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Cape Town Convention: Complex Questions and Significant Opportunities

BY David G. Mayer
October 03, 2005

The Cape Town Convention on International Interests in Mobile Equipment (“Cape Town” or “CT”) and the related Aircraft Protocol (“Protocol”) (www.unidroit.org/english/conventions/mobile-equipment/main.htm) continue to advance slowly toward an expected effective date in 2006. When the Protocol enters into force it will affect virtually every commercial and business aviation transaction in the United States and many other nations around the world. Although Cape Town and the Protocol (collectively, the “Treaty”) promise to facilitate aircraft financing and provide new financing opportunities, the Treaty also poses numerous questions and requires new approaches to documenting and closing aviation transactions.

The complexity of the Treaty should not be understated, but neither should its potential value to aviation finance. It creates a new and simple registration system; yet its deceptive simplicity may set a trap for the unwary. To fully understand and evaluate issues presented by the Treaty, it is important to read the Convention on International Interests in Mobile Equipment and Protocol Thereto on Matters Specific to Aircraft Equipment, Official Commentary, Professor Sir Roy Goode CBE, QC, University of Oxford, Sept. 2002.

Scope and Impact of Treaty

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