MACAU SAR, CHINA Law and Practice Contributed by: Frederico Rato, Pedro Cortés and Calvin Tinlop Chui, Lektou
6. Enforcement 6.1 Enforcement of Collateral by Secured Lenders A secured lender can enforce its collateral in accord- ance with the terms and conditions set out in the loan agreement, with collateral entered by and between the secured lender and borrower. Typically, securities and guarantees can be enforced judicially or, when certain circumstances are met, out of court. Once there is a default, the secured lender may enforce its security against the borrower. For certain types of securities – such as mortgages, promissory notes and other executive titles – enforcement pro- ceedings can be initiated without prior declarative proceedings, allowing the secured lender to apply directly to the court, identify the borrower’s assets and request their seizure. 6.2 Foreign Law and Jurisdiction The choice of a foreign law as the governing law of the contract and the submission to a foreign jurisdiction are, in general, upheld under Macau law. Particular attention must be paid to the relevance of the choice of a foreign law and the exclusivity of the Macau court’s jurisdiction (eg, location of the collat- eral). Waiver of immunity for civil matters is only valid if made in accordance with local legislation and interna- tional, regional and bilateral agreements, particularly with respect to the nature of the underlying collateral, person and entity. 6.3 Foreign Court Judgments Foreign Judgments The courts of Macau recognise a judgment from for- eign courts through a special proceeding called “Revi- sion and Confirmation of Foreign Judgments”, unless regulated otherwise in an international treaty appli- cable in the Macau jurisdiction, an agreement under judiciary co-operation, or special law (meaning any law, decree or government decision that falls outside that general rule/provision). The following conditions also need to be fulfilled.
• credit for expenses strictly necessary to the exist- ence of the debtor or of the persons who are dependent on the debtor as from the request for payment; • credit emerging from the labour contract or related to the termination or cessation of the labour con- tract in relation to a period of six months as from the request for payment; and • the funeral expenses of the debtor. All the aforesaid privileged credits have priority over The principle of “first in time, first in right” generally applies in Macau. The priority of security interests is determined based on the order of registration or per- fection. Typically, the first security interest registered or perfected will have priority over subsequent secu- rity interests. In order to establish priority and protect a lender’s security interest, it is advisable to register the security interest with the relevant public registry or authority. In Macau, the Commercial and Movable Assets Registry is responsible for registering secu- rity interests over movable assets, while real estate mortgages are registered with the Real Estate Assets Registry. To structure around priming liens, lenders may con- the secured credits. 5.8 Priming Liens sider various methods, including the following. • Obtaining subordination agreements: lenders can negotiate subordination agreements with existing lienholders, where the existing liens are subordinat- ed to the lender’s security interest – this agreement establishes the priority of the lender’s security interest over the existing liens. • Taking additional collateral: lenders may require additional collateral from the borrower or other guarantors that is not subject to existing liens – by securing additional assets, the lender can create a separate security interest with a higher priority. • Perfecting security interests promptly: timely registration or perfection of the security interest is crucial to establish priority – lenders should ensure that all necessary steps are taken promptly to record their security interests with the relevant registries.
354 CHAMBERS.COM
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