Is the UK’s ratification of the Cape Town Convention premature?

Is the UK’s ratification of the Cape Town Convention premature?

What will the ratification of the Cape Town Convention (CTC) mean for the UK aviation industry? Jonathan Russell, senior associate, and Zohar Zik, consultant, at Holman Fenwick Willan (HFW), explain why they believe the UK’s ratification of the CTC is not necessarily a positive step and why the timing of the ratification seems premature.

Original News

The UK government has ratified the CTC on International Interests in Mobile Equipment and the associated protocol on matters specific to Aircraft Equipment. The CTC and Protocol will enter into force in the UK on 1 November 2015.

What does this mean for the UK? Can ratification be welcomed as necessary and positive progress, or are there any drawbacks?

We do not believe the ratification is necessarily positive progress for the UK. The CTC was designed to provide a uniform, global standard for providing security over ‘aircraft objects’ by aligning the administrative and judicial systems in less developed countries—who want access to aircraft finance—with those countries who either manufacture aircraft or want to gain access to underserved markets.

It is therefore no surprise that the US—together with Ethiopia, Ireland, Malaysia, Nigeria, Oman, Panama and Pakistan—was one of the first contracting states to ratify the CTC in order to facilitate the likes of Boeing and EXIM bank gaining access to potential customers in Africa, the Middle East and Asia.

This is not the case in the UK, which has a highly regarded legal system and a Civil Aviation Authority which is both reliable and predictable. Ratifying the CTC will only place an additional administrative and financial burden on airlines who are unlikely to benefit from it due to the ‘home country’ rule. In addition, given the relatively small number of countries that have ratified the CTC, the timing of the UK’s ratification seems premature.

We also question why the UK did not seek to condition its ratification upon

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About the author:

Meet Neil:

1. Banking and finance lawyer with particular experience in asset finance

2. Likes Wales, wine, sport and anything else that means he doesn’t have the time to have to write personal information about himself

3. Thinks the law is a far broader topic than any of his family and friends who do not work in law

Neil specialises in banking and asset finance transactions with a particular emphasis in finance for shipping, aviation and renewable energy, as well as providing corporate transactional support. He trained and qualified at TLT LLP and spent a further four years working as a finance solicitor, acting for borrowers and lenders before joining the Asset Finance team at DLA Piper (UK) LLP.