These agreements could help Canadian airlines achieve important savings on aircraft financing.
"The Government of Canada is focused on the economy and working to create a more competitive business environment in Canada," said Minister Lebel. "The Convention and Protocol help to strengthen the airline and aerospace industries through an international legal framework for the financing of their aircraft equipment."
The Jobs and Growth Act, 2012, which was passed by Parliament earlier this month, includes amendments to the International Interests in Mobile Equipment (aircraft equipment) Act and other legislation that introduce necessary policy and regulatory changes to support Canada's participation in the Convention and Protocol.
This federal legislation, in conjunction with legislation adopted in Alberta, British Columbia, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Ontario, Quebec and Saskatchewan, implements the Convention and Protocol.
Further to today's announcement, the Convention and Protocol will take effect in Canada on April 1, 2013. They are more formally known as the Convention on International Interests in Mobile Equipment and the Protocol to the Convention on International Interests in Mobile Equipment on Matters specific to Aircraft Equipment.
Participation in the Convention and Protocol was confirmed with the deposit of Canada's instrument of ratification with the International Institute for the Unification of Private Law (UNIDROIT) in Rome on Friday, December 21, 2012.
For more information on the Convention: http://www.unidroit.org/english/conventions/mobile-equipment/main.htm
For more information on the Protocol: http://www.unidroit.org/english/conventions/mobile-equipment/main.htm#NR2
About the Cape Town Convention and Aircraft Protocol
The Convention on International Interests in Mobile Equipment and the Protocol to the Convention on International Interests in Mobile Equipment on Matters specific to Aircraft Equipment are multilateral agreements that establish a commercially oriented international legal framework to protect security and leasing interests in aircraft equipment (i.e., airframes, engines and helicopters), thereby facilitating cross-border, asset-based financing and leasing of this equipment.
The Convention and Protocol allow the value of aircraft equipment to be used as security for payment, and also establish an international registry for security interests in aircraft equipment. This registry records the existence of rights and determines their order of priority for use in the purchase and financing of aircraft in order to facilitate the resolution of questions of title in the event of insolvency or bankruptcy.
The Convention and Protocol provide creditors with greater assurance that aircraft assets could be recovered in a timely manner in cases where those operating the assets, including airlines, become financially insolvent. This allows lending institutions the possibility of reducing risk premiums. In turn, it will offer more favourable lending with significant cost savings for the Canadian aviation industry.
The Convention and Protocol will initially apply in Alberta, British Columbia, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Ontario, Quebec and Saskatchewan. The Government will extend the application of the Convention and Protocol to the other provinces and territories at their request should they adopt the Convention and Protocol framework as part of their laws.