A Comparison of the Position of Buyers Under the Cape Town Convention, the Three Existing Protocols and the Draft MAC Protocol.

Abstract

The position of buyers of equipment under the Cape Town Convention itself is modified in each of the existing three Protocols. Buyers are considered differently in, on one hand, the Aircraft and Space Protocols to the Cape Town Convention, and on the other hand, the Rail Protocol. The former treat a buyer as having an International Interest which can be registered in the International Registry, while under the latter only registration of a ‘notice of sale’ is possible. The draft MAC Protocol currently follows the Rail Protocol. This paper considers the unmodified position of buyers under the Convention, particularly in relation to the priority rules and the requirement of a ‘power to dispose’, and then considers how this is changed by the modifications in each Protocol. The line between a Title Reservation Agreement and a contract of sale is examined, although ultimately this is of limited significance, at least in relation to the Aircraft and Space Protocols. Treating a sale as an international interest causes some challenges to the drafting of the Aircraft and Space Protocols, and some of the resulting difficulties are discussed. The reasons for the different approach in the Rail Protocol, and the ramifications of that approach, are considered. Finally, in relation to the draft MAC Protocol, the various options available in relation to the treatment of sales are discussed, both as to registration and the priority position of buyers.

Keywords: secured transactions, Cape Town Convention, Aircraft Protocol, MAC Protocol, buyers, sale of goods

JEL Classification: K11, K12, K20, K22