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 Cayman Islands law), the Cayman courts will typically recognise and enforce contractual arrangements such as lease termination provisions created under foreign laws. The Cayman 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 Cayman 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 CAACI pursuant to a deregistration power of attorney or IDERA to effect a deregistration. Cayman Islands 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?

See question 19. For aircraft present in, or that are brought to, the Cayman Islands itself, the relevant fees prescribed pursuant to the Airports Authority Law of the Cayman Islands must be paid with respect to such aircraft. Under this law, the Cayman Islands Airports Authority has a lien on every aircraft for the recovery of airport dues, fees and other charges imposed. This Authority may enter, take control of and arrest and sell by public auction or private arrangement in compliance with applicable rules and regulations to that effect any aircraft over which it has a lien. The Authority shall not be a bailee for reward and has no liability for loss or damage occasioned thereby and thereto unless such loss or damage is owing to the wilful neglect or default of the Authority.

Generally, issues of compensation for detention, requisitioning, etc, are typically also dealt with contractually in the transaction or insurance documentation.

Enforcement of foreign judgments and arbitral awards

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

Recognition of foreign judgments

The courts of the Cayman Islands would generally recognise as a valid judgment, a final and conclusive judgment in personam obtained in foreign courts under which a sum of money is payable (other than a sum of money payable in respect of multiple damages, taxes or other charges of a like nature or in respect of a fine or other penalty) or, in certain circumstances, an in personam judgment for non-monetary relief, and would give a judgment based thereon provided that

  • such courts had proper jurisdiction over the parties subject to such judgment;
  • such courts did not contravene the rules of natural justice of the Cayman Islands;
  • such judgment was not obtained by fraud;
  • the enforcement of the judgment would not be contrary to the public policy of the Cayman Islands;
  • no new admissible evidence relevant to the action is submitted prior to the rendering of the judgment by the courts of the Cayman Islands; and
  • there is due compliance with the correct procedures under the laws of the Cayman Islands.

Recognition of foreign arbitral awards

The UK government extended the operation of the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 to the Cayman Islands on 26 November 1980. Subject to the exceptions outlined below, under the Cayman Arbitration Law, foreign arbitration awards are recognised as binding and, upon application to the Cayman Islands court, will be enforced.

Further, subject to the exceptions outlined below, foreign arbitration awards may be enforced under the Cayman Foreign Arbitral Awards Enforcement Law, which applies where the arbitration award to be enforced was made in pursuance of an arbitration agreement in a state which is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards adopted by the 1958 United Nations Conference on International Commercial Arbitration (the Convention).

In general, the courts of the Cayman Islands will enforce a foreign arbitration award made under the Convention or a foreign arbitration award under the Arbitration Law (each an Award) unless it is proved by the party against whom the Award was made that:

  • a party to the arbitration agreement was (under the law applicable to him or her) under some incapacity;
  • the arbitration agreement was not valid under the law to which the parties subjected it or, failing any indication thereon, under the law of the country where the award was made;
  • he or she was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his or her case;
  • the award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration or contains decisions on matters beyond the scope of the submission to arbitration (save that in such case an award on matters submitted to arbitration may be enforceable to the extent these matters can be separated from those not submitted);
  • the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, with the law of the country where the arbitration took place; or
  • the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, it was made.

Enforcement of an Award may also be refused by the courts of the Cayman Islands where the Award is in respect of a matter which is not capable of settlement by arbitration or where it would be contrary to the public policy of the Cayman Islands to enforce such an Award.

A foreign arbitration award may also be enforced in the Cayman Islands pursuant to common law principles by action on the award.