Vol 19 (2022) - Issue 3

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Australian High Court Delivers Seminal Judgment on the Cape Town Convention’s Aircraft Protocol in the Virgin Airlines Administration

Synopsis
The High Court of Australia recently handed down the first decision of any domestic court of ultimate appeal on the construction of a key provision of the Cape Town Convention on International Interests in Mobile Equipment, done at Cape Town on 16 November 2000 and the Protocol to that Convention on Matters Specific to Aircraft Equipment. At issue in Wells Fargo Trust Company, National Association (as owner trustee) v VB Leaseco Pty Ltd (administrators appointed) [2022] HCA 8 (proceedings arising from the Virgin Australia airlines administration) was the content of the obligation, in Alternative A of Article XI(2) of the Protocol that 'the insolvency administrator or the debtor, as applicable, […] give possession of the aircraft object to the creditor'.
In finding that the content of that obligation is no more than to provide the creditor with an opportunity to take possession of the aircraft or engine wherever it happens to be located (and rejecting a construction that the obligation requires redelivery in compliance with the underlying lease), the High Court's judgment significantly boosts the prospects of successfully restructuring insolvent airlines in countries which are parties to the Convention.