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Asset Finance Law
Asset Finance Law Definition
DLA Piper’s asset finance lawyers in Russia assist their clients in transactions related to the acquisition and leasing of high cost assets, such as aircraft, sea vessels, trains, and rolling stock.
Due to the high cost of these assets (and other reasons such as high customs duties), operators prefer to lease such assets rather than buy them. Leasing is generally divided into finance leasing (where the lessee acquires the asset at the end of the lease term) and operating leasing (where the asset is returned to the lessor at the end of the lease term).
The assets are leased by leasing companies that specialize in leasing particular assets. In order to buy the assets, leasing companies attract financing from financial institutions or capital markets.
Our asset finance lawyers advise various market participants including airlines, shipping companies, leasing companies, financial institutions, and manufacturers on various aspects of financing, selling, leasing, importing, exporting, and operating the assets.
The structuring of transactions varies significantly depending on the type of assets. Transactions in relation to rolling stock are commonly made under Russian law and involve Russian participants, whereas aircraft transactions are normally made under English or New York law and involve foreign manufacturers, lessors, and financial institutions.
In case of multi-jurisdictional transactions, Russian lawyers advise on a broad range of issues, including customs clearance, tax, currency control, local air and sea transport regulations, foreign law application, and the enforcement of foreign court judgments.
Customs clearance is an important aspect of international leasing to Russia. It is common practice to import foreign aircraft under a temporary import regime, which imposes certain obligations on the importer. Even though a Russian lessee would be the importer and the declaration of the leased aircraft, in case of a violation of the import regime the owner/lessor of the aircraft would face significant risks if the Russian authorities try to freeze the asset and recover outstanding duties or penalties from its value.
Russia is a party to various international treaties and conventions that play an important role in asset finance transactions. For example, Russia has ratified the Ottawa Convention on International Financial Leasing and the Cape Town Convention on International Interests in Mobile Equipment (together with the Protocol on Matters specific to Aircraft Equipment), which provides good comfort to those who are considering or are already involved in an asset finance transaction in Russia.
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