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APPENDICES 63 ARRANGEMENT BETWEEN CANADA AND THE UNITED STATES OF AMERICA RELATING TO AIR NAVIGATION (Effective August 1, 1938) ARTICLE I (a) The present arrangement between the United States of America and Canada relates to the operation in either country of civil aircraft duly registered in territory of the other country in accordance with its requirements as to registration. (b) The term "civil aircraft" shall for the purposes of this arrangement be understood to mean all aircraft other than military, naval, customs and police aircraft. ARTICLE II The present arrangement shall apply to continental United States of America, including Alaska, and to Canada, including their territorial waters. ARTICLE III (a) Each of the Parties to the present arrangement shall grant, in time of peace, liberty of passage above its territory to aircraft of the other Party duly registered in the territory of such other Party, provided that the conditions set forth in the present arrangement are observed. (b) It is, however, agreed that the establishment and operation by an enterprise of one of the Parties of a regular air route or service to, over or away from the territory of the other Party, with or without a stop, shall be subject to the consent of such other Party. (c) Any air transport enterprise of either Party applying for permission to operate such a route or service shall be required to submit its application through diplomatic channels. ARTICLE IV (a) The aircraft of each of the Parties, passengers and goods carried thereon and personnel employed on the aircraft shall, while within or over the territory of the other Party, be subject to the laws in force in that territory, including all regulations relating to air traffic applicable to foreign aircraft, the transport of passengers and goods, and public safety and order, as well as any regulations concerning entry and clearance, immigration, passports, quarantine and customs.