Aircraft finance and leasing in Switzerland

  1. PROPOSED TRANSACTION STRUCTURE
  2. SEARCHES
    1. Are there any public registers in the Relevant Jurisdiction where a search can be carried out to determine whether an order or resolution for any bankruptcy, bankruptcy protection or similar bankruptcy proceedings has been registered in relation to the Airline?
    2. If so, specify which public registers, how long such searches typically take and if the fees are more than USD 100, approximately what fees apply.
  3. RIGHTS AND EVIDENCE OF OWNERSHIP
    1. In the case of the transfer of title to an aircraft registered in the Relevant Jurisdiction:
    2. Other than Insolvency laws (see section 9) are there any laws which may have the effect of defeating the Owner’s right in the aircraft – for example, Government requisition? Do the laws of the Relevant Jurisdiction provide for any compensation in such circumstances?
  4. THE AIRCRAFT REGISTER – NATIONALITY OF AIRCRAFT
    1. Has the Relevant Jurisdiction ratified any of:
    2. If the Relevant Jurisdiction has ratified the Cape Town Convention, see the Cape Town Convention Annex.
    3. If the Relevant Jurisdiction has not ratified the Cape Town Convention, has the Relevant Jurisdiction started official proceedings or given any other official indication that it will accede to or ratify the Cape Town Convention in the near future?
    4. Is there an Aircraft Register in the Relevant Jurisdiction and if so, what is it called and who operates it?
    5. If so, in relation to registration:
    6. What documents and/or consents are required to obtain registration on the Aircraft Register and will these require any formalities (for example, notarisation, legalisation or application of apostille)?
    7. Are there any restrictions on the legal status and/or nationality/domicile of parties seeking to register an aircraft on the Aircraft Register?
    8. In respect of aircraft transactions connected with the Relevant Jurisdiction generally, are there any foreign Aircraft Registers that are commonly used, or should be considered, as alternatives to or in addition to registration with the Relevant Jurisdiction’s Aircraft Register? If so, what is the benefit of such registration?
    9. Are there any other filings or registrations necessary or desirable (other than the registrations already mentioned and Lease Registration – see section 6) in the Relevant Jurisdiction in order to ensure the validity, priority or enforceability of the transaction documents, or to perfect the interests of the Owner in the Aircraft or the transaction documents?
  5. LEASES
    1. Will the Relevant Jurisdiction recognise the concept of a lease over an aircraft?
    2. Would the choice of English law to govern the Lease be upheld as a valid choice of law in any action in the Relevant Jurisdiction?
    3. Must the Lease be in a particular form if it is to be valid and enforceable in the Relevant Jurisdiction (for example, must it be in the language of the Relevant Jurisdiction or be notarised, legalised or have the apostille applied)?
    4. If the Lease must be in the language of the Relevant Jurisdiction, is it possible under the Relevant Law also to have an English version, and to provide that the English version should prevail in case of conflict with the Relevant Jurisdiction language version?
    5. Are there any special terms that the Lease must contain or that it is advisable for the Lease to contain?
    6. Are there any circumstances under which the Lease might be re-characterised under the laws of the Relevant Jurisdiction as:
  6. LEASE REGISTRATION
    1. Is there a separate register for Aircraft leases in the Relevant Jurisdiction?
    2. If yes, then:
  7. ENFORCEMENT OF LEASES (ASSUMING AIRLINE IS NOT IN A FORM OF INSOLVENCY PROTECTION)
    1. On the occurrence of an event of default under the Lease, assuming that the Owner is permitted to do so under the terms of the Lease, can the Owner terminate the Leasing of the Aircraft under the Lease and enforce the Lease by taking physical possession of the Aircraft?
    2. If so, can the Owner take physical possession of the Aircraft without the need for judicial proceedings in the Relevant Jurisdiction?
    3. Where judicial proceedings in the Relevant Jurisdiction are necessary, please provide details of the proceedings, in particular:
    4. Where judicial proceedings are not necessary, please comment on the time limits relevant to taking possession of the Aircraft, in particular:
    5. Apart from the judicial proceedings described above and ignoring deregistration (see section 8), is the permission of any other party (including any official body) in the Relevant Jurisdiction required to take possession of the Aircraft?
    6. Is there any history of actual repossession of Aircraft by Owners in the Relevant Jurisdiction? If so, please provide details of any matters or issues of which an Owner should be aware.
    7. Are there any circumstances in which the sums expressed to be payable under the Lease or obligations expressed to be assumed by the Airline in the Lease are or will be unrecoverable or unenforceable in the Relevant Jurisdiction?
    8. Are there any restrictions on the ability of the Owner to sell the Aircraft in the Relevant Jurisdiction during the term of the Lease or, following an event of default, on termination of the leasing or pending judicial enforcement of the Lease?
    9. Are there any export restrictions on export of a repossessed aircraft?
  8. DEREGISTRATION POWER OF ATTORNEY/EXPORTATION
    1. Can the Owner apply for deregistration of the Aircraft either at the end of the lease term or following successful repossession (with or without judicial proceedings) and is there any time period within which such application should be made?
    2. Is the consent of the Airline required to deregister the Aircraft either by law or as a matter of custom or practice?
    3. How long does deregistration take, both where there is co-operation from the Airline and where this is no co-operation from the Airline?
    4. Is it possible to obtain an export licence or export permit in advance?
    5. Approximately how long does it take to obtain an export licence or export permit? What are the costs involved?
    6. Is it possible to obtain a certificate of deregistration in advance?
    7. Will a power of attorney empowering the Owner to deregister and export the Aircraft from the Relevant Jurisdiction, either at the end of the lease term or following successful repossession (with or without judicial proceedings), be enforceable in the Relevant Jurisdiction? Will the courts recognise a power of attorney in the form of an IDERA and governed by English law?
    8. If the power of attorney was stated to be irrevocable would this be enforceable against the Airline or can the Airline revoke such power of attorney?
    9. Upon the occurrence of a bankruptcy or insolvency of the Airline is the power of attorney still effective?
  9. INSOLVENCY
    1. In the event that the Airline were to become insolvent either on a balance sheet basis (assets less than liabilities) or unable to pay debts as fall due:
  10. EXCHANGE CONTROLS
    1. Are payments to foreign owners by companies incorporated or registered in the Relevant Jurisdiction subject to any form of exchange or similar control?
    2. If yes, can any consents, authorisations or licences be obtained to exempt payments from any such control? How would these be obtained? Are such consents, authorisations or licences transferable?
  11. INSURANCE
    1. Is it a legal requirement to insure the Aircraft within the Relevant Jurisdiction?
    2. If so, is there any restriction on reinsurance of the primary insurance outside the Relevant Jurisdiction?
    3. Is there a minimum percentage of cover which a local insurer is obliged to retain, and if so, what is it?
    4. Is it possible for local insurers to assign contracts of reinsurance? If not, is a cut-through clause enforceable?
  12. LIABILITY FOR DAMAGE
    1. Can the Owner be strictly liable - liable without a requirement to prove fault or negligence - for any damage or loss caused by the Aircraft assuming Owner is an innocent owner with no operational control of the Aircraft?
  13. DETENTION/CONFISCATION
    1. Are there any rights to detain or sell the Aircraft pursuant to drug trafficking, tax or other laws or pursuant to rights of airport or air navigation authorities if the Airline fails to pay when due?
    2. If so, can the Aircraft be forfeited and sold without the Owner being made aware?
  14. SOVEREIGN IMMUNITY
    1. Is any Airline based in the Relevant Jurisdiction entitled to any form of sovereign or other immunity from suit which might restrict the Owner's rights under the Lease?
    2. Can such immunity be validly waived in advance by contract?
  15. DISPUTE RESOLUTION AND RECIPROCAL ENFORCEMENT
    1. Do the laws of the Relevant Jurisdiction permit and recognise an “asymmetric” submission to jurisdiction clause under which the lessee submits to the exclusive jurisdiction of the Courts of England but the Owner has discretion to choose a jurisdiction other than the Courts of England?
    2. If the Lease is governed by English Law and a judgment is obtained by the Owner in the English courts, can that judgment be automatically enforced in the Relevant Jurisdiction or will the case have to be re-examined on its merits? If so what procedures must be complied with to enforce such a judgment?
    3. Is the Relevant Jurisdiction party to the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) or the 1965 Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the Washington Convention)? Will the courts of the Relevant Jurisdiction recognise and enforce a decision of an arbitrator?
    4. What is the usual choice of dispute resolution in international supply contracts involving a lessor or buyer incorporated in or with its main place of business in the Relevant Jurisdiction?
  16. ADDITIONAL INFORMATION – IS THERE ANYTHING ELSE WE SHOULD HAVE ASKED?
Information current as of February 2020

