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Cape Town Convention Journal

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The relationship between the Geneva and CapeTown conventions

Donal Hanley

To cite this article: Donal Hanley (2015) The relationship between the Geneva and Cape Townconventions, Cape Town Convention Journal, 4:1, 103-113, DOI: 10.1080/2049761X.2015.1102010

To link to this article: https://doi.org/10.1080/2049761X.2015.1102010

© 2015 The Author(s). Published by Taylor &Francis

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The relationship between the Geneva and Cape Townconventions

Donal Hanley*

This article examines the relationship between the Cape Town Convention (insofar as it relates to aircraft) and the GenevaConvention. The latter continues to apply to rights not constituting international interests under, and to rights in aircraft belowthe minimum threshold set out in, the former. The Geneva Convention provides that the law of the state of registration of theaircraft in question is the applicable law for rights and interests covered by it but gives no guidance as to whether such law is thedomestic law only of that state or includes that state's private international law rules. The Cape Town Convention providesthat references in it to applicable law are to the domestic law of the state in question but, in fact, relevant references therein toapplicable law are few and international interests under the Cape Town Convention are sui generis interests not dependent onnational law.

The relationship between the Convention onthe International Recognition of Rights in Air-craft signed at Geneva on 19 June 1948 (the‘Geneva Convention’) and the Conventionon International Interests in Mobile Equipmentsigned at Cape Town on 16 November 2001(together, in the context of aircraft, with theProtocol to the Convention on InternationalInterests in Mobile Equipment on Matters

specific to Aircraft Equipment [the ‘AircraftProtocol’], the ‘Cape Town Convention’) isnot always fully understood or, indeed, easyfully to understand.Article XXIII of the Aircraft Protocol pro-

vides that, for Contracting States that are alsoparty to the Geneva Convention, the CapeTown Convention shall supersede the GenevaConvention as it relates to aircraft and aircraftobjects1 as defined in the Aircraft Protocol.Article XXIII goes on to provide that ‘withrespect to rights or interests not covered oraffected by’ the Cape Town Convention, ‘theGeneva Convention shall not be superseded’.Sir Roy Goode, in the Official Commentaryto the Cape Town Convention,2 writes thatthe Cape Town Convention retains ‘the pro-visions of the Geneva Convention relating to

© 2015 The Author(s). Published by Taylor & FrancisThis is an open-access article distributed under the terms of the Creative Commons Attribution License http://creativecommons.org/licenses/by/4.0/, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

* Donal Hanley is Managing Director of ACG Air-craft Leasing Ireland Limited, a subsidiary of AviationCapital Group (www.aviationcapital.com), and anexternal instructor in aircraft leasing and financing atMcGill University (www.mcgill.ca) and the Inter-national Air Transport Association (www.iata.org) inMontreal. A non-practising solicitor admitted inIreland and England and Wales, he is also an attorneyadmitted in California. He holds an MA degree fromTrinity College Dublin, an MBA (International Avia-tion) degree from Concordia University, Montrealand LLM (Adv) (Air and Space Law) and PhD degreesfrom Leiden University. He is grateful for helpfuladvice received from Morten Jakobsen, partner of Gor-rissen Federspiel in Copenhagen, but any errors, andindeed all views expressed herein, are his alone. Email:donal.hanley@aviationcapital.com

1 The Aircraft Protocol defines aircraft objects in ArtI as ‘airframes, aircraft engines and helicopters’ thusallowing for the separate application of the CapeTown Convention to aircraft engines.

2 See also further extracts from the Official Com-mentary set out for convenience in the Annex.

Cape Town Convention Journal, 2015Vol. 4, No. 1, 103–113, http://dx.doi.org/10.1080/2049761X.2015.1102010

2015 Cape Town Convention Journal 103

the recognition of rights and interests which arenot “covered or affected by” the present Con-vention, a phrase intended to be read widely’.3

1. Aircraft, engines and parts

1.1 Aircraft

Article I(2) of the Aircraft Protocol definesaircraft to mean aircraft as defined for the pur-poses of the Chicago Convention which areeither ‘airframes with aircraft engines installedthereon or helicopters’. It goes on to defineairframes for the purposes of the CapeTown Convention as being ‘other thanthose used in military, customs or police ser-vices’ which are certified to transport at leasteight persons including the crew or goodsin excess of 2750 kilograms. Aircraft enginesare defined as aircraft engines which, in thecase of jet propulsion engines, have at least1750lb of thrust or its equivalent or, in thecase of turbine or piston-powered engines,at least 550 rated take-off shaft horsepoweror its equivalent.In fact, the Convention on Civil Aviation

