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The Cape Town Convention and Its Implementation in South African Air Law

Phetole Sekhula

Background

The Convention on International Interests in Mobile Equipment (“the Convention”) and the Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft equipment (“Aircraft Protocol”)1 were ratified by the Government of South Africa in 2003 and subsequently incorporated into domestic law by the promulgation of the Convention on International Interests in Mobile Equipment Act 4 of 2007 (“the CIIME Act”). The South African Government also made the required Declarations when ratifying the Convention (“the SA Declarations”).2

The effect of the incorporation of the Convention and the Aircraft Protocol, collectively referred to as the Convention, was to modify the practical administration of security interests in aircraft in the Republic, and put to the questions the legal effect of the enforcement of such international security interests under domestic judicial processes. Yet there is legal uncertainty in South Africa in regard to the effective incorporation and implementation of the Convention and Aircraft Protocol in domestic law. This is primarily due not only to the substantive requirements of the provisions of the Convention, but also uncertainty attendant to the adherence or [1] [2]

non-fulfillment of constitutional prerequisites for effective incorporation of international agreements into domestic law. As a result of this legal uncertainty, South Africa has not enjoyed the benefits flowing from being a Contracting Party to the Convention.[3]

The benefits accruing to the airline industry in a fully compliant Party jurisdiction include, inter alia, less cumbersome contractual requirements and reduced financing or leasing costs. The confidence that financiers or lessors of aircraft have in the special protections afforded to creditors in terms of the Convention facilitates and reduces anxieties when concluding commercial transactions in the aircraft business in compliant jurisdictions. However, the associated formal requirements for acquiring the benefits of the Convention is compliance with the prerequisites contained in the Aircraft Sector Understanding, a “gentleman’s agreement”, amongst participant States that include Australia, Brazil, Canada, the EU, Japan, US, etc., which sets out the minimum premium rates charged for new and used aircraft, spare engines, spare parts, maintenance, service contracts as well as the conditions for reduction of premium rates.

In order to qualify for the reduction of premium rates, the buyer or lessor of the aircraft object must be situated in a State which, at the time of the conclusion of the disbursement, appears on the list of States which qualify for reductions (“the Cape Town List”). To be on the Cape Town List, a State must be a Contracting Party, made the specified declarations (“the qualifying declarations”), and incorporated the Convention in its domestic laws and regulations, including the qualifying declarations, in a satisfactory manner. While South Africa has satisfied the first two requirements, albeit with some reservations on the constitutionality of Declaration made in terms of Article 54(2), the validity of the qualifying declarations under domestic law is uncertain. Thus far, this has proved an Achilles heel to the local airline industry since South Africa is not on the Cape Town List.

South Africa has not ratified the Railway Protocol nor the Space Assets Protocol. In the main, the uncertainties surrounding the effectiveness of the Aircraft Protocol, coupled with the negative sentiments held by a very small satellite community aligned to the international satellite consortia, has negatively affected the impetus towards a positive consideration of the Space Asset Protocol. It has not been established, at the time of writing, what the relevant executive authority’s position is as regards the railway Protocol. Hence, the tentative position is unless and until the uncertainties surrounding the Aircraft Protocol are adequately addressed, there is little chance of, at least as the Space Assets Protocol is concerned, any further ratification of these associated instruments.

  • [1] Convention on International Interests in Mobile Equipment, 2001, Protocol to the Convention onInternational Interests in Mobile Equipment on Matters Specific to Aircraft Equipment, 2001, andalso Protocol to the Convention on International Interests in Mobile Equipment on Matters Specificto Space Assets, 2012 and Luxembourg Protocol to the Convention on International Interests inMobile Equipment on Matters Specific to Railway Rolling Stock, 2007, http://www.unidroit.org/english/conventions/mobileequipment/main.html
  • [2] Annex to the Instrument of Ratification in respect of the Cape Town Convention, http://www.unidroit.org/english/conventions/mobileequipment/main.html P. Sekhula (*) South African Council for Space Affairs (SACSA), Pretoria, South Africae-mail: This email address is being protected from spam bots, you need Javascript enabled to view it © Springer International Publishing AG 2017 163 S. Kozuka (ed.), Implementing the Cape Town Convention and the DomesticLaws on Secured Transactions, Ius Comparatum - Global Studies inComparative Law 22, DOI 10.1007/978-3-319-46470-1_9
  • [3] See, e.g, Airline Association of Southern Africa, Discussion Document on the Incorporation ofthe Convention on International Interests in Mobile Equipment, 22 August 2012, on file withauthor.
 
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