration process.

No Consent From Government Entities

Government consent is not required as a prerequisite to the execution and delivery of a bill of sale in relation to an aircraft or engine registered in Rwanda.

Transfer of Ownership of the Aircraft

Value added tax at the rate of 18% is payable as a consequence of the execution of a sale agreement of an aircraft or an engine located in Rwanda, even in transit, at the time of transfer of title. In addition, a fee ranging from USD250 to USD5,000 applies to the re-registration of the aircraft.

Transfer of the Ownership Interest in an Entity That Owns an Aircraft

The sale of the ownership interest in an entity that owns an aircraft or engine will not be effectively recognised as a sale of the aircraft or engine itself, provided that entity remains the owner of the aircraft or engine. No tax or duty will therefore be due.

All types of operating/wet/finance leases or leases concerning only engines or parts are permissible and recognised under Rwandan law.

A lease involving either a domestic party or an asset situated in Rwanda can be governed by a foreign law.

Under Regulation 42 of 2022 governing foreign exchange operations and Directive 0520/2023-00041 on transaction in foreign currencies by non-licensed persons issued by the National Bank of Rwanda (BNR), all transfers of funds, regardless of the currency, to non-residents and by Rwandan residents to or from a foreign country must be made through authorised intermediaries (eg, all banks licensed by the BNR).

In addition, if the payments are made in a foreign currency – ie, one other than the Rwandan franc – the domestic lessee must apply to the BNR for authorisation to transact in a foreign currency, unless it has already been authorised to do so (such an authorisation is general – ie, it is not granted for a specific transaction or operation).

There are no foreign exchange controls that could prevent rent payments under a lease, or any repatriation of realisation proceeds if the lease is enforced by a foreign lessor.

There are no taxes or fees payable for executing a lease physically in Rwanda and/or regarding a domestic party or as a consequence of an original or copy of a lease being brought into Rwanda either physically or electronically.

The lessor does not have to be licensed or otherwise qualified in Rwanda to do business with a Rwandan lessee.

There are no specific mandatory terms required to be in a lease that would not typically already be included in a lease governed by English or New York law.

Mandatory terms required to be in a lease include:

• the official names and addresses of the parties;
• the duration of the lease;
• detailed information on each aircraft involved in the agreement (make, model, series and registration numbers);
• an explanation of the type of operations that will be conducted by the lessee; and
• an explanation of which party has the responsibility and authority for operational control, maintenance, insurance, etc.

Tax and withholding gross-up provisions are permissible and enforceable.

A lease can cover parts that are installed or replaced on an aircraft or engine after its execution. All that is required is that this is clearly stated in the lease agreement.

There is a risk of title annexation in respect of aircraft engines installed on an airframe if the aircraft engines are not clearly indicated as separate parts from the aircraft itself.

The concept of a trust and the role of an owner trustee under a lease are recognised under Rwandan law.

Interests of the owner or the lessor of an aircraft are not noted in the Aircraft Register. They can be noted either in the national system for recording interest in any aircraft or aircraft engine register in Rwanda (the “National Register for Interests in Aircraft”) or in the International Registry pursuant to the Cape Town Convention (the “International Registry”).

In practice, it is advisable to register the interests in the National Register for Interests in Aircraft. However, if the owner or the lessor so wishes, RCAA can be used as a conduit for transmitting the required information to the International Registry. Registration of interests establishes the priority of right or interest in an aircraft or an aircraft engine.

An operator can register an interest only if they are an owner whereas an owner does not also have to be an operator to register an interest.

Leased aircraft are registered in the Aircraft Register. However, the lease agreement and the lessor’s interests are registered in the National Register for Interests in Aircraft and/or in the International Registry.

Registration of Leases

A lease, and a lessor’s interest therein, can be registered and will be registered in the National Register for Interests in Aircraft and/or in the International Registry.

The parties must provide the RCAA with at least:

• a complete certified copy of the lease agreement; and
• an operator analysis showing how the lease agreement conforms with the Rwanda Civil Aviation Regulations (RCAR). Depending on the type of lease other documents must also be submitted.

