Draft Protection and Enforcement of Interests in Aircraft Objects Bill, 2022

• IAS NEXT, Lucknow
• 25, Apr 2022

Reference news:-

Recently, the Ministry of Civil Aviation has sought stakeholders’ comments on the draft Protection and Enforcement of Interests in Aircraft Objects Bill, 2022. 

Highlights of the Bill:

• The Bill implements the provisions of the Convention on International Interests in Mobile Equipment and Protocol on Matters Specific to Aircraft Equipment which was adopted at a conference in Cape Town in 2001.
• India acceded to the two instruments in 2008.
• These provide default remedies for the creditor and create a legal regime for disputes.
• Once passed, the law will help international aircraft leasing companies to repossess and transfer planes out of India incase of a financial dispute with an Indian airline at a time many regional airlines have been refused planes on rent.
• The proposed law provides remedies such as repossession of an aircraft object, or its sale or lease or collection of income from its use as well as de-registration and export of planes.
• It also suggests remedies pending final adjudication of a claim as well as safeguards a debtor’s claim during insolvency proceedings against its Indian buyer. 

Need for:

As per the ministry, the draft legislation is necessary because several Indian laws such as the Companies Act, 2013 and the Insolvency and Bankruptcy Code, 2016 are in conflict with the Cape Town Convention and Protocol.

• It says that Indian entities have also suffered as international financial institutions demand an implementing legislation. 

Convention on International Interests in Mobile Equipment (Cape Town Convention):

• It is an international treaty intended to standardize transactions involving movable property.
• 83 countries, including India, have signed and ratified the Convention & the Protocol.
• The treaty creates international standards for registration of contracts of sale (including dedicated registration agencies), security interests, leases and conditional sales contracts, and various legal remedies for default in financing agreements, including repossession and the effect of particular states’ bankruptcy laws.

Four protocols to the convention are specific to four types of movable equipment:

1. Aircraft Equipment (aircraft and aircraft engines; signed in 2001).
2. Railway rolling stock (signed in 2007).
3. Space assets (signed in 2012).
4. Mining Agricultural and Construction Equipment (signed in 2019).