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The International Comparative Legal Guide to: A practical cross-border insight into aviation law Published by Global Legal Group, with contributions from: Advokatfirman Eriksson & Partners AB Alexander Holburn Beaudin + Lang LLP ARNECKE SIBETH Arnold & Porter Kaye Scholer LLP Azmi & Associates Cervantes Sainz, S.C. Christodoulou & Mavrikis Inc. Clyde & Co Condon & Forsyth LLP DDSA – De Luca, Derenusson, Schuttoff e Azevedo Advogados Dingli & Dingli Law Firm GDP Advogados GRATA International Kubes Passeyrer Attorneys at Law Locke Lord (UK) LLP Maples and Calder McAfee & Taft, A P .C. MMMLegal Legal Counsels Mori Hamada & Matsumoto ONV LAW PRIMUS attorneys at law Salazar & Asociados Sayenko Kharenko Studio Pierallini Ventura Garcés & López-Ibor Abogados VISCHER AG 5th Edition Aviation Law 2017 ICLG

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Page 1: ARNECKE SIBETH ICLG 2017

The International Comparative Legal Guide to:

A practical cross-border insight into aviation law

Published by Global Legal Group, with contributions from:

Advokatfirman Eriksson & Partners ABAlexander Holburn Beaudin + Lang LLPARNECKE SIBETHArnold & Porter Kaye Scholer LLPAzmi & AssociatesCervantes Sainz, S.C.Christodoulou & Mavrikis Inc.Clyde & CoCondon & Forsyth LLPDDSA – De Luca, Derenusson,Schuttoff e Azevedo AdvogadosDingli & Dingli Law FirmGDP AdvogadosGRATA International

Kubes Passeyrer Attorneys at LawLocke Lord (UK) LLPMaples and CalderMcAfee & Taft, A P.C.MMMLegal Legal CounselsMori Hamada & MatsumotoONV LAWPRIMUS attorneys at lawSalazar & AsociadosSayenko KharenkoStudio PieralliniVentura Garcés & López-Ibor AbogadosVISCHER AG

5th Edition

Aviation Law 2017

ICLG

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WWW.ICLG.CO.UK

Further copies of this book and others in the series can be ordered from the publisher. Please call +44 20 7367 0720

DisclaimerThis publication is for general information purposes only. It does not purport to provide comprehensive full legal or other advice.Global Legal Group Ltd. and the contributors accept no responsibility for losses that may arise from reliance upon information contained in this publication.This publication is intended to give an indication of legal issues upon which you may need advice. Full legal advice should be taken from a qualified professional when dealing with specific situations.

General Chapters:

Country Question and Answer Chapters:

5 Austria Kubes Passeyrer Attorneys at Law: Dr. David Kubes & Mag. Marko Marjanovic 17

6 Bolivia Salazar & Asociados: Sergio Salazar-Machicado & Ignacio Salazar-Machicado 23

7 Brazil DDSA – De Luca, Derenusson, Schuttoff e Azevedo Advogados: Ana Luisa Castro Cunha Derenusson 30

8 Canada Alexander Holburn Beaudin + Lang LLP: Michael Dery & Darryl G. Pankratz 37

9 France Clyde & Co: Maylis Casati-Ollier & Benjamin Potier 45

10 Germany ARNECKE SIBETH: Holger Buerskens & Ulrich Steppler 53

11 Ireland Maples and Calder: Donna Ager & Mary Dunne 62

12 Italy Studio Pierallini: Laura Pierallini & Francesco Grassetti 71

13 Japan Mori Hamada & Matsumoto: Hiromi Hayashi 80

14 Kazakhstan GRATA International: Marina Kahiani & Kamila Suleimenova 89

15 Lithuania PRIMUS attorneys at law: Paulius Docka 104

16 Malaysia Azmi & Associates: Norhisham Abd Bahrin & Rosinah Mohd Salleh 110

17 Malta Dingli & Dingli Law Firm: Dr. Tonio Grech 117

18 Mexico Cervantes Sainz, S.C.: Luis A. Cervantes Muñiz & Alejandro Zendejas Vásquez 123

19 Poland MMMLegal Legal Counsels: Krystyna Marut & Anna Burchacińska-Mańko 129

20 Portugal GDP Advogados: Francisco de Sousa Alves Dias 137

21 Romania ONV LAW: Mihai Furtună & Ioana Anghel 142

22 South Africa Christodoulou & Mavrikis Inc.: Chris Christodoulou & Antonia Harrison 150

23 Spain Ventura Garcés & López-Ibor Abogados: Alfonso López-Ibor Aliño & Pablo Stöger Pérez 165

24 Sweden Advokatfirman Eriksson & Partners AB: Stephan Eriksson & Martin Thysell 174

25 Switzerland VISCHER AG: Urs Haegi & Dr. Thomas Weibel 180

26 Ukraine Sayenko Kharenko: Andrei Liakhov & Vasyl Liutyi 187

27 United Kingdom Locke Lord (UK) LLP: Alan D. Meneghetti & Arnold & Porter Kaye Scholer LLP: Philip Perrotta 195

28 USA Condon & Forsyth LLP: Bartholomew J. Banino & Nicole M. Smith 207

1 The Use of Personal Data in the Commercial Aviation Industry – Alan D. Meneghetti, Locke Lord (UK) LLP 1

2 The Aviation Industry – Constant Change Leading to Tales of the Unexpected – Philip Perrotta, Arnold & Porter Kaye Scholer LLP 5

3 Digital Signatures, Subordinations and Drones – Erin M. Van Laanen & Brian A. Burget, McAfee & Taft, A P.C. 10

4 The Need to Extend WALA’s Presence in the Airport Industry – Alan D. Meneghetti & Michael Siebold, Worldwide Airports Lawyers Association (WALA) 15

Contributing EditorsAlan D. Meneghetti, Locke Lord (UK) LLP and Philip Perrotta, Arnold & Porter Kaye Scholer LLP

Sales DirectorFlorjan Osmani

Account DirectorsOliver Smith, Rory Smith

Sales Support ManagerPaul Mochalski

Sub EditorNicholas Catlin

Senior EditorRachel Williams

Chief Operating OfficerDror Levy

Group Consulting EditorAlan Falach

Group PublisherRichard Firth

Published byGlobal Legal Group Ltd.59 Tanner StreetLondon SE1 3PL, UKTel: +44 20 7367 0720Fax: +44 20 7407 5255Email: [email protected]: www.glgroup.co.uk

GLG Cover DesignF&F Studio Design

GLG Cover Image SourceiStockphoto

Printed byAshford Colour Press LtdFebruary 2017

Copyright © 2017Global Legal Group Ltd.All rights reservedNo photocopying

ISBN 978-1-911367-35-2ISSN 2050-9839

Strategic Partners

The International Comparative Legal Guide to: Aviation Law 2017

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Chapter 10

1 General

1.1 Pleaselistandbrieflydescribetheprincipallegislation and regulatory bodies which apply to and/or regulate aviation in your jurisdiction.

