Answer ... Agreements governed by the laws of other jurisdictions will be recognised and enforced in Brazil as long as they do not violate Brazilian sovereignty, good customs or public morality. Most typical aircraft finance documents do not violate these criteria, with the exception of:
- self-help remedies; and
- in certain cases, unilateral option provisions (including provisions that are subject to the sole discretion of a lessor).
Increasingly, the Brazilian judiciary also applies principles of equity when enforcing aircraft leases. As a result, enforcement of the literal terms of a lease – especially short timeframes for actions or default cures – may be delayed if a court finds that such terms are unconscionable.
To be enforceable in Brazil, most aircraft finance documents must be registered with the Brazilian Aeronautical Register (RAB). The RAB is a specific single national register for aircraft in Brazil. The RAB is responsible for the registration of aircraft, the registration of liens and encumbrances over aircraft and the issuance of registration and airworthiness certificates. The RAB is maintained by the National Agency of Civil Aviation, a regulatory agency of the federal government.
Generally, aircraft lease agreements, assignments, assumption agreements, novations and mortgages must be registered with the RAB. Such documents are usually written in English. Any document written in a language other than Portuguese must be translated into Portuguese by a licensed translator in Brazil. Such translations are called ‘sworn’ translations.
As of 16 August 2016, documents that are signed outside Brazil in a state that is a signatory to the Convention Abolishing the Requirement of Legalisation for Foreign Public Documents of 5 October 1961 must bear a certificate called an ‘apostille’, issued by the competent authority of the original state.
Any documents signed in a state that is not a signatory to the Apostille Convention must be legalised by the Brazilian consulate responsible for the jurisdiction in which the document was signed. In most cases the consulate will require local notarisation as a prerequisite to legalisation. In some cases the apostille of a government officer is required for legalisation. The rules of the various consulates vary.
Documents signed in Brazil by attorneys in fact pursuant to notarised and apostilled or legalised powers of attorney need not themselves be legalised. The RAB requires the signature of two witnesses on all documents submitted for registration. Documents signed in Brazil with a digital signature that complies with Brazilian law are treated as notarised and do not require further notarisation. Exceptionally, during the COVID-19 crisis, the RAB accepts powers of attorney that have been notarised, but not yet apostilled. Such powers of attorney must be apostilled in due course, but in the meantime registrations can be completed prior to such apostille.
Specifically for bills of sale, the RAB also requires the signature of representatives of both the seller and the buyer. However, the RAB has not applied this policy to bills of sale for new aircraft – the RAB has accepted such bills of sale when signed by the manufacturer only.
The Brazilian Aeronautical Code and the RAB’s regulations allow the RAB, after receiving documents for filing, to issue requests for clarification or additional documents if the filing is incomplete or otherwise incorrect. If such a request is not complied with within the specified timeframe (usually 30 calendar days), the priority from the filing date is lost.
Documents that are digitally signed in a particular format are accepted by the RAB without notarisation. Not all digital signatures are acceptable. The Brazilian government has published several standards in this regard. These standards usually require pre-registration of the signatory’s personal details and the issuance of a small device (ie, a token) to authenticate a signature. The popular DocuSign platform does not meet the Brazilian requirements.
The RAB’s filing system is also electronic.
There is another register of relevance in the context of aviation finance: the register of titles and documents (RTD). Unlike the RAB, which is a single specialised aircraft register, there are many RTDs in Brazil, which deal with documents of any nature. According to the Law of Public Registries (1973), any document signed in a language other than Portuguese or signed outside Brazil must be registered with an RTD to be admissible in Brazilian public offices, including the Brazilian courts, and to give public notice of such assignments to third parties. In the past, RTD registration costs were reasonable; although they were much higher than the RAB costs, they were nonetheless acceptable to most parties. However, around March 2016 the RTDs of the state of Rio de Janeiro changed their fee structure and began to charge exorbitant registration fees. The variations are so great that it is difficult to estimate these fees; however, the RTD registration fees for an aircraft mortgage could be equivalent to $10,000, $20,000 or even more.
Since 2016, the general practice in Brazil has been to forgo RTD registration of documents filed with the RAB. The majority view is that RAB registration will suffice for the purposes of registration. However, RTD registration should be considered on a case-by-case basis, to ascertain whether a document must be registered with an RTD and whether the cost is justifiable.