BERMUDA Law and Practice Contributed by: Erik Gotfredsen, Jemima Fearnside and Larina Kenny, Wakefield Quin Limited
6. Enforcement 6.1 Enforcement of Collateral by Secured Lenders In general, secured lenders are not involved in com- petition with unsecured lenders, except to the degree that any balance remains due after realising on their collateral. Secured lenders will compete amongst themselves and provided that all of their security is properly perfected and registered, insolvency law will generally not interfere with the competing claims. Secured lenders may enforce collateral in accordance with the contractual agreement creating the security interest, without the requirement to seek court inter- vention or other enforcement steps. The instrument creating the security interest will reference the events allowing for enforcement and remedies including pos- session, receiver appointment, and/or sale. In the absence of a statutory power of sale for a mortgagee or chargee, any security instrument must include an express power of sale to enable the secured lender to take advantage of this remedy. The appointment of a receiver is commonly used to assist with gathering and realising assets. Bermuda law does not grant any statutory power to a secured lender to appoint a receiver and this remedy, including all of the receiver’s powers, should be specially set out in the applicable security documents. Any appoint- ment of a receiver under the terms of a security docu- ment must be notified to the Registrar of Companies Contractual agreements on governing law and the jurisdiction of courts outside Bermuda are common- place, with many financing arrangements concluded under US or English law. In general, arrangements as to foreign governing law and jurisdiction are enforcea- ble in Bermuda save in limited circumstances such as where the application of foreign law would be contrary to public policy in Bermuda or where there is litigation pending on the same matter in another jurisdiction. 6.3 Foreign Court Judgments A final and conclusive judgment in the superior courts of England (as well as Australia, Bahamas, Barba- within seven days of the appointment. 6.2 Foreign Law and Jurisdiction
dos, Dominica, Gibraltar, Grenada, Guyana, Jamaica, Leeward Islands, Nigeria, St. Lucia and St. Vincent) against a Bermuda company, based on a contract under which a sum of money is payable (not in respect of multiple damages, or a fine, penalty, tax or other similar charge) (each a “Money Claim”) would, on reg- istration in accordance with the Judgments (Recip- rocal Enforcement) Act 1958, be enforceable in Ber- muda without the need of any retrial of issues or any re-examination of underlying claims, provided that the judgment: (i) is final and conclusive (notwithstanding that any appeal may be pending against it or it may be still subject to an appeal); (ii) has not been given on an appeal from a court which is not a superior court; and (iii) is duly registered in the Supreme Court of Bermuda. A final and conclusive judgment in a US court against a Bermuda company, based on a Money Claim, may be enforced in Bermuda under the common law doc- trine of obligation for the debt evidenced by the US court judgment. When considering whether a US court judgment should be recognised and enforced, such proceeding would likely be successful if (i) the US court was competent to hear the action in accordance with private international law principles as applied in Bermuda and (ii) the judgment is not contrary to public policy in Bermuda, has not been obtained by fraud, or in proceedings contrary to natural justice and is not based on an error in Bermuda law. Where a foreign judgment is expressed in a denomi- nation other than Bermuda dollars, the registration may involve the conversion of the judgment debt into Bermuda dollars. However, the current policy of the Bermuda Monetary Authority is to permit payment in the original judgment currency. A foreign judgment against a Bermuda company can form the basis of a Bermuda statutory demand, even if the judgment has not been registered under Ber- muda law, provided that the jurisdiction of the foreign court is not disputed. The non-payment of the statu- tory demand would be sufficient for a secured lender to seek commencement of winding-up proceedings against the Bermuda company.
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