Aviation legislation in Germany is, to a high degree, characterised by international treaties and by European law. On a national level, aviation law is primarily based on the German Air Traffic Act (Luftverkehrsgesetz) of 1922, the Air Traffic Order (Luftverkehrs-Ordnung) of 1963 and the Aviation Security Act (Luftsicherheitsgesetz) of 2005.The Federal Aviation Office (Luftfahrt-Bundesamt or “LBA”) was established in 1954 in Braunschweig as the supreme authority in civil aviation and, as such, is directly subordinated to the Federal Ministry of Transport, Building and Urban Development (Bundesministerium für Verkehr, Bau und Stadtentwicklung). Amongst other tasks, the LBA is responsible for the supervision of the aviation industry and for the German Aircraft Register (Luftfahrzeugrolle).

1.2 What are the steps which air carriers need to take in order to obtain an operating licence?

The provisions of Regulation (EC) No. 1008/2008 of the European Parliament and of the Council of 24 September 2008 on common rules for the operation of air services in the Community (“Regulation (EC) No. 1008/2008”), which were transposed into German law by sec. 20 para. 4 German Air Traffic Act (see question 1.1), set out the conditions for granting an operating licence. The Regulation consolidates and updates the set of liberalisation measures known as the ‘Third Package’, adopted by the European Commission in 1992. According to Art. 3 para. 1 Regulation (EC) No. 1008/2008, no undertaking established in the Community shall be permitted to carry air passengers, mail and/or cargo for remuneration and/or hire unless it has been granted the appropriate operating licence.An undertaking shall be granted an operating licence by the Federal Aviation Office (Luftfahrt-Bundesamt or “LBA”) provided that:■ its principal place of business is located in Germany;■ it holds a valid Air Operator Certificate;■ it has one or more aircraft at its disposal through ownership

or a dry lease agreement;■ its main occupation is to operate air services in isolation or

combined with any other commercial operation of aircraft or the repair and maintenance of aircraft;

■ its company structure allows for the implementation of the provisions outlined in this chapter;

■ Member States and/or nationals of Member States own more than 50% of the undertaking and effectively control it, whether directly or indirectly through one or more intermediate undertakings, except as provided for in an agreement with a third country to which the Community is a party;

■ it meets the financial conditions specified in Art. 5 of Regulation (EC) No. 1008/2008;

■ it complies with the insurance requirements specified in Art. 11 of Regulation (EC) No. 1008/2008; and

■ it complies with the provisions on good repute as specified in Art. 7 of Regulation (EC) No. 1008/2008.

Additional relevant information:■ The LBA is entitled to revoke or suspend an operating licence

at any time if the above-mentioned requirements are not (all) met.

■ Air carriers from Member States of the European Economic Area (“EEA”) are allowed to operate intra-Community scheduled air services in the EEA. A separate application or notification is no longer necessary. Air carriers from EEA Member States must, however, apply for entry permissions with regard to commercial flights for other purposes (e.g. aerial work, flights with balloons or local flights).

■ Air carriers from non-EEA Member States shall apply for operating permission prior to commencing scheduled air services to and from Germany. Prior to commencing charter flights to and from Germany, air carriers from non-EEA Member States, as well as air carriers from EEA Member States wanting to conduct flights to third countries, have to apply for an entry permit. Companies from non-EEA Member States shall apply for entry permits with regard to commercial flights for other purposes (e.g. aerial work, flights with balloons or local flights).

1.3 What are the principal pieces of legislation in your jurisdiction which govern air safety, and who administers air safety?

With the adoption of Regulation (EC) No. 1592/2002 of the European Parliament and of the Council of 15 July 2002 on common rules in the field of civil aviation, the establishment of a European Aviation Safety Agency (“Regulation (EC) No. 1592/2002”) and the subsequent establishment of the European Aviation Safety Agency (“EASA”), a European Agency and Europe-wide regulatory authority was created. In this regard EASA absorbed most tasks from the Joint Aviation Authorities (“JAA”), as well as acquiring new responsibilities. Initially, EASA was responsible for: safety and environmental type certification of all aeronautical products; approval of organisations involved in the design of aeronautical products, as well as foreign production, maintenance and training

ARNECKE SIBETH Ulrich Steppler

Holger BuerskensGermany

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1.5 Are air charters regulated separately for commercial, cargo and private carriers?

In commercial air traffic, which does not qualify as scheduled transport operations (Gelegenheitsverkehr or “non-scheduled services”), the licensing authority can determine conditions and requirements or prohibit transportation, if such air traffic has a negative impact on the public interest. For special requirements relating to licensing of non-scheduled services, refer to question 1.2.

1.6 As regards international air carriers operating in your jurisdiction, are there any particular limitations to be aware of, in particular when compared with ‘domestic’ or local operators? By way of example only, restrictions and taxes which apply to international but not domestic carriers.

Yes. Concerning the German Air Travel Tax (Luftverkehrsteuer) for instance, carriers with a registered office outside Germany have to nominate a so-called licensed tax or fiscal representative, which can be considered discriminative at least under the European aviation law regimes if not also under the Chicago Convention.Pursuant to sec. 3 of the German Air Traffic Act (Luftverkehrsgesetz), aircraft can, inter alia, only be registered in the German Aircraft Register (Luftfahrzeugrolle) if they are exclusively owned by German nationals or nationals of an EU Member State.An undertaking shall only be granted an operating licence by the German Federal Aviation Office (Luftfahrt-Bundesamt) according to Art. 4 lit. f of Regulation (EC) No. 1008/2008 of the European Parliament and of the Council of 24 September 2008 on common rules for the operation of air services in the Community, if Member States and/or nationals of Member States own more than 50% of the undertaking and effectively control it, whether directly or indirectly through one or more intermediate undertakings, except as provided for in an agreement with a third country to which the Community is a party. See also question 1.2.

