Study Of Legal Issues In Cross-border Aircraft Secured Transactions

Cross-border secured transactions are frequently used by airlines to finance their fleet. Nevertheless, the legal principles and rules applicable to secured transactions of movables vary significantly between common law and civil law countries. For parties involved in a cross-border aircraft secured transaction, the conflict rules and the applicable laws are critical, as they determine the financer's willingness to provide fund and the structure of a certain transaction. The international community has made continuous effort in this field to unify the relevant rules, as a result of the industry's call for a more predictable and transparent legal framework conducive to aircraft secured transactions.This paper will examine the characteristics of cross-border aircraft secured transactions, introduce the applicable laws of different countries and relevant international conventions.The study will focus on the two of the most important forms of secured transaction, aircraft mortgage and financial lease. As China ratified Cape Town Convention its Protocol in 2008, the study of legal rules governing aircraft secured transactions has become ever more needed. Therefore, this paper will add up to the legislative research in China and provide guidance to legal practitioners involved in such transactions.In Chapter One of this paper, cross-border aircraft secured transaction is defined in details, its characteristics and evolution of the transaction structure and forms are then introduced. Chapter Two focuses on the latest international convention in this field, the Cape Town Convention and its Protocol. Readers will learn its background, objectives, applicability, basic principles and major clauses. In Chapter Three and Four, aircraft mortgage and financial lease, as two of the most important forms of aircraft secured transactions, are studied, with a particular focus on relevant conflict of laws issues, applicability and enforcement of aircraft mortgage, contractual and proprietary issues relating to financial lease of aircrafts. In Chapter Five, the current legal framework andpractices in China is introduced, concluded by legislative proposals and suggestions forpractitioners.