From 1 November 2010, the Civil Aviation (Cape Town Convention and Other Matters) Amendment Act 2010 takes precedence over the Personal Property Securities Act (PPSA) with respect to interests in certain aircraft objects, even where both parties are in New Zealand.
The Act gives effect to the Cape Town Convention and Aircraft Protocol (the Convention). When the Convention applies, any person who holds a security interest, is a lessor under a lease agreement, or holds a reservation of title, in a debtor's aircraft object can register that interest on the International Register (based in Dublin). An interest that is registered on the International Register has priority over any interest that is registered only under the PPSA (even if the PPSA interest was registered first in time).
The Convention differs from the PPSA in the following two crucial respects:
- the Convention applies to all leases, whereas the PPSA only applies to leases with a term of more than 12 months; and
- traceable proceeds under the Convention are narrower than under the PPSA.
From now on, holders of security and lease interests in relevant aircraft objects should ensure that their interests are protected by registering on the PPSA register and the International Register under the Convention. Both registers must be searched to determine if there are any prior interests.
For further details click here to read our earlier client update on this development.