signed at Chicago on 7 December 1944 (the‘Chicago Convention’) does not define aircraftat all but does provide, in Article 3(a), that theChicago Convention shall be ‘applicable onlyto civil aircraft, and shall not be applicable tostate aircraft’ and, in Article 3(b), that ‘[a]ircraft used in military, customs and police ser-vices shall be deemed to be state aircraft’.Article XIII of the Geneva Convention like-

wise provides that the Geneva Conventionshall not apply to ‘aircraft used in military,customs or police services’. However, unlikethe Cape Town Convention, there is nominimum passenger, cargo or engine capacityrequired in order for the Geneva Conventionto apply. Thus, for those States which areparty to both the Geneva Convention andthe Cape Town Convention, the Geneva

Convention shall still continue to apply,without reference to the Cape Town Conven-tion, to aircraft which do not meet suchminimum capacity criteria.Article XVI of the Geneva Convention pro-

vides that:

[f]or the purposes of this Convention the term‘aircraft’ shall include the airframe, engines, pro-pellers, radio apparatus, and all other articlesintended for use in the aircraft whether installedtherein or temporarily separated therefrom.

1.2 Aircraft engines

The Geneva Convention only deals with aircraftand, pursuant to Article X(1), certain spare parts,but not to aircraft engines themselves.Thismeantthat there was no provision in the Geneva Con-vention for the recognition of separate interests inaircraft engines. As mentioned above, however,the Cape Town Convention includes aircraftengines as standalone aircraft objects over whichinternational interests may be created.Given that aircraft engines, which meet the

threshold criteria, are aircraft objects for the pur-poses of the Cape Town Convention, inter-national interests created thereover, in thisauthor’s view, clearly prevail, due to the superses-sion provisions of the Cape Town Convention,over any contrary interests pursuant to theGeneva Convention, which does not recognizeseparate rights in engines. Thus, accession oftitle to engine issues should not arise in stateswhich are party to the Cape Town Conventioneven when they are also party to the GenevaConvention.In the Cimber Sterling A/S bankruptcy case,4

the Danish High Court on 19 June 2015applied a modified rather than absolute titleaccession principle in interpreting Article XVIof the Geneva Convention and the equivalentdomestic Danish legislation. Under an absolutetitle principle, the estate in bankruptcy wouldbe entitled to the airframe, plus any enginesinstalled but owned by third parties (at least3 Roy Goode, Convention on International Interests in

Mobile Equipment and Protocol Thereto on Matters Specificto Aircraft Objects: Official Commentary (3rd edn, UNI-DROIT 2013) para 5.101.

4 BS SKSK-1292/2012, 1301/2012, 1302/2012,1303/2012, 1304/2012 and 1206/2012.

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up until the point of installation) plus tempor-arily uninstalled engines. This would poten-tially mean that the liquidator could claimownership of up to four engines in respect ofan airframe which could only hold twoengines at any one time.Jakobsen and Midtgaard Pedersen comment

that, in applying a modified title accessionprinciple,

the High Court, at least in principle, agreed withthe bankruptcy estate to the extent that it is anassessment of the fate of the original engine thatwill determine accession of the replacementengine – and not the other way around.5

In other words, if the removed engine wasdetermined to be only temporarily removed,title thereto is kept by the airframe owner andtitle to an installed engine in temporary substi-tution therefor is retained by the originalengine owner. If, however, the removedengine is determined to have been permanentlyremoved, the airframe owner has no claim to itpursuant to Article XVI of the Geneva Conven-tion but can claim title to the engine installed onthe airframe in replacement therefor. Given thisuncertainty, Jakobsen and Midtgaard Pedersen6

comment that little comfort is available to lessorsof engines to Danish airlines but that the situ-ation should soon be resolved given that theCape Town Convention is expected tobecome part of Danish law in 2015.

1.3 Parts

Although, ‘[i]n classical Continental thinking,to extend the creditors’ secured rights overthe spare parts was a monstrosity’,7 Article X(1) of the Geneva Convention provides:

If a recorded right in an aircraft of the nature speci-fied in Article 1, and held as security for the

payment of an indebtedness, extends, in confor-mity with the law of the Contracting State wherethe aircraft is registered, to spare parts stored in aspecified place or places, such right shall be recog-nised by all Contracting States, as long as the spareparts remain in the place or places specified, pro-vided that an appropriate public notice, specifyingthe description of the right, the name and addressof the holder of this right and the record inwhich such right is recorded, is exhibited at theplace where the spare parts are located, so as togive due notification to third parties that suchspare parts are encumbered.

