HISTORY

STUDY LXXII K – DEVELOPMENT OF A FOURTH PROTOCOL TO THE CAPE TOWN CONVENTION ON MATTERS SPECIFIC TO MINING, AGRICULTURAL AND CONSTRUCTION EQUIPMENT

Introduction

The MAC Protocol is an international treaty that will increase global productivity in the mining, agriculture and construction sectors. The treaty will provide an international legal framework for the financing of MAC equipment.

The MAC Protocol is an extension of the Convention on International Interests in Mobile Equipment, adopted in 2001 in Cape Town, South Africa (the “Cape Town Convention”). 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”.

Cheaper financing and access to modern MAC equipment will allow parties involved in the mining, agriculture and construction sectors to optimise their productivity and profitability.

 

Scope of the MAC Protocol

The MAC Protocol applies to specific categories of MAC equipment, as defined by six-digit Harmonized System (“HS”) codes. Administered by the World Customs Organization, the HS is used globally to classify goods for the purposes of customs tariffs.

The draft Protocol categorises HS codes into three annexes:

  • Annex 1 for HS codes covering mining equipment
  • Annex 2 for HS codes covering agricultural equipment
  • Annex 3 for HS codes covering construction equipment

56 individual HS codes are listed in the MAC Protocol Annexes, which account for over USD 100 billion worth of MAC equipment traded globally each year. These HS codes were proposed by States and private industry during the negotiation of the MAC Protocol. The HS codes listed in the MAC Protocol Annexes can be amended through processes set out in Articles XXXV and XXXVI of the treaty.

 

Economic Benefits of the MAC Protocol

An economic assessment of the MAC Protocol prepared by a team of independent economists found that the MAC Protocol is predicted to have a positive impact of $23 billion on GDP in developing countries and of $7 billion in developed countries, for a total impact on GDP equivalent to $30 billion a year. It is estimated that over a ten-year period, the Protocol may increase the stock of MAC equipment in developing countries by $90 billion. As the scope of the economic assessment was limited to UNIDROIT’s 63 Member States, the actual global economic impact is likely to be much higher.

 

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.

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 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 the financing of 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
· C.D. (96) 4
· C.D. (97) 5
· C.D. (98) 4

 

Study Group

At its 93rd session in 2014 the Governing Council convened a Study Group entrusted with preparing a first draft of the MAC Protocol prior to its 95th session. The Study Group was composed of five international experts in secured transactions law:

– Mr Michel DESCHAMPS
  Partner, McCarthy Tetrault
  Montreal, Canada

– Professor Charles MOONEY
  Charles A. Heimbold Jr. Professor of Law
  University of Pennsylvania, United States of America

– Professor Jean-François RIFFARD
  Professor, Université de Clermont-Ferrand
  Clermont-Ferrand, France

– Professor Teresa RODRÍGUEZ DE LAS HERAS BALLELL
  Associate Professor in Commercial Law
  Universidad Carlos III de Madrid, Spain

– Professor Benjamin VON BODUNGEN
  Of Counsel at Bird & Bird LLP
  Frankfurt, Germany

 

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.

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

 

2016 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

 

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”) was held at the Headquarters of the Food and Agriculture Organization of the United Nations in Rome in the Green Room, from 20 to 24 March 2017.

The session was attended by 126 representatives from 48 Governments (30 UNIDROIT Member States and 18 non-Member States), six regional and intergovernmental organisations and four international non-governmental organisations.

 

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)

UNIDROIT 2017 – Study 72K – CGE1 – Doc. 8
MAC Working Group’s position paper in support of and commenting on the Cape Town Convention’s proposed mining, agriculture and construction Protocol

UNIDROIT 2017 – Study 72K – CGE1 – Doc. 9
Comments (Submitted by the Government of the United Kingdom)

UNIDROIT 2017 – Study 72K – CGE1 – Doc. 10
Background paper (Submitted by the US Department of Commerce on request of the UNIDROIT Secretariat)

UNIDROIT 2017 – Study 72K – CGE1 – Doc. 11
Position paper (Submitted by the Government of Japan)

UNIDROIT 2017 – Study 72K – CGE1 – Doc. 12
Comments (Submitted by the Government of the Republic Of South Africa)