1. PROPOSED TRANSACTION STRUCTURE

An aircraft is typically financed through a finance lease rather than an operating lease (see 5.6.2 below).


2. SEARCHES

2.1 Are there any public registers in the Relevant Jurisdiction where a search can be carried out to determine whether an order or resolution for any bankruptcy, bankruptcy protection or similar bankruptcy proceedings has been registered in relation to the Airline?

There is no official federal or cantonal public register of pending or closed bankruptcy proceedings. However, liquidation of a company due to bankruptcy is registered in the Commercial Register at the seat of the company. An (informal) excerpt from the Commercial Register can be obtained from the website www.zefix.ch. Moreover, information relating to bankruptcy proceedings – such as the opening of bankruptcy proceedings, collocation plan, revocation of bankruptcy, suspension of bankruptcy proceedings and closure of bankruptcy proceedings – is published in the Swiss Official Gazette of Commerce (SOGC) and the cantonal Official Gazette at the seat of the company. SOGC provides on its website (www.shab.ch) a free of charge database for all SOGC notices which were published within the last three years. The SOGC online database is usually permanently available and the search results are provided instantly.

2.2 If so, specify which public registers, how long such searches typically take and if the fees are more than USD 100, approximately what fees apply.

See above 2.1.


3. RIGHTS AND EVIDENCE OF OWNERSHIP

3.1 In the case of the transfer of title to an aircraft registered in the Relevant Jurisdiction:

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

A distinction has to be made between aircrafts registered in the Swiss aircraft register (Luftfahrzeugregister) (Aircraft Register) and aircrafts also registered in the Swiss aircraft record (Luftfahrzeugbuch) (Aircraft Record) (see 4.4 below).

If the aircraft is registered in the Aircraft Register: Aircrafts qualify as movable assets and are subject to the rules of the Swiss Civil Code. The transfer of title to a moveable asset requires (i) a valid agreement between the seller and the buyer which is not subject to any formal requirements, (ii) a generally implicit in rem contract under which the parties declare their intent to complete the transfer of title, and (iii) a transfer of physical possession over the movable asset from the seller to the buyer.

If the aircraft is registered in the Aircraft Record: Although an aircraft clearly constitutes a movable asset, as soon as it is registered in the Aircraft Record rules similar to those governing immovable property apply. The conditions for a valid transfer of title over such aircrafts are (i) a valid agreement between the seller and the buyer which must be in written form, and (ii) registration of the new owner in the Aircraft Record on the previous owner's request. The Swiss Federal Office of Civil Aviation (FOCA) provides a corresponding application form on its website (www.bazl.admin.ch) that should be used for the filing. The transfer of title is effective once the new owner is registered.

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

See 3.1.1 above.

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?

Under Swiss law a distinction has to be made between the agreement generating obligations between parties (obligating act) and the actual performance of the obligations (act of disposal). The parties are free to choose the law governing their obligating act (e.g. sale and purchase agreement or lease agreement).

With regard to the act of disposal (e.g. transfer of ownership), if the aircraft is registered in the Aircraft Register only, the lex rei sitae applies to the act of disposal (i.e. foreign law if the aircraft is located in a foreign country). According to article 104 of the Federal Act on Private International Law, the parties may submit the act of disposal to the law of the state of shipment or of destination or to the law which governs the underlying legal transaction. However, such choice of law may not be asserted against third parties. In case the parties choose Swiss law to govern the act of disposal, the transfer will be recognized provided it was executed in accordance with Swiss law, i.e. the aircraft was physically transferred to the buyer.