1.7 Are airports state or privately owned?

German airports are mainly state-owned through operating companies organised under private law, i.e. there are no airport authorities, in the sense of a government agency, that operate an airport. Shareholders are mostly the Federal Republic of Germany (“FRG”) and the federal state and/or city/county in which the airport is situated. Some operating companies also include private shareholders.Out of the licensed German airports, of which there are currently 39, the five biggest (by passengers per year) are owned as follows: FRA – state of Hesse, Deutsche Lufthansa AG and two other private investors as well as free float; MUC – FRG, state of Bavaria, city of Munich; DUS – city of Dusseldorf, private investor; TXL – FRG, states of Berlin and Brandenburg; HAM – city of Hamburg, private investor; and CGN – FRG, cities of Cologne and Bonn, state of North Rhine-Westphalia, two counties.

1.8 Do the airports impose requirements on carriers flyingtoandfromtheairportsinyourjurisdiction?

Yes. The most notable requirement is the payment of airport charges as laid down in the Airport Charges Regulation (Entgeltordnung) drawn up by each airport and subject to prior authorisation by the supervising authority (sec. 19 lit. b German Air Traffic Act

organisations; and coordination of the European Union programme, Safety Assessment of Foreign Aircraft (“SAFA”).Regulation (EC) No. 216/2008 of the European Parliament and of the Council of 20 February 2008 on common rules in the field of civil aviation, establishing a European Aviation Safety Agency, and repealing Council Directive 91/670/EEC, Regulation (EC) No. 1592/2002 and Directive 2004/36/EC (“Regulation (EC) No. 216/2008” or the so-called “Basic Regulation”), entered into force on 8 April 2008 and extended the competencies of EASA to air operations, pilot licensing and authorisation of third-country operators (first extension). On 7 September 2009, the Council further extended EASA’s competencies in order to cover the safety of aerodromes, air traffic management and air navigation services (second extension).EASA works closely with the Federal Aviation Office (Luftfahrt-Bundesamt or “LBA”), but has taken over many of the LBA’s functions in the interest of aviation standardisation across the European Union (“EU”).By performing ramp inspections on third-country aircraft landing at Community airports, the EU tries to meet the need for effective enforcement of international safety standards. In this regard, Directive 2004/36/EC of the European Parliament and of the Council of 21 April 2004 on the safety of third-country aircraft using Community airports (the so-called “SAFA Directive”), which came into effect on 30 April 2004, provides a legal obligation for EU Member States to perform ramp inspections upon third-country aircraft landing at their airports.On 6 May 2014, Commission Regulation (EU) No. 452/2014 laying down technical requirements and administrative procedures related to air operations of third-country operators pursuant to Regulation (EC) No. 216/2008 of the European Parliament and of the Council, was published in the Official Journal of the European Union. As from 26 May 2014, EASA will issue safety authorisations to commercial air carriers from outside the EU upon earlier request, if all authorisation requirements are met. Third-country operators (TCO) flying to any of the 28 EU Member States and/or to the EFTA States (Iceland, Norway, Liechtenstein, Switzerland) must apply to EASA for a so-called TCO authorisation.Furthermore, air carriers may be refused landing within the EU for safety reasons on the basis of Regulation (EC) No. 2111/2005 of the Parliament and of the Council of 14 December 2005 on the establishment of a Community list of air carriers subject to an operating ban within the Community and on informing air transport passengers of the identity of the operating air carrier, and repealing Art. 9 of Directive 2004/36/EC. The lists, which distinguish between an operational ban and operation restrictions, are prepared by EASA and updated every four months.The German Air Traffic Control (Deutsche Flugsicherung GmbH) is responsible for air traffic control in Germany. It is a company organised under private law and 100% owned by the Federal Republic of Germany. Under certain circumstances, flights might remain under the control of EUROCONTROL.

1.4 Is air safety regulated separately for commercial, cargo and private carriers?

Not entirely. An operating licence is required for non-commercial air transport operations of passengers, mail or cargo if those operations are conducted for remuneration, pursuant to sec. 20 para. 1 German Air Traffic Act (Luftverkehrsgesetz). An exception is made whenever an operation is conducted with an aircraft with no more than four passenger seats. An operating licence is also not necessary for flights that are exclusively carried out to drop parachutists or which entail aerial sport devices.

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1.10 Have there been any recent cases of note or other notable developments in your jurisdiction involving air operators and/or airports?

On 16 February 2016, the Federal Court of Justice (Bundes-gerichtshof or “BGH”) had to decide on three similar cases brought by a consumer association against two domestic carriers – Condor (X ZR 98/14) and Lufthansa (X ZR 97/14), and one web portal selling flights operated by a company-owned airline, TuiFly, and other airlines (X ZR 5/15). The Court held that an air carrier is legally allowed to claim full payment of the ticket price from a passenger as early as the time of the flight booking. Some legal experts had argued that an airline would be limited to request a percentage of the ticket price as down payment at the time of booking. However, the Court decided that a pre-payment clause would not present an unreasonable disadvantage to the passenger and would not be contrary to the fundamental principles of German law.On 1 April 2016, the German Consumer Dispute Resolution Act (Verbraucherstreitbeilegungsgesetz or “VSBG”) came into force. As of February 2017, all companies using websites or general terms and conditions have to comply with additional information duties, e.g. naming the conciliation body.On 22 June 2016, the Court of Justice of the European Union (“CJEU”) ruled, at the request of the Local Court Dusseldorf, on the interpretation of Article 10(2) and Article 2(f) Regulation (EC) No. 261/2004 and the calculation of a reimbursement owed to the passenger following a downgrade. The CJEU held that the price to be taken into account in determining the reimbursement for the passenger affected is the price of the flight on which the passenger was downgraded, not including components of the price unrelated to that inconvenience (CJEU Case C-255/15).On 26 July 2016, the Federal Labour Court confirmed its judgments of August 2015 denying compensation to a third party as a consequence of a strike. Two airlines claimed compensation for profit losses incurred by a strike. However, the direct opponent of the striking union, the employer and operator of Frankfurt Airport, successfully claimed compensation. The Federal Labour Court overruled the previous instances and granted the airport operator a right to compensation because the strike violated the industrial peace obligation and was therefore unlawful (BAG 1 AZR 160/14).

