2001 Cape Town Convention (aircraft interests)
The treaty that creates an international interest in aircraft, engines and helicopters, recorded in a global registry, and gives the creditor or lessor fast repossession remedies on default.
Airliners are largely financed by banks and lessors, which need to be able to repossess the aircraft if the airline stops paying. Yet an aircraft moves from country to country, and national security interest laws differ. The Cape Town Convention on International Interests in Mobile Equipment, and its aircraft protocol, create an international interest recorded in a single electronic registry, enforceable in all state parties. On default, the creditor may repossess, sell or lease the aircraft, and have it deregistered from the national registry through an irrevocable deregistration authorization signed in advance by the airline. An insolvency option sets a waiting period after which the administrator must return the aircraft or cure the default. The convention lowers financing costs, but its effectiveness depends on states' good faith, as shown when a state under sanctions retained leased aircraft.
Signed on November 16, 2001, with an aircraft protocol in force since March 1, 2006, the convention did not prevent Russia, although a party to the treaty, from retaining several hundred aircraft owned by foreign lessors in March 2022, shifting the dispute to their contingent and possessed and war risk policies.
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