Enforcement measures

Repossession following lease termination

Outline the basic repossession procedures following lease termination. How may the lessee lawfully impede the owner’s rights to exercise default remedies?

Subject to enforceability considerations under the governing law, the lex situs and any other relevant laws (other than BVI law), the BVI courts will typically recognise and enforce contractual arrangements such as lease termination provisions created under foreign laws. The BVI courts would also generally recognise self-help remedies by which the counterparties may take possession of the aircraft.

Enforcement of security

Outline the basic measures to enforce a security interest. How may the owner lawfully impede the mortgagee’s right to enforce?

Similarly, the BVI courts would typically recognise self-help remedies in the context of an enforcement of security interests over the aircraft (and often over the shares of the aircraft-owning vehicle), for example, by dealing directly with the Governor pursuant to a deregistration power of attorney or IDERA to effect a deregistration. BVI law will generally also respect the secured parties’ security interests in the event of the insolvency of the relevant obligor.

Priority liens and rights

Which liens and rights will have priority over aircraft ownership or an aircraft security interest? If an aircraft can be taken, seized or detained, is any form of compensation available to an owner or mortgagee?

While not definitive, it is believed that the following aircraft liens exist under BVI law:

  • possessory lien - a common law lien, which requires that the lienholder has continuous possession of an aircraft on which it has bestowed labour authorised by the owner which has improved the aircraft in some way; and
  • contractual lien (including pledge) - a lien created by contract. For example, the owner of an aircraft may pledge it to a creditor as security for a debt, or a lien may arise as a result of a person expending labour on an aircraft that improves its value in some way in accordance with a contractual agreement (such as frequently occurs in respect of aircraft repairs).

The law in the BVI with respect to salvage liens is unclear, since the BVI has no statutory provision similar to the UK Civil Aviation Act 1982, section 87. It is uncertain whether an aircraft salvage lien can be asserted in the BVI or whether the maritime salvage liens established by the Merchant Shipping Act 2001 would be extended to apply to aircraft.

It is possible to register contractual liens in the BVI. Generally, an aircraft lienholder will not have to apply to the BVI courts to enforce its lien, since it will have a contractual right to undertake such action. An exception is a possessory lien where the lienholder has no general right to sell an aircraft without the consent of the court.

Enforcement of foreign judgments and arbitral awards

How are judgments of foreign courts enforced? Is your jurisdiction party to the 1958 New York Convention?

The BVI is, by Order-in-Council from the United Kingdom, a party to the New York Convention. In the BVI the recognition of a foreign judgment is either by registration, by an action at common law on the debt (if the judgment is for a sum of money) or by bringing a fresh action. Registration is only available in very limited circumstances prescribed by statute. The relevant act is the Reciprocal Enforcement of Judgments Act 1922 (the Act). Pursuant to the Act, to be eligible for registration a judgment must be obtained:

  • in a court of superior jurisdiction;
  • for a sum of money; and
  • from a recognised jurisdiction.