Aircraft finance and leasing in Netherlands

Please note that all questions relating to the registration of Leases and Aircraft Mortgages in the Netherlands are subject to the condition that: 

• the Aircraft will be purchased by the Owner and leased on an operating lease basis to the Airline pursuant to the Lease;
• the Lease will be registered in the Nationality Register in The Netherlands; and
• the Aircraft Mortgage will be registered in the Nationality Register in the Netherlands.

Is this is the usual structure for transactions of this nature in the Relevant Jurisdiction?

Yes.

Yes, there are public registers in The Netherlands where such searches may be carried out. Please note that while a search thus conducted will reveal whether an order or resolution for any bankruptcy, bankruptcy protection or similar insolvency proceedings has been registered in relation to the Airline, it may not reveal all forms of pending procedures.

Searches can be performed at:

• the bankruptcy chamber of the District Court, here the searches free of charge;
• the Central Insolvency Register (on-line search), here the searches free of charge; and
• the trade register of the Dutch Chamber of Commerce (on-line search), here minimal charges apply (in any case below USD 100). 

In all cases results of the searches can be obtained instantly.

3.1.1 Is any particular form of transfer required for the transfer to be legally recognised?

Yes, ownership can be transferred by execution of a notarial deed before a notary in The Netherlands. Such notarial deed must be registered in the Public Register in order for the transfer of title to the Aircraft to be perfected. It is also possible to transfer a beneficial interest in an Aircraft.

3.1.2 Must any particular conditions be satisfied for the transfer to be recognised?

The Aircraft or Engine must be located: (i) in The Netherlands, (ii) in another country that recognises a transfer of title in the form as required under Dutch law, or (iii) in another country that recognises the title transfer as a valid method of title transfer under its domestic law pursuant to the Geneva Convention.

3.1.3 Will such a transfer still be recognised by the courts of the Relevant Jurisdiction as legally valid where the relevant aircraft is located in another jurisdiction at the time of the transfer?

Yes, provided that the Aircraft or Engine is located in a country that recognises the transfer of title in the form as required under Dutch law or another country that recognises the title transfer as a valid method of title transfer under its domestic law pursuant to the Geneva Convention.

If the Aircraft or Engine is located in another country, which does not recognise the transfer in a manner as set out above, the courts of the Relevant Jurisdiction will not recognise the transfer and local law advice should be taken at the time of preparing the transfer of title to the Aircraft outside the Relevant Jurisdiction.

3.1.4 Are any duties, taxes or fees levied on such transfer of ownership?

Yes. Duties levied by the Nationality Register are EUR 150. Duties levied by the Public Register are approximately EUR 250. 

No Dutch corporate income tax is due by the Owner under the assumption that the Owner does not have a permanent establishment in the Netherlands. The sale of an Aircraft (or parts thereof) and of Aircraft equipment within the Netherlands is generally subject to Dutch VAT. However, if the Aircraft is used by Airlines operating chiefly on international routes, the supply may be zero-rated for VAT purposes.

Requisition of an Aircraft by the Government is possible, provided that (i) such requisition serves the public interest of the country, and (ii) the Government compensates the Owner in full for its damages.
Other laws which may have an effect on the Owner’s right in the Aircraft are explained under 14.1 (e.g. confiscation by the tax authorities).

4.1.1 The Chicago Convention of 1944 on International Civil Aviation (the “Chicago Convention”)?

Yes

4.1.2 The 1948 Geneva Convention on the International Recognition of Rights in Aircraft (the “Geneva Convention”)?

Yes

4.1.3 The 1933 Rome Convention for the Unification of Certain Rules Relating to the Precautionary Arrest of Aircraft (the “Rome Convention”)?

Yes

4.1.4 The 2001 Cape Town Convention on International Interests in Mobile Equipment and the associated Protocol on Matters Specific to Aircraft Equipment (the “Cape Town Convention”)?

No

The Netherlands has not ratified the Cape Town Convention although the Dutch Government had initially expressed its intention to do so. Currently, however, there are no plans to ratify the Cape Town Convention.

There are two Aircraft Registers:

• The Dutch Civil Aircraft Register (in Dutch: Nederlands Register voor Burgerluchtvaartuigen) kept by the Civil Aviation Authority of the Human Environment and Transport Inspectorate (in Dutch: Inspectie Verkeer en Waterstaat, divisie Luchtvaart)  (the "Nationality Register"); and
• The Dutch Aircraft Title Register (in Dutch: Register van Teboekgestelde Luchtvaartuigen) (the "Public Register").

