4 Moveable assets: Cape Town Convention
and Protocol on aircraft equipment
| (29920)
12135/08
COM(08) 508
| Amended Draft Council Decision on the conclusion by the European Community of the Convention on International Interests in Mobile Equipment and its Protocol on matters specific to aircraft equipment, adopted jointly in Cape Town on 16 November 2001
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| Legal base | Articles 61(c) and 300(2)EC; co-decision; QMV
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| Department | Business, Enterprise and Regulatory Reform
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| Basis of consideration | Minister's letter of 29 January 2009
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| Previous Committee Report | HC 16-xxx (2007-08), chapter 1 (8 October 2008)
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| To be discussed in Council | 26-27 February 2009
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| Committee's assessment | Legally and politically important
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| Committee's decision | Cleared
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Background
4.1 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 is applied
to different high-value mobile equipment by equipment-specific
protocols, and the Aircraft Protocol applies to equipment, such
as airframes, engines and helicopters above a certain size (other
than that used for military, customs or police purposes).
4.2 For some aspects, the Convention and the Aircraft
Protocol are within the competence of Member States,[7]
but, in so far as the Community has competence, two earlier draft
Decisions[8] would have
allowed it to sign and conclude the Convention and the Aircraft
Protocol. However, the UK and a number of other Member States
argued that there was Member State, rather than Community, competence
in relation to the insolvency aspects, and that, until this had
been resolved, the draft Decisions should not be carried forward.
A draft declaration confirming that Member States retain their
competence in respect of the substantive rules of insolvency was
subsequently agreed, but further progress was then prevented by
an unresolved disagreement between the UK and Spain over the position
of Gibraltar in relation to mixed agreements.
4.3 Although that dispute was subsequently resolved,
the situation had in the meantime been altered by the accession
of the new Member States, and by the fact that the Convention
and Protocol were no longer open to signature. The Commission
therefore put forward in August 2008 this new proposal, which
replaces the earlier proposals, and simply addresses the Community's
conclusion of the Convention and the Protocol, but not its signature.
However, the Convention and the Protocol require a regional organisation,
such as the Community, to indicate at the time of its accession
the matters which fall within its jurisdiction. The proposal therefore
had annexed to it a declaration highlighting the Community's locus
in relation to jurisdiction and the recognition and enforcement
of judgements in civil and commercial matters, insolvency proceedings,
the law applicable to contractual obligations, and indicating
its approach to certain Articles in the Protocol (notably those
governing insolvency). This was accompanied by a second declaration
describing the way in which the Community intended to its legislation
so far as interim relief is concerned.
4.4 As we noted in our Report of 8 October 2008,
those interested parties in the UK consulted by the Government
generally support the UK's signature, but that there were still
two outstanding issues. First, the Commission maintained that
Member States should not make declarations relating to remedies
on insolvency, whereas the UK and some other Member States would
like to be free to do so, Secondly, the Commission said that the
elements of Community competence bind all Member States, and that
the Community should accede first to the Convention and Protocol,
followed by the Member States, whereas the UK and other Member
States consider that they should be able to choose whether to
ratify. In view of this, we decided to hold the document under
scrutiny, pending confirmation that these issues had been resolved
to the Government's satisfaction.
Minister's letter of 29 January 2009
4.5 We have now received from the Minister for Trade
and Investment at the Department for Business, Enterprise and
Regulatory Reform (Lord Davies) a letter of 29 January 2009 confirming
that it has now been established that the competence of Member
States concerning the rules of the substantive law of insolvency
is not affected. He adds that the document is currently on the
agenda for the Justice and Home Affairs Council on 26-27 February,
but that it is likely to be placed on the agenda of an earlier
Council, if the UK is able to lift its Parliamentary scrutiny
reserve before then.
Conclusion
4.6 We have noted what the Minister has said,
and we also understand that the point over ratification has been
resolved to the Government's satisfaction. We are therefore clearing
the document.
7 Four of which - France, the UK, Italy and Germany
- have signed both the Convention and Protocol Back
8
(24357) 15904/02: see HC 63-xix (2002-03), chapter 2 (30 April
2003), HC 34-xxi (2005-06), chapter 8 (8 March 2006) and HC 16-xxx
(2007-08), chapter 1 (8 October 2008). Back
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