2 Moveable assets
| (30468)
7115/09
+ ADD 1
COM(09) 94
| Draft Council Decision on the signing by the European Community of the Protocol to the Convention on International Interests in Mobile Equipment on matters specific to railway rolling stock, adopted in Luxembourg on 23 February 2007
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| Legal base | Article 71(1) EC; co-decision; QMV
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| Document originated | 2 March 2009
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| Deposited in Parliament | 4 March 2009
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| Department | Transport
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| Basis of consideration | EM of 23 March 2009
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| Previous Committee Report | None
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| To be discussed in Council | Not known
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| Committee's assessment | Politically and legally important
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| Committee's decision | Not cleared; further information requested
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Background
2.1 Those providing asset-based finance for high-value, internationally
mobile equipment are reliant on the national laws of the territories
through which such equipment passes, but those laws differ in
the extent to which a security interest is recognised, thus creating
risks for the financier. The 2001 Cape Town Convention on International
Interests in Mobile Equipment provides a new uniform international
legal order for the creation, registration and enforcement of
security and similar interests in such equipment (including insolvency
proceedings and the remedies available in the event of default
by a debtor). The general regime of the Convention, which, for
the Community is a mixed competence instrument, is applied to
different high-value mobile equipment by equipment-specific protocols.
The Community is still in the process of concluding (acceding
to) the Convention.[5]
The document
2.2 This draft Decision is to authorise signature by the Community
of the protocol to the Cape Town Convention on matters specific
to railway rolling stock, the Luxembourg Rail Protocol. This protocol
was adopted at a Diplomatic Conference on 23 February 2007 in
Luxembourg, held under the auspices of the International Institute
for the Unification of Private Law[6]
and the Intergovernmental Organisation for International Carriage
by Rail.[7] It is intended
to facilitate financing of high-value railway rolling stock by
seeking to ensure protection, for example of a leasing company's
rights against defaulters, by a method of central registration,
priority and common contractual terms. One of the purposes of
this is to reduce the costs of leasing contracts for rolling stock.
2.3 The Luxembourg Rail Protocol is, like the
Cape Town Convention itself, a mixed agreement falling partly
under exclusive Community competence. The Community has competence
over certain matters governed by the protocol such as jurisdiction,
the recognition and enforcement of judgements in civil and commercial
matters, insolvency proceedings and contractual obligations. There
is also existing Community rail legislation — Directive
2008/57/EC on interoperability of the rail system within the Community
and Regulation (EC) No 881/2004 establishing the European Railway
Agency. For these reasons individual Member States cannot sign
up to and adopt the protocol in its entirety, rather only those
aspects for which the Community does not have exclusive competence.
2.4 Under Article XXII of the Luxembourg Rail
Protocol, Regional Economic Integration Organisations may sign,
accept, approve or accede to the protocol. In this respect, as
the Community has competence over certain matters governed by
the protocol, it would be able to sign the protocol provided it
obtains the approval of the Council and the European Parliament.
Article XXII(2) requires that at the time of signature, acceptance,
approval or accession, the Community, as such a regional organisation,
must make a general declaration indicating the matters covered
by the protocol, which fall within the Community's jurisdiction.
A declaration annexed to the draft Decision outlines the Community
powers conferred by Regulations (EC) No 44/2001 (on jurisdiction
and the recognition and enforcement of judgements in civil and
commercial matters), No 1346/2000 (on insolvency proceedings)
and No 593/2008 (on the law applicable to contractual obligations),
Directive 2008/57/EC (on interoperability of the rail system)
and Regulation (EC) No 881/2004 (establishing the European Railway
Agency).
The Government's view
2.5 The Minister of State, Department for Transport
(Lord Adonis) comments that:
- increasingly, in the UK and
elsewhere in the Community, purchase of transport equipment is
being financed by private investors, through the capital markets;
- in the light of this, the UK along with other
Member States signed the Cape Town Convention;
- although the UK has signed the Cape Town Convention,
this in itself is not legally binding with respect to adoption
of the Luxembourg Rail Protocol, as it would need to be signed,
ratified and transformed into UK law by enabling legislation;
- while the Government realises that it may be
advantageous for the Community and other Member States to sign
the protocol, it considers that the it would only be of limited
benefit to potential UK lenders and lessors who engage in cross-border
transactions;
- in April 2003 the Government undertook a full
public consultation on the protocol;
- the overall conclusion was that, while there
was support from respondents for the protocol on the basis that
it may lead to greater security for the leasing companies of rolling
stock, this was against the backdrop of only minimal response
to the consultation, and concerns about the interaction between
the rights of parties who have invested in stock and those who
have defaulted on leasing and credit agreements and how this would
relate to the need to preserve public rolling stock service;
- in December 2008 the Government consulted the
three principal rolling stock companies in the UK for their assessment
of the content and potential benefits of the protocol to the UK;
- their responses indicated a belief that the protocol
would only be of limited benefit to UK lessors or financiers;
- there was also concern at the time and cost implications
of setting up a central register of rolling stock and common enforcement
rights, against any potential benefits, and the potential for
conflict or restriction of the current workings of the UK system;
- therefore the Government does not see any need
for the Protocol to be implemented in the UK to improve the security
of rolling stock financing; and
- before the UK could be in a position to do so,
due consideration would have to be given to the reservations that
the Government has.
Conclusion
2.6 We are grateful to the Minister for his
explanation of this proposal and the Government's view of it.
However we are not absolutely clear as to the Government's intentions.
We take it that on the one hand the Government will support the
draft Decision, in the interests of those Member States who would
benefit from Community accession to the Luxembourg Rail Protocol.
On the other hand it does not intend that the UK should accede
to the protocol, given its limited interest for the UK. Before
considering the document further we should be grateful for clarification
of this. Meanwhile the document remains under scrutiny.
5 (29920) 12135/08: see HC 19-vi (2008-09), chapter
4 (4 February 2009). Back
6
See http://www.unidroit.org/. Back
7
see http://www.otif.org/index.php?L=2. Back
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