2 Aircraft Trading, Finance and Leasing

2.1 Does registration of ownership in the aircraft register constitute proof of ownership?

No. The registration in the Aircraft Register (Luftfahrzeugrolle) is only a declaratory one. It does not have any constitutive effect on the ownership of the aircraft under German law. Ownership can be proven by an effective transfer of ownership according to sec. 929 et seqq. of the German Civil Code (Bürgerliches Gesetzbuch) through mutual consent and delivery to the buyer on the basis of an effective contractual agreement under the law of obligations, e.g. a purchase and sale agreement. Good faith (bona fide) regarding the ownership of the registered party is not protected. This is a consequence of the fact that the German Aircraft Register mainly aims at securing registered data for purposes under public law, i.e. airworthiness and identification of the owner, nationality of the same, etc. Regardless of the public law nature and character of the Register, it is common practice to make use of the Aircraft Register for transactions under civil law.

(Luftverkehrsgesetz or “LuftVG”)), i.e. the Ministry of Transport of the federal state where the airport is located. Operational limitations for carriers result e.g. from varying charges for aircraft in categories like noise and pollutant emissions, as well as maximum take-off weight (“MTOW”) or time of operation. Sec. 19 lit. b LuftVG contains a non-discrimination clause, therefore in general there is no distinction e.g. between domestic and foreign carriers whereas the law expressly states that differentiations by noise categories or other material reasons are justified.Technical requirements, such as specific approach or take-off procedures or specifications of aircraft allowed to use the airport, are frequently not imposed on carriers and other users by the airport itself; instead the competent authorities such as the Ministries of Transport or the Federal Aviation Agency act in these matters. Further requirements may also stem from the licence under which the airport in question operates, e.g. curfew hours, etc.

1.9 What legislative and/or regulatory regime applies to air accidents? For example, are there any particular rules, regulations, systems and procedures in place which need to be adhered to?

The German Federal Bureau of Aircraft Accident Investigation (Bundesstelle für Flugunfalluntersuchung or “BFU”) is subordinated to the Federal Ministry of Transport and is responsible for the investigation of civil aircraft accidents and serious incidents in Germany. The purpose of the BFU is to improve aviation safety by determining the causes of accidents and serious incidents and making safety recommendations in order to prevent recurrence. The BFU is not, however, responsible for determining liability.Regulation (EC) No. 996/2010 of the European Parliament and the Council of 20 October 2010 on the investigation and prevention of accidents and incidents in civil aviation and repealing Directive 94/56/EC (“Regulation (EC) No. 996/2010”) came into force on 2 December 2010. According to this regulation, each Member State has to set up a national safety investigation authority and information on safety investigation should be exchanged between Member States. Regulation (EC) No. 996/2010 supplements the provisions contained in Annex 13 to the Convention on International Civil Aviation (“ICAO Convention”) dated 7 December 1944.Germany ratified the ICAO Convention in 1956. Annex 13 of the ICAO Convention contains information regarding the process of investigation and analysis of aviation accidents and incidents regarding civil aviation, and stipulates the rights and responsibilities of signatory states in relation to their collaboration. Pursuant to Art. 37 and 38 of the ICAO Convention, signatory states are obliged to implement the rules and regulations and processes provided by the International Civil Aviation Organisation (“ICAO”), preferably unmodified.On a national level, there is also the Law Relating to the Investigation into Accidents and Incidents Associated with the Operation of Civil Aircraft (Gesetz über die Untersuchung von Unfällen und Störungen bei dem Betrieb ziviler Luftfahrzeuge), which is in line with Regulation (EC) No. 996/2010 and the ICAO Convention, and which came into force on 1 September 1998. This law replaced existing general administrative regulations regarding the specialist investigation of aviation accidents in relation to the operation of aircraft. In the course of the new regulation, sec. 5 of the German Air Traffic Regulations (Luftverkehrsordnung) regarding the notification of aviation accidents and incidents was also adapted.

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29 December 1933), the Hague Protocol for the amendment of the Warsaw Convention 1955 (effective date 1 August 1963), the Chicago Convention (effective date 8 June 1956), as well as the Geneva Convention on the International Recognition of Rights in Aircraft (effective date 5 October 1959). The Cape Town Convention has not been ratified by Germany.

2.5 How are the Conventions applied in your jurisdiction?

The ratification process renders the International Conventions into directly applicable national and EU law. The application is performed by the relevant German courts.

3 Litigation and Dispute Resolution

3.1 What rights of detention are available in relation to aircraft and unpaid debts?

If a creditor has a claim regarding an outstanding debt against the owner of an aircraft, and if this creditor does not have a registered mortgage in relation to the relevant outstanding debt, then the creditor has to obtain an enforceable title (as recognised under German law) for the outstanding debt against the owner of the aircraft (e.g. by way of an enforceable court judgment or enforcement order) from the German civil courts. The enforceable title also needs to be issued with an enforcement clause by the competent German civil court and must be duly served on the debtor.If the aircraft in question is registered in the German Aircraft Register, then the creditor needs to apply to the Local Court in Braunschweig (where the Register of Mortgages on Aircraft is kept) for the entry of a registered mortgage on the aircraft.The enforcement of the mortgage is carried out by way of enforcement proceedings. In order to enforce the mortgage, the creditor has to apply to the relevant German civil court for compulsory auction of the aircraft.If the outstanding debt is already secured by way of a registered mortgage and if the debtor has agreed to be subjected to immediate enforcement proceedings (which is common), then the creditor can (if all the necessary requirements are fulfilled) apply for compulsory auction of the aircraft with the relevant German civil court straight away.Aircraft of foreign origin are not registered in the German Aircraft Register and no registered mortgage can be entered against such aircraft. Once the creditor has received an enforceable title with the relevant enforcement clause and has served this title on the debtor, the creditor will need to apply to the relevant bailiff to enforce title by way of seizure.An aircraft can be released from a registered mortgage by cancellation of the registered mortgage by way of a transaction between the owner of the aircraft and the owner of the registered mortgage. Further, if the outstanding debt ceases to exist (e.g. by way of settlement) then the registered mortgage ceases to exist. Similarly, the registered mortgage ceases to exist if outstanding debt is settled as a result of enforcement proceedings.If a foreign aircraft is seized, seizure can be released by way of a transaction between the owner of the aircraft and the creditor. Further, seizure can be released by way of settlement of the outstanding debt or return of the aircraft to the owner.In order to secure the enforcement proceedings, the creditor can apply for an arrest of the aircraft with the relevant German civil court. The enforcement of the arrest regarding an aircraft, which is

2.2 Is there a register of aircraft mortgages and charges? Broadly speaking, what are the rules around the operation of this register?

