Home Law Implementing the Cape Town Convention and the Domestic Laws on Secured Transactions
Rapport suisse sur le theme « Les suretes grevant les moyens de transport - La Convention du Cap et sa transposition en droit national »
Abstract 20.1. Switzerland has signed the Cape Town Convention on international interests in mobile equipment as well as the Aircraft Protocol and the Rail Protocol. However, it has not ratified these instruments (yet) and has not signed the Space Protocol either.
20.2.1 There is a limited number of rights in rem under Swiss law. The main security rights which can be created in a movable are : pledges, transfers of ownership for security purpose and financial leases (all of which require that possession of the asset be transferred to secured creditor), as well as retentions of title (whose validity require a registration in a public registry); mortgages may encumber only certain categories of movables (aircraft, ships, cattle, etc.).
Switzerland keeps an Aircraft Records Register (not to be confounded with the Swiss Aircraft Registry maintained in accordance with Sect. 17 et seq. of the Chicago Convention on international civil aviation, of December 7, 1944) enabling the registering of rights in rem (and of certain personal rights) concerning aircrafts. If an aircraft is registered in this Records Register (which is not compulsory), it may be encumbered by way of filing the security rights in the register (mortgage, transfer of ownership for security purpose and financial lease [including lease-back]).
Aircrafts which are not registered in the Aircraft Records Register, railway rolling stock and space assets may be encumbered by possessory security rights (pledge, transfer of ownership for security purposes and financial lease) or be subject to a retention of title clause.
Likewise, if a mortgage is deleted from the registry, lower-ranked mortgages do not advance in rank and a mortgage may be registered in place of the one that has been deleted.
On the other hand, Swiss law is interpreted as not allowing the creditor to proceed by way of private sale if its security interest is an aircraft mortgage; in this case, the creditor must in principle resort to enforced sale proceedings (see also Article VII.1 of the Geneva Convention on the international recognition of rights in aircraft, of June 19, 1948).
20.3.3 Under Swiss law, the parties to a security agreement are at liberty to agree on other remedies in the case of an event of default, within the limit of compulsory law.
If the security at stake is a transfer of ownership for security purpose or a financial lease, the parties may in particular provide (in advance or upon the occurrence of an event of default) that the secured creditor is allowed to grant a lease of the aircraft received as security or to collect any income or profit arising from the management or use of such aircraft (cf. Article 8.1 (b) and (c) of the Cape Town Convention).
It is usually accepted that the parties may agree after default that the asset encumbered by a limited right in rem security interest shall vest to the secured creditor in satisfaction of the secured obligation (cf. Article 9.1 of the Cape Town Convention); likewise, the creditor who is entitled to realize the asset by way of private sale may acquire it itself, provided it accounts to the grantor and remits any excess proceeds resulting from such sale. It can be argued that the beneficiary of an aircraft mortgage may be contractually allowed to resort to these two remedies provided no enforcement proceedings have been initiated yet.
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