If the aircraft is registered in the Aircraft Record, the Federal Aircraft Record Act (ARA) applies and a transfer will be recognized to the extent it is in line with the requirements set forth in the ARA (i.e. registration of the new owner in the Aircraft Record).

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

If the aircraft is registered in the Aircraft Register: To register the change of ownership a fee amounting to 1/2 of the aircraft registration fee applies. The aircraft registration fee ranges between CHF 300 and CHF 600, depending on the type and the maximum take-off weight of the aircraft. Hence, a fee up to a maximum of CHF 300 can be levied for the registration of the change of ownership.

If the aircraft is registered in the Aircraft Record: A fee amounting to 1/2 of the aircraft registration fee applies to the mandatory registration of the change of ownership. The aircraft registration fee ranges between CHF 195 and CHF 10,320 and is calculated based on the maximum take-off weight of the aircraft (CHF 9 per 100 kilograms). Hence, a fee up to a maximum of CHF 5,600 can be levied for the registration of the change of ownership.

Taxes: In general, Switzerland levies VAT at the rate of 8 % on the supply and import of aircraft which will be registered in Switzerland. According to article 23 para. 2(8) of the Federal Act on Value Added Tax, an exception to this rule exists in case of supply of aircrafts to airlines which carry on air transport and charter business commercially and whose turnovers from international flights exceed those from domestic traffic. This exception applies to supplies of aircrafts to air carriers domiciled abroad as well as to those domiciled in Switzerland. The Federal Tax Administration maintains a list of Swiss domiciled air carriers that qualify for these exceptions.

3.2 Other than Insolvency laws (see section 9) are there any laws which may have the effect of defeating the Owner’s right in the aircraft – for example, Government requisition? Do the laws of the Relevant Jurisdiction provide for any compensation in such circumstances?

Expropriation: The Swiss Constitution (Bundesverfassung) guarantees one's property rights. The expropriation of such rights by the government is only permissible if it is in the public interest, proportionate, has a legal basis, and is compensated.

Seizure by prosecution or court: In criminal proceedings, assets belonging to the accused or a third party may be seized provided they can be used as evidence. Hence, if an aircraft had been used for criminal activities the prosecution could order its confiscation. In addition the court shall, irrespective of the criminal liability of any person, order the seizure of objects that have been used or were intended to be used for the commission of an offence in the event that such objects constitute a future danger to public safety, morals or public order.

Seizure in case of an aircraft accident or serious incident: In case of an accident or a serious incident involving aircrafts, the investigating authority has the right to seize the aircraft and other assets in order to clarify the facts of the case.

Seizure by FOCA: In case of statutory violations, FOCA has the right to seize aircrafts provided their further use would endanger the public security or their abusive use is to be feared.

Seizure by police: Switzerland does not have a Police Act on federal level, instead, every canton has its own. According to the Police Act of the Canton of Zurich, the police can seize assets to avert a significant danger and keep it in custody until the danger is averted.

Retention rights: See 9.1.10 below.


4. THE AIRCRAFT REGISTER – NATIONALITY OF AIRCRAFT

4.1 Has the Relevant Jurisdiction ratified any of:

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? 

Yes.

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 Cape Town convention has been signed, but not yet ratified.

4.2 If the Relevant Jurisdiction has ratified the Cape Town Convention, see the Cape Town Convention Annex.

N/A

4.3 If the Relevant Jurisdiction has not ratified the Cape Town Convention, has the Relevant Jurisdiction started official proceedings or given any other official indication that it will accede to or ratify the Cape Town Convention in the near future?

Switzerland has signed the Cape Town Convention on 16 November 2001. However, the ratification process is still on hold. No official information is available as to whether the government will ratify it any time soon.

4.4 Is there an Aircraft Register in the Relevant Jurisdiction and if so, what is it called and who operates it?

FOCA holds two registries, the Aircraft Register and the Aircraft Record.

The Aircraft Register contains detailed information regarding Swiss registered aircraft, including the name of the owner of the aircraft. Please note that the registration has no legal effect regarding the title to the aircraft and does not provide any proof of it.

In the Aircraft Record material rights relating to aircraft (e.g. ownership, aircraft liens and preregistrations) can be recorded. Please note that the registration is optional and that, if registered, the aircraft will be subject to rules similar to those applying to immovable property. In particular, transfer of title over such aircraft is effective only if it has been registered in the Aircraft Record. Furthermore, the acquisition of rights on the aircraft by a third party relying in good faith on the information contained in the Aircraft Record is in principle protected.

4.5 If so, in relation to registration:

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

The owner of the aircraft is responsible for registering the aircraft in the Aircraft Register. A request of the owner is necessary for the registration in the Aircraft Record.

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?

The following minimum information is being recorded in the Aircraft Register: (i) date of registration, (ii) sign of registration, (iii) manufacturer, (iv) aircraft model, (v) serial number, and (vi) name and address of the owner.

The lease and/or an aircraft mortgage cannot be recorded in the Aircraft Register, but both can be recorded in the Aircraft Record (see 4.4 above and 6.1 below).

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?

N/A

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

No. The registration in the Aircraft Register has no legal effect regarding title to the aircraft.

The ownership of the aircraft can be determined by requesting an excerpt from the Aircraft Record, provided the aircraft is recorded in the Aircraft Record. The Aircraft Record is public and consequently an objection of not knowing its content is excluded. The acquisition of a right on the aircraft by a third party relying in good faith on the registration of such right in the Aircraft Record is in principle protected.

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

No.

4.6 What documents and/or consents are required to obtain registration on the Aircraft Register and will these require any formalities (for example, notarisation, legalisation or application of apostille)?

