'Cape Town' Comes To The United Kingdom

Initially implemented in eight countries nine years ago, the international treaty on recognition of rights in airframes, aircraft engines and helicopters, informally known as "Cape Town", has now been implemented (as of August 24, 2015) in almost seventy countries. The treaty is set to take on even greater significance in the world's aviation market as the United Kingdom of Great Britain and Northern Ireland ("GBNI") has ratified Cape Town as of July 27, 2015. Such ratification was extended to the territories of the Cayman Islands, the Island of Guernsey and Gibraltar (along with the United Kingdom of Great Britain and Northern Ireland, the "UK").

With Cape Town set to become effective across the UK on November 1, 2015, knowledge of Cape Town's basic principles and an understanding of some of its more complicated and country-specific features remains critical for all parties involved in the structuring, documentation and negotiation of aviation-related transactions.

Background

"Cape Town" is actually comprised of two components: The Convention on International Interests in Mobile Equipment (the "Convention") and the Protocol on Matters Specific to Aircraft Equipment (the "Aircraft Protocol"). The Convention is an umbrella text governing transactions involving three types of movable assets - aviation-related assets, rail assets and space assets. The Aircraft Protocol is, as its name suggests, the text that applies specifically to aviation-related assets.

The Convention was developed out of concerns that many parties were hesitant to offer financing for aviation, rail and space assets, which are easily and often moved from one jurisdiction to another and therefore from one legal system to another, resulting in uncertainty as to rights and remedies. The drafters of the Convention hoped to offer a uniform framework to eliminate or lessen such transaction risks.

As of August 24, 2015, sixty-eight countries and the European Community had ratified or acceded to the Convention and the Aircraft Protocol (referred to as "Contracting States"): Afghanistan, Albania, Angola, Australia, Bahrain, Bangladesh, Belarus, Bhutan, Brazil, Burkina Faso, Cameroon, Canada, Cape Verde, China, Colombia, Congo, Costa Rica, Côte d'Ivoire, Cuba, Egypt, Ethiopia, Fiji, Gabon, India, Indonesia, Ireland, Jordan, Kazakhstan, Kenya, Kuwait, Latvia, Luxembourg, Madagascar, Malawi, Malaysia, Malta, Mexico, Moldova, Mongolia, Mozambique, Myanmar, the Netherlands, New Zealand...