12th Annual McGill Conferenceon International Aviation
Liability, Insurance &Finance
Montreal, Saturday 19 October 2019
“YELP-IFYING” THE CAPE TOWN CONVENTION AFTER
15 YEARS IN FORCE
Dr.Donal Hanley – PANEL CHAIRInstitute of Air and Space Law, McGill University – Montreal, Canada
PANEL MEMBERS
Louis EmeryEXIM Bank –Washington, D.C., USA
Maria Regina M.A. LynchMotta Fernandes Avogados – São Paulo, Brazil
Jason MacIntyreBlake, Cassels & Graydon LLP –Toronto, Canada
Carlos SierraAbogados Sierra – Mexico City, Mexico; Chair, Legal Advisory Panel, Aviation
Working Group
LisaValentovishMorgan Lewis – NewYork, NewYork, USA
CAPE TOWN CONVENTION – AIRCRAFT PROTOCOL
in force in 76 states
Is Cape Town delivering on its promise of cheaper aircraft financing?
Reduces Risk
Improve Risk Returns
Increases Access to Capital
Expands Aircraft Market
Governmental Benefits
Financier, Lessor, and Investor Benefits
Airline Benefits
Aircraft/Engine Manufacturerand Supplier Benefits
1
Air CanadaExample of CTC Savings
Benefited from Canada’s
Cape Town ratification
Collateralized by
787-8 aircraft
787-9 aircraft
777-300ER aircraft
Raised $1.6Bwith issuances in
March and December 2015
March pricing: (A) 3.600%, (B) 3.875%, (C) 5.000%
December pricing: (AA) 3.750%, (A) 4.125%, (B) 5.000%
Is Cape Town delivering on its promise of cheaper aircraft financing?
1
Source: Boeing © 2015 all rights reserved
New uses for Cape Town discount eligibility outside export credit financing
Can CTC constitute a benchmark
outside export credit financing
methods?
2
Ensure a level playing field for manufacturers and borrowers
Not displace or adversely affect commercial markets
Ensure that reasonable levels of export credit capacity and higher volumes during
times of market disruption
Relying on the Contracting States’ qualifying declarations
Benefits or preferential rates
CTC discount list taken as reference by the creditors
Export Credit
Private Financial Entities(example)
New uses for Cape Town discount eligibility outside export credit financing
2
Aviation Working Group monitoring of compliance with Cape Town
Source: Aviation Working Group © 2011 AWG
3
CTC Compliance Index ICAO Safety and Security Scoring
Assesses compliance by contracting states Measures the effective implementation of a State’s safety oversight system
Assigning a score and a categorization Assessing the effective implementation of eight critical elements in eight audit areas
Based on a noncommercial, non-political, objective assessment
According to the Universal Safety Oversight Audit Programme (USOAP)
Meaning fully and effective implementation, prevailing over conflicting law
As well as the Continuous Monitoring Approach (CMA)
Is AWG’s monitoring parallel with ICAO safety and security scoring?
Source: ICAO Safety Report 2018 Edition
Aviation Working Group monitoring of compliance with Cape Town 3
Source: Aviation Working Group © 2011 AWG
Aviation Working Group monitoring of compliance with Cape Town 3
Source: Aviation Working Group © 2011 AWG
The Cape Town Academic Project
Database containing reports provided by parties involved in the transaction, their counsel, or the government that sought or
took such action.
Reporting on Administrative and Other Non-Judicial Activity
(i) An agreed summary by the relevant parties
(ii) Where there is no agreed summary, an initial report by one of the relevant parties
Seeking only factual and objective
information
Prohibiting speculation, opinion, or commercial or proprietary
information or materials
May also include any official government documentation
publicly available
4
Source: Cape Town Convention Academic Project
The Cape Town academic project = airlines are NOT mentioned
1. Date of the transaction
2. Creditor3. State of Creditor4. Debtor5. State of Debtor6. State and date of aircraft registration 7. Summary of transaction structure8. Recordation of IDERA9. Registrations with International Registry10. Commencement by Creditor of the exercise of CTC remedies11. Completion of the exercise of CTC remedies by Creditor12. Nature of governmental action sought and taken, including by which authority and where and when
13. Related court order, if any, and timing therefor
14. Other CTC related technical information(Questions 8 – 13)15. List and description of attachments, being official government documents16. List the relevant parties and their contact details
I. Report Items
II. Comments on report
III. Comments on comments
4
CTC Index v. Pillsbury repossession, differences
CTC Compliance Index Pillsbury World Aircraft Repossession Index
Assesses compliance by contracting states Measures the legal environment for aircraft repossessions
Assigning a score and a categorization
Using seven factors(repossession, insolvency, deregistration, export, judgments and arbitral awards, preferential liens and political stability)
Based on a noncommercial, non-political, objective assessment
Assigning a weighting of each factor in accordance with its relative importance
Meaning fully and effective implementation According to:
Prevailing over conflicting law (a) the jurisdictional questionnaire
Being interpreted and applied in accordance with its terms and intent
(b) other external information
Source: Pillsbury © 2018 Pillsbury Winthrop Shaw Pittman LLP
5
Source: Aviation Working Group © 2011 AWG
Ranking of jurisdictions generally 5
Source: Pillsbury © 2018 Pillsbury Winthrop Shaw Pittman LLP
Discussion on recent replacements for aircraft export credit financing