WHAT IS CAPE TOWN CONVENTION AND PROTOCOL

The Convention on International Interests in Mobile Equipment was concluded in Cape Town on 16 November 2001 commonly known as Cape Town treaties, as the Protocol on Matters Specific to Aircraft Equipment. The Convention and the Protocol, adopted under the joint auspices of ICAO and UNIDROIT, shall be read and interpreted together as a single instrument (Article 6(1) of the Convention). In simple words, this Cape Town convention and protocol is to protect mobile equipment particularly aircraft, engine etc from legal and commercial impact or delays. As an example, the aircraft was leased from bank or creditor while operated under name it “oneair airlines” and due to some reason the aircraft was unserviceable or carrying prohitbited or illegal items that the legal system held the aircraft under custody, if the oneair bankcrupt then under this convention, the signatories can not held the mobile equipment under custody especially it is not own by the operator but to the creditor. This signatories will save cost of insurance, liabilities, etc   The signatories also establishes the right for owners of these aircraft to grant an Irrevocable De-Registration and Export Request Authorization (IDERA) to a secured party.  Until 16 June 2016 there are 65 signatories to the conventions. There are many people does not aware on this convention and that increases the insurance cost,  how to choose air charter company processes to assure you are well prepared. For this discussion, there are more issues such as commercial aviation MANPADS defense act of 2004 as follows for Draft convention The Cape Town Treaty and Markup – Hearing on Subcommittee on Aviation

PURPOSE OF THE TREATY AND MARKUP

The purpose of the hearing is to discuss the Cape Town convention and protocol on Aircraft Equipment. Immediately following the hearing the Subcommittee will mark up two bills, the “Cape Town Treaty Implementation Act of 2004” and the “Commercial Aviation MANPADS Defense Act of 2004”

BACKGROUND OF CONVENTION AND PROTOCOL

The Cape Town convention and protocol on Aircraft Equipment (known collectively as the Cape Town Treaty) was transmitted to the Senate on November 5, 2003. The Cape Town Treaty will extend modern commercial finance laws, already in place in the United States, to international transactions involving aircraft and aircraft engines. The Treaty adopts U.S. asset-based financing and assignment of payment rights financing concepts as the international standard. These principles are reflected in the U.S. Uniform Commercial Code (UCC), which permits lenders to use the value of the asset to compensate for other factors that would drive risk and credit costs up or sharply limit credit altogether. This treaty will make asset-based financing available in emerging countries where today such commercial law and the associated credit may not be adequate and where credit and country risk are obstacles. The Cape Town Treaty is strongly supported by the aircraft manufacturing industry and the key government agencies involved. The Cape Town Convention came into force April 1, 2004, with three ratifying States. However, the Convention will not apply to aircraft until the Protocol also comes into force, which requires ratification by eight States. Currently, four countries have ratified the Convention and Protocol. Additional ratifications are likely to occur by the fall, and the Protocol is expected to come into force by the end of calendar year 2004. U.S. manufacturing and financing interests have placed strong importance on early ratification in order to provide a boost in sales in aircraft frames and engines. The treaty will facilitate the acquisition of newer, safer aircraft and help developing countries without private capital. Several major sales of U.S. equipment have been made or will be made based on the expectation of other countries that the U.S. will ratify the treaty. To fully implement the Protocol, the Administration has proposed enacting technical amendments to the Federal Aviation Administration authority concerning registry functions under the Protocol. The Treaty permits optional declarations that designate the FAA as the entry point for the U.S. filings in a new international registry. WITNESSES PANEL I The Honorable Karan K. Bhatia Assistant Secretary for Aviation and International Affairs U.S. Department of Transportation Accompanied by: Ms. Clare Donelan Senior Attorney, Legislative Staff Office of the Chief Counsel Federal Aviation Administration   H.R. 4056 – “Commercial Aviation MANPADS Defense Act of 2004” (CAMDA) BACKGROUND AND SUMMARY As mandated by Congress, the Department of Homeland Security (DHS), in partnership with other federal agencies, is taking an aggressive approach to counter the threat of shoulder-fired missiles to civilian commercial aviation. DHS’s Science and Technology division is leading the technology aspects of the effort through its Counter-MAN Portable Air Defense Systems (MANPADS) Special Program Office. This Office will help determine the viability, economic costs and effectiveness of adapting existing technology from military to commercial aviation use. Following an aggressive 18-24 month analysis, prototype demonstration and testing phase, DHS will provide the Administration and Congress with a recommendation for the most viable solution to defend against shoulder-fired missiles. The recommendation is expected some time in late Spring to early Summer 2005. The United States must take a comprehensive approach to the threat MANPADS pose to commercial aviation. This includes long-term and short-term solutions, as well as domestic and international efforts. H.R. 4056, the Commercial Aviation MANPADS Defense Act of 2004 (CAMDA) is intended to make clear that while the Department of Homeland Security (DHS) is conducting research and development (R & D) of missile defense equipment for commercial aircraft, interim solutions to the threat posed by MANPADS should be taken. CAMDA includes:

• A provision encouraging the President to pursue strong international diplomatic and cooperative efforts, including multilateral and bilateral treaties, to limit the availability, transfer and proliferation of MANPADS and to seek the destruction of excess, obsolete and illicit MANPADS.
• A provision requiring the FAA to, when appropriate, expedite their airworthiness certification of the missile defense systems for commercial aircraft and to avoid duplicating the efforts taken by DHS during the missile defense system R & D program.
• A provision encouraging the President to continue programs to reduce the number of MANPADS worldwide.
• A provision requiring DHS to report to Congress, within one year, on the vulnerability assessment reports they are conducting at U.S. airports and any ground-based defense policies or procedures recommended through that process.

H.R. ____- “Cape Town Treaty Implementation Act of 2004” BACKGROUND AND SUMMARY The Cape Town Convention on International Interests in Mobile Equipment, and the related Protocol on Aircraft Equipment, will extend modern commercial finance laws, already in place in the U.S., to international transactions involving high value mobile equipment. This bill makes the following minor conforming changes to the provision in U.S. law that governs the recordation of security interests with the FAA Registry. The Cape Town Treaty Implementation Act of 2004:

• Allows for the recordation of slightly less powerful engines with the FAA registry (includes broader types of engines, including those that power all medium size business aircraft to large commercial aircraft). These slightly less powerful engines would also be eligible for benefits of the new International Registry.
• Allows for the recordation of a notice of prospective interest in aircraft or aircraft engines (which are eligible for recording under the Cape Town Treaty) with the FAA registry. A notice of prospective interest is an advance filing, giving notice of intended secured interests in an asset, where both parties to the transaction agree.
• Designates that the FAA’s Civil Aircraft Registry, currently operated out of the FAA Oklahoma City Regional Office, to be the U.S. “Entry Point” to the International Registry.
• Allows the FAA’s Civil Aircraft Registry to authorize filings with the International Registry related to U.S. registered aircraft, aircraft engines, and notices of prospective interest in aircraft that have received a U.S. identification number. Authorization of filings will occur when the registrant receives the required form from the FAA’s Civil Aircraft Registry.
• Requires filing of documentation with the FAA’s Civil Aircraft Registry before an authorization from the FAA’s Civil Aircraft Registry for U.S. civil aircraft, or aircraft that have received a U.S. identification number (but have not yet been registered) can be transmitted to the International Registry.
• Provides for when the FAA can authorize transmittals of prospective interests in aircraft that have received a U.S. identification number. Also makes FAA authorization optional for aircraft engines (since engines do not have any country’s nationality). Finally, the bill sets forth what is required for the priority of a prospective interest to be maintained (the term “priority” means prior in time; all interests filed prior in time have priority in an asset).
• Directs the FAA to immediately proscribe regulations for the registration and deregistration of aircraft (currently addressed in two specific regulations sections 47.37 and 47.47 of 14 C.F.R.), the registration and deregistration of aircraft (currently addressed in two specific regulations sections 47.37 and 47.47 of 14 C.F.R.), and to complete the rulemaking process as expeditiously as possible.
• Indicates that, if necessary, the Treaty shall apply to the registration and deregistration of aircraft (currently addressed in two specific regulations sections 47.37 and 47.47 of 14 C.F.R.), until the FAA regulations are effective.
• Provides that the amendments made by this Act and any related regulations are effective upon the Cape Town Treaty’s coming into force and do not apply to any prior registration or recordation. All existing rights are subject to prior rules and are unaffected by the Act.