case for a commercial orientation to the proposed Unidroit Convention as applied to aircraft equipment, The

Law and Policy in International Business, Fall 1999 by Wool, Jeffrey

This permissible,52 yet unorthodox,53 treaty making device produces complex instruments because one needs to read two technical documents as a "single instrument."54 Why was it originally proposed? The corollary question is, should States finalize the instruments pursuant to the convention-plus-protocol structure or, alternatively, should the draft Convention and Aircraft Protocol now be merged into a "standalone" text?55 If the latter, could other equipment, such as space property and rail property, be the subject of their own stand-alone conventions and should governments so desire?

The answer to both of these questions centers on the commercial objective. It should be recalled that the convention-plus-protocol structure was originally proposed by the aviation sector.56 This was done to permit the multi-equipment text to address the commercial practices and expectations of different sectors. While the aviation sector has not expressed any objection to the "upgrade" or "harmonization" of general commercial law, these points can be viewed as ancillary benefits.

These key points should not be lost sight of during the intergovernmental process. Weakening the controlling feature of the Aircraft Protocol or, more insidiously, reluctance to satisfactorily address difficult issues in that instrument, pose the greatest risk to the current structure.

Simply stated, the complexity of the current structure is justified only if the Aircraft Protocol addresses the commercial needs of the aviation sector.57 Weakening the Aircraft Protocol or softening its terms, for fear of the commercial law "precedent," would demand a fundamental reconsideration of the convention-plus-protocol versus stand-alone convention issue.

III. IMPORTANT PROVISIONS FROM A COMMERCIAL VANTAGE POINT

A. Preliminary Observations

Not all provisions in the draft Convention/Aircraft Protocol are of equal value from a commercial vantage point. Those provisions that correspond most closely to the asset-based financing and leasing principles are of particular significance to the aviation sector.

The Convention's proposed international registry system,58 allied with its first-to-file priority rule,59 accords with the transparent priority rule. These features of the Convention/Aircraft Protocol are commercial in nature and thus satisfactory. If States so desire, they may protect special priorities for select classes of nonconsensual lights and interests, such as tax liens.60 While market forces may extract a price for transactions with nationals from States making unusually broad declarations,61 the matter is best assessed on a case-by-case basis. 62

Thus, it is the provisions reflecting the "prompt enforcement" and "bankruptcy law enforcement" principles that will determine the extent to which the instruments remain commercial in orientation. As mentioned, these provisions potentially raise policy issues, and, accordingly, may be reserved upon by States. The following section lists and discusses the relevant provisions.