UNIDROIT 2017 – Study 72K – CGE1 – W.P. 1
Provisional order of business

UNIDROIT 2017 – Study 72K – CGE1 – W.P. 2
Daily Report for 20 March 2017

UNIDROIT 2017 – Study 72K – CGE1 – W.P. 3
Proposal by the United States

UNIDROIT 2017 – Study 72K – CGE1 – W.P. 4
Daily Report for 21 March 2017

UNIDROIT 2017 – Study 72K – CGE1 – W.P. 5
Proposal by China

UNIDROIT 2017 – Study 72K – CGE1 – W.P. 6
Daily Report for 22 March 2017

UNIDROIT 2017 – Study 72K – CGE1 – W.P. 7
Report of the Drafting Committee

UNIDROIT 2017 – Study 72K – CGE1 – W.P. 8
Daily Report for 23 March 2017

UNIDROIT 2017 – Study 72K – CGE1 – W.P. 9
Daily Report for 24 March 2017

UNIDROIT 2017 – Study 72K – CGE1 – Report
Report

 

Second session of the Committee of Governmental Experts

The second 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”) was held at the Headquarters of the Food and Agriculture Organization of the United Nations in Rome in the Green Room, from 2 to 6 October 2017. 120 representatives from 51 Governments (33 UNIDROIT Member States and 18 non-Member States), five regional and intergovernmental organisations and five international non-governmental organisations registered to attend the session.

The Report for the meeting, which includes information on the deliberations of the Committee in relation to each Article, the Report of the Drafting Committee, the amended text to the preliminary draft Protocol and the list of participants is available here.

At the end of the session, the Committee decided that the preliminary draft MAC Protocol was sufficiently advanced to recommend to the UNIDROIT Governing Council that a Diplomatic Conference be convened to finalise and adopt the Protocol.

 

Committee of Governmental Experts – Second session (Rome, 2 – 6 October 2017)

UNIDROIT 2017 – Study 72K – CGE2 – Doc. 1:
Annotated draft agenda.

UNIDROIT 2017 – Study 72K – CGE2 – Doc. 2:
Text of the revised 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 – CGE2 – Doc. 3:
Explanatory Report to the preliminary draft MAC Protocol.

UNIDROIT 2017 – Study 72K – CGE2 – Doc. 4:
Legal Analysis.

UNIDROIT 2017 – Study 72K – CGE2 – Doc. 5:
Spreadsheet detailing Harmonized system codes proposed for inclusion in the Annexes to
the preliminary draft MAC Protocol.

UNIDROIT 2017 – Study 72K – CGE2 – Doc. 6:
The 2017 Edition of the Harmonized commodity description and coding system (HS System).

UNIDROIT 2017 – Study 72K – CGE2 – Doc. 7:
Comments (Submitted by the Government of the Republic of Sierra Leone).

UNIDROIT 2017 – Study 72K – CGE2 – Doc. 8:
Comments (Submitted by the Holy See).

UNIDROIT 2017 – Study 72K – CGE2 – Doc. 9:
Comments (Submitted by the World Bank Group).

UNIDROIT 2017 – Study 72K – CGE2 – Doc. 10:
Comments (Submitted by the United States Department of State)

UNIDROIT 2017 – Study 72K – CGE2 – Doc. 11:
Conclusions paper (Prepared by the Chair of the IWGRC and approved by the Group)

UNIDROIT 2017 – Study 72K – CGE2 – Doc. 12:
Comments (Prepared by the Republic of South Africa)

UNIDROIT 2017 – Study 72K – CGE2 – Doc. 13:
Comments (Prepared by the Republic of the Sudan)

UNIDROIT 2017 – Study 72K – CGE2 – Doc. 14:
Comments (Prepared by the United Kingdom)

UNIDROIT 2017 – Study 72K – CGE2 – Doc. 15:
Comments (Prepared by Japan)

UNIDROIT 2017 – Study 72K – CGE2 – Doc. 16:
Preliminary economic assessment (Prepared by Warwick Economics and Associates)

UNIDROIT 2017 – Study 72K – CGE2 – Doc. 17:
Comments (Prepared by the Government of the People’s Republic of China)

UNIDROIT 2017 – Study 72K – CGE2 – W.P. 1:
Provisional order of business.

