Secured Transactions - February 2014

International Interests in Mobile Equipment – Communiqué on 2nd. Meeting on Possible 4th Protocol to Cape Town Convention

As a follow-up to the December meeting, in January the working group held its second meeting to continue preliminary work on a potential 4th Protocol to the Cape Town Convention on International Interests in Mobile Equipment (the “Cape Town Convention”). The fourth protocol would cover mining, agricultural and construction (MAC) equipment.

At the second meeting, experts continued discussions on the potential economic benefits of a MAC protocol and possible approaches to determine its scope. One of the challenges will be to determine how a proposed protocol would coordinate with national law and national registration systems. National systems typically create security interests in general items of collateral and are debtor-based; frequently, by national law they are made subordinate to international registries for specialized items of collateral (e.g., aircraft), which are asset-based. Under Article 51 of the Cape Town Convention, its application may be extended by protocol to equipment that crosses national borders, is high-value and specifically identifiable. It is generally recognized that equipment of low value, that does not cross national borders or cannot be specifically identified, should not be taken out of national registration systems. The challenge is where and how to make this delineation.

As the Department of International Law works to support OAS Member States engaged in secured transactions reform, we strive to monitor, participate in and remain informed about the development of other relevant international instruments in this area.

These first two meetings were held in Washington and were hosted by the UNIDROIT* Secretariat in coordination with the International Law Institute. The Department of International Law was represented by Mr. Eugenio Briales, Secured Transactions Expert. The next meeting will be held in March in Buenos Aires, to coincide with the World Farmers Organization General Assembly in order to take advantage of the gathering of key stakeholders on the subject of MAC equipment.

*UNIDROIT – International Institute for the Unification of Private Law.

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