Yes. Aircraft mortgages can be registered in the separate Register of Mortgages on Aircraft (Pfandrechtsregister für Luftfahrzeuge) in accordance with the 1948 Geneva Convention on the International Recognition of Rights in Aircraft. The conditions are set out in the German Aircraft Mortgage Act (Gesetz über Rechte an Luftfahrzeugen). The public register is maintained by the Local Court in Braunschweig. Upon request, a certified excerpt from the register may be issued.A key precondition for the registration in the Register of Mortgages on Aircraft is that the aircraft is registered in the Aircraft Register. An effective mortgage requires mutual consent between the owner and the creditor and needs to be recorded in the Register of Mortgages on Aircraft. The declarations of the parties have to be certified before a notary public or the Register Court. As a consequence, recordings in the Register of Mortgages on Aircraft are not only declaratory but constitutive for the creation of the mortgage.Upon its registration (Eintragung), the mortgage is a valid, enforceable and perfected security interest in the form of a first-ranking aircraft mortgage over the aircraft. The German aircraft mortgage generally covers the engines, provided such engines are installed at the airframe; title to the engines is and remains with the mortgagor as owner of the aircraft and they do not qualify as third-party accessories (Zubehör) of the airframe. Due to the flexible use of aircraft engines, it was in dispute in jurisprudence and amongst legal scholars in Germany in the past whether the ownership right of the aircraft owner and the rights of a mortgagee over the aircraft extend to the respective engine(s). It can now be considered a prevailing view for the time being under German law that aircraft engines do not form an integral part (wesentlicher Bestandteil) of an aircraft, and engines are therefore capable of being subject to independent rights. It is still controversial whether engines do qualify as accessories (Zubehör). Consequently, extra liens separate from the aircraft could rest on the engines without being registered in the Register of Mortgages on Aircraft. In Germany a separate register of mortgages on aircraft engines does not exist. However, so far the German Federal Court (Bundesgerichtshof) has not ruled on this qualification and therefore the questions have not been clarified yet.

2.3 Are there any particular regulatory requirements whichalessororafinancierneedstobeawareofasregards aircraft operation?

The lessor/financier needs to be aware that the tax debtor in relation to the German Air Travel Tax (Luftverkehrsteuer or “ATT”) is generally the carrier or the so-called licensed or fiscal representative, which carriers with a registered office outside Germany have to nominate. However, if an international carrier does not nominate a licensed or fiscal representative, then the owner (lessor) or keeper (operator) of the aircraft will be liable for ATT.Regarding the restrictions of the lessor/financier on their right to retake possession of the aircraft, see question 3.2.

2.4 Is your jurisdiction a signatory to the main international Conventions (Montreal, Geneva and Cape Town)?

Germany is a signatory to the International Conventions of Montreal 1999 (effective date 28 June 2004), Warsaw 1929 (effective date

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3.4 What service requirements apply for the service of court proceedings, and do these differ for domestic airlines/parties and non-domestic airlines/parties?

Service of documents in court proceedings is effected according to the German rules of civil procedure. Generally speaking, and unless the recipient has appointed legal representation, the service is effected to the legal representative or the respective party. In this regard there is no differentiation between domestic and foreign parties. However, service of documents to foreign parties may often require service to be performed in foreign countries. Depending on applicable international conventions, the respective service can either be performed via mail or formal diplomatic service.It should further be noted that foreign carriers from non-Member States of the EU need to legitimate an officially authorised recipient (according to the law on service in administrative procedure and the law on administrative procedure) for the entire correspondence with German administrative authorities and the law courts in the Federal Republic of Germany. The respective person has to be named before the German aviation authorities (Luftfahrt-Bundesamt – “LBA”).

3.5 What type of remedies are available from the courts or arbitral tribunals in your jurisdiction, both on an i) interimandaii)finalbasis?

Entering into legal proceedings before a court of law is the standard remedy to be taken in Germany in order to enforce one’s rights. Summary proceedings are available for monetary claims and can be initiated by filing a standard form with the local court. Lawsuits require the filing of a detailed statement of claim, in particular including proper documentation of all facts presented to the court. Depending on the content and volume of the claim, the case will be heard on different levels of the German court system, typically comprising first instance, appellate level and – under certain conditions – a further appeal on questions of law at the federal level and/or the European level. The likely time involved to obtain a court order is two to three months (summary proceedings), six to 18 months (judgment at first instance) or several years (appeal up to federal level). Obviously, exceptions may apply. Injunctive relief offers interim rulings in urgent matters to be obtained within days if not hours. Appeals are possible. Injunctive proceedings are often followed by regular court proceedings in which the subject matter of the injunctive proceedings will be reviewed in greater detail.The parties are free to submit to arbitration proceedings rather than regular court proceedings. Arbitration proceedings can be rather time-consuming but are decided in one instance, usually without the right to appeal. Only in rare cases is an appeal to the public courts of law possible. Arbitration proceedings take between several months and up to several years, depending on the complexity of the subject matter, the experience of the arbitrators, etc. Depending on the arbitration rules established between the parties, the arbitral tribunal may also render injunctions for an interim solution.

3.6 Are there any rights of appeal to the courts from the decision of a court or arbitral tribunal, and, if so, in what circumstances do these rights arise?

In court cases an appeal to the respective higher instance is possible if either party faces negative effects with a value of more than EUR 600.00. A further appeal on a question of law requires an explicit admission, to be granted inter alia if the case involves legal questions of fundamental importance.

registered in the German Aircraft Register or the German Register of Mortgages on Aircraft, is executed by the bailiff entering a registered mortgage against the aircraft and (if permissible) taking the aircraft into safe custody. In relation to aircraft of foreign origin, the bailiff will seize the aircraft instead of entering a registered mortgage.

