1. What international aviation conventions has your jurisdiction signed and/or ratified?
The British Virgin Islands is not a signatory (or party by extension from the UK) to the Rome Convention, the Geneva Convention, the Chicago Convention or the Cape Town Convention.
In relation to the Chicago Convention, however, certain provisions of that Convention with which the United Kingdom is obliged to ensure that its overseas territories comply (including the British Virgin Islands) are reflected in the Air Navigation (Overseas Territories) Order 2013 ("ANOTO").
The British Virgin Islands is, by Order-in -Council from the United Kingdom, a party to the New York Convention.
2. If your jurisdiction has signed and ratified the Cape Town Convention: a. Which qualifying declarations (opt-in and opt-out) has your jurisdiction made under the Cape Town Convention? b. Does the Cape Town Convention take priority over conflicting national law?
3. Will a court uphold the choice of a foreign governing law in respect of the following contracts and if so, please also state any conditions or formality requirements to this recognition a. Lease and b. Security document (for example, mortgage)?
The choice of foreign laws as the governing law of a lease is a valid choice of law and would be recognised and given effect to in any action brought before a court of competent jurisdiction in the British Virgin Islands, except for those laws (i) which such court considers to be procedural in nature, (ii) which are revenue or penal laws or (iii) the application of which would be inconsistent with public policy, as such term is interpreted under the laws of the British Virgin Islands. The submission in the Lease to the non-exclusive jurisdiction of the Foreign Courts is valid and binding.
4. Please confirm whether it is (i) customary and (ii) necessary to also take a local law mortgage and if so, why?
No it is not customary or necessary.
5. Are foreign judgments recognized and enforceable by courts of your jurisdiction and if so, please also state any conditions or formality requirements to this recognition (for example, do you require a local court order confirming such recognition)?
In respect of Australia, Bahamas, Barbados, Belize, Bermuda, Grenada, Guyana, Jamaica, Nigeria, St. Lucia, St. Vincent, Trinidad and Tobago, United Kingdom courts: A final and conclusive judgment in the superior courts of the Foreign Courts against a Company under which a sum of money is payable (not being in respect of multiple damages, or a fine, penalty, tax or other charge of similar nature) would, on registration in accordance with the provisions of The Reciprocal Enforcement of Judgments Act (or, where applicable, the Foreign Judgments (Reciprocal Enforcement) Act), be enforceable in the High Court of the British Virgin Islands against the Company without the necessity of any retrial of the issues which are the subject of such judgment or any re-examination of the underlying claims. For all other courts: The courts of the British Virgin Islands would recognise as a valid judgment, a final and conclusive judgment in personam obtained in the foreign courts against a company 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) and would give a judgment based thereon provided that (a) such courts had proper jurisdiction over the parties subject to such judgment, (b) such courts did not contravene the rules of natural justice of the British Virgin Islands, (c) such judgment was not obtained by fraud, (d) the enforcement of the judgment would not be contrary to the public policy of the British Virgin Islands, (e) no new admissible evidence relevant to the action is submitted prior to the rendering of the judgment by the courts of the British Virgin Islands and (f) there is due compliance with the correct procedures under the laws of the British Virgin Islands.
6. Is your aircraft registry an owner-register (registering ownership interests) or an operator-register (registering interests as operator)? Please also state any conditions, procedural steps or formality requirements for such registration and explain how this is evidenced (for example, the issuance of a Certificate of Registration)
The British Virgin Islands is an overseas territory of the United Kingdom. As such, the register of aircraft is governed by ANOTO. Air Safety Support International, a wholly owned subsidiary of the Civil Aviation Authority of the United Kingdom, acts as the oversight regulatory body for the Overseas Territories of the United Kingdom. There are currently only 5 aircraft registered in the British Virgin Islands all in the names of locally registered companies. Requirements for registration of aircraft are fully set out in the ANOTO. This includes who is considered to be a qualified person for registration. Such qualified persons are:
- The Crown in right of Her Majesty's Government in the United Kingdom or in the right of the government of the BVI;
- United Kingdom Nationals;
- Commonwealth Citizens;
- Nationals of any European Economic Area (EEA) state;
- Bodies incorporated in any part of the Commonwealth that have their registered office or principal place of business in any part of the Commonwealth.