FOCA provides on its website guidelines and forms concerning the registration and certification of aircraft in the Aircraft Register. The first step in the registration procedure is to reserve a registration mark for the aircraft; for this purpose the corresponding reservation form has to be completed. After the provided details have been verified, the aircraft will be assigned a registration mark and the owner will receive an invoice, together with an administrative and technical checklist citing the documents required for registration.

The registration procedure will be initiated as soon as all the required documents have been submitted. In addition to the application for registration, the owner must submit the following:

  1. Documents that provide evidence of the applicant's ownership over the aircraft. For this purpose, either a proof of ownership (FOCA Form) or an unconditional transfer of title signed by the last registered owner (bill of sale) may be used. Receipts cannot be used as proof of ownership.
  2. Registered companies with seat in Switzerland are required to enclose a certified, up-to-date excerpt from the commercial register (https://www.zefix.admin.ch).
  3. Associations are required to provide proof that at least two-thirds of their members as well as the committee and chairperson are resident in Switzerland and Swiss citizens or foreign citizen with equal status as Swiss citizens due to inter-governmental agreements.
  4. Natural persons are required to provide proof of Swiss citizenship.
  5. Foreign citizens are required to submit official confirmation from the relevant authorities that they hold a residence permit for Switzerland (category B or C). Furthermore, they are obliged to submit a declaration to the effect that the aircraft concerned will normally be operated from within Switzerland. This requirement can only be met if the home base of the aircraft concerned is in fact in Switzerland.
  6. In the event of shared ownership, all owners must be listed. One of the owners must be designated as the officially responsible owner. The relevant forms are provided for this purpose by FOCA.
  7. An official confirmation must be provided to the effect that the aircraft concerned has either never been entered in the country of manufacture or in the aircraft register in the country of residence of the predecessor (in title) of the applicant (certificate of non-registration), or that it has been deleted from the aircraft register in the country in which it was last registered (certificate of cancellation of registration).
  8. In case of a used aircraft imported to Switzerland from a foreign country, proof of proper maintenance must be provided.

The documents generally need to be in written form, no further formalities are required.

Yes. Please see 4.6 above.

4.8 In respect of aircraft transactions connected with the Relevant Jurisdiction generally, are there any foreign Aircraft Registers that are commonly used, or should be considered, as alternatives to or in addition to registration with the Relevant Jurisdiction’s Aircraft Register? If so, what is the benefit of such registration?

No.

4.9 Are there any other filings or registrations necessary or desirable (other than the registrations already mentioned and Lease Registration – see section 6) in the Relevant Jurisdiction in order to ensure the validity, priority or enforceability of the transaction documents, or to perfect the interests of the Owner in the Aircraft or the transaction documents?

Ownership and other material rights relating to an aircraft can be recorded in the Aircraft Record. The Aircraft Record is public and consequently an objection of not knowing its content is excluded. The acquisition of a right on the aircraft by a third party relying in good faith on the registration of such right in the Aircraft Record is in principle protected.


5. LEASES

5.1 Will the Relevant Jurisdiction recognise the concept of a lease over an aircraft?

Yes. Swiss law recognizes the concept of a lease over an aircraft, although the lease agreement as such is not regulated in the Swiss Code of Obligations as a separate type of agreement.

5.2 Would the choice of English law to govern the Lease be upheld as a valid choice of law in any action in the Relevant Jurisdiction?

A distinction has to be made between the agreement generating obligations between the parties (obligating act) and the actual performance of the obligations which creates or changes the ownership with respect to a right in rem (act of disposal). The parties are free to choose the law governing their obligating act (e.g. sale and purchase agreement or lease agreement). With regard to the act of disposal (e.g. transfer of ownership), the parties' choice depends on where the aircraft is registered.

If the aircraft is registered in the Aircraft Register, the lex rei sitae applies to the act of disposal (i.e. Swiss law if the aircraft is located in Switzerland). According to article 104 of the Federal Act on Private International Law, the parties may submit the act of disposal to the law of the state of shipment or of destination or to the law which governs the underlying legal transaction. However, such choice of law may not be asserted against third parties.

If the aircraft is registered in the Aircraft Record, the ARA applies to the act of disposal and the parties cannot agree on another law.

5.3 Must the Lease be in a particular form if it is to be valid and enforceable in the Relevant Jurisdiction (for example, must it be in the language of the Relevant Jurisdiction or be notarised, legalised or have the apostille applied)?

Under Swiss law no formal requirements apply to a lease agreement. However, for evidentiary purposes a written form of the lease agreement is highly recommended.

5.4 If the Lease must be in the language of the Relevant Jurisdiction, is it possible under the Relevant Law also to have an English version, and to provide that the English version should prevail in case of conflict with the Relevant Jurisdiction language version?

N/A

5.5 Are there any special terms that the Lease must contain or that it is advisable for the Lease to contain?

There are no mandatory terms which need to be included in the lease agreement. However, among others, it is recommended to include events-of-default and acceleration provisions and a repossession procedure in case of a premature termination of the lease agreement. Also, potential tax risks need to be assessed and – to the extent possible – be covered by the lease agreement.

Please note that if an aircraft is registered in the Aircraft Record, the right to use the aircraft can be registered in the Aircraft Record provided the right is granted under a lease agreement or a charter agreement with a term of at least six months.

5.6 Are there any circumstances under which the Lease might be re-characterised under the laws of the Relevant Jurisdiction as:

5.6.1 a secured loan?

Yes. As set forth under 1.1 above, the prevailing financing of aircrafts in Switzerland occurs through finance lease rather than operating lease. To the extent that such an agreement entails elements of a credit agreement and provides for security, a re-characterisation may not be excluded. The name of an agreement is not decisive. As the qualification is important for accounting and tax purposes, an analysis on a case by case basis is advisable.

5.6.2 a finance (or capital) lease?

Yes. In any case where an operating lease also entails elements of a finance lease, there is a risk that the operating lease is re-characterised as finance lease (and vice versa).

