Applicable law to real rights on aircraft in Private International Law and Cape Town Convention & Protocol

The subject of the study can be summarized as the law applicable to legal transactions involving foreign elements concerning real rights to transport vehicles, in particular aircraft. In this study, in particular the "Convention on international guarantees relating to mobile equipment" more commonly known in practice as the Cape Town Convention (CTC), which envisages a new system of guarantee and financing in kind on aircraft and their equipment, and the Protocol Containing Regulations for Mobile Equipment on matters specific to aeronautical equipment called the Cape Town Protocol (CTP), which is an annex to the CTC, were reviewed in detail. In the first part of the study, general information is given about the subject of Private International Law and its conflict of laws rules. The concepts of connecting factor and connection points are discussed. In addition, explanations are included about the qualification of the relevant legal act or transaction in order to determine the conflict of laws rule to be applied. As a general principle in private international law, the law of the judge (lex fori) is competent with resolving the dispute is applied to qualification. Subsequently, the general rule regarding the law applicable to real rights over movable and immovable property, regulated in Article 21 of the Private International Law and Procedural Law (PILPL) is examined. In accordance with Article 21, the law of the place where the goods are located ("Lex Rei Sitae" for short "LRS") will be applied with real rights. The two exceptions to the local law (LRS) rule are movable goods in transit and means of transport, which are a special type of movable goods and are the main subject of this study. For movables which are trasported, the law of destination "lex transitu" will apply according to PILPL Art. 21/2. Moreover, real rights that have not yet been acquired on movable goods that have changed location are subject to the law of the country where the goods were last located (PILPL Art. 21/3). The second situation where the law of the place where the goods are located does not meet the needs is the real rights on vehicles of transportation, which are regulated for the first time as a separate article in PILPL No. 5718. Transport vehicles, especially aircraft and commercial ships and dedicated to international trade, constantly make trips from one country to another, and sometimes they are within the borders of more than one state on the same day. Subjecting real rights on means of transportation to LRS will result in a constant change in the legal regime to be applied to these real rights. Moreover, unlike immovable properties that have a real and concrete connection with the places where they are located and other movable goods that do not constantly change location, there is often no more than a coincidence between the transport vehicle and the places under the sovereignty of foreign states that it passes through, territorial waters or airspace during commercial voyages. Therefore, due to the uncertainty and practical difficulties arising from constant variability and the lack of a concrete bond between the transportation vehicle and the LRS most of the time, the law applicable to transportation vehicles has been subject to a separate regulation as "Country of Origin" law. In accordance with PILPL Art 22/2, the country of origin is the registry place where real rights are registered in air and sea transport vehicles, the mooring port if this registry is not available for sea transport vehicles, and the license place in rail transport vehicles. Motorized land vehicles are not included in the scope of PILPL Art. 22. Regarding the same rights on means of transportation, the German Law contains another regulation that has no equivalent in PILPL. The regulation in question is EGBGB Art. According to Article 46, if there is a law that is more closely related to either "lex regsitrati", that is, the law of the place of registry, for transport vehicles, or "lex transitu", that is, the law of the place of destination, for moving movables (EGBGB Art. 43), the said law can be applied to real rights. The absence of a similar provision in Turkish law has been criticized in the doctrine. It is possible to say that a significant portion of ship owners in our country register their ships in flag of convenience countries in order to benefit from various financial advantages. Following the death of the owner of a flag-of-convenience ship, the transfer of real rights over the ships in the estate is governed by PILPL Art. In accordance with Article 22, the application of the law of the place of registry, which has no concrete connection with the subject and parties of the legal transaction, is unfortunately a problematic situation in terms of the what law should be (de lege ferenda). Different opinions have been put forward in the doctrine regarding the law to be applied to the form of disposition of movable goods. Discussion is focused on the issue of whether the general conflict of laws rule regulated in PILPL Art. 7, should be applied to the disposal legal transaction of real rights on movables.Pursuant to CTS Art 7, legal transactions can be carried out in accordance with the form prescribed by the substantive law provisions of the law of the country in which they are carried out or the law that is competent on the substance of that legal transaction. A similar discussion is not available for immovable properties because in accordance with Article 21/4 of PILPL, the legal rule to be applied to the form of the legal transaction affecting the real rights on immovable property, that is, the disposal transaction, has been determined as the law of the place where the immovable property is located. According to one view in the doctrine, In the absence of a regulation similar to PILPL Art. 21/4, PILPL Art. 7 can be applied to the manner of disposition transactions regarding real rights on movables. According to the opinion we agree with, in the acquisition of real rights, an alternative to the property law regulations of the national law refer by the PILPL Art. 21 and 22, shouldn't be brought with PILPL Art. 7. Otherwise, PILPL Art. 7 will constitute bypass the real right status (LRA), and will enable the parties to