This Insight outlines key Kazakhstan law aspects regarding cross-border aircraft and engine leasing transactions.
REGISTRATION AND LEGAL FRAMEWORK
- Kazakhstan law and international treaties (conventions) will apply to cross-border aircraft and engine leasing transactions.
- Kazakhstan is a party to the Cape Town Convention and the Aircraft Protocol, which provide additional protections for lessors and lenders.
PROTECTION OF THE LESSOR’S RIGHTS
- Ownership of the aircraft remains with the lessor. The same applies to an engine even when installed on an airframe owned by another party. The legal consequence is that in the event of the lessee’s insolvency/bankruptcy such assets should not be included in the lessee’s bankruptcy estate.
- In cases of default or dispute, the lessor may rely on both judicial and nonjudicial remedies. A deregistration power of attorney is an available instrument under the Cape Town Convention and the Aircraft Protocol, however the court practice in Kazakhstan in this area remains limited.
- For dispute resolution, parties typically rely on international arbitration clauses. Kazakhstan is a party to the 1958 New York Convention, thus ensuring the recognition and enforcement of arbitral awards. As an alternative, parties may choose the Astana International Financial Centre Court if appropriate.
PRACTICAL CONSIDERATIONS
When structuring a leasing transaction in Kazakhstan, parties should consider the following additional factors:
- Customs clearance and relevant certificates
- Insurance requirements
- Tax implications
HOW WE CAN HELP
If you have any questions, please do not hesitate to contact the authors of this Insight at any time.