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The new Cape Town Convention regime applies to "international interests" created
on and after March 1, 2006 in certain aircraft assets. From that time, “international
interests” in aircraft and aircraft engines are supposed to be registered with
Aviareto, the operator of the new International Registry, in Ireland. The "international
interest" in aircraft assets is a newly defined concept. Such an interest is
deemed to be created when either (1) a "debtor" based or organized in a jurisdiction
which has adopted the Convention (such as the U.S.) creates any charge or security
interest in, enters into a title-reservation agreement covering, agrees to sell
or purchase or agrees to lease either an aircraft or an aircraft engine of a certain
size, or a party holding such an interest assigns it to another party, or (2)
an airframe registered in a signatory country has such an interest created with
respect to it.
The new system does not displace national filing systems such as the FAA Registry,
compliance with which will continue to be required as before. Pre-existing interests
duly filed in national systems up through February 28, 2006 are not affected by
Cape Town.
The new system affects the relative priority of interests and is structured as
a "pure race" system – i.e., the first to register has priority over others.
Even "prospective" interests may be registered to establish a priority date, before
the interests actually become effective. The nature of the interest is not disclosed
by the registration -- inquiry must be made of the parties named in the registration.
Local law continues to define the rights of the parties to the interests.
The Convention regime applies to airframes type-certificated to carry eight or
more persons or cargo over 6,050 pounds, and helicopters type-certificated to
carry five or more persons or cargo over 990 pounds. Also, piston and turboprop
aircraft engines rated at 550 or more takeoff shaft horsepower are covered (down
from 750 hp under previous FAA rules), and jet engines having 1,750 or more pounds
of thrust are covered. Therefore, a Cessna 172 is not covered by this regime
and an Embraer 135 regional jet is covered, but there may be possibilities for
some gray areas in between. Also, more engines are now covered than were covered
previously by FAA filings.
The parties to the transactions are themselves required to become authorized
users of the Web-based International Registry. Such a user is called a "transactional
user entity." Transactional users also may be individuals, since individuals
often own or lease aircraft. The signup system for users authorized to do the
on-line registrations of interests went live on February 21, 2006.
There is another category of user -- the "professional user entity" -- into which
law firms and title firms fall. They may interact with the IR system as authorized
representatives of transactional users.
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