The Cape Town Convention and Italian Law on Secured Transactions
The subject of this book concerns the (possible) impact on national law of a uniform law instrument developed by an inter-governmental organization, the International Institute for the Unification of Private Law (Unidroit). The International Academy of Comparative Law had already specifically addressed other Unidroit’s instruments in past congresses. The 2014 session from which this volume arose focused in particular on the Cape Town Convention on International Interests on Mobile Equipment and the Protocols thereto (relating to aircraft, railway-rolling stock and space assets).
As is well known, the field of secured transactions has recently been at the centre of a number of harmonization initiatives, differing in their nature and geographical sphere of application (being both global and regional).
The Convention and the Aircraft Protocol can be counted amongst the most successful of such harmonization efforts, and indeed, more generally, of commercial law treaties so far, both in terms of ratifications and volume of transactions. On a more theoretical level, the Convention introduces a uniform and innovative regime in the field of secured transactions, which is notorious for its complexity and for the difference in the approaches developed in domestic laws. Work towards the adoption of the Convention system started from the assumption that though a wider use of cross-border asset-based financing would be beneficial, it was hampered by the interplay between the conflict-of-law regime generally applicable to proprietary rights and the existing divergences in the national legal systems. This was considered to be particularly the case for high value mobile equipment.
Italy has signed the Convention as well as the Aircraft and Rail Protocols, but has not (yet) ratified them. In the case of a non-Party jurisdiction, the questionnaire prepared by the General Reporter, Professor Kozuka (see Appendix in this volume), invited to compare domestic law with the Cape Town Convention (and its Protocols) and consider the implications of its possible future introduction in the national legal system.
Such analysis will be conducted against the backdrop of Italian general secured transactions law, the main features of which will be summarized at the outset, focusing on the regime of security devices that can be effectively created over the kind of equipment asset covered by the Convention. Specific key aspects of the Cape Town Convention will be then compared with Italian law. For the purposes of this Chapter, again referring to the scope of application of the Cape Town Convention, the term ‘security device’ will encompass a traditional security agreement (pledge or mortgage), a title reservation agreement, as well as a leasing agreement (Art. 2 (2) Conv.).
By way of conclusion, two aspects will be briefly touched upon: the economic advantages for Italy of becoming part of the Cape Town Convention system; the compatibility of the main architecture of the Cape Town Convention with principles and rules underlying general Italian secured transactions law.
-  Regarding international contracts see the General Report by Michael Joachim Bonell in Bonell,MJ (ed), A New Approach in International Commercial Contracts. The UNIDROIT Principles ofInternational Commercial Contracts (Kluwer Law Int, 1999); in the field of asset-based financingsee the General Report by Herbert Kronke: Kronke, H, Financial Leasing and its Unification byUnidroit, (2011) Unif L Rev 23.
-  2001 Convention on International Interests in Mobile Equipment, available at http://www.unidroit.org/instruments/securityinterests/cape-town-convention. From now on “Cape TownConvention” or “Convention”.
-  2001 Protocol to the Convention on International Interests in Mobile Equipment on MattersSpecific to Aircraft Equipment, available at http://www.unidroit.org/instruments/securityinterests/aircraft-protocol. From now on “Aircraft Protocol”.
-  2007 Luxembourg (Rail) Protocol to the Convention on International Interests in MobileEquipment on Matters Specific to Railway Rolling Stock, available at http://www.unidroit.org/instruments/securityinterests/rail-protocol. From now on: “Rail Protocol”.
-  Ranging from instrument intending to become legally binding such as Cape Town Conventionand its Protocols, to soft law products such as the 2010 Legislative Guide on Secured Transactions(and its 2012 Supplement on Electronic Registries) by the UN Commission on International TradeLaw UNCITRAL (a legislative guide discussing policy issues and containing recommendationswith the aim of paving the way to domestic law reforms), or the recently approved UNCITRALModel Law. Other instruments at global level have specifically addressed security rights in thecapital markets: 2006 Hague Convention on the Law Applicable to Certain Rights in Respect ofSecurities Held with an Intermediary; 2009 Unidroit (Geneva) Convention on Substantive Rulesfor Intermediated Securities. See Goode R, Kronke H, McKendrick E, Transnational CommercialLaw. Text, Cases and Materials (2nd ed., OUP, 2015), 432; 453.
-  One of the most interesting achievements at a regional level was the European Bank forReconstruction and Development (EBRD) Model Law on Secured Transactions, originally published in 1994 and aimed at facilitating the transition to capital market economies and the introduction of efficient systems of security rights over movables in Central and Eastern Europeancountries. Other regional bodies have recently developed model laws in this field: as an examplesee the 2002 Organization of American States (OAS) Model Inter-American Law on SecuredTransactions. Finally, whilst the European Union has limited its legislative intervention to thefinancial markets with the 2002 Financial Collateral Directive (expanded in 2009), an entire bookof the Draft Common Frame of Reference project was dedicated to ‘Proprietary security in movable assets’ (Book IX, in von Bar, Ch, Clive, E (eds.), Principles, Definitions and Model Rules ofEuropean Private Law, Draft Common Frame of Reference (DCFR), Vol. 6 (Full ed., Sellier, 2009)5389.
-  In the relatively short time since the July 2014 IACL Congress, twelve additional States have ratified or otherwise accessed to the Convention, for a total of 72 States; the contracting States to theAircraft Protocol are 65, the Aircraft Protocol being the only one that entered into force so far,triggering the effects of the Convention (data checked up to 3 October 2016). This is a staggeringnumber in view of the recent adoption of the two instruments and is steadily increasing every year.The European Community/European Union has also approved the Convention and the AircraftProtocol, and end of 2014 the Rail Protocol, in its capacity as a Regional Economic IntegrationOrganisation (REIO. Most recently, the Rail Protocol (already ratified by Luxemburg and signedby four other States including Italy) has been signed by the United Kingdom with a view towardsratification.
-  The International Registry, operated by Aviareto, a joint venture between the private companySITA SC and the Irish Government, appointed and supervised by the International Civil AviationOrganisation (ICAO), that adopted the Convention and the Aircraft Protocol jointly with Unidroit,has received more than 700,000 entries since the beginning of its activity in 2006.
-  See for ah: Drobnig U, Security Rights in Movables, in Hartkamp, AS, Hesselink, MW et al.(eds.) Towards a European Civil Code (4th ed., Wolters Kluwer, 2010), Chapter 43, 1025;Kieninger, E-M (ed.) Security Rights in Movable Property in European Private Law (CUP, 2009);Beale H, Bridge M, Gullifer L, Lomnika E, The Law of Security and Title-Based Financing, (2nded., OUP, 2012).
-  See Cuming, RCC, International Regulation of Aspects of Security Interests in MobileEquipment, (1991) Unif L Rev 75; Goode, R, Transcending the Boundaries of Earth and Space: thePreliminary Draft Unidroit Convention on International Interests in Mobile Equipment, (1998)Unif L Rev 52.
-  Italy is among the ten States that have adhered to the 1988 UNIDROIT Convention onInternational Financial Leasing (Ottawa Convention), which represented a - very limited - firststep in the direction of cross-border recognition of leasing on equipment and as such, opened thepath to the work on the future Cape Town Convention (see above, fn 1).
-  Security rights over movables and immovables were the topic of an earlier Italian national reportto the International Academy: see Bussani, M, Le present et l’avenir des suretes reelles, in Rapportsnationaux italien/Italian National Reports, XVI International Congress of Comparative Law,Brisbane 2002 (Milano, Giuffre, 2002) 245.