The Governor of the British Virgin Islands is the authority for the registration of aircraft in the British Virgin Islands and is responsible for maintaining the register in a legible form.
An application for registration of an aircraft in the British Virgin Islands must be made in writing to the Governor and must include or be accompanied by the particulars and information specified in the Governor's published requirements.
Upon receiving an application for registration of an aircraft, the Governor must register the aircraft upon being satisfied that the aircraft may properly be so registered and must include in the register such particulars that the Governor may specify.
The Governor must supply to the registered owner a certificate of registration.
The certificate issued by the Governor sets out the following information:-registration mark, aircraft type and serial number, name of registered owner (and whether such a "registered" owner holds a charter by demise) and the nationality of the registered owner.
7. Is there a security document register in your jurisdiction where a mortgagee's interests will be recorded? If so, please also state any conditions, procedural steps or formality requirements for such registration and explain how this is evidenced (for example, the issuance of a certificate or official stamp on the security document)
A BVI company is required to keep a register of all charges. To the extent that a security document creates a charge, particulars of the charge must be entered in the register of charges and a copy of the register must be kept at the office of the registered agent. It may also be desirable to ensure priority in the BVI that the particulars of charge are register with the BVI registrar of corporate affairs (the "Registrar") pursuant to section 163 of the BVI Business Companies Act, 2004 (as amended). Upon registration the Registrar will issue a certificate of registration.
8. What is the effect of registration of: a. Ownership interest (for example, proof of title to third parties of ownership) b. Lease (for example, perfects the status of the Lessor under the Lease) c. Security document (for example, secures priority over later registered security). If there are any interests that could rank prior to the security document please state these
a. Ownership interest
Registration of an ownership is prima facie evidence of title and therefore is proof of title to third parties.
Registration of a lease perfects the status of the lessor under the lease.
c. Security document
Registration of a charge will ensure priority in the BVI over a charge on the property that is subsequently registered in accordance with section 163 and a charge on the property which is not registered in accordance with that section provided that a registered floating charge is postponed to a subsequently registered fixed charge unless the floating charge contains a prohibition or restriction on the power of the company to create any future charge ranking in priority to or equally with the charge.
9. What types of lease are recognized in your jurisdiction (for example, translation, notarization, apostille, legalization etc.)?
All types of lease are recognized. There is no requirement for notarization, apostille or legalization. If the lease is not in English it should be translated.
10. What formalities are required to perfect Lessor's rights under a lease in your jurisdiction?
The persons qualified to a leasehold interest or charter by demise are listed in section 6. Application is made to the Governor for registration. In general terms, the Governor will not concern himself with the terms of the lease.
11. Are the ownership rights relating to engines recognized as separate and distinct from the ownership of the rest of the aircraft in your jurisdiction? Please highlight any separate registration, filing or additional formalities that are required to be completed to perfect Lessor's interest in the engines
Ownership rights to engines are typically subject to mortgage and may be registered in the BVI aircraft registry (if the aircraft is registered in the BVI). Application is made to the Registrar accompanied by the appropriate fee and a copy of the mortgage deed. Otherwise, a foreign mortgagee can register the mortgage over the engine under S. 163 if the borrower /lessor is a BVI entity.
12. What form does security over aircraft generally take in your jurisdiction?
A typical security package for a financing involving a BVI company will consist of an aircraft mortgage, a security assignment of the borrowing party's contractual rights (e.g under the relevant lease agreements, the lease rentals or insurances) and a deregistration power of attorney or IDERA. It is often the case that the lenders will take security over the shares of the owner or borrower. Save where the shares are of a BVI company these documents are not typically governed by BVI law.
13. Are there any particular terms or characteristics that such a security document must take (for instance, a cap on the secured liabilities)?
There are no particular terms or characteristics that such security documents must take.
14. Are there any perfection requirements for such security document? If so, please state any conditions, procedural steps, formality requirements or documentation (for example, corporates, list of directors etc.) required to effect this
There are no perfection requirements in the BVI. As noted above registration under section 163 ensures priority of the charge. A notation on the register of members filed with the Registrar puts third parties on notice that the shares of a BVI company have been charged.
