Cape Town Convention in US Bankruptcy Courts: How Foreign Creditors May Seek Greater Protection in US Bankruptcy Courts through Enforcement of Article XXX(4) of the Aircraft Protocol

Abstract

The Cape Town Convention on International Interests in Mobile Equipment (‘Treaty’) and the Protocol on Matters Specific to Aircraft Equipment (‘Protocol’) were drafted to give more predictability to the aircraft financing market: given that the assets in question often moved through different jurisdictions, there was a need for a body of law that would give owners, lessors, lessees, and creditors assurance that their rights and claims would apply uniformly throughout the globe. The United States has signed and ratified the Treaty and Protocol, and has also passed the Cape Town Treaty Implementation Act of 2004. By simply reading the words of these documents and treaties, one might think that US bankruptcy courts ought to be bound by Protocol Article XXX(4) as well. Protocol Article XXX(4) requires bankruptcy courts to go beyond the US Bankruptcy Code when dealing with debtors whose primary insolvency jurisdiction is another Contracting State of the Treaty. The courts are required to apply versions of an insolvency measure as had been adopted by the Contracting State that is the primary insolvency jurisdiction. As it is then shown that mere ratification does not make a treaty enforceable, I consider various arguments to assess the enforceability of Protocol Article XXX(4). Lastly, utilizing the conclusions made, I briefly comment on the unexpected outcome of In Re: Oceanair and its potential errors.