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ProQuest Information and Leaming 300 North Zeeb Road, Ann Arbor, MI 48106-1346 USA 800-521-0600 The Seizure and Detention of Aireraft by Canadian Airports and the Convention on International Interests in Mobile Equipment A Critical Analysis ofNon-consensual Rights Under the Unidroit Regime by: Dimitri Maniatis A thesis submitted to the Faculty ofGraduate Studies and Research in partial fulfillment of the requirements ofthe degree of Master of Laws May, 2001 Institute of Air and Space Law McGi11 University Montreal, Canada .~ © Dimitri Maniatis 2001 1+1 ~nationaJe Acquisitions and AcquiIitions et Bibliographie Services services bibliographiques 315 WIIIingtDn Street 315, rue WeIingIan oeta.-ON K1A 0N4 01.-ON K1A 0N4 CMIIdI c..a The author bas granted a non­ L'auteur a accordé une licence non exclusive licence aIloWÎDg the exclusive pennettant à la National Library ofCanada ta Bibliothèque uationale du Canada de reproduce, Joan, distnbute or seU reproduire, prêter, distribuer ou copies ofthis thesis in microfonn, vendre des copies de cette thèse sous paper or electroDic formats. la forme de microfiche/film, de reproduction sur papier ou sur format électroDique. The author retains ownership ofthe L'auteur conserve lapropriété du copyright in tbis thesis. Neither the droit d'auteur qui protège cette thèse. thesis nor substantiaJ extraets nom it Ni la thèse ni des extraits substantiels may be printed or otherwise de celle-ci ne doivent être imprimés reproduced without the author's ou autrement reproduits sans son pe11DlSS1on. autorisation. 0-612-75367-0 Canadl • ACKNOWLEDGEMENTS The preparation and presentation of a Master's thesis in law is a challenging task, this one perhaps more so as a result only of the author's professional schedule and other commitments. Without the understanding of the partners and associates of my firm, it would have been impossible. l therefore express my gratitude to the members of Langlois Gaudreau for their patience and assistance while 1 was working on the preparation of this manuscript. As the topic of this thesis dissertation grew out of work conducted by the author on behalf of Aéroports de Montreal, portions of this study were prepared with the research assistance of members of the firme Ta the extent that this research was relied on herein, the author expresses his gratitude to them. Editorial assistance was provided by Me Jonathan R. Levinson and Me Guy P. Martel, to whom the author is grateful. For her assistance in the formatting and presentation of the text, Ms. Marcia Diaz also deserves thanks. The unwavering support and assistance of Prafessor Dr. Michael Milde, Professor at the Faculty of Law, McGill University, is also gratefully acknowledged. Despite his busy schedule, Dr. Milde graciously agreed ta supervise the author in the preparation of this texte The author shaH forever be indebted to him for his support throughout and is praud ta remain his student in life and in the study of law. Finally, the author wishes ta express his eternal gratitude to his parents, Nicholas and Effie Maniatis, without whom the author may not have been in a position to complete the requirements of this LL.M. degree, let alane embark upon the challenging and rewarding career that • he hase This dissertation is lovingly dedicated to them both. - i - • AB8TRACT Canadian airport authorities benefit from the right to seize and detain aircraft where airport charges remain unpaid. By objective measures, this right constitutes a preferred non-consensual right or interest that takes priority under Canadian law over all competing rights and interests in the aireraft subjeet ta seizure and detention, including, for example, the interests of an owner, lessor or secured creditor. In this manner, airpart authorities may recover outstanding user fees from bath the airlines themselves and from the aircraft owners or lessors. The Unidroit Convention attempts ta harmonise the law applicable to aircraft finance transactions. As such, it targets private law rights. However, its breadth and scope touch upon the statutory rights of third parties with non-consensual interests in aireraft, including those of airport authorities to seize and detain aircraft. The interplay between the Unidroit regime and the seizure and detention rights of Canada's airport is the [oeus of this academic discourse. It demonstrates that even though this right, recourse and remedy lS of fundamental importance ta Canada's National Airports