Aviation finance in South Africa: overview

A Q&A guide to aviation finance in South Africa.

This Q&A provides a high level overview of key practical issues including financing options for purchasing aircraft; registration and deregistration requirements; transfer of title; security, including aircraft mortgages; transfer of security; enforcement of security and repossession; and application of the Cape Town Convention.

To compare answers across multiple jurisdictions, visit the Aviation Finance Country Q&A tool.

The Q&A is part of the global guide to aviation finance. For a full list of jurisdictional Q&As visit www.practicallaw.com/aviationfinance-guide.

Contents

Financing options

1. What are the main options available for financing the purchase of an aircraft? How are aircraft purchases typically financed?

Loans from local and foreign banks are popular options for financing the purchase of aircraft. Loans are usually secured by a mortgage registered with the South African Civil Aviation Authority (SACAA) and/or the International Registry under the Convention on International Interests in Mobile Equipment (Cape Town Convention). South Africa acceded to the Cape Town Convention and to the Protocol on Matters Specific to Aircraft Equipment (see Question 27).

Leasing (including both finance leases and operating leases) is also a popular option. In a leasing scenario, the lessor (which is often a special purpose vehicle) purchases the aircraft through a combination of loan and equity financing, and leases it to the operator. The parties can agree on whether ownership passes automatically to the operator after the final payment is made.

A small portion of aircraft purchases are financed through vendor financing by the manufacturer.

In addition, there is an increasing amount of aircraft purchases financed by:

  • Export credit agencies.

  • Capital markets (usually with the South Africa Exim Bank input).

 
2. What are the issues arising in relation to the various financing options?

A common issue that arises is when the facility is secured by the registration of a mortgage bond over the aircraft. In contrast to a mortgage bond registered with the International Registry (IR), which can encumber the airframe only (or the engines only), a mortgage bond registered with the South African Civil Aviation Authority (SACAA) can only cover the aircraft as a whole (that is, the airframe and engines). If the parties intend to encumber the engines only through security registered in South Africa, the only effective form of security is a special notarial bond registered with the South African Deeds Office. Special notarial bonds are only recognised and enforceable within the borders of South Africa, which makes it an unattractive option for mobile assets such as aircraft.

Unlike other jurisdictions, South Africa does not require the aircraft to be physically located in South Africa at the time of registration of the mortgage bond with the SACAA.

In the case of a leasing financing structure, the SACAA will only record mortgage bonds. Therefore, a lessor that wishes to register the lease for publication purposes can only register it in the IR.

Additionally, there has been a growing awareness in the last few years that the declarations made by the South African Government on self-help remedies when acceding to the Protocol on Matters Specific to Aircraft Equipment may be contrary to the South African Constitution. As a result, it may be prudent to seek a court order of attachment before repossessing a leased or mortgaged aircraft, even if the lease or mortgage is registered as an international interest in the IR. See Question 18 for more information.

 

Registration and deregistration requirements

Registration

3. What is the procedure for registration of an aircraft?

Aircraft must be registered with the South African Civil Aviation Authority (SACAA) on the South African Civil Aircraft Register (SACAR). The SACAR is an aircraft registry, not an ownership (title) registry. Under the South African Civil Aviation Regulations, an aircraft must be registered in the name of the operator/possessor of the aircraft, which must be a local entity. The application for registration of an aircraft is made on Form CA-47A1. The original application form and the prescribed registration fee must be submitted to the Director of the SACAA, together with certified supporting documents. The following information must be provided in the registration form:

  • Particulars of the aircraft.

  • Aircraft type.

  • Engine type and serial number.

  • Intended operation of the aircraft.

The supporting documents that are required depend on the type of aircraft being registered and on the entity in whose name the aircraft is being registered. Generally, the information required relates to the identification of the entity and the responsible persons acting for the entity. The applicant must make an appointment with the SACAA for a pre-filing assessment and, if the documents are in order, the applicant must make another appointment for registration of the aircraft. The SACAA will issue both a:

  • Certificate of registration of the aircraft.

  • Registration mark for the aircraft (that is, the identity reference of the aircraft).

 
4. What is the procedure for registration of aircraft mortgages?

After the financier and the borrower conclude a deed of mortgage, the borrower must:

  • Sign the accompanying application form (Form MAR 2.1).

