Canada: Mining, Agricultural And Construction Equipment Financing

The Protocol to the Convention on International Interests in Mobile Equipment on Matters specific to Mining, Agricultural and Construction Equipment (the "MAC Protocol") was adopted on November 22, 2019, in Pretoria, South Africa by all signatory nations (the "Contracting States").1

The MAC Protocol is an extension of the Convention on International Interests in Mobile Equipment (the "Cape Town Convention") and both instruments must be applied together.2 All declarations made by a Contracting State under the Cape Town Convention are deemed to be subject to the MAC Protocol.3 However, a Contracting State may choose, using its instrument of accession/ratification, to modify existing declarations under the Cape Town Convention specifically for their application under the MAC Protocol.4

The Cape Town Convention applies to categories of equipment to which a Protocol applies.5 In order for a new Protocol to be established under the Cape Town Convention, three elements of an equipment category must be demonstrated. The equipment category must be: (i) high-value, (ii) mobile and (iii) uniquely identifiable.6 These criteria are met under the specific Harmonized Commodity Description and Coding System ("HS") as identified equipment listed in the respective MAC Protocol Annexes.7 Therefore, the scope of the MAC Protocol is limited to the listed HS-coded equipment.8

A Contracting State can limit the application of the MAC Protocol to specific Annexes, but it cannot select specific HS coded equipment within an Annex.9 Equipment covered under an applicable MAC Protocol Annex will fall within the scope of the MAC Protocol, regardless of the use made of the equipment under another MAC Protocol Annex or of any intended or actual use of the equipment.10

The MAC Protocol proposes several declarations alternatives to Contracting States related to critical aspects of equipment financing, including inventory financing and association with immovable/real property. For instance, the MAC Protocol allows Contracting States to decide whether they want their national legal regimes to apply for inventory financing or to allow the MAC Protocol apply to such financing.11 In the event that a declaration is made by a Contracting State to apply the inventory financing regime, the applicable law cannot contradict the elected MAC Protocol regime. Also, Contracting States must choose between different regime alternatives regarding the association of equipment with immovable/real property to better reflect their national legal regime. The different alternatives proposed to the Contracting States under the MAC Protocol are based on the protocols adopted under the Cape Town Convention.12 As a matter of policy, UNIDROIT recommends that Contracting States be consistent with the previous protocols when choosing an alternative.13

Concerning the remedies on insolvency, if a Contracting State makes a declaration to apply the MAC Protocol insolvency regime, a creditor-friendly approach is adopted allowing for expedited remedies for parties holding international interests.14 In contrast, the Aircraft Protocol provides for two alternative proposals while the Railway Protocol offers three alternative proposals.15

All MAC-Protocol equipment interest constituted as an international interest16 may be registered at the International Registry17 for further enforceability.18 A supervising authority will be responsible for establishing an International Registry for MAC equipment.19. A registration of an international interest made under the MAC Protocol will supersede domestic interests.20

Gowling WLG has been registered as a Professional User Entity at the International Registry21 since the Canadian government ratified the Cape Town Convention in 2012. We have the expertise to register an entity as a Transacting User Entity ("TUE") at the International Registry and to act as its administrator in order to register and consent to International Interests for TUEs.

The MAC Protocol will only take effect in Canada after it is ratified, and Canada has not yet confirmed whether it will do so. In light of the above, creditors involved in mining, agricultural and construction transactions for which the MAC Protocol will be applicable should be aware of new legal obligations and possibilities that could affect their practice.

Footnotes

1. Gowling WLG (Canada) LLP published an article on the announcement of the forthcoming MAC Protocol diplomatic conference. For further details, the article can be read at:  https://gowlingwlg.com/en/insights-resources/articles/2019/mac-protocol-mining-agricultural-construction/

2. MAC Protocol Legal Analysis, par. 9; In the event of any inconsistency, the MAC Protocol shall prevail over the Cape Town Convention (6(2) Cape Town Convention).

3. Article XXIX MAC Protocol.

4. Article XXX MAC Protocol.

5. Article 49(1) Cape Town Convention.

6. Article 51(1) Cape Town Convention.

7. MAC Protocol Legal Analysis, par. 27-37.

8. Article I, II and XXXV MAC Protocol ; Annex 1 (Mining Equipment), Annex 2 (Agricultural Equipment) and Annex 3 (Construction Equipment) MAC Protocol.

9. Article II (2) MAC Protocol.

10. Article II(1) MAC Protocol ; There are 96 HS codes listed in the MAC Protocol Annexes, several of which are listed in two or three MAC Protocol Annexes (MAC Protocol Legal Analysis, par. 41).

11. Article XII MAC Protocol; Contracting States can elect to opt out of the MAC Protocol application to inventory financing. This possibility is given in the event that Contracting States have well established national regimes inventory financing systems.

12. The Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment (the "Aircraft Protocol"), the Convention on International Interests in Mobile Equipment on Matters Specific to Space Assets (the "Space Protocol") and the Convention on International Interest in Mobile Equipment on Matters Specific to Railway Rolling Stock (the "Railway Protocol") were all adopted as protocols under the Cape Town Convention.

13. MAC Protocol Legal Analysis, par. 111.

14. Article X MAC Protocol ;

15. Alternative A is considered creditor-friendly, Alternative B is considered debtor-friendly and Alternative C is a European comprise found is Continental Europe legal regimes. Alternative A and B are proposed under the Aircraft Protocol and all three alternatives are proposed under the Railway Protocol.

16. Article 7 Cape Town Convention.

17. Article 16 and 17 Cape Town Convention.

18. Article 20 Cape Town Convention.

19. Id.; Resolution 2 Relating to the Establishment of the Supervisory Authority of the International Registry for Mining, Agricultural and Construction Equipment convened to invite the International Finance Corporation to act as a supervising authority responsible for establishing an International Registry.  

20. Article 29 Cape Town Convention.

21. International Registry for Mobile Objects.

"Read the original article on GowlingWLG.com".

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions