Security Interests (Jersey) Law 1983

Jersey Law 4/1983

 

SECURITY INTERESTS (JERSEY) LAW, 1983.

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1                     Interpretation

2                     Creation of security interest

3                     Security agreement

4                     Time of creation of security interest

5                     Priority between security interests in same collateral

6                     Effect of subsequent bankruptcy of debtor

7                     Cancellation or partial discharge of security interest

8                     Power of Sale

9                     Termination of security interest

10                  Service of notices

11                  Saving provisions

12                  Security given under foreign law

13                  Loi (1880) sur la propriété foncière

14                  Exclusive application

15                  Rules of court

16                  Short title


A LAW     to make provision for the creation of security interests in respect of certain intangible moveable property and with regard to capacity of persons to give security over certain property under the law of another jurisdiction and for connected purposes, sanctioned by Order of Her Majesty in Council of the

 

16th day of MARCH, 1983.

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(Registered on the 5th day of April, 1983).

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STATES OF JERSEY

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The 1st day of June, 1982.

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THE STATES, subject to the sanction of Her Most Excellent Majesty in Council, have adopted the following Law:  -

ARTICLE 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 recognises 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 recognises 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;

“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 he has an interest and includes his 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;

“moveable 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 (45 and 46 Vict.c.61) 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 his 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 moveable property that secures payment or performance of an obligation under the provisions of this Law;

(2)           Where in this Law there is a reference to an Article or Schedule by number only, and without further identification, such reference shall be construed as a reference to the Article or Schedule of that number contained in this Law.

(3)           Where in any Article or other division of this Law there is a reference to a paragraph, sub-paragraph or clause by number or letter only, and without further identification, such reference shall be construed as a reference to the paragraph, sub-paragraph or clause of that number or letter contained in the Article or other division of this Law in which such reference occurs.

(4)           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.

(5)           In paragraph (4) “enactment” includes the Bills of Exchange Act 1882 (45 and 46 Vict.c.61).

ARTICLE 2

Creation of security interest

(1)           For the purposes of this Law a security interest may be created only in intangible moveable 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 his 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 his 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 moveable property other than a lease is created where the secured party (or some person on his 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.

ARTICLE 3

Security agreement

(1)           For the purposes of this Law a security agreement shall –

(a)     be in writing;

(b)     be signed by the debtor; and

(c)     specify –

(i)      the name of the debtor;

(ii)     the name of the secured party;

(iii)    particulars of the collateral sufficient to enable it to be identified;

(iv)    particulars of any encumbrances affecting the collateral;

(v)     the events which are to constitute events of default; and

(vi)    the nature, duration and amount of the obligation payment or performance of which is secured under the security agreement.

(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.

ARTICLE 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.

ARTICLE 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 his rights.

ARTICLE 6

Effect of subsequent bankruptcy of debtor

(1)           Upon the debtor becoming bankrupt a security interest created within the period of ten days immediately preceding his becoming bankrupt shall be void.

(2)           Subject to the provisions of paragraph (1), upon the debtor becoming bankrupt, where the secured party (or some person on his 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 paragraph (3), (4) or (5) of Article 2 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.

(3)           Where the secured party (or some person on his 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 (2) shall apply.

(4)           Subject to the provisions of this Article and without prejudice to the provisions of Article 8, the debtor becoming bankrupt or he or his property being subjected, whether in the Island or elsewhere, to any other judicial arrangement or proceeding consequent upon insolvency shall not affect the power of a secured party to realise or otherwise deal with the collateral in the same manner as he would have been entitled to realise or deal with it if the debtor had not become bankrupt or he or his property had not been subjected to any such judicial arrangement or proceeding.

(5)           Where the moveable property of the debtor has been declared ‘en desastre’ –

(a)     the Viscount may apply to the court for an order vesting in him 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 sub-paragraph (b) of paragraph (6) of Article 8; 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.

ARTICLE 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 he requires –

(a)     subject to the rights of other secured parties –

(i)      possession of the documents relevant for the purposes of paragraph (3) or (4) of Article 2;

(ii)     control of the account relevant for the purposes of paragraph (5) of Article 2;

(iii)    title to the collateral relevant for the purposes of paragraph (6) of Article 2;

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 he 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 seven 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 paragraph (3) or (4) of Article 2” means a certificate of title to securities or a policy, as the case may be.

ARTICLE 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 fourteen 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 his 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 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 through some person on his behalf) for the purposes of Article 2.

ARTICLE 9

Termination of security interest

(1)           Subject to paragraph (3), a security interest created under paragraph (3) or (4) of Article 2 terminates when the secured party (or some person on his 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 paragraph (3) or (4) of Article 2.

(2)           In paragraph (1) “documents relevant for the purposes of paragraph (3) or (4) of Article 2” 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 paragraph (6) of Article 2.

(4)           A security interest created under paragraph (5) of Article 2 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 paragraph (5) of Article 2.

(5)           A security interest created under paragraph (6) of Article 2 terminates when the secured party ceases to have pursuant to the security agreement title to the collateral relevant for the purposes of paragraph (6) of Article 2.

ARTICLE 10

Service of notices

(1)           This Article shall have effect in relation to any notice or other document required or authorised 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 him;

(b)     by leaving it at his proper address; or

(c)     by sending it by post to him 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 12 of the Interpretation (Jersey) Law, 19541 (meaning of service by post) 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 his last known address, except that –

(a)     in the case of a company or its secretary, clerk or other officer or person referred to in subparagraph (a) of paragraph (3), 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 the Island or of a partnership carrying on business outside the Island shall be their principal office within the Island.

(5)           If the person to be given or served with any document mentioned in paragraph (1) has specified an address within the Island other than his proper address within the meaning of paragraph (4) as the one at which he or someone on his 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 12 of the Interpretation (Jersey) Law, 19542 as his proper address.

ARTICLE 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.

ARTICLE 12

Security given under foreign law

(1)           This Article applies to security given after the commencement of this Law over property situated outside the Island where such security is governed by foreign law.

(2)           A person having capacity under such foreign law to give security to which this Article applies shall be deemed to have capacity so to do under the Law of the Island.

(3)           In this Article “foreign law” means any law other than the law of the Island.

ARTICLE 13

Loi (1880) sur la propriété foncière

Nothing in the “Loi (1880) sur la propriété foncière”3 shall affect the validity of a security interest.

ARTICLE 14

Exclusive application

For the avoidance of doubt it is declared that after the commencement of this Law no security over intangible moveable property may be created under the law of the Island except under the provisions of this Law.

ARTICLE 15

Rules of court

The power to make rules of court under the Royal Court (Jersey) Law, 19484 shall include a power to make rules for the purposes of this Law and proceedings thereunder.

ARTICLE 16

Short title

This Law may be cited as the Security Interests (Jersey) Law, 1983.

 

E.J.M. POTTER,

 

Greffier of the States.


SCHEDULE

(Article 7)

SECURITY INTERESTS (JERSEY) LAW, 1983

Certificate of discharge

 

I, A.B. of (insert name and address of secured party) hereby certify that the security interest created or provided by C.D. of (insert name and address of debtor) under a security agreement dated the
                                         day of                          , 19           , is wholly discharged (or) is discharged in part as follows (here state the description of the part of the collateral in respect of which the security interest is discharged).

Dated:

...........................................

Signature of secured party.

 



1        Tome VIII, page 381.

2        Tome VIII, page 381.

3        Tomes I–III, page 386 and R & O –  5222.

4        Tome VII, page 502.


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