On 28th April, 2008, the European Community ratified the Cape Town Convention on International Interests in Mobile Equipment and the Protocol thereto on Matters Specific to Aviation Equipment (together the Convention). The European Community should pass enabling legislation and, if that legislation has direct effect, the Convention will enter into force throughout the European Community (with the exception of Denmark) on 1st July, 2009.

The European Community has ratified the Convention as a “regional economic integration organisation” in accordance with Article 48 of the Convention. It has the power to bind the Member States to the extent that it has competence over matters governed by the Convention. The Member States have transferred their competence to the Community as regards matters which affect Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Brussels), Council Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings (the Insolvency Regulation) and Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I).

The Convention has been ratified within all the Member States to the extent that it addresses matters covered by these regulations. It is expected that certain Member States will subsequently ratify the Convention for the purposes of giving effect to those provisions in respect of which the European Community has no competence. There is some doubt as to the status of the Convention within Member States which have not ratified it individually. It is unclear whether those states will be “Contracting States” for the purposes of the Convention and this will lead to some difficulties: for example, in deciding whether or not any particular international interest is registrable.

The European Community has not made any declarations under Article XXX of the Protocol. In particular, the ratification makes it clear that the Member States will retain competence over their substantive law regarding insolvency. If the current laws within any Member State regarding remedies of a creditor upon the debtor’s default are to be altered, that will be the subject of a declaration to be made by the relevant Member State at the time that it ratifies the Convention itself. In particular, Member States will need to decide individually whether the provisions of “Alternative A” (which, in summary, provides for the obligatory return of an aircraft to a creditor upon the expiry of a specified waiting period) should be applied in their jurisdiction.  

The ratification by the European Community further clarifies that, in the event of any conflict between the Convention and the Brussels Convention, the latter will prevail.

Denmark has opted out of the provisions conferring powers on the European Community to ratify international treaties on behalf of the Member States under the terms of a Protocol to the Treaty establishing the European Community. The ratification by the European Union of the Convention therefore has no consequence in that country.

Ireland and Luxembourg have already ratified the treaty individually.