Aircraft finance and leasing in Czech Republic

The Aircraft will be purchased by the Owner and leased on an operating lease basis to the Airline pursuant to the Lease.

 Is this is the usual structure for transactions of this nature in the Relevant Jurisdiction?
Yes. The purchase of the Aircraft by a leasing company with a subsequent operating lease is the prevailing structure for transactions of this nature. Although there have been cases of direct purchases of aircraft in recent years, it is not considered a prevailing trend in the Czech Republic.

Yes.

The applicable register is the Insolvency Register (the “IR”) maintained by the relevant regional court (the court where the company has its registered office). Searches can be carried out online for free as the IR is accessible through a public web portal. An official extract concerning a certain legal entity can be obtained, among others, through a notary for a small fee.

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

Pursuant to Act No. 49/1997 Coll. on Civil Aviation (the “ACA”), the agreement through which the ownership title is transferred must be executed in the written form.

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

The ACA prescribes that the transfer must be registered in the Czech Aviation Register (the “Czech Aviation Register”) to become effective vis-à-vis third parties as a right in rem. Furthermore, if the aircraft is subject to a pledge, the pledgee’s consent must be obtained.

The ACA does not contain specific provisions governing the transfer of aircraft engines or specific aircraft parts (being in each case separated from the airframe), but such transfer would be generally effective on the agreement of the parties.

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. This is because under the applicable provisions on conflict of laws, the transfer of the aircraft is governed by the laws of the country where the aircraft is registered. Therefore, the actual location of the aircraft at the time of its transfer is irrelevant.

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

Generally, VAT applies to the supply of an aircraft to the Czech Republic. However, the airline will be exempted from this VAT duty if the aircraft is designated to serve on international routes. The same applies to the repair, modification, maintenance and lease of such aircraft or devices installed in it.

Additionally, profit from the sale of an aircraft is subject to income tax unless the aircraft is owned by an individual and is sold later than one year following its acquisition.

In specific statutory defined emergency situations (natural disasters, war etc.), the Czech government is entitled to expropriate any asset, including aircraft or, otherwise restrict the owner’s disposal right. Nevertheless, compensation must be paid.

From the tax law perspective, the tax authorities may secure the debts arising from unpaid taxes through the unilateral establishment of a pledge on the property of the debtor.

In criminal proceedings, the seizure of goods may be imposed as a result of conviction of various crimes such as money laundering and the reduction/curtailment of taxes.

The ownership title may also be defeated by the retention right of the possessor of the aircraft to secure the debt that arose in connection with the aircraft. For example, the repairer may retain the aircraft until the owner fulfils its obligation to pay the price for the agreed services.

Regarding the rights of the national Civil Aviation Authority (the “CAA”), it is entitled to seize the Certificate of Airworthiness if the aircraft does not meet the conditions of airworthiness.

The Chicago Convention of 1944 on International Civil Aviation?
Yes

The 1948 Geneva Convention on the International Recognition of Rights in Aircraft?
Yes

The 1933 Convention for the Unification of Certain Rules Relating to the Precautionary Arrest of Aircraft?
No

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 EU acceded to the Cape Town Convention and therefore the Czech Republic is bound by certain specific provisions where the EU has exclusive competence.

Official negotiations on the accession of the Czech Republic to the Cape Town Convention were stopped several years ago due to a lack of political consensus at the governmental level. There is no indication the negotiations will recommence in the near future.

Furthermore, please note that the EU acceded to the Cape Town Convention as a Regional Economic Integration Organisation in 2009. However, the Czech authorities do not seem to derive any practical or legal consequences of this, as the implications of the Convention are not taken into account and the applicability of the Convention in the Czech Republic is not recognised by the relevant civil aviation authorities (CAA).

Yes, the Czech Aviation Register maintained by the CAA.

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

The respective application may be filed by either the owner or operator (e.g. lessee if applicable) of the aircraft. It can therefore be assumed that the Czech Aviation Register is rather of a hybrid nature.

4.5.2 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?

Details concerning both owner and operator (if applicable) must be recorded. Regarding the details of the aircraft itself, its registration mark, aircraft type and MSN, aircraft pledge (if applicable), aircraft address (if assigned) and date of registration/deregistration must all be entered into the Czech Aviation Register. Furthermore, additional technical information such as the identification of the manufacturer and maximum take-off weight must also be registered. The lease of the aircraft is not subject to registration. On the other hand, the lessor of the aircraft would typically be recorded as the operator.

4.5.3 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?

It is possible to record details on both the owner, the operator and the aircraft pledge, including the pledgee.

