Security Interests (Jersey)
Law 1983
A LAW to make provision for the creation of security interests in respect
of certain intangible movable property and with regard to the capacity of
persons to give security over certain property under the law of another
jurisdiction and for connected purposes
Commencement [see endnotes]
1 Interpretation
(1) In
this Law, unless the context otherwise requires –
“bearer certificate”
means a certificate of title to securities by the delivery of which (with or
without endorsement) the title to the securities is transferable;
“certificate of
deposit” means a document relating to money, in any currency, which has
been deposited with the issuer or some other person, being a document which recognizes
an obligation to pay a stated amount to bearer or to order, with or without
interest, and being a document by the delivery of which, with or without
endorsement, the right to receive that stated amount, with or without interest,
is transferable;
“certificate of
title to securities” means any document of title whereby a person
recognizes the title of another to securities issued or to be issued by the
first-mentioned person, and in the case of any such document with coupons
(whether attached or on separate coupon sheets) includes any coupons which have
not been detached;
“collateral”
means property that is subject to a security interest and includes initial,
substituted and additional property which is so subject from time to time;[1]
“Court” means
the Inferior Number of the Royal Court;
“debtor” means
a person who causes or permits a security interest to be created in property in
which the person has an interest and includes the person’s successors and
assigns;
“lease” means
a lease, underlease or other tenancy, assignment operating as a lease or
underlease of a corporeal hereditament, or an agreement for such lease,
underlease, tenancy or assignment;
“movable property”
means all property, wherever situated, whether tangible or intangible, vested,
contingent, or future, which is not regarded by the law of Jersey as immeubles and includes choses in action;
“negotiable
instrument” means a bill, note or cheque within the meaning of the Bills
of Exchange Act 1882 of the United Kingdom or a certificate of deposit;
“obligation”
includes a debt and also includes a contingent obligation and a guarantee of
payment or performance of an obligation;
“policy of life
assurance” or “policy” means any instrument by which the
payment of moneys by or out of the funds of an assurance company, on the
happening of any contingency depending on the duration of human life, is
assured or secured; and “assurance company” means any corporation,
society or company carrying on the business of assuring lives or survivorships,
either alone or in conjunction with any other object or objects;
“secured party”
means a person who has a security interest and includes the person’s
successors and assigns;
“securities”
means shares, stock, debentures, debenture stock, loan stock, bonds, units of a
unit trust scheme, or other shares of the investments subject to the trusts of
such a scheme, but does not include negotiable instruments;
“security agreement”
means an agreement that makes provision for a security interest under the
provisions of this Law;
“security interest”
means an interest in intangible movable property that secures payment or
performance of an obligation under the provisions of this Law.
(2) Unless
the context otherwise requires, where this Law refers to any enactment, the
reference is a reference to that enactment as amended, and includes a reference
to that enactment as extended or applied by or under any other enactment,
including any other provision of that enactment.
(3) In
paragraph (2) “enactment” includes the Bills of Exchange
Act 1882 of the United Kingdom.
1A Application
of this Law[2]
(1) This
Law shall apply only to a continuing security interest in relation to which the
Schedule to the Security
Interests (Jersey) Law 2012 provides that the prior law applies.[3]
(2) In
this Article, “continuing security interest” and “prior law”
shall have the same meanings as in that Law.
2 Creation of security interest
(1) For
the purposes of this Law a security interest may be created only in intangible
movable property other than a lease.
(2) A
security interest may be created in accordance with any one or more of the
methods of creation referred to in this Article.
(3) A
security interest in securities is created where the secured party (or some person
on the secured party’s behalf other than the debtor or some person on
behalf of the debtor) has possession pursuant to a security agreement of the
certificates of title to such securities.
(4) A
security interest in a policy of life assurance is created where the secured
party (or some person on the secured party’s behalf other than the debtor
or some person on behalf of the debtor) has possession pursuant to a security
agreement of the policy.
(5) A
security interest in moneys held in a bank account is created where the bank
which holds such account for its customer is the secured party and has control
of such account pursuant to a security agreement and its customer and the
debtor are one and the same person.
