British Virgin Islands law does not lay out a specific regime for taking security interests over securities, securities accounts, or deposit accounts. In most financing transactions involving debt securities that are governed by British Virgin Islands law or equity securities issued by a British Virgin Islands business company, the parties will use a British Virgin Islands law security agreement. That is not mandatory, and British Virgin Islands courts, in general terms, uphold the applicability of freely chosen foreign laws. That said, if the entity creating the security interest is incorporated or established in the British Virgin Islands and if the collateral consists of either securities or cash that are held in an account in the British Virgin Islands, there are advantages to ensuring that the documentation for that security interest is governed by British Virgin Islands law.
No matter which law is chosen by the parties to govern the contractual relationship, the British Virgin Islands courts will in most cases apply the lex situs to any “proprietary” issues. The lex situs is the law of the place where the collateral is (or is deemed to be). Any issues of procedure relating to a security interest (no matter the governing law) will usually be governed by British Virgin Islands law if enforcement is being sought in the British Virgin Islands (the so-called lex fori or law of the forum).