Malta Aircraft Registration

Michela Pirotta | 27 May 2011

Malta Aircraft Registration

On the 1st of October, 2010 the Aircraft Registration Act was implemented with the purpose of regulating the registration of aircraft together with the availability of setting up aircraft mortgages as well as to re-enact any laws which are ancillary thereto. The Act provides for the consolidation of already existing legislation related to aircraft as well as the introduction of important innovations and novelties to the industry.

Due to Malta’s size and position as well as a result of the restrictive amount of natural resources in the Maltese archipelago, Malta has had to rely on a number of exports in order to drive the economy. Examples could constitute those industries involving tourism and shipping.

In recent years, research has been targeted so as to exploit and harness the booming development in the aviation sector, particularly due to the implementation of The Cape Town Convention and the establishment of Lufthansa Technik Malta which was formed in 2002 as a joint venture between Lufthansa Technik AG and Air Malta p.l.c. with the former holding the majority of shares in the company.

Even though the industry did not initially take off as successfully as expected, prior to the introduction of the Act in 2010, it was still possible for an enterprise to register an aircraft in Malta. However, the sector was more or less fragmented and it consequently did not reach the expected results. In 2010, apart from the overhaul in the legislative sphere, the authority responsible for transport also underwent a drastic transformation with the fusion of maritime, land transport and aviation under one authority known as Transport Malta which was established under the Authority for Transport in Malta Act, Chapter 499 of the Laws of Malta.

With the introduction of the Act, it is now possible to take advantage of all the benefits which emerge from Malta’s aviation industry; particularly the recognition of fractional ownership as well as joint ownership as provided for in the Act; the regulation of trust agreements in relation to aircraft; and broader qualifying requirements. In addition, upon obtaining valid registration of the aircraft as well as fulfilling all the necessary requirements established by law and those established by the Authority, so as to maintain the validity of the licence and legal operation of the aircraft, the said aircraft registered in Malta would be granted the right and freedom to fly across all intra-Community routes within the EU.

Definitions

The Act provides for an extensive quantity of definitions. An aircraft is defined as any machine which derives support in the atmosphere from air reactions which do not constitute as reactions of the air against the earth’s surface. The Minister may illustrate or amplify the definition through regulations. The definition however, excludes any aircraft operated with the purpose of use for military, customs or police operations of any State. A clear distinction is made in terms of undertakings where, by making reference to The Civil Aviation Act an air transport undertaking is defined as an undertaking whose business includes the carriage by air of passengers, mail or cargo for reward or compensation; whilst an aviation undertaking is distinguished as that legal organisation which is established under the laws of Malta with specific objects as are enlisted in the law: ownership of aircraft; operation of aircraft; management of aircraft; and the continuation of specific enlisted business transactions.

Application for Registration

The manner in which an aircraft is registered under Maltese legislation is intrinsically provided for in the new Act. In comparison to its predecessor, the 2010 Act provides for the broadening of the possibility of services under the aviation sector especially via the possibility of registering any aircraft which is still under construction provided that it is uniquely identifiable according to the conditions laid down by the Minister responsible. Moreover, the law lays down a rebuttable presumption in stating that unless it is otherwise proven, the manufacturer shall be deemed to be the owner of the aircraft who is entitled to register the aircraft under the Act.

Upon registration of aircraft in the National Aircraft Register, the Director General responsible for Civil Aviation in Malta (the Director General) shall take account of the relevant details appertaining to the aircraft. The Director General, upon the insertion of the registration into the National Aircraft Register will furthermore, take note of and record any ownership rights, lessor and lessee rights, any details of a resident agent or any information regarding an international interest as appropriate. The afore-mentioned information recorded in the National Register will be made public together with the acts made effective against third parties; it shall in addition create priority in rights and where expressly conditional on registration, there will be the creation of legal effects between the parties as well as other effects provided for under the applicable law.

