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Introduction

 

The Cape Town Convention is designed to establish an international legal regime for the creation, enforcement, registration and priority of security interests in categories of high-value, uniquely identifiable mobile equipment. The principal objective of the Cape Town Convention is, in the words of the Official Commentary: “the efficient financing of mobile equipment. [...] The Convention system is designed to bring significant economic benefits to countries at all stages of economic development, and in particular to developing countries by bringing within their reach commercial finance for mobile equipment that has previously been unavailable or available only at relatively high cost. A sound, internationally adopted legal regime for security, title-retention and leasing interests will encourage the provision of finance and reduce its cost” 1.

 

The categories of mining, agriculture and construction are areas of commercial activity of universal importance, with heightened relevance in developing countries. The reasons agricultural, construction and mining equipment were proposed for a fourth protocol are two fold. Firstly, it would allow enterprises engaged in agriculture, construction and mining the ability to acquire equipment they would otherwise not be able to acquire and thus to permit them to optimise their activity. Secondly, it would allow producers of equipment to export to markets that without such a protocol would remain closed to them.

 

 

 

First Session of the Committee of Governmental Experts

 

At its 95th session (18-20 May 2016), the Governing Council considered the draft text produced by the Study Group, and decided that it was sufficiently developed to warrant the convening of a Committee of Governmental Experts.

 

The first session of the UNIDROIT Committee of Governmental Experts for the preparation of a draft Protocol to the Convention on International Interests in Mobile Equipment on Matters specific to Agricultural, Construction and Mining Equipment (the “MAC Protocol”) will be held at the Headquarters of the Food and Agriculture Organization of the United Nations (FAO, Viale delle Terme di Caracalla, 00153) in Rome in the Green Room, from 20 to 24 March 2017.

 

The proceedings will be conducted in English and French, with simultaneous interpretation in the two languages. On Monday 20 March the session will be opened at 10:00. Registration will start at 08:30.

 

From thereon, the regular hours of the session will be as follows:

- Morning session:        09:00 – 12:30

- Afternoon session:     14:00 – 17:00

 

As consistent with Article 51 of the Cape Town Convention, Unidroit has invited States Parties to the Cape Town Convention, member States of UNIDROIT, member States of the United Nations and relevant intergovernmental organisations to participate in the first session. Non-governmental organisations have been invited to attend as observers.

 

Invitees have been invited to submit written comments on the preliminary draft MAC Protocol. Unidroit has requested that invitees submit such comments by 9 January 2017 at the latest, in order to allow the UNIDROIT Secretariat to translate and circulate the comments received to all other invitees. Any comments received after this date may not be translated.

 

Additional documentation for the first session of the Committee of Governmental Experts will be posted below in the documentation section as it becomes available.

 

 

 

Committee of Governmental Experts First session (Rome, 20 – 24 March 2017)

 

· UNIDROIT 2016 - Study 72K – CGE1 – Doc. 1: Annotated draft agenda
· UNIDROIT 2017 - Study 72K – CGE1 – Doc. 2 corr.: Preliminary draft Protocol to the
  Convention on International Interests in Mobile Equipment on Matters
  specific to Agricultural, Construction and Mining Equipment
· UNIDROIT 2017 - Study 72K – CGE1 – Doc. 3 corr.: Explanatory Report to the
  preliminary draft MAC Protocol
· UNIDROIT 2016 - Study 72K – CGE1 – Doc. 4: Legal Analysis
· UNIDROIT 2017 - Study 72K – CGE1 – Doc. 5 corr.: Spreadsheet detailing harmonized system
  codes proposed by the Study Group for inclusion in the annexes to the preliminary
  draft MAC Protocol
· UNIDROIT 2017 - Study 72K - CGE1 - Doc. 6: Comments
  (prepared by the World Bank Group)
· UNIDROIT 2017 - Study 72K - CGE1 - Doc. 7: Comments
  (submitted by the Government of the United States of America)

 

 

 

 

 

Background

 

Initial work (2005-2006)

At its 84th session (Rome, April 2005), the UNIDROIT Governing Council recommended to the UNIDROIT General Assembly to include in the 2006 – 2008 Work Programme of the Institute the preparation of a fourth Protocol to the 2001 Cape Town Convention on International Interests in Mobile Equipment on Matters specific to Agricultural, Construction and Mining Equipment. At its 59th session (Rome, December 2005) the UNIDROIT General Assembly agreed to include such a project on the Institute’s Work Programme.

At the 85th session of the Governing Council in 2006 a document was presented on the MAC Protocol, which included an appendix listing categories of agricultural, construction and mining equipment that could be covered by the Protocol.

