New legislation aimed at boosting the local aviation sector was passed by the Legislative Assembly this month. The International Interests in Mobile Equipment (Cape Town Convention) Bill 2015; the Civil Aviation Authority (Amendment) Bill 2015; and the Bill of Sale (Amendment) Bill 2015 are intended to increase the international prestige of Cayman’s aviation sector and attract additional aircraft finance business to Cayman, the Financial Services Ministry said in a statement.
All of the bills were passed on April 17, and they are expected to be gazetted shortly.
Commerce Minister Wayne Panton said the new legislation seeks to strengthen Cayman’s international standing, in addition to boosting the aviation sector.
“Ultimately, these amendments speak to increasing our jurisdictional reputation, which is a key to all aspects of commerce,” he said. “Being current and compliant with all major global treaties assists our efforts to maintain Cayman’s place as a major international financial center.”
The International Interests in Mobile Equipment (Cape Town Convention) Bill 2015 will extend the Cape Town Convention to the Cayman Islands. The Cape Town Convention is an international treaty that aims to standardize transactions involving movable property, such as aircraft.
The convention creates a standardized international legal framework for the registration of international interests in aircraft and aircraft objects such as airframes and engines. It provides creditors who register an interest with a recognized set of rights in the event of a debtor’s default or insolvency and institutes a dispute resolution system.
Although the U.K. signed the convention as early as 2001, and it could have applied to Cayman by extension, the British government did not ratify the convention until 2014.
In 2009, Cayman enacted the Cape Town Convention Law, 2009, which was designed to mirror the provisions of the Cape Town Convention. However, the law did not achieve the desired result, as large financial institutions were put off by Cayman’s lack of international recognition as a contracting party to the Cape Town Convention.
Cayman Islands business vehicles were therefore unable to participate in certain aircraft finance transactions, which instead were conducted using business vehicles domiciled in competing jurisdictions that are a party to the Cape Town Convention, the ministry said.
The Civil Aviation Authority (Amendment) Bill 2015 adds the registration of aircraft mortgages as a function of the Civil Aviation Authority. The regulatory body deals with such registrations on a day-to-day basis. For historical reasons, this function is governed under a U.K. statutory instrument, but following consultation with the U.K., the Cayman Islands may enact local legislation in regard to the registration of aircraft mortgages, similar to the way it is handled in other overseas territories.
The other amendment introduced in connection with the Cape Town Convention is the Bill of Sale (Amendment) Bill 2015, which will make express reference to the Cape Town Convention and incorporate certain Cape Town Convention terms.