On 28 December 2017, Uzbekistan adopted a law acceding to (i) the Convention On International Interests in Mobile Equipment (the "Cape Town Convention"), and (ii) the Protocol Thereto On Matters Specific to Aircraft Equipment (the "Protocol"). (The Convention and the Protocol collectively are referred to as the "Treaty.")
The instrument of accession to the Treaty was deposited with UNIDROIT on 31 January 2018, and, therefore, the Treaty will enter into force for Uzbekistan on 1 May 2018. Generally, international treaties to which Uzbekistan is a party have direct effect in Uzbekistan. Thus, no further law or act should be necessary in order for the parties to be able to apply the Cape Town Convention or the Protocol in respect of their transactions on or after 1 May 2018.
The Cape Town Convention creates an international legal framework and standards for transactions involving movable assets. There are three protocols to the Convention specific to three types of movable equipment: (i) aircraft equipment, (ii) railway rolling stock, and (iii) space assets. The Cape Town Convention and the Protocol focus on the issues pertaining to aircraft equipment with a view to make it easier for banks, lenders, leasing companies, insurers, etc. to participate in the acquisition and leasing of aircraft and related equipment (e.g., engines). Particularly important are the Treaty's provisions concerning an event of default and a debtor's insolvency and the Treaty's international registration system for transactions.
More than 70 countries are now parties to the Treaty. Uzbekistan's accession to the Treaty is another step in the country's efforts to harmonize its legislation with international standards.
Declarations Made by Uzbekistan
Declarations to the Treaty made by Uzbekistan in its accession include the following:
- Declaration under Article 53 of the Convention: Uzbekistan's economic courts shall be the appropriate courts for the purposes of Article 1 and Chapter XII of the Convention;
- Declaration under Article 54.2 of the Convention: Any remedy available to a creditor under the Convention which is not expressed to require application to the court may be exercised out-of-court;
- Declaration regarding choice of law: Uzbekistan applies Article VIII of the Protocol, under which the parties to an agreement may agree on the law to govern their contractual rights and obligations;
- Declaration regarding insolvency assistance: Uzbekistan applies Article XII of the Protocol, under which Uzbek courts in accordance with Uzbek laws shall cooperate to the maximum extent possible with foreign courts and foreign insolvency administrators in carrying our insolvency remedies available to creditors under the Protocol;
- Declaration regarding IDERA: Uzbekistan applies Article XIII of the Protocol which introduces irrevocable de-registration and export request authorizations (IDERA). Accordingly, an IDERA issued by a local lessee/airline should be recognized in Uzbekistan pursuant to the Treaty;
- Declaration regarding relief pending final determination: Uzbekistan applies the entirety of Article X of the Protocol, with the time period not exceeding 10 calendar days for the types of relief indicated in Articles 13.1(a), (b) and (c) of the Convention and 30 calendar days for the types of relief indicated in Articles 13.1(d) and (e) of the Convention;
- Declaration regarding remedies on insolvency: Uzbekistan applies Alternative A of Article XI of the Protocol for all claims regarding debtor insolvency, and the "waiting period" under Article XI.3 of the Protocol shall be 60 calendar days. Under such Alternative A, the debtor (or insolvency administrator) shall give possession of the aircraft object to the creditor no later than the earlier of: (i) the end of the "waiting period," and (ii) the date on which the creditor would be entitled to possession of the aircraft object if Article XI of the Protocol did not apply.
Parties to agreements to which the Treaty applies (e.g., lease agreements and security agreements) may rely on the Treaty provisions subject to the declarations above. Even though such declarations generally are lender friendly, some of the declarations (e.g., on out-of-court enforcement of remedies) may be difficult to enforce in practice in the absence of specific regulation and procedures.