Estimated Period for Completion

Once the required documentation has been submitted, the RCAA will issue its decision within two to 45 working days, depending on the type of lease.

Consequence of the Registration

Registration of the lease establishes the priority of interest in the aircraft or engine.

Prior Authorisation From Government Entities

All lease agreements must be submitted to the Flight Safety Services (FSS) for approval. Approval is a prerequisite to the execution and delivery of an aircraft in Rwanda.

The lease needs to be certified to be valid and registrable. If the lease is not in English, an English translation will be required.

The registration of a lease is subject to a fee ranging from USD500 to USD10,000 for the registration of an interest in an aircraft or a fee of USD3,000 for the registration of an interest in an engine or any other components.

There is currently one aircraft registered in Turkey which is habitually based in Rwanda.

The RCAA requires that all documents submitted to it be certified (ie, notarised) copies. While it is not always mandatory, it is strongly recommended to provide an English translation of documents submitted to the RCAA.

A foreign lessor will not be required to pay any taxes as it is not operating in Rwanda. The lessee is solely responsible for paying all relevant taxes and withholding applicable taxes in accordance with the tax legislation.

A foreign lessor will not be deemed to be resident, domiciled or carrying on business in Rwanda as a result of being a party to, or enforcing, a lease.

If all obligations relating to operation, maintenance and insurance of an aircraft or engine rely on the aircraft operator (ie, the lessee) as per the lease agreement, there is generally no liability imposed on a foreign lessor in that respect.

If all obligations relating to operation, maintenance and insurance of an aircraft rely on the aircraft operator (ie, the lessee) as per the lease agreement, there is generally no liability imposed on a foreign lessor as a result of damage or loss caused by the aircraft.

Creditors of a domestic lessee generally have no rights under Rwandan law to attach an aircraft leased to it as the lessee is not the legal/registered owner of the aircraft.

Rwanda declared under Article 39(1) of the Cape Town Convention that:

• liens in favour of workers for unpaid wages arising since the time of a declared default declared by an employer under a contract to finance or lease the subject object; and
• liens in favour of repairers of an object in their possession to the extent of service performed on and value added to that object,

will have priority under its law over an interest in an object equivalent to that of the holder of a registered international interest and will have priority over a registered international interest, whether in or outside insolvency proceedings.

According to the law governing the organisation of insurance business, a foreign insurer may be authorised by the BNR to cover a risk in the territory of Rwanda where:

• no Rwandan insurer is able to cover that risk; or
• the class of insurance required is not found in Rwanda.

In all other cases, it is mandatory that either all or part of the insurances be placed with Rwandan insurance companies.

No licensee will operate a domestic or an international air service unless, for every accident or incident related to the operation of that service, it has:

• liability insurance covering risks of injury to or death of passengers, damage to or loss of luggage and cargo; and
• insurance covering third-party liability risks.

Foreign reinsurers are required by the BNR to establish a representative office in Rwanda and to obtain authorisation before starting operations.

Cut-through clauses that are in line with insolvency laws and regulations are enforceable in Rwanda.

Assignments of insurance and reinsurance are generally permitted in Rwanda.

There are no restrictions on the lessor’s abilities to:

• terminate an aircraft lease;
• re-export the aircraft; and/or
• sell the aircraft, provided that the operation is compliant with:
1. the terms of the lease; and
2. requirements for irrevocable deregistration and export authorisation.

In the event of default, the lessor may take physical possession of the aircraft provided that the lessee has at any time so agreed – ie, if it is clearly stated in the lease agreement. The lessor may alternatively apply for a court order authorising it to take possession of the aircraft.

There is no specific court for aviation disputes in Rwanda. These disputes are referred to the commercial courts unless the parties have agreed to arbitration.

A lessor can obtain an interim order pending final resolution of judicial proceedings if the matter is urgent. The order is issued between four and 17 days from the date of the registration of the application.

