Security interests in mobile equipment: Lawmaking lessons from the Cape Town convention

The announcement by the Australian government of Australia's intention to ratify the Cape Town Convention and its associated Aircraft Protocol provides a timely opportunity to describe the key elements of these two important international instruments adopted in November 2001 which, as will be seen later, have already attracted strong support which is steadily increasing. The Cape Town Convention has already received 61 ratifications and the Aircraft Protocol 55 ratifications. With its enactment of the Personal Property Securities Act 2009 (Cth), Australia joined the many jurisdictions that have adopted a modern, functional approach to security interests based on art 9 of the United States Uniform Commercial Code and the Canadian Personal Property Security Acts. But domestic laws are not well suited to high-value equipment that moves regularly across national borders, such as aircraft objects and railway rolling stock, or to equipment that is not on Earth at all, such as satellites and other space assets. The conflict rule designating the lex situs as the applicable law does not work for objects having no fixed situs or for assets in space where no private law exists. Moreover, even if a uniform conflict rule could be devised it would not overcome major differences in national laws governing secured transactions. Hence the need for an international regime governing the creation, perfection and priority of interests in mobile equipment, with an international registry for the registration of such interests and priority rules based on the order of registration. This paper describes the key features of the Cape Town Convention and Aircraft Protocol and their relationship to national law.