Aircraft are not cheap. Aircraft finance transactions are not simple. There are many risks to analyse, allocate, mitigate and price – and lawyers have to help the financiers do this. Country risk is one example: consider the possibility of being unable to repossess the aircraft because it is in a country with laws which are ambiguous or debtor-friendly. As such, the Cape Town Convention has been trailed as a quantum leap forward in country risk mitigation. Given the sums at stake, the complex structures, many jurisdictions and issues in aircraft deals, it is not surprising that it took a diplomatic conference and thousands of lawyer hours – over many years – to create the new cross-border legal regime that is the Cape Town Convention.
The convention and its Aircraft Equipment Protocol (known as ‘Cape Town’) came into force in March this year in the first eight states to have signed and ratified it. These were the US, Malaysia, Ireland, Oman, Pakistan, Ethiopia, Nigeria and Panama. A steady stream of ratifications has followed, including Kenya and Mongolia during the past month.
