Unicredit Global Leasing Export gmbh v Business Aviation Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice Denis McDonald
• Judgment Date: 06 March 2019
• Neutral Citation: [2019] IEHC 139
• Docket Number: [2018 No. 297 M.C.A.],[2018 No. 297 MCA]
• Court: High Court
• Date: 06 March 2019

IN THE MATTER OF THE INTERNATIONAL INTERESTS IN MOBILE EQUIPMENT (CAPE TOWN CONVENTION) ACT, 2005

IN THE MATTER OF THE CONVENTION ON INTERNATIONAL INTERESTS IN MOBILE EQUIPMENT

AND

IN THE MATTER OF THE PROTOCOL TO THE CONVENTION ON INTERNATIONAL INTERESTS IN MOBILE EQUIPMENT IN MATTERS SPECIFIC TO AIRCRAFT EQUIPMENT

BETWEEN

UNICREDIT GLOBAL LEASING EXPORT GMBH

APPLICANT

AND

BUSINESS AVIATION LIMITED

AND

AVIARETO LIMITED

RESPONDENTS

[2019] IEHC 139

[2018 No. 297 M.C.A.]

THE HIGH COURT

Registrations – Discharge – Positive obligation – Applicant seeking the discharge of registrations – Whether the respondent was under a positive obligation to remove the registrations

Facts: The applicant, UniCredit Global Leasing Export gmbh, applied to the High Court seeking an order removing three RCNRIs from the International Registry for International Interests in Mobile Equipment which had been registered by the first respondent, Business Aviation Ltd (BAL). Those registrations (which were effected on 9 March, 2018) related to an aircraft owned by UniCredit namely a Bombardier Challenger 850 aircraft (manufacturer’s serial number 8065) together with its two General Electric engines. The purported RNCRIs in question relied on the declaration made by the United Arab Emirates in accordance with Article 40 of the Convention on International Interests in Mobile Equipment done at Cape Town on 16th November, 2001. In its originating notice of motion, UniCredit sought an order directing BAL to forthwith procure the discharge of the registrations (which had been assigned International Registry file numbers 1491816, 1491817 and 1491818 respectively). UniCredit also sought an order pursuant to Article 44(1) and/or Article 44(3) of the Convention requiring the second respondent, Aviareto Ltd (the Registrar) to discharge the registrations in question in the event that BAL failed to procure their discharge within 48 hours after the making of the order against it.

Held by McDonald J that UniCredit had proved its case and that there was no proper basis for the registrations that were made by BAL. McDonald J held that BAL was under a positive obligation under Article 25(4) of the Convention to take all necessary steps to remove the registrations and their persistent failure to do so required the intervention of the court. McDonald J therefore had no hesitation, following the conclusion of the hearing on 19th February, 2019, in making an order directing BAL to discharge the three registrations in question. In light of the failure of BAL to discharge the registrations, McDonald J also made the further order that was sought under Article 44(3) of the Convention.

McDonald J held that, in light of the provisions of Article 44(3), the long standing practice of the court, the evidence in the case at to the manner in which the registrations were effected and the failure or refusal of BAL to discharge the registrations, he was satisfied, at the conclusion of the hearing on 19th February, 2019, to make an order directing the registrar to give effect to the order made against BAL in the event that the latter did not comply with the order made against it within 48 hours from 19 February, 2019.

Application granted.

JUDGMENT of Mr. Justice Denis McDonald delivered on 6 March, 2019.

Introduction

1 These proceedings relate to the International Registry for International Interests in Mobile Equipment (‘the Registry’) established under Article 16 of the Cape Town Convention (i.e. the Convention on International Interests in Mobile Equipment done at Cape Town on 16th November, 2001) and the Aircraft Protocol (i.e. the Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment).

2 The Registry is maintained by the second named respondent (‘the Registrar’) in Dublin. The Registrar was appointed by the International Civil Aviation Organisation (‘ ICAO’) to operate the Registry pursuant to Article 17(5) of the Cape Town Convention.

3 As explained in para. 4 of the affidavit of Robert Cowan sworn on 15th November, 2018, the Registry is at the centre of the Cape Town Convention and Aircraft Protocol priority system which operates on an internet or web-based worldwide platform accessible 24 hours a day. It provides for the electronic registration and the protection of registered interests which are recognised by all States which have ratified or acceded to the Convention and the Protocol, with priority being determined on a ‘ first-to-file’ basis. Registration of an interest in an aircraft object serves as a notification to the world of that interest. Registered interests will have priority over unregistered interests. Registration is considered to be an essential step for owners, creditors, lessors and others in protecting their financial interest in aircraft objects. The registration system established under Convention and the Protocol thus serves a very important function ensuring legal predictability in cross border financing and leasing transactions involving aircraft.

