CONCLUSION
The Convention and the Protocol provide for an efficient legal system
to protect creditor’s rights to allow financiers to use high value aircraft and
aircraft engines as collateral for monies borrowed.
The concept as such is not new and has been addressed by many national legal systems worldwide during the last century. In contrast, the goal of the Convention and the Protocol is to establish a system which will be applied in the same manner
worldwide.
The Cape Town System derives from the common law and is based
mainly on UCC Article 9.
Therefore, for a civil lawyer many of the concepts introduced by the Convention and the Protocol may at first glance be difficult to understand and seem to be non-compliant with civil law traditions (e.g. the concept of security interest and its creation, self help remedies, debtor protection during enforcement proceedings, aircraft engines as legally distinct items, etc.).
Depending on the changes to be introduced into the respective
national laws and the declarations by the ratifying states, these ‘theoretical’
difficulties can be solved.
However, the risk remains that with the making of such declarations (e.g. Remedies: Article 8, 9 and 10 of the Convention) a ratifying state could deprive the Convention and the Protocol of its main effect.
The incentive for a state to ratify is minimal, as most of these civil law
restrictions (i) strive mainly to protect individuals from the harshness of an
enforcement proceeding and assure due process (e.g. self help remedies) or
(ii) are theoretical in nature (e.g. concept of security interest or aircraft engine
as distinct item).
Financing aircraft is a highly specialised area of commercial law involving mostly companies being represented by competent legal advisors; therefore, statutory protection for defaulting debtors can be minimal.
Since its coming into force in March 2006, the Convention and the
Protocol have been ratified by 24 states.
Until today, the only country with a significant number of aircraft registered within the Cape Town System are the United States of America.
Obviously, the Convention would be more effective if the EU, Russia, Canada, Brazil and some particular jurisdictions in the Caribbean would join, but for now it seems that aviation finance has been saddled with increased complexity, thousands of dollars of filing fees, and little benefit in return.