4.4.1 Who is responsible for registering the Aircraft – is it an owner registry or an operator registry?

Both the Owner and the Lessee are responsible for the registration of the Aircraft in the Nationality Register, even though that register is an operator registry. Permits relating to the production of noise and pollution and certificates with respect to technical features are both issued by the Civil Aviation Authority. Both are required to be delivered for purposes of the registration of the Aircraft in the Nationality Register.

4.4.2 What details would normally be recorded on the Aircraft Register upon registration of an aircraft in the Relevant Jurisdiction? If not normally recorded, is it possible to record the Lease and/or an Aircraft Mortgage on the Aircraft Register?

Under Dutch law only:

• the ownership of an Aircraft;
• a right of mortgage created in respect of an Aircraft;
• the right to acquire an Aircraft pursuant to a sale and purchase agreement entered into or to be entered into by the by purchase combined with the holder of such a right's possession of the Aircraft;
• rights to possession of Aircraft under leases with a duration of at least six months,can be registered in the Public Register, provided the Aircraft is recorded in the Nationality Register.  

4.4.3 If the Aircraft Register is an operator register, is it possible to record the details of the aircraft owner/lessor and any financier with an Aircraft Mortgage?

Yes, it is possible to record the details of the aircraft owner/lessor and any financier to be recorded in the Nationality Register. Aircraft Mortgages that are governed by Dutch law must be registered in the Public Register once the Aircraft Mortgage has been executed by a civil-law notary in The Netherlands.

4.4.4 If the Aircraft Register is an owner register, is registration on the Aircraft Register definitive to determine ownership of the Aircraft?

Yes. The owner has the obligation to keep the registered owner information, as recorded in the Public Register, up-to-date.

4.4.5 Are any distinctions made between aircraft employed on international routes and those used purely for domestic flights?

No.

Registration of the Aircraft with the Nationality Register requires the filing of a form and numerous certificates/permits (on noise/pollution/technical features, etc).

Registration of the Aircraft in the Public Register requires the approval of the District Court in the Netherlands and the submission of a form in the Public Register. This form can only be filed by a civil-law notary registered in the Netherlands. The notary will require a power of attorney including a legalised signature and an apostil i.e. (if legalised outside the Netherlands). The District Court will charge approximately EUR 600 for its approval, the registration of the form with the Public Register costs approximately EUR 100.

There are no such restrictions in the Netherlands for the Public Register. The Nationality Register has requirements pertaining to the operator, relating to the operating permit as included in Regulation (EC) No 1008/2008 of the European Parliament and of the Council of 24 September 2008 on common rules for the operation of air services in the Community (Recast).

No. Although, there is some a debate with respect to the potential benefits of the registration of Aircraft in the Caribbean parts of the Kingdom of the Netherlands, since these parts have ratified the Cape Town Convention.

No.

Yes

In order to enjoy Geneva Convention protection, the Lease is required to be governed by Dutch law. It is common practice to register a one-page notarial deed stipulating a Lease governed by Dutch law, which refers to a detailed English law Lease attached to the Dutch law Lease in the form of an annex.
All responses below relate to such a registered Lease.

In order for the Lease to be valid and enforceable in The Netherlands, the Lease must be executed in the form of a notarial deed by a civil-law notary in the Netherlands, acting on behalf of the Lessor and the Lessee under two separate powers of attorney. These powers of attorney must be legalised and apostilled (if signed in another country than the Netherlands).

Filings with the Public Register must be made in Dutch.

However, the notarial deed can be executed in English, provided that a sworn-translation is made available as well. The Dutch translation of the deed must be registered with the Public Register. Nevertheless, the English language version of the deed will prevail.

The term of the Lease must be at least six months.

5.6.1 a secured loan?

No such legal precedents are known in the field of Aviation.

5.6.2 a finance (or capital) lease?

No such legal precedents are known in the field of Aviation.

Yes, the Public Register.

6.2.1 What documentation and/or consents are required for the registration of the Lease?

A notarial deed executed by a civil-law notary in The Netherlands on behalf of the Lessor and the Lessee on the basis of two powers of attorney.

If an Aircraft Mortgage is vested on the Aircraft, usually consent of the Mortgagee is required for the creation of the Lease.

6.2.2 What registration fees are payable (if any)?

The Public Register charges approximately EUR 200 per registration.

6.2.3 What information is recorded on the register? How is the eventual discharge of the Lease recorded?

The notarial deed, as referred to under 6.2.1, must include at least the details of the Lessee and the term of the Lease. It is possible to include additional information. However, since the deed will be registered in its entirety with the Public Register, all information included in such notarial deed will be available for third parties.

A Lease can be terminated pursuant to (i) the execution of a notarial deed entailing the discharge of the Lease by a civil-law notary, and (ii) the registration of such deed with the Public Register.
It is common practice that the Lessor grants a deregistration power of attorney at the start of the Lease.

