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29 July 2020
The COVID-19 crisis has brusquely forced businesses and professionals to close offices and work from home. Luckily, the Brazilian government began implementing measures relating to electronic filings and electronic signatures approximately 20 years ago, all of which have made closing aircraft deals from home offices relatively easy. Although there has been a steep decline in the number of aircraft trading transactions since the start of the crisis, the pandemic has increased the number of aircraft and engine lease amendments to document rent deferrals and other restructuring measures. The Brazilian Aeronautical Registry (RAB) has adjusted some of its requirements on an interim basis to serve the aviation community by facilitating compliance with necessary formalities and filings.
A basic understanding of the formality requirements for aircraft documents is necessary to understand how the facilities allowed in Brazil have benefitted the aviation sector. Certain documents, such as bills of sale, leases, mortgages and amendments thereto must be registered with the RAB to be effective and enforceable in Brazil. In addition, it is usually advisable to register security assignments with the RAB.
To be eligible for registration with the RAB, a document must be signed by the parties and two witnesses. All signatures must be notarised. If a signature is affixed outside Brazil, it must be apostilled (if the country adheres to the Apostille Convention) or consularised (in non-Apostille Convention jurisdictions). It is usually more efficient to have documents signed in Brazil under apostilled powers of attorney. The power of attorney can be signed, notarised and apostilled while the documents are being negotiated and prepared, thus enabling RAB filing at closing, without delay. Relying on documents signed outside Brazil would mean delaying RAB filing, which could delay the effectiveness of the document.
Further, Brazil requires authorising entry point (AEP) codes for registrations over airframes registered with the RAB. The RAB is responsible for issuing AEP codes. The usual procedure to obtain an AEP code is for a professional user entity to send a request to the RAB, accompanied by an apostilled power of attorney from a party in interest.
To meet the notarisation requirement for documents signed in Brazil usually requires notarial offices to be open. Notaries work in special offices and are generally unavailable outside business hours. Although notarial offices have not completely closed during the pandemic, their hours have been shortened and, in some cases, erratic.
Some practitioners have increased their use of digital signatures during the pandemic. The RAB considers a digital signature to have the same value as a notarised signature. Thus, a signatory that can sign a document digitally can sign it at any time, regardless of whether notarial offices are open. Digital signatures can be affixed at any time.
Even though the authenticity brought by digital signatures has been considered sufficient to alleviate the need for the signatures of witnesses in some other practice areas, in the case of documents being filed with the RAB, witness signatures are still required. Witness signatures can be affixed digitally.
Some doubts have arisen concerning the dating of digitally signed documents. A digital signature includes the date on which it is affixed. This does not work well with transactions that rely on parties sending undated signature pages prior to a scheduled closing. However, this problem is overcome by the almost immediate availability of a digitally signed document. Ideally all signatures to a document being digitally signed should be affixed on the same day. Occasionally this proves impossible.
In most jurisdictions, where a document is signed on more than one day, the date of the document is the date of the last signature to be affixed. This is not necessarily the case in Brazil. In principle, a notary cannot certify a signature in an undated document. Consequently, in past cases where parties have signed and notarised documents on different dates, the RAB or first notary has attributed the date of the first signature as the date of the document. The logic is that the latter signatures are ratifying an agreement that was reached on the first date. There is no clear rule in relation to dating documents signed digitally on different dates; however, if this principle is applied by analogy, a document digitally signed by different parties on different dates might be deemed dated as of the date of the first signature. Parties should consider this when signing documents digitally and if the date of a document carries a particular relevance, parties should avoid signing on different dates.
The expressions 'e-signature', 'electronic signature' and 'digital signature' can easily be misunderstood. Generally speaking, an 'e-signature' or 'electronic signature' is any signature affixed by some electronic means, by contrast with a wet ink signature affixed with a pen. A 'digital signature' is a type of electronic signature that is more reliable because it has been subjected to additional verification.