Parties are generally free to choose a foreign law as the governing law of an aircraft lease and to submit any disputes arising out of the lease to a foreign jurisdiction. The Rwandan courts will generally uphold the parties’ choice.

Recognition and Enforcement of Foreign Judgments

Subject to specific international agreements, foreign judgments are only enforceable in Rwanda after they have been granted exequatur. As a rule, a foreign judgment will be granted exequatur provided that:

• the judgment is not contrary to Rwandan public policy;
• the judgment has acquired res judicata in accordance with the laws of the country of origin;
• the applicant provides a copy of the judgment that fulfils all the conditions necessary for its authenticity in accordance with the laws of the country of origin; and
• the rights of defence have been respected.

Recognition and Enforcement of Foreign Awards

Rwanda recognises and enforces foreign arbitral awards on the basis of reciprocity and therefore only recognises awards issued in countries that themselves recognise awards issued in Rwanda, which is the case for all countries party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”).

A lessor can obtain a judgment in a foreign currency, as the judgment should refer to the currency agreed upon by parties in the lease agreement.

Damages for breach of the contract may be provided for in the contract, but only at a reasonable amount based on the actual loss or potential loss that could occur in the case of a breach of the contract.

A clause fixing excessive damages will be deemed contrary to public policy and therefore will not be enforced by Rwandan courts.

The lessor will not be required to pay taxes or fees in a significant amount (ie, non-nominal) in connection with the enforcement of a lease in Rwanda.

In principle, the lessor will be required to comply with a mandatory notice period of at least ten working days. However, it is highly advisable to give the lessee a reasonable notice period depending on the specific circumstances of the case.

The lessee is in principle not entitled to claim sovereign or other immunity from suit. In any event, this immunity can be waived.

Rwanda has adopted the New York Convention. Rwanda recognises and enforces foreign arbitral awards on the basis of reciprocity, and therefore only recognises awards issued in countries that themselves recognise awards issued in Rwanda, which is the case for all countries party to 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.

The concepts of contractual assignment and novation are generally recognised in Rwanda.

Assuming that a lessor transferring its rights under an aircraft lease is assigning or novating its rights under the lease to a new lessor pursuant to a New York or English law-governed assignment and assumption agreement or novation agreement, the agreement will be held valid by Rwandan courts provided that:

• the lessee has been given notice in writing;
• the notice identifies the associated rights; and
• the new lessor has consented in writing.

There are no mandatory terms that Rwandan law requires to be included in the agreement. The agreement must only be in writing and enable the associated rights to be identified.

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

However, if the case goes to court, a (partial) translation will be required if the agreement is not written in Kinyarwanda.

Filing or Registration of Lease Assignment/Novations

A lease assignment or novation can be registered. If so, it will be registered in the National Register for Interests in Aircraft and/or the International Registry.

The parties must, inter alia, provide the RCAA with a complete certified copy of the lease assignment or novation agreement.

Estimated Period for Completion

Once the required documentation has been submitted, the RCAA should issue its decision within a few weeks.

Consequence of the Registration

Registration establishes the priority of interest in the aircraft or engine.

Prior Authorisation From Government Entities

All lease assignment or novation agreements must be submitted to the FSS for approval. This approval is a prerequisite to the execution and delivery of an aircraft in Rwanda.

Provided that the operation does not entail any transfer of ownership, there are no taxes or duties payable in respect of the assignment or novation agreement, or as a consequence of an original or copy of it being brought into Rwanda physically or electronically.

Assuming that the ownership interest of the entity owning an aircraft is transferred with the legal title to the asset remaining with that entity, the transfer will not be effectively recognised as a transfer of ownership of the aircraft itself. Therefore, it is not required to notify the RCAA.

The RCAA can deregister an aircraft in the following circumstances.

• Upon application by the registered owner (or the lessor) for purposes of registering the aircraft in another state or for any other purpose.
• Upon the destruction of the aircraft or its permanent withdrawal from use.

