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United States of America: Reconsidering the Transaction Document Filing Requirement for National Registry

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Implementing the Cape Town Convention and the Domestic Laws on Secured Transactions

Part of the book series: Ius Comparatum - Global Studies in Comparative Law ((GSCL,volume 22))

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Abstract

The National Report for the USA provides an overview of secured transactions law generally, primarily Article 9 of the Uniform Commercial Code (“UCC”). Article 9 has been enacted in substantially the uniform version in every state of the USA. The Report summarizes the relationship between the Cape Town Convention, including the Aircraft Protocol (together, “CTC”), and non-Convention law. Of particular interest and significance, registrations with the international registry must be made through the Federal Aviation Administration (“FAA”) as a mandatory (except for engines) entry point and registration is also conditioned on FAA authorization. Under the CTC it is the international registration—not the filing for recordation of relevant transaction documents in the FAA registry—that controls issues of third-party effectiveness and priority. However, USA federal law requires compliance with both regimes. This structure was thought necessary to obtain the support and cooperation of the FAA and local interests (such as attorneys and title companies) in the process of obtaining USA ratification of the CTC. This redundant registration structure is difficult to justify based on the costs and meager (if any) benefits of the system. It should be reconsidered.

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Notes

  1. 1.

    See General Report [3].

  2. 2.

    UCC § 9-109(a)(1).

  3. 3.

    UCC § 1-202(b)(35) (defining “security interest”).

  4. 4.

    UCC § 9-109(a)(3).

  5. 5.

    UCC § 9-203(a), (b).

  6. 6.

    See, e.g., UCC § 9–317.

  7. 7.

    UCC § 9-308(a).

  8. 8.

    UCC § 9-310(a).

  9. 9.

    UCC §§ 9-310(b)(6); 9–313.

  10. 10.

    See UCC § 9-501(a)(2).

  11. 11.

    UCC § 9-502(a); 9–504.

  12. 12.

    UCC § 9-516(b); UCC § 9-520(a).

  13. 13.

    UCC § 9-519(c).

  14. 14.

    UCC § 9-523(c).

  15. 15.

    UCC § 9–502, official comment 2.

  16. 16.

    UCC § 9-322(a)(1).

  17. 17.

    UCC § 9–324.

  18. 18.

    UCC § 9-317(a)(2).

  19. 19.

    11 U.S.C. § 544(a)(1).

  20. 20.

    UCC §§ 9-201(a); 9-317(b) – (d).

  21. 21.

    UCC § 9-320(a).

  22. 22.

    UCC § 1-201(b)(9) (defining “buyer in ordinary course of business”).

  23. 23.

    UCC § 9–601, official comment 3.

  24. 24.

    UCC § 9-9-609(a).

  25. 25.

    UCC §§ 9–610; 9-611-9-614.

  26. 26.

    UCC § 9-609(b).

  27. 27.

    UCC § 9–607.

  28. 28.

    UCC § 9-301(1).

  29. 29.

    UCC § 9-301(2).

  30. 30.

    UCC § 9-301(3)(C).

  31. 31.

    Convention art. 29(1), (2).

  32. 32.

    49 U.S.C. § 44107.

  33. 33.

    49 U.S.C. § 44108(a), (b).

  34. 34.

    Convention art. 18(5) (protocol may provide for Contracting States to designate entry points); Aircraft Protocol art. XIX(1) (Contracting State may designate entry points), (2) (designation may permit but may not compel use of entry points for aircraft engines).

  35. 35.

    49 U.S.C. § 44107(e)(3); 14 C.F.R. § 49.63).

  36. 36.

    See Chicago Convention on International Civil Aviation (1944) art. 77(maintenance of national registry).

  37. 37.

    49 U.S.C. § 11301; 14 C.F.R. §§ 1177.1–1177.5.

  38. 38.

    Convention art. 18(1); Aircraft Protocol art. XX(1); Registry Regulations Section 5.3(c).

  39. 39.

    Roy Goode, The Convention on International Interests in Mobile Equipment and Protocol thereto on Matters Specific to Aircraft Objects: Official Commentary ¶ 2.122 (3d ed. 2013).

  40. 40.

    Convention arts. 1(o); 2(2).

  41. 41.

    Convention art. 2(4).

  42. 42.

    Because under UCC Article 9 a title reservation agreement is treated as a security agreement, Article would apply also to an agreement structured as a title reservation agreement.

  43. 43.

    Convention art. 8(1).

  44. 44.

    Convention art. 8(2).

  45. 45.

    Convention art. 11(1).

  46. 46.

    Convention art. 8(3). This requirement extends to remedies under art. 8(1) and 13 (relief pending final determination. Under the Aircraft Protocol, however, this requirement extends to all remedies. Aircraft Protocol art. IX(3). If a remedy is exercised in accordance with a provision of the parties’ agreement such exercise is commercially reasonable “except where such a provision is manifestly unreasonable.” Convention art. 8(3); Aircraft Protocol art. IX(3).

