Spain ratifies the Aircraft Protocol to the Cape Town Convention

01 February 2016

José Luis Lorente Howell

The Aircraft Protocol to the Cape Town Convention shall finally enter into force in Spain on 1 March 2016. Spain's accession to the Cape Town Convention means that, as of 1 March of this year, the rules and proceedings under which the Spanish Registry of Moveable Assets (Registro de Bienes Muebles or "RBM") as national entry point for the implementation of the instrument in Spain, will come into play.

However, it seems, as explained below, that the registration process envisaged by Spain does not fully merge with the Convention's own.

Advantages of the Cape Town Convention

The Convention seeks to establish a legal framework for international securities of mobile equipment and, with this in mind, to build an international registry system. The Convention is designed to overcome the problem of obtaining secure and readily enforceable rights in items of high-value mobile equipment which by their nature do not have a fixed location and, in the case of space assets (such as satellites) are not on Earth at all. This problem derives essentially from the widely-differing approaches taken by legal systems to security, title reservation and leasing rights, engendering uncertainty amongst intending financiers as to the efficacy of their rights. The result is to inhibit the extension of finance in respect of such categories of high-value mobile equipment, particularly to developing countries, and to increase borrowing costs.

The effect of the Convention and its protocols has already been shown, in jurisdictions where legislation has taken effect, to greatly improve predictability as to the enforceability of security, title reservation and leasing rights in the various categories of high-value mobile equipment covered by its terms, especially when it comes to aircraft objects. This will be done by means of the creation of a uniform international regime governing for interests over high-value mobile equipment. This is based on the creation of an international interest in such categories of equipment that is to be recognised in all Contracting States and on the establishment of an electronic international registration system for the registration of such interests.

Technical issues of the accession: Spain's entry point

Pursuant to Article XIX(1) of the Aircraft Protocol, Spain has designated the RBM as an authorising entry point specifying that "it shall authorise the transfer by the International Registry of the necessary information for the inscription with regards to aircraft or registered helicopters in the Kingdom of Spain or in the process of registration (…)".

Such authorisation is usually made by the granting of a prior code the so-called Unique Authorisation Code or "UAC" a first step for the purposes of the registration of international interests with the International Registry. In essence, this means that the remedies and rights contained within the Convention and the Protocol do not require a previous registration on a national level for their complete legal efficacy: indeed, if an interest or right subject to Spanish law may be registered at the International Registry, it is due to the fact that, first and foremost, it is an international interest, regardless of whether it may or may not be registered in Spain pursuant to Spanish law.

However, the Spanish law (Royal Decree 384/2015, of 22 May, which approves the Regulation on civil aircraft registration) that sets the legal framework for the implementation of the Protocol in Spain seems to require the previous local registration in the RBM before going onto the registration on the International Registry. Such contradiction may be due to the Spanish authorities' overall unawareness regarding the actual functioning of the International Registry, a fact which should cause considerable concern as it counterbalances the benefits which accession to the Protocol is meant to generate, essentially defeating the purpose of the accession itself.

This is why section 12.7 of the Regulations and Procedures for the International Registry, specifies that, should a national entry point exist at all (like Spain's own RBM), any registration in the International Registry which eludes the proceedings foreseen by the Convention for the national access point would become invalid. In this regard, it is undisputed that Spain's prior national registration arguably eludes or contradicts the Convention's proceedings.

Consequently, it remains to be seen whether the effective measures are taken in order to ensure a proper application in Spain; otherwise given that the so-called "useful effect" of Cape Town's registration system depends on a correct functioning of the national entry points both the time and effort involved in the accession process will not have made any sense at all.

For further information on the rights and remedies afforded by the Convention and Protocol, please get in touch with a member of the the Aviation Team..