  • Have the deed commissioned by a commissioner of oaths, or notarised by a notary public.

Form MAR 2.1 is prescribed by the South African Civil Aviation Authority (SACAA) for the registration of mortgages. The original Form MAR 2.1, the deed of mortgage and the original supporting documents (for example, powers of attorney, resolutions, and so on) must be assembled into a bundle (mortgage documents). All the mortgage documents must be signed in black ink of durable quality. The original mortgage documents must be accompanied by two certified (notarised) copies of these documents.

The party that will be filing the documents for registration of the mortgage must make a pre-filing appointment with the SACAA to ensure that all required documents are in order. Once the SACAA is satisfied that the mortgage documents are in order, the relevant party must make another appointment for registration of the mortgage. Before filing the mortgage documents for registration, the relevant party must pay a registration fee of ZAR1,100 directly into the bank account of the SACAA, and include proof of payment in the mortgage documents. On filing of the mortgage documents, the SACCA will issue an acknowledgement of receipt and the processing of the mortgage documents will take seven days. Filing of the mortgage documents is only permissible before noon. At the expiry of the processing period, the SACAA will inform the relevant party that the mortgage has been registered. However, it is prudent for the relevant party to follow up with the SACAA. The Director of Civil Aviation will:

  • Return the original mortgage documents to the mortgagee.

  • Send a copy of the mortgage documents to the mortgagor.

However, in practice, the relevant party ordinarily collects these documents from the SACAA.

There are no limitations on who can be considered to be a mortgagee. A person referred to as a mortgagee in the deed of mortgage will be registered as such in the South African Register of Aircraft Mortgages. A mortgagee can be local or foreign.

Spare parts that are not installed on the aircraft can be separately encumbered by a special notarial bond, which is registrable with the Registrar of Deeds and not with the SACAA (see Question 2). However, once installed on the aircraft, the spare parts will be part of the aircraft and will be covered by any aircraft mortgage registered with the SACAA.

Mortgage bonds over aircraft can also be registered with the International Registry.

 
5. Can aircraft leases be registered? If so what is the procedure for registration of aircraft leases?

Aircraft leases cannot be registered with the South African Civil Aviation Authority (SACAA). However, finance leases can simply be filed with the SACAA if, for example, filing is part of the conditions precedent under a facility agreement or any other finance document. Therefore, there is no procedure for registration of aircraft leases, but the SACAA will issue a letter acknowledging receipt of a lease (if filed).

Aircraft leases can only be registered with the International Registry.

 
6. What is the effect of registration of:
  • An aircraft?

  • An aircraft mortgage?

  • An aircraft lease?

Aircraft

The registration of an aircraft and the issuing of a certificate of registration in the name of the operator of the aircraft do not confer or imply ownership (title) of the aircraft. However, the records of the South African Civil Aviation Authority (SACAA) refer to the registered operator as the "owner" of the aircraft. In relation to an aircraft, "owner" means a person in whose name the aircraft is registered, including any person who is or has been acting as agent in South Africa for a foreign owner, or any person who hires the aircraft at the time (section 1, Aviation Act).

Aircraft mortgage

Registration of an aircraft mortgage on the South African Register of Aircraft Mortgages (SARAM) confers recognition and priority to the interests of the mortgagee. The South African Civil Aircraft Register will also be endorsed accordingly.

Registration of the mortgage with the SACAA is sufficient to perfect the mortgage and the mortgagee's interest. Registration is considered to be a notice to the whole world of the existence of the mortgage over the aircraft. After the date of the registration of the mortgage, the mortgage will not be affected by any of the following events:

  • Act of insolvency committed by the mortgagor.

  • Sequestration of the estate of the mortgagor.

  • Winding-up of the mortgagor (if the mortgagor is a company).

The mortgage remains in effect until it is discharged or amended.

Aircraft lease

The filing of aircraft leases with the SACAA does not confer any rights to the lessor in respect of the aircraft, but aircraft leases can be registered with the International Registry (see Question 5). However, the rights under an aircraft lease can be secured by a separate deed of cession or a pledge. There is no central registry of pledges or cessions in South Africa.

