Capetown Convention

In 2009 Aruba ratified and implemented the ICAO Cape Town Convention and the Aircraft Protocol and thus became the first offshore registry signatory of the convention. From this date all the air finance transactions completed by debtors situated in Aruba or involving airframes pertaining to aircraft therein registered can enjoy the protection given by the international treaty.

Parties can register their interests in the International Registry via their website, www.internationalregistry.aero created under the Cape Town Convention in order to give notice to third parties and preserve their conventional priority.

In essence the Convention, with its Protocols, is designed to overcome the problem of obtaining secure and readily enforceable rights in aircraft objects, railway rolling stock and space assets which by their nature have no fixed location, and in the case of space assets are not on earth at all. The problem is not so much one of determining what law applies – which can be resolved by a uniform conflict of laws Convention such as the 1948 Geneva Convention on the International Recognition of Rights in Aircraft – but rather the widely differing approaches of legal systems to security and title reservation rights, engendering uncertainty among intending financiers as to the efficacy of their rights. The result is to inhibit the extension of finance, particularly to developing countries, and to increase borrowing costs. The Convention and its supporting Protocols have five basic objectives:

• To provide for the creation of an international interest which will be recognized in all Contracting States;

• To provide the creditor with a range of basic default remedies and, where there is evidence of default, a means of obtaining speedy interim relief pending final determination of its claim on the merits;

• To establish an electronic international register for the registration of international interests which will give notice of their existence to third parties and enable the creditor to preserve its priority against subsequently registered interests and against unregistered interests and the debtor’s insolvency administrator;

• To ensure through the relevant Protocol that the particular needs of the industry sector concerned are met;

• By these means to give intending creditors greater confidence in the decision to grant credit, enhance the credit rating of equipment receivables and reduce borrowing costs to the advantage of all interested parties.