15. Summarize any captive insurance regime in your jurisdiction as applicable to aviation.
No such regime exists in the BVI.
16. Are cut-through clauses under the insurance and reinsurance documentation legally effective in your jurisdiction?
There are no BVI statutory provisions in relation to such clauses. The position under BVI law will reflect English common law principles (which are of persuasive, if not binding, effect before the courts of the BVI.
17. Are there minimum requirements for the amount of third-party liability cover that must be in place in your jurisdiction?
There are no specific BVI law requirements.
18. Can a mortgagee (or equivalent security interest holder) or lessor following an event of default under a mortgage (or equivalent security document) or lease, respectively, take possession of the aircraft without judicial intervention in your jurisdiction? Please also state any conditions, procedural steps, formality requirements or documentation (for example, original, legalized, translated Lease/Mortgage, corporates etc.) required to effect this
Yes. Subject to enforceability considerations under the governing law, the lex situs and any other laws ( other than BVI law), the BVI courts will typically recognize and enforce contractual arrangements such as lease termination provisions created under foreign laws. The BVI courts would also generally recognize self-help remedies by which the counter-parties may take possession of the aircraft. There are no formality requirements.
19. How can a mortgagee (or equivalent security interest holder), lessor under a lease or designee/beneficiary of an IDERA deregister the aircraft? Please also state any conditions, procedural steps, formality requirements or documentation (for example, original, legalized, translated Lease/Mortgage/IDERA etc.) required to effect this
A mortgagee (or equivalent security interest holder) may deal 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.
20. Can the government or the lessee lawfully prevent the repossession or deregistration and if so, in what circumstances
21. If judicial intervention is required, please describe the process? Please also state any procedural steps, length of time to complete and advise as to documentation required
22. How is legal title transferred under the laws of your jurisdiction? Please also state any conditions, procedural steps, formality requirements or documentation (for example, corporates etc.) required to effect this
Title is transferred by way of a bill of sale. There are no formality requirements.
23. Are there any restrictions on the sale of an aircraft following enforcement (for example, the requirement to obtain a court order or conduct a public auction or other action in order to sell the aircraft upon enforcement)
There are no restrictions in the BVI.
24. Would lease rentals be subject to tax (for example, withholding or income tax)? Please also state if there are any conditions for such tax to be imposed and any steps usually taken to mitigate this
Lease rentals would not be subject to any taxes in the BVI either withholding or other taxes.
25. Would a sale of an aircraft in your jurisdiction incur sales tax? Please also provide details of amount or calculation and any steps usually taken to mitigate this
26. Are there any restrictions on the import or export of aircraft in your jurisdiction and would such importation or exportation incur any liability as to customs or taxes? Please also state if any consents or approvals are required and the procedural steps taken to obtain these, and any procedural steps or formality requirements to mitigate any taxes
All imports into the BVI are subject to import tax. There are no restrictions.
27. Are there any foreign exchange restrictions on transfers of funds
There are no foreign exchange controls.
28. How successful have foreign creditors and lessors been in enforcing their security and lessor rights over and successfully repossessing aircraft in a timely manner?
We are not aware of any enforcement precedents in the BVI.
29. What government led reforms affecting creditor and lessor rights are currently underway in the aviation sector in your jurisdiction?
There are no government led reforms underway.
30. Please describe any interesting legal development in your jurisdiction (for instance, decided court cases or arbitral awards) which affect creditor and lessor rights?
There have been no developments which affect creditor or lessor rights.
31. Please discuss any relevant governmental regulations implemented in your country to help alleviate the financial and other difficulties faced by airlines in your jurisdiction caused by CoVid 19 and whether that will impact rights of lessors (who lease aircraft to the airlines) and lenders (who finance such aircraft which are mortgaged in favour of the lenders)? Are such governmental regulations expected to be in place until the difficulties faced by airlines caused by the CoVid 19 subside or are they more long term?
There have been no government regulations implemented to help the difficulties faced by airlines.
This article was originally published in The Legal 500.
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.