6.2.4 Does any registration in respect of the Lease remain valid throughout the tenure of the Lease or does such a registration require periodic renewal? If renewal is required when must this be done and what is the approximate cost of renewal?

No periodical renewal of the registration is required.

Additional registration costs will only be accrued upon amendment of the Lease (in practice such amendments merely include a change of the parties to the Lease or the term of the Lease).
Dutch law does not know the concept of ‘novation’ of the Lease.

Registration can be updated retrospectively, if the term of the Lease at registration is still at least of six months. 

The Public Register would again charge approximately EUR 200 for updating the registration.

The Owner can take physical possession of the Aircraft due to its ownership. This remedy is generally available. The Lease as such is not an enforcement method under Dutch law. It is possible for the Lessee to apply for relief from forfeiture if it believes the action is disproportionate (but it is likely to have to make good any default) or if the repossession is not justified.

Responses hereafter relate to a Lease registered in the Public Register or governed by Dutch law.

No. If the Owner wants to take physical possession of the Aircraft, the Owner has to start legal proceedings against the Lessee (the “Main Proceedings”).

Next to Main Proceedings, the Owner has to obtain the permission of the competent Provisional Relief Court (in Dutch: voorzieningenrechter), before it may take physical possession of the Aircraft (the “Relief Proceedings”). The Owner has to start the Relief Proceedings with the Provisional Relief Court authorised in the district where the Aircraft is located or authorised in the district where the Aircraft is expected to land.

7.3.1 What documents would the Owner as lessor need to present in order to obtain possession of the Aircraft, both before and subsequent to judgment? Can documents be copies?

Main Proceedings start with a writ of summons (in Dutch: dagvaarding). During the Main Proceedings the Owner will have to provide evidence that (i) the Lease has been validly terminated, and that (ii) it is the rightful owner of the Aircraft. Documents which will be necessary to provide the required evidence will vary from case to case, but might include a copy of the Lease, evidence when payment was due and documents demonstrating non-payment, evidence of an event of default and/or evidence of service of a notice of default, an extract from the Public Register providing proof of the Ownership.
In order to start Relief Proceedings, the Owner has to submit an application (in Dutch: verzoekschrift) requesting for permission to take physical possession of the Aircraft to the authorised Provisional Relief Court. The Owner has to provide evidence that (i) it is the Owner of the Aircraft, and (ii) that the Aircraft is not subject to any prohibition to take physical possession (this requirement is only applicable to (a) Aircraft with the Dutch nationality, which is registered in the Public Register, and (b) Aircraft which has the nationality of one of the Member States of Rome Convention).

Once the permission of the Provisional Relief Court has been obtained, a bailiff will conduct the actual possession on behalf of the Owner. After the bailiff has taken possession over the Aircraft and during the Main Proceedings the air traffic control will prohibit the Aircraft from take-off. Furthermore, the Aircraft can be placed in a hangar or on a separate platform, preventing the Aircraft physically from take-off. Finally, the bailiff can take the Aircraft in judicial deposit (in Dutch: gerechtelijke bewaring), pursuant to which the Aircraft will be transported to a judicial custodian. The aforementioned restrictions will be eliminated, once the court has ruled in the Main Proceedings.

The bailiff must serve the report of seizure (in Dutch: proces verbaal), pursuant to which he has taken physical possession of the Aircraft, to the Owner.

If the place of residence of the Owner is located in a state where the Regulation (EC) No 1393/2007 of the European Parliament and of the Council of 13 November 2007 on the service in the Member States of judicial and extrajudicial documents in civil or commercial matters (service of documents), and repealing Council Regulation (EC) No 1348/2000 (the “Regulation”) applies, the report of seizure must be sent in accordance with the provisions of the Regulation.

The Convention on the service abroad of judicial and extrajudicial documents in civil or commercial matters 1965 (“Hague Convention”) remains applicable in the relations between the Netherlands and the states which are not bound by the Regulation, but which are party to the Hague Convention.
If the place of residence of the Owner is located outside the European Union, and the Hague Convention does not apply, the provisions of the Dutch Code of Civil Procedure (“DCCP”) apply.
Furthermore, the bailiff will register the official report with the Public Register.

In the Netherlands, courts are free to assess the value of most evidence provided by the parties. Only authentic deeds and judgments have conclusive evidentiary value (in Dutch: dwingende bewijskracht).
If the Aircraft is not located in the Netherlands, but is located in a state that is a party to the Rome Convention it is debated whether a court order on seizure of the Aircraft would be enforceable in such state. In this respect, stipulations protecting the interests of the Lessor which are included in the Lease can be of importance.

7.3.2 What is the approximate cost of issuing proceedings? 

An estimate of the costs depends on the structure of agreements and response of the Lessee.