 
7. What is the procedure for obtaining a certificate of airworthiness?

To obtain a certificate of airworthiness, the operator of the aircraft must have both:

  • The certificate of registration of the aircraft.

  • A certificate for aircraft maintenance organisation (AMO) issued by the South African Civil Aviation Authority (SACAA).

An application for a ferry certificate of airworthiness must be submitted to the SACAA, which will issue a certificate valid for a period of 30 days only. While an aircraft is operated under a ferry certificate of airworthiness, it can only be occupied by essential crew required for the ferry flight and no other passengers can be carried. During this period, the aircraft cannot be used for any commercial purposes.

The SACAA can only extend the ferry certificate of airworthiness beyond the 30-day limitation in exceptional circumstances, with the approval of the Director of Civil Aviation (DCA).

The organisation releasing the aircraft to service (manufacturer's aircraft completion centre) must hold a valid AMO approval issued by the DCA. This organisation must complete a:

  • Certificate of release to service (CRS) for the aircraft.

  • Check sheet.

These documents must be submitted by the operator to the SACAA before the issuance of a ferry certificate of airworthiness.

On arrival of the aircraft in South Africa, the SACAA will inspect the aircraft and its maintenance documentation. A full certificate of airworthiness (that is, for the intended operations as endorsed on the certificate) can be issued on satisfaction of all relevant requirements. If the owner of the aircraft chooses to ferry the aircraft to South Africa on a foreign register, the normal procedures for issuance of a certificate of airworthiness will apply.

The SACAA and the applicant for a certificate of airworthiness will hold a pre-application meeting to discuss the following:

  • Aircraft import requirements.

  • Certification process and criteria that will be applied.

  • SACAA inspection team.

  • Anticipated completion period for the certification process.

  • Regulatory requirements applicable to the application.

  • Registration requirements for aircraft to be registered abroad.

  • Equipment to be installed on the aircraft, for the kind of operation required.

  • Documents and forms to be submitted for approval.

  • Maintenance programme to be followed for the maintenance of the aircraft.

  • Specific maintenance to be performed on the aircraft before the issuance of a certificate of airworthiness.

  • AMO requirements that must be met before the aircraft can be released to service.

  • Requirement for preparing and keeping current status reports.

  • Data relevant to the history of the aircraft that will be required.

  • Fees involved.

  • Travel logistics, for aircraft inspection to be conducted abroad.

  • Aeronautical information circular (that is, the applicable requirements when importing a "first of type" aircraft).

  • The aircraft intended lease arrangements and maintenance agreement (if applicable).

  • Test flight or other tests that may be required during the certification process.

  • Requirements for opening South African aircraft logbooks.

  • Noise certificate, engine emission, fuel vetting and radio licence requirements.

  • Proposed operator.

  • Certificate of airworthiness renewal and fees payment requirement.

  • Various aspects of the proposed application.

  • Any questions the applicant may have about the aircraft certification process.

  • For an aircraft intended to be operated commercially:

    • the proposed operator;

    • the type of operation intended; and

    • the commercial aircraft requirements that the applicant must meet before the issuance of a certificate of airworthiness.

Following the pre-application meeting, the formal application meeting will be convened. The applicant will be notified by letter of whether the formal application is accepted or rejected. The SACAA's acceptance of a formal application does not constitute approval or acceptance of individual attachments. These documents will be evaluated thoroughly during subsequent phases of the certification process. If the formal application is not accepted, it will be returned with a written explanation of the reasons for its return.

During the formal application meeting, the certification team of the SACAA and the applicant will review the application package and resolve any discrepancies. If mutual agreements cannot be reached on any discrepancies, the certification team must terminate the meeting and inform the applicant that the application package is not acceptable. The application package will then be returned to the applicant with a letter explaining the reasons for the rejection. When an agreement has been reached on corrective actions for any deficiencies, the certification team must encourage the applicant to present any questions concerning the upcoming certification. The certification team members must answer these questions fully.

Before the conclusion of the formal application meeting, the certification team must ensure that the applicant clearly understands the following:

  • The applicant will receive notification in writing if the application is rejected. This notification is usually issued five working days after the formal application meeting. A telephone call concerning the application rejection can be made to the applicant as soon as the determination is made, indicating that the written notification will follow and will include the reasons for the rejection.