The Swiss Code of Obligations neither defines lease agreements nor distinguishes between operating and finance leases. Further, the legal classification of a lease agreement is generally disputed. However, according to the prevailing doctrine, a finance lease typically involves three parties, the term of the lease is longer compared to an operating lease and usually entails an option of the lessee to buy the lease object at the end of the lease term. In contrast, an operating lease usually involves two parties, runs for a shorter period of time and does not entail an option of the lessee to buy the lease object at the end of the lease term. As the qualification is important for accounting and tax purposes, an analysis on a case by case basis is advisable.


6. LEASE REGISTRATION

6.1 Is there a separate register for Aircraft leases in the Relevant Jurisdiction?

There is no separate register for aircraft leases in Switzerland. However, if the aircraft is registered in the Aircraft Record, the right to use such aircraft can be registered in the Aircraft Record provided the right is granted under a lease agreement or a charter agreement with a term of at least six months.

Although aircraft leases cannot be registered in the Aircraft Register, the lessee can be registered in the Aircraft Register as operator of the registered aircraft subject to the requirements applicable to the registration of ownership (apart from the ownership requirement).

6.2 If yes, then:

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

The registration requires the filing of the corresponding FOCA form and a copy of the lease or charter agreement.

6.2.2 What registration fees are payable (if any)?

The fee for the registration of a lease depends on the time necessary to perform the registration, but is limited to CHF 1,200.

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

The Aircraft Record registers the holder of the right to use an aircraft. Deletion of the annotation is only possible with the consent of the holder of the right or on the basis of a court judgement.

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?

There is no requirement for periodic renewal.


7. ENFORCEMENT OF LEASES (ASSUMING AIRLINE IS NOT IN A FORM OF INSOLVENCY PROTECTION)

7.1 On the occurrence of an event of default under the Lease, assuming that the Owner is permitted to do so under the terms of the Lease, can the Owner terminate the Leasing of the Aircraft under the Lease and enforce the Lease by taking physical possession of the Aircraft?

The lease can be terminated by the owner. If the owner validly terminates the lease, the lessee is obliged to return the aircraft to the owner.

7.2 If so, can the Owner take physical possession of the Aircraft without the need for judicial proceedings in the Relevant Jurisdiction?

No. If the lessee does not return the aircraft, the owner is generally not allowed to take physical possession of the aircraft, but has to take judicial proceedings.

7.3 Where judicial proceedings in the Relevant Jurisdiction are necessary, please provide details of the proceedings, in particular:

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 as lessor has a contractual claim for repossession and a claim based on ownership. To receive a judgment against the lessee, the owner needs to convince the court that he is the owner of the aircraft, that he has leased the aircraft to the lessee and that the lease was validly terminated. To prove the above, the owner may submit the lease agreement, the notice of termination, and the chain of title from the first owner of the aircraft or an excerpt from the Aircraft Record. Copies of the relevant documents are usually sufficient as long as the opposing party does not dispute the content of or the authenticity of the signature under the document.

7.3.2 What is the approximate cost of issuing proceedings?

Under Swiss law the court fees are subject to statutory provisions and depend on the value in dispute (i.e. value of the aircraft), the time exposure and the difficulties of the case. The costs may only be assessed on a case-to-case basis.

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

The court may demand that the plaintiff make an advance payment up to the amount of the expected court costs. Other security is generally not required.

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?

If the claim is uncontested, depending on the facts of the case and the competent court, proceedings could last between six months and one year.

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?

If the claim is contested, depending on the facts of the case and the competent court, proceedings could last between 1.5 and several years.

7.4 Where judicial proceedings are not necessary, please comment on the time limits relevant to taking possession of the Aircraft, in particular:

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

N/A

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

N/A

7.4.3 Is a Public Auction of the Aircraft required?

N/A

7.5 Apart from the judicial proceedings described above and ignoring deregistration (see section 8), is the permission of any other party (including any official body) in the Relevant Jurisdiction required to take possession of the Aircraft?

No.

7.6 Is there any history of actual repossession of Aircraft by Owners in the Relevant Jurisdiction? If so, please provide details of any matters or issues of which an Owner should be aware.

We are not aware of any published case in Switzerland dealing with repossession of aircraft by the owner.

7.7 Are there any circumstances in which the sums expressed to be payable under the Lease or obligations expressed to be assumed by the Airline in the Lease are or will be unrecoverable or unenforceable in the Relevant Jurisdiction?

In addition to restrictions in case of insolvency of the lessee, the obligations of the lessee could be unrecoverable if the lease agreement is invalid for any reason or if the obligations under the lease agreement no longer exist (e.g. due to set off or statute of limitation).

7.8 Are there any restrictions on the ability of the Owner to sell the Aircraft in the Relevant Jurisdiction during the term of the Lease or, following an event of default, on termination of the leasing or pending judicial enforcement of the Lease?

No. The owner is free to sell the aircraft at any time unless provided otherwise in the lease agreement.

7.9 Are there any export restrictions on export of a repossessed aircraft?

For the export of an aircraft, an export airworthiness inspection may be required. Further, the regulations of the country of destination have to be observed. FOCA recommends the seller to get in touch with the civil aviation authorities in the country concerned.


8. DEREGISTRATION POWER OF ATTORNEY/EXPORTATION

8.1 Can the Owner apply for deregistration of the Aircraft either at the end of the lease term or following successful repossession (with or without judicial proceedings) and is there any time period within which such application should be made?

The owner of the aircraft can apply for deregistration of the aircraft in the Aircraft Register. If the aircraft is also registered in the Aircraft Record, the aircraft first needs to be deregistered in the Aircraft Record. There is no time period within which such applications needs to be made.

If the lessee's right to use the aircraft is registered in the Aircraft Record, FOCA informs the lessee of the deregistration request and – as a matter of practice – generally requires the consent of the lessee.

8.3 How long does deregistration take, both where there is co-operation from the Airline and where this is no co-operation from the Airline?

If the aircraft is registered in the Aircraft Register, deregistration time mainly depends on the applicant and the time he needs to provide all documents necessary for deregistration. Once FOCA is in receipt of all required documents, deregistration is usually completed within a few business days.