7.3.3 Would the Owner be required to provide a bond, guarantee or other security in order to issue proceedings? 

The Owner does not have to provide any security prior to the legal proceedings taking place. However, the Owner must reimburse the Lessee for any losses if (i) the Owner levied an attachment contrary to the specific provisions regarding attachments on Aircraft (e.g. when an attachment is levied on an Aircraft contrary to a legal prohibition), or if (ii) the Owner has levied the attachment without any reasonable grounds.

7.3.4 What is an estimate of the normal duration of possession proceedings from time at which all required documentation is made available – if uncontested?

The Provisional Relief Court has to grant its approval during the Relief Proceedings before the Owner may take physical possession of the Aircraft. The Provisional Relief Court decides upon the request of the Owner and after having conducted a concise investigation.

In principle, the Airline cannot contest the request of the Owner during the Relief Proceedings. However, the Airline can contest the attachment during the Main Proceedings or during separate preliminary relief proceedings (in Dutch: kort geding). The duration of the Main Proceedings depends on the circumstances of the specific case. The processing time in the first instance will often last up to a year (subject to any additional (procedural) complexities or other reasons for delay on the side of parties or court). Appeal with the Court of Appeal and appeal in cassation with the Supreme Court usually take longer than a year each. The preliminary relief proceedings can be started at short notice. The duration of such proceedings will vary between a few days (in case of immediate urgency) and approximately six weeks.

7.3.5 What is an estimate of the normal duration of possession proceedings from time at which all required documentation is made available – if contested?

Please be referred to answer 7.3.4. 

7.4.1 Is there a waiting period before action may be taken?

There is no set period of time but if there is no risk of loss or damage to the Aircraft, the Lessee should in general be notified of the default and given a reasonable period of time to remedy the default before action to repossess is taken. Naturally, the Lease could stipulate the possibility of an immediate repossession.

7.4.2 Is there a long stop date by which action must be taken?

According to Dutch law the right to take action prescribes after five years if not pursued within that period.

7.4.3 Is a Public Auction of the aircraft required?

No. This would be required at a seizure by a mortgagee or third party.

There are practical issues such as clearance to repossess an Aircraft which is “airside” at an Airport, as well as the possibility to move or store the Aircraft at the Airport. Generally a specialist aviation consulting firm with familiarity of such issues is used to effect repossession. There is, however, no formal permission required – simply compliance with ground security and similar requirements.

Yes, we are aware that there have been successful repossessions in the Netherlands. Practical issues such as obtaining permits/certificates and possibilities for storage or transport of the Aircraft and/or Engines can be challenging.

It is possible that sums remain unrecoverable in case the Airline has been declared bankrupt. When the Lessee has been declared bankrupt, both the bankruptcy trustee and the Lessor may terminate the Lease taking into account a common term of notice for such leases.

The bankruptcy trustee will divide the bankruptcy estate among all creditors. The rental claims of the Lessor accrued after the bankruptcy (in Dutch: boedelvorderingen) will be paid out of the bankruptcy estate immediately. The rental claims accrued before the Lessee has been declared bankrupt (in Dutch: concurrente vorderingen) may remain unrecoverable, since these claims have a low priority in the bankruptcy estate.

The Owner is free to sell the Aircraft at any time (subject to the Lease if the Lease has not been terminated pursuant to the occurrence of a default). Contractually the Lease could restrict the Owner’s ability to sell the Aircraft or to assign the Lease but this is rather a matter of contract than a matter of law.

After the Owner has repossessed the Aircraft, there are no export restrictions which prohibit the Owner from exporting the Aircraft.

The Owner can apply for deregistration from both the Public Register and the Nationality Register at any time.

The Nationality Register will deregister the Aircraft from the Nationality Register on its own initiative if the actual operator does not qualify for registration purposes.

In order to deregister the Lease from the Public Register the consent of the Airline is required. As an alternative the consent can be given by way of a court order. However, it is common practice to have a power of attorney for deregistration in place. The Lessee provides such power of attorney at the start of the Lease.

As a matter of custom, the consent of the Lessee is also required for deregistration of the Aircraft from the Nationality Register.

If all powers of attorney and notarial deeds have been prepared, deregistration from the Public Register and subsequently from the Nationality Register should be possible in one day.
However, due to the limited opening hours of the Public Register, it is common that one working day lapses between the execution of the document and the filing with the Public Register.

Export licences are not required for all goods and generally there are no requirements for a licence to export civil Aircraft if there is no military end use. If UN and/or EU sanctions have been implemented by the Dutch government there may be a complete prohibition on export to an affected country. Alternatively, an export licence may be required.

If an Export Licence is required, most licences are granted within 2 months. However, depending on whether the relevant ministry has to be consulted by the customs authority, this may take up to 4 months. There are no costs involved for the party requesting the export license.

