CMS Expert Guide to international rolling stock financing

The European Green Deal recognises rail as the future backbone of the European transport system. As a matter of priority, a substantial part of the 75% of inland freight carried today by road shall be shifted onto rail and inland waterways. In addition taking into account projected transport growth, the demand for cross border rail transport and the international rolling stock financing market will continue to grow. However, crossing borders in the rail market is still hindered by numerous legal and operational problems. This also applies to structuring the security package in such cross border deals. In particular, as long as the Rail Protocol to the Cape Town Convention on International Interests in Mobile Equipment has not entered into force, there is no global legal system for the recognition of security interests over rolling stock.

For financiers active in the international rolling stock market and all other stakeholders, one of the key issues they face is ensuring their security package is robust and effective across multiple jurisdictions and at the same time commercially reasonable.

To avoid unpleasant surprises when structuring rolling stock financings, it is important for financiers and relevant stakeholders to have an overview of the key aspects that need to be considered when structuring an international security package.

The purpose of this Expert Guide is to give you a broad overview, in particular, of the following key aspects of taking security in each of the jurisdictions covered in this Expert Guide:

• Creation of security: How are security interests over rolling stock, lease receivables and shares/interests created and perfected.
• Applicable law: Which law should apply to the security interests.
• Recognition of foreign law securities: To what extent will validly created foreign law securities be recognized.
• Fleet manager: Which additional aspects should be considered where the transaction structure includes a fleet manager.

The information in this publication is for general purposes and guidance only and does not purport to constitute legal or professional advice.

The guide makes no claims as to completeness and does not constitute legal advice. Although the guide may provide information concerning potential legal issues, it is not a substitute for legal advice from a qualified legal professional. This guide is not created nor designed to address the unique facts or circumstances that may arise in any specific instance. You should not rely on this content as a source of legal advice.