Economic Assessment
Treaty Design, Implementation, and Compliance
Benchmarking Economic Benefit –
A framework as applied to the Cape Town
Convention
Jeffrey Wool
CTC Academic Project – 1st Conference
Oxford, 5th and 6th September 2012
Topics
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Introduction
Int’l Commercial Law Reform and Economic Benefit (EB)
Observations on Economic Assessment (EA)
Framework for Benchmarking EB
Application of Framework to CTC
Evidence, Analytics, and Literature relating to EB
Select Comments on Rail and Space Protocols and EA
Conclusions
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I. Introduction – part of CTC academic project
• Economic assessment segment in the CTC academic project
• Objectives of segment
– Framework for economic assessment
– Economic assessment of CTC
– Guidelines for applied assessment of CTC
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Economic Impact Forum
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Contact Group (next slide) w/ leadership of Deutsche Bank (P. Kaufer)
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Initial materials
– Draft discussion document
– Initial research
– Article summarised in this presentation
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I. Introduction – contact group
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Anthony Saunders – NYU (Stern)
Ingo Walters – NYU (Stern)
Oren Sussman – Oxford (Said)
Julian Franks – London Business School
Vadim Linetsky – Northwestern (McCormick, IEMS)
Jacques Lawarree – University of Washington (Dept. of Economics)
Jonathan Root – Moody’s
Thomas Cahill – Morgan Stanley
Patrick Kaufer – Deutsche Bank
Eric Eugene – BNP Paribas
Klaus Heinemann – HH Kapital
Frederique Dahan – EBRD
Nils Hallerstrom – PK Finance
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N.B.: (1) This is an initial list; and (2) Airbus and Boeing will support via their
co-chair role in AWG
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I. Introduction – summary of article
• Purpose – skeletally address the design and implementation of
the CTC and compliance with these texts benchmarking EB
• EB as the central and driving objective of the CTC
• Scope – Convention and Aircraft Protocol (see comments on
rail and space protocol)
• Framework for benchmarking and application to CTC,
responding to questions on why a treaty might not produce EB
• Potential wider application in the field of international
commercial law reform
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II. International Commercial Law Reform and
Economic Benefit (EB)
• International commercial law reform (ICRL)
• Instruments designed to facilitate transactions. Role of EB
• EB defined
• Role of treaties in international commercial law reform
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III. Observations on Economic Assessment
• Incongruity b/ need for EB and developments in the field of EA
and issues, problems, and practicalities in that undertaking
• Different fields of study, perspectives, objectives, and
orientation (law, finance, economic, and government policy)
• Terminological and methodological issues, including
– nature of work / reasoning (a priori / a posteriori)
– issues: time frames; assumptions; causation; data
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IV. Framework for Benchmarking
Economic Benefit (EB)
• Symbolic, non-qualified formula: EB = RIC
– R = transaction risk reduction (requirements to have that effect)
– I = effective implementation (prevailing national law)
– C = compliance, presumed or actual
• Country / political risk model
• Rationale for and role of presumptions
• Allocation of EB
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V. Application of Framework to CTC
• Symbolic, non-qualified formula: EB = RIC
– R = transaction risk reduction (has that effect)
– I = effective implementation (some problems and solutions)
– C = compliance, presumed or actual
• CTC actions
• Specific circumstances further supporting presumptions
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Enforcement proxy – ASU 2011
Costs of noncompliance with aviation law
Crossover costs of noncompliance with investment law
Enhanced reputational costs given transparency / publicity9
VI. Evidence, Analytics and Literature relating
to Economic Benefit (EB)
• Evidence and analytics
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ASU 2011
Capital market transactions
Other reference points (banking and leasing)
Analytics generally
• Literature
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CTC literature (Saunders / Walters; Linetsky; Zasu / Sato)
Compliance literature (empirical support for treaty compliance)
Commercial / insolvency law and law reform (vast literature)
CTC academic project research
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VII. Select Comments on Rail and Space
Protocols and EA
• Governments recalibrated balance between (1) commercial
objectives and (2) other government policies
• Some elements of the Rail Protocol, more in the Space
Protocols, would raise issues if the proposed framework above
were to be applied (element “R”, transaction risk reduction)
– public service exemption (rail and space)
– additional insolvency option (rail)
– other limitations / restrictions on remedies (space)
• Threshold work needed
– current / future demand for assets
– role of secured financing / leasing in these sectors
– assessment of role of protocols (re current law / risk reduction)
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VII. Conclusions
• CTC is one of the most success ICLR treaties in terms of
ratifications and innovative content
• That is attributable to EB = RIC
• Thus need to ensure RIC
• Wider applicability of EB = RIC (before, during, and after
diplomatic conferences) in the field of ICLR
• Additional supporting work / research
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