Security Interests in Transport Vehicles: The Cape Town Convention and Portuguese Law
Maria Helena Brito
The Convention does not establish the specific rules to a particular kind of equipment and so it will be applied to each category of object referred to in Article 2 of the Convention through separate Protocols: airframes, aircraft engines and helicopters, railway rolling stock and space assets.
The Cape Town Convention intends to encourage and facilitate financing transactions regarding such mobile equipment, as well as to reduce the corresponding costs by providing uniform rules of law applicable to international security interests in certain categories of mobile equipment and associated rights.
The financing of aircraft equipment, railway rolling stock and space assets may be the effect of different kinds of agreements: secured loan agreements, title reservation agreements or leasing agreements.
The efficiency and the success of these financing transactions depend on the confidence of the creditor in the possibility of exercising his rights and remedies in case of default of the debtor.
However, the criterion to determine the law applicable to the referred transactions is different from a system of conflict of laws to another. Furthermore, the material law on security interests is one of the sectors where the disparity between legal systems is more evident.
The traditional rule of conflict of laws means that international security interests on mobile equipment should be governed by the law of the country where the mobile equipment is located - the lex rei sitae.
But, in the case of aircraft equipment, railway rolling stock and space assets, the equipment is permanently moving from one state to another, making the determination of the lex rei sitae difficult. Additionally, there is the possibility of conflicting regimes, through changes in time of the connecting factor (“conflit mobile”).
Therefore, the conflict of laws method, based on the lex rei sitae, has been considered to be “manifestly inadequate” to determine the law applicable to financing transactions concerning mobile equipment with high value.
Even if it were possible to attain an agreement about a uniform private international law - as, in a way, it was achieved by the Convention on the International Recognition of Rights in Aircraft, signed at Geneva, on 19 June 1948 -, such a solution, based on the application of a state law, would be questionable.
So the option for the uniformity fell upon the material law applicable to international security interests.
II. The fundamental aim of the Cape Town Convention is carried out through the following features:
- the establishment of provisions about the creation and the effects of international
security interests concerning mobile equipment with high value, in order to permit their recognition in all Contracting States;
- - the creation of an electronic international registry system that ensures the publicity of international security interests concerning mobile equipment with high value as well as the priority of competing interests;
- - the allocation of rights and remedies to the creditor in case of default of the debtor.
-  The complete version of the Portuguese report presented for the XIXth International Congress ofComparative Law, on the subject “Security interests in transport vehicles - The Cape TownConvention and its implementation in national law”, is available on the website of the Cape TownAcademic Project (http://www.ctcap.org). This paper contains a reduced text and, for that reason,only includes references to Portuguese literature.
-  M.H. Brito, “A Convengao da Cidade do Cabo relativa a garantias internacionais sobre equipa-mento movel e o Protocolo Anexo sobre questoes especificas relativas a equipamento aeronau-tico”, Nos 20 anos do Codigo das Sociedades Comerciais, Vol. III, Coimbra, 2007, p. 447 ff(p. 455); L.M. Leitao, “A Convengao do Cabo e o Protocolo sobre equipamento aeronautico.Registo internacional de aeronaves”, Estudos de Direito Aereo, Coimbra, 2012, p. 617 ff (p. 618).
-  Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific toAircraft Equipment (Cape Town, 16.11.2001).
-  Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific toRailway Rolling Stock (Luxembourg, 23.02.2007).
-  Some systems of Private International Law adopt a special connecting factor for certain categories of objects. This is the case of Portuguese law. Article 46(3) of the Civil Code (hereafter CC)sets up that: “The creation and transfer of rights in rem pertaining to means of transport subject toa matriculation are ruled by the law of the country where the matriculation has been effected”. SeeD. Moura Vicente, “O estatuto juridico da aeronave”, Estudos de Direito Aereo, p. 571 ff (p. 583
-  The 1948 Geneva Convention on the International Recognition of Rights in Aircraft is in force inPortugal since 12.03.1986.