If communicated with the Nationality Register the certificate of deregistration can be prepared in advance. However, the Nationality Register will only issue such certificate upon deregistration. The Nationality Register is in direct contact with Civil Aviation Authorities in most countries. As a result it can confirm that deregistration has taken effect.

Such a power of attorney will be enforceable (although no specific legal precedents are known in this respect). However, the Dutch courts can always rule differently on the basis of general legal principles, such as reasonableness and fairness (in Dutch: redelijkheid en billijkheid).
Please note that the notary requires a subsequent power of attorney for deregistration from the Public Register, which has to be governed by Dutch law.

In general such power of attorney cannot be revoked. However, the Dutch courts may rule differently on the basis of general grounds such as reasonableness and fairness.

Under the Dutch law an irrevocable power of attorney terminates upon the principal having been declared bankrupt.

9.1.1 Would the airline be required to file for insolvency protection?

No, the Airline is not required to file for its own bankruptcy. However, the directors of the Airline must undertake everything to minimise losses to creditors, which may or may not involve ceasing to trade. Failure to take such steps can lead to personal liability of the directors.

9.1.2 Do the available forms of insolvency protection in the Relevant Jurisdiction involve the appointment of either an officer of the court or a specifically court appointed official to take control of the Airline (an Insolvency Official) while in insolvency protection?

Yes, the court appoints two insolvency officials: 

• a supervisory judge (in Dutch: rechter-commissaris), who will supervise the liquidation process, and 
• a bankruptcy trustee (in Dutch: curator), who is trusted with the administration and liquidation of the bankruptcy estate. It is not possible to influence the court with respect to the appointment of these two officials.

9.1.3 Does the Insolvency Official have authority to negotiate and reach agreement with the Owner in relation to matters such as the payment of unpaid rent, continuation or termination of the Lease and repossession of the Aircraft without the need for court approval?

Once the Lessee has been declared bankrupt, the bankruptcy trustee is exclusively authorised to act on behalf of the bankruptcy estate. As a result the bankruptcy trustee can decide on continuation or termination of the Lease on behalf of the estate.

During a bankruptcy, strict rules apply with respect to the payment of creditors. Rental claims accrued after commencement of the bankruptcy, qualify as estate claims (in Dutch: boedelvorderingen). Rental claims accrued before the commencement of the bankruptcy qualify as unsecured claims (in Dutch: concurrente vorderingen). Different regimes apply to both types of claims. The bankruptcy trustee shall liquidate the assets and divide their proceeds accordance with statutory priority rules.
During the bankruptcy, the supervisory judge may declare a cooling-off period (in Dutch: afkoelingsperiode) in order to enable the bankruptcy trustee to make an inventory of the estate. A cooling-off period can be declared for a period of two months and may be extended with another two months. The cooling-off period affects the rights of all creditors. During such cooling-off period the Owner will not be allowed to take physical possession of the Aircraft without the consent of the supervisory judge.

9.1.4 Does the commencement of insolvency protection involving the appointment of an Insolvency Official in the Relevant Jurisdiction have the effect of prohibiting the Owner from taking the following actions to enforce the lease after commencement of such protection:

• applying any security deposit held by the Owner against any unpaid amounts due under the Lease? The Owner may set-off unpaid lease instalments against such security deposit. The Owner may also set-off lease instalments accrued after termination of the Lease with a maximum of three months. Further lease instalments or damages resulting from early termination of the Lease cannot be off-set against the security deposit.
• accepting payment of rent or other lease payments from:
  • i. the Airline? If the Lease has not been terminated, the bankruptcy trustee will pay the Owner on behalf of the bankruptcy estate of the Airline. The Lessee may accept these payments.
  • ii. a guarantor? Yes, the Lessor can accept payments (e.g. lease instalments or damages) from third parties if this has been agreed between the third party and the Lessor. Payments by third parties may have negative effects on potential rights of recourse of the third party towards the bankruptcy estate.
  • iii. a shareholder? Please be referred to answer 9.1.4 (b).
• giving notice of default under the lease? Yes, the Owner may give a notice of default. However, giving notice of a default is not a requirement for termination of the Lease by the Lessor in case the Lessee has been declared bankrupt.
• obtaining a judgment or arbitral award for unpaid lease payments? The Owner cannot start legal proceedings against the Airline. If the Owner wants to receive payment for its claim, it has to file its claim with the bankruptcy trustee. The bankruptcy trustee will assess the claim and will either recognize or contest such claim. Afterwards, the claim will be discussed during the creditors’ meeting (in Dutch: verificatievergadering), during which the trustee and the other creditors can dispute each claim filed with the bankruptcy trustee. If no consent is reached during the meeting, the disputed claims will be dealt with by a court during separate legal proceedings (in Dutch: renvooiprocedure).
• giving notice to terminate the leasing of the Aircraft? Yes, the Owner may terminate the Lease.
• exercising rights to repossess the Aircraft? Yes, it is possible to take physical possession over the Aircraft. However, as set out in paragraph 9.1.3, a cooling-off period may be declared pursuant to which the Owner may be limited in its possibilities repossess the Aircraft during the cooling-off period.