(6) A
security interest in any intangible movable property other than a lease is
created where the secured party (or some person on the secured party’s
behalf other than the debtor or some person on behalf of the
debtor) –
(a) has
pursuant to a security agreement title to the collateral; and
(b) has
complied with the requirements of paragraph (8) as to the giving of
notice.
(7) The
reference to title in paragraph (6) is a reference to title
acquired –
(a) in
the case of a bearer certificate or a negotiable instrument, by delivery with
any necessary endorsement; and
(b) in
any other case, by assignment of the collateral (with or without a proviso or
condition for reassignment).
(8) Express
notice in writing shall be given by or on behalf of the secured party to the person
from whom the assignor would have been entitled to claim the collateral.
(9) Paragraph (8)
does not apply in the case of a bearer certificate or a negotiable instrument.
(10) References
in this Article to a security agreement are references to a security agreement
which complies with the requirements of Article 3.
3 Security agreement
(1) For
the purposes of this Law a security agreement shall –
(a) be in
writing;
(b) be
dated;
(c) identify
and be signed by the debtor;
(d) identify
the secured party;
(e) contain
provisions regarding the collateral sufficient to enable it to be identified;
(f) specify
the events which are to constitute events of default; and
(g) contain
provisions regarding the obligation payment or performance of which is to be
secured sufficient to enable it to be identified.[4]
(2) Subject
to paragraph (1), a security agreement may be in such form and contain or
refer to such matters as shall be agreed between the parties to such agreement.
4 Time of creation of security interest
A security interest may
be created before or after the obligation to which it relates comes into
existence.
5 Priority between security interests in same collateral
(1) Priority
between security interests in the same collateral shall be determined by the order
of creation of security interests relating to the same collateral.
(2) Nothing
in this Article shall prevent the postponement by a secured party of the
secured party’s rights.
6 Effect of subsequent bankruptcy of debtor
(1) Upon
the debtor becoming bankrupt, where the secured party (or some person on the
secured party’s behalf other than the debtor or some person on behalf of
the debtor) does not have title to the collateral –
(a) to
the extent that the collateral is sufficient, the amount due to a secured party
in respect of a security interest created under Article 2(3), (4) or (5)
shall be paid in priority to all other claims; and
(b) nothing
in this Law shall affect the vesting in the Viscount or other body or person,
under the law relating to bankruptcy, of the title of the debtor to the
collateral.[5]
(2) Where
the secured party (or some person on the secured party’s behalf other
than the debtor or some person on behalf of the debtor) has title to the
collateral the provisions of this Article other than paragraph (1) shall
apply.
(3) Subject
to the provisions of this Article and without prejudice to the provisions of Article 8,
the debtor becoming bankrupt or the debtor or the debtor’s property being
subjected, whether in Jersey or elsewhere, to any other judicial arrangement or
proceeding consequent upon insolvency shall not affect the power of a secured
party to realize or otherwise deal with the collateral in the same manner as the
secured party would have been entitled to realize or deal with it if the debtor
had not become bankrupt or the debtor or the debtor’s property had not
been subjected to any such judicial arrangement or proceeding.
(4) Where
the movable property of the debtor has been declared en désastre –
(a) the
Viscount may apply to the Court for an order vesting in the Viscount the rights
of the secured party to the collateral and directing that it be sold;
(b) the
proceeds of such sale of the collateral shall be applied by the Viscount in the
order referred to in Article 8(6)(b); and
(c) subject
to sub-paragraph (b), the Court may make an order directing such vesting
and sale upon such terms and subject to such conditions as the Court may think
fit.
7 Cancellation or partial discharge of security interest
(1) After
discharge, payment or other performance of the obligation payment or
performance of which is secured, the debtor may notify the secured party that the
debtor requires –
(a) subject
to the rights of other secured parties –
(i) possession of the
documents relevant for the purposes of Article 2(3) or (4),
(ii) control
of the account relevant for the purposes of Article 2(5),
(iii) title
to the collateral relevant for the purposes of Article 2(6),
as the case may be; and
(b) a
duly completed certificate of discharge of the security interest.
