Civil Aviation (Cape Town Convention and Other Matters) Amendment Bill

on behalf of the Minister of Transport: I move, That the Civil Aviation (Cape Town Convention and Other Matters) Amendment Bill be now read a first time. On 24 March 2010 the Minister of Transport, Steven Joyce, announced that the Government had decided to accede to the Convention on International Interests in Mobile Equipment, commonly known as the Cape Town Convention, and to the Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment, commonly called the Aircraft Protocol.

By taking this treaty action New Zealand will become part of an international system to protect commercial security interests in mobile aircraft equipment. Because mobile equipment such as aircraft move from one country to another, international investors in, or lessors of, such equipment have historically had to rely on different national laws to protect their investments. Consequently, financiers seek a premium on their lending as a hedge against the legal risks involved.

The convention creates a set of international rules governing security interests in mobile equipment, including an international securities register. The Aircraft Protocol modifies and supplements the convention to meet the particular needs of those involved in cross-border transactions applying to “aircraft objects”, which include airframes, aircraft engines, and helicopters. The protocol provides the creditor with additional remedies, including the deregistration and export of an aircraft. It also establishes a special insolvency regime in relation to aircraft objects to strengthen the creditor’s position against the debtor or the insolvency administrator. It is estimated that the financial savings over the next six years to the aviation industry, including Air New Zealand, could range from $18 million for savings in export credit guarantees to as much as a whopping $325 million in reduced finance charges. And, of course, the benefits will continue into the foreseeable future.

Amendments to domestic legislation are necessary to ensure that it aligns with the Cape Town Convention and Aircraft Protocol when they come into force in New Zealand. The bill amends the Civil Aviation Act 1990 to give the convention and the protocol the force of law in New Zealand, to ensure that these instruments prevail over inconsistent domestic law, and to require the Director of Civil Aviation to deregister an aircraft when required to do so by a creditor, in accordance with the new processes set out in the Aircraft Protocol. The bill also amends several other Acts.

Debate interrupted.

Sitting suspended from 1 p.m. to 2 p.m.