To achieve this registration, the registered owner or lessor is required to:

• return the certificate of aircraft registration to the RCAA;
• settle any liens or encumbrances attached to the aircraft; and
• remove all nationality and registration marks assigned to the aircraft.

The RCAA may refuse to deregister the aircraft if the deregistration is inexpedient or not in the public interest.

The aircraft owner, mortgagee or lessor can in principle apply for deregistration without the lessee’s or operator’s consent.

To deregister an aircraft, the registered owner or lessor is required to:

• return the certificate of aircraft registration to the RCAA;
• settle any liens or encumbrances attached to the aircraft; and
• remove all nationality and registration marks assigned to the aircraft.

Relevant regulations do not provide a specific timeframe for the deregistration process.

The authority does not give any advance assurance as to the prompt deregistration of the aircraft. Deregistration must be carried out in line with the relevant procedures specified by regulations.

As a general rule, deregistration fees apply only to the deregistration of unmanned aircraft systems (UAS). In the authors’ experience, no fees are charged for the deregistration of an aircraft.

A deregistration power of attorney will be recognised by the RCAA. This power of attorney must: (i) identify the person authorised to make the application; (ii) be in English; and (iii) be certified.

In the case of a corporate body, the following additional documents are required.

• A certified copy of the certificate of incorporation.
• A certified copy of a document identifying the names of the directors of the company owning or leasing the aircraft and their specimen signatures giving authority to deregister the aircraft.

A deregistration power of attorney does not have to be governed by Rwandan law.

In principle, the grantor (ie, the lessor) should be able to revoke a deregistration power of attorney even if it is expressed to be irrevocable.

The aircraft owner, mortgagee or lessor can in principle export the aircraft without the lessee’s or operator’s written consent. However, the aircraft owner, mortgagee or lessor must give reasonable prior notice (at least ten working days) in writing to the lessee or operator.

To increase the likelihood that it will be able to export the aircraft without the lessee’s consent, the owner, mortgagee or lessor may want to include a specific clause to this effect in the lease or mortgage (as applicable).

An application for an export certificate must be made in a form prescribed by the RCAA at least 14 days before the intended date of export of the aircraft out of Rwanda.

The RCAA will issue an export certificate within a few weeks upon submission of the required documentation.

Fees ranging from approximately USD500 to USD3,500 are charged in respect of the export of an aircraft.

Proof of removal of registration marks from the aircraft must be made before deregistration is granted.

In addition, the RCAA may refuse to deregister the aircraft if the deregistration is inexpedient or not in the public interest.

The relevant statutory provisions for insolvency of a lessee domiciled in Rwanda are the following:

• Law 075 of 2021 of 06/12/2021 relating to insolvency (the “Rwanda Insolvency Act”);
• Law 34 of 2013 of 24/05/2013 on security interests in movable property; and
• Ministerial Order No 01/CAB.M/019 of 06/02/2019 amending Ministerial Order No 04/CAB.M/08 of 24/07/2018 establishing civil aviation regulations.

Under the Rwanda Insolvency Act, insolvency proceedings start when the lessee is unable to pay its debts when they fall due in the normal course of business, or when its assets are less than its liabilities plus its stated capital.

The following persons may file an application with the commercial courts to start insolvency proceedings:

• the creditor (ie, the lessor);
• the debtor (ie, the lessee);
• the directors or shareholders of one of them;
• the Registrar General; or
• the regulatory authority.

Insolvency proceedings will usually be followed by either:

• judicial reorganisation proceedings, when there is a reasonable prospect for rescuing the company and it is clear that the company will likely meet its future financial obligations as they become due and payable; or
• judicial liquidation proceedings when it is clear that the company is unable to pay its debts.

It is also possible to immediately file for judicial reorganisation or judicial liquidation.

Cross-border Insolvency Regime

The Rwanda Insolvency Act establishes a cross-border insolvency regime, which applies notably when:

• assistance is sought in Rwanda in connection with a foreign proceeding;
• foreign and domestic proceedings in respect of the same debtor are taking place concurrently; or
• where foreign creditors have interest in initiating, or participating in, insolvency proceedings in Rwanda.

