Non-possessory Security Interests in Transport Vehicles
Creation of Non-possessory Interests and Their Registries
An international interest under the Cape Town Convention will in practice be a nonpossessory security interest in a movable asset. Jurisdictions are divided over whether movables can generally be the subject of such non-possessory security interest. As far as aircraft is concerned, however, it seems universal that such an interest can be constituted in an aircraft and registered in the relevant registry in all the reported jurisdictions.
In some jurisdictions, movable assets in general can be mortgaged and no special law is needed with regards to aircraft. Such is the case in Canada (the Personal Property Security Act (PPSA) in common law provinces and Code Civil in Quebec) and Poland (Registered Pledge Act). In Poland, a registered pledge is distinguished from a regular pledge in that the possession need not be transferred to the pledgee and that registration with the registry operated by the district courts suffices. Spain also has a registry for non-possessory pledge and mortgage in movables, and the mortgages in aircrafts are also registered in this registry (Ley sobre Hipoteca Mobiliaria y prenda sin desplazamiento de posesion of 16 December 1954). In the United States, the general filing system for security interests under the Uniform Commercial Code (UCC) does not govern aircrafts and railway rolling stock, as these assets have their specialised recording system. For space assets, though, an interest equivalent to an international interest under the Cape Town Convention is subject to the UCC filing.
Many other jurisdictions have special rules on aircraft mortgages with a registry for that purpose being established. England (Mortgaging of Aircraft Order 1972), Finland (Aviation Act (1194/2009)), Greece (Law 1340/1983), Italy (Codice della navigazione), Portugal (Decreto No.20.062, 25 October 1930) and Switzerland (Loi federale sur le registre des aeronefs, du 7 octobre 1959: LRA) are the jurisdictions of this group. Malaysia (Civil aviation regulations 1996) and the United States (recording of transaction documents with the Federal Aviation Authority (FAA)) are the States Parties to the Convention and Aircraft Protocol, but they also maintain their domestic registries for registering mortgages on aircraft.
A few jurisdictions have a similar registry for railway rolling stock. The United States requires the secured transactions over rolling stock to be filed with the Surface
Transportation Board (STB). In Finland, mortgages in railway rolling stock may be created under the Vehicle Mortgage Act (810/1972).
For space assets, no state appears to have a special registry for registration of security interests. As noted above, in some jurisdictions such as Canada, Poland and the United States, an interest in a space asset may be registered in the general registry for security interests. In the absence of specific registry, a pledge may also be created through taking possession of a space asset. As space assets are controlled from the ground through the TTC (telemetry, tracking and command) center, if the domestic law recognises the indirect possession through the operator of such TTC center, it is possible that a pledge is validly constituted.