Analysis
In the introduction, a few questions were asked. This chapter is an attempt to answer them, as clearly as possible.
Creating an international interest
When entering into an international security agreement under the Cape Town Convention, several aspects have to be considered. Firstly, the parties are to pick a jurisdiction. The interest must be perfected duly to the applicable law, that is, as we now know, the law pointed out by the private international law of the forum state. The parties within European Union Member states and Contracting States who made the declaration according to Article VIII AP, will be able to choose the law that shall govern their contract. In other cases, the parties will have to do so indirectly, by picking the forum with the suitable private international law. The law pointed out in its turn, naturally can allow party autonomy regarding the applicable law. Otherwise, the parties most likely will be limited to the law where the debtor is situated or where the equipment has its national registration.
The applicable law is important; it has the power to declare the interest void if it e.g. has been created in fraud of creditors or if the Connecting factor at the time of the closing was not present. The applicable law can recharacterise an agreement, for example from being an agreement of title reservation to being a security agreement. This will lead to seriously reduced power to undertake measures in the case of, for example, debtor’s default. It is important to keep in mind that just by registering an interest in the International Registry, one will not per se create an International Interest or make it valid. What the registration will do, however, is to give notice over, and priority in the Contracting States, of a valid International Interest perfected due to the formal requirements of the Convention and the applicable law.
When entering into an agreement, considerations ought to be made regarding the state in which the debtor is situated and where the equipment is registered. In view of the declarations the Contracting State in question has made, the prospective holder of an interest can estimate how strong its position will be in a possible event of default and from this position negotiate its contract.
How the holder of an International Interest preserves its rights
The answer is registration of the International Interest as well as good knowledge about the default remedies and the possible relief pending final determination. The general principle is easy: a rapid registration is always effective. Failing to do so can make the holder of an International Interest loose its priority in favour of a subsequently undertaken, but earlier registered interest. Alternatively, the creditor’s interest will simply not be paid respect to in a foreign insolvency. Even interests gained through