US VIRGIN ISLANDS Law and Practice Contributed by: George H.T. Dudley, G. Hunter Logan, Kurt Petri and Anna Vlasova, Dudley Newman Feuerzeig LLP
lection action against such collateral in accordance with the procedures outlined in the UCC. 6.2 Foreign Law and Jurisdiction In general, a choice of a foreign law as the governing law of the contract in a commercial contract between sophisticated parties will be upheld by USVI courts. There are exceptions, such as: • the provisions of the UCC which limit the ability of parties to contract to agree that the laws of a dif- ferent jurisdiction shall apply; • internal laws and judicial decisions of the US Virgin Islands applicable to real property (or interests therein) located in the US Virgin Islands, includ- ing, without limitation, those affecting the creation, perfection, priority and enforcement of liens and security interests; and • internal laws of the US Virgin Islands, judicial deci- sions and general principles of equity affecting the availability of remedies or of equitable relief, including, without limitation, specific performance or equitable remedies. 6.3 Foreign Court Judgments The USVI, as an unincorporated territory of the United States, follows a legal framework similar to that of the states for the recognition and enforcement of for- eign judgments (ie, judgments from courts outside the USVI, including those from foreign countries or other US jurisdictions). Enforcement is primarily governed by the Uniform Foreign Money-Judgments Recogni- tion Act of 1962 (the “1962 Uniform Act”), which the USVI has adopted in substantial part. This codifies common law principles derived from the US Supreme Court case Hilton v Guyot , 159 U.S. 113 (1895), emphasising comity (mutual respect among jurisdic- tions) while requiring due process. 6.4 A Foreign Lender’s Ability to Enforce Its Rights Generally, a foreign lender may enforce its rights under a loan or security agreement in the USVI. A recita- tion of all potential exceptions to this general rule is beyond the scope of this general guide, but primary exceptions would be if the security agreement vio- lated federal or USVI statutory or common law or were
found to violate USVI public policy in a case of first impression.
7. Bankruptcy and Insolvency 7.1 Impact of Insolvency Processes
The United States Bankruptcy Code is applicable in the USVI. Insolvency proceedings in the USVI are filed under the US Bankruptcy Code and before a US Bankruptcy Court. 7.2 Waterfall of Payments The waterfall of payments is determined by the United States Bankruptcy Code. 7.3 Length of Insolvency Process and Recoveries Bankruptcy proceedings may take years. 7.4 Rescue or Reorganisation Procedures Other Than Insolvency Company rescue or reorganisation are almost exclu- sively filed under the US Bankruptcy Code and before a US Bankruptcy Court. 7.5 Risk Areas for Lenders Lenders have the same risk areas under the Bank- ruptcy Code as lenders in the United States. Project finance activity occurs in the USVI and the hotel industry is the most active user. Large finance projects have also included the acquisition and ren- ovation of the oil refinery and oil storage terminal located on St Croix, and construction of the Diageo Captain Morgan Rum distillery located on St Croix. The USVI also has certain laws that may assist in project financing, such as the Hotel Development Act. The Act is to “provide for the planning, financ- ing, acquisition, construction, improvement, mainte- nance and operation of new hotels, and the planning, financing, reconstruction, renovation, maintenance, and operation of existing hotels in the Territory”. This 8. Project Finance 8.1 Recent Project Finance Activity
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