(2) Where
it is agreed to release part of the collateral upon payment or performance of
certain of the obligations referred to in the security agreement, payment or
performance of which is secured, then after payment or performance of such
obligations the debtor may notify the secured party that the debtor requires a
duly completed certificate of discharge as to the part of the collateral released
from the security interest.
(3) Where
the secured party has refused or neglected to comply with a requirement made by
the debtor under paragraph (1) or (2) for a period of 7 days after the
date on which a notice in writing of such requirement was given to or served on
the secured party, the debtor may apply to the Court for an order under paragraph (4).
(4) Where
an application is made under paragraph (3) the Court may –
(a) make
an order requiring the secured party to comply with the requirement made by the
debtor to such extent, within such time and subject to such damages and
penalties as the Court shall specify in the order; or
(b) make
such other order as it shall think fit.
(5) In
this Article “certificate of discharge” means a certificate of discharge
in the form given in the Schedule and “documents relevant for the
purposes of Article 2(3) or (4)” means a certificate of title to
securities or a policy, as the case may be.
8 Power of sale
(1) An
event of default occurs upon the happening of an event which under the
provisions of the security agreement is an event of default.
(2) A
power of sale of the collateral arises after an event of default occurs.
(3) A
power of sale under this Article or any provision of a security agreement shall
not be exercisable unless the secured party has served on the debtor a
notice –
(a) specifying
the particular event of default complained of; and
(b) if
the default is capable of remedy, requiring the debtor to remedy it,
and the debtor fails to
remedy the default, if it is capable of remedy, within 14 days after receiving
such notice.
(4) Subject
to paragraph (5) and subject to any provision of the security agreement to
the contrary, a power of sale under this Article shall be exercised only on the
authority of an order of the Court, which –
(a) shall
grant such order upon being satisfied that a power of sale has arisen and has
become enforceable under this Law;
(b) subject
to paragraph (6), may grant such order either unconditionally or upon such
conditions as the Court may think fit; and
(c) may
grant an order directing the debtor to do such acts and things as to the Court
may seem requisite for the effective execution of the power of sale.
(5) Unless
otherwise provided in the security agreement, paragraph (4) shall not
apply in respect of collateral which is money or is represented by a negotiable
instrument or moneys held in a bank account.
(6) Upon
a sale under this Article the secured party shall –
(a) take all
reasonable steps to ensure that the sale is made –
(i) within a
reasonable time, and
(ii) for
a price corresponding to the value on the open market at the time of sale of
the collateral being sold;
(b) apply
the proceeds of sale in the following order –
(i) in payment of the
costs and expenses of such sale,
(ii) in
discharge of any prior security interest,
(iii) in
discharge of all moneys properly due in respect of the obligation secured by
the security agreement,
(iv) in
payment, in due order of priority, of secured parties whose security interests
were created after the secured party’s security interest was created, if paragraph (8)
applies to such subsequent security interests,
(v) as to the balance (if
any remains) in payment to the debtor, or in the event that the debtor has
become bankrupt or been subjected to any other judicial arrangement consequent
upon insolvency, to the Viscount, receiver or other proper officer.
(7) For
the purposes of this Article moneys derived from collateral of the kind
referred to in paragraph (5) shall be applied as if such moneys were
proceeds of sale under paragraph (6).
(8) This
paragraph applies to the security interest of any secured party on whose behalf
(as well as on his or her own behalf) the secured party exercising the power of
sale was, immediately before the exercise of such power, holding possession of
or exercising control of documents or collateral (whether by himself or herself
or through some person on his or her behalf) for the purposes of Article 2.
9 Termination of security interest
(1) Subject
to paragraph (3), a security interest created under Article 2(3) or
(4) terminates when the secured party (or some person on the secured
party’s behalf not being the debtor or some person on behalf of the
debtor) ceases to have possession pursuant to the security agreement of the
documents relevant for the purposes of Article 2(3) or (4).
(2) In
paragraph (1) “documents relevant for the purposes of Article 2(3)
or (4)” means a certificate of title to securities or a policy, as the
case may be.
