The rationale of the new Aircraft Registration Act, 2010 is to establish a robust legal framework that would assist in the creation and support of a successful Malta aircraft register, while consolidating the laws on Malta aircraft registration into one single legislative instrument. The Aircraft Registration Act provides for a National Aircraft Register. One is to note that there is no separate register for aircraft engines. The Aircraft Registration Act, is intended to attract aircraft owners and lessors who wish to register their commercial and private aircrafts in Malta. The definition of aircraft includes air balloons, gliders, seaplanes and helicopters.
The Act also provides for contemporary aircraft ownership trends for business and private jets, including concepts such as fractional ownership and ownership through trust structures. Moreover, it introduces a number of innovative concepts which make the Maltese Aviation Register increasingly competitive when comparing it to the world’s leading aviation registers. The Act seeks to do this by limiting nationality and form requirements in order to make the register accessible to as many owners and operators as possible, while ensuring that the register requirements comply with EU law.
Eligibility for Registration
The aircraft registration act provides for those parties, which are eligible to register aircraft on the Malta aircraft register. The following parties may register any aircraft on the Malta aircraft register, be it a private aircraft or an aircraft utilised for hire and/or reward:
- The Government of Malta;
- A citizen of Malta or a citizen of a Member State of the EU or of an EEA State, or Switzerland, having a place of residence or business in Malta, the EU, the EEA, or Switzerland, including a person sharing in the ownership of such aircraft by virtue of the community of acquests subsisting between such person and a citizen as described above in whose name the aircraft is registered;
- An undertaking formed and existing in accordance with the laws of Malta, of a Member State of the E.U., of an EEA State, or of Switzerland and having its registered office, central administration and principal place of business within Malta, or the EU, or the EEA, or Switzerland, whereof not less than 50% of the undertaking is owned and effectively controlled by the Government of Malta, or by any Member State of the EU or by persons referred to above, whether directly or indirectly through one or more intermediate undertakings.
With regard to private aircraft the eligibility requirements are broader. To this end Malta aircraft legislation provides that a natural person who is a citizen of, or an undertaking established in a jurisdiction approved by the Minister may register aircraft provided it:
- has legal capacity to own/operate an aircraft in terms of law;
- appoints a local resident agent to represent the owner in Malta for matters concerning the registration of the aircraft;
- complies with applicable regulations/guidelines.
Moreover, the Act provides for the innovative concept of the registration of aircraft under construction. Such can be registered so long as such aircraft is uniquely identifiable.
Issue of Registration Certification
During the registration process the applicant would be required to submit legal documentation to substantiate the information entered in the application form. This documentation would usually include, but may not be restricted to the following:
- a bill of sale or other proof of ownership of the aircraft;
- a copy of the lease or operating agreement if the aircraft is leased;
- a de-registration certificate or formal notification by the civil aviation authority if the aircraft was previously registered in another state;
- a statement on registered mortgages or similar encumbrances as the case may be;
- power of attorney, company resolution or evidence of authority for signatory/ies of application form.
The Aircraft Registration Act provides for citizens of approved jurisdictions or undertakings established in approved jurisdictions to qualify to register aircraft. An international owner seeking to register Maltese aircraft in its name is required to produce the pertinent documentation to the Directorate of Civil Aviation including an original “Declaration of Appointment of Resident Agent” duly notarised and legalised by apostille. Where an applicant seeking to register Malta aircraft in its name is a body corporate and is resident outside Malta, it is required to file an original legal opinion (outlining that the person signing the opinion acted as legal counsel for the incorporation of the foreign company and has reviewed the Articles of Incorporation of the Company) duly notarised and legalised by a lawyer qualified in the jurisdiction where the international owner is established, and issued as of recent date (not earlier than 3 months). The applicant is also required to submit an original Certificate of Good Standing issued by the competent (companies) authority, as of recent date, referable to the international owner. Finally, a copy of the valid Memorandum and Articles of Association (M&A) of the international owner, duly certified by a lawyer or notary public, as a true copy of the original M&A, also ought to be submitted.
