Most registrations and discharges of interests on the International Registry established under the Cape Town Convention and the Aircraft Protocol are effected on a consensual basis between the parties entitled to do so, when they are entitled to do so. However, in certain contracting states the registration of non-consensual rights or interests may be made unilaterally based on specific declarations. For other registrations, the party with the right to discharge the registration may have ceased to exist or cannot be found. Where undischarged, those registrations can present problems. Our Aviation and Dispute Resolution teams consider what a party, whose aircraft assets are burdened by such registrations, can do to secure discharges.
The International Registry for International Interests in Mobile Equipment (Aircraft Equipment) (International Registry) was established under Article 16 of the Convention on International Interests in Mobile Equipment done at Cape Town on 16 November 2001 (Cape Town Convention) and the Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment (Aircraft Protocol). The International Registry is maintained in Ireland by Aviareto Limited, which was appointed as Registrar by the International Civil Aviation Organisation under Article 17(1)(b) of the Cape Town Convention.
The Cape Town Convention provides for the registration of various classes of interests on the International Registry, most of which are registrable on a consensual basis. A central objective in creating the International Registry was to overcome the problem of obtaining secure and readily enforceable rights in aircraft objects. Another core objective was to give certainty to aircraft industry actors by providing priority on a first-to-file basis. The registration system fulfils an important function of ensuring legal predictability in cross-border financing and leasing transactions. It is an essential means by which owners, creditors, lessors and others in the aviation sector can protect their financial interests. The registration system is wholly automated and, given the consensual nature of most interests registered, most registrations and consequential discharges are undertaken by relevant parties without controversy.
However, there are two particular circumstances where the right to discharge holder may be unwilling or unable to effect the necessary discharge. These are:
- Where the registration is of a disputed non-consensual right or interest (RNCRI) under Article 40, and
- Where the right to discharge holder cannot be located.
Although the Registrar has no power to discharge such registrations, it can be directed to do so by a relevant court. Article 44(1) of the Cape Town Convention provides:
“The Courts of the place where the Registrar has its centre of administration shall have exclusive jurisdiction to award damages or make orders against the Registrar.”
Although Article 44(3) does provide for the possibility of discharge proceedings against third parties being brought elsewhere, consistent with Article 44(1), Article 44(4) provides that no other court “may make orders or give judgments or rulings against or purporting to bind the Registrar”. Accordingly, any proceedings which seek to direct the Registrar to effect discharges – whether as the primary relief or a default relief - must be brought in Ireland. In practice, therefore, two types of applications have been heard before the Irish High Court where applications have sought orders against the Registrar to discharge registrations. Each has developed its own specific line of relevant case law.
Disputed RNCRIs
Article 40 provides for the registration of RNCRIs which can be made unilaterally where the Contracting State has made the necessary declaration. RNCRIs are typically made by a third party to protect their position where there is some dispute, usually involving monies payable regarding the aircraft for services rendered. However, irrespective of the merits of such underlying dispute, RNCRIs are only valid where the conditions of Article 40 are met, namely that a Contracting State must have deposited a list of the categories of RNCRI which shall be registrable. This list should encompass the claimed RNCRI. As recognised in Belair Holdings Ltd v Etole Holdings Ltd & Anor[1] if “no Contracting State with any arguable connection to the dealings between the parties has lodged an Article 40 declaration”, there is no basis for the RNCRI. Even if there was, any claim giving rise to the RNCRI would have to be within one of the categories listed as registrable by the Contracting State.
Subsequently, in UniCredit Global Leasing Export GmBH v Business Aviation Ltd & Anor[2] Mr Justice McDonald was more definitive in holding that where a debtor, as defined in the Cape Town Convention, was not situated in a Contracting State and the relevant aircraft was not registered in a Contracting State, there was no connecting factor to the Cape Town Convention at all and it could not apply. Even if there was a connecting factor, he also considered the nature of the underlying claim giving rise to the alleged RNCRI. The court held that the claim in that case could only be an in personam claim, ie made against a specific person or entity, but that the registration system created under the Cape Town Convention was concerned with claims which gave rise to rights or interests in or as against the res, ie the aircraft or engines. Accordingly, there was no basis for the RNCRIs even if the Cape Town Convention did apply.
