16 Moveable assets
| (35013)
11140/13
COM(13) 349
| Draft Council Decision on the approval of the Luxembourg Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Railway Rolling Stock, adopted in Luxembourg on 23 February 2007
|
| Legal base | Articles 81(2) and 218(6)(a) TFEU; consent; QMV
|
| Department | Transport
|
| Basis of consideration
| Minister's letter of 23 October and 27 November 2013
|
| Previous Committee Reports
| HC 83-xiii (2013-14), chapter 10 (4 September 2013); HC 83-xii (2013-14), chapter 4 (17 July 2013)
|
| Discussion in Council
| 4-5 December |
| Committee's assessment
| Legally and politically important
|
| Committee's decision
| Cleared |
Background
16.1 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 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 is for the EU a mixed competence instrument, is applied
to different high-value mobile equipment by equipment-specific
Protocols.
16.2 This draft Council Decision is to authorise
approval by the EU of the Protocol to the Cape Town Convention
on matters specific to railway rolling stock, the Luxembourg Rail
Protocol. 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.
16.3 The Luxembourg Rail Protocol is, like the Cape
Town Convention itself, a mixed agreement falling partly under
exclusive EU competence. The EU has competence over certain matters
governed by the Protocol, as in Regulation (EC) No. 1346/2000
(on insolvency proceedings), Regulation (EC) No. 44/2001 (on jurisdiction
and the recognition and enforcement of judgements in civil and
commercial matters) and Regulation (EC) No. 593/2008 (on the law
applicable to contractual obligations). There is also existing
EU rail legislation — Directive 2008/57/EC on interoperability
of the rail system within the EU and Regulation (EC) No. 881/2004
establishing the European Railway Agency. So individual Member
States cannot sign up to and adopt the Protocol in its entirety,
rather only those aspects for which the EU does not have exclusive
competence.
Previous scrutiny
16.4 When we last considered this draft Council Decision,
on 4 September, the then Minister of State at the Department of
Transport (Mr Simon Burns) said that:
· he agreed with us
that the Commission's wording in recital 11 (that because the
UK and Ireland have opted into the relevant internal EU legislation
on which external EU competence is based it is automatically bound
by this Decision) was not acceptable. He had consulted the Ministry
of Justice (as we had suggested as it was facing a similar problem
in EU negotiations) and its advice was that the Minister should
seek an amendment to recital 11 to reassert the right to opt-in;
· the Government would,
therefore, press for this amendment. If it did not succeed, it
planned to assert its opt-in rights by putting down a Minute
Statement formally to record its position when the proposal was
agreed in the Council of Ministers; and
· the Government had
also considered, in discussion with the Ministry of Justice, whether
a legal challenge would be merited. Its view was that, while
there might be occasions where it would be in the Government's
interests to test this issue in the ECJ, it did not believe it
would be appropriate to do so in the case of this uncontroversial
proposal, especially if it opted into it. This approach was consistent
with Ministry of Justice policy in the case of the 1965 Hague
Service Convention.
16.5 In response, we questioned whether putting down
a Minute Statement on the adoption of the proposal in the Council
could accurately be described as asserting the UK's opt-in
rights. We asked the Minister to write again when the negotiation
of recital 11 was concluded. In that letter we asked to know the
views of other Member States on the legality of recital 11, particularly
Ireland.
Minister's letter of 23 October 2013
16.6 The Minister of State at the Department of Transport
(Baroness Kramer) wrote to tell us that the Government had opted
into the proposal, and that it had sought an amendment of recital
11 to assert the Government's opt-in rights at the first working
group meeting. Five Member States had opposed it, however.
Minister's letter of 27 November 2013
16.7 The Secretary of State now writes as follows:
"As you may recall from
the original Explanatory Memorandum on this proposal, the Government
took the view that the Protocol would be advantageous to the UK
and European rail industry, would provide greater security for
the leasing companies of rolling stock, and would be beneficial
both to borrowers, by stimulating increased flows of capital at
lower cost, and to equipment suppliers. We did however have a
concern, which your Committee shared, about the Commission's wording
in recital 11 (that because the UK and Ireland have opted into
the relevant internal EU legislation on which external EU competence
is based it is automatically bound by this Decision).
"I am pleased to say
that compromise text has recently been negotiated on recital 11
(in what is now recital 12) that instead simply records that the
United Kingdom and Ireland are taking part in the adoption and
application of this decision.
"There remains a
difference of opinion between Member States as to whether the
opt-in applies in situations like this where there is external
competence. However, as you know the Government believes that
the UK's opt-in is engaged and our objective has been to achieve
wording which protects the UK's right to assert its opt-in in
similar circumstances in the future. We believe that the wording
we have secured meets that objective.
"Following the conclusion
of negotiations, the proposal is now due to be finally agreed
as an "A" Point at the Justice and Home Affairs Council
5-6 December and the Government would like to take part in the
adoption of this Decision. I would therefore be most grateful
if your Committee could clear the proposal from scrutiny ahead
of this date."
Conclusion
16.8 We are grateful to the Minister for her letters.
We take note of the compromise language in recital 12, which we
consider a minimum safeguard to protect the UK's opt-in rights
for a proposal with a Title V legal base, and now clear the document
from scrutiny.
|
