Canada: Ratification Of Cape Town Convention By The Government Of Canada: Its Effects On Aircraft Financing And Sale In The Majority Of The Provinces And Territories In Canada

On December 12, 2012, the federal government of Canada passed legislation that, in conjunction with various provincial laws, ratified its signature to the Convention on International Interests in Mobile Equipment (the "Convention") and the Protocol to the Convention on International Interests in Mobile Equipment on Matters specific to Aircraft Equipment (the "Protocol" collectively with the Convention the "Cape Town Convention") which occurred on March 31, 2004. This ratification is subject to the declarations lodged by the Canadian government (the "Canada Declarations") amending and supplementing sections 39, 52, 53, 54 and 60 of the Convention and articles VIII, X, X(6) XII and XIII of the Protocol.

The Cape Town Convention requires, subject to the exceptions indicated therein and to the Canada Declarations, that a written security agreement, title reservation agreement, leasing agreement or  contract of sale1 involving a debtor situated2 in a contracting state of the Cape Town Convention (which now includes Canada), which creates an international interest3 or prospective international interest4in aircraft equipment meeting certain size and power requirements,5 be published in the International Registry of Mobile Assets(the "IRMA") in order for such interest to be enforceable/perfected against third parties and for its priority to be established.

The Cape Town Convention will take effect on April, 1 2013 (the "Implementation Date") in Alberta, British Columbia, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Ontario, Québec and Saskatchewan. Although registration is not required for International Interests, Prospective International Interests or Non-Consensual Rights or Interest (within the meanings given to such terms in the Cape Town Convention) created before the Implementation Date, all such rights and interests created after the Implementation Date will need to be published in the IRMA. The priority of IRMA registrations is established on a "first to register" basis.

The one exception to this rule pertains to Pre-Existing Rights or Interests (within the meaning set forth in the Convention) governed by Sections 426 to 436 of the Bank Act (SC 1991, c 46). Such rights and interest have been given a five year grace period: up until April 1, 2018, such rights and interests will continue to be governed by the Bank Act. However, after April 1, 2018 the Convention will apply for the purposes of determining priority, including the protection of any existing property.

In addition to the abovementioned exception, the Cape Town Convention and the Canada Declarations6 provide that the priority of Non-Consensual Interests (within the meaning set forth in the Cape Town Convention), such as those arising from a government decree or a legal judgment, will continue to have priority over International Interests as defined by the Convention.

At present, the states that have ratified the Cape Town Convention include, but are not limited to, Canada, the United States, Brazil, New Zealand, Mexico, Norway, the United Arab Emirates and Russia. It should be noted however that several western countries including France, Germany, Switzerland, Italy and the United Kingdom have not ratified the Cape Town Convention.

The ratification of the Cape Town Convention by the Government of Canada will greatly alter aircraft financing and sale regimes in the majority of Canadian provinces and territories. The law imposes new obligations for publication and, in practical terms, will require that IRMA searches be included among the standard publication searches conducted in the context of aircraft financing or sale transactions.

The law will also provide creditors with a range of basic default remedies and recourses. Where there is evidence of certain defaults, the Cape Town Convention provides a means of efficiently obtaining interim relief pending final determination of its claim on the merits, deregistration, repossession, sale, lease and export of aircraft equipment.

In light of the above, creditors should conduct a thorough review of their standard financing documents to ensure that the terms and conditions of the Cape Town Convention have been accounted for. For creditors, this will include ensuring that standard documents provide for all rights, recourses and remedies available under the new law.

Footnotes

1 Subject to the adaptations made pursuant to the Protocol.

2 For the purposes of the Convention, the country where a debtor is deemed to be situated is based on the law of which it is incorporated or formed; or where it has its registered office or statutory seat; or where it has its centre of administration; or  where it has its place of business.

3 Amendments, assignments, subordinations and subrogations relating to an international interest may also be published.

4 Section 19 of the Convention also allows for the registration of  "Prospective International Interests". A Prospective International Interests which becomes an International Interests is treated as if registered from the time that the Prospective International Interests was registered.

5 Section 1 of the Protocol and section 2 of the Convention establish the particular application of the Cape Town Convention.

6 See the Canada Declaration regarding section 39(a) of the Convention.

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
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must 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