The Cape Town Convention: Some Practical Insights
- Laws have now been passed in Australia to adopt the Cape Town Convention (“the Convention”) and Aircraft Protocol (“the Protocol”);
- No operative date has yet been set, however, it is expected to commence operation sometime in early 2014; and
- Some consequential amendments have been passed to the Personal Properties Security Act 2009 (“the PPSA”) and other Australian aviation legislation.
The Convention is an international treaty designed to protect security interests in moveable property including aircraft, rolling stock and space equipment. In Australia, it will have most relevance to the aviation industry as a result of the Protocol.
The Convention is aimed at assisting in cross border leasing and financing of significant value assets and originally came into force on 1 April 2004. The specific aviation Protocol came into force on 1 March 2006. The aim of the Convention is to reduce the credit risk to financiers with the ultimate goal of lowering the cost of credit and improving the availability of credit in the industry.
Currently there are 57 Contracting States to the Convention (excluding Australia).