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

The registration of an owner in the Czech Aviation Register certifies the ownership of the aircraft vis-à-vis third persons. The good faith of third parties acting in reliance of the registration is protected by law.  

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

Not relevant for registration purposes.

The scope of required documentation depends on the type of registration proceedings. In usual aircraft transactions, the required documents must include in particular: (i) extract from the Commercial Register evidencing the existence of an owner/operator; (ii) documents evidencing the owner’s title/operator’s legal title to the aircraft (i.e. purchase agreement, lease agreement); (iii) insurance certificate; (iv) document evidencing the existence of the aircraft pledge; (v) confirmation that the aircraft is not registered in another jurisdiction (only in case of supply of an aircraft from abroad). All documents need to be submitted at least in the form of verified copies.

No.

No.

The aircraft pledge must be recorded in the Czech Aviation Register to become perfect. The application itself must, among others, specify the parties, secured debt and identify the relevant aircraft.

Furthermore, the application needs to be accompanied by the original/verified copy of the pledge agreement.

Yes.

Generally yes, as the parties are free to choose the applicable law and the choice of English law would be respected. However, in certain situations, the choice of English law will not prejudice the application of mandatory provisions of the Czech and EU law, and the application of English law must not prejudice Czech public policy principles.

No, there are no specific local requirements.

N/A

There are no special mandatory terms that the aircraft lease agreement must contain. However, due to the complexity of aircraft leases it is advisable to seek legal advice from a local law firm experienced in dealing with such matters.

5.6.1 a secured loan?

We are unaware of any substantial case law indicating the basis for the re- characterisation of lease (sale and financial lease back) as a secured loan. On the other hand, sale and financial leaseback transactions have been disputed in the context of tax laws. In this regard, case law generally does not deem sale and lease back as an unlawful tool to disguise a different type of transaction to reduce the tax burden.

However, in specific circumstances (e.g. repeating such transaction with the same goods contrary to its true economic substance), liability for a tax reduction may arise.

5.6.2 a finance (or capital) lease?

Generally no; however, an operating lease may be re-characterised a finance lease for Czech tax purposes (if applicable) if it meets the conditions of finance lease as set out in the tax laws.

No.

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

Please see our responses relating to section 4 above.

6.2.2 What registration fees are payable (if any)?

The registration fee for one aircraft depends on the maximum take-off mass of the aircraft. The registration fee is CZK 8,000 for aircraft with maximum take-off mass exceeding 10 tonnes, and CZK 3,000 for 10 tonnes and less.

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

Please see our responses relating to section 4 above.

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 periodic renewal is required. The operator of an aircraft entered in the Czech Aviation Register, the owner of the aircraft, the pledgee and the persons affected by the entry in the Czech Aviation Register are obliged to promptly notify and submit to the CAA any changes to the data entered in the Czech Aviation Register.

Yes, such option can be agreed in the aircraft lease agreement.

In general, the owner is entitled to take physical possession of the leased goods without judicial proceedings provided such enforcement method is granted in the lease agreement. However, the owner can take only legal measures to do so. If the operator refuses to hand over the aircraft to the owner, the owner should proceed with legal proceedings.

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?

The Owner would need to prove ownership of the aircraft and valid termination of the lease. If the aircraft is not handed over voluntarily, the owner may start enforcement proceedings, for which the relevant court decision will be required. Generally, originals of documents must be provided.

7.3.2 What is the approximate cost of issuing proceedings?

This is different on a case-by-case basis and depends on the circumstances of each case.

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

No, but since the proceedings would be normal court proceedings a court fee would have to be paid.

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?

Usually three to 12 months.

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?

Usually nine to 24 months.

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

There is no statutory waiting period before action to repossess is taken. The period may be prescribed under the terms of the lease agreement.

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

There is a general limitation period of three years following the date the lessor has learnt it is entitled to repossess the goods (aircraft) (i.e. the conditions for repossession stipulated under the lease agreement were fulfilled). However, the right of repossession must be exercised within ten years following the date of its maturity.

7.4.3 Is a Public Auction of the aircraft required?

No.

No formal permission by any official body is generally required in aircraft lease repossessions.

We are aware of the repossession of two aircraft by an owner from a lessee in 2023 in the Czech Republic. The owner faced no particular issues with the repossession (no judicial proceedings were needed).

 There are no specific issues with unenforceability relating to sums or obligations under aircraft lease agreements compared to other general contractual obligations in the Czech Republic. Payment and non-payment obligations awarded by a court decision are generally enforceable in the Czech Republic. The enforceability of foreign court decisions and foreign arbitration awards may be limited or may require further formal steps to become enforceable in the Czech Republic.

