Jersey: Jersey Security - Revolution Not Evolution?

Last Updated: 23 September 2013
Article by James Gaudin

The new Security Interests (Jersey) Law 2012 (the New Law) has been a long time coming. The draft of the New Law received the approval of the States of Jersey as early as July 2011, and privy council approval on 10 July 2012 but implementation has been delayed by important debate concerning the scope of the New Law and, in particular, the mechanism for registration of security interests. That debate culminated with subordinate legislation amending the New Law in the shape of the Security Interests (Amendment of Law) (Jersey) Regulations 2013. Still, good things come to those who wait.

The New Law is set to see a phased implementation and promises to revolutionise the methods for taking and enforcing security in Jersey.

Phased Implementation

Phase 1 begins on 1 October 2013 and permits registration of existing outright assignments of receivables for a period of three months until Phase 2 is implemented. Phase 2 begins on 2 January 2014 and brings into force the remaining provisions of the New Law related to security over intangible moveable property. Phase 3 relates to securities over the rest of tangible movable property, and these provisions are expected to be implemented in late 2014. The New Law also includes transitional provisions to deal with security interests created under the Security Interests (Jersey) Law 1983 (the 1983 Law), which the New Law replaces.

Key Provisions of the New Law

The New Law provides a security framework far better suited to the complex cross border financing arrangements that are a feature of the Jersey financial services industry, whilst retaining a pragmatic flexible approach. Key provisions include:

  • Greater Collateral Scope - The classes of collateral over which security may be taken under the New Law are far wider than previous legislation. The New Law includes security over the proceeds of sale of collateral, book debts and present and future property. Furthermore, the taking of "whole business" security will be permitted, creating a security of all intangible moveable assets of a borrower.
  • A Register of Securities - A comprehensive system of registration and priority has been introduced, with the creation of a Securities Interest Register. The Register will be an online directory hosted by the Jersey Financial Services Commission and will be open to public searches; making it accessible, current and transparent. The ability to register security interests will be placed in the hands of law firms and other registered providers to provide flexibility of registration in transactional scenarios. It is important to note that security interests created under the 1983 Law will retain priority under the transitional provisions without the need for registration, and also that trusts will not be required to register.
  • Clarification on Priority - A clear set of rules have been provided to deal with priority of security interests created under the New Law. The concepts of attachment and perfection are introduced in Jersey for the first time. These sit neatly alongside the registration process and should ensure that priority is never surrendered as a result of documents or certificates being misplaced. This provides greater protection and certainty in insolvency scenarios.
  • Enforcement Power - Enforcement powers available to secured parties have been widened significantly. Where the 1983 Law provided only for a power of sale, the New Law includes specific powers for secured parties to appropriate and deal with collateral on behalf of the grantor. No notice is required to be given to the grantor prior to enforcement.
  • Dealing with Property - Grantors of security under the New Law will be able to continue to "deal" with collateral during the subsistence of a security interest without potentially jeopardising the validity of that security.
  • Third Parties - The New Law also specifically permits the granting of security in respect of third party obligations without the need for guarantees to be entered into. Secured parties are also able to agree to subordinate their security interests to the interests of any other transaction party.

What Should Transaction Parties do Next?

Don't panic – security interests created under the 1983 Law will retain priority over any security interest created under the New Law, unless amended to include additional collateral. Prudent lenders should consider:

  • Updating standard security agreements for compliance with the New Law (these will not be required until Phase 2);
  • Updating internal policies and procedures for compliance with the New Law, in particular to cover registration and alternative options where public registration might be commercially sensitive to borrowers;
  • Updating documentation and procedures for proposed extensions and amendments to existing secured facilities, for example, upgrading the terms favourable to lenders and considering registration to avoid inadvertently losing priority upon amendment;
  • Reviewing security suites to consider whether perfection of a particular security interest by registration on or around 1 October 2013 might be beneficial;
  • Reviewing the options for facilities in default, for example, taking additional collateral or using wider enforcement powers such as appropriating or taking control of collateral, rather than exercising a power of sale;
  • Considering whether the New Law affords fresh opportunities in terms of the type of collateral available to be secured or implementation of new products or facilities.

Existing Security Interests under the 1983 Law

The New Security Law contains transitional provisions which will preserve the validity of existing security interest agreements. There will be grandfathering of security interests created under the 1983 Law so existing security interest agreements will not have to be amended or publicly registered once the New Security Law comes into force. However, we believe that in many cases lenders will wish to improve their position by requiring that existing security interest agreements be amended or replaced once the New Law comes into force (for example, in reliance on further assurance provisions in existing documentation referring to the New Law).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Bedell Cristin
Hatstone Lawyers
Bedell Cristin
Collas Crill Jersey
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Bedell Cristin
Hatstone Lawyers
Bedell Cristin
Collas Crill Jersey
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions