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Legal opinion, standards and practices and the Cape Town Convention

8 September 2015

Cape Town Convention Academic Project – 4th Conference

Oxford, England

Phil Durham & Ken Basch

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Value of Cape Town Convention Closing Opinions

Rationales for Value of Cape Town Convention Closing Opinions

» oversight role of the attorney rendering the opinion

» closing of the information gap between the parties by having the attorney rendering the opinion to typically be the party with the most efficient and least costly access to the information

» pledge of reputation as a warranty of the accuracy of the information contained in the opinion by the issuing attorney

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Value of Cape Town Convention Closing Opinions

Value analysis in determining Cape Town Convention Closing Opinions

» registration opinions vs. implementation opinions

» “good standing” opinion

» impact of closing room

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Who Renders Cape Town Convention Closing Opinions

Typical Legal Roles in Aircraft Finance Transaction» Operator Country Counsel

» Transaction Document Counsel

» International Registry Counsel

» Aircraft Registry Counsel

» often roles are blurred or combined

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Who Renders Cape Town Convention Closing Opinions

Determining Who Gives What Opinions» understanding interplay between national law and the Cape Town

Convention

» choice of law issues relevant

» does registering party need to give registration opinion?

» international registry counsel vs. operator jurisdiction/aircraft registry counsel opinions

» coming shift in practice due to global implementation issues and re-nationalization risk

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Current Global Practice in Cape Town Convention Closing Opinions

Survey of Current Cape Town Convention Opinion Practice

» Canada, China, Brazil, Colombia, Indonesia, Ireland, Kenya, Malta, Malaysia, Mexico, Norway, Panama, Russia, Singapore, Turkey, the United Arab Emirates and the United States of America

» heavy reliance on International Registry counsel in the US and Ireland to give majority of Cape Town Convention closing opinions

» International Registry counsel opinions rather uniform and standardized

» operator jurisdiction / aircraft registry opinions vary widely in scope and substance

» time since ratification impacts opinion practice

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Current Global Practice in Cape Town Convention Closing Opinions

Common International Registry Counsel Opinions

» airframe/engines constitute Aircraft Objects based on documents compiled by the FAA (US only)

– opinion vs assumption in broader practice?

» Based on priority search certificate, interest is duly registered

– value of registration opinion?

» Based on a contracting state search, country [x] is a contracting state and has made the declarations set out therein

– value vs. local implementing legislation opinion

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Current Global Practice in Cape Town Convention Closing Opinions

Common International Registry Counsel Opinions

» Interests are entitled to the priorities, protections of the Convention subject to the provisions of the Convention and Protocol and the assumptions and qualifications set out herein

– value of this opinion?

» No further registration opinion

– value of this opinion?

» Documents constitute an international interest

– Changing practice as judicial decisions mount?

» Priority of registrations

– Value absent Article 39 opinion?

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Current Global Practice in Cape Town Convention Closing Opinions

Issues Operator Jurisdiction/Aircraft Registry Opinions

» IDERA opinions

» re-characterization of interest under national law

– Can be a difficult opinion to give

– Golden Rule analysis

» Qualification regarding lack of judicial interpretation

– Jurisdictional history of creditor’s rights appears to impact

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Global Standard for Cape Town Convention Closing Opinions

Towards a Standard for Operator Jurisdiction/Aircraft Registry Opinions

» closing information gap vs. “clean” opinions

» training, model opinions

» focus on what should be given and not what can be given

» engagement with global aircraft finance community

» role of ABS transactions in creating global standard

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Global Standard for Cape Town Convention Closing Opinions

Towards a Standard for Operator Jurisdiction/Aircraft Registry Opinions: Pro-forma Opinions

» document creates international interest

» characterization of interest?

» registration opinions?

» IDERA: proper form, enforceable, registered

» Alternative A

» Article 39

» choice of law

» no immunity

» Jurisdiction

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Legal opinion, standard and practices and the Cape Town Convention

Questions and Discussion