CAYMAN ISLANDS Law and Practice Contributed by: Sarah Humpleby, Alexandra Franklin, Peter Kendall and Sam Hall, Walkers
3.2.14 Perfection of Domestic Law Mortgages Typically, mortgages over aircraft are governed by English or New York law. If such a mortgage is over an aircraft registered with the CAACI, the mortgage will need to be registered with the CAACI in accordance with the Mortgaging of Aircraft Regulations, 2015. Once the mortgage is registered on the CAACI Mort - gage Register, all persons will at all times be taken to have express notice of all the facts appearing on the register; however, the registration of a mortgage is not evidence of its validity. It is also possible to file a priority notice with the CAACI prior to entry into the mortgage. Assuming that the mortgage satisfies the require - ments for classification as an “international interest” pursuant to the Cape Town Convention, IR filings can be made in respect of that mortgage. 3.2.15 Differences Between Security Over Aircraft and Spare Engines There is no difference between the form of security (or perfection) taken over an aircraft and that taken over spare engines. There is also no separate engine reg - ister maintained by the CAACI in the Cayman Islands. 3.2.16 Form and Perfection of Security Over Bank Accounts An account charge would typically be taken over a bank account located outside the Cayman Islands. Security over an account held in the Cayman Islands would typically be achieved by way of an account charge. Pursuant to the P(MP) Act, to perfect such security, notice must be given to the account bank. Acknowledgement of that notice by the account bank should be obtained as a matter of best practice, but failure to do so would not affect the perfection of the security. If the account charge is granted by a Cay - man Islands company, details of the security interest created by the account charge should be recorded in the company’s ROMC to comply with Section 54 of the Companies Act. 3.3 Liens 3.3.1 Third-Party Liens Cayman Islands law provides for liens in favour of the CAACI and CIAA for fees and charges owed. However, the law does not specify whether such a lien is only
in respect of the aircraft that incurred such fees and charges, or if it extends to any aircraft operated by the person owing such fees and charges. The CIAA may enter, take control of and arrest and sell by public auction or private arrangement, in compli - ance with any rules or regulations to that effect, any aircraft over which it has a lien. The CAACI may enter, take control of and arrest any aircraft over which it has a lien. The possibility that a court in the Cayman Islands would order the sale of an aircraft in connection with proceedings that consider the rights of a lien-holder with respect to that aircraft (being the holder of a con - tractual, possessory, statutory or other lien) will turn on the particular circumstances and facts and, if appli - cable, the terms of any relevant contracts. 3.3.2 Timeframe to Discharge a Lien or Mortgage The effective time for the discharge of a lien or mort - gage over an aircraft will depend on the terms of the discharge document. The cancellation of the registration of the mortgage on the Mortgage Register will be effective from the time the CAACI confirms that the entry in respect of the mortgage has been removed from the Mortgage Register. 3.3.3 Register of Mortgages and Charges The CAACI maintains the Mortgage Register. A reg - istered mortgage is given statutory priority over sub - sequently registered mortgages and unregistered mortgages. The ROMC of a Cayman Islands company is not pub - licly available but companies creating security inter - ests must record them on the company’s ROMC in order to comply with Section 54 of the Companies Act. 3.3.4 Statutory Rights of Detention or Non-
Consensual Preferential Liens See 3.3.1 Third-Party Liens .
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