CAYMAN ISLANDS Law and Practice Contributed by: Sarah Humpleby, Alexandra Franklin, Peter Kendall and Sam Hall, Walkers
man Islands law other than the general requirements for any contract to be substantively valid. Assuming the lease is effective to create, within the meaning of the Cape Town Convention, “international interests” vested in the lessor with respect to the air - frame and engines, IR filings can be made in respect of those interests. See 2.10 Cape Town Convention and Others . 2.2.2 Tax and Withholding Gross-Up Provisions Tax and other withholding gross-up provisions are permissible and enforceable in the Cayman Islands, provided such provisions are permissible and enforce - able pursuant to the governing law of the lease. See 2.1.2 Application of Foreign Laws with respect to the enforceability of a lease governed by foreign law. 2.2.3 Parts Installed or Replaced After a Lease’s Execution A lease can cover parts installed or replaced on an aircraft or engine after its execution, and any steps to be taken to capture such parts under the lease would be a matter of the governing law of the lease. 2.2.4 Risk of Title Annexation There is no known risk of title annexation under Cay - man Islands law. However, it is common market practice for relevant parties to enter into contractual “recognition of rights” agreements with other inter - ested parties when engines are installed on different airframes. 2.2.5 Recognition of the Concepts of Trust/Trustee Cayman Islands law recognises trusts, although the concept of a trust under the laws of the Cayman Islands may differ from that in other jurisdictions; for example, a trust constituted under the laws of the Cayman Islands does not have a legal personality. 2.3 Lease Registration 2.3.1 Notation of Owner’s/Lessor’s Interests on Aircraft Register The Aircraft Register is primarily a private-use catego - ry register, and any aircraft registered in the Cayman Islands must not be used for commercial operations unless the operator holds an Air Operator′s Certifi - cate. The Aircraft Register is a register of registered
owners and aircraft only, and the recording of details on the Aircraft Register does not determine priority between competing interests in the aircraft. It is possible to register the aircraft in the name of: • the owner of the aircraft; or • the “charterer by demise”, provided such a party is qualified to be the registered owner pursuant to the ANOTO. The ANOTO specifies particular categories of “quali - fied person”, including: • citizens of the UK, Commonwealth, a European Economic Area state or of the Swiss Confedera - tion; or • bodies incorporated, or undertakings formed, in any part of the Commonwealth or in accordance with the law of a European Economic Area state or within the Swiss Confederation that have their registered office, central administration or principal place of business in such location. Full details of the requirements and eligibility for reg - istration of aircraft on the Aircraft Register are set out in the ANOTO. It is also possible to note the interests of other parties (such as the lessor or a mortgagee) on the Aircraft Register. No legislation in the Cayman Islands expressly pro - vides that recording a “charterer by demise” as the registered owner constitutes public notice of a lessor′s interest in the relevant aircraft. However, a person examining a certificate of registration in which the lessor′s interest is noted will have actual notice of that interest. It would be reasonable to expect the Cayman Court to consider inspection of the Aircraft Register in respect of an aircraft which records that the registered owner is a ”charterer by demise” to constitute actual notice to the inspecting party of third-party interest in the relevant aircraft.
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