Published On: Wed, Dec 4th, 2019

African countries lead the way on international treaty on Mining, Agricultural and Construction Equipment

Source: Stephenson Harwood.

African countries lead the way on international treaty on Mining, Agricultural and Construction Equipment

South Africa’s Department of International Relations and Cooperation hosted a diplomatic conference in Pretoria to finalise and adopt the fourth protocol to the Cape Town Convention on International Interests in Mobile Equipment (“Convention”). The Convention facilitates the financing and leasing in cross border transactions of mining, agricultural and construction equipment (“MAC equipment”). On 22 November 2019, The Republic of Congo, The Republic of Gambia, The Federal Republic of Nigeria together with The Republic of Paraguay were the first states to sign and adopt the new international treaty.

A number of the original legal and academic experts involved in the Convention, which was signed in 2001, were amongst the 150 delegates from “forty three states, a regional economic integration organisation, three intergovernmental organisations, four international non- governmental organisations, and a technical adviser” to finalise and adopt the protocol for MAC equipment prepared by UNIDROIT2. South Africa, and at least another 26 states attending, signed the Final Act of the diplomatic conference setting out the approved final version of the treaty3. We also understand from UNIDROIT that more than 20 states have expressed support for the treaty and “declared that their internal processes for signature are already under consideration.” Although the UK is one state which made a strong statement in support of the treaty, it cannot, whilst still a member state of the EU, sign the Pretoria Protocol on its own. When, and indeed if, the UK leaves the EU, it would be in a position to do so in its own right. As yet, the EU has not signed. The UK has, however, signed the Final Act.

The MAC protocol has been renamed the Pretoria Protocol (“Pretoria Protocol”).

What assets are covered and protected?

The Pretoria Protocol will provide legal certainty and protection for the interests of lessors, security interests of secured creditors, and seller’s rights under conditional sale agreements of MAC equipment in cross border transactions, with the intention of removing concern about whether a lease or security interest is recognised and enforceable or not from one state to another when parties are in different states and the MAC equipment has to cross borders during its life. These interests will be effective where the debtor is located in a contracting state and the interest has been registered on an electronic register as an international interest.

The Pretoria Protocol covers specific assets used in three industry sectors: mining, agriculture and construction. MAC equipment eligible for registration of an international interest is listed in each of three annexes by reference to a category of asset using the Harmonised Commodity Description and Coding System used by the World Customs Organisation. Accessories installed, incorporated and attached to, and all data, manuals and records relating to that item of MAC equipment will also be covered. An international interest over an item of MAC equipment will have priority over a domestic security interest over the same asset.

1 Hamza Hameed, Legal Consultant, UNIDROIT
2 Information from UNIDROIT- The International Institute for the Unification of Private Law, see www.unidroit.org
3 FINAL ACT 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 22 November 2019.

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