The Cape Town Convention in an EU Context

Morten Jakobsen, Gorrissen Federspiel

On 28 April 2009, the European Union (EU) acceded to the Convention on International Interests in Mobile Equipment, also known as the Cape Town Convention (CTC) and its Protocol on Matters Specific to Aircraft Equipment, referred to as the Aircraft Protocol (AP (together with the CTC, the Convention)), thus becoming the first and only regional economic integration organisation (REIO) to ratify the two instruments. 

The Convention entered into force on 1 August 2009 with respect to the EU. Eight out of the 28 EU member states have individually ratified it so far.

This article addresses certain practical consequences stemming from the Convention’s interaction with the EU legal system and highlights some aspects to be considered by practitioners when dealing with EU jurisdictions. 


Legal Background

Article 48 of the CTC and article XXVII of the AP provide that REIOs may accede to the Convention and the Protocol. As a precondition, organisations must hold competences in matters governed by the two instruments and a declaration must be issued at the time of accession specifying such competences. Upon ratification, the REIO has the rights and obligations of a CTC contracting state in respect of the pertinent subject areas.

With respect to the EU regime, the Treaty on the Functioning of the European Union (TFEU) provides that the EU may conclude international agreements in order to achieve its objectives or if such agreements are likely to affect EU legislation (article 216).  

EU competences 

The declarations lodged by the EU at the time of accession recognise that certain aspects of the CTC and the AP overlap with EU legislation, justifying the Union’s adherence to the Convention. The EU identified these common areas by listing in the ratification process:

Council Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (now replaced by Regulation (EU) No 1215/2012, and each referred to as Brussels I and Brussels I recast); 

Council Regulation (EC) No 1346/2000 on insolvency proceedings (now replaced by Regulation (EU) 2015/848 and each referred to as Insolvency Regulation and Insolvency Regulation recast); and 

Regulation (EC) No 593/2008 on the law applicable to contractual obligations (referred to as Rome I). 

The above legal acts are part of the EU’s objective to maintain and develop “an area of freedom, security and justice” as explicitly stated within each of their preambles and provided for in article 4(2)(j) of the TFEU. Indeed, the EU is competent and may adopt measures for the purpose of “judicial cooperation in civil and matters having cross-border implications”. The regulations at hand seek to harmonise the area of private international law across all member countries, facilitating access to justice for the “proper functioning of the internal market” (article 81 TFEU). It is therefore only in this respect that the Convention and EU regimes interact.

Article 4(2)(j) forms part of Title I of the TFEU, defining categories and areas of EU competence. The functioning of the EU is based on the transfer of decision-making powers by member states onto shared institutions. The EU may only act within the limits of competences delegated by its members according to the principle of conferral laid down in article 5 of the Treaty on the European Union. Conversely, states limit their own legislative powers by mandating EU institutions to adopt measures within specified areas.

This is known as the division of competences between the EU and its member countries. Competences are defined and classified according to three categories: exclusive competences, referring to areas where only the EU may adopt legally binding acts; shared competences, which concern cases where both the Union and member states may legislate, but the latter may only do so to the extent that the EU has not exercised its competence; supporting competences, relating to matters where the EU can only supplement or coordinate the actions of member states.

The establishment of an “area of freedom, security and justice” is listed as part of the Union’s shared competences. This is of particular interest within the CTC context as it affects the ability of member states to make declarations under the Convention. As mentioned above and in line with article 2(2) of the TFEU, “Member States shall exercise their competence to the extent that the Union has not exercised its competence.”

EU Declarations

Upon accession, the EU made declarations with respect to several Convention provisions, asserting its competence over these matters – as shall be explained below.

Pursuant to the EU’s declaration under article 55, articles 13 and 43, which governs relief pending final determination and the corresponding jurisdiction in relation to such proceedings, should only be applied in accordance with EU regulations when the debtor is domiciled in a member state – in this case, article 31 of Brussels I on provisional measures. The EU further specifies, in accordance with the AP’s article XXX(5), that article XXI, which complements the jurisdiction clause in article 43, shall not apply as Brussels I applies. These two declarations have the effect of expanding jurisdiction for provisional measures to the courts of any member state, and not only those specifically designated in the articles.

Finally, the EU indicates that it shall make no declarations pursuant to the AP’s articles XXX(1) in respect of article VIII; XXX(2) referring to article X; and XXX(3) regarding article XI, meaning that the provisions concerned by such declarations cannot be invoked. As specified earlier, member states are not entitled to make declarations in areas of shared competence to the extent that the EU has expressed itself – the consequences of which shall be assessed below. 