3.2 Is there a regime of self-help available to a lessor or a financierofaircraftifitneedstoreacquirepossessionof the aircraft or enforce any of its rights under the lease/financeagreement?

No, the lessor/financier has to proceed in accordance with the German laws of enforcement and debt recovery in order to repossess the aircraft or enforce its rights under the lease/finance agreement.If the lessor/financier has a claim for the return of the aircraft against the debtor which is not fulfilled, then the lessor/financier has to obtain an enforceable title (recognised under German law) for this claim from the relevant German civil court. The title has to contain the necessary enforcement clause and needs to be duly served on the debtor. The creditor can then apply for the enforcement of the enforceable title with a bailiff, who will procure the creditor possession of the aircraft. This process can be rather lengthy.The parties can, however, agree in the lease/credit agreement/surety agreement that the lessee/borrower submits to subjecting the aircraft to immediate enforcement proceedings. In such cases the lessor/financier does not need to go through the first step of obtaining an enforceable title from the German civil courts. Instead, the creditor can (if all the requirements are fulfilled) apply for the enforcement of the enforceable title with a bailiff directly, who will procure the creditor possession of the aircraft.If ownership of the aircraft has not been transferred to the financier as a security and the financier only has a registered mortgage, then the financier cannot claim the return of the aircraft, but has to apply for the compulsory auction of the aircraft according to the relevant rules (see question 3.1).In order to secure the enforcement proceedings of the claim for the return of the aircraft, the owner can apply for an injunction with the relevant German civil court. The enforcement of an injunction in relation to an aircraft which is registered in the German Aircraft Register or the German Register of Mortgages on Aircraft, is executed by the bailiff entering a registered mortgage for the claim and (if permissible) taking the aircraft into safe custody. In relation to foreign aircraft, the bailiff will enforce the injunction by way of seizure of the aircraft instead of entering a registered mortgage.

3.3 Which courts are appropriate for aviation disputes? Does this depend on the value of the dispute? For example, is there a distinction in your country regarding the courts in which civil and criminal cases are brought?

There are no special courts (of any type) for aviation disputes.Civil claims in relation to aviation disputes have to be brought before the German civil courts. For a more detailed description of the civil court system and the remedies available, see questions 3.4 and 3.5.Administrative proceedings regarding aviation disputes have to the brought before the relevant German administrative courts.Criminal proceedings in relation to aviation disputes have to be brought before the relevant German criminal courts.

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4.6 Arethereanysector-specificruleswhichgoverntheaviationsectorinrelationtofinancialsupportforairoperators and airports, including (without limitation) state aid?

There are no sector-specific rules, but there are various forms of support (tax relief regarding kerosene and VAT, state aid for airlines, flight control and infrastructure).

4.7 Are state subsidies available in respect of particular routes? What criteria apply to obtaining these subsidies?

Yes, state subsidies may be granted in the context of so-called “public service obligations” according to Art. 16 et seqq. of Regulation (EC) No. 1008/2008 of the European Parliament and of the Council of 24 September 2008 on common rules for the operation of air services in the Community (“Regulation (EC) No. 1008/2008”). The individual criteria are determined in the corresponding public tender procedure (cf. Art. 16 para. 10 and 17 Regulation (EC) No. 1008/2008).

4.8 What are the main regulatory instruments governing the acquisition, retention and use of passenger data, and what rights do passengers have in respect of their data which is held by airlines?

The main regulatory instrument in Germany governing the acquisition, retention and use of passenger data is the Federal Data Protection Act (Bundesdatenschutzgesetz or “BDSG”), in which Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data, was incorporated. According to the BDSG, the acquisition, retention and use of personal data is only lawful if permitted by the BDSG or other law or if the passenger has provided consent.According to the BDSG, passengers have a right of information on recorded data relating to them, the recipients or categories of recipients to which the data are transferred and the purpose of the data recording. If data is collected without the passenger’s knowledge, the passenger has to be notified of such collection. Furthermore, passengers have the right to request rectification of recorded personal data relating to them if such personal data is inaccurate. In addition, passengers may claim damages in case of unlawful acquisition, retention or use of personal data relating to them.

4.9 In the event of a data loss by a carrier, what obligations are there on the airline which has lost the data and are there any applicable sanctions?

If an airline determines that in case:■ special categories of personal data (any information on racial

or ethnic origin, political opinions, religious or philosophical beliefs, trade union membership, health or sex life);

■ personal data subject to professional secrecy;■ personal data referring to criminal or administrative offences;

or■ personal data concerning bank or credit card accounts,which it has recorded have been unlawfully transferred or otherwise unlawfully disclosed to third parties, threatening serious harm to the rights and legitimate interests of passengers, the airline has to inform the supervisory authority and the passengers, without undue delay, describing the nature of the unlawful disclosure, and

An appeal against an arbitration award is only possible in case of a grave violation of procedural principles. In order to be enforceable, arbitration rulings have to be declared enforceable by a court of law. Germany is a signatory to the New York Convention on the enforcement of arbitral awards.

4 Commercial and Regulatory

4.1 How does your jurisdiction approach and regulate joint ventures between airline competitors?

Joint ventures on the basis of a joint venture company are subject to German merger control if the turnover thresholds are met. Joint ventures based solely on a cooperation agreement may be subject to the rules on the prohibition of cartels, which are similar to EU antitrust law.

4.2 How do the competition authorities in your jurisdiction determine the “relevant market” for the purposes of mergers and acquisitions?

The essential authority with regard to mergers and acquisitions is the Federal Cartel Office (Bundeskartellamt). Its decision can be appealed before the Dusseldorf Higher Regional Court. As regards the determination of the relevant market, the specific type of aviation sector has to be considered. While in the context of passenger flights further distinction is made between the direct destinations served by the airlines at hand, cargo flights require a broader market definition.

4.3 Doesyourjurisdictionhaveanotificationsystemwhereby parties to an agreement can obtain regulatory clearance/anti-trust immunity from regulatory agencies?

Yes, parties can obtain regulatory clearance for mergers from the Federal Cartel Office (Bundeskartellamt) under the terms of sec. 35 et seqq. of the Act against Restraints of Competition (Gesetz gegen Wettbewerbsbeschränkungen). There is no system of clearances for cartels.

