The Security Interests (Jersey) Law 2012: what Rassmal v ASG means for security enforcement and valuation

When it comes to Jersey security enforcement, the Royal Court’s decision in Rassmal v ASG provides valuable insight for lenders.

Article 46 of the Security Interests (Jersey) Law 2012 (SIJL 2012) lays down clear rules when it comes to security enforcement: a secured party who appropriates or sells collateral has a duty to take all commercially reasonable steps to determine or obtain the fair market value of the collateral at the time of the appropriation or sale. But what does determining or obtaining "fair market value" mean in practice? And what is considered to be "commercially reasonable" in the context of an appropriation or sale by a secured party? 

The Court's decision in Rassmal Investments LLC v Mubarak Abdullah Al Suwaiket & Sons [2025] JRC 220 (Rassmal v ASG) builds on and refines the approach taken in earlier Jersey cases.

In practice, the cases point to a clear set of expectations for lenders:

• a credible, evidence-based valuation process is required – not just a valuation (Rassmal v ASG)
• valuation methodology matters as much as outcome – flawed assumptions will undermine reliance (Rassmal v ASG)
• independent valuers are necessary but not sufficient – lenders must interrogate the analysis (Rassmal v ASG)
• an open market sale is not required, but pricing must still be properly tested (Re Bayswater Road (Holdings) Limited [2019] JRC 102) (Bayswater)
• single valuations are risky where there is potential upside (Kidd v All Service Group Holdings [2019] JRC 221) (Kidd)

The Jersey approach: a secured party's duties on enforcement

Appropriation of collateral

Upon an appropriation of the collateral, the secured party has a duty to take all commercially reasonable steps to determine the fair market value of the collateral at the time of such appropriation, and must act in all other respects in a commercially reasonable manner in relation to the appropriation.

Sale of collateral

Upon a sale of the collateral, the secured party has a duty to take all commercially reasonable steps to obtain fair market value for the collateral at the time of sale, and it must act in a commercially reasonable manner in relation to the sale and must enter into any agreement for sale on commercially reasonable terms. These duties are owed not only to the grantor, but also to any other "interested person" who has an interest in the collateral and has given the secured party written notice of that interest not less than 21 days before the appropriation or sale.

Jersey case law already provides some colour to interpreting the obligations set out in SIJL 2012. A secured party is expected to actively test the market and support its pricing with robust evidence. In Bayswater, the Court found that a secured party had taken all commercially reasonable steps to obtain a fair market value for the collateral because it had made repeated attempts to sell the underlying property owned by the borrower. An independent valuer also confirmed it was unlikely that an offer for the property would be made in excess of the proposed purchase price for the borrower's shares – which was a lot less than the debt owed. Similarly, Kidd flagged the importance of not relying on a single valuation, particularly where there is a chance that the value of the collateral could be worth more than the outstanding debt.

Rassmal v ASG: the facts

This case involved a dispute between two prominent family-owned investment vehicles: Rassmal Investments LLC (Rassmal) and Mubarak Abdullah Al Suwaiket & Sons (ASG). Together, they purchased a prime development site at Vauxhall Cross, London (VX) earmarked for substantial redevelopment. Three Jersey companies, VCI Limited (VCIL) VCI Intermediate Limited (Intermediate) and VCI Property Holding Limited (PropCo) (together, the VCI companies) had been incorporated on behalf of Rassmal to acquire and develop VX. 

The directors of VCIL and PropCo agreed to purchase VX for £94 million. To finance the purchase, Rassmal lent in excess of £30 million to VCIL and an individual investor lent £600,000 which he later converted to equity, becoming a 1% shareholder in VCIL. ASG subsequently invested £35 million in VCIL and was issued 50% of the shares in VCIL, leaving Rassmal with a 49% shareholding. The VCI companies experienced difficulties obtaining third-party lending to pay the balance of the consideration required to complete the purchase of VX. 

