Home Law Implementing the Cape Town Convention and the Domestic Laws on Secured Transactions
The Application of the Cape Town Convention
Sphere of Application
As a uniform law treaty, the Cape Town Convention binds the courts of States Parties to apply the provisions of the Base Convention and the Protocol that the State ratifies. In such courts, the Cape Town Convention applies when the debtor is situated in a Contracting State at the time of the conclusion of the agreement creating or providing for the international interest. The location of the creditor is not relevant. If the State of the court is a Party to the Aircraft Protocol, the court must apply the Base Convention as modified by the Aircraft Protocol also when the airframe or helicopter is registered in an aircraft register of a Contracting State which is the State of registry. The other two Protocols do not have an equivalent to the last provision.
If a Contracting State makes a declaration to opt in, several provisions of the Cape Town Convention are not applicable to “internal transactions.” Still, some of the remedial provisions and all of the provisions on registration and priorities remain applicable. A transaction that could otherwise be a transaction covered by the Convention becomes an internal transaction (i) when the centre of the main interests of all parties to the transaction is situated, and the relevant object is located, in the same Contracting State at the time of the conclusion of the contract, and (ii) where the interest created by the transaction has been registered in a national registry in the same Contracting State, and (iii) the same Contracting State has made a declaration to opt in to Article 50 of the Base Convention.
For a transport vehicle as mobile equipment, the location of the object under the condition (i) is not easy to determine. Each Protocol offers guidance in this respect. Under the Aircraft Protocol, the location of object is determined by the State of registry of the aircraft (for an airframe and engine installed on an aircraft) or the State of registry of the helicopter (for a helicopter). The Space Protocol provides that a space asset on orbit is deemed to be in the Contracting State which registers the space asset, or on the registry of which the space asset is carried, as a space object under the relevant space law instruments. The railway rolling stock might appear to be easier in determining a physical location of the object, but the
Luxembourg Rail Protocol adds an additional case of an internal transaction. It is when the rolling stock is only capable of being operated on a single railway system within the Contracting State concerned, because of track gauge or other elements of the design of such railway rolling stock.
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