Mobile Device International Interest Convention and Related Aircraft Equipment Specific Issues Protocol: Official Annotations

Author: (English) Roy Goode | Translators/Nationality: Mainland China
Publisher:
Publish Date: 2004-02-01
Features: Article 35: Priority of Preferential Transfer in Adverse Transfers
1. If there is an adverse transfer of relevant rights, and at least one of the transfers includes relevant international interests and has been registered, the provisions of Article 29 shall apply, where the registered interest now referred to means the transfer of relevant rights and the related registered interests, and the registered or unregistered interest is deemed to mean the registered or unregistered transfer.
2. The transfer of relevant rights shall be governed by the provisions of Article 30, where the international interest is deemed to mean the transfer of relevant rights and the related international interests.
Annotations
1. This article applies to adverse transfers of at least one relevant right that include a transfer of relevant international interests (see Article 35(1) of the Convention). Priority conflicts arising from transfers of relevant rights that do not transfer international interests are not within the scope of adjustment by the Convention, as these rights cannot be registered (see Article 32(3) of the Convention). However, the requirement of Article 32(3) can be met if one transfer is related to international interests and that international interest is registered, which is the sole condition for applying this article. Under such circumstances, the rights of the registered transferee take precedence over those of the transferee of relevant rights that do not transfer international interests, as long as the rights of the registered transferee are still linked to the transferred international interests, and the priority applies only within the scope of the link (see Annotation 2). Therefore, this article and this Convention do not apply if both adverse transfers are solely related to relevant rights (which can be agreed upon by agreement, see Article 31(1) of the Convention).
2. Since the registration system only focuses on the registration of interests in the subject matter and not on the registration of relevant rights, the priority of the transferee of relevant rights depends on the continuous link between relevant rights and international interests. A transferee who only transfers relevant rights without transferring international interests cannot register and thus cannot protect their priority against a transferee who simultaneously transfers relevant rights and international interests and registers the transfer. Similarly, if relevant rights transferred together with international interests are disconnected from international interests, such as in a conditional sales agreement where the transferee of relevant rights transfers international interests while retaining part of the relevant rights, it falls outside the scope of adjustment by the Convention and is no longer protected by the Convention’s priority rules, as they are no longer linked to the registered interest.
3. Article 35(1) of the Convention appears complex because it requires treating the registered interest under Article 29 in two ways:
(1) As the transfer of relevant rights and the related registered interests.
(2) As the registered transfer.
The two "deemed" provisions are because the first paragraph addresses priority issues in two different situations. The first situation is the priority between the transferee of a registered interest and the transferee of a subsequent registered interest or an unregistered interest. The rule is that the transferee acquires the priority of the transferor, so the transferee of the registered interest takes precedence over the transferee of the subsequent registered interest or the unregistered interest. The second situation is the priority between adverse transferees of the same registered interest. In this case, as described in the second "deemed," the rule is that the registered transfer takes precedence over the subsequent registered transfer and the unregistered transfer. However, this rule should be applied in accordance with the provisions of Article 36 regarding the priority of competitive transfers of the same relevant right. If the registered transfer of relevant rights does not fall within the scope of Article 36, the priority of the transferee of the same right over another transferee is not governed by the Convention, and the same applies to competitive rights of related international interests (see Example 36).
4. The Convention does not exclude the transfer of unregistered interests, but the transferee should complete the registration of their rights by first registering the international interest (according to the provisions of the transfer, only the transferee has the right to register) and then registering the transfer. It is impossible to register the transfer without registering the international interest, as the international registration office cannot mark the transfer. The effect of dual registration is to preserve the priority of the transferee over subsequent transferees, as well as over prior unregistered transferees and subsequent holders of international interests.
5. As for the priority between the registered transferee and other non-competitive transferees—such as a buyer who completely purchases the subject matter from a debtor—the priority of the transferee is the same as that of the transferor (see Article 31(1)(b) of the Convention), meaning that the transfer does not affect the existing priority order. P.81-82