In these circumstances, a foreign authority, representative or creditor may apply to initiate, or to participate in, insolvency proceedings in Rwanda.

Co-ordination Principles

The Rwanda Insolvency Act states that co-operation “may be implemented by any appropriate means”, and therefore does not prevent the parties from adopting certain co-ordination principles such as the American Law Institute and International Insolvency Institute Guidelines Applicable to Court-to-Court Communications in Cross-Border Cases 2001, and the INSOL International (International Association of Restructuring, Insolvency and Bankruptcy Professionals).

Recognition of Foreign Proceedings

A foreign representative may apply to the competent court in Rwanda for recognition of a foreign proceeding in which it has been appointed. In doing so, the foreign representative must provide the competent court with the required documentation, including a certified copy of the decision commencing foreign proceedings and appointing the foreign representative.

Once an application for recognition of the foreign proceedings is made, it will cause an automatic stay over the debtor’s property.

Assuming that a lessee has granted a deregistration power of attorney or an irrevocable deregistration and export request authorisation (IDERA) to a lessor, owner or mortgagee of an aircraft, the power of attorney should not be void or terminated as a consequence of the liquidation of the lessee.

Assuming that a lessee has possession of the aircraft and is put into liquidation or administration or similar process, the following applies.

• The liquidator may decide to terminate the lease agreement.
• The lessor will not be prevented or delayed from repossessing the aircraft, in accordance with the relevant provisions of the Cape Town Convention, which Rwanda has ratified.
• The aircraft will not be deemed to be part of the lessee’s property.
• The liquidator will not impose the rights of other creditors in priority to those of the lessor. However, it is important that the lessor diligently requests the return of the aircraft.

The main risks for a lender would be the inability to obtain payment from the borrower if the borrower becomes insolvent.

Moratorium/Stay

As a rule, the rights of secured creditors are not stayed by the commencement of insolvency proceedings. However, where the debtor shows the intention to submit a reorganisation plan along with the application for insolvency proceedings, all claims including secured claims and rights of retention are stayed effective from the date of application.

Duration

The debtor must submit a reorganisation plan to the court within a period not exceeding three months from the date of initiating the proceedings. The period of stay cannot exceed six months (including the three months allowed for submitting the reorganisation plan).

In accordance with the Rwanda Insolvency Act, a company is put into liquidation by the appointment of a liquidator, who must be an insolvency practitioner. The liquidator is appointed following an application made by a special resolution of the shareholders, an application made by the directors or any other person if the company’s incorporation document so requires or permits, or an order made directly by the court.

There are three main stages in a company’s liquidation:

• appointment of a liquidator, by the company itself (“voluntary liquidation”) or by the court (“compulsory liquidation”);
• collection and realisation of the company’s assets; and
• payment to the creditors, with respect to their legal priority.

Performance defaults should be required to repossess an aircraft during a lessee insolvency proceeding.

If a domestic lessee is wound up by a court or administration proceedings, the following generally occurs.

• The aircraft may be repossessed by the lessor if the lease is terminated for default of payments or if the liquidator decides not to continue the lease.
• The lease rentals will be due and must be claimed to the liquidator – if the lease rentals cannot be paid, the lessor may terminate the lease agreement.
• The lease security deposit and maintenance will be returned to the lessor upon termination of the lease agreement.
• The maintenance reserves (whether classified as reserves or supplemental rent) held by the lessor and not used, should be returned to the lessee, unless the lease agreement provides otherwise.

Rwanda ratified the Convention on International Interests in Mobile Equipment (the “Convention”) and the related Protocol on Matters specific to Aircraft Equipment (the “Protocol”) in 2010.

Registration of interests establishes the priority of right or interest in an aircraft. In practice, the Aircraft Register is used as a conduit for transmitting the required information to the International Registry.

Rwanda has made the following declarations under the Convention.