4.4 How does your jurisdiction approach mergers, acquisition mergers and full function joint ventures?

According to sec. 37 of the Act against Restraints in Competition (Gesetz gegen Wettbewerbsbeschränkungen), mergers are defined as a) acquisition of assets, b) acquisition of joint or sole control, c) acquisition of shares (at least 25%), or d) exercise of competitively significant influence (also in case of shares below 20%). However, no distinction is made between various forms of joint ventures.

4.5 Details of the procedure, including time frames for clearanceandanycostsofnotifications.

A notification procedure before the Federal Cartel Office (Bundeskartellamt) begins with Phase I investigations, which take up to four weeks (no reaction = clearance). If the case at hand is rather complicated, Phase II investigations will be initiated (in few cases). Their duration is limited to another three months. Normally, costs for Phase I proceedings range between EUR 2,000.00 and 8,000.00, while Phase II proceedings are much more expensive.

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4.12 What powers do the relevant authorities have in relationtothelatearrivalanddepartureofflights?

According to Regulation (EC) No. 261/2004 of the European Parliament and of the Council of 11 February 2004 establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights, and repealing Regulation (EEC) No. 295/91 (“Regulation (EC) No. 261/2004”), Member States should ensure and supervise general compliance by their air carriers with this Regulation and designate an appropriate body to carry out such enforcement tasks.In Germany, the Federal Aviation Office (Luftfahrt-Bundesamt or “LBA”) is the National Enforcement Body (“NEB”) and, as such, is the competent authority for the implementation of Regulation (EC) No. 261/2004.As a first step, the LBA investigates passenger complaints. If the LBA finds potential infringements based on a passenger’s complaint, it will initiate administrative fine proceedings. The air carrier has the right to be heard and can submit a written statement regarding the accusations directed at it.As a second step, the LBA may end the proceedings based on the air carrier’s statement or may issue an administrative order imposing a fine. In this respect, the LBA can impose fines of up to EUR 25,000.00. The air carrier can file objections against this administrative order.Finally, the LBA may end the proceedings or may dismiss the objection to the administrative order. In the latter case, the air carrier may file an application for a decision by a court of law, which then has to decide on the matter.The LBA procedure is a purely administrative procedure. The LBA is not in a position to enforce possible civil claims for passengers legally. Passengers can only assert their claims according to the procedures provided for in German civil law.

4.13 Are the airport authorities governed by particular legislation? If so, what obligations, broadly speaking, are imposed on the airport authorities?

Airport operators (see question 1.7) are subject to German and EU legislation, as well as international agreements to which Germany is a signatory. Specific rules on the construction and operation of airports are contained in sec. 6 et seqq. German Air Traffic Act (Luftverkehrsgesetz) and sec. 38 et seqq. German Air Traffic Licensing Regulation (Luftverkehrszulassungsordnung), stipulating a general licensing requirement and compliance, e.g., with zoning, construction and environmental compatibility laws. Also relevant are the German Aviation Security Act (Luftsicherheitsgesetz), imposing various obligations e.g. to secure and control the airport premises, and the German Ground Handling Services Regulation (Bodenabfertigungsdienstverordnung), the latter implementing Council Directive 96/67/EC of 15 October 1996 on access to the ground handling market at Community airports. Furthermore, all relevant EU legislation, such as Regulation (EC) No. 300/2008 of the European Parliament and of the Council of 11 March 2008 on common rules in the field of civil aviation security and repealing Regulation (EC) No. 2320/2002, applies, as well as related Regulations (EC) No. 272/2009, No. 18/2010 and No. 185/2010 and specific international treaty law such as Annex 14 (airports) of the Chicago Convention.

recommend measures to minimise possible harm. The notification to the supervisory authority shall, in addition, describe possible harmful consequences and measures taken by the airline as a result.Any breach of this obligation is deemed to be an administrative offence and may be punished by a fine of up to EUR 300,000.00, or more if the benefit derived from such offence is higher.

4.10 What are the mechanisms available for the protection of intellectual property (e.g. trademarks) and other assets and data of a proprietary nature?

In the Federal Republic of Germany (“FRG”), intellectual property is protected by industrial property rights (“IPR”), which prevent the IPR from being copied or imitated. IPR include patents (protection of technical inventions), utility models (protection of technical innovations), designs (protection of designs and models) and trademarks. These IPR must be registered to obtain the respective protection. The administrative body dealing with industrial property rights is the German Patent and Trademark Office (Deutsches Patent- und Markenamt).With regard to patents and utility models, the Employee Invention Act (Gesetz über Arbeitnehmererfindungen or “ArbNErfG”) needs to be considered. The employee is entitled to any invention made in the course of employment if the employee makes use of the invention in accordance with the specifications of German law. The employee shall receive the statutory compensation. The ArbNErfG sets out how employee inventions and proposals for technical improvement should be dealt with.As regards copyrights, in the FRG, copyright protection comes into effect when a work is created; official registration is not necessary. The German Copyright Act (Urheberrechtsgesetz) applies to works of literature, art and signs.In relation to patents, utility models and trademarks, like in other European countries, protection at a European level with effect also in the FRG can be sought at the European Patent Office and/or the Office for Harmonization in the Internal Market. New designs are even protected without registration. The term of copyright expires, however, after three years.An infringement of an IPR can be pursued in court proceedings or via interim injunctions, the latter of which may be obtained within hours. There are specialised civil divisions at the various German regional courts that deal with such cases.The basic claims connected with any IPR proceeding are the cease and desist claim, the information claim, the damage claim, as well as the right to have the infringing products destroyed.

4.11 Is there any legislation governing the denial of boarding rights?

Regulation (EC) No. 261/2004 of the European Parliament and of the Council of 11 February 2004 establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights, and repealing Regulation (EEC) No. 295/91, grants passengers a right to fixed-rate compensation, a right to reimbursement or re-routing, as well as a right to care in case of denied boarding and cancellation. Passengers may also have contractual claims for damages under the contract of carriage pursuant to sec. 631 et seqq. of the German Civil Code (Bürgerliches Gesetzbuch or “BGB”). Passengers travelling on a package holiday may have claims for damages against the tour operator under sec. 651a et seqq. BGB. Furthermore, a conciliation body for air passenger rights was established in Germany as of 1 November 2013.

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4.16 Are there any ownership requirements pertaining to GDSs operating in your jurisdiction?

