Luxembourg Protocol streamlines railway financing

Luxembourg Protocol streamlines railway financing

The Luxembourg Protocol, which streamlines the financing of railway rolling stock, has officially entered into force, creating a global legal framework for securing creditors' interests.

This spring marks the entry into force of the Luxembourg Rail Protocol, an international agreement designed to facilitate the financing of railway rolling stock by establishing a global legal regime for the recognition and priority of creditors' security interests. These interests include those of lessors, creditors under secured loans and vendors in conditional sales where title is retained until payment is made in full.

The Protocol establishes a publicly accessible, 24/7 international registry of these interests to enhance transparency and legal certainty in the financing of rail assets. With increasing global emphasis on environmental and sustainability issues, the Protocol is timely in promoting rail transport as a more environmentally friendly alternative to other modes of transport.

Commenting on the importance of the Protocol, a spokesperson emphasised, "The Luxembourg Protocol not only facilitates more accessible and cost-effective private sector financing for rolling stock, but also allows governments to allocate more resources to the development of critical infrastructure."

The success of the Aircraft Protocol, a similar agreement under the Convention on International Interests in Mobile Equipment, has demonstrated the potential for such schemes to significantly reduce the cost of railway equipment procurement. The Luxembourg Protocol is expected to bring similar benefits, covering a wide range of railway equipment from high-speed trains to trams and freight locomotives.

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