Article 39(1)

The following have priority under its law over an interest in an object equivalent to that of the holder of a registered international interest and will have priority over a registered international interest, whether in or outside insolvency proceedings:

• liens in favour of workers for unpaid wages arising since the time of a declared default declared by an employer under a contract to finance or lease the subject object; and
• liens in favour of repairers of an object in their possession to the extent of service performed on and value added to that object.

Article 40

The following will be registerable under the Convention as regards any category of object as if the right or interest were an international interest and will be regulated accordingly:

• rights of a person obtaining a court order permitting attachment of an aircraft object in partial or full satisfaction of a legal judgment;
• liens or other rights of a state entity relating to taxes or other unpaid charges of any type whatsoever (which is not covered by the declaration under Article 39(1)(a) of the Convention); and
• any other non-consensual right or interest which is not covered by the declaration under Article 39(1)(a) of the Convention.

Other Declarations

In addition, Rwanda has declared that:

• under Article 52 the Convention will apply to all its territorial units;
• under Article 53 the Commercial Court and the Commercial High Court are the relevant court(s) for the purposes of Article 1 and Chapter XII of the Convention; and
• under Article 54(2) any remedies available to the creditor under the Convention which are not expressed under the relevant provision thereof to require application to the court may be exercised without leave of the court or other court action.

Rwanda has also made declarations under Articles XXIX and XXX(1), (2), and (3) of the Protocol.

Article XIII of the Protocol applies in Rwanda. An IDERA can be submitted to the Aircraft Register. It must be in the form shown in RCATS 35.125.

The authors are not aware of any case law regarding the enforcement of the Convention or the Protocol.

Rwanda has not ratified the 1948 Geneva Convention on the International Recognition of Rights in Aircraft on 17 May 1971, nor the 1933 Rome Convention on the Unification of Certain Rules relating to the Precautionary Arrest of Aircraft.

Foreign lenders and borrowers are subject to Rwandan law. As a general rule, there are no restrictions on foreign lenders financing an aircraft locally or on borrowers using the loan proceeds.

Specific Exchange Controls or Government Consents

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

General Exchange Controls

Nonetheless, the general exchange control framework will apply to the financing or repatriation of any realisation proceeds (eg, using an authorised bank, see 2.1.3. Restrictions Concerning Payments in US Dollars).

Prior Government Consents

In addition, prior to any financing or repatriation of the proceeds, the realisation itself will require government consents in the case of a security document (eg, obtaining a certificate from the Office of the Registrar General (ORG) authorising the possession of the collateral).

Borrowers are permitted to grant security to foreign lenders, which must comply with the general requirements for securities under Rwandan law.

Downstream, upstream and cross-stream guarantees are permitted in favour of lenders when made in accordance with Rwandan contract law.

It is possible for a lender to take share security over a domestic special purpose vehicle that owns the financed aircraft. A pledge of shares is recognised under Rwandan law.

Negative pledges are recognised under Rwandan law as enforceable contractual obligations when made in accordance with Rwandan contract law.

There are no material restrictions or requirements imposed on intercreditor arrangements.

The concept and role of agent and agency under a syndicated loan is recognised in Rwanda.

Contractual or structural debt subordination are recognised in Rwanda if they comply with Rwandan contract and company law.

The transfer or assignment of all or part of an outstanding debt under an English or New York-governed loan is permissible and recognised under Rwandan law, to the extent the transfer or assignment is not precluded by the contract, does not materially change the obligations of the debtor, and does not violate Rwandan law or public order.

There are no usury or interest limitation laws as such in Rwanda. However, there are other consumer, competition, and banking-related obligations regarding rates and fees, such as publication, disclosure and display obligations.

The typical form of security and recourse granted in an aviation finance transaction in Rwanda is a mortgage.

There are no types of security that cannot be taken over an aircraft or related collateral.

The concept of a trust and the role of a security trustee are recognised in Rwanda.

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

It is possible to assign the rights and benefits of the lessor under an aircraft lease only, without also assigning its attendant obligations.