 

Questionnaire and draft text (2007-2009)

At the 86th session the results of a comprehensive questionnaire on matters relating to the development of the MAC Protocol were presented to the Governing Council. The questionnaire received responses from 21 member States and 10 non-member States covering the following topics:

 

· The structure of agriculture, mining and constructions sectors in States· The
   average size of land holdings
· Percentage of high-value mobile equipment used in the agriculture, mining and
  construction sectors
· Percentage of high-value mobile agricultural, mining and construction equipment
  imported that moves across international borders in the course of its activity
· Percentage of high-value mobile equipment hired at need instead of acquired
· Credit problems associated with the international acquisition of agricultural,
   mining and construction equipment
· Whether easier access to credit would benefit domestic industry in the agricultural,
  mining and construction sectors
· Which States export high-value agricultural, mining and construction equipment and
   the types of equipment exported
· Whether there are domestic restrictions on the forestry, fisheries and aquaculture
   industries which would limit the use of large equipment

 

The document for the 86th session also contained a table at Appendix 2 which suggested some possible wording for the MAC Protocol, based on a comparative analysis of the Aircraft Protocol, Railway Rolling Stock Protocol and the draft Space Protocol.

 

A preliminary draft text of the Protocol was presented to the Governing Council at the 88th session in 2009. Ten member States provided comments on the draft (Australia, Austria, Canada, Colombia, Finland, Germany, Latvia, Portugal, Romania and the United States of America). The proposed Protocol received particularly strong endorsement from the United States and Germany.

 

Consultations with private industry (2010-2012)

Germany and the United States subsequently conducted consultations with their domestic private industries. Germany initially contacted 50 stakeholders and held a meeting with six stakeholders, at which there was a general interest and support for the MAC Protocol. The United States State Department consulted with the Equipment Financing Association (which represents over 600 companies) and reported the responses were positive. The results of these consultations were reported back to the Governing Council at the 89th session in 2010. In 2011 further discussions were held at a forum chaired by Dr Bollweg as part of the UNIDROIT Agricultural Investment Colloquium.

 

Economic analysis’s and issues dialogues (2013-2014)

Mr Heywood Fleisig, Director of Research at the Center for the Economic Analysis of Law (CEAL), prepared a paper on the potential economic benefits of the MAC Protocol. The paper was presented to the Governing Council at the 92nd session in 2013. The CEAL study noted that the MAC Protocol could facilitate using about $2 trillion in MAC equipment and would increase the sales of MAC equipment by $600 billion over five-seven years.
As part of the preliminary work aimed at setting the scope of a possible fourth protocol, two Issues Dialogues were organised by the United States State Department and the International Law Institute. The meetings were held in November 2013 and January 2014 in Washington.
Subsequently, the National Law Center for the Inter-American Free Trade (NLCIFT) produced a report on the possible benefits of the MAC Protocol.

 

 

 

Governing Council documents

 

· C.D. (85) 7(c)
· C.D. (86) 8(d)
· C.D. (88) 3(c)
· C.D. (89) 4(c)
·
C.D. (90) 4(c)
· C.D. (91) 4(c)
· C.D. (92) 5(b)
· C.D. (93) 4(b)
· C.D. (93) 4(b) Add.
· NLCIFT Report on Secured Financing for Mobile Equipment
· C.D. (94) 5(b)
· C.D. (95) 5

 

 

 

Study Group Negotiations

 

At the 93rd session of the Governing Council in 2014 it was agreed to convene a Study Group entrusted with preparing a first draft of the MAC Protocol prior to its 95th session. The Study Group is composed of various international experts in secured transactions law and is chaired by Dr Hans Georg Bollweg, member of the UNIDROIT Governing Council.

 

 

 

First meeting of the Study Group on a Fourth Protocol of the Cape Town Convention on matters specific to mining, agricultural and construction equipment, Rome 15-17 December 2014

 

The first meeting of the Study Group was held at the seat of UNIDROIT in Rome from 15 – 17 December 2014. The meeting was attended by various international experts in secured transactions law comprising the Study Group, as well as observers from the United Nations Commission on International Trade Law (UNCITRAL) and the National Law Center for Inter-American Free Trade. The Study Group discussed various legal issues surrounding the creation of the Protocol, the delineation of the Protocol’s scope and a preliminary first draft of the Protocol. The Study Group also considered how the Harmonised Commodity Description and Coding System (HS) could be utilised to define the scope of the Protocol. The Study Group made good progress in resolving issues that had been raised at the two Issues Dialogues.

 

· UNIDROIT 2014 - Study 72K - SG1 - Doc. 1:  Annotated Draft Agenda
· UNIDROIT 2014 - Study 72K - SG1 - Doc. 2:  Legal Analysis
· UNIDROIT 2014 - Study 72K - SG1 - Doc. 3:  Preliminary annotated first draft of a
  fourth protocol to the Cape Town Convention on matters specific to agricultural,
  construction and mining equipment (MAC Protocol)
· UNIDROIT 2014 - Study 72K - SG1 - Doc. 4: Practical Issues
· UNIDROIT 2015 - Study 72K - SG1 - Doc. 5: Report

 

 

 

Second meeting of the MAC Protocol Study Group

 

The second meeting of the MAC Protocol Study Group was held from 8 - 9 April 2015 at the seat of UNIDROIT in Rome. At the second meeting the Study Group focussed on the interaction between the MAC Protocol and the Harmonised Commodity Description and Coding System (HS), as well as further refining the preliminary draft Protocol.