If the aircraft is also registered in the Aircraft Record, deregistration requires the consent of the mortgagee and the lessee. The aircraft will be deleted in the Swiss Aircraft Record three months after the application for deregistration has been filed, provided the aircraft has not been seized or the realisation of a pledge has not been set in motion.

8.4 Is it possible to obtain an export licence or export permit in advance?

Upon request, FOCA issues an export certificate of airworthiness after the needed examination and maintenance work has been completed. In addition, the regulations of the country of destination have to be observed.

8.5 Approximately how long does it take to obtain an export licence or export permit? What are the costs involved?

The time to get the export certificate of airworthiness depends on the time needed for the examination and maintenance work. The costs of such a certificate depend on the time exposure and the type and weight of the aircraft. The cost may range between CHF 200 and CHF 36,000.

8.6 Is it possible to obtain a certificate of deregistration in advance?

No. A certificate of deregistration is issued by FOCA only upon request.

8.7 Will a power of attorney empowering the Owner to deregister and export the Aircraft from the Relevant Jurisdiction, either at the end of the lease term or following successful repossession (with or without judicial proceedings), be enforceable in the Relevant Jurisdiction? Will the courts recognise a power of attorney in the form of an IDERA and governed by English law?

A power of attorney, if subject to Swiss law, is revocable at any time by operation of mandatory Swiss law. As Switzerland is not a signatory state to the Cape Town Convention, Swiss courts are not bound by the Cape Town Convention and its provisions with respect to an IDERA (Irrevocable De-Registration and Export Request Authorization). Thus, it cannot be completely excluded that a Swiss court would hold the irrevocability of an IDERA to be inconsistent with Swiss public policy and, thus, would recognize a revocation without regard to the choice of English law under the IDERA.

8.8 If the power of attorney was stated to be irrevocable would this be enforceable against the Airline or can the Airline revoke such power of attorney?

See question 8.7.

8.9 Upon the occurrence of a bankruptcy or insolvency of the Airline is the power of attorney still effective?

No. The power of attorney will extinguish upon the occurrence of bankruptcy or insolvency.


9. INSOLVENCY

9.1 In the event that the Airline were to become insolvent either on a balance sheet basis (assets less than liabilities) or unable to pay debts as fall due:

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

If there is good cause to suspect overindebtedness, an interim balance sheet must be drawn up and submitted to a licensed auditor for examination. If the interim balance sheet shows that the claims of the company's creditors are not covered, whether the assets are appraised at going concern or liquidation values, the board of directors must notify the court unless certain company creditors subordinate their claims to those of all other company creditors to the extent of the capital deficit. On receiving notification the court commences bankruptcy proceedings. If the company is clearly overindebted and the board of directors fails to notify the court of this, then the auditor will notify the court.

The court may grant a stay of bankruptcy proceedings on request of the board of directors or a creditor where there is a prospect of financial restructuring; in such case the court will order measures to preserve the company's assets. However, a stay of bankruptcy proceedings is not common in practice.

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?

In case of a granted stay of bankruptcy proceedings, the court may appoint an administrative receiver (Sachwalter) and either deprive the board of directors of its power of disposal or make its resolutions conditional on the consent of the administrative receiver. The court may appoint one or more natural or legal person as administrative receiver.

If bankruptcy proceedings are opened and the proceeds of the inventoried assets are likely to cover the costs of ordinary proceedings, the first creditor committee decides whether the bankruptcy office (Konkursamt) or one or more persons shall form the bankruptcy administration (Konkursverwaltung).

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?

The bankruptcy administration has to maintain and realize the bankruptcy estate and to represent the estate in court proceedings. Under Swiss law, bankruptcy proceedings do not automatically lead to the termination of the lease agreement. In general, the lease as agreed by the parties will remain valid. The bankruptcy administration is entitled – but not obliged – in the debtor's stead to fulfil synallagmatic contracts which had not or had only partially been fulfilled at the time of opening of bankruptcy proceedings. If the owner requests the handing over of the aircraft based on an ownership claim, the bankruptcy administration may not approve such request on its own, but has to wait for the decision of the second creditor committee. If the bankruptcy administration denies the claim, the owner has to file a suit with the court within 20 days.

9.1.4 Does the opening 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 opening of such protection:
  • (a.) Applying any security deposit held by the Owner against any unpaid amounts due under the Lease? Yes. The owner is prohibited from taking such acts if the security deposit held by the owner is part of the bankruptcy estate and not part of the estate of the owner.
  • (b.) Accepting payment of rent or other lease payments from:
    1. (i.) the Airline? Acts of the debtor after opening of bankruptcy proceedings in relation to assets belonging to the bankrupt estate are invalid towards the creditors. The payment could hence be reclaimed from the owner by the bankruptcy administration.
    2. (ii.) a guarantor? The owner is not prohibited from accepting payments from a guarantor.
    3. (iii.) a shareholder? The owner is not prohibited from accepting payments from a shareholder.
  • (c.) giving notice of default under the lease? Notice of default may be given.
  • (d.) obtaining a judgment or arbitral award for unpaid lease payments? After the opening of bankruptcy proceedings, court proceedings against the lessee and bankruptcy estate, respectively, may no longer be initiated in Switzerland and pending court proceedings are stayed. The owner has to file its claims for unpaid lease payments with the bankruptcy office within one month after the opening of bankruptcy proceedings were announced. It is disputed whether the same applies to arbitration proceedings.
  • (e.) giving notice to terminate the leasing of the Aircraft? The owner may request security for future payments if the lessee is in bankruptcy proceedings. The owner needs to give an adequate deadline to the lessee and the bankruptcy administration for providing such securities in written form. If no security is furnished to the lessor within the set deadline, the lessor may terminate the contract with immediate effect.
  • (f.) exercising rights to repossess the Aircraft? In general, the opening of bankruptcy proceedings does not prohibit the owner from exercising its rights to repossess the aircraft. However, the owner cannot take action against the airline itself, but has to file its claim with the bankruptcy office.
9.1.5 Can the opening of Bankruptcy proceedings have retrospective effect in relation to any such actions taken before opening? If so, for what period can there be a look back?

