In November 2001, several countries signed, in Cape Town, the Convention on Interests in Mobile Equipment and its Aircraft Specific Protocol. The declared aim of the Convention is the introduction of more transparency and predictability in aviation finance deals. Already the Geneva convention, signed back in 1948, tried to address the concerns of the international financial community. However, this convention is now generally considered to be insufficient and not adapted to new financing instruments. In order to gain widespread approval, the Cape Town Convention provides for an opt-out system whereby Contracting States can decide not to apply or how to apply certain provisions of the Convention. Since these opt-out provisions relate to core area of the Convention, it is legitimate to ask whether this system, that has on the one hand granted the Convention general approval, would not, in the end, jeopardize its scope. Would then the lenders be better off under the existing system ? After having analyzed the core opt-out provisions and having tried to evaluate their impact on the scope of the Convention, the author concludes that the overall project of the Convention brings about more predictability and transparency in aviation finance and that the opt-out system is a ?necessary evil to obtain a higher good?.
European Review of Private Law