The passage of Cape Town Convention Bill 2018 intends to provide sector-specific resolution to the aviation industry in India. Explain (200 Words)
Refer - Financial Express
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IAS Parliament 4 years
KEY POINTS
· The ministry of civil aviation introduced the Cape Town Convention Bill on to implement the Cape Town Protocol in India. The Bill intends to discharge the treaty obligations and avail full benefit of the Indian accession to the treaty.
· It aims to resolve the concerns regarding uncertainty of security rights in the high-value aviation assets, which by their nature, have no fixed location.
· The Bill, once passed, will override the moratorium provisions of the IBC. Pursuant to Article XI of the Protocol, the lessor can take possession of the aircraft if dues are not cleared within two months of initiation of insolvency proceedings.
· Until then, the insolvency administrator must preserve and maintain the aircraft as stated in the lease agreement. The lessor is also entitled to apply for any other interim relief available under the Indian laws.
· Further, it is yet to be seen how courts will decide on the cross-country cooperation and execution of a foreign decree. While the protocol under Article XII binds India to co-operate to the extent possible with foreign courts and foreign insolvency administrators, the role of the court remains important.
· Courts should not pass any order, inter alia, that may defeat the purpose of this. The success of such harmonisation endeavours would largely depend on the pioneering role and cooperation of the airline industry in India.
· In India, the aviation sector currently contributes $72bn annually—3% of the GDP. Considering that the sector may witness continued stress, there is an imminent need for a special resolution framework for both operationally and financially reorganisation.