4 It is important to note that it is not part of the Registrar's function to verify or validate any specific registration made. The Registrar has a purely administrative function. The Cape Town Convention and Aircraft Protocol priority system is essentially premised upon the bona fides of those undertaking registrations.

5 It is also important to note that the registration system established under the Convention and Protocol is, for the most part, concerned with consensual rights and interests arising under security agreements, title reservation agreements, leasing agreements and (through the Protocol) outright sales. Such registrations are effected consensually with the input of the parties to the underlying transaction. These proceedings are not concerned with rights and interests of this kind.

6 These proceedings concern rights or interests which can be registered unilaterally. This is provided for in Chapter X of the Convention. These are known as registrable non-consensual rights or interests (‘RNCRIs’). It is for each Contracting State to declare the categories of RNCRIs that may be registrable. This is done pursuant to a declaration to that effect which is deposited by the relevant Contracting State under the provisions of Article 40. Professor Goode in the Official Commentary on the Convention (3rd ed., July 2013, at para. 4.282) explains that Article 40:

‘enables a Contracting State to extend the application of the Convention so as to allow designated categories of non-consensual rights or interests to be registered as if they were international interests’.

7 Professor Goode further explains (at para. 2.219) that Article 40 declarations typically cover:

‘judgments or orders permitting attachment of equipment covered by the Protocol and State liens for taxes or unpaid charges’.

8 The Convention and the Protocol have been given the force of law in Ireland by s. 4 of the International Interests in Mobile Equipment (Cape Town Convention) Act, 2005 (‘the 2005 Act’). Under s. 8 of the 2005 Act, all courts and tribunals are required to take judicial notice of the provisions of both the Convention and the Protocol. In addition, s. 3(5) provides that, in interpreting the Convention and the Protocol, the court is entitled to have recourse to the Official Commentary by Professor Goode together with such other texts as the court considers relevant.

9 Under s. 7 of the 2005 Act, the High Court is the relevant court for the purposes of both the Cape Town Convention and the Aircraft Protocol. In fact, as a consequence of the provisions of Article 44.1 of the Convention, the High Court has exclusive jurisdiction to make orders against the Registrar. In this context, article 44.1 provides that the courts of the place in which the Registrar has its centre of administration shall have exclusive jurisdiction to award damages or make orders against the Registrar.

The application before the court

10 The applicant in these proceedings (‘ UniCredit’) seeks an order removing three RCNRIs from the registry which have been registered by the first named respondent (‘ BAL’). These registrations (which were effected on 9 March, 2018) relate to an aircraft owned by UniCredit namely a Bombardier Challenger 850 aircraft (manufacturer's serial number 8065) (‘ the aircraft’) together with its two General Electric engines (‘ the engines’). The purported RNCRIs in question rely on the declaration made by the United Arab Emirates (‘ UAE’) in accordance with Article 40 of the Convention.

11 In its originating notice of motion, UniCredit has sought an order directing BAL to forthwith procure the discharge of the registrations (which have been assigned International Registry file numbers 1491816, 1491817 and 1491818 respectively). UniCredit has also sought an order pursuant to Article 44(1) and/or Article 44(3) of the Convention requiring the Registrar to discharge the registrations in question in the event that BAL fails to procure their discharge within 48 hours after the making of the order against it.

12 The application by UniCredit was heard by me on Tuesday 19th February, 2019. At that hearing, I heard submissions from counsel on behalf of UniCredit and on behalf of the Registrar. There was no attendance on behalf of BAL. I should explain that, until recently, BAL was represented by McCann Fitzgerald solicitors. A number of affidavits were filed on behalf of BAL while McCann Fitzgerald continued to act on its behalf. However, on 18 January, 2019, McCann Fitzgerald made an application to Haughton J. for leave to bring an application, under O. 7. R. 3 of the Superior Court Rules, for an order that they had ceased to act as solicitors for BAL. The application was made on the basis that McCann Fitzgerald had been unable to obtain instructions from BAL. Haughton J. directed that the...