Generally, the lessor is allowed to transfer the ownership title to the property under the lease agreement without restrictions (unless otherwise agreed in the lease agreement). Furthermore, insolvency or enforcement/execution proceedings against the lessee also do not impose such restriction.

Pursuant to Czech insolvency law, once a decision on the lessee’s insolvency has been issued, the lessor is not entitled to terminate the lease agreement due to the lessee’s delay with rental payments or other considerations that arose before the decision on the insolvency or due to the deterioration of the lessee’s property situation. On the other hand, the insolvency administrator may freely terminate the lease agreement on behalf of the lessee despite the lease agreement stating otherwise.

There are generally no restrictions that would apply to re-export. Please note that restrictions would apply in re-export to a particular country at a particular time (e.g. to a country subject to sanctions). An Export Certificate of Airworthiness is required except for exports between EU Member States).

Yes, the owner can apply for deregistration of the aircraft. There is no specific time period within which such application should be made, however the law requires that the persons affected by the entry in the Czech Aviation Register, including the owner and the operator, are obliged to promptly notify and submit to the CAA any changes to the data entered in the Czech Aviation Register.

According to the ACA, if the aircraft is not to be sold in enforcement proceedings, the CAA may delete the aircraft from the Czech Aviation Register only if all the holders of the rights relating to the aircraft entered in the Czech Aviation Register (including the operator and the pledgee) have consented to the deletion.

The deletion of the registration of a pledge on an aircraft is carried out by the CAA at the request of the pledgee or on its own initiative on the basis of a document proving the termination of the pledge.

If the application for deregistration is filed by the operator, the owner’s consent is required.

If both parties co-operate, the proceedings will take approximately ten days. In general, the CAA is obligated to carry out deregistration within 30 days (in difficult cases, this may be increased to 60 days).

Aircraft should not be subject to export licences/permits as long as they are used only for civil aviation purposes and no international sanctions apply.

N/A

No.

Generally, a power of attorney from the operator where the operator’s consent is required under the ACA may be considered problematic by the CAA. However, if the termination of the lease is demonstrated to the CAA, as a result of the lease term end or successful repossession, the consent of the operator (and the relevant power of attorney) should not be required for deregistration.

Will the courts recognise a power of attorney in the form of an IDERA and governed by English law?

A power of attorney governed by English law will be recognised but must also conform with Czech law requirements (regarding the identification of the parties, etc.). However, we do not have any experience with IDERA. As the Czech Republic is not a direct signatory to the Cape Town Convention, the representatives of the CAA confirmed to us that they are also not familiar with IDERA.

Generally, irrevocability may not be fully enforceable as Czech law does not recognise a fully irrevocable power of attorney. On the other hand, it is allowed to agree on exclusive reasons for which the power of attorney can be revoked. If the power of attorney is required to be irrevocable, we recommend that the parties choose English law as the governing law. We also note that any procedural power of attorney (for registration or deregistration of the aircraft) may be granted to one individual (attorney) at a particular time only.

On the occurrence of bankruptcy and appointment of an insolvency administrator, the power of attorney ceases to apply.

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

Yes, an entity (its statutory body) is obliged to file for its insolvency without undue delay once the conditions of insolvency are met. If the petition is not filed or is filed late, the personal liability of the statutory body might arise.

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. However, the extent of an Insolvency Official’s powers depends on the method of the resolution of the insolvency. In the case of bankruptcy, the Insolvency Official has all the disposal rights to the assets of the insolvent company, while in reorganisation their role is only supervisory.

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?

In the case of bankruptcy, an Insolvency Official has the authority to negotiate and agree with the Owner regarding the above-mentioned matters. In some cases, the consent of the creditors’ committee and/or the insolvency court may be required.

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:

