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An Analysis of Conflicts of Law Rules As Applied to Aircraft

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An Analysis of Conflicts of Law Rules As Applied to Aircraft 2 Aerial Confl icts of Law: An Analysis of Confl icts of Law Rules as Applied to Aircraft Berend Crans* 1. Introduction When it comes to the transfer of title to an aircraft or the creation of security rights in aircraft, the parties generally do not have the liberty to choose the law governing the property law aspects of such transfer of title or the creation of a security right. The question which property laws do apply is of course of utmost importance as for in- stance a transfer of title or an aircraft mortgage which is not compliant with applica- ble law, i.e. the laws which apply according to the conflict of laws rules of the lex fori, will probably result in such transfer of title or such mortgage not being recognized by such court or not being enforceable in the relevant jurisdiction. In addition, the status of aircraft engines may depend on the property regime of the applicable law accord- ing to the rules of private international law of the forum. Obviously, as aircraft are by their very nature extremely mobile and as their purpose is to travel from one jurisdiction to another, it is unfortunate that there are neither universally applied conflicts rules nor a uniform property regime in re- lation to aircraft. On the contrary, international conventions do not contain paral- lel conflicts rules or create a uniform regime and the 1948 Geneva Convention on the International Recognition of Rights in Aircraft, hereinafter also referred to as the Geneva Convention, and the the 2001 Cape Town Convention on International Interests in Mobile Equipment and the related Protocol on Matters specifijic to Aircraft Equipment, this Convention and the Protocol, jointly referred to as the Cape Town Convention, take opposing views on certain matters, including the status of aircraft engines. In this publication I will review the various conflict of laws rules and demon- strate, on the basis of fijictional – but very realistic – scenarios, why the aviation in- dustry needs uniform rules of private international law and conclude with explaining why the lex registrii, i.e. the laws of the jurisdiction where the aircraft is registered as to nationality, is the most appropriate option. * Partner/Shareholder at De Brauw Blackstone Westbroek N.V., Amsterdam. Pablo Mendes de Leon (ed.), From Lowlands to High Skies – A Multilevel Jurisdictional Approach towards Air Law. Copyright 2013 Koninklijke Brill NV. Printed in The Netherlands. ISBN 978-90-04-26063-4. pp. 215-226. 216 Part C: Private Air Law | Chapter 3 – Berend Crans 2. Analysing the options When determining which property laws should apply to aircraft, various options can be considered: – the lex situs, being the laws of the jurisdiction where the aircraft is physically located at the relevant moment in time; – the lex domicilii, being the laws of the jurisdiction of the owner of the aircraft; – the lex actus, being the laws of the jurisdiction where the instrument of transfer or security document is delivered;1 – the lex registrii, being the laws of the jurisdiction where the aircraft is registered as to nationality at the relevant moment in time; – the ‘proper law of transfer’, which is basically the law chosen by the parties. The quick scan of jurisdictions set forth below2 demonstrates that there is a wide variety of choices made by nations. Some of which may have been inspired by the Geneva Convention when adopting the lex registrii whilst other jurisdictions appar- ently stuck to the good old lex situs rule, without recognizing that aircraft deserve a separate regime in view of their inherent mobility. In the United States, the conflict rule for the transfer of title to property like aircraft is the lex actus, i.e. the place where the relevant transfer instrument is deliv- ered. This rule is less fijirm than it looks, because the relevant provision of the Federal Aviation Act3 also provides that if the instrument specifijies the place at which delivery is intended, it is presumed that the conveyance, lease or instrument was delivered at such specifijied place. As a consequence, the parties, by specifying the place of intend- ed delivery are in principle able to choose the governing law. On that basis, the lex actus is not diffferent from theproper law of transfer. Things may be more complicated where it concerns the creation of security interests in aircraft and in particular the recognition and enforcement thereof. In principle the recognition of security rights in aircraft is provided by three sources of law in the United States. As the United States have ratifijied both the Geneva Convention and the Cape Town Convention, these instruments are relevant in that connection; in addition, if such treaties do not apply to a certain transaction, the Uniform Commercial Code (UCC) comes into play. As described in more detail below in paragraph 3.1, the Geneva Convention adheres to the lex registrii without excluding ‘renvoi’, whilst the Cape Town Convention provides that references to ‘the applicable law’ are references to the domestic rules of the law applicable by virtue of the rules 1 This is regardless of the place where the subject of such transfer or security instrument is located. 2 The author cannot fully assess whether recent accessions to the Cape Town Convention (e.g. Canada and Turkey) may have changed the rules of private international law in some of the jurisdictions referred to below. 3 Federal Aviation Act 1958 s. 506 (as amended by S.44108(c) of the Transportation Act 1994). .
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