Spain takes its first step towards securing international interests in mobile equipment.
On October 4, 2013, the Official Gazette of the Spanish State published Spain’s accession to the Convention on International Interests in Mobile Equipment signed in Cape Town on November 16, 2001 (the “Convention”), implying a substantial change to the Spanish regime for chattel guarantees, mainly since it incorporates the regulation of the so-called international interests that are valid internationally regardless of where the encumbered assets are located6.
Forming these interests only requires that they be set out in writing (identifying the object and the guaranteed obligations, with no need to stipulate the maximum guaranteed amount7) and the guarantor’s authority to dispose of them. Entry on the International Registry of Guarantees8 is not a requisite for completion, but it is a requisite for enforceability against third parties. This detail is vital because an international interest formed in line with the Convention has priority over any national guarantee regulated by domestic law, even where the national guarantee was created before the international interest, and it takes precedence even where the national guarantee has been placed on record by notifying the International Registry of Guarantees9.
International interests may be enforced through one or more of the following procedures: (i) delivery of possession or control of the encumbered asset, (ii) sale or lease of the asset, or (iii) collection of all revenues or profit from the management or use of the asset. These recourses can only be exercised with court approval, since Spain chose that option in keeping with its entitlement to do so under the terms of the Convention.
Regarding the insolvency regime for these interests, the rule under the Convention is that they are enforceable in insolvency proceedings if they were registered before the proceedings began, which means that the international interest would be treated in the insolvency as a national in rem guarantee.
The Convention is supplemented by three additional protocols10 adapted to the specific types of mobile equipment: aircraft equipment, railway rolling stock and space assets. As the Convention will not apply to a specific type of asset until the corresponding protocol has entered into force, it will not apply in Spain until the latter has adhered to those protocols (the Convention and the protocols are interpreted as a single instrument).