Immovable-Associated Equipment under the Draft Mac Protocol: A Sui Generis Challenge for the Cape Town Convention

Abstract

UNIDROIT is in the process of adopting a fourth Protocol under the umbrella of the Cape Town Convention, the MAC Protocol, which will cover mining, agricultural and construction equipment. This article addresses a challenge faced by the MAC Protocol that was not encountered in the development of the previous Protocols - the potential for MAC equipment to be associated with immovable property in ways that result in the holder of an interest in the immovable property acquiring an interest in the associated MAC equipment under the law of the State in which the immovable property is located. The article first discusses how civil law and common law jurisdictions traditionally address the situation of security interests in movables that become associated with immovable property. It then explains and evaluates how the three alternatives in Article VII of the current draft of the MAC Protocol deal with this issue. Finally, it sheds some light on the outstanding issues with respect to Alternative A of Article VII of the MAC Protocol that will need to be dealt with in the run up to the diplomatic conference for the adoption of the MAC Protocol, which is expected to go ahead in the near future.

Keywords: secured transactions, international instruments, security interests, immovable-associated equipment, IAE, Harmonized Commodity Description and Coding System, HS System codes determine scope of coverage, CTC object-based international registry system, local immovable property laws

JEL Classification: K11, K22, K33, O13, Q14