Malta Top Ranked on the Cape Town Convention Compliance Index Q1/2024

In its reporting for the first quarter of 2024, Malta has once again been top ranked on the Cape Town Convention Compliance Index. Malta came first in Europe and second worldwide on the Index, with a top score of 95 on 100. Malta’s compliance with the Cape Town Convention (CTC) has been ranked as Very High.

In its explanatory comments, the Index reported that in Malta the “CTC prevails over national law and is comprehensively implemented through legislation, rules and regulations. There is judicial precedent with both mixed outcomes relating to compliance with the terms and intent of CTC (Wind Jet S.p.A.) and outcomes that are substantially compliant with the terms and intent of CTC (Air X Charter vs. Avmax; Hi Fly). Such precedent has medium predictive value for the outcome of future cases with similar facts. There has been positive practical experience on CTC issues.  Malta is and should remain eligible for the OECD discount.  The government has established a communications channel with AWG, and work on CTC issues has been effective and efficient.”

The Convention on International Interests in Mobile Equipment was concluded in Cape Town on 16th November 2001 together with the Protocol on Matters Specific to Aircraft Equipment (CTC).

The CTC aims to resolve the problem of obtaining certain and opposable rights to high-value aviation assets, namely airframes, aircraft engines and helicopters which, by their nature, have no fixed location. This challenge arises primarily from the fact that legal systems have different approaches to securities, title retention agreements and lease agreements, which creates uncertainty for lending institutions regarding the efficacy of their rights. This hampers the provision of financing for such aviation assets and increases the borrowing cost.

By creating an international interest recognized in all of the contracting states to the CTC and establishing an international electronic interest registration system, the CTC improves predictability with respect to the opposability of the securities and the interest held by sellers of aviation assets.

The CTC is intended to reduce risks for creditors, and consequently, the borrowing costs to debtors, through the resulting improved legal certainty. This promotes the granting of credit for the acquisition of more modern and thus more fuel-efficient aircraft.

Malta has ratified the CTC which has been implemented into Maltese law to the highest degree. There are also court judgments that have enforced the CTC in Malta and cemented the significance of its first priority security locally.

The Cape Town Convention Compliance Index, developed by the Aviation Working Group (AWG), monitors and assesses compliance by contracting states to the CTC with their respective undertakings thereunder. With input on legal facts from over 200 law firms worldwide and following a rigorous methodological process, the Index assigns a score reflecting AWG’s assessment of the likelihood of compliance with CTC obligations to each contracting state.

Mamo TCV Advocates is one of the foremost law firms in Malta in the aviation sector and it is a market leader in this area. The firm covers the full spectrum of aviation-related legal work and is noted for its experience in complex corporate structures relating to the ownership and operation of aircraft. The group specialises in all aspects of aviation law including asset finance, sale and purchase of aircraft, liability claims, passenger claim handling, tax and corporate set ups, asset repossession and arrest, European aviation law and drafting of legislation.

Feel free to get in touch with us to discuss our aviation practise and the services we can provide to your business, including assisting you with navigating your legal and regulatory obligations, on aviation@mamotcv.com.