With respect to the application of the AP’s article VIII on choice of law, the EU addresses the applicable law in respect of civil and commercial contracts through Rome I. Article 3 of Rome 1 is entitled “Freedom of choice” and provides that:

[a] contract shall be governed by the law chosen by the parties. The choice shall be made expressly or clearly demonstrated by the terms of the contract or the circumstances of the case. By their choice the parties can select the law applicable to the whole or to part only of the contract.” 

With respect to the modification of the interim relief clause under article X, the EU’s declining to make a declaration is in line with the application of Brussels I over articles 13 and 43. 

More problematic is the EU’s interference with the adoption of alternative A under the AP’s article XI. The EU is competent in insolvency matters through its Insolvency Regulation, but only for the purpose of guaranteeing efficient cross-border proceedings through uniform rules on jurisdiction and applicable law. The regulation does not address or seek to harmonise substantive insolvency laws, which is in contradiction with the EU’s assertion of competence in respect of article XI. Even more so, the declaration specifically recognises that rules of substantive insolvency law fall within the EU member states’ competence.

Effects of the EU Legal Regime

The effects of the EU accession are in principle limited to procedural or choice of law matters and, insofar as EU’s Convention declarations are concerned, the EU legal system appears to complement rather than adhere to the Convention. 

There are practical implications to be considered for practitioners, namely in respect of legal opinions and jurisdictional questionnaires from EU member states. Such will not confirm that the relevant EU state has made what would be expected in respect of Convention declarations, and reference must be made to the EU declaration to the Depositary as well as national law of such state. 

The EU declaration with respect to alternative A has created a little inconsistency in the manner in which EU countries have approached the provision. Out of the eight ratifying states, Luxembourg has made the declaration, as it ratified the Convention prior to the EU; Denmark has made a declaration following the EU ratification as it has opted out of the three EU regulations; several states that became parties to the Convention after the EU and are bound by the regulations have modified their national laws (eg, Malta); finally, several states have chosen not to adopt Alternative A at all (eg, Spain).

The inability of states to make qualifying declarations does not, however, preclude member states from becoming eligible for the Aircraft Sector Understanding (ASU) CTC Discount available under the auspices of the OECD. Mindful of this situation, Annex 1 of the 2011 ASU provides, in its article 4, that several declarations may be deemed satisfied if the laws of the EU or its member states are substantially similar to the provisions set out in the AP. The Annex explicitly states that such is the case in respect of the Rome I Regulation for choice of law. For insolvency, the national laws of each state must be amended to reflect the terms of Alternative A. 

Unrelated to the above accession matters, certain potential conflicts between the CTC regime and EU law have yet to be resolved, reference being made to the 2012 Maltese Wind Jet cases. While the substance of the dispute shall not be addressed here, it is worth stressing that the legal certainty granted by CTC’s article 39 declarations regarding the priority of non-consensual rights and interests may be weakened by the application of Brussels I. This seems to be the case with respect to article 33 of the Brussels I (article 35 under the Brussels recast) (although this provision was not the one invoked by the parties), establishing the recognition of judgements among EU states “without any special procedure”. If EU state A has declared that, say, airport liens shall not have priority under the Convention, it will nevertheless be obliged to recognise and enforce a judgment from EU state B giving such priority. It is unfortunate that this issue has not been addressed as part of the EU’s accession to the Convention. The issue, however, only arises in case the court in state B would not have applied the laws of state A (which does not recognise the non-consensual right or interest in question) under the conflict of law rules of state B, see article 5 (3) of the CTC. If the conflict of law rules of state B were to refer the question to lex situs (and thus recognise a non-consensual right created under the laws of the state in which the aircraft was located at the time), there would be no conflict between the CTC and the interim measure recognised pursuant to Brussels I/Brussels recast. 


EU’s accession to the Convention no doubt safeguards the homogeneity of private international law rules across the EU in line with its objective of judicial cooperation in transnational legal matters. However, the EU’s accession also adds a layer of complexity to the Convention’s legal framework that may lead to practical issues in respect of proper use of the framework. The mishap in respect of the CTC’s article 39 declarations as discussed above is no doubt unintentional and may, accordingly, very well be a result of said complexity.

Complex or not, the EU’s accession is a necessary tool in order for the EU states to accede to the Convention; it has set an example for the EU states that have not yet ratified the Convention.

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