Thus, security rights over spare parts are onlycovered if the law of the state of registrationrecognizes them and if those spare parts relateto a specific aircraft.Parts which are not spare parts as such but

which are temporarily removed from an aircraftare covered by Article XVI of the GenevaConvention which extends the definition of‘aircraft’ beyond the airframe, engines, propel-lers, radio apparatus to include ‘all other articlesintended for use in the aircraft whether installedtherein or temporarily separated therefrom’.The Cape Town Convention has no similar

provision: parts are not within the definition ofaircraft objects, airframes or aircraft engines,since references in the definitions thereof toparts are limited to those which are ‘installed,incorporated or attached’ thereon, therein orthereto. It should, however, be noted thatArticle 29(7) of the Cape Town Conventionprovides that the Cape Town Convention:

does not affect the rights of a person in an item,other than an object. Held prior to its installationon an object if under the applicable law thoserights continue to exist after than installation; and

does not prevent the creation of rights in an item,other than an object, which has been previouslyinstalled on an object where under the applicablelaw those rights are created.

2. Background to Geneva Convention

Consideration of an international legal frame-work for protection of interests in aircraftgoes back over 80 years:

5 Morten Jakobsen and Morten Midtgaard Pedersen,‘The Danish Aircraft Engine Dispute – The Sequel’(2015) Air & Space Law (forthcoming).

6 ibid.7 Jacob Sundberg, ‘Rights in Aircraft: A Nordic

Lawyer Looks at Security Rights in Aircraft’ (1983) 8Annals of Air and Space Law 233, 237.

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As early as 1931, the Comité international tech-nique d’experts juridiques (CITEJA) began tostudy the question of development of a conven-tion on aircraft mortgages. Shortly after theSecond World War, this subject was studied bythe Interim Assembly (1946) of the ProvisionalInternational Civil Aviation Organisation (P-ICAO), the First Assembly of the InternationalCivil Aviation Organisation (ICAO) in 1947and the First Session of the ICAO Legal Commit-tee in the same year. At Geneva, in 1948, theSecond Assembly of the ICAO Assemblyadopted the Convention on International Recog-nition of Rights in Aircraft.8

Quite apart from issues of accession of title toaircraft engines,9 whereby the owner of an air-frame on which an aircraft engine is installedautomatically becomes the owner of theengine, regardless of who owned it prior toinstallation, the applicability or non-applica-bility of certain forms of security to movableassets such as aircraft varied greatly dependingon the national legal system, in particulardepending on whether such a legal system isbased on English common law or continentalEuropean civil law. ‘Faced with two opposingsystems, both created and existingwithout any great concern for the uniquecharacteristics of the international aviationindustry’10 and ‘[u]nable to resolve systemicdifferences between… common law and civillaw traditions’, the Geneva Conventionconference of 1948 ultimately adopteda convention ‘served only as a choice of lawtreaty’.11

The Geneva Convention has been describedas ‘ill-suited to handle the demands of modernasset-based and lease-based financing’.12 EvenLord Wilberforce, later Lord Justice in theHouse of Lords, who had a special interest inaircraft finance law and represented theUnited Kingdom at the Geneva Conventionconference in 1948,13 wrote that ‘it was fullyrecognized at Geneva that this Convention-the best that could be achieved in the time-isbut a stage in the development of an effectivesystem of international protection for securitieson aircraft’.14

Whilst agreeing withWilberforce in conced-ing that the Geneva Convention was ‘the bestthat could be achieved under the circum-stances’, Bunker remarks that it has been‘seldom relied upon and really gives no greatcomfort to creditors’.15 This echoes Rosaleswho wrote in 1991 that a further problemwith the Geneva Convention is ‘the fact thatthere are no reported decisions, to thiswriter’s knowledge, dealing in any great detailwith the operation of the Geneva Convention,a situation which adds an aura of uncertainty tothe treaty’.16 ‘In the late 1980s, the need tofacilitate greater financing for high-valuemobile equipment such as aircraft led Unidroitto being working’17 on what would eventuallybecome the Cape Town Convention. Anexploratory working group set up by Unidroit

8 Gerald FitzGerald, ‘A Canadian Central Registryfor Security Interests in Aircraft: A Progress Report’(1984) 9 Annals of Air and Space Law 3, 15–16.

9 See discussion in Donal Hanley, Aircraft OperatingLeasing: A Legal and Practical Analysis in the Context ofPublic and Private International Air Law (Kluwer LawInternational 2012) 88–95.

