India Introduces the Cape Town Convention Bill 2018

INDIA INTRODUCES THE CAPE TOWN CONVENTION BILL 2018

By

Nitin Sarin (Managing Partner)

For several years now, despite acceding to the Convention on International Interest in Mobile Equipment (herein after referred to as the “Cape Town Convention“) and the Aircraft Protocol (herein after referred to as the “Aircraft Protocol”) in 2008, India has been notorious for not having properly implemented the Cape Town Convention and Aircraft Protocol into local law, resulting in conflicts with already implemented archaic Indian laws.

As a result, India remains a jurisdiction at high risk but at the same time the prospects of fantastic returns are immense. This has attracted all the large banks, financing and leasing companies to invest in the aviation industry in India despite its glaring shortcomings

To overcome the problem of conflicts of the Cape Town Convention and Aircraft Protocol with already enacted laws, the Aviation Working Group (herein after referred to as the “AWG”) has been working tirelessly with the Government of India – Ministry of Civil Aviation towards enacting a short form Cape Town Convention and Aircraft Protocol legislation (overriding all other laws).

As an interim measure, India introduced Rule 30 (7) of the Aircraft Rules, 1937 which gave sanctity to an Irrevocable De-registration and Export Request Authorisation (herein after referred to as an “IDERA”). Thereafter, Rule 32A was introduced which talked about “export of aircraft” from India, however the rationaile behind acceeding to the Cape Town Convention and Aircraft Protocol remained unfulfilled.

Thereafter a further amendment to Rule 30 (7) was proposed, which essentially empowered the Directorate General of Civil Aviation (hereinafter referred to as the “DGCA”) to de-register an aircraft without seeking the consent of any other party (read other creditors of a lessee / airline). The proposed amendment, despite being thrown open to the public for comments is yet to see the light of day.

Surprisingly, on the 8th of October 2018, the Government of India – Ministry of Civil Aviation has sprung a “bouncer” (for those not well versed with the game of cricket, the term “bouncer” may be used interchangebly with “surprise”) on the aviation industry by throwing open the “Cape Town Convention Bill, 2018” for public comments.

Some of the salient feature of the Bill are that it overrides any other conflicting provision contained in any other law in force in India and that the Government may enact Rules to properly implement the Act.

While the move is very noble and indeed a step in the right direction, there is a tremendous amount of work left with the Government to have the Cape Town Convention Bill 2018 passed into an Act of Parliament. The process of enactment of an Act from a Bill is briefly reproduced below:

  • A bill is a legislative proposal. It can either be a Government bill (in the case of Cape Town Convention Bill, it’s a Government bill, as it has been brought by Ministry of Civil Aviation.) or a Private Member’s bill.
  • A bill has to be introduced in either of the Houses of Parliament (i.e. Rajya Sabha or Lok Sabha).
  • When the bill is introduced in the house for the first time. This stage is known as the “First reading”.
  • Once a bill gets introduced in the House, it has to be published in the Official gazette. Once the bill gets introduced, the presiding officer of the concerned house can refer that bill to a Standing Committee. Though reference to a Standing Committee is not necessary in every case. However if the bill is referred to a standing committee, the committee then examines the bill and it may also take the opinion of experts from that field.
  • After the first reading, the bill goes through a second reading, which consists of two stages. In the first stage, it’s a general discussion over the bill. At this stage, the bill may be referred to the select committee of the concerned house or to the joint committee of both the houses. If the bill is referred to any committee, then the bill is scrutinized clause by clause by the members of that committee and they can even propose amendments to the original bill. The committee then submits its report to the house, which once again considers the bill. It is at this stage that amendments can be moved to the bill and then they are discussed and voted upon. Once the bill gets adopted by the house then the second reading is deemed to be over.
  • Now comes the third stage, known as the third reading. At this stage the arguments are confined either towards the rejection or in support of the bill. At this stage, if the bill is an ordinary bill (the present case is that of an Ordinary bill) only a simple majority is required, but if it’s a bill to amend the constitution than special majority as mandated by the constitution is required.
  • Once the bill gets passed by the house where it was introduced, it is sent to the other house for its concurrence and there it goes through the same process as mentioned above except the introduction phase.
  • Once the bill is passed by both the houses, it is sent to the president for his/herOnce the bill gets the assent of the president, it becomes a law from the date as notified in the bill.

There is no doubt that the whole aviation industry is watching this move by the Government of India very closely. This action by the Government is a much needed step in the right direction.

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