The opening of bankruptcy proceedings itself does not have a retrospective effect on such actions. However, the bankruptcy administration and the creditors may challenge certain transactions of the lessee that were undertaken before the opening of the proceedings (so called "Anfechtungsklagen"). Defendants in this case are persons with whom the lessee concluded such transactions (e.g. the owner).

Following transactions may be challenged:

  1. All gifts and unpaid disposals made by debtor in the year prior to the opening of bankruptcy proceedings. Transactions which include a disproportionate counter-performance are deemed equivalent to a gift.
  2. Certain acts (granting of collaterals, unusual settlement of debt or payment of unmatured debt) of the debtor carried out in the year prior to the opening of bankruptcy proceedings, provided they were at that time already overindebted.
  3. All transactions carried out by the debtor five years prior to the opening of bankruptcy proceedings with the intent of disadvantaging their creditors or giving a preferential treatment only to certain creditors.
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?

No, there is no time period within which the bankruptcy administration is required to “adopt” or “reject” the lease.

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

No. Unpaid lease payments which were due before the opening of the bankruptcy proceedings are classified as ordinary unsecured claims (third class, see question 9.1.9) and will not be paid separately. These claims have to be filed in the bankruptcy proceedings.

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. The owner's claim for any outstanding sums would rank equally with other ordinary unsecured creditors (third class, see question 9.1.9). However, if the owner's claims had been secured, they would be satisfied directly out of the proceeds from the realisation of the collateral.

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

Yes. Secured claims are satisfied directly out of the proceeds from the realisation of the collateral. Unsecured claims and uncovered parts of secured claims are satisfied out of the proceeds of the remainder of the bankruptcy estate in the order of their class. The first and second class will rank above the claims of the owner. The first class includes, among others, certain claims of employees and certain claims of insured persons derived from the Federal Statute on Accident Insurance and from facultative pension schemes and claims of pension funds against employers. The second class includes, among others, contributions due under certain federal statutes (such as, for example, the Federal Statute on old-age and survivor's insurance, the Federal Statute on disability insurance, and the Federal Statute on accident insurance). The claim of the owner would rank in the third class with all other ordinary unsecured claims. Creditors of the same class are equal among themselves. Creditors of a class only receive proceeds once all creditors of the class or classes above have been satisfied.

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?

Under Swiss law, a creditor has a statutory right of retention over movable assets which have come into his possession with the debtor's consent to secure a claim against the debtor which is intrinsically connected with the retained asset. The creditor can exploit the retained asset in the same way as a pledged asset. However, if the debtor (airline) is not the actual owner of the aircraft, the right of retention arises only if the owner explicitly or implicitly agreed to the creation of the retention situation. If the owner did not agree thereto, the creditor may only assert a right of retention if he was in good faith at the time of the transfer of possession. The good faith requirement relates to the entitlement of the possessor to transfer possession over the aircraft to the creditor.

However, if the aircraft is registered in the Aircraft Record, the creditor may not assert a right of retention. Further, a retention right may not be exercised to the extent it conflicts with the provisions of the 1933 Rome Convention for the Unification of Certain Rules Relating to the Precautionary Arrest of 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.

Under Swiss law, a right of retention can only be asserted by persons who are in possession of the movable assets with the debtor's consent at time of assertion. Therefore, persons not in possession of the aircraft or in possession of the aircraft without the debtor's consent cannot assert a lien over the asset in question.

Moreover, according to the Federal Aviation Act and the 1933 Rome Convention for the Unification of Certain Rules Relating to the Precautionary Arrest of Aircraft, aircraft actually put in service on a regular line of public transportation and any other aircraft assigned to transportation of person or property for hire are exempted from arrest.


10. EXCHANGE CONTROLS

10.1 Are payments to foreign owners by companies incorporated or registered in the Relevant Jurisdiction subject to any form of exchange or similar control?

No. Payments to non-residents are free of any restrictions from a Swiss law perspective.

10.2 If yes, can any consents, authorisations or licences be obtained to exempt payments from any such control? How would these be obtained? Are such consents, authorisations or licences transferable?

N/A


11. INSURANCE

No, there is no legal requirement to insure the aircraft itself under Swiss law.

However, the operator (Halter) of an aircraft is obliged to maintain liability insurance for damages caused to third parties on the ground and for damages caused to passengers. The operator is the person that uses the aircraft on its own account and has the actual control over the aircraft. Further, aircraft operators who carrier goods and persons on a professional basis must also maintain liability insurance for damages caused to luggage and goods. It is no legal requirement to insure the Aircraft within the Relevant Jurisdiction.

11.2 If so, is there any restriction on reinsurance of the primary insurance outside the Relevant Jurisdiction?

N/A

11.3 Is there a minimum percentage of cover which a local insurer is obliged to retain, and if so, what is it?

N/A

11.4 Is it possible for local insurers to assign contracts of reinsurance? If not, is a cut-through clause enforceable?

Yes, it is possible for local insurers to assign contracts of reinsurance.


12. LIABILITY FOR DAMAGE

Can the Owner be strictly liable - liable without a requirement to prove fault or negligence - for any damage or loss caused by the Aircraft assuming Owner is an innocent owner with no operational control of the Aircraft?

No, the owner is not liable for any damage or loss caused by the aircraft as long as he does not qualify as operator or carrier or manufacturer of the aircraft (see 11.1 above).


13. DETENTION/CONFISCATION

13.1 Are there any rights to detain or sell the Aircraft pursuant to drug trafficking, tax or other laws or pursuant to rights of airport or air navigation authorities if the Airline fails to pay when due?

Seizure by prosecution or court: In criminal proceedings, assets belonging to the accused or a third party may be seized provided they can be used as evidence. Hence, if an aircraft had been used for criminal activities, the prosecution could order its seizure. In addition the court shall, irrespective of the criminal liability of any person, order the seizure of objects that have been used or were intended to be used for the commission of an offence in the event that such objects constitute a future danger to public safety, morals or public order.