10 Donald Bunker, International Aircraft Financing,Volume 1: General Principles (International Air TransportAssociation 2005) 614.

11 Brian Havel and Gabriel Sanchez, The Principlesand Practice of International Aviation Law (CambridgeUniversity Press 2014) 348.

12 ibid 350.13 See B Patrick Honnebier, ‘The English Blue Sky

Case: Topical International Aviation Law FinanceIssues’, rectified contribution offprint from Sagar Sin-gamsetty (ed), Contemporary Issues and Future Challengesin Air and Space Law: Celebrating 25 years of IIASL(Liber Amicorum) (Air & Space Law Books 2011) 5,fn 4.

14 RO Wilberforce, The International Recognition ofRights in Aircraft (1948) 2 ILQ 421, 422.

15 Donald Bunker, ‘Securing Aircraft Financing’(2004) 29 Annals of Air and Space Law 147, 169.

16 Rex Rosales, ‘Recordation of Rights in Aircraftand International Recognition: A Comparisonbetween the American and Canadian Situations’(1991) 16 Annals of Air and Space Law 195, 215.

17 Havel and Sanchez (n 11) 351–352.

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concluded, in the context of the Geneva Con-vention, that:

[t]here was a Convention which contained rules forthe recognition and priority of security interests inaircraft but it was generally recognized that it wasin some respects outdated, particularly in its treat-ment of the financing of aircraft engines separatelyfrom an airframe. A significant number of majorStates were noted not to have ratified thisConvention.18

3. Principal differences in the scope ofthe Geneva Convention and the CapeTown Convention

Article I of the Geneva Convention provides thatthe Contracting States undertake to recognize:

(a) rights of property in aircraft;(b) rights to acquire aircraft by purchase coupled

with possession of the aircraft;(c) rights to possession of aircraft under leases of

six months or more;mortgages, hypotheques and similar rights inaircraft which are contractually created assecurity for payment of an indebtedness;

provided that such rights

(i) have been constituted in accordance with thelaw of the Contracting State in which the air-craft was registered as to nationality at the timeof their constitution, and

(ii) are regularly recorded in a public record of theContracting State in which the aircraft isregistered as to nationality.

The Cape Town Convention provides, pur-suant to Article 2 and Article II(1) of the Air-craft Protocol, that an international interest isone in an aircraft object (see definition above):

(a) granted by the chargor under a securityagreement;

(b) vested in a person who is the conditional sellerunder a title reservation agreement; or

(c) vested in a person who is the lessor under aleasing agreement,

and also, pursuant to Article III of the AircraftProtocol, vested in a buyer under a contractof sale.The Cape Town Convention applies, under

Article 3(1) where, at the time of the creation ofthe international interest, the debtor (defined inArticle 1 as modified by Article II(1) of the Air-craft Protocol) to mean the chargor, con-ditional seller, lessor or buyer referred toabove) is ‘situated in a Contracting State’ or,under Article IV of the Aircraft Protocol, inthe case of ‘a helicopter, or… an airframe per-taining to an aircraft, registered in an aircraftregister of a Contracting State which is theState of registry’. Further, in order to gain pri-ority protection under the Cape Town Con-vention, the international interest must beregistered in the International Registry19 setup pursuant to the provisions of Article XVIIof the Aircraft Protocol.There are some important differences here in

scope between the two conventions, as well assignificant overlap.

3.1 Types of interest in aircraft

As shown above, the Cape Town Conventionrecognizes rights of chargors under a securityagreement, defined in Article 1 to mean ‘anagreement by which a chargor grants oragrees to grant to a chargee an interest (includ-ing an ownership interest) in or over an objectto secure the performance of any existing orfuture obligation of the chargor or a thirdperson’. It is submitted that this should generallycover the same types of interest as those listed inthe Geneva Convention at Article I(1)(d) as‘mortgages, hypotheques and similar rights inaircraft which are contractually created as secur-ity for payment of an indebtedness’.The Cape Town Convention also recognizes

the rights of a person who is a conditional sellerunder a title reservation agreement whereas theGeneva Convention protects ‘rights to acquireaircraft by purchase coupled with possessionof the aircraft’. This will normally be rights of

18 Unidroit International Institute for Unification ofPrivate Law, Restricted Exploratory Working Group toExamine the Feasibility of Drawing Up Uniform Rules onCertain International Aspects of Security in Mobile Equip-ment, Study 62, 1992, Doc 5, p 4.