To finance the project, ASG provided a sum of £25 million in September 2017 which was notionally repaid and replaced with a second and final loan in the sum of £60 million to VCIL which was subject to a Master Murabaha Agreement. As security for its obligations under the Master Murabaha Agreement, Rassmal granted security in favour of ASG (¹) over its shares in VCIL under a share security interest agreement and (²) over all of VCIL's Jersey situs assets, including its shares in Intermediate under a general security interest agreement.

Difficulties arose when the Master Murabaha Agreement fell into default, and ASG ultimately enforced its Jersey law security as follows:

• In May 2020, ASG appropriated Rassmal’s shares in VCIL, before selling the shares to ASG's own special purpose vehicle, MAMS Holdings Limited (MAMs) for £1 (the first enforcement)
• In December 2020, ASG appropriated VCIL’s shares in Intermediate, before selling the shares to MAMs for £1 (the second enforcement)

As a result of the first enforcement, Rassmal was left with no shareholder interest in the VX project, but it remained a creditor of VCIL. By appropriating VCIL’s shares in Intermediate in the second enforcement, ASG had, effectively, put the assets out of Rassmal’s reach. 

Rassmal challenged ASG’s actions, alleging (among other things) that the shares were substantially undervalued and the enforcement procedure breached good faith and statutory requirements. Specifically, Rassmal argued that the secured party had a duty to sell VX in order to ascertain the true or fair market value of the collateral. In their view, ASG had not established a fair market value for the shares, and that to do so would have required selling the property on the open market.

Rassmal v ASG: the Court's decision

The duty of good faith

The Court clarified that, beyond the statutory requirements, there is no separate and independent duty for the secured party to act in good faith attached to the valuation process. Nevertheless, in this specific scenario, the parties’ relationship took on quasi-partnership and joint venture characteristics, so the security was treated as a “relational contract” to which an implied duty of good faith applied. The Court then found no breach of this duty on the facts.

The first enforcement: commercially reasonable steps 

The Court expressly rejected Rassmal’s argument that in order to determine fair market value, the secured party had a duty to sell VX on the open market. Building on Bayswater and Kidd, the Court confirmed that instructing a valuer or valuers in order to determine fair market value of the collateral at the time of appropriation would have been, and was, commercially reasonable in all the circumstances of this case.

To determine whether ASG had taken "all commercially reasonable steps", the Court adopted the principles set out in the English case of ABT Auto Investments v Aapico Investment Pte Limited [2022] EWHC 2839 (Comm) (ABT). In summary, the Court adopted the following practical principles for assessing whether a valuation process is commercially reasonable:

• if the third-party valuer has not carried out the valuation in a commercially reasonable manner, the collateral taker cannot say that it has been commercially reasonable simply on the basis that they themselves have acted reasonably in retaining an apparently competent third party to do the work
• it is the methodology used for the valuation which must be commercially reasonable — It does not necessarily follow that the result itself must be a commercially reasonable one
• the requirement for the valuation to be made in a commercially reasonable manner imports an objective standard
• the question of what, in any given case, is commercially reasonable is fact-sensitive, several approaches to valuation may all be commercially reasonable — it will depend, in each case, on the particular facts
• there is no separate and independent requirement for the collateral taker to act in good faith, and no room for the implication of any of the equitable or other duties associated with the law of mortgage in English law

The Court concluded that ASG had not taken all commercially reasonable steps to obtain fair market value in this instance. While ASG did use multiple professional valuers, the valuations were found to be outside a commercially reasonable range, had been unduly influenced by the enforcement context and failed to account for prospective development of the site resulting in an unacceptable margin of error that rendered the valuations not representative of fair market value. Crucially, the Court emphasised that responsibility for ensuring a commercially reasonable valuation rests with the secured party regardless of the valuers' steps and the requirement for the valuation to be carried out in a commercially reasonable manner is an objective standard. 

Importantly, breaches of valuation obligations do not automatically invalidate enforcement. Instead, the Court relied on its own ability (as affirmed in ABT) to substitute its own valuation and make consequential orders.