 

· UNIDROIT 2015 – Study 72K – SG2 – Doc. 1: Annotated Agenda
· UNIDROIT 2015 – Study 72K – SG2 – Doc. 2: The Harmonized Commodity
  Description and Coding System
· UNIDROIT 2015 – Study 72K – SG2 – Doc. 3: Descriptive summary of the
  preliminary list of HS codes for inclusion under the MAC Protocol
· UNIDROIT 2015 – Study 72K – SG2 – Doc. 4: Legal Analysis
· UNIDROIT 2015 – Study 72K – SG2 – Doc. 5: Second preliminary annotated draft
  Protocol
· UNIDROIT 2015 – Study 72K – SG2 – Doc. 6: Report
· UNIDROIT 2015 – Study 72K – SG2 – Doc. 7: Third preliminary annotated draft
  Protocol

 

 

 

Third meeting of the MAC Protocol Study Group

 

The third meeting of the MAC Protocol Study Group was held from 19 - 21 October 2015 at the seat of UNIDROIT in Rome. In addition to the panel of international experts in secured transactions law, the meeting was attended by observers from the United Nations Commission on International Trade Law (UNCITRAL), the International Finance Corporation (IFC) and the World Customs Organization. The Study Group continued to make progress in resolving the legal issues that had been raised at the previous meetings, especially in relation to the treatment of fixtures and the use of the Harmonized Commodity Description and Coding System.

 

· UNIDROIT 2015 – Study 72K – SG3 – Doc. 1: Annotated Agenda
· UNIDROIT 2015 – Study 72K – SG3 – Doc. 2: Issues Paper
· UNIDROIT 2015 – Study 72K – SG3 – Doc. 3: Fourth preliminary annotated draft
  of a fourth protocol to the Cape Town Convention on matters specific to agricultural,
  construction and mining equipment (MAC Protocol)
· UNIDROIT 2015 – Study 72K – SG3 – Doc. 4: Preliminary List
· UNIDROIT 2015 – Study 72K – SG3 – Doc. 5: Report

 

 

 

Fourth meeting of the MAC Protocol Study Group

 

The fourth meeting of the MAC Protocol Study Group was held from 7 – 9 March 2016 at the seat of UNIDROIT in Rome. The Study Group reviewed the entire text of the draft Protocol and gave further attention to several unresolved legal issues, with particular consideration given to (i) how the Protocol should address the legal effects of MAC equipment becoming associated with immovable property, and (ii) how the amendment process for the Protocol should be refined.

 

At the conclusion of the fourth Study Group meeting, the Study Group decided that the preliminary draft Protocol was ready for submission to the Governing Council with a recommendation that a Committee of Governmental Experts be convened to further consider the Protocol. Following the meeting, the Secretariat updated the core documents to reflect the decisions made by the Study Group at its fourth meeting (See docs Study 72K - SG4 - Doc. 6, Study 72K - SG4 - Doc. 7 and Study 72K - SG4 - Doc. 8 below). 

 

· UNIDROIT 2016 – Study 72K – SG4 – Doc. 1: Annotated Agenda
· UNIDROIT 2016 – Study 72K – SG4 – Doc. 2: Issues Paper
· UNIDROIT 2016 – Study 72K – SG4 – Doc. 3: 5th Annotated Draft Protocol
· UNIDROIT 2016 – Study 72K – SG4 – Doc. 4: Preliminary List of HS codes
  (March 2016)
· UNIDROIT 2016 – Study 72K – SG4 – Doc. 5: Report
· UNIDROIT 2016 – Study 72K – SG4 – Doc. 6: 6th Annotated Draft Protocol
· UNIDROIT 2016 – Study 72K – SG4 – Doc. 7: Preliminary List of HS codes
  (May 2016)
· UNIDROIT 2016 – Study 72K – SG4 – Doc. 8: Legal Analysis

 

 

 

 

MAC Protocol: Symposium for Unidroit member States and States parties to the Cape Town Convention

 

In advance of the first session of the UNIDROIT Committee of Governmental Experts for the preparation of a draft Protocol to the Convention on International Interests in Mobile Equipment on Matters specific to Agricultural, Construction and Mining Equipment (the “MAC Protocol”), UNIDROIT invited member States and States parties to the Cape Town Convention to attend a half-day symposium to discuss key aspects of the project. The symposium took place at the Seat of UNIDROIT on Friday 2 December 2016.

 

· UNIDROIT 2016 – Study 72K – PM1 – Doc. 1: Agenda
· UNIDROIT 2016 – Study 72K – PM1 – Presentation 1 - M Dubovec
· UNIDROIT 2016 – Study 72K – PM1 – Presentation 2 – C Mooney
· UNIDROIT 2016 – Study 72K – PM1 – Presentation 3 – A Veneziano
· UNIDROIT 2016 – Study 72K – PM1 – Presentation 4 – T De Las Heras Ballell
· UNIDROIT 2016 – Study 72K – PM1 – Presentation 5 – W Brydie-Watson

 

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