19 This may constitute the ‘public record’ referred toin Art I(1)(ii) of the Geneva Convention.

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the conditional buyer. Similarly, the CapeTown Convention recognizes the rights of alessor under a leasing agreement whereas theGeneva Convention recognizes ‘rights to pos-session of aircraft under leases of six monthsor more’.20 Presumably, this means the rightsof the lessee (in the absence of a default) or(in the case of a default by lessee) the lessorwhere lessor has then the right to possessionof the aircraft).Finally, the Cape Town Convention has no

equivalent of the Geneva Convention’s generalrecognition of ‘rights of property in aircraft’,in respect of which Matteesco Matte observesthat ‘[t]his may refer to the owner himselfor one who is destined to become theowner’.21

3.2 Existence or recognition of interest

Whereas the Geneva Convention only recog-nizes under Article I certain interests ‘providedthat they have been constituted in accordancewith the law of the Contracting State inwhich the aircraft was registered as to nation-ality at the time of their constitution’, theCape Town Convention actually creates ‘inter-national interests’ under Article 2(3). Further,Article II(3) of the Geneva Convention pro-vides that a ‘Contracting State may prohibitthe recording of any right which cannotvalidly be constituted according to its nationallaw’.In addition to the interests recognized pur-

suant to Article I, the Geneva Conventionalso provides for recognition of certain otherinterests, such as certain rights over compen-sation due for salvage or expenses indispensablefor the preservation of the aircraft. The AircraftProtocol does not deal with these issues,although, interestingly, the Space Protocolto the Cape Town Convention, dealing with

satellites and other space assets, touches onsalvage in Article IV(3).22

3.3 Governing law

The Geneva Convention provides, in Article I,that interests that are the subject matter thereofshould have been ‘constituted in accordancewith the law of the Contracting State in whichthe aircraft was registered as to nationality atthe time of their constitution’.23 This meansthat, with respect to such Article I interests, thelex registrii, or law of the state of registration ofthe aircraft pursuant to theChicagoConvention,rather than the lex situs, or the law of the statewhere the aircraft was physically present at thetime of the creation of the interest, applies.24

It has been a matter of some debate as towhether the Geneva Convention reference tolaws of the state of registration is a reference tothe domestic laws only of such a state or includesreference to the rules of private international lawof that state also, which may result in renvoi.Reuleaux and Tonnaer25 argue that thisshould be construed as referring to domesticlaw only whereas Honnebier26 counter-argues

20 Art XVI(1) of the Aircraft Protocol providescertain quiet enjoyment rights for a lessee or borrowerin the absence of a default within the meaning of Art11 of the Cape Town Convention.

21 Nicolas Matteesco Matte, Treatise on Air-Aeronau-tical Law (McGill University 1981) 567.

22 ‘Nothing in the Convention or this Protocolaffects any legal or contractual rights of an insurer tosalvage recognised by the applicable law. “Salvage”means a legal or contractual right or interest in, relatingto or derived from a space asset that vests in the insurerupon the payment of a loss relating to the space asset.’

23 Note that Art 4(1) on rights in respect of salvage orpreservation applies the laws of the state where suchsalvage or preservation takes place; Art 4(4)(b) regardinginterruptions or suspensions to a three month time limiton such salvage or preservation claims applies the laws ofthe forum (that is, the laws of the court hearing therequest for interruption or suspension); and Art 7(1)on certain procedures to be followed in case of salesof aircraft in execution (or Art 10(3) in the case ofspare parts) applies the laws of the state where the saletakes place.

24 Of course, the lex registrii itself may provide thatthe lex situs applies.

25 Matthias Releaux and Hein Tonnaer, ‘FinancingAircraft Engines: Pitfalls and Solution’ ZLW 56. Jg 1/2007, 33–44, para 2.2.

26 BP Honnebier, ‘Clarifying the Alleged IssuesConcerning the Financing of Aircraft Engines ZLW3/2007, 383, para 1.3.

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that it also include reference to the rules ofprivate international law. This can be importantin the context of accession of title to engines.In the Blue Sky case,27 Beatson J of the

English High Court held:

In the case of a transfer of title to tangible move-ables, such as the aircraft in this case, the referenceto the lex situs is to the domestic law of the placewhere the aircraft are situated on the relevantdate, and not to its entire law including itschoice of law rules; that is the doctrine of renvoidoes not apply.

The Cape Town Convention deals with thismatter in Article 5(3):

References to the applicable law are to the dom-estic rules of the law applicable by virtue of therules of private international law of the forumState.