 9.1.5 Can the commencement of Insolvency Proceedings have retrospective effect in relation to any such actions taken before commencement? If so, for what period can there be a look back?

The bankruptcy has retrospective effect until 00.00 of the day of commencement of the bankruptcy. Furthermore the bankruptcy trustee may terminate any legal act commenced by the debtor without it having a legal obligation to do so of which the debtor knew or ought to have known when performing such legal act that such act would cause damage to its other creditors. However, if such legal act has been commenced in favour of a third party who paid in return, the bankruptcy trustee may only terminate the legal act if the third party had the same knowledge with respect to prejudicing the interests of other creditors. The knowledge with respect to prejudicing other creditors interests is presumed to exist, if the voluntary legal act was performed within one year before commencement of the bankruptcy.

The bankruptcy trustee may terminate legal acts involving payment of claims pursuant to a due debt in two situations: (1) if the creditor knew that a party had filed a request for bankruptcy at the time of the payment by the debtor, or (2) if the payment is the result of an agreement between the creditor and the debtor with the purpose to favour a creditor over the other creditors.

As a result of the termination of the legal acts the goods/ moneys involved will be retransferred to the bankruptcy estate.

If the goods/moneys have been obtained by a third party in the meantime, these goods/moneys can only be retransferred to the bankruptcy estate if the third party knew that the creditors of the debtor were prejudiced by the actions of the debtor. However, if the third party obtained the goods/moneys in good faith (in Dutch: te goeder trouw), it will be protected against any such actions from the bankruptcy trustee. 

9.1.6 Is there, either under law or as a matter of practice in the Relevant Jurisdiction, a period of time within which the Insolvency Official will either “adopt” the lease and pay rent and other lease payments as an expense of the insolvency or “reject” the lease and permit the Owner to enforce such rights as it may have under the lease? 

If the bankruptcy trustee wishes to adopt the Lease, he will inform the Lessor of his intentions to do so as soon as possible. If the bankruptcy trustee wishes to end the Lease it will have to take a notice period of three months into account. The same notice period has to be taken into account if the Lessor wishes to end the Lease.

9.1.7 If the lease is “adopted” will the Insolvency Official also pay any unpaid lease payments due as at commencement of the insolvency protection? 

The lease instalments due as at the commencement of the bankruptcy of the debtor will qualify as unsecured claims. These claims can be filed with the bankruptcy trustee, who will deal with these claims in the manner as set out in paragraph 9.1.3.

9.1.8 If not or if the lease is “rejected”, would the Owner’s claim for any outstanding sums rank equally with other ordinary unsecured creditors of the Airline? 

The Lease instalments qualify as unsecured claims. Such claims have a low priority in bankruptcy proceedings. The unsecured rental claims rank equally to other unsecured claims.

9.1.9 Are there certain types of preferred creditors whose claims will rank above claims of the Owner? 

Yes. Creditors with estate claims (e.g. bankruptcy costs and other claims accrued after commencement of the bankruptcy) are the highest ranking claims. The bankruptcy trustee will pay these creditors directly and in full (if possible) out of the bankruptcy estate.

The preferred creditors (e.g. the tax authorities, the Employee Insurance Agency, employees) will be paid by the bankruptcy trustee out of revenues of the liquidated assets. After deduction of the estate claims and the preferred claims, the remainder will be used for payment of the lower ranking claims: the unsecured claims.

Furthermore, the secured creditors (i.e. mortgagees / pledgees / retentors) may foreclose their rights and liquidate the corresponding assets as if no bankruptcy proceedings had been commenced. The secured creditors will be remunerated from these proceeds. Any surplus will fall in the bankruptcy estate.

9.1.10 If the Aircraft is in the possession of a person other than the Airline at the commencement of Insolvency Protection of the Airline, for example an independent maintenance facility, will such person be entitled, under the laws of the Relevant Jurisdiction, to assert a lien arising under law or contract over the Aircraft in respect of amounts then due and unpaid to such person by the Airline? 

No, such provisions only apply to goods which fall in the bankruptcy estate. The Airline is owned by the Lessor, therefore the Aircraft will not be subject to such provisions.