A security assignment or a guarantee can be governed by English or New York law and does not necessarily have to be governed by Rwandan law to be fully enforceable, as long as it does not violate Rwandan public policy.

Registration

To perfect the security assignment, it should be registered in the National Register for Interests in Aircraft Registry and/or, if applicable, in the International Registry.

Other Formalities

It is not required that the security assignment is translated, certified, notarised or legalised to be enforceable against a domestic party.

However, if the case goes to court, a translation will be required if the assignment is not written in Kinyarwanda.

If an English or New York law-governed security assignment were to be taken in respect of an aircraft registered domestically, an additional domestic law security instrument would not be required. Domestic law security instruments or local law filings are not required in order to make Cape Town filings. In the event of a domestic law security instrument and local law filings, the average costs of execution would be subject to a fee ranging from USD500 to USD10,000 for the registration of an interest in an aircraft or a fee of USD3,000 for the registration of an interest in an engine or any other components.

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

The transfer of security over an aircraft and/or an engine is recognised in Rwanda.

If the identity of the secured parties under a security assignment changes after its execution, the security interest will not be jeopardised, although the appropriate filings and registrations must be made.

The authors are not aware of parallel debt structures in aviation financing in Rwanda. The role of security trustee is recognised in Rwanda and, as such, parallel debt structures are not per se necessary (see 3.2.3 Trust/Trustee Concepts).

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

A domestic law mortgage over an aircraft or engine can be perfected by registration in the National Register for Interests in Aircraft.

There are no differences between the forms of security or perfection taken over an aircraft and those taken over spare engines.

The form of security typically used to take security over a bank account would be a pledge over the bank account. The pledge can be perfected by registration with the securities registry of the Office of the Registrar General (ORG).

Permissible Third-Party Liens

As per Rwanda’s declaration under Article 39(1)(a) of the Convention, a third party can take and register a lien over an aircraft or engine for certain non-consensual liens. Unpaid airport fees, navigation charges, customs duties and repairers’ costs are all permissible non-consensual liens.

Remedies in Enforcing the Lien

To enforce their lien, third parties can seize and detain the aircraft until the due amount gets paid in full.

If airport fees or navigation charges are not paid, the RCAA will initiate court proceedings to attach any aircraft operated or owned by the debtor.

In contrast, a repairer can, without a court order, retain physical possession of an aircraft or engine until it has been paid for its services.

The discharge of a lien or mortgage over an aircraft may take two to three months.

The interests of an aircraft mortgagee or security trustee can be registered in the National Register for Interests in Aircraft. Registration establishes the priority of interest in the aircraft or engine. These interests cannot be noted or registered in the Aircraft Register.

Statutory rights of detention and non-consensual preferential liens can arise over an aircraft and/or on a “fleet-wide” basis.

A third party, such as a potential purchaser of an aircraft, may access the content of the National Register for Interests in Aircraft by filing a request with the RCAA.

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

If, under a security assignment, security is granted to a security trustee by a lessor in respect of its rights under an aircraft lease, that security trustee can enforce its rights under the security assignment pursuant to a notice and acknowledgement executed by that lessor and the relevant lessee respectively in connection with the security assignment.

Rwandan courts will generally uphold a foreign law as the governing law of a finance or security document, and the submission to a foreign jurisdiction.

Rwandan courts will recognise and enforce a final judgment of a foreign court or an arbitral award without reviewing the merits of the matter.

A secured party can take physical possession of the aircraft in execution of a security or lease agreement without further consent required from the lessee.

The commercial courts are competent to decide enforcement action in commercial aviation matters.

A secured party can obtain an interim order pending final resolution of judicial proceedings if the matter is urgent. The order is generally issued between four and 17 days from the date of the registration of the application.

The court may order the secured party to post a bond or provide a guarantee if it decides that the circumstances so require.

A secured party under a security agreement or aircraft mortgage can obtain a judgment in a foreign currency.

There are no taxes or fees required from the secured party in connection with the enforcement of a security agreement or aircraft mortgage.

There are no relevant or notable issues in relation to the enforcement of its rights.