eliminate the real right status(LRS). Such a practice is contrary to the intent of the legislator and the spirit of the law ("ratio legis"). In Chapter Two, CTC and CTP are examined. CTC is an international convention prepared by UNIDROIT. The aim of the convention is to facilitate the financing of certain special movable goods internationally and to ensure that the financiers of the said movable goods can collect their receivables in the most practical, effective and rapid way in case of debt. A separate Protocol has been prepared for each group of goods. So far, four Protocols specific to aircraft, railway vehicles, spacecraft such as satellites and shuttles, and large agricultural, mining and construction machinery have been prepared. Of these, only the Cape Town Protocol (CTP) and the Luxembourg Protocol specific the railway vehicles specific to aircraft could come into force as of 2024. The CTP, which is the main subject of this study, is an annex and integral part of CTC that is specific only to aircraft objects. In the case of aircraft objects, the two international conventions can only be applied together. CTC&P brought with it a sui generis, in rem; "International (in rem) Security". The real right in question has a security function on aircraft objects and is dependent on the receivable it provides security for. In other words, it is an accessory right. It is also subject to the principle of certainty (presence of the manufacturer number and serial number information of the secured aircraft object is a condition of validity). The constitutive element of international guarantees as a real right and the moment of establishment are controversial in the doctrine. In our opinion, International Guarantees are established as real rights at the time of registration with the International Registry, which is established in Dublin, Ireland and is not affiliated with any state. The guarantee stipulated in standard contracts before registration in the International Registry only results in personal rights between the parties. "International (in rem) Security have priority over all unregistered securities (CTC Art. 29/1). CTC Art. 39 and CTC Art. In 40, regulates "Non-Consensual Right Or Interest " (NCROI) which are applicable only if a declaration is made by the state parties. Türkiye, has made a declaration regarding the articles 39 and 40 of CTS. Although NonConsensual Right Or Interest within the scope of Article 39 are not registered in the International Registry, they have priority over all registered (in rem) securities. NCROI falling within the scope of 40 are subject to registration and only if they are registered in the International Registry do they enjoy the same priority order as "International (in rem) Security. Internal transactions are real rights with a collateral function that do not contain any foreign element and are established by first registering in the Turkish Aircraft Registry. In Turkish practice, only aircraft mortgages are included in this definition. It is also possible to register the aircraft mortgages in question to the International Registry. If they are registered in this way, CTC Art. They can benefit from the priority order according to the registration date stipulated in Article 29, just like International (In rem) Securities. On the other hand, in accordance with the declaration made by The Republic of Turkey according to CTC Art 52, securities (in rem), cannot benefit from the legal remedies regulated in the Chapter III of the CTC (optional rights and interim relief provision regulated in CTC Art. 13) granted to Creditors in cases of no performance of the obligation even if they are registered in the International Registry (IR). In this context, International (in rem) Securities, registered National (in rem) Securities arising from internal transactions and NCROI regulated by CTC Article 40, are in the second place in the priority order and will be ranked among themselves according to their registration dates. All other securities that are not or cannot be registered to IR are in third place and are ranked among themselves according to the applicable law. In case of breach of contractual obligations, the International (In rem) Securities right grants its owner extra legal remedies. Those remedies may be summarized as (i) taking the control of the aircraft object serving as collateral, (ii) a speedy and effective interim relief on the aircraft and in case of insolvency or bankruptcy of the debtor in Turkey (iii) the power will to remove the aircraft object from the bankruptcy estate within 60 days at the latest, preventing the aircraft from going into total liquidation along with the estate assets, and its possession will be transferred to the creditor who has International (In Rem) Security rights. CTC&P has adopted three types of remedies. The first is by using judicial means, through courts and enforcement offices (Court Route), and the second is the extra-judicial route. With the help of administrative authorities, the Creditor can seize the objects in question, so to speak, in case of breach of debt, without the need for the intervention of the court and enforcement offices. In order to resort to this method, the debtor must have previously accepted that in cases of default and other breach of obligation, the creditor can regain possession of the goods pledged or on which he has ownership rights through extrajudicial means. The only CTC&P non-judicial remedy currently in force in Turkey is the so-called IDERA route. Accordingly, if the Debtor fills out the Irrevocable Deregistration and Export Request authorization form and authorizes the Creditor, in the event of a default in the future or in case of a different breach of debt, the Creditor authorized by the form may apply to the General Directorate of Civil Aviation and request the aircraft to be deregistered and exported abroad. can request. Upon this request, the administration must finalize the request within five business days. This authorization cannot be withdrawn or canceled by the debtor later without the written consent of the creditor. Many innovations have come to Turkish law with CTC&P, which is comprehensive, detailed and multifaceted, affecting many areas of law and regulated from a Common Law perspective. Unfortunately, these innovations are not compatible with the Turkish legal system and tradition.