Draft Convention on International Interests in Mobile Equipment 2001

CHAPTER VIII - EFFECTS OF AN INTERNATIONAL INTEREST AS AGAINST THIRD PARTIES

Article 41

Priority of competing interests

1. - A registered interest has priority over any other interest subsequently registered and over an unregistered interest.

2. - The priority of the first-mentioned interest under the preceding paragraph applies:

(a) even if the first-mentioned interest was acquired or registered with actual knowledge of the other interest; and

(b) even as regards value given by the holder of the first-mentioned interest with such knowledge.

3. - A buyer under a registered contract of sale takes its interest free from an interest subsequently registered and from an unregistered interest, even if the buyer has actual knowledge of the unregistered interest, but subject to a previously registered interest.

4. - The priority of competing interests under this Article may be varied by agreement between the holders of those interests, but an assignee of a subordinated interest is not bound by an agreement to subordinate that interest unless at the time of the assignment a subordination had been registered relating to that agreement.

5. - Any priority given by this Article to an interest in an aircraft object extends to proceeds.

6. - This Convention does not determine priority as between the holder of an interest in an item held prior to its installation on an aircraft object and the holder of an international interest in that aircraft object.

7. - The provisions of paragraphs (1) to (4) of the present Article shall determine the priority of the holders of interests in an aircraft engine and paragraph (6) of the present Article shall not apply.

8. - Ownership of an aircraft engine shall not pass by virtue of its installation on, or removal from, an airframe or an aircraft.

Article 42

Effects of insolvency

1. - In insolvency proceedings against the debtor an international interest is effective if prior to the commencement of the insolvency proceedings that interest was registered in conformity with this Convention.

2. - Nothing in this Article impairs the effectiveness of an international interest in the insolvency proceedings where that interest is effective under the applicable law.

3. - Nothing in this Article affects any rules of insolvency law relating to the avoidance of a transaction as a preference or a transfer in fraud of creditors or any rules of insolvency procedure relating to the enforcement of rights to property which is under the control or supervision of the insolvency administrator.

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