(3) Paragraph (1)
shall not apply where the secured party has a security interest in the same
collateral under Article 2(6).
(4) A
security interest created under Article 2(5) terminates when the bank
being the secured party ceases to have control pursuant to the security
agreement of the account relevant for the purposes of Article 2(5).
(5) A
security interest created under Article 2(6) terminates when the secured
party ceases to have pursuant to the security agreement title to the collateral
relevant for the purposes of Article 2(6).
10 Service of notices
(1) This
Article shall have effect in relation to any notice or other document required
or authorized by or under this Law to be given to or served on any person.
(2) Any
such document may be given to or served on the person in question –
(a) by
delivering it to the person;
(b) by
leaving it at the person’s proper address; or
(c) by
sending it by post to the person at that address.
(3) Any
such document may –
(a) in
the case of a company, be given to or served on the secretary, clerk or other
similar officer of the company or any person who purports to act in any such
capacity, by whatever name called;
(b) in
the case of a partnership, be given to or served on a partner or a person
having the control or management of the partnership business.
(4) For
the purposes of this Article and Article 7 of the Interpretation
(Jersey) Law 1954 in its application to this Article, the proper
address of any person to or on whom a document is to be given or served shall
be the person’s last known address, except that–
(a) in
the case of a company or its secretary, clerk or other officer or person referred
to in paragraph (3)(a), it shall be the address of the registered or
principal office of the company;
(b) in
the case of a partnership or a person having the control or management of the
partnership business, it shall be that of the principal office of the
partnership,
and for the purposes of
this paragraph the principal office of a company registered outside Jersey or
of a partnership carrying on business outside Jersey shall be their principal
office within Jersey.
(5) If
the person to be given or served with any document mentioned in paragraph (1)
has specified an address within Jersey other than the person’s proper
address within the meaning of paragraph (4) as the one at which the person
or someone on the person’s behalf will accept documents of the same
description as that document, that address shall also be treated for the
purposes of this Article and Article 7 of the Interpretation
(Jersey) Law 1954 as the person’s proper address.
11 Saving provisions
(1) The
rights of –
(a) a
holder in due course of a negotiable instrument other than a certificate of
deposit;
(b) a bona fide
purchaser of securities without notice of a security interest affecting such
securities;
(c) a person
who has taken a certificate of deposit in good faith and for value without
notice of a security interest affecting such certificate of deposit,
are to be determined
without regard to this Law.
(2) Nothing
in this Law shall affect a lien or a right of set-off.[6]
12 Security given under foreign law[7]
(1) In
this Article –
(a) “foreign
law” means any law other than the law of Jersey;
(b) “person”
means a person having the capacity to create a security interest under this Law;
(c) “property”
means all property, whether tangible or intangible, vested, contingent or
future whether or not regarded by the law of Jersey as immeubles
and includes choses in action.
(2) Despite
anything in Article 1A, if after the commencement of this Law and before
the date on which Part 3 of the Security
Interests (Jersey) Law 2012 comes into force a person incorporated,
resident or domiciled in Jersey or, being a limited liability partnership,
registered under the Limited Liability Partnerships (Jersey) Law 1997
gives security governed by foreign law over property situated outside Jersey
the person giving the security shall (without prejudice to the person’s
existing capacity, if any) be deemed to have had capacity to give it under the law
of Jersey.[8]
13 Loi (1880) sur la propriété
foncière
Nothing in the Loi (1880) sur
la propriété foncière shall affect
the validity of a security interest.
14 Exclusive application
For the avoidance of
doubt it is declared that after the commencement of this Law and before the
date on which Part 3 of the Security
Interests (Jersey) Law 2012 comes into force no security over
intangible movable property may be created under the law of Jersey except under
the provisions of this Law.[9]
15 Rules of Court
The power to make Rules
of Court under the Royal Court
(Jersey) Law 1948 shall include a power to make Rules for the purposes
of this Law and proceedings thereunder.
16 Citation
This Law may be cited as
the Security Interests (Jersey) Law 1983.