• (a.) Applying any security deposit held by the Owner against any unpaid amounts due under the Lease? The possibility to set off the due debts against the security deposit depends mainly on the stage of insolvency proceedings. In general, until the issuance of a decision on insolvency, set off is not restricted. However, set off is banned in the moratorium or in reorganisation unless the court issues a preliminary measure enabling the creditor to take such action. After the decision on insolvency is issued, set off is generally permitted (although certain exceptions may apply).
• (b.) Accepting payment of rent or other lease payments from:
  1. (i.) the Airline? It is allowed to accept payments under the lease agreement for the period following the declaration of insolvency (the Airline will not be entitled to pay the pre-insolvency obligations, including the rent and other lease payments).
  2. (ii.) a guarantor? There is no restriction on claiming the due debts against the guarantor alongside the insolvency proceedings.
  3. (iii). a shareholder? There is no limitation on accepting payments from the shareholder.
• (c.) Giving notice of default under the lease? A notice of default may be given.
• (d.) Obtaining a judgment or arbitral award for unpaid lease payments? •    After the commencement of insolvency proceedings, unpaid lease payments cannot be enforced through court or arbitral proceedings. The receivables must be claimed only through application filed with the relevant insolvency court.
• (e.) Giving notice to terminate the leasing of the Aircraft? The commencement of insolvency proceedings itself does not affect the owner’s right to terminate the lease agreement, however the owner’s right to terminate the lease agreement may be substantially limited once insolvency is declared.
• (f.) Exercising rights to repossess the Aircraft? The commencement of insolvency proceedings itself does not affect the owner’s contractual rights (such as lease termination and subsequent repossession); however, the owner’s right to terminate the lease agreement (and repossess the aircraft as a result thereof) may be substantially limited once insolvency is declared.

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 lease automatically continues after the declaration of insolvency and the appointment of the Insolvency Official. However, the Insolvency Official may terminate the lease on three months’ notice. If the lease continues after the declaration of insolvency, the rent and other lease payments for the post-insolvency period must be paid as a preferred creditor’s claim.

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?

The “adoption” of the lease applies only to the situation where the respective goods have not been handed over to the lessee yet. Under these circumstances and provided the decision on bankruptcy has been issued, the lessor may request to be informed by the Insolvency Official whether the lease is rejected or not. The Insolvency Official is obligated to provide the information on adoption (or rejection) of the lease within ten days following the request. Otherwise, the right to reject the lease ceases to exist.

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?

No. The payments due on the commencement of insolvency proceedings must be claimed through the application filed with the insolvency court and will be satisfied pro rata together with other general creditors’ claims.

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?

Yes, unless the rent and other lease payments are secured by collateral.Yes, unless the rent and other lease payments are secured by collateral.

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

Unless the Owner qualifies as a secured creditor, the claims of the secured creditors will be preferred. Furthermore, among others, the claims arising in the costs of the insolvency proceedings, post-insolvency claims, and the employment claims will also be preferred.

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?

Any such liens would need to be established before the commencement of the insolvency proceedings, otherwise they would be ineffective. In the case of the retention right established by such maintenance facility before the start of insolvency, the respective creditor will be a secured creditor due to the retention right to the aircraft.

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.

No.

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

No, provided that the aircraft is operated on international routes.

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

Yes, tax withholding applies. Operating lease: 15%; Financial lease: 5%

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

Yes, tax withholding applies. Operating lease: 15%; Financial lease: 5%

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

No for dry leases, provided that the aircraft is operated on international routes.

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

Yes, tax withholding applies. Operating lease: 15%; Financial lease: 5%

10.1.6 the Owner is incorporated and is tax resident in the Channel Islands (Jersey, Guernsey)?

Yes, tax withholding applies. Operating lease: 35%; Financial lease: 5% (International treaty on the prevention of double taxation concluded with the UK does not extend to the Channel Islands; No other treaty concluded.)

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

Yes, tax withholding applies. Operating lease: 35%; Financial lease: 5% (International treaty on the prevention of double taxation concluded with the UK does not extend to the Isle of Man; No other treaty concluded)

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

Yes, tax withholding applies. Operating lease: 35%; Financial lease: 5% (No treaty concluded.)

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

Yes, tax withholding applies. Operating lease: 35%; Financial lease: 5% (No treaty concluded.)

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

Yes, tax withholding applies. Operating lease: 35%; Financial lease: 5% (No treaty concluded.)

Yes.

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:

Yes

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 EUVAT 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 If yes, is this because the Relevant Jurisdiction does not apply the decision in ECJ Case C-33/2011?

N/A

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?

0 %

10.4 Is any stamp duty, notarial or other fee or equivalent payable in respect of the execution of the Lease, a de-registration power of attorney or any other lease related document concerning the aircraft? Will such stamp duty or fee still be payable if the relevant documents are executed and held outside the Relevant Jurisdiction? If any such amount is payable how much is it approximately?

No such fees apply.

10.5 Can any form of consent, authorisation or licence be obtained exempting the payments referred to in this Section from such tax or duty? If so, how would it be obtained?

No.

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.

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.

 In general, no specific restrictions are imposed on the export of capital in favour of foreign entities. This is subject to a state of emergency declaration made by the Government of the Czech Republic, when certain measures such as the suspension of payments from the Czech Republic abroad or from abroad to the Czech Republic might be adopted. In addition, international sanctions’ policies need to be followed.