The Cape Town Convention does not giveguidance as to what the applicable law is. Thetext of the Cape Town Convention does not,in fact, determine the applicable law in thecontext of international interests as a matter ofproperty law, but only as to matters of contractlaw, where under Article VIII of the AircraftProtocol, parties are free, in the case of a Con-tracting State having made a declaration underArticle XXX(1), to choose the governing lawof their agreement, contract of sale, or relatedguarantee contract or subordination agreement.In such instances, under Article VIII(3), thereference to the law chosen by the parties is,unless otherwise agreed, to the domestic lawsof the state in question.Given that the Cape Town Convention

actually creates international interests, the termsof the convention itself govern as a matter ofproperty law and priorities. An internationalinterest is thus a sui generis interest. Goodemakes this clear in the Official Commentarywhere he states that:

The provisions of the Convention relating to aninternational interest reflect a central purpose ofthe Convention, which is to create a new and

sui generis interest which is neither derivedfrom nor dependent on national law andto confer on the holders of rights in rem overthe equipment a means of protecting thoserights by registration in the InternationalRegistry.28

It is worth noting, in this context, Article 5(1)and (2) of the Cape Town Convention whichprovide:

(1) In the interpretation of this Convention, regardis to be had to its purposes as set forth in the pre-amble, to its international character and to theneed to promote uniformity and predictabilityin its application.

(2) Questions concerning matters governed by thisConvention which are not expressly settled init are to be settled in conformity with thegeneral principles on which it is based or, inthe absence of such principles, in conformitywith the applicable law.

3.4 Registration of interest

Article I of the Geneva Convention requiresthat rights protected by it must be ‘regularlyrecorded in a public record of the ContractingState in which the aircraft is registered as tonationality’. Under Article II(1), all ‘recordingsrelating to a given aircraft must appear in thesame record’. According to Sundberg:

The Geneva Convention does not oblige anyContracting State to maintain a Public Recordof the type referred to in Art I(1)(ii). All it doesis to provide that if one Contracting State main-tains such a Record, then other ContractingStates are obliged to give recognition to rightsentered upon the same.29

The Cape Town Convention provides for aninternational registry. It could potentially bethe register referred to in the Geneva Conven-tion but the fact that, as discussed above, thetypes of aircraft and interests therein coveredby each convention are not exactly the same,albeit with varying degrees of overlap, shouldbe borne in mind.

27 Blue Sky One Ltd v Mahan Air and Another [2010]EWHC 631 (Comm) [201].

28 Goode (n 3) [2.42].29 Sundberg (n 7) 247.

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3.5 Priority of interest

The Geneva Convention provides for priority ofinterests registered and otherwise complyingwith Article I(1) over other interests. Article I(2)then provides:

Nothing in thisConvention shall prevent the recog-nition of any rights in aircraft under the law of anyContracting State; but Contracting States shall notadmit or recognise any right as taking priority overthe rights mentioned in paragraph 1 of this Article.

Other exceptions then follow. Article IV(1)provides:

In the event that any claims in respect of: (a) com-pensation due for salvage of the aircraft, or (b)extraordinary expenses indispensable for the pres-ervation of the aircraft give rise, under the law ofthe Contracting State where the operations ofsalvage or preservation were terminated, to aright conferring a charge against the aircraft,such right shall be recognised by ContractingStates and shall take priority over all other rightsin the aircraft.

Then there is Article VI:

In case of attachment or sale of an aircraft inexecution, or of any right therein, the ContractingStates shall not be obliged to recognise, as againstthe attaching or executing creditor or against thepurchaser, any right mentioned in Article I, para-graph 1, or the transfer of any such right, if consti-tuted or effected with knowledge of the sale orexecution proceedings by the person againstwhom the proceedings are directed.

Diederiks-Verschoor comments on Article VIthat:

It should be noted that the debtor’s awareness ofthe sale in execution is a prerequisite: a noticeon the record is not sufficient. The party againstwhom execution procedures are brought mustbe aware they have commenced. The Articletries to prevent the fraudulent transfer of an air-craft, viz. the creation of a claim by a debtorwho knew the aircraft was under execution.30

Finally, in the context of other rights taking pri-ority over Article I rights, in the English High

Court case of Global Knafaim,31 Collins J held,although without citing authority to supporthis position, that nothing in the Geneva Con-vention protected a creditor’s right underArticle I thereof from subsequent seizure byEurocontrol for the fleet debt of its debtor:

[Counsel for the creditor] submits that Article 1(2)forbids fleet lien at least where an owner’s rightsare overridden. I do not think that Article 1(2)has the wide effect which is suggested by MrThompson. Most states have laws which enableproperty to be seized if, for example, taxes areunpaid. It would be remarkable if such measureswere prohibited by Article 1(2). It is, I think,aimed at private rights which might normally beenforceable by overriding rights specified inArticle 1(1). I do not think it was intended to orcan extend to rights in the public interest whichcan ensure payment of amounts due.

