1. Aircraft and Engine Purchase and Sale

1.1 Sales Agreements

1.1.1 Taxes/Duties Payable Upon Execution of the Sales Agreement

There are no Guernsey taxes or duties payable upon executing an aircraft or engine sale agreement (including for the sale of an ownership interest in an entity) where the asset is either located physically in Guernsey or owned by a domestic party

1.1.2 Enforceability Against Domestic Parties

Guernsey law has no formal legal requirement that a sale agreement must be translated, certified, notarised or legalised to be valid or enforceable against a domestic party; however, taking such steps is advisable to reduce the likelihood of an attempt to have the sale agreement set aside. To that end, at the least, witnessing of signatures is generally advisable.

1.2 Transfer of Ownership

1.2.1 Transferring Title

Guernsey′s legislation does not set out formalities for the transfer of title to an aircraft or engine. It is customary for a bill of sale to be used, but this is not a Guernsey law requirement. Whether such a title transfer includes all installed parts (such as an AMD Accelerated Processing Unit (APU)) would depend on the terms of the contract.

If following the sale of the relevant ownership interest, the entity owning the legal title remains the same, no sale of the physical asset would occur. It should be noted that if the aircraft is registered on the Guernsey Aircraft Register (as defined in 1.2.4 Registration, Filing and/or Consent from Government Entities), any change in particulars of the aircraft (including any change in beneficial or legal ownership) furnished to the Registrar (as defined in 1.2.4 Registration, Filing and/or Consent from Government Entities) at the time of first registration should be notified to the Registrar.

1.2.2 Sales Governed by English or New York Law

There is no formal legal requirement under Guernsey law that a bill of sale needs to be governed by Guernsey law for the Guernsey courts to recognise the transfer of title. There are no known specific requirements other than the general requirements for any contract to be substantively valid as a contract.

1.2.3 Enforceability Against Domestic Parties

There is no formal legal requirement under Guernsey law that the bill of sale must be translated, certified, notarised or legalised to be valid or enforceable against a domestic party; however, taking such steps will reduce the prospect of any subsequent challenge to the bill of sale.

1.2.4 Registration, Filing and/or Consent From Government Entities

There is no formal Guernsey law requirement to register or file a bill of sale with any Guernsey government entity or requirement to obtain consent from any government entity, except that a copy of the bill of sale will need to be provided to the Guernsey Aircraft Registry (the Registry) in respect of an aircraft registered or to be registered on the Guernsey Aircraft Register (the Aircraft Register).

For a new registration, registration commences by way of an initial application form completed via the Registry website. Thereafter, further information is provided to the Registry electronically and should include a copy of the bill of sale for the aircraft in favour of the registering owner.

If there is a change in ownership of a Guernseyregistered aircraft, the Registry must be notified within 21 days, and a copy of the bill of sale for the aircraft should be provided as evidence of that change in ownership.

In each case, once all information has been provided to the Registry, the Aircraft Register can often be updated on the same day.

If a document is not provided in English, a translation of it in English must be provided unless waived by the Registrar of Aircraft (the Registrar).

No government applications or consents are required as a prerequisite to executing and delivering a bill of sale in relation to an aircraft or engine registered in Guernsey.

Assuming the bill of sale satisfies the requirements for registration as an "international interest" under the Cape Town Convention (as defined in 2.10 Cape Town Convention and Others), such filings can be made in the International Registry (IR). See 2.10 Cape Town Convention and Others with respect to the Cape Town Convention.

1.2.5 Taxes/Duties Payable Upon Execution of a Bill of Sale

See 1.1.1 Taxes/Duties Payable upon Execution of the Sales Agreement. There are no Guernsey taxes or duties payable upon executing and/or delivering a bill of sale for an aircraft or engine or for consummating the sale of the ownership interest in an entity that owns an aircraft or engine, including where title to that aircraft or engine is transferred while it is:

  • located in Guernsey;
  • over international waters; or
  • in transit to/from Guernsey

2. Aircraft and Engine Leasing

2.1 Overview

2.1.1 Non-permissible Leases

Subject to the general legal principles of contract law, there are no types of operating/wet/ finance leases or leases concerning only engines or parts that are not permissible or recognised in Guernsey, as far as is known.

2.1.2 Application of Foreign Laws

A lease involving either a domestic party or an asset situated in Guernsey can be governed by a foreign law. See 2.6.5 Domestic Courts' Approach to Foreign Laws and Judgments.

2.1.3 Restrictions Concerning Payments in US Dollars

There are no restrictions imposed on domestic lessees making rent payments to foreign lessors in US dollars.

2.1.4 Exchange Controls

There are currently no foreign exchange controls under Guernsey law.

2.1.5 Taxes/Duties Payable for Physical Execution of a Lease

No taxes/duties are payable for executing a lease physically in Guernsey or as a consequence of an original or copy of a lease being brought into Guernsey, either physically or electronically.

2.1.6 Licensing/Qualification of Lessors

There are no formal legal requirements under Guernsey law for lessors to be licensed or otherwise qualified in Guernsey to do business with a domestic lessee. However, in relation to finance leases only, a lessor who is either a Guernsey person or entity, or is conducting their financing leasing business "in or from within" Guernsey, will from 1 July 2023 likely need to obtain a licence from the Guernsey Financial Services Commission in relation to their finance leasing activities (although an exemption is available in certain circumstances).

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Originally published by Chambers and Partners Global Aviation Finance & Leasing Guide

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.