CAYMAN ISLANDS Law and Practice Contributed by: Sarah Humpleby, Alexandra Franklin, Peter Kendall and Sam Hall, Walkers
of a Cayman Islands law-governed equitable share mortgage or charge (as legal title to the shares remains with the shareholder). Share pledges are recognised but not typically used in aircraft finance transactions involving Cayman Islands companies. 3.1.6 Negative Pledges Negative pledge provisions are typically included in the share security documents. 3.1.7 Intercreditor Arrangements No material restrictions or requirements are imposed on intercreditor agreements under Cayman Islands law. Typically, intercreditor agreements are governed by English or New York law, following the governing law of the other transaction documents. 3.1.8 Syndicated Loans Agency is a recognised concept under Cayman Islands law. 3.1.9 Debt Subordination Subject to general qualifications as to enforceability, any method of subordination permitted by a transac - tion governed by English or New York law would be permissible and recognised under Cayman Islands law. 3.1.10 Transfer/Assignment of Debts Under Foreign Laws Subject to general qualifications as to enforceabil - ity, the courts of the Cayman Islands will recognise a New York law-governed or an English law-governed assignment that is effective under that law. 3.1.11 Usury/Interest Limitation Laws See 2.6.8 Limitations on Lessors’ Actions Following Termination . 3.2 Security 3.2.1 Typical Forms of Security and Recourse Aviation finance transactions are typically governed by English or New York law and tend to have a secu - rity package including an aircraft mortgage, security assignments in respect of the lease, warranties and insurance proceeds, security over the shares in the aircraft-owning entity and an IDERA. If the aircraft- owning entity is a Cayman Islands exempted com -
pany, recourse would be limited to the assets of the special-purpose vehicle, with no recourse to the direc - tors or shareholders. A mortgage granted over an aircraft registered on the Aircraft Register should be filed with the CAACI for entry on the Mortgage Register. There is no statutory format of aircraft mortgage. 3.2.2 Types of Security Not Available There are no known restrictions under Cayman Islands law. See 3.2.1 Typical Forms of Security and Recourse . 3.2.3 Trust/Trustee Concepts See 2.2.5 Recognition of the Concepts of Trust/Trus- tee . 3.2.4 Assignment of Rights to an Aircraft by a Borrower to a Security Trustee Cayman Islands law does not restrict or prohibit any such assignment or mortgage. 3.2.5 Assignment of Rights and Benefits Without Attendant Obligations A party may assign its rights and benefits under an agreement by way of security without entering into any arrangements to transfer its obligations under that agreement. 3.2.6 Choice of Foreign Law A security assignment or guarantee does not have to be governed by the laws of the Cayman Islands to be valid and enforceable in the Cayman Islands. Subject to general qualifications as to enforceability (see 3.4.10 Other Relevant Issues ), the courts of the Cayman Islands would recognise as effective a New York law-governed or an English law-governed secu - rity assignment or guarantee that is effective under that law. 3.2.7 Formalities/Mandatory Terms to Create and Perfect Security Assignments For foreign law assignments, the rules of priority and perfection in that jurisdiction will apply. Under Cayman Islands law, it would be advisable to give notice of an equitable assignment to the lessee
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