The Cape Town Convention sets out at Article29 a system of priority whereby, subject tocertain exceptions such as for unregisteredinterests, such as the fleet lien the subject ofthe Global Knafaim case, earlier registeredinternational interests have priority over laterregistered international interests, and registeredinternational interests have priority over regi-strable but unregistered international interests.Indeed, in contrast to Article VI of the

Geneva Convention, which gives priority tocertain prior unregistered interests wherethere is actual knowledge thereof over sub-sequent registered interests, the Cape TownConvention provides, in Article 29(1), that a‘registered interest has priority over any otherinterest subsequently registered and over anunregistered interest’ and goes on to provide,in Article 29(2)(a), that the priority of a regis-tered interest under Article 29(1) applies ‘evenif the first-mentioned interest was acquired orregistered with actual knowledge of the otherinterest’.The priority system under the Cape Town

Convention supersedes that under the Geneva

30 IHPh Diederiks-Verschoor, An Introduction to AirLaw (Kluwer Law International 2006) 269.

31 Global Knafaim Leasing Limited & Another v TheCivil Aviation Authority & Another [2010] EWHC 1348(Admin) 21.

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Convention in cases where both conventionsare in effect.

4. Interplay of Geneva Convention andCape Town Convention

Although Crans writes that ‘the interface of thetwo regimes remains unclear’32 and that ‘[i]twould appear that the Geneva Conventionand the Cape Town Convention are notaligned, with Geneva opting for the lex registriiand Cape Town opting for the domestic rulesof law applicable by virtue of the rules ofprivate international law of the forum State’,33

which, domestic rules may, it should benoted, provide for the lex situs to apply, andalthough he is correct insofar as there is noexpress alignment to be found in the texts ofeither convention, the situation may, in prac-tice, not be quite so stark, at least with regardto in personam contractual rights.Honnebier writes that:

It is noted that the Cape Town Convention onlysupersedes the Geneva Convention in relation tomatters within the scope of the former treaty. Thelatter treaty may, to some extent, complement theformer. It is a private international laws treatyseeking the recognition of rights in aircraft,which may make the uniform substantive lawsregime of the former convention more complete.It is emphasized that a state that accedes to theCape Town Convention does not have to with-draw from the Geneva Convention.34

In fact, it seems that there was some expectationthat the Cape Town Convention would buildon the Geneva Convention with regard toapplicable law. Thus, Djojonegoro writes, inthe context of the drafting of what was thenreferred to as the Unidroit Convention andwhich would become the Cape Town Con-vention, that

[i]n principle, both the Geneva and UnidroitConventions would be coordinated. Forexample, the conflicts of law principle under Art(1)(i) of the Geneva Convention is maintained,thus ensuring minimal disruption of the existinglegal order.35

Clarke and Wool, in the context of giving thehistory of cooperation among the study groupfounded by Unidroit (originally invited todraft a treaty by Canada), the InternationalCivil Aviation Organization and the AviationWorking Group (the ‘AWG’, formed amongmajor manufacturers, financiers and lessors byAirbus and Boeing), mention that the AWG‘noted that the basic issue underlying the lexsitus problem has already been addressed inthe Geneva Convention of 1948’.36

In the Official Commentary, Goode, whileacknowledging that ‘very little remains of theGeneva Convention in its application to aircraftobjects within the scope of the Cape TownConvention’,37 states:

It is however possible to argue that the basicconcept in the Geneva Convention – the recog-nition of rights arising under the laws of theState of registry – can be preserved by a comp-lementary construction of the two instruments.Where the Convention and Protocol are inforce, they constitute the ‘law’ for the purposesof Art. I(1)(i) of the Geneva Convention in thatState.38

But this only applies to those interests coveredby the Geneva Convention but not supersededby the Cape Town Convention. Those inter-ests are set out in the Official Commentaryand repeated in the Appendix.

32 Berend Crans, ‘Aerial Conflicts of Law: AnAnalysis of Conflicts of Law Rules as Applied to Air-craft’ in Pablo Mendes de Leon (ed), From Lowlands toHigh Skies: A Multilevel Jurisdictional Approach towardsAir Law (Martinus Nijhoff 2013) 215, 221.

33 ibid 220.34 Honnebier (n 26) 9.

