Conclusion: The Cape Town Convention as Innovative Uniform Law
The Cape Town Convention is one of the uniform law treaties. It is one of the most successful instruments of this kind, judging from the number of States Parties. A closer examination of the Convention, based on the comparison with domestic laws of major jurisdictions on the subject, reveals that it goes beyond a simple unification.
First, the Cape Town Convention unifies the rules on secured transactions, in particular its formation, registration and enforcement upon default by the debtor, over mobile equipment. Its scope is broad enough to cover not only the security proper or “real rights” such as mortgage, hypotheque or pledge, but also title-based transactions that have equivalent functions. However, the unification by the Cape Town Convention is rather modest. On some important issues, options are open to States, which could end up with a large variety in rules under the Convention. Some other issues are left to the applicable law or the court.
Secondly, the Cape Town Convention does not simply unify the laws. It modernises the domestic laws that are outdated or complicated. It also introduces rules to adapt to the new developments of practice (as in the case of engine finance) or rules facilitative to asset based financing (as with rules on insolvency proceedings).
The shift of focus from simple unification to modernisation should not be seen as an isolated anecdote. The United Nations Commission on International Trade Law (UNCITRAL), an international body within the United Nations to promote unification of commercial law, has recently added to its mission the modernisation of law. Recent law reforms in the area of financial and insolvency law, such as those advanced under the auspices of the World Bank, European Bank for Reconstruction and Development (EBRD) or Organization of American States (OAS), usually target at modernising the local law. The Cape Town Convention must be seen as forming a part of such law reform movements.
The law reform inevitably requires a convincing argument that the adopted rules will be more efficient than the existing law. In the case of the Cape Town Convention, an economic assessment was made to quantify the enhanced efficiency that it will bring about. While the theoretical study on the assessment of laws by economics has been known since the last few decades, such use of empirical study in the legislative process is not common at all. In many jurisdictions, “the economic effect” in the abstract term is one of the elements to be considered when enacting or reforming a law, but there are few, if any, cases where an empirical assessment is actually conducted. The actual use of economic empirical study is another innovating feature of the Cape Town Convention.
Finally, the third aspect of the Cape Town Convention is that it has established a global scheme that operates in reality. For one thing, international interests are registered with the International Registry, which is an entity established by the Protocol, independent from domestic registries. For another, the ASU is applicable to finance transactions making use of an international interest, and the benefit from the Cape Town Convention becomes visible by the Cape Town Discount under it. The traditional uniform law treaties seldom establish such global schemes. This is another innovation that the Cape Town Convention realised. And it has been successful with it, supported by both the industry and regulators, including the international orgnisations.
Thus, the Cape Town Convention is a uniform law treaty, not only a successful one but an innovative one. To see exactly how innovative it is, one needs to analyse the functions that a uniform law instrument can have, and then examine in what respects the Convention changes the existing laws, and how.
Acknowledgements The author acknowledges the informative and insightful analysis of each chapter’s contributors. The remaining errors are ah attributable to the author. This work is a product supported by the Grant-in-aid of the Japan Society for Promotion of Research (JSPS grant no.15H01917).