Aviation Malta signs Cape Town Convention

abowsley | Published on 20 Jan 2011

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On the 1st of May 2010, the Maltese Parliament approved a second reading on a bill which will ratify the Cape Town Convention, 2001 and the Aircraft Protocol.  This signals the Maltese government’s commitment to promote and facilitate asset-based financing of aircraft and leasing of aviation equipment via Malta.


The main object of the Cape Town Convention (CTC) is to reduce the risk for financial institutions engaging in the business of aircraft finance. In their Economic Impact Study on the implementation of the Cape Town Convention, Anthony Sanders and Ingo Walter held that “The Cape Town Convention will reduce risk applicable to asset-based financing and leasing transactions…The risk reduction will increase the availability and reduce the cost of aviation credit, thus broadening the spectrum of financing alternatives available to aircraft operators.”

“Malta’s early signing of the Capte Town Convention has proved a critical move is Malta’s positioning as a prime aviation centre and augurs well for Malta’s Aircraft Register,” stated Dr JP Chetcuti, Partner in charge of the firm’s Aviation Law Practice Group.  “Investors find it significantly difficult to preserve their interest in mobile assets such as aircraft, yachts and vessels are mobile. This has led to various financial institutions requiring a burdensome level of security in order to mitigate the risk involved and any potential losses and has hence hindered aircraft financing activities. This convention is a move to dissipate such risks and thus facilitates the financing of aircraft and other mobile equipment.”

The Cape Town Convention on International Interests in Mobile Equipment and the Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment, together usually referred to as the Cape Town Treaty, is an international treaty intended to standardize transactions involving movable property, particularly aircraft and aircraft engines.

The treaty creates international standards for registration of ownership, security interests (liens), leases and conditional sales contracts, and various legal remedies for default in financing agreements, including repossession and the effect of particular states' bankruptcy laws.

The treaty's Protocol applies to aircraft which can carry at least 8 people or 2750 kilograms of cargo, aircraft engines with thrust exceeding 1,750 pounds-force (7,800 N) or 550 horsepower (410 kW), and helicopters carrying 5 or more passengers.

The Cape Town Convention and the Aircraft Protocol provide for the establishment of an international aircraft registry. This convention will enable creditors, financiers and other relevant players in the industry to register their security interest in the international registry. This is further complimented by the introduction of standard remedies which are made available in the event of default by the debtor. Such remedies include the ability to require the removal of an aircraft from the national civil aircraft register and export it.

For more information about aircraft registration in Malta and the implications of the Cape Town Convention on the registration, financing, mortgaging and operation of aircraft in or via Malta, contact our Aviation Law Practice Group at your convenience.


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Dr Charlene Mifsud

Partner, Corporate & Commercial

+356 2205 6298

Dr Priscilla Mifsud Parker

Senior Partner, Corporate, Tax & Immigration

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Mr Steve Muscat Azzopardi

Head of Tax and Corporate Services

+356 2205 6328

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