35 Anda Djojonegoro, ‘The Unidroit Proposal for aUniform Air Law: A New Aircraft Mortgage Conven-tion?’ (1997) 22 Annals of Air and Space Law 53, 60–61.

36 Lorne Clarkand and Jeffrey Wool, ‘InternationalAviation Finance Laws Revisited: A Report on theDevelopment of the Proposed Unidroit Conventionon International Interests in Mobile Equipment asapplied to Aircraft’ (1998) XXIII Annals of Air andSpace Law 271, 272.

37 Goode (n 3) [5.102].38 ibid [5.104].

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It should also be noted that, of course, theCape Town Convention does not bind non-parties thereto. Thus, the supersession discussedabove only applies where both states in ques-tion are parties to the Cape Town Conventionbut not where neither or only one of them is.But even in some cases, it may have some rel-evance, as discussed suggested by Goodeabove and further in the Official Commentary:

The effect of the present Article39 is limited to therelations between Contracting States to the CapeTown Convention; it has no effect on the rightsand obligations of a Contracting State to theCape Town Convention in its relations with anon-Contracting State, so that the Geneva Con-vention will continue to apply where both suchStates are Parties to that Convention. See Article30(4)(b) of the Vienna Convention. In such acase the Geneva Convention will complementthe Cape Town Convention where the applicablelaw is that of a State Party to the Cape TownConvention, since for the purposes of theGeneva Convention the law of a ContractingState Party to that Convention will then includethe law incorporating the Cape TownConvention.40

As regards those interests in respect of whichthe Cape Town Convention does supersedethe Geneva Convention, Goode states:

This supersession of the Geneva Conventioncovers all rules relating to the creation, enforce-ment (including enforcement in insolvency), per-fection and priorities of interests, as well as relatedassignments.41

5. Conclusion

Crans is of the view that the Cape Town Con-vention does not ‘give a practical tool in inter-national transactions because the applicable lawis not identified’.42 Writing in light of the BlueSky case, Crans states that ‘the lex registrii,

provided “renvoi” is excluded, provides thebest conflicts of law rule for aircraft’43 andthus suggests, quite reasonably, that ‘[r]atifica-tion could be made more attractive if theCape Town Convention would offer theadditional benefit it lacks today: application ofthe property laws of the lex registrii of the air-craft’.44 Although the international interest isa sui generis interest not dependent on nationallaw, if the Cape Town Convention isamended in the future, it is submitted that itis worth considering therein the issue of theapplication of the lex registrii to internationalinterests.

APPENDIX

Geneva Convention Provisions remaining in force underCape Town Convention45

5.105. The provisions of the Geneva Conventionremaining in force for a Contracting State Party tothe Cape Town Convention are provisions relating to:

(1) the recognition of rights of first ownership ofan aircraft or of ownership not resultingfrom a sale where those rights are recordedin a public aircraft nationality register of theContracting State concerned, since suchrights are not covered by the Cape TownConvention;

(2) priorities between two unregistered inter-national interests (since these fall outside theCape Town Convention);

(3) the duty under Article X of the Geneva Con-vention to recognise the extension of securityrights in an aircraft to ‘stored’ (i.e. unattached)spare parts under the law of the ContractingState where the aircraft is registered (ArticleX), since in a Geneva Convention Contract-ing State the law in question will be the appli-cable law for the purposes of Article 29(7)(a) ofthe Cape Town Convention – but in relationto aircraft engines Article X, as previouslystated, is overridden by the Convention andthe Aircraft Protocol.

39 Art XXIII on supersession of the GenevaConvention.

40 Goode (n 3) [5.106].41 ibid [3.128].42 Crans (n 32) 219. See also above.

43 ibid 225.44 ibid 226.45 Official Commentary, Goode (n 3).

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The Geneva Convention also continues to governrights in aircraft objects which fall below the capacitythreshold set out in Article I(2)(b), (e) and (l) of theAircraft Protocol.

5.106. The effect of the present Article is limitedto the relations between Contracting States to theCape Town Convention; it has no effect on therights and obligations of a Contracting State to theCape Town Convention in its relations with anon-Contracting State, so that the Geneva

Convention will continue to apply where bothsuch States are Parties to that Convention. SeeArticle 30(4)(b) of the Vienna Convention. In sucha case the Geneva Convention will complementthe Cape Town Convention where the applicablelaw is that of a State Party to the Cape Town Con-vention, since for the purposes of the Geneva Con-vention the law of a Contracting State Party to thatConvention will then include the law incorporatingthe Cape Town Convention.

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