Seizure in case of an aircraft accident or serious incident: In case of an accident or a serious incident involving aircrafts, the investigating authority has the right to seize the aircraft and other assets in order to clarify the facts of the case.

Seizure by FOCA: In case of statutory violations, FOCA has the right to seize aircrafts provided their further use would endanger the public security or an abusive use is to be feared.

Tax Authorities: According to the Federal Act on direct Federal Taxation, if the debtor does not pay the tax debt after an overdue notice, enforcement measures against the aircraft may be taken in order to enforce the tax debt of the owner. The debt enforcement will be governed by the Federal Debt Enforcement and Bankruptcy Act.

Retention rights: Under Swiss law, a creditor has a statutory right of retention over movable assets which have come into his possession with the debtor's consent to secure a claim against the debtor which is intrinsically connected with the retained asset. The creditor can exploit the retained asset in the same way as a pledged asset. However, if the debtor (airline) is not the actual owner of the aircraft, the right of retention arises only if the owner explicitly or implicitly agreed to the creation of the retention situation. If the owner did not agree thereto, the creditor may only assert a right of retention if he was in good faith at the time of the transfer of possession. The good faith requirement relates to the entitlement of the possessor to transfer possession over the aircraft to the creditor.

However, if the aircraft is registered in the Aircraft Record, the creditor may not assert a right of retention. Further, a retention right may not be exercised to the extent it conflicts with the provisions of the 1933 Rome Convention for the Unification of Certain Rules Relating to the Precautionary Arrest of Aircraft.

13.2 If so, can the Aircraft be forfeited and sold without the Owner being made aware?

It is unlikely that the aircraft is forfeited and sold without the owner being made aware of it.


14. SOVEREIGN IMMUNITY

14.1 Is any Airline based in the Relevant Jurisdiction entitled to any form of sovereign or other immunity from suit which might restrict the Owner's rights under the Lease?

No. However, according to the Federal Aviation Act, the following aircrafts are not subject to precautionary attachements: (i) aircrafts exclusively used for state services, (ii) aircrafts in service for a regular line of public transport or indispensable reserve aircrafts, or (iii) aircrafts used for the carriage of persons or goods for consideration and already prepared to take-off.

14.2 Can such immunity be validly waived in advance by contract?

N/A


15. DISPUTE RESOLUTION AND RECIPROCAL ENFORCEMENT

15.1 Do the laws of the Relevant Jurisdiction permit and recognise an “asymmetric” submission to jurisdiction clause under which the lessee submits to the exclusive jurisdiction of the Courts of England but the Owner has discretion to choose a jurisdiction other than the Courts of England?

“Asymmetric” jurisdiction clauses are not explicitly regulated under Swiss law and whether such clauses are valid under Swiss law has not yet been decided by the Federal Supreme Court. However, the vast majority of Swiss scholars recognizes such "asymmetric" jurisdiction clauses.

15.2 If the Lease is governed by English Law and a judgment is obtained by the Owner in the English courts, can that judgment be automatically enforced in the Relevant Jurisdiction or will the case have to be re-examined on its merits? If so what procedures must be complied with to enforce such a judgment?

Currently (i.e. before BREXIT), the recognition and enforcement of a foreign judgement made by an English court in Switzerland is subject to the limitations set forth in the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters done at Lugano on 30 October 2007 (Lugano Convention). In particular, and without limiting the foregoing, a Swiss court may refuse to recognise or enforce such judgement if:

  1. the recognition or enforcement is manifestly contrary to the principle of public policy ("ordre public") (art. 34 para. 1 and art. 45 Lugano Convention);
  2. the judgement was not properly served (art. 34 para. 2 and art. 45 Lugano Convention);
  3. it is irreconcilable with a judgment given in a dispute between the same parties in Switzerland (art. 34 para. 3 and art. 45 Lugano Convention);
  4. it is irreconcilable with an earlier judgment given in another state bound by the Lugano Convention or in a third state involving the same cause of action between the same parties, provided that the earlier judgment fulfils the conditions necessary for its recognition in Switzerland (art. 34 para. 4 and art. 45 Lugano Convention); or
  5. such recognition or enforcement would not be in line with art. 35 of the Lugano Convention.

Following BREXIT, the recognition and enforcement of a foreign judgment made by an English court in Switzerland will be subject to the limitations set forth in the Swiss Federal Private International Law Statute (PILS). Inter alia, the recognition and enforcement of a foreign judgment in Switzerland is subject to the following PILS rules:

  • a Swiss court may refuse to give effect to any foreign judgement if such judgement is inconsistent with Swiss public policy (art. 27 para. 1 PILS);
  • a Swiss court may refuse to give effect to any foreign judgement if a party to such judgement can establish that:
    • (i) under the laws of its domicile such party had not received proper service of process (art. 27 para. 2 lit. a PILS);
    • (ii) the judgement was rendered in violation of fundamental principles of Swiss procedural law, in particular the right to be heard (art. 27 para. 2 lit. b PILS);
    • (iii) a lawsuit between the same parties concerning the same case was first initiated or decided in Switzerland or first decided in a third country, provided the requirements for the recognition of such decision are met (art. 27 para. 2 lit. c PILS).

15.3 Is the Relevant Jurisdiction party to the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) or the 1965 Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the Washington Convention)? Will the courts of the Relevant Jurisdiction recognise and enforce a decision of an arbitrator?

Yes. Switzerland is party to both the New York Convention and the Washington Convention. A final and non-appealable award rendered by the competent arbitral tribunal will be recognised and enforceable in Switzerland in accordance with and subject to the rules of the New York Convention.

15.4 What is the usual choice of dispute resolution in international supply contracts involving a lessor or buyer incorporated in or with its main place of business in the Relevant Jurisdiction?

Dispute resolution choices vary from contract to contract. If Swiss parties are involved, arbitration under the Swiss Rules of International Arbitration is commonly used. However, if also foreign parties are involved, the Rules of Arbitration of the International Chamber of Commerce are often chosen.


16. ADDITIONAL INFORMATION – IS THERE ANYTHING ELSE WE SHOULD HAVE ASKED?

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?