CAYMAN ISLANDS Law and Practice Contributed by: Sarah Humpleby, Alexandra Franklin, Peter Kendall and Sam Hall, Walkers
(as the obligor in respect of the assigned rights) to fix the priority of the interest of the lessor as assignee in accordance with the principles set out in the judgment in Dearle v Hall (1828) 3 RUSS 1. • There is no requirement that written notice of an equitable assignment should be given to the obli - gor, but there are certain advantages in doing so, including: • a later encumbrancer taking without notice of the earlier assignment and giving notice first would obtain priority; • without written notice to the obligor, the obligor can still obtain a good discharge in respect of any payment made to the assignor before the obligor receives notice of the assignment; • notice prevents the obligor from setting up further equities or set-offs; and • notice will also prevent the obligor and assignor from varying the assigned agreement in a manner prejudicial to the assignee. With respect to an absolute assignment, Section 5 (1) of the Property (Miscellaneous Provisions) Act (as amended) (the “P(MP”) Act”) will apply to any legal assignment of a debt or a chose in action. The basic requirements for a legal assignment to be effectual are: • the assignment must be absolute (ie, unconditional) and may not purport to be by way of a charge only; • it must be in respect of the whole debt or chose in action; • it must be in writing and signed by hand by the assignor; and • express notice in writing of the assignment must be given to the person from whom the assignor would have been entitled to claim such a debt or thing in action. There is no formal legal requirement under Cayman Islands law that a security assignment must be trans - lated, certified, notarised or legalised to be valid or enforceable. 3.2.8 Domestic Law Security Instruments No additional domestic law security instruments are needed. With respect to IR filings, where the security
assignment creates a registrable “international inter - est” under the Convention, that international interest in respect of the aircraft may be recorded on the IR. No additional registrations or filings are required to be made in relation to a security instrument in the Cay - man Islands, except as mentioned in 3.2.9 Domestic Registration of Security Assignments Governed by Foreign Laws . There is no requirement to file the security assign - ment on any register in the Cayman Islands, except if a Cayman Islands company is a party to a security assignment as assignor, in which case, such company should record details of the security interest created thereunder on the company′s register of mortgages and charges (“ROMC”), to comply with Section 54 of the Companies Act. 3.2.10 Transfer of Security Interests Over Aircraft/ Engines See 3.2.11 Effect of Changes in the Identity of Secured Parties . 3.2.11 Effect of Changes in the Identity of Secured Parties 3.2.9 Domestic Registration of Security Assignments Governed by Foreign Laws This is a question to be determined as a matter of the governing law of the security assignment. As a matter of Cayman Islands law, if the security interest is granted to a security trustee and the identity of that security trustee does not change, the security interest should not be discharged because of a change to the other secured parties. 3.2.12 “Parallel Debt” Structures See 2.2.5 Recognition of the Concepts of Trust/Trus- tee . 3.2.13 Effect of Security Assignments on Residence of Secured Parties A security trustee or other secured creditor that is not already resident in the Cayman Islands prior to its entry into a security assignment would not be deemed resident, domiciled or carrying on business in the Cay - man Islands by reason only of the execution, deliv - ery, performance or enforcement of such a security assignment.
107 CHAMBERS.COM
Powered by FlippingBook