When an application is submitted by an international registrant from an approved jurisdiction, the applicant is required to appoint, prior to registration of an aircraft, a resident agent who shall be based in Malta. The international registrant shall ensure that it has a validly appointed resident agent at all times. The resident agent shall act as the channel of communication between the International Registrant and the Director General of Civil Aviation and other Maltese government departments and authorities. WDM International can be duly appointed as resident agent.
A Resident Agent must be habitually resident in Malta, is not interdicted or incapacitated or is an undischarged bankrupt; has not been convicted of any of the crimes affecting public trust or of theft or of fraud or money laundering or of knowingly receiving property obtained by theft or fraud and has satisfied the Director General of Civil Aviation that he is a person capable of carrying out the functions stated under the Aircraft Registration Act 2010. The appointed resident agent has to accept the appointment in writing.
Special Privileges and Mortgages on Aircraft
An aircraft constitutes a particular class of movables forming separate and distinct assets within the estate of their owners for the security of actions and claims to which the aircraft may be subject. In the case of bankruptcy or insolvency of the owner of an aircraft, all actions and claims to which the aircraft may be subject, shall have preference on the aircraft over all other debts of the estate.
When dealing with mortgages an ‘aircraft’ shall comprise:
- All data, manuals and technical records
- The airframe, all equipment, machinery and other appurtenances as accessories belonging to the aircraft, which are on board or which have been temporary removed there from.
- Any engines owned by the owner of the aircraft whether attached to the aircraft of not as well as any replacement engines which are designated for use on the aircraft and owned by the owner of the aircraft but temporarily not attached to the aircraft.
Mortgages and special privileges shall have priority of claims on the aircraft over all other debts of the owner. Given the mortgage has been created or the special privilege arises, the bankruptcy or insolvency of the owner of the aircraft shall not affect the actions and claims to which the aircraft may be subject. A registered mortgage or a privilege shall attach to the aircraft (or share therein) until it is discharged, thus when an aircraft has been sold the interests of the mortgagee as well as that of the privileged creditor in the aircraft shall pass on to the proceeds of the sale of the aircraft. Mortgages are unknown in Maltese Civil Law. Nonetheless they now form part of Maltese law solely for the purpose of putting a ship or aircraft as a security for a loan or debt. The law also prescribes that it is lawful for a mortgage to be executed and registered in favour of a security trustee. Such security trustee shall be recognised as the mortgagee and shall be entitled to exercise all the rights in relation to that mortgage.
An aircraft may also constitute security for a debt or other obligation either by agreement or by operation of the law in the form of a special privilege. A special privilege is subject to registration in the International Registry of Mobile Assets and such registration is necessary for the continuing existence of the privilege.
The role of a security trustee in such a scenario is fundamental because of the huge costs involved in aircraft financing where financiers may wish to share the burden of these costs. The law acknowledges this and provides for a situation where, rather than having each financier enforcing the security, a pool of financiers could appoint one of themselves as security trustee.
This is based on the advantages that are recognized in the context of syndication of creditors, whereby the administration of the creditors’ interests by the sole security trustee who would hold the security on their behalf would expedite matters in relation to the debt administration, whilst facilitating the operation of the arrangement, which necessity would be rendered more impelling, the greater the number of creditors involved.
A Maltese registered aircraft or a share therein may be made a security for any debt or other obligation by means of a mortgage instrument, signed by the mortgagor in favour of the mortgagee in the presence of, and attested by, a witness or witnesses. On the production of a mortgage for registration in the prescribed form, the Director General shall record it in the national aircraft register.
The Cape Town Convention and its Aircraft Protocol
Malta has acceded to the Cape Town Convention on International Interests in Mobile Equipment and the Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment on 1st October 2010, coming into force in Malta on 1st February, 2011.
The Treaty provides for rules in respect of the recognition, enforcement and priority status of interests in mobile equipment. The Treaty also provides for the establishment of an international interest which is proprietary in character and which encompasses security agreements, title reservation agreements, leasing agreements and their equivalents. International Interests are registered in the International Registry, which is established under the Treaty and which is an on-line, notice based registry.
