Enforcement Under The Security Interests (Jersey) Law 2012

Published date09 November 2020
Subject MatterFinance and Banking, Insolvency/Bankruptcy/Re-structuring, Debt Capital Markets, Financial Services, Securitization & Structured Finance, Insolvency/Bankruptcy
Law FirmOgier
AuthorMr Bruce MacNeil

The Security Interests (Jersey) Law 2012 (the SIJL) came into force on 2 January 2014, changing the way in which security is created, perfected and enforced over Jersey intangible movable property. This briefing note is one of a series relating to the SIJL, dealing with enforcement of security interests.

Enforcement under the 1983 Law

Under the Security Interests (Jersey) Law 1983 (the 1983 Law), the powers of a secured party on enforcement were limited to a power of sale, although a power of appropriation was available where the collateral was money or represented by a negotiable instrument or moneys held in a bank account. In addition, the 1983 Law required a 14 day statutory grace period before exercise of the power of sale where the event of default complained of was capable of remedy.

Powers of enforcement under the SIJL

The SIJL provides for a wide range of enforcement powers, as follows:

  • appropriating the collateral
  • selling the collateral
  • taking any of the following actions
    • taking control or possession of the collateral
    • exercising the rights of the grantor in relation to the collateral
    • instructing any person who has an obligation in respect of the collateral to carry out such obligation for the benefit of the secured party
  • applying any remedies provided for by the security agreement to the extent that such remedies do not conflict with the SIJL.

In practice, the most widely exercised enforcement powers under the SIJL are sale and appropriation. Jersey law does not have the concept of receivers enforcing security and enforcement must be completed by the secured party (or its nominees/agents). An enforcement sale involves the secured party selling the collateral to a third party, whereas appropriation involves the secured party taking full ownership of the collateral in return for reducing the secured obligations by the value appropriated.

Under Article 43 of the SIJL, these powers became exercisable upon (a) the occurrence of an event of default as provided for in the security agreement and (b) the secured party serving written notice on the grantor specifying the event of default. The powers can be exercised more than once after an event of default and in respect of all or part of the collateral.

In Albion Energy Limited v Energy Investments Global Limited and Heritage Oil Limited [2020] JRC 147A, a secured party applied for orders under Article 52 of the SIJL to enable it to enforce its security interest over shares in the grantor's...

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