  47. 47.

    Convention art. 8(4).

  48. 48.

    Convention art. 8(5).

  49. 49.

    Convention art. 8(6).

  50. 50.

    See, e.g., UCC §§ 9–601, official comment 2 (circumstances giving rise to a default left to the agreement of the parties); 9–607 (collection and enforcement); 9–608 (application of proceeds of collection or enforcement); 9–609 (right to take possession following default); 9–610 (disposition of collateral after default); 9–611 – 9–614 (notification of disposition); 9–615 (application of proceeds of disposition); 9–620 (acceptance of collateral full or partial satisfaction of secured obligation).

  51. 51.

    Declarations lodged by the United States of America under the Cape Town Convention at the time of the deposit of its instrument of ratification, available at http://www.unidroit.org/status-2001capetown?id=496.

  52. 52.

    See UCC §§ 2A-523 – 2A-532 (lessor’s remedies on lessee’s default).

  53. 53.

    .Aircraft Protocol art. I(2)(n) (defining “primary insolvency jurisdiction” as “the Contracting State in which the centre of the debtor’s main interests is situated”).

  54. 54.

    .Aircraft Protocol arts. XI(1) (Article XI applies only if a declaration is made under Article XXX(3)); XXX(3) (declarations concerning Article XI). There are similar provisions under the Rail Protocol and the Space Protocol. See Rail Protocol art. IX (Alternatives A, B, and C); Space Protocol art. XXI (Alternatives A and B).

  55. 55.

    .11 U.S.C. § 1110.

  56. 56.

    .Convention art. 1(k) (defining “insolvency administrator” as “a person authorised to administer the reorganisation or liquidation, including one authorised on an interim basis, and includes a debtor in possession if permitted by the applicable insolvency law”).

  57. 57.

    .Aircraft Protocol art. XI(2) (Alternative A).

  58. 58.

    . Id. art. XI(3) (Alternative A).

  59. 59.

    . Id. art. XI(7) (Alternative A). However, “a default constituted by the opening of insolvency proceedings” need not be cured. Id.

  60. 60.

    See Anthony Saunders et al., The Economic Implications of International Secured Transactions Law Reform: A Case Study, 20 University of Pennsylvania Journal of International Economic Law 309 (1999).

  61. 61.

    See Jeffrey Wool, Treaty Design, Implementation, and Compliance Benchmarking Economic Benefit—a Framework as Applied to the Cape Town Convention, 17 Uniform Law Review 633, 640 (2012); Jeffrey Wool, Compliance with Transnational Commercial Law Treaties—A Framework as Applied to the Cape Town Convention, 3 Cape Town Convention Journal 5 (2015); Charles W. Mooney, Jr., The Cape Town Convention’s Improbable-but-Possible Progeny Part Two: Bilateral Investment Treaty-Like Enforcement Mechanism, 55 Virginia Journal of International Law 451 (2015).

  62. 62.

    In fairness, it is clear that in some situations being a Contracting State party to the Convention and Protocol may afford USA-based financers of aircraft equipment to greater cooperation from courts and administrators in other Contracting States.

References

  1. Goode, Roy. 2013. The convention on international interests in mobile equipment and protocol thereto on matters specific to aircraft objects: Official commentary, 3rd ed. Rome: UNDROIT.

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  2. Mooney Jr., Charles W. 2015. The Cape Town Convention’s improbable-but-possible progeny part two: Bilateral investment treaty-like enforcement mechanism. Virginia Journal of International Law 55: 451.

    Google Scholar 

  3. Saunders, Anthony, Anand Srinivasan, Ingo Walter, and Jeffrey Wool. 1999. The economic implications of international secured transactions law reform: A case study. University of Pennsylvania Journal of International Economic Law 20: 309.

    Google Scholar 

  4. Wool, Jeffrey. 2012. Treaty design, implementation, and compliance benchmarking economic benefit—A framework as applied to the Cape Town Convention. Uniform Law Review 17: 633.

    Article  Google Scholar 

  5. Wool, Jeffrey. 2015. Compliance with transnational commercial law treaties—A framework as applied to the Cape Town Convention. Cape Town Convention Journal 3.

    Google Scholar 

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Authors and Affiliations

  1. University of Pennsylvania Law School, University of Pennsylvania, Philadelphia, PA, USA

    Charles W. Mooney Jr.

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Correspondence to Charles W. Mooney Jr. .

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  1. Faculty of Law, Gakushuin University, Toshima-ku, Tokyo, Japan

    Souichirou Kozuka

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Mooney, C.W. (2017). United States of America: Reconsidering the Transaction Document Filing Requirement for National Registry. In: Kozuka, S. (eds) Implementing the Cape Town Convention and the Domestic Laws on Secured Transactions. Ius Comparatum - Global Studies in Comparative Law, vol 22. Springer, Cham. https://doi.org/10.1007/978-3-319-46470-1_11

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  • DOI: https://doi.org/10.1007/978-3-319-46470-1_11

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