Aircraft Lease and Registration in the Maldives: Questions and Answers

Maldives, ownership and security rights over aircraft are recognised. This article answers questions concerning the lease and registration of aircraft in the Maldives.

Questions

Who is entitled to register an aircraft in the Maldives?

Under Maldivian law, the following entities are deemed as persons which are qualified to apply to register an aircraft in the Maldives:

• the Maldivian government;
• Maldivian nationals;
• companies and organisations;
• associations registered in the Maldives; and
• companies, organisations and associations registered outside the Maldives and conducting business in the Maldives.

If an aircraft is leased to a qualified person (whether or not an unqualified person is the aircraft's owner), the aircraft should be registered in the lessee's name if it is satisfied that the aircraft may otherwise be properly so registered. Subject to the law, the aircraft may remain so registered during the continuance of the lease.

The Maldives recognises rights in aircraft under international law. The Maldives ratified the Convention on the International Recognition of Rights in Aircraft (Geneva Convention 1948) on 5 September 1995. However, the Maldives is not a signatory to the Cape Town Convention on International Interests in Mobile Equipment.

What rights in aircraft are recognised in the Maldives?

The Maldives recognises rights in aircraft, including:

• rights of property in aircraft;
• rights to recognise mortgages;
• rights to recognise hypothecation; and
• similar rights in aircraft.

Such security rights are recorded in the Civil Aircraft Registry.

What enforcement measures are available for aircraft lease areements governed by foreign laws?

Aircraft lease agreements may be governed by foreign laws (in fact, it is customary to have lease agreements governed by foreign laws).

Foreign court judgments are not directly enforceable in the Maldives – a local court judgment would be required.

On the other hand, foreign arbitral awards can be enforced in the Maldives. The Maldives is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Arbitral awards made in foreign countries are recognised and enforced in the Maldives so long as the award was not made in contradiction with the procedures in the Maldives Arbitration Act. The enforcement of an arbitral award recognised accordingly is mandatory in the Maldives.

What taxes apply to non-resident aircraft lessors?

Income derived as lease payments by a non-resident aircraft lessor can be exempt from withholding tax where the commissioner general of taxation determines that an aircraft lessor resident in the Maldives is not liable to pay income tax or tax similar to income tax imposed by the laws of the country or territory in which the non-resident aircraft lessor is resident, or in other circumstances in which the non-resident aircraft lessor is exempt.

Lessors can invoke an irrevocable deregistration and export authorisation or a similar power of attorney to deregister and export aircraft from the Maldives.

What are the qualifying conditions for applying for an all operational wet and dry lease?

The qualifying conditions for applying for a wet lease are as follows:

• The lessee and lessor must hold valid air operator certificates throughout the duration of the lease.
• The lessor should retain operational control of the aircraft.
• For wet-lease arrangements among Maldivian air operators, the lessee must ensure that the lessor maintains the aircraft as per the lessor's approved maintenance programme.
• The lessee must ensure that reportable occurrences and incidents affecting the leased aircraft are reported to the Civil Aviation Authority.
• The duration of a wet lease is three months, subject to a one-time extension of an additional three months.
• The duration of an intrastate wet lease is 12 months, subject to a one-time extension of an additional 12 months.

When applying for a dry lease, there are two conditions which must be met:

• The lessee must ensure that the aircraft equipment relating to flight operations meets Maldivian requirements.
• The duration of a dry lease is six months.

For all types of lease, the following criteria must be met:

• The lessee must demonstrate the need to enter into an aircraft operational lease arrangement.
• The lessee must ensure that provisions are made in the leasing arrangement to enable the Civil Aviation Authority to inspect the aircraft when necessary.
• When the leasing arrangement involves safety inspections by foreign authorities, the leasing arrangement should include information on compliance with relevant regulations of both the Civil Aviation Authority and the foreign authority.

For more information, please contact:

Mr. Ahmed Murad, Senior Partner

Email: [email protected]