No. However, it should be noted that a system vendor, pursuant to Regulation (EC) No. 80/2009 of the European Parliament and of the Council of 14 January 2009 on a Code of Conduct for computerised reservation systems and repealing Council Regulation (EEC) No. 2299/89 (“Regulation (EC) No. 80/2009”), shall publicly disclose, unless this is otherwise made public, the existence and extent of a direct or indirect capital holding of an air carrier or rail-transport operator in a system vendor, or of a system vendor in an air carrier or rail transport operator. A system vendor within the meaning of Regulation (EC) No. 80/2009 means any entity and its affiliates which is or are responsible for the operation or marketing of a computerised reservation system.

4.17 Is vertical integration permitted between air operators and airports (and, if so, under what conditions)?

Yes. Although the shares in – especially the major – airports in Germany are usually not owned by private investors (see question 1.7), there is no general prohibition on air operators acquiring such shares, as illustrated by the fact that Deutsche Lufthansa AG owns 8.44% of Frankfurt airport operator Fraport AG (as of November 2016). Potential restrictions may arise under applicable national and/or EU competition law but would, depending on the case, not exist with the aim of preventing vertical integration.

5 In Future

5.1 In your opinion, which pending legislative or regulatory changes (if any) or potential developments affecting the aviation industry more generally in your jurisdiction are likely to feature or be worthy of attention in the next two years or so?

The use of drones is developing at a fast pace on a global scale. This poses a challenge to the various legislators on a national, international and European level. The European Aviation Safety Agency (“EASA”) seems to be at the forefront of such developments for the harmonisation of regulations for drones not only in Europe but worldwide. The industry has high hopes that the regulatory framework will make a good step forward during 2017. It is expected that the next legislative level will be reached in the not-too-distant future, and that stakeholder consultation will emerge into a concrete regulatory proposal.

4.14 To what extent does general consumer protection legislation apply to the relationship between the airport operator and the passenger?

German consumer protection law is characterised by a rather high standard, but there is no specific and consolidated codified law in Germany. Instead, respective norms are placed in a number of codes. Based on these norms, prior to a purchase or the signing of a contract, consumers in Germany must be able to recognise the benefits and consequences of their decision. Transparency and information are important for the German market, including with regard to the airline industry. The Federal Office of Consumer Protection and Food Safety (“BVL”) and other authorities are responsible for the enforcement of consumer protection in Germany.According to sec. 13 German Civil Code and related norms, German consumers are better protected than non-consumers. The general German consumer protection legislation consists of norms in the German Civil Code and, inter alia, insolvency law, unfair competition law, law against unfair terms and conditions and many norms related to protection of consumer health. There have also been activities in German legislation against telephone marketing and other means of distribution practice.However, there is typically no contractual relationship between passengers and airport operators, because passengers enter into air carriage agreements with airlines or travel companies whereas airlines enter into agreements with airport operators in order to provide services for passengers. Thus many norms regarding contracts with consumers are not directly applicable concerning the relationship between the airport operator and the passenger. Airport charges to be paid by passengers are a special scenario and transparency is important in this regard, because of general consumer protection law. Also, many general public law regulations relating to safety and security exist in Germany in order to protect consumers in airports. Furthermore, Regulation (EC) No. 1107/2006 is a specific consumer protection law which provides that passengers with a disability must be properly assisted by airport operators.

4.15 What global distribution suppliers (GDSs) operate in your jurisdiction?

The key players are AMADEUS, Sabre, Galileo and Worldspan (Travelport).

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ARNECKE SIBETH is one of the market leaders in Transport and Aviation Law. The firm’s highly specialised Transport, Aviation and Logistics practice group is widely renowned in the market for its expertise and attracts an impressive clientele ranging from major domestic and foreign commercial airlines, cargo airfreight companies, forwarding agents, logistics companies, manufacturers and insurance companies to lenders, banks and financiers of aircraft. ARNECKE SIBETH provides legal support on all aspects of business in the airline and aviation industry, including advice in relation to corporate, employment, competition and property law, regulatory matters, litigation and arbitration, aircraft leasing, financing and registration, and accident investigation or claims handling. The firm has repeatedly received numerous awards and recommendations in publications such as The Legal 500 (Top Tier Law Firm 2015, 2016), Legal Experts, Who’s Who Legal, Focus and JUVE.

Holger Buerskens, LL.M. (McGill) heads the Transportation, Aviation and Logistics (“TAL”) group at ARNECKE SIBETH. He has practised in the field of transportation, aviation and logistics for more than 20 years and is the author of numerous articles and books on German transportation and international business law, as well as being a regular speaker at industry events. Holger represents international airlines, forwarding agents and logistics providers. He has been awarded the title of Specialist Attorney for Transportation and Forwarding Law, and over the years has been recommended frequently by publications such as The Legal 500 (“Leading Individual”), European Legal Experts, the Nomos Handbook on Law Firms in Germany and the JUVE Handbook on German Commercial Law Firms.

Ulrich StepplerARNECKE SIBETHHamburger Allee 460486 Frankfurt am MainGermany

Tel: +49 69 979 885 356Email: [email protected]: www.arneckesibeth.com

Ulrich Steppler, LL.M. is the joint head of the Transportation, Aviation and Logistics (“TAL”) group at ARNECKE SIBETH. He specialises in aviation matters, focusing in particular on passenger air transportation. Ulrich Steppler has published numerous articles, case notes and reviews, as well as a book on the International Air Transport Association (“IATA”) interlining and a collection of regulations on the inclusion of aviation in the EU Emissions Trading Scheme (“EU ETS”). He is also the winner of the International Law Office (“ILO”) Client Choice Award 2010, 2011, 2014 and 2015 for the category “Aviation Law Expert Germany”, as well as other awards, and has been recognised as a “Leading Individual” by various institutions (e.g. The Legal 500, Who’s Who Legal and Legal Experts). Ulrich represents numerous international airlines, industry participants, banks, financiers and organisations in all relevant areas. He has significant experience in the German courts as well as expertise in regulatory and aircraft finance matters. Ulrich is also admitted to represent clients before the Austrian courts and institutions.

Holger BuerskensARNECKE SIBETHHamburger Allee 460486 Frankfurt am MainGermany

Tel: +49 69 979 885 220Email: [email protected]: www.arneckesibeth.com

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