  • If the application is acceptable, the certification process continues with an in-depth examination of the application and associated documents during the "document compliance phase". In some cases, telephone confirmation is sufficient, although written confirmation is encouraged. A letter accepting the application will be sent, as the time limit starts on receipt of the application in an acceptable form.

  • Acceptance of the formal application does not constitute acceptance or approval of any attached documents. They will be reviewed further, and the applicant will be expected to take corrective action as required. Acceptance or approval of each attachment will be indicated separately at a later date during the certification process.

  • If the applicant is unable to meet the targets as proposed during the formal meeting, the SACAA will need additional time, as agreed on during the meeting, to make the necessary reviews and inspections. Consequently, the proposed inspection date can be delayed.

  • If the application is rejected, the SACAA will document thoroughly the reasons for the rejection. The reasons must clearly indicate that to proceed with the certification process would not be productive unless the applicant is willing to accept the certification team's corrective suggestions. Reasons for rejection may include a lack of agreement on the appropriate course of action.

If the application is acceptable and the attachments are in order, the certificate of airworthiness can be issued within two to three weeks from the date of receipt of the application in an acceptable form.

Deregistration

8. What is the effect of deregistration of:
  • An aircraft?

  • An aircraft mortgage?

  • An aircraft lease?

Aircraft

Deregistration of an aircraft from the South African Civil Aircraft Register is done before exporting an aircraft to another jurisdiction, for registration on that jurisdiction's register. On deregistration, the SACAA will cancel the registration certificate of the aircraft and issue a certificate of cancellation.

Deregistration can be effected within two to four weeks, depending on the availability of the required information to effect deregistration.

Deregistration of an aircraft entitles the mortgagee or lessor to repossess the aircraft. The mortgagee does not need to obtain the mortgagor's consent to deregister and export the aircraft if the mortgagor had signed a deregistration power of attorney and the irrevocable deregistration export request authorisation in favour of the mortgagee.

Aircraft mortgage

The effect of discharging a mortgage is that the mortgagee's security interest in respect of the aircraft is terminated. The discharge of the mortgage is registered by the SACAA on filing of Form MAR 3, which contains a certificate of discharge of the mortgage to be signed by the DCA, confirming that the discharge was recorded in the South African Register of Aircraft Mortgages (SARAM). The DCA will make an entry in the SARAM recording that the mortgage has been discharged, and will cancel the deed of mortgage.

A mortgage can be discharged within two weeks from the date of filing of Form MAR 3.

Aircraft lease

Aircraft leases cannot be registered with the SACAA (see Question 5). Therefore, no deregistration can be effected, and no certificate to that effect can be issued.

 

Transfer of title

9. How is legal title to an aircraft transferred?

Airframe

Usually, an aircraft is sold as a whole (that is, with engines installed on it), although engines can be sold separately. The main terms of the agreement usually include the following:

  • Sale and purchase of an adequately described aircraft.

  • Determination of the purchase price.

  • Any conditions to which the sale agreement is subject.

  • Method of payment.

  • Transfer of risk in, and title to, the aircraft.

Title to an aircraft is transferred on delivery of a bill of sale by the seller to the purchaser. There are no notarisation or registration requirements applicable to bills of sale in South Africa. If the aircraft being sold was registered in South Africa in the name of the seller (as operator) and is to be registered in South Africa in the name of the purchaser (as operator), the SACAA records will need to be updated to reflect that the purchaser is the new owner. However, if the aircraft was registered in the name of an independent operator under a lease and the purchaser decides to continue the lease after the sale, the ownership records of the SACAA do not need to be updated, as the independent operator will remain registered as the "owner". However, any new security interest (mortgage bond) will need to be registered in the name of the purchaser.

Engine

The same considerations apply as for the sale of airframes, even where engines are sold separately (see above, Airframe).

 

Security

Mortgages

10. What are the types of aircraft mortgages available? What are the validity requirements for aircraft mortgages?

Only aircraft mortgages registered with the South African Civil Aviation Authority (SACAA) are recognised. To be valid, an aircraft mortgage must be created by a deed of mortgage signed by the mortgagor and mortgagee. To be enforceable, the mortgage must be registered with the SACAA on Form MAR 2.1.

