From 1 September 2015 the Cape Town Convention (The Convention) will come into force in Australia.  The Convention provides a mechanism by which financiers can register a security interest against a mobile vehicle (such as an aircraft or boat).

The convention consists of the Convention on International Interests in Mobile Equipment and the associated Protocol to the Convention on International Interests in Mobile Equipment.

The Convention establishes the International Registry of Mobile Assets for creditors to register their priority security interests in mobile objects.

It is essential that all insolvency practitioners are aware of the practical implications of the scheme particularly with respect to its interaction with the Personal Property Securities Act 2009 (Cth) (PPSA).

Currently all security interests in aircraft objects are registered on the Personal Property and Security Register (PPSR). Financiers will now be required to register their interest on both the PPSR and on the International Registry of Mobile Assets.

In the event of competing interests a security interest registered with the International Registry of Mobile Assets will have priority over a registration on the PPSR regardless which security interest was registered first in time.

We are currently preparing a full article on the interaction between the PPSR and the Convention.

In the meantime please contact us if you have any queries.