OVERVIEW OF THE CAPE TOWN CONVENTION
LEGAL REGIME FOR AIRCRAFT EQUIPMENT
Ukraine has not ratified the Cape Town Convention
U.S.-Ukraine Business Council (USUBC), Wash, D.C., Tue, September 8, 2009
WASHINGTON, D.C, - The Cape Town convention is designed to establish a commercially oriented, comprehensive international legal regime for the creation, enforcement, registration and priority of security interests and interests held by chargees, conditional sellers and lessors in airframes, aircraft engines and helicopters of a minimum size (aircraft equipment).
The Cape Town Convention establishes an international set of rules governing security, title-retention and leasing interests in aircraft equipment which will provide financial institutions and other creditors with the necessary safeguards, while at the same time incorporating measures for the protection of debtors.
The principal objective of the Cape Town convention is the efficient financing of aircraft equipment. Such financing will assist in the development of cost effective air transportation systems utilizing modern aircraft equipment.
The Cape Town Convention is designed to bring significant economic benefits to countries at all stages of economic development, and in particular, to developing countries by bringing within their reach a wider range of financing alternatives on more attractive terms.
The Cape Town Convention is a sound, internationally adopted legal regime for security, title-retention and leasing interests will encourage financing and reduce its cost.
The text of the Cape Town Convention was finalized at an international diplomatic conference held under the joint auspices of the International Civil Aviation Organization (ICAO) and the International Institute for the Unification of Private Law (UNIDROIT) at Cape Town, South Africa from October 29 to November 16, 2001. Government representatives from 68 States and 14 international organizations attended the Diplomatic Conference.
At the conclusion of the Diplomatic Conference, 20 participating States signed the Cape Town Convention. Currently, 28 countries have ratified it including Afghanistan, Albania, Angola, Bangladesh, Cape Verde, China, Colombia, Cuba, Ethiopia, European Community, India, Indonesia, Ireland, Kenya, Luxembourg, Malaysia, Mexico, Mongolia, Nigeria, Oman, Pakistan, Panama, Saudi Arabia, Senegal, Singapore, South Africa, Tanzania, UAE, and the United States.
Since 2003, the Export-Import Bank of the United States (Eximbank) has reduced its exposure fee by one-third for Eximbank guaranteed financings of new U.S.-manufactured large commercial aircraft for airlines situated in countries that ratify and implement the Convention and Protocol. Eximbank financing covering 16 aircraft and engines and spares to Panama, Oman, Pakistan and Ethiopia have resulted in a savings of over $10 million in Eximbank exposure fees.
The government of Ukraine has not ratified the Cape Town Convention and thus Ukrainian companies such as AeroSvit Ukrainian Airlines and Ukrainian International Airlines (UIA) cannot take advantage of the reduced exposure fee offered by the Export-Import Bank of the United States (Eximbank).