As a matter of principle, the court also acknowledged Ms Justice O’Malley observations in Belair regarding the importance of ensuring that misleading registrations were removed as soon as possible given the fundamental importance of the integrity of the International Registry. It was also acknowledged that interested parties had to be able to rely upon the International Registry as an accurate reflection of the registrable rights or interests reflecting aircraft objects. These statements are particularly important as they reflect the desire of the Irish courts to uphold the registration system under the Cape Town Convention and the International Registry.
Overall, these judgments, and other similar rulings in RNCRI discharge cases, demonstrate that the Irish Courts undertake a detailed analysis to ensure that there is a proper basis for any RNCRIs, given their exceptional nature under the Cape Town Convention. They also clearly show that, where there is no proper basis for the RNCRIs, the Irish courts will make orders for the discharge of the registrations. Typically, such cases are brought against the registering party as the first Respondent and the Registrar as second Respondent. If the case succeeds, the obligation to effect the discharge is directed in the first instance against the first Respondent. It is only if they fail to do so within the stated period that the obligation to effect the discharge defaults to the Registrar. This frequently arises in such cases as the first Respondent rarely even appears at the proceedings.
Discharge cannot be effected by Right to Discharge Holder
The other scenario where the proceedings seek to direct the Registrar to effect a discharge is where the right to discharge holder cannot discharge the registration because they cannot be found or no longer exist, such as by reason of dissolution in a corporate context. This scenario has historically been less frequent than the other involving disputed RNCRIs. In such cases, the proceedings are usually addressed to the Registrar as the sole Respondent and the relief involving discharge is sought directly against it.
The basis for such proceedings derives from Article 44(2), which provides that the courts referenced in Article 44(1) shall have exclusive authority to direct the Registrar to discharge the registration. The Irish courts have therefore been prepared to make orders directing the Registrar to effect discharges under Article 44(1) where the status of the right to discharge holder is as provided for in Article 44(2). This has been the case even where the applicant is not a debtor, as defined in the Cape Town Convention, and has no express entitlement to make a demand under Article 25, as also envisaged by Article 44(2). The Registrar has typically not objected to the making of orders under Article 44(1) where there is no longer any basis for the registration and its retention on the International Registry is therefore clearly incorrect.
Procedural considerations
Any proceedings against the Registrar are commenced by a document known as an originating notice of motion. The motion is supported by an affidavit to which the relevant documentation is exhibited. However, it is possible to apply to enter any such proceedings into the Commercial List of the Irish High Court, where the applicable rules under Order 63A of the Rules of the Superior Courts (RSC) facilitate expedited case-managed proceedings. In particular, Order 63A, Rule 1(h) RSC provides that one class of proceedings entitled to admission to the Commercial List are proceedings involving the Registrar and its functions under the Cape Town Convention. Notably, this provision has the distinction of being the only amendment for the type of proceedings eligible for admission to the Commercial List since the original adoption of Order 63A RSC in 2004.
Accordingly, cases seeking relief against the Registrar can be, and routinely are, admitted to the Commercial List which facilitates much speedier determination than if the proceedings were to advance in one of the High Court’s ordinary lists. In uncontested cases, particularly where the Registrar is the only Respondent to the proceedings, it is not uncommon for the substantive relief to be granted as part of the Commercial List admission application. In addition, it may be possible to issue the Commercial List entry application at the same time as the substantive underlying proceedings. This means the substantive proceedings can potentially be determined in a matter of days, if not weeks, from issue. From a practical perspective, if directed to discharge the relevant registration(s), the Registrar does so promptly, typically within a day or so.
Conclusion
Proceedings can be brought against the Registrar to discharge disputed RNCRIs or in cases where the right to discharge holder cannot be found or has ceased to exist, and those proceedings must, by virtue of the Cape Town Convention, be brought before the Irish Courts. However, this should not be daunting to a potential Applicant. The Irish courts have shown themselves to be very amenable to such applications, both by virtue of the decisions delivered to date and the amendment of the Commercial List rules to accommodate speedy determination. Ultimately, for Applicants whose aircraft objects are subject to the relevant registrations identified above, proceedings before the Irish courts can be a timely and cost-effective way to ensure discharge of those registrations.
We have extensive experience advising and acting in proceedings relating to the discharge of registrations on the International Registry. If you are interested in discussing any of the issues raised in this article, please contact a member of our Aviation or Dispute Resolution teams.
The content of this article is provided for information purposes only and does not constitute legal or other advice.
[1] [2015] IEHC 569
[2] [2019] 3 IR 689
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