The Oklahoma Bar Journal October 2024

fall within the purview of the IR. Therefore, it is crucial to evaluate whether the contemplated transac tion qualifies for registration on the IR. In doing so, practitioners will analyze certain threshold qualities of 1) the aircraft equipment covered in the transaction and 2) the docu ments and interests qualifying for IR registration eligibility. Aircraft and Engines Qualifying for IR Registrations Registration on the IR is pri marily limited to larger aircraft equipment, and so, legal counsel and lenders should first deter mine whether its contemplated transaction even qualifies for registration on the IR. This initial analysis hinges on two primary considerations. First, will the collateralized aircraft equipment fall within the CTC’s definition of “aircraft objects”? That is, the anal ysis is whether the aircraft object is of a certain threshold size that makes the particular asset eligible for registration on the IR. Aircraft objects under the CTC include airframes, engines and helicopters. Propellers are not

protection of financial interests in such aircraft assets. Across various countries and regional economic organizations that have ratified the CTC, there are over 80 contracting states to the protocol to the CTC that may utilize the simple, web based data for aircraft equipment listed on the International Registry, accessible 24 hours a day, seven days a week, 365 days a year. the CTC on April 1, 2006, under United States law, the perfection of interests in qualifying aircraft equipment is a two-fold process: 1) the filing of instruments with the FAA for recordation, as described earlier, and 2) the registration of interests on the IR . The filing of instruments with the FAA for recordation does not create a complete form of perfec tion or priority; instead, the FAA filing is simply a precursor to the registration on the IR. If a regis tration is not made on the IR, a third party can take priority over any unregistered interest. Not all aircraft financing transactions FAA Intersection With the IR Since the entry into force of

their legal counsel must also be prudent in perfecting the security interests by making registrations related to the filed FAA mortgage on the International Registry (IR), thereby achieving perfection through the notice requirements of state, federal and international law. The IR originates from the Nov. 16, 2001, Convention on International Interests in Mobile Equipment (the “treaty” or “Cape Town Convention” (CTC)) and the Protocol on Matters Specific to Aircraft Equipment (the “pro tocol”), which established the legal framework for the Aviation Protocol. On Oct. 28, 2004, the United States ratified the CTC, and on March 1, 2006, the CTC entered into force domestically as the United States codified it into the U.S. Transportation Code. 26 The Aviation Protocol under the CTC created the IR as a framework of registering “international inter ests,” which are security interests in airframes, aircraft engines and helicopters derived from a lease, security agreement or associated instrument, such as an assign ment, supplement or amendment. The purpose of the IR is to create uniformity between contracting states for liens, default provisions and insolvency. Generally, if the aircraft equipment covered by the security agreement meets applica ble size requirements, the lender’s/ mortgagee’s legal counsel should advise and ensure that the corre sponding registration of security interest with the IR has been made, in addition to filing and recording mortgages with the FAA. Operatively, the IR is an elec tronic system for registering interests in qualifying aircraft assets. These IR registrations serve as a notice mechanism for the

Special FAA and IR counsel is always recommended for this niche corner of the legal field, but having a basic understanding of the workings of such fields will help your client understand the sophistication of aviation transactions.

Statements or opinions expressed in the Oklahoma Bar Journal are those of the authors and do not necessarily reflect those of the Oklahoma Bar Association, its officers, Board of Governors, Board of Editors or staff.

10 | OCTOBER 2024

THE OKLAHOMA BAR JOURNAL