An aircraft mortgage can also be registered with the International Registry.

See Question 4 for information on the applicable registration procedure for aircraft mortgages.

 
11. Will a registered mortgage take priority over other mortgages and charges over the aircraft?

If there are more than one mortgage registered in respect of the same aircraft, the order of priority between the mortgagees is determined by the date and time at which each mortgage is recorded in the South African Register of Aircraft Mortgages (not by the date and time at which each deed of mortgage was executed). A registered mortgage will have priority over any other encumbrances over the aircraft that are recognised as security interests. There are no exceptions to these statutory provisions.

Liens over aircraft cannot be registered with the South African Civil Aviation Authority, but can be registered with the International Registry in accordance with the Convention on International Interests in Mobile Equipment.

 
12. Can spare parts be subject to an aircraft mortgage? If not, are there any other forms of security that can be taken over spare parts?

Spare parts that are not installed on an aircraft are not part of that aircraft and cannot be subject to a registered mortgage bond over that aircraft (see Question 4). However, spare parts can be subject to a notarial bond registrable with the Registrar of Deeds.

Leases

13. What forms of security can be granted over an aircraft lease?

Cessions and pledges can be taken over leases. There is no register of pledges and cessions, and these cannot be registered with the South African Civil Aviation Authority.

Other forms of security

14. What other forms of security can be taken over an aircraft?

Airframe

The only forms of security that can be taken over an airframe are:

  • Mortgage bonds registered on the South African Register of Aircraft Mortgages or with the International Registry.

  • Special notarial bonds registered with the Registrar of Deeds (see Questions 2 and 4).

Engine

Special notarial bonds registered with the Registrar of Deeds are the only form of security that can be taken over an engine (see Questions 2 and 4).

 
15. What other forms of security over an aircraft can be registered?

The only recognised and registrable form of security over an aircraft as a whole is a mortgage, which can be registered with the South African Civil Aviation Authority and/or the International Registry.

General notarial bonds can be registered with the Registrar of Deeds in respect of engines and spare parts, or engines only.

 

Transfer of security

16. Is it possible to transfer security interests over an aircraft? Are there specific issues of local law when transferring security interests?

It is possible to transfer security interests over an aircraft. A registered aircraft mortgage can be transferred to any person through a deed of cession (assignment). There is no statutory format for a deed of cession (assignment) under South African law. The deed of cession must be lodged at the South African Civil Aviation Authority (see Question 17).

 
17. Is a transfer of security subject to registration requirements?

A deed of cession for the transfer of security interests must be registered with the South African Civil Aviation Authority (SACAA) along with completed Form MAR4 and supporting documents. The SACAA will:

  • Enter the name of the transferee as mortgagee on the South African Register of Aircraft Mortgages.

  • Record the transfer by endorsing the deed of mortgage and deed of cession, stating the date and time of recording.

 

Enforcement of security and repossession

Mortgages

18. What are the circumstances in which a mortgagee can take possession of the aircraft and/or sell the aircraft? What requirements must the mortgagee comply with?

In the event of a breach of any obligations under the underlying agreements (for example, a facility agreement or other finance document), a mortgagee with a deregistration power of attorney and irrevocable deregistration and export request authorisation (IDERA) signed by the mortgagor can apply to the South African Civil Aviation Authority (SACAA) for the deregistration and exportation of the aircraft, without any co-operation from the mortgagor.

However, to first obtain possession of the aircraft, the mortgagee must follow due process.

Mortgage registered with the SACAA

In the case of a mortgage bond registered with the SACAA, self-help clauses are not legally valid, and a foreclosure procedure must be followed.

The mortgagee must apply to the High Court for leave to attach the aircraft. This can be done on an urgent basis by way of an initial order of attachment obtained in judge's chambers without notice to the mortgagor. The initial order is served on the mortgagor, the lessee or charter party, the pilots, Air Traffic Control and the airport later that same day, and the aircraft is placed under attachment. The initial attachment order will have a stated return date of six weeks, during which the mortgagor, the lessee or charter party can file any objections to the order. For example, the lessee can argue that it was not in arrears on the lease payments or not in breach of the lease. Once the order is made final on the return day, the aircraft can be flown out of the jurisdiction and exported out of South Africa under the IDERA.

