Maples advises on first-of-its-kind parking title for “green delivery”

Alasdair Whyte
By Alasdair Whyte April 21, 2010 17:29

The┬áCivil Aviation Authority of the Cayman Islands (CAACI) offers a fast and efficient registration service which is cost competitive and provides robust security to a financier. At the conclusion of the registration process a Certificate of Registration is issued to the registered owner of the aircraft (who must be a “Qualified Person” (as defined in the Air Navigation (Overseas Territories) Order 2007)). In lieu of issuing a Certificate of Airworthiness, the CAACI will issue special flight authorisations as may be needed to transport the aircraft. The aircraft will remain on the Aircraft Register during the fit out period subject always to the financier’s registered security interest.

One of the most attractive features of the Aircraft Register is the dual system for registration of aircraft mortgages. Registration under the Convention on International Interests in Mobile Equipment (the “CIIME”) and a protocol to the CIIME specific to aircraft equipment (the CIIME as modified by the Protocol being the “Cape Town Convention”) is permitted as a result of the Cape Town Convention Law (2009) of the Cayman Islands. This law affords a Cayman Entity (as defined therein) an ‘opt in’ to the Convention and integrates the provisions of the Convention to the jurisdiction through domestic legislation.

Alternatively, registration on the Mortgages Register maintained by the CAACI (the “Mortgages Register”) pursuant to the Mortgaging of Aircraft Regulations 1979 (the “Regulations”) may be effected. The Regulations, among other things, offer a system for obtaining priority for a security interest and protection from de-registration of an aircraft without the registered mortgagee’s consent. An interest on the Mortgages Register would be trumped by a Cape Town registered interest and certain other interests (such as possessory liens) as outlined in the Regulations. However a mortgagee can take comfort from the fact that in the event a Cape Town registration is unavailable, a fallback regime for priority and perfection exists and is well established.

A Qualified Person and a Cayman Entity both include the typical Cayman Islands exempted limited liability company set up for asset finance transactions.

While the Aircraft Register is primarily a ‘private use’ register intended for aircraft which are not operated for hire or reward, this should not be an issue during fit out. Once fit out is completed, the aircraft may be de-registered from the Aircraft Register and re-registered on an alternate register as may be required for commercial operation. The de-registration process is simple and low cost and can be completed on a same day basis.

For the above reasons, the Aircraft Register provides a practical, cost effective and secure register on which to park title during fit out.

For further information please contact:

Joannah Bodden Small
Direct: +1 345 814 5313

Mark Western
Direct: +852 3690 7407

Shari McField-Bell
Direct: +1 345 814 5551

This update is intended to provide only general information. It does not purport to be comprehensive or to render legal advice.

Alasdair Whyte
By Alasdair Whyte April 21, 2010 17:29

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