The second enforcement: improper purpose

Enforcement must be for a proper purpose, such as to discharge the secured obligations. In ABT, it was considered settled law that where enforcement of a security interest is wholly for a collateral purpose (meaning for an ulterior motive other than to secure the repayment of the debt and, in the event of default, to enforce the lender's rights to recover their money) that enforcement is void. However, the secured party does not need to have "purity of purpose", meaning that its only motive is recovery: there may be additional purposes from which the secured party benefits. 

The Court was satisfied that in the first enforcement ASG was enforcing its security for a proper purpose and not a collateral purpose. However, the Court considered that the second enforcement was undertaken for an improper and collateral purpose. Namely to obstruct a theoretical claim by Rassmal against VCIL, rather than to realise the value of security. As a result, the second enforcement was void. The Court did, however, comment that although the second enforcement was not carried out in good faith or for a proper purpose, it had little practical effect as Rassmal no longer had any equity in the structure following the first enforcement. 

There is some debate as to whether the Court should have applied the proper purpose test, in circumstances where, in its judgment, the Court confirms that the SIJL 2012 is a "self-contained code in relation to the taking of security" and that there is no space for the implication of equitable duties derived from the English law of mortgages. Serious issues may have arisen if, following the second enforcement, ASG had sold the shares to a third-party purchaser. The Court did note that where there had been a breach of duty to obtain a fair valuation or fair price, presumably the Court can either award damages to the grantor or set aside the appropriation. Perhaps awarding damages would have been the better choice, to provide certainty of title.

Summary

Ultimately, while the Court criticised elements of the valuation process used by ASG, it dismissed Rassmal’s substantive claims.

Key takeaways: best practice for lenders 

This case provides important guidance for those advising on the enforcement of Jersey law security, especially in complex structures. 

Commercially reasonable steps

While an open market sale is not required to obtain fair market value, lenders must take all commercially reasonable steps to achieve fair market value. This all depends on the facts of the matter and will introduce an objective standard. Where valuations fall short of what is reasonable, the Royal Court has discretion to set aside those valuations and substitute its own assessment.

Engagement of professional valuers

Lenders must actively interrogate valuations. Simply instructing a third-party valuer will not, on its own, satisfy statutory obligations. If the third-party valuer has not carried out the valuation in a commercially reasonable manner then a secured party cannot say it was acting commercially reasonably even though it was reasonable to instruct a competent third party to do the work. Secured parties must scrutinise valuation methodologies and valuations that are overly context-driven will fall short of the required standard.

Flexible enforcement mechanisms

The SIJL 2012 provides a secured party with extremely wide discretion on how to deal with enforcement and permits swift and efficient security enforcement - but only if objective legal standards are met. Notably, breaches of valuation duties may not automatically invalidate enforcement actions.

How should this decision impact my approach to enforcing Jersey security?

While the SIJL 2012 continues to offer flexible and efficient enforcement options, Rassmal makes clear that those benefits depend on a robust, evidence-based approach to valuation and decision-making. In particular, lenders should ensure that they:

• actively interrogate valuation evidence, rather than relying on it at face value
• are comfortable that the methodology used is commercially reasonable, not just the headline result
• can demonstrate a credible and well-documented process for determining or obtaining fair market value

Ultimately, this decision reinforces that Jersey remains a reliable and creditor-friendly regime, but one in which the Court will expect discipline and rigour in how enforcement decisions are taken and evidenced.

How can Ogier’s Jersey specialists help?

Our Banking and Finance team works closely with financial institutions, private lenders, intermediaries and insolvency practitioners and those providing lending into Jersey structures and contemplating security enforcement. Contact our specialists for more information on compliance with the SIJL 2012. 

Ogier’s Dispute Resolution team is on hand to advise on all aspects of banking disputes, including contentious Jersey security enforcement matters.

About Ogier

Ogier is a professional services firm with the knowledge and expertise to handle the most demanding and complex transactions and provide expert, efficient and cost-effective services to all our clients. We regularly win awards for the quality of our client service, our work and our people.

Disclaimer

This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.

Regulatory information can be found under Legal Notice