Successful Risk Management Problems arising from the lack

Successful Risk Management – Problems arising from the lack of rolling stock title security Martin J Fleetwood – Partner Secretary, Rail Working Group

Overview § Can interest be registered? § Claims by Third Parties § Recovery at the end of the lease period § Insolvency of Operators § Keeping track of rolling stock

Can an interest be registered? § Rolling stock is designed to move about – Which country should an asset be registered in? – Can a charge be registered over a moveable asset? § What registers are available for recording an interest in rolling stock? – Operational Asset Register for a particular system – Charges register – A specific county-based asset ownership register – Asset register under the Luxembourg Rail Protocol § Will one country recognise a charge registered in another? – Conflict of laws § How can you identify your item of rolling stock amongst a number of similar vehicles?

Claims by Third Parties § Sale to third parties – Bona fide purchaser in good faith § In “home” country § Once vehicle is in another country – Where notice of ownership is apparent e. g. title plate § Third party creditor’s claim for distress – Jurisdiction may give priority of claim – Requirement to apply to court for release of asset § Administrator of insolvent Operator – Jurisdiction may give priority of claim

Recovery at end of Lease Period § Location of rolling stock – How easy is it to locate the asset? – Is proof of ownership required to recover if not redelivered by the Operator? – Are fees payable for demurrage § Speed of local courts to assist recovery – What proof of ownership is required by the court? – What if there is a counterclaim by a third party? – What are the likely court/recovery costs § Loss of rental from being unable to re-lease rolling stock

Insolvency of the Operator § Proof of ownership as against the administrator/ liquidator – Local insolvency regime – If a fleet is spread over a number of countries will there be a number of separate proceedings to deal with? § Ability to recover rolling stock – Can an Administrator continue to use the asset? § US Chapter 11 proceedings – Payments for continued use of rolling stock § Speed of local courts to deal with claims for return of rolling stock – Loss of rental from being unable to re-lease rolling stock – A number of civil law jurisdictions are more favourable to the debtor

Keeping Track of Rolling Stock § Operator’s vehicle identification number – Often relates to the type of vehicle and can change with alterations to the vehicle – Likely to change with a change of Operator § Record are only as good as the people who keep them – Miss-recording the vehicles making up a train – Identifying where vehicles are crossing borders § Entering private sidings – How can you gain access to check that the vehicle is yours? § GPS coverage – Is there coverage for the entire journey? – How secure is the transponder?