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Additional and General Considerations

This subpart of the report first offers some observations on the attitudes and perspectives of USA constituencies toward the Cape Town Convention. It then contrasts with those observations the motivating factors that led to the USA’s actual ratification of the Convention and the Aircraft Protocol.

From the beginning the USA government and aircraft finance professionals were quite favorably disposed toward the Convention project. Early empirical and economic analyses of the prospective economic benefits of the Convention were highly influential.[1] More recently, emphasis has been placed on the importance of the implementation of and compliance with the Convention by Contracting States.[2] Suffice it to note that there is considerable support in the USA for the Cape Town Convention and the Aircraft Protocol to be widely adopted around the world.

But this support likely had little to do with motivating the USA to ratify the Convention and Protocol. USA support for widespread adoption of the Convention and Protocol quite clearly is consistent with the interests of USA-based manufacturers and exporters of aircraft equipment—read: Boeing (aircraft), Pratt & Whitney/ United Technologies (aircraft engines), General Electric (aircraft engines). It is also consistent with the interests of USA-based providers of asset-based financing for foreign buyers and users aircraft equipment. But those benefits were not materially enhanced by the USA’s ratification. The Convention and Protocol are unlikely to have reduced the costs of financing for USA buyers, borrowers, and lessees or increased sales and leases by USA manufacturers to USA-based entities. This is because Article 9 of the UCC, supplemented by the FAA aircraft registry, has provided a solid legal framework for aircraft financing for many years before the USA’s adoption of these instruments.[3] If anything, the Cape Town Convention may have disadvantaged USA air carriers to the extent that it has lowered the costs of financing for those carriers’ foreign competitors.

Why, then, was the USA motivated to ratify the Convention and Protocol? USA interests could actually realize the potential benefits of these instruments only if an operational International Registry were in place. Without the volume provided by USA debtor transactions, the registry would not be economically viable. Providing the volume and resulting revenues to the registry appears to be the principal—and completely rational—motivating factor behind USA ratification. But, of course, even with such a motivation the USA likely would not have ratified had the prod- uct—the Convention and Protocol—not been of a high quality that would support efficient asset-based financing.

  • [1] See Anthony Saunders et al., The Economic Implications of International Secured TransactionsLaw Reform: A Case Study, 20 University of Pennsylvania Journal of International Economic Law309 (1999).
  • [2] See Jeffrey Wool, Treaty Design, Implementation, and Compliance Benchmarking EconomicBenefit—a Framework as Applied to the Cape Town Convention, 17 Uniform Law Review 633,640 (2012); Jeffrey Wool, Compliance with Transnational Commercial Law Treaties—AFramework as Applied to the Cape Town Convention, 3 Cape Town Convention Journal 5 (2015);Charles W. Mooney, Jr., The Cape Town Convention’s Improbable-but-Possible Progeny Part Two:Bilateral Investment Treaty-Like Enforcement Mechanism, 55 Virginia Journal of InternationalLaw 451 (2015).
  • [3] In fairness, it is clear that in some situations being a Contracting State party to the Conventionand Protocol may afford USA-based financers of aircraft equipment to greater cooperation fromcourts and administrators in other Contracting States.
 
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