Qualification of Persons

The expansion of the remit of the provisions relating to aircraft registration is also a result of the absence of formal and nationality requirements making it accessible to wide-ranging owners and operators provided that the qualifying requirements are maintained. An aircraft may be registered by the qualified persons enlisted under Article 6 as follows: the Government of Malta; a citizen of Malta, EU or EEA Member State, or Switzerland provided that such person resides in Malta, EU, EEA or Switzerland; an undertaking constituted and existing under the laws of Malta, EU or EEA Member State or Switzerland provided that its registered office, central administration and principal place of business falls within the afore-mentioned territories respectively; the undertaking must moreover have 50% of its shareholding owned and effectively controlled by the government of a Member State or any citizen of Malta, EU, EEA or Switzerland. The last category of persons with the ability to register an aircraft is a citizen or undertaking of an approved jurisdiction other than Malta, EU or EEA Member State or Switzerland, who or which is entitled to register an aircraft which is under construction or an aircraft which is not used to provide air services as long as it has the legal capacity to own or operate an aircraft under the appropriate jurisdiction and that it applies any established requirements; the Director General must moreover be satisfied that it can abide by the laws of Malta relating to civil aviation and that it must lastly apply the requirements for international registrants.

The qualified registrants must nonetheless be either the owner who operates the aircraft, the owner of an aircraft still under construction, an operator who holds a temporary title over the aircraft, or the purchaser of an aircraft under a conditional sale or title reservation or similar agreement.

Fractional Ownership and Trust Agreement

One of the advantages of registering aircraft under Maltese law is that the application for registration may be for an aircraft where ownership is vested in more than one person provided that 50% of the owners fall under the requirements of a qualified person. The same shall apply for an aircraft being registered on the basis of its operation. Moreover, the same applies in the event of the aircraft being held under a trust agreement in relation to the trustee. As a result of the introduction of The Trusts and Trustees Act in 2004, the institution of a trust agreement under Maltese law had a great impact and has been made use of with great success. Therefore, the possibility of registration of aircraft which is held under a trust agreement provides an extension to the object of a trust.

International Registrants

The extension of the availability of aircraft registration under Maltese law to international registrants broadens the scope of the act immensely; however certain conditions apply in order for an international registrant to apply for registration mainly, the international registrant must provide for the appointment of a resident agent who habitually resides in Malta, who is not interdicted, incapacitated or an undischarged bankrupt and who has not been convicted of any of the crimes affecting public trust, theft, fraud, money laundering or of knowingly receiving any property which was obtained by theft or fraud. It is also required that the Director General is satisfied that the person applying for the registration of the aircraft is a person capable of carrying out the functions stated under the Act. The functions of the resident agent involve him acting on behalf of the international registrant so as to act as a channel of communication between the latter and the Director General or other authorities, sign and file all documents required under Maltese law and act as a judicial representative. Notwithstanding his functions, the resident agent shall not be personally liable for non-compliance by the international registrant with any law unless the resident agent has personally undertaken liability in writing or has wilfully or recklessly made a false declaration.

Separation of the Estate

Under the Act, it is also possible for aircraft to form security for debts with the benefit that the aircraft constitutes a particular class of movables which by operation of law are considered to be separate and distinct assets from the owner’s estate, in relation to the security of actions and claims to which the aircraft is subject. In fact, in the event of the owner’s insolvency and, or bankruptcy, all actions and claims to which the aircraft is subject shall have preference over all other debts of the estate in relation to the said aircraft. Aircraft may be constituted as a form of security either by operation of law or as otherwise provided in an agreement.

In conclusion, the Registration Act of 2010 has broadened the horizons of the applicability of the registration of aircraft under the laws of Malta. Apart from legislative benefits, aircraft registered under the laws of Malta will benefit from the access of intra-Community routes together with traffic rights including all the privileges found under the Freedoms of the Air thereby making it an attractive hub for the surging industry.
 


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Dr Silvana Zammit

Partner, Global Property, Yachts & Aircraft

+356 22056423

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