9.1.11 Is a person other than the Airline, for example an airport authority, entitled under the laws of the Relevant Jurisdiction to seize possession of the Aircraft after commencement of Insolvency

Protection and assert a lien arising under law or contract over the Aircraft in respect of amounts then due and unpaid to such person by the Airline. 

Please be referred to the answer in paragraph 9.1.10.

10.1.1 the Owner is incorporated and is tax resident in Ireland?

No

10.1.2 the Owner is incorporated and is tax resident in the United Kingdom?

No

10.1.3 the Owner is incorporated and is tax resident in Hong Kong?

No 

10.1.4 the Owner is incorporated and is tax resident in Singapore?

No 

10.1.5 the Owner is incorporated and is tax resident in Malta?

No

10.1.6 the Owner is incorporated and is tax resident in the Channel Islands?

No

10.1.7 the Owner is incorporated and is tax resident in the Isle of Man?

No

10.1.8 the Owner is incorporated and is tax resident in Mauritius?

No

10.1.9 the Owner is incorporated and is tax resident in Bermuda?

No

10.1.10 the Owner is incorporated and is tax resident in the Cayman Islands?

No

Yes, but taking into account our response to Question 10.1 this does not seem to be relevant.

10.3.1 New lease to airline operating for reward chiefly in domestic routes: VAT will be applied to lease rentals at current rate:

21%

10.3.2 New Lease to airline operating for reward chiefly on international routes: VAT will not be applied to lease rentals by reason of application of exemption:

0%

10.3.3 Sale of aircraft by an aircraft lessor to another aircraft lessor of an aircraft subject to a lease to an airline operating for reward chiefly in domestic routes: VAT will be applied to the purchase price. If the seller and the purchaser are both EU entities and the purchaser supplies its EU VAT Number to the seller then the VAT charge will be a reverse charge. Otherwise VAT will be applied to purchase price at current rate:

21%

10.3.4 Sale of aircraft by an aircraft lessor to another aircraft lessor of an aircraft subject to a lease to an airline operating for reward chiefly on international routes: VAT will be applied to purchase price:

No

10.3.5 If no, is this because of application of the exemption under Article 148(f) to the airline following the decision in ECJ Case C-33/2011?

Yes

10.3.6 Is this because of application of the exemption under Article 148(f) to the airline following the decision in ECJ Case C-33/2011?

No, because of earlier Dutch regulation.

10.3.7 If the transaction involves the first importation of the aircraft into the EU (and assuming the aircraft is intended for use as a civil and not military aircraft) what rate of Customs Duty will apply?

Generally 0%

The Lease can be registered in the Public Register (see our response to Question 5 Leases). Besides costs to execute the notarial deed before a notary in The Netherlands, the Public Register charges app. EUR 200 on registration fees.

No.

Relevant Jurisdiction taxation consequence of the Owner:

10.6.1 being owner and lessor of an aircraft registered in the Relevant Jurisdiction and operated/leased by a company incorporated or registered in the Relevant Jurisdiction?

No.

10.6.2 making available a lease facility to a company incorporated or regulated in the Relevant Jurisdiction?

No.

10.6.3 receiving rent and other lease payments under the Lease from the lessee incorporated or registered in the Relevant Jurisdiction?

No.

10.6.4 repossessing the aircraft and exporting the aircraft from the Relevant Jurisdiction?

No.

10.6.5 selling the aircraft at a profit, whether such sale is after repossession or is subject to the Lease and the lessee’s rights?

No Dutch corporate income tax is due by the Owner under the assumption that the Owner does not have a permanent establishment in the Netherlands. The sale of an Aircraft (or parts thereof) and Aircraft equipment within the Netherlands is generally subject to Dutch VAT. However, if the Aircraft is used by Airlines operating for reward chiefly on international routes, the supply may be zero-rated for VAT purposes.

N/A

N/A

Regulation (EC) No. 785/2004 of the European Parliament and of the Council of 21 April 2004 on insurance requirements for air carriers and aircraft operators, which is applicable in the Relevant Jurisdiction, provides that air carriers and Aircraft operators are legally required to be insured as regards their aviation-specific liability in respect of passengers, baggage, cargo and third parties. The regulation provides the minimum insured amounts for the different categories. The insured risks shall include acts of war, terrorism, hijacking, acts of sabotage, unlawful seizure of Aircraft and civil commotion. There is no requirement that the risk is placed with insurers or underwriters in the Relevant Jurisdiction.

N/A

N/A

It is possible for an insurer in the Relevant Jurisdiction to assign a contract of reinsurance. If the contract of reinsurance contains a clause giving a third party (the insured) the right to claim (directly) under the reinsurance policy, this clause will make the third party a party to the contract of reinsurance as soon as the third party unilaterally accepts the right by notifying one of the parties of the reinsurance contract of its acceptance. Unless the contract of reinsurance provides otherwise, the stipulator (reinsured) under the reinsurance contract can retract the third party clause (in Dutch: derdenbeding) until the third party clause is accepted by the third party.

