The Security Interests (Jersey) Law 2012- Enforcement

The Security Interests (Jersey) Law 2012 (the New Law) came fully into force on 2 January 2014, changing the way in which security is created over Jersey intangible movables. This briefing note is one of a series relating to the New Law, dealing with enforcement of security interests on an event of default.

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

The New Law has introduced a wider 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 New Law. 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.

Notice of appropriation or sale

A secured party must give 14 days' written notice of an appropriation or sale of the collateral to:

the grantor. However, this can be waived and a well-drafted security agreement will include such a waiver any person who, at least 21 days before the appropriation or sale has either (a) registered a financing statement at the Jersey Security Interests Register (the SIR) in respect of a security interest in the collateral or (b) given the secured party notice of a proprietary interest in the collateral. It follows that, if no such registration or notice has been made or given, there is no person to whom notices of appropriation or sale need be given. Further, if the third party has only made such registration or given such notice...