Cape Town Convention and Aircraft Protocol

On 20 July 2010, New Zealand acceded to the Convention on International Interests in Mobile Equipment (the Cape Town Convention) and the Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment (the Aircraft Protocol). At the same time, New Zealand made 'declarations' specifying how aspects of the Convention and the Aircraft Protocol would apply, or not apply, when the two instruments came into force for New Zealand on 1 November 2010.

The Civil Aviation (Cape Town Convention and Other Matters) Amendment Act amended the Civil Aviation Act 1990 to:

• give the Convention and Protocol the force of law in New Zealand, and to ensure these instruments prevail over any inconsistent domestic law
• require the Director of Civil Aviation to de-register an aircraft when requested to do so by a creditor in accordance with new processes set out in the Aircraft Protocol.

The Act also made amendments to several other Acts to ensure that the special insolvency regime provided for in the Aircraft Protocol prevails over any inconsistent domestic processes. These amendments also came into force, by Order-in-Council, on 1 November 2010.

Background information

International investors in, or lessors of, mobile equipment such as aircraft have had to rely on differing national laws to protect their investments. When there is a default by the debtor, recovery of the property sometimes requires protracted legal proceedings across more than one jurisdiction. Consequently, financiers seek a premium on their lending as a hedge against the risks involved.

The Convention and the Aircraft Protocol are private legal agreements, supported by the International Institute for the Unification of Private Law (UNIDROIT) and the International Civil Aviation Organization (ICAO).

They are intended to significantly improve financial security for investors from cross-border transactions in high-value mobile equipment, such as aircraft, rail rolling stock and space equipment.

The Convention enables creditors (financiers) to register international security interests and provides standard remedies in the event of default by the debtor. The Aircraft Protocol supplements and modifies the Convention to meet the particular requirements of aircraft financing. The Aircraft Protocol offers creditors additional remedies, including the ability to require removal of an aircraft from the national civil aircraft register and export it.

Consequently, organisations involved in aircraft financing will have more confidence in transactions, and the resulting reduction in risk will permit discounted finance costs. Debtors are in turn protected from unwarranted seizure of the assets by creditors, provided they have maintained their financial obligations.

Accession to the Convention and Aircraft Protocol by New Zealand supports an international system to protect commercial security interests in mobile aircraft equipment, and potentially enables New Zealand aircraft operators to secure commercial advantages from savings in funding and transaction costs in future aircraft acquisitions. 

References

Read Transport Minister Steven Joyce's media release announcing that the Civil Aviation Amendment Bill was passed (Beehive website, 23 June 2010)

Read Transport Minister Steven Joyce’s media release announcing that New Zealand will become a party to the Cape Town Convention and associated Aircraft Protocol (Beehive website, 24 March 2010)

Read the Cape Town Convention on International Interests in Mobile Equipment
 
Read the Aircraft Protocol (to the Cape Town Convention)

View the International Registry website

Read the National Interest Analysis on the Convention and Aircraft Protocol (PDF, 1,854kb)

Read the Ministry’s presentation to the Transport and Industrial Relations Select Committee on 29 April 2010 (PDF, 463kb)

Read the Civil Aviation (Cape Town Convention and Other Matters) Amendment Act 2010 (PDF, 864kb)

Read the Act commencement order (PDF, 203kb)

Read the Act declarations order (PDF, 222kb)

Ministry contact

Nigel Mouat, Principal Adviser
Tel: +64 4 439 9354
Fax: +64 4 439 9004
Email: n.mouat@transport.govt.nz