UNIDROIT 2017 – Study 72K – CGE2 – W.P. 4 rev.:
Daily Report for 2 October 2017

UNIDROIT 2017 – Study 72K – CGE2 – W.P. 6:
Daily Report for 3 October 2017

UNIDROIT 2017 – Study 72K – CGE2 – W.P. 11:
Daily Report for 4 October 2017

UNIDROIT 2017 – Study 72K – CGE2 – W.P. 13:
Daily Report for 5 October 2017

UNIDROIT 2017 – Study 72K – CGE2 – W.P. 14:
Daily Report for 6 October 2017

UNIDROIT – Organisation of the second session
Presentation by Mr William Brydie-Watson Legal Officer, UNIDROIT

Report of the Intersessional Working Group on Registration Criteria
Presentation by Mr Ole Böger Hanseatic, Court of Appeal in Bremen, Germany

Introduction of the HS System: the draft MAC Protocol context
Presentation by Mr Marek Dubovec, National Law Center For Inter-American Free Trade

An Economic Assessment of the Fourth Protocol to the Convention on International
  Interests on Mobile Equipment on Matters Specific to Agricultural, Construction and
  Mining Equipment (the MAC Protocol)
A Preliminary Report by Warwick Economics and Associates

UNIDROIT 2017 – Study 72K – CGE2 – Report:
Report

 

Diplomatic Conference

At its 97th session (Rome, 2 – 4 May 2018), the UNIDROIT Governing Council approved the convening of a Diplomatic Conference in 2019 to formally adopt the MAC Protocol. The Diplomatic Conference was held in Pretoria, South Africa between 11 – 22 November 2019. Over 150 delegates from 42 States, 1 regional economic integration organisation, 3 intergovernmental organisations, 4 international non-governmental organisations, and 1 technical adviser participated in the Diplomatic Conference.

 

States that attended the MAC Protocol Diplomatic Conference

200804 map01

Four States (the Republic of Congo, the Republic of Gambia, the Republic of Paraguay and the Federal Republic of Nigeria) signed the treaty on adoption. During the signing ceremony on 22 November, an additional 20 States expressed their support for the treaty and many declared their intention to initiate domestic processes to sign the instrument. In appreciation of the Republic of South Africa hosting the Diplomatic Conference, the MAC Protocol will also be known as the “Pretoria Protocol”.

LIST OF DOCUMENTS of the Diplomatic Conference for the adoption of the draft Protocol to the Convention on International Interests in Mobile Equipment on Matters specific to Mining, Agricultural and Construction Equipment (Pretoria, 11 to  22 November 2019)

FINAL ACT of the diplomatic Conference to Adopt a Protocol to the Convention on International Interests in Mobile Equipment on Matters specific to Mining, Agricultural and Construction Equipment

 

Consultations

During the negotiation of the MAC Protocol, the Secretariat undertook extensive consultations through bilateral, regional and multilateral channels. The objectives of these consultations were to (i) inform States about the legal operation and predicted economic benefits of the MAC Protocol; (ii) encourage States to attend the MAC Protocol Diplomatic Conference and consider signing the instrument; and (iii) receive feedback on the draft provisions and open legal issues.

In preparing for the Diplomatic Conference in 2018 and 2019, UNIDROIT delivered 32 bilateral, regional and international consultation events on the MAC Protocol.

 

MAC Protocol Consultations 2018 – 2019

Bilateral Consultations

  1. Papua New Guinea (Port Moresby, APEC February 2018)
  2. Mexico (Mexico City, March 2018)
  3. United Kingdom (London, March 2018)
  4. South Africa (Johannesburg, June 2018 and Pretoria, September 2019)
  5. Indonesia (Jakarta, APEC July 2018)
  6. Japan (Tokyo, August 2018)
  7. Australia (Canberra and Melbourne, September 2018)
  8. Chile (Santiago, November 2018, February 2019 and June 2019)
  9. Spain (Madrid, November 2018 and May 2019)
  10. Peru (Lima, November 2018)
  11. United States (Washington DC, November 2018)
  12. Ireland (Dublin, January 2019)
  13. France (Paris, January 2019)
  14. Colombia (Bogota, March 2019)
  15. Canada (Montreal, April 2019)
  16. Brazil (Brasilia, July 2019)
  17. China (Beijing, July 2019)
  18. Mauritius (September 2019)

 

Regional Consultations

  1. Asia-Pacific and Latin America (Mexico City, APEC/IFC March 2018)
  2. Latin America (Asuncion, Paraguay, June 2018)
  3. Latin America (Sao Paolo, Brazil, August 2019, 8 States)
  4. Asia-Pacific (Puerto Varas, Chile, APEC Economic Committee, August 2019, 21 APEC Members)
  5. Europe (Brussels, Belgium, European Union workshop, October 2019, 27 EU Member States)
  6. Africa (Nairobi, Kenya, October 2019)

 

International Consultations

  1. UN Member States (Oxford, United Kingdom, September 2018, 19 States)
  2. UN Member States (London, United Kingdom, September 2019, 18 States)
  3. UN Member States (Rome, Italy, October 2019, 34 States)