Home Law Implementing the Cape Town Convention and the Domestic Laws on Secured Transactions
The Cape Town Convention has proven to be an enormous success. The Base Convention and the Aircraft Protocol entered into force in 2006, only 5 years after their adoption. As of December 2015, the Convention has 70 Contracting States, and the Aircraft Protocol has 63 States Parties (besides the European Union as the Regional Economic Integration Organisation being a Party to both instruments). Only a few other uniform law instruments have paralleled such achievements of the
Cape Town Convention. Not only has it had a significant impact on the practice of aircraft financing, but also their intellectual influence on the designing of secured transactions law has been significant.
Remarkably, the Cape Town Convention does not merely provide a set of uniform rules to be applied by the courts of the States Parties. Some mechanisms to ensure its implementation and enforcement exist, which make the Cape Town Convention an operating institution by itself. One of such mechanisms is the International Registry established under each Protocol for the asset covered by the Protocol. The International Registry for Aircraft Equipment has been in operation since 2006 and has been widely used in practice. As of 2014, the number of aircraft objects against which the international interests are registered reached 340,000, and the number of registrations recorded 613,900. Another mechanism relevant to the Aircraft Protocol is the reference in the Aircraft Sector Understanding (ASU) of the Organisation for Economic Co-operation and Development (OECD), most recently revised in September 2015. The ASU provides for the agreement among the export credit agencies on the conditions that they can offer and approves a beneficial treatment of the debtor (acquirer of an aircraft) in a State Party to the Cape Town Convention, as long as certain conditions are satisfied and the Convention is found to be implemented effectively in the relevant State. Thus, a State has an incentive for effective implementation of the Cape Town Convention if it wishes to enable its airline to enjoy the beneficial treatment under the ASU.
Furthermore, effectiveness of the implementation of the Cape Town Convention is monitored by the Aviation Working Group (AWG). The AWG is a private body originally formed to provide the drafters with expertise in aircraft financing. It has now become an organisation to promote ratification of the Convention and to monitor the implementation within the States Parties.
Two other Protocols are on their way to catch up with the Aircraft Protocol. The Luxembourg Rail Protocol has one Contracting State, namely, Luxembourg, and has been approved by the European Union as the Regional Economic Integration Organisation. It has also been signed by five States, most recently by the UK in February 2016, a fact which may indicate its significance. An industry group named the Rail Working Group (RWG) has been making efforts to promote ratification. The Space Protocol has four Signatories but no Party yet. Still, it is recognised as the first private law instrument in space law and has attracted much attention from the experts in space law.
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