Holders of an international interest are afforded extensive remedies under the Treaty in the event of the debtor’s default or insolvency. It also establishes the right for registrants of aircraft, (as debtors) to grant an Irrevocable De-Registration and Export Request Authorization (IDERA) in favour of an authorised party, to procure the de-registration and export of the aircraft.
Where an IDERA has been issued and it has been submitted to be recorded at the Civil Aviation Directorate, the Director General of Civil Aviation shall record the details of such IDERA, or any other power of attorney, irrevocable or otherwise, as the case may be.
The treaty applies to the following aircraft and aircraft equipment:
Airframes that are type certificated to transport:
- At least eight (8) persons including crew; or
- Goods in excess of 2750 kilograms (6050 pounds);
Helicopters that are type certificated to transport:
- At least five (5) persons including crew; or
- Goods in excess of 450 kilograms (990 pounds)
Requirements to Lodge an IDERA
The IDERA has to be submitted to the Civil Aviation Directorate in the prescribed format as the IDERA should be duly signed by the registrant or a person duly authorised to act for and on behalf of the registrant or the aircraft owner and submitted in duplicate. The signature on the IDERA shall be notarised and legalised by apostille (the requirement for legalisation by apostille applies if the IDERA is executed outside Malta) and be accompanied by sufficient evidence that the person signing the IDERA has due authority to bind the registered owner by his/her signature. Signed scanned copies are generally accepted by email until the originals are submitted.
Revocation of an IDERA
Revocation of an IDERA where recorded by the Civil Aviation Directorate, requires the written consent of the authorised party. A request to cancel an aircraft’s registration due to its export from Malta can only be made by the last registered owner, the last owner of record, the foreign purchaser when supported by evidence of ownership, or by the authorized party under an Irrevocable De-Registration and Export Request Authorization. Authorised signatory/ies requirements apply as for the IDERA. It has to be submitted in duplicate and will be agreed by the CAD when signed and dated. One copy will be returned and one copy will be kept by the CAD.
Attainment of an Air Operator Certificate (AOC)
An AOC, issued by Transport Malta Civil Aviation Directorate is necessary for an air transport organisation to carry out any air service within the (European) Community in accordance with Council Regulation 1008/2008 on common rules for the operation of air services in the Community As the AOC is the certificate authorising a business to operate as an air transport organisation, the requirements apply to those operational and technical aspects of the business relating to equipment (including aircraft and their support equipment), organisation, staffing and so on.
The requirements for the business organisation in terms of adequacy of capital, business plan and other commercial matters shall also have to be met. In these matters, the organisation shall be required to comply with the requirements of the CAD and to obtain an Air Operating Licence (AOL).
An operator shall not operate an aircraft for the purpose of commercial air transportation otherwise than under, and in accordance with, the terms of an AOC.
An applicant for an AOC, or variation of an AOC, shall allow the CAD to examine all safety aspects of the proposed operation and to provide the CAD with access to their personnel, aircraft, operations and facilities and associated records for the purpose of certification and continued surveillance.
An applicant for an AOC must:
- not hold an AOC issued by another Authority unless specifically approved by the Authorities concerned:
- have his principal place of business and, if any, his registered office located in the EU State responsible for issuing the AOC;
- satisfy the Authority that he is able to conduct safe operations.
If an operator has aircraft registered in different Member States, appropriate arrangements shall be made to ensure appropriate safety oversight. Moreover, an operator shall grant the Authority access to his organisation and aircraft and shall ensure that, with respect to maintenance, access is granted to any associated Part-145 maintenance organisation, to determine continued compliance with regulations.
An AOC will be varied, suspended or revoked if the CAD is no longer satisfied that the operator can maintain safe operations.
At WDM International we can provide full consultancy and technical assistance to our clients who wish to register their aircraft and maintain such registration in Malta. We can also provide administrative support functions and the setting up of corporate vehicles as well as advice on the Cape Town Convention where necessary. WDM International has experience in drafting sale and purchase contracts of aircraft, and in dealing with aircraft ownership, finance and leasing structures. We can also provide assistance in relation to the application of an AOC.