A presidential executive order issued in August 2001 was the first legal document relating to the requirements for digital signatures acceptable in Brazil. That order mandated the establishment of acceptable digital signature criteria, the Brazilian Public Key Infrastructure (Infra-Estrutura de Chaves Públicos Brasileira-ICP-Brasil, commonly referred to as the ICP-Brasil). For operative documents, the RAB accepts digital signatures that comply with the ICP-Brasil. Signatories usually register through specialised service providers in Brazil and receive a token or similar authenticating device. Normally, people who wish to obtain a digital signature must provide fingerprints and a photograph, all of which are shared with the public verification agency. As some of the larger certifying companies offer different types and levels of electronic signature security, parties must ensure that the ICP-Brasil requirements have been met. Parties should not assume that all companies providing digital signature services comply with the ICP-Brasil. Increasingly, lawyers practising in the aircraft finance field, as well as airline directors, have registered ICP-Brasil digital signatures.
When receiving a document that appears to be digitally signed, care must be exercised to ensure that the signature is ICP-Brasil compliant. Some, but not all digital signatures include the words 'ICP-Brasil' on the face of the signature. It is usually possible to verify whether the ICP-Brasil protocols have been met by clicking on signatures and following the full certification chain.
At present, it should be possible for a person located outside Brazil to obtain a digital signature compliant with ICP-Brasil; however, the process is difficult and most digitally signed documents continue to be signed by attorneys in fact located in Brazil acting under apostilled powers of attorney.
In general, it is preferable for documents to be fully executed through digital signatures instead of mixing digital signatures with wet ink signatures. Typically, the RAB does not accept mixed documents; however, the RAB is accepting some mixed documents on an exceptional basis during the pandemic. Wet-ink signatures must be notarised.
In May 2017 the RAB instituted a system for the electronic filing of documents. This system allows for professionals who have previously registered with the RAB to make filings at any time. Until early 2020, most electronic filings were made with PDF documents that had notarised wet ink signatures. Filings made through the RAB's electronic system receive priority numbers similar to those that would be issued through a physical filing. This innovation has greatly improved the RAB's service to the sector by eliminating problems with closing times across different time zones, as well as the need to concentrate documents in a single location for closing. Although the system was designed years before the COVID-19 pandemic, its use during the health crisis, especially when coupled with documents signed digitally, has greatly facilitated document filings with the RAB over the past few months. This is important because leases are increasingly being amended to defer rent and alter other obligations to address the crisis brought on by the pandemic and the ability to sign and file amendments from a home office has been invaluable (for further details please see "Modernising the Aeronautical Registry: electronic filing now available").
To further facilitate document processing during the COVID-19 crisis, the RAB began to accept, on a provisional basis, PDFs of notarised powers of attorney from parties abroad. This is in recognition of the current difficulties and delays in obtaining apostille stamps in various parts of the world. This means that lessors and other interested parties may send PDFs of notarised powers of attorneys to their appointed attorneys in fact and those attorneys can upload facsimiles to the RAB's electronic system. However, this does not eliminate the requirement of apostilled powers of attorney. The attorneys in Brazil must eventually deliver apostilled powers of attorney to the RAB; however, in the interim, agreements and other documents may be filed and fully processed, thus becoming effective.
As mentioned above, an AEP code request usually must be accompanied by an apostilled power of attorney from a party in interest; however, the RAB's interim acceptance of PDFs of notarised powers of attorney has made it possible to make international registry registrations during the pandemic, without delay.
Through progressive modernising policies established years ago and refined during the current pandemic, Brazilian aircraft finance transactions have continued throughout 2020 notwithstanding that most private and public offices have been closed for four months for public safety reasons. Agreements can be negotiated, digitally signed and filed with the RAB from home offices without the need for physical meetings. This has greatly lessened the disruption caused by the COVID-19 crisis and demonstrates the RAB's continued effort to maintain an efficient and accurate aircraft registry.
For further information on this topic please contact Kenneth D Basch at Basch & Rameh by telephone (+55 11 3064 8599) or email (email@example.com). The Basch & Rameh website can be accessed at www.baschrameh.com.br.
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