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Cape Town Agreement Insights

The aircraft protocol applies to a transaction that meets three requirements: (i) the aircraft/engine meets certain size/power requirements, (ii) an «international interest» is created, and (iii) the aircraft is registered in a Contracting State at the time of the conclusion of the agreement bearing interest or the debtor «is in a Contracting State». Unfortunately, these requirements pose a large number of problems and are very difficult to manage in practice. If the registration order does not reflect the original priority agreement or if that agreement is modified during the term of the financing or leasing, the parties may change the priority of registered international interests through the implementation of a subordinate agreement. . . .