The Australian Minister for Infrastructure and Transport, Anthony Albanese announced on 12 October 2012 that Australia will sign the Cape Town Convention and will table the Convention in Parliament later this month.
The Cape Town Convention
The Cape Town Convention creates the International Registry of Mobile Assets, which allows financiers and lessors to notify third parties of their security interests in certain aircraft and engines. The Convention also imposes standard rules governing priority of competing security interests, debtor default, jurisdiction for disputes and remedies for default. The Protocol to the Convention contains additional remedies, including the Irrevocable De-Registration and Export Request Authorisation which allows a financier to deregister an aircraft from the relevant national civil aircraft register and to export it.
Potential Benefits to Industry
Implementation of the Convention in Australia should reduce barriers for international aircraft acquisitions, disposals and financing. The greater certainty for international transactions provided by the Cape Town Convention should have a positive effect on competition as the perceived risks of doing business in Australia may be reduced and a greater number of international financiers may seek to enter the Australian market.
Making the Cape Town Convention Law in Australia
In Australia, a treaty signed by the Government only has legal effect through enabling legislation. This means that whilst the signing of the Cape Town Convention is a positive step, there may be further delays before the Convention has the force of law in Australia. Currently, the Government estimates that the Convention will be brought into force in 2014.
It must be remembered that Australia was one of the first countries to sign the Montreal Convention in 1999 but that the Convention did not come into effect in Australia until amendment of the Civil Aviation (Carriers’ Liability) Act in 2009.