Mortgage registered with the International Registry (IR)

While the South African Government made declarations agreeing to self-help in relation to repossessions of aircraft mortgages registered with the IR, there is a concern that these declarations may be contrary to the South African Constitution. Therefore, it may be prudent to seek a court order of attachment before repossessing an aircraft in this context. The same process as for an aircraft mortgage registered with the SACAA will apply (see above, Mortgage registered with the SACAA).

 
19. What is the procedure for repossession of the aircraft?
 
20. Will local courts recognise a choice of foreign law in an aircraft mortgage? Are there any mandatory local rules that apply, despite a choice of foreign law?

South African common law allows parties to an agreement to agree on the law that governs their contractual rights and obligations, wholly or in part. Additionally, in the aviation context, the South African Government made a declaration to that end in accordance with the Convention on International Interests in Mobile Equipment.

However, South African courts will refuse to uphold or enforce a choice of law provision in an agreement in any of the following cases:

  • The provision is contrary to public policy.

  • Giving a judgment would be contrary to natural justice.

  • The law was chosen to deliberately avoid a provision of South African law that would have applied otherwise.

An expert on the foreign law chosen by the parties will need to assist a South African court in applying this law in any proceedings.

In the event of insolvency of any entity that is resident or has assets in South Africa, the South African laws of insolvency will apply regardless of the choice of law provisions. However, the mortgagee will not be affected by the following events after the date of registration of the mortgage:

  • Any act of insolvency committed by the mortgagor.

  • Sequestration of the estate of the mortgagor.

  • Winding-up of the mortgagor (if the mortgagor is a company).

 
21. Will local courts recognise and enforce a foreign court judgment in favour of a mortgagee?

A foreign judgment is not directly enforceable in South Africa, but constitutes a cause of action that can be enforced by the South African courts, provided that the following requirements are met:

  • The court that pronounced the judgment had jurisdiction to hear the case under the principles recognised by South African law on the jurisdiction of foreign courts (sometimes referred to as international jurisdiction or competence).

  • The judgment is final and conclusive in its effect and has not become superannuated.

  • The recognition and enforcement of the judgment by South African courts would not be contrary to public policy.

  • The judgment was not obtained by fraudulent means.

  • The judgment does not involve the enforcement of a penal or revenue law of the foreign state.

  • The enforcement of the judgment is not precluded by the provisions of the Protection of Business Act 99 of 1978, as amended.

Other forms of security

22. What is the applicable procedure for repossession of an aircraft under other forms of security interests?

See Question 18. There are no other methods or procedures for repossessing an aircraft in South Africa.

Leases

23. In the event of a default event under an aircraft lease, can the lessor take possession of the aircraft without judicial intervention?

If the aircraft lease is not registered with the International Registry (IR), the lessor must obtain a court order to attach and retake possession of the aircraft from the defaulting lessee. The process will be the same as that outlined in Question 18. Self-help clauses in leases are invalid.

Where the lease is registered on the IR, although the South African Government made declarations agreeing to self-help in relation to repossessions, there is a concern that these declarations may be contrary to the South African Constitution. Therefore, it may be prudent to seek a court order of attachment before repossessing a leased aircraft in this context. The process will therefore be the same as that outlined in Question 18. If a deregistration power of attorney and irrevocable deregistration and export request authorisation were signed in favour of the lessor, the lessor, after having obtained possession of the aircraft under the court order for attachment, will be able to deregister the aircraft and export the aircraft out of South Africa without recourse to the courts.

 
24. What is the procedure for taking possession of an aircraft before the expiration of a lease?

A lessor can take possession of an aircraft before the expiration of the lease agreement if it cancelled the lease agreement on valid grounds (see Question 23). See Question 18 for information on the procedure for repossession.

Additionally, the lessor can approach any court of South Africa for any remedy the lessor genuinely believes to be entitled to, including any form of interdict (injunction).

 
25. If recovery of the aircraft is contested by the lessee and a court judgment is obtained in favour of the lessor, how long is it likely to take to gain possession of the aircraft?

Contested motion proceedings can take between three and six months to be finalised. The possession itself pursuant to the court order (once final) can take a few hours or a few days.

