LAWS8026 Chap.6 Structured and Asset Financing
Structured and Asset Financing
Class 4 covers finance built around an asset or a flow of goods: trade finance, export credit agencies, resource financing and the financing of high-value mobile equipment.
This chapter sets out the reading list that centres on the Cape Town Convention, its Aircraft Protocol, the 2013 implementing Act and the 2022 High Court decision in Wells Fargo v VB Leaseco, gives a route through Australia's declarations, and explains why a domestic register such as the PPSA leaves a mobile-equipment financier exposed. The chapter separates three kinds of question the class asks.
Some concern the parties and rules of trade finance, including whether the international rules used in practice are legally binding. Some concern the structure of a financing, such as the role of export credit agencies or how resource financing documentation reflects its particular risks.
The largest group concerns one instrument, the Cape Town Convention: what it offers a financier of high-value mobile equipment, why a domestic register alone falls short, what follows from a failure to register, which protocols exist and which Australia has joined, and how Australia's declarations change the Convention's operation here.
What this chapter covers
- 01
Trade finance parties and international rules
- 02
Export credit agencies in export financing
- 03
Resource financing and its documentation
- 04
Types of asset financing
- 05
The Cape Town Convention and the Aircraft Protocol
- 06
Reading Australia's declarations
Worked example · free
Route a mobile-equipment question through the Convention
- +1Confirm the asset is high-value mobile equipment within the Convention.
- +1Identify the Protocol that applies to the asset.
- +1Read Australia's declarations, starting from the Declarations Matrix.
- +1Read the 2013 implementing Act and compare the position with the PPSA alone.
Key terms
- Export credit agency
- An export credit agency is a body that supports exports by providing loans, guarantees or insurance to finance them.
- Cape Town Convention
- The Cape Town Convention is the 2001 treaty on international interests in mobile equipment.
- International Registry
- The International Registry is the register in which interests under the Cape Town Convention are recorded.
- Sale and leaseback
- A sale and leaseback is a financing in which an owner sells an asset and leases it back to keep using it.
- Aircraft Protocol
- The Aircraft Protocol is the 2001 instrument applying the Cape Town Convention to aircraft equipment.
- Resource financing
- Resource financing funds the development or production of natural resources, with documents shaped by that sector's risks.
Structured and Asset Financing FAQ
Why can the PPSA alone not protect an aircraft financier?
The PPSA is a domestic regime, while an aircraft moves between legal systems whose courts apply their own law to goods located there. The Convention responds with an international interest recorded in one International Registry, and the class asks what follows from failing to register it.
How should I read Australia's Cape Town declarations?
The course instructs you to open the Declarations Matrix first to see which articles the declarations relate to, then to read the declarations arranged by article. Repeat the process for the Aircraft Protocol and compare the two before class.
What is the MAC Protocol pointer in Class 4?
The seventh question asks which protocols to the Convention have been adopted and how many are in force, and it points to the 2019 MAC Protocol on the UNIDROIT site. Use that page and the depositary information to answer, and check whether Australia is a party.
What does the Class 4 reading list contain?
Chapters 12, 14 and 20 of the main text, Roy Goode's 2014 Adelaide Law Review article on the Convention, the Cape Town Convention Act 2013, the 2001 Convention and Aircraft Protocol, and the High Court decision in Wells Fargo v VB Leaseco. The optional list adds books, articles and a long list of leasing and penalty cases.
Is there a discussion problem for Class 4?
Yes. The course information asks you to read a scenario provided in a separate file and prepare it for in-class discussion. Applying the research route in this chapter to its facts is a good way to prepare a contribution.
Assessment move
Prepare a one-page research route for the Convention questions: instrument, protocol, declarations, Act, case. Read the Wells Fargo decision with one question in mind and write a paragraph on how it bears on Australia's position. Prepare the separate discussion problem by applying the route to its facts.
Read one optional case from the list with a specific question in mind, note which Class 4 question it answers, and be ready to say so in class rather than citing it generally. Keep your notes on the declarations by article number so you can cite them precisely in class.
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