Dutch law draws a distinction between the concepts of "owner" and "carrier". A carrier is subdivided into "actual carrier" and "contracting carrier". According to Dutch law both may be held liable under certain circumstances for any damage or loss caused by the Aircraft. The Netherlands is a party to the Convention for Unification of Certain Rules for International Carriage by Air ("Montreal Convention"). The concepts of "actual carrier" and "contracting carrier" are incorporated in the Montreal Convention. Both may be held liable in certain circumstances. However, the Owner of an Aircraft may be held liable through tort law if the act which caused the loss or damage may be attributed to him. This obviously depends on the nature and basis of the liability. Furthermore, the contract between the owner and Airline is important in this matter (in case the parties included provisions about liability in the contract).

Strict liability is a form of liability that is not based on an act or omission but on a certain role or title. It implies that one is liable for the damages suffered by another without the existence of culpability. Dutch law does not impose a strict liability of the innocent Owner for faults or omissions of the Operator/Lessee.

Attachment of the Aircraft is possible and might result in the sale of the Aircraft. Please be referred to the answers to Question 7.

The Dutch tax authorities may seize goods (which can include an Aircraft) for unpaid taxes. If the unpaid taxes are not paid within a short period after the seizure, the goods may be sold in a public auction. The tax authorities may not seize and sell goods (including an Aircraft) which are owned by a person other than the person with the tax debts. As a consequence a leased Aircraft cannot not be seized and sold in connection with the Airline's unpaid taxes. This would be different if the Owner would be liable for unpaid taxes of the Lessee, but this very unlikely to happen.

No, see 14.1.

The Dutch Supreme Court has accepted the doctrine of relative immunity. The starting point is state immunity. There are currently no Airlines in the Netherlands which are entitled to sovereign or other immunity. The issue is more relevant in relation to Airlines which are registered in another state. We recommend obtaining specific local law advice in such circumstances.

Again, if a transaction with a party which is entitled to sovereign or other immunity is contemplated, we recommend obtaining specific local law advice.

There are no statutory provisions of Dutch law that prohibit asymmetric submission to jurisdiction clauses. Furthermore, the parties in the Netherlands have freedom of contract. Since Dutch law constitutes freedom of contract it is possible to rely on asymmetric submission to jurisdiction clauses.
However, the Court has discretion to choose a jurisdiction in case the requested jurisdiction has no connecting factor with the parties (unless both parties have appointed a judge by contract to have exclusive jurisdiction in a case).

The Netherlands and the UK are both parties to Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the "Brussels Regulation"). 

Article 39 of the Brussels Regulation provides the following: judgments of a member state which are enforceable in that member state also enjoy enforceability in the other member state without a declaration being required. 

Article 41 of the Brussels Regulation refers as a general rule to the law of the requested member state to regulate the enforcement procedure of the judgments given in another state, which shall be executed under the same conditions as a purely domestic decision.

To facilitate the enforcement of foreign resolutions within the EU, the Brussels Regulation provides for a standard form in Annex 1. At the request of the interested party the court shall issue a certificate in the form of Annex 1. The applicant has to submit the form to the competent authority of the member state where enforcement is to take place, together with a copy of the judgment which satisfies the requirements for it to be considered authentic. 

Judgements from English courts can therefore be enforced directly in the Netherlands, without a declaration of enforceability. The person against whom enforcement is sought is entitled to apply for refusal of the recognition or enforcement of a judgment.

The Netherlands is a party to the New York Convention and Washington Convention and will recognise and enforce foreign arbitral awards.

The party concerned may choose between application of the provisions of the DCCP or the provisions of the New York Convention. As the Netherlands have opted for reciprocity, awards rendered in a state that has not ratified the New York Convention may only be enforced on the basis of the rules of the DCCP. Provisions of the DCCP provide for nearly identical provisions as the New York Convention with respect to refusal of recognition and enforcement.

Dispute resolution choices vary from company to company. 

Yes. See 17.2 and 17.3, significant changes are required in relation to Aircraft Engines. 

No. This is a well-known problem for which protection should be sought (e.g. by creating a mortgage over the Aircraft, which automatically includes a right of mortgage over the Aircraft Engine, or by creating a right of pledge over the Aircraft Engine under the condition of detachment).
A right of mortgage over the Aircraft might as well include a right of pledge over the spare parts after these have been detached (including the Aircraft Engine).

There is no separate register. Aircraft Engine serial numbers are registered in the Public Register. In practice, this registration is hardly ever updated if Aircraft Engines are changed.