The aviation industry, due to its complex and global nature, necessitates a structure that provides a legal framework for international transactions involving aircraft. One such structure is the International Registry of Mobile Assets, often referred to as the International Registry or simply the "IR." But what exactly is the International Registry, and how does it factor into the purchase, sale, or lease of an aircraft? Let's briefly delve into these questions.
What is the International Registry?
The International Registry was established under the provisions of the Cape Town Convention and its Aircraft Protocol, which came into effect in 2006. The Convention was designed to create an international legal framework for the creation, perfection, and enforcement of security interests in mobile equipment, including aircraft objects.
The International Registry is an online platform that allows creditors, lessors, and conditional sellers to register their international interests in aircraft objects. This includes airframes, engines, and helicopters that meet a specific size or power output.
Why is the International Registry Important?
Registering an interest on the International Registry has significant legal implications, primarily around the principle of "first to file". The International Registry operates on this principle, meaning that the first party to register an interest in an asset has priority over subsequent registrations. Therefore, securing your interest by filing as soon as possible is vital to ensuring your rights are protected in the case of a debtor's insolvency or a conflicting claim.
The International Registry in Aircraft Transactions
Whether you're buying, selling, or leasing an aircraft, the International Registry plays a crucial role in the transaction. Here's how:
Purchasing an Aircraft
If you are purchasing an aircraft, a search of the International Registry will reveal any registered interests on the aircraft. This ensures that the aircraft is free of liens and encumbrances that could affect your rights as the new owner. Once the purchase is complete, the buyer can register their ownership interest on the International Registry, protecting their rights against third-party claims.
Selling an Aircraft
As a seller, it is important to ensure that any registered interests (like a mortgage or lease) are properly discharged on the International Registry. This not only facilitates a smoother sale process but also protects the buyer's rights and your reputation as a seller.
Leasing an Aircraft
In a leasing transaction, both the lessor and the lessee have interests to register. The lessor, who retains ownership of the aircraft, should register their ownership interest, while the lessee should register their lease interest. This ensures both parties are protected, and their rights enforceable in the event of a dispute or insolvency.
"It's essential to search the IR in the course of transactional due diligence."
The International Registry, while a complex aspect of aviation law, is a vital tool in the successful completion of an aircraft transaction. It provides a robust and transparent system for protecting interests in high-value aviation assets. It's highly recommended that those involved in an aircraft transaction engage the services of an experienced aviation attorney, such as Johnlee Curtis or Amanda Cutler at Aviation Transaction Advisors, to navigate this crucial part of the process.
Remember, the goal is to ensure that your rights are protected and that the aircraft you are buying, selling, or leasing is free of any legal encumbrances. That's where the International Registry comes in, and why it's such an integral part of aircraft transactions.
For more information on aircraft transactions and the role of the International Registry, don't hesitate to reach out to our team at Aviation Transaction Advisors. We are here to guide you through the complexities of the aviation transaction process and ensure a smooth and secure journey from start to finish.