System and its transportation infrastructure generally, the Unidroit Convention could, if implemented as drafted, effectively compromise the ability of Canadian airports to seize and detain aircraft. • - u- • RÉSUMÉ Les administrations aéroportuaires canadiennes bénéficient d'un droit de saisie et de rétention des aéronefs lorsque les frais d'aéroport sont impayés. D'une façon objective, un tel droit constitue un droit ou un intérêt préférentiel non consensuel ayant priorité en droit canadien sur les droits et intérêts quant aux autres créanciers relativement aux aéronefs faisant l'objet d'une saisie et d'une rétention, incluant par exemple les intérêts d'un propriétaire, locateur ou créancier garanti. Ainsi, les autorités aéroportuaires peuvent recouvrer, à la fois, des frais d'usager impayés par les lignes aériennes et par les propriétaires ou locateurs d'aéronefs. La Convention d'Unidroit tente d'harmoniser le droit applicable aux transactions financières visant des aéronefs. En ce sens, cette convention relève du droit privée. Toutefois, de par sa nature et son étendue, la convention affecte les droits statutaires de tiers ayant des intérêts non consensuels relativement aux aéronefs, incluant le droit de saisie et de rétention des administrations aéroportuaires. L'interaction entre le régime proposé par la Convention d'Unidroit et le droit de saisie et de rétention des aéroports canadiens fait l'objet de la présente étude. Celle-ci démontre que même si le droit de saisie et de rétention des aéroports est d'une importance fondamentale pour le système aéroportuaire canadien, la Convention d'Unidroit pourrait, advenant son intégration en droit canadien telle que rédigée, compromettre la capacité des administrations aéroportuaires canadiennes de se prévaloir de leur droit de saisie et de rétention. • - iü - • TABLE OF CONTENTS Acknowledgements i Ahstract ii Résumé iii 1. Introduction 1 PART ONE: THE SEIZURE AND DETENTION OF A1RCRAFT BY CANADIAN A1RPORTS: A NON-CON8ENSUAL RlORT OR INTEREST II. A Brief Overview of Canadian Airports 8 A. The National Airports Policy 8 B. Regulatory Oversight of Airports 12 II. Origins and Rationale of the Detention Rights of Canadian Airports 13 A. Rationale and Public Policy Considerations 13 B. Origins of the Detention Rights of Canadian Airports 15 1. 1985 Amendments to the Aeronautics Act 15 2. Amendments to the Airport Transfer Act. 16 C. Value and Effectiveness 18 III. The Seizure and Detention of Aircraft 19 A. Seizure and Detention by Transport Canada 19 B. Seizure and Detentian by Canadian Airport Authorities 20 1. Seizure of Aircraft 22 • 1.1 Leave to Seize and Detain Aircraft. 22 - iv - -v- 1.1.1 Procedure to Obtain Leave 22 1.1.2 When Leave to Seize and • Detain Will be Granted 27 a. Identity of the Seizing Party 28 b. Operation of Airport by Seizing Party 29 c. Nature of the Debt 29 d. Identity of the Seized Aircraft 32 1. Aircraft "Owned or Operated" by the Person Liable to Pay the Airport Charges 32 11. Are Seizures Limited to the Specifie Aircraft for Which the Unpaid Airport Charges Were Incurred? 36 111. Number of Aircraft Which may be Seized 40 e. Location of the Seized Aircraft 40 f. Aircraft Exempt from Seizure 41 1. Aircraft Exempt from Seizure by Regulation 41 11. Aircraft Exempt from Seizure Under a Writ of Execution 42 1.2 Seizure of Aireraft Once Leave Has Been obtained 44 2. Detention of Aircraft 45 2.1 Release on Payment 46 2.2 Release on the Posting of a Bond or Other • Securit:)' ......................•..................................47 - VI - 2.2.1 Forro of the Bond or Other Seeurity 48 • 2.2.2 Amount of Seeurity 50 2.3 Release by Court Order 53 3. Other Remedies 54 3.1 Sale of Aireraft by Seizing Authority 54 3.2 Drawing on Security 55 V. Competing Rights in Aircraft: A Practical Problem 56 PART TWO: THE MOBILE EQUIPMENT CONVENTION AND A1RCRAFT PROTOCOL VI. The Unidroit Initiative 66 A. Historical Background 67 B. Principle F'eatures 69 VII. Mobile Equipment Convention/Aircraft Protocol. 72 A. Chapter 1 of the Convention - Interpretation and Application Law 72 1. Preamble 73 2. Article 5(2) of the Convention - General Principles Underlying the Unidroit Regime 75 B. Chapter X of the Convention - Non-consensual Rights and Interests 77 1. Article 38 of the Convention - Registerable Non- consensual Rights and Interests 78 2. Article 39 of the Convention - Preferred Non- consensual Rights and Interests 80 c. Article l(s) of the Convention - Definition of "Non- • consensual Right or Interest" 84 - vü- o.