Cape Town Convention Extended to Cayman Islands and UK

The Cape Town Convention is critically important for the financing of aircraft, and provides a system protecting the interests of financiers.

With effect from 1 November 2015, the United Kingdom, including the Island of Guernsey, Cayman Islands and Gibraltar, has ratified the Cape Town Convention, being the Convention on International Interests in Mobile Equipment and related Protocol on Matters Specific to Aircraft Equipment, a treaty designed to facilitate asset-based financing and leasing of aviation equipment, expand financing opportunities, and reduce costs – thereby providing substantial economic benefits.

The main benefit should be the cost of raising finance by providing for an internationally recognised system of “international interests” to be created and registered and standard remedies upon default, which would give creditors certainty as to the likelihood of being able to recover the aircraft.

These remedies include the ability of the creditor to take possession, deregister and export the aircraft, sell or grant a lease of an aircraft object, collect or receive any income or profits in connection with the management or use of that aircraft object and obtain interim relief pending final determination of any claim. Remedies must be exercised in a “commercially reasonable manner”.

In providing for a standard set of remedies, aircraft financiers will benefit from greater certainty in their ability to recover their aircraft assets upon default. This should reduce risks to the financiers and may result in lower financing costs.

The Cayman Islands, together with the Isle of Man is one of the leading jurisdictions for the registration of privately owned business jets.  Osiris is well versed in matters relating to aviation, and through its offices in the Cayman Islands is well placed to attend to such registrations.  We welcome the development as a further affirmation of the jurisdictions importance in this regard.