 
26. Will local courts recognise a foreign court judgment in favour of a lessor?
 

Cape Town Convention

27. Has your country signed and ratified the Convention on International Interests in Mobile Equipment (Cape Town Convention)?

South Africa ratified the Cape Town Convention and enacted it into local law through a local South African act, the Convention on International Interests in Mobile Equipment Act No. 4 of 2007, with effect from 24 August 2007.

 
28. Has ratification of the Cape Town Convention caused any conflicts or issues with local laws?

The self-help provisions of the Cape Town Convention, which allow a mortgagee or lessor to repossess an aircraft without judicial intervention, are regarded as being potentially in conflict with the South African Constitution, by depriving the mortgagor or lessee of their constitutional right of access to the courts.

 
29. What is the legal position regarding non-consensual rights and interests under Article 39 of the Cape Town Convention?

South Africa declared that all categories of non-consensual rights or interests that, under South African law, have and will in the future have priority over an interest in an object equivalent to that of the holder of a registered international interest, must have priority over a registered international interest. The declared non-consensual rights are:

  • Rights of a person obtaining a court order permitting attachment of an aircraft object in partial or full satisfaction of a legal judgment.

  • Liens or other rights of a state entity relating to taxes or other unpaid charges, which were declared to be registrable under the Cape Town Convention as regards any category of object as if the right or interest were international interests (and regulated accordingly).

 
30. Has your country adopted the remedies on insolvency provided under Article XI of the Protocol to the Cape Town Convention?

South Africa has made a declaration that:

  • It will apply Article XI, Alternative A in its entirety to all types of insolvency proceedings.

  • The waiting period for the purposes of Article XI(3) of that Alternative must be 30 calendar days.

 
31. What is the procedure to file an irrevocable deregistration and export request authorisation (IDERA)?

An IDERA can be filed with the South African Civil Aviation Authority as a standalone document, together with the deregistration power of attorney or together with both the deregistration power of attorney and the deed of mortgage.

 

Reform

32. Are there any proposals for reform in the area of aviation finance?

There are currently pending amendments to the Civil Aviation Regulations, but these amendments either affect technical specifications or registration marks, and are not directly relevant to aviation finance.

 

Online resources

South African Civil Aviation Authority (SACAA)

W www.caa.co.za

Description. This is an official website maintained by the SACAA. The website contains information on aircraft registration and provides access to the relevant aviation legislation. The website is up to date.

Department of Transport of the Republic of South Africa

W www.transport.gov.za

Description. This is the official website of the Department of Transport of South Africa, which is maintained by the Department. The website provides access to legislation and is up to date.

International Institute for the Unification of Private Law

W www.unidroit.org

Description. This is the official website of the International Institute for the Unification of Private Law. It contains declarations relating to the Cape Town Convention and its Protocol.

International Registry

W www.internationalregistry.aero

Description. This is the official website of the electronic registry of mobile assets, which operates under the legal framework of the Cape Town Convention and its Protocol. The website is maintained and operated by International Registry officials, and the authors believe that it is up to date. The website contains information relating to the registration of international interests over aircraft.



Contributor profiles

Claire van Zuylen, Partner

Bowman Gilfillan

T +27 11 669 9406
F +27 11 669 9001
E c.vanzuylen@bowman.co.za
W www.bowman.co.za

Professional qualifications. South Africa, Attorney

Areas of practice. Aviation finance; leasing and transactions; restructuring and insolvency.

Non-professional qualifications. LLB Degree

Professional associations/memberships. International Association of Restructuring, Insolvency and Bankruptcy Professionals (INSOL); South African Restructuring and Insolvency Practitioners Association (SARIPA).

Publications

  • South African chapter, "Insolvency and Restructuring" (Getting the Deal Through), 2004-2016.

  • South African chapter, "Cross-Border Insolvency, a commentary on the UNCITRAL Model Law" (Globe Publishers), 2007 and 2008.

Sizwe Msimang, Senior Associate

Bowman Gilfillan

T +27 11 669 9471
F +27 11 669 9001
E s.msimang@bowman.co.za
W www.bowman.co.za

Professional qualifications. South Africa, Attorney

Areas of practice. Aviation finance; leasing and transactions; restructuring and insolvency.

Non-professional qualifications. LLB Degree


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