Finally, entities meeting the criteria of statistically significant reporting persons may be required to report payments to and from abroad to the Czech National Bank for statistical purposes.

N/A

The operator must ensure that adequate third-party liability insurance will be maintained but there is no requirement that the risk is placed with insurers or underwriters in the Czech Republic.

N/A

N/A

The assignment of contracts of reinsurance is generally possible under Czech law. Regarding cut-through clauses, we are of the view that such provisions should be enforceable under Czech law (if properly drafted). However, as this is not a standard provision and there is a lack of sufficient case law, it cannot be excluded that the courts may take a different position.

Generally, the operator (lessee) would be liable for any damage caused by the aircraft.

Neither the CAA, airport or navigation authorities dispose of the right to detain an aircraft under the described (or any other) circumstances. For other cases of detention/confiscation, please refer to 3.2.

Regarding cases of criminal activity or the emergency situation as described in 3.2., it could be possible that the owner would not be aware of the confiscation/detention of the aircraft.

There are currently no civil airlines in the Czech Republic that would be considered as state bodies and as such would be entitled to enjoy the state immunity.

Yes. It is a sole discretion of the state to waive its immunity.

We note that some national courts of EU members states have taken the view that certain asymmetric jurisdiction clauses are void in their entirety, based on the application of European procedural law. Although these decisions are not binding on Czech courts and there currently is, to the best of our knowledge, no Czech court decision adopting a similar view, we cannot fully exclude that the Czech courts may declare such jurisdiction clauses void based on similar considerations.

The application of the relevant enforcement procedure will depend on the time of the judgement and further circumstances of the case. For example, a judgment given by an English court designated in an exclusive choice of court agreement from January 2021 will be recognised and enforced in the Czech Republic in accordance with Hague Convention of 30 June 2005 on Choice of Court Agreements. In principle, there will be no review of the merits of the judgment given by the court of origin and the relevant Czech court will be bound by the findings of fact on which the English court based its jurisdiction, unless the judgment was given by default.

It is expected that the recognition of English court judgements in the Czech Republic issued in the future will be governed by the Hague Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters after it becomes effective in the UK.

If none of the above conventions can be used, the Czech Act on International Private Law will apply requiring, among others, reciprocity.

Yes, the Czech Republic is a party to both the New York Convention and the Washington Convention, meaning decisions of arbitrators are enforceable. However, we note the current rather problematic approach of the Czech Supreme Court, which has repeatedly held that although arbitral awards issued under the New York Convention may serve as a title for judicial enforcement (which is less effective and less practical), they cannot be used as an eligible enforcement title for the purposes of more effective bailiff enforcement proceedings, where a separate procedure for recognition of a foreign arbitral award is required.

Due to the complexity of international supply contract disputes and length of the proceedings before the courts, the contracts often contain a dispute resolution clause pursuant to which the potential disputes are to be resolved through arbitration (ICC or similar).

Provided the aircraft engine remains unattached to the airframe, the changes to the responses would not be substantial (e.g., please refer to 17.3). If the situation is different, please refer to 17.2.

From the Czech law perspective, once an engine is mounted onto the aircraft, there is a risk it will be deemed to become a part of the latter and as a result lose its character as an individual asset (the owner of the aircraft would assume the title to the engine). However, even if such interpretation prevails, its effects should not be irreversible. There is a prevailing persuasion among the experts on Czech civil law that in the case of a temporary or easily removable connection between two assets (as is usually the case with the airframe and the engine) owned originally by two separate owners, the ownership of both original owners should remain intact, enabling either of them to require the restoration to the original state of two separate assets. We recommend that both owners agree in advance the conditions for the separation of the engine from the airframe and confirm its effects on their ownership.

We would like to point out that this doctrine has not been tested yet by the Czech courts regarding aircraft engines specifically. Hence, it is not possible to currently elaborate on the stance of the Czech courts in the matter.

The CAA does not maintain a separate aircraft engine register. Nevertheless, pursuant to the CAA it is possible to register a pledge regarding an aircraft engine. In this regard, the owner of the engine is obliged to keep the engine separate from the other spare parts in the warehouse (provided the engine is not incorporated in the aircraft and is used as a spare part). Furthermore, the engine would need to be visibly labelled to demonstrate the existence of the pledge.

Are there any other matters, issues, recommended courses of action or steps which can be taken to protect and/or perfect the Owner‘s interests, as owner and lessor of the Aircraft in the Relevant Jurisdiction or of which the Owner should be aware when contemplating leasing an aircraft to a company incorporated and operating in the Relevant Jurisdiction?

N/A