The Portuguese Presidency of the EU Council wishes to take forward discussions on the Regulation on the law applicable to third-party effects of assignments of claims (see EUROPE 11979/1). To this end, it has drawn up a compromise proposal on one of the particularly thorny issues in this dossier, namely secured claims.
The text, dated 12 February and obtained by EUROPE, is expected to be discussed at the meeting of the EU Council Working Party on Civil Law Matters, on 22 February next.
The proposal deals with the third-party effects of the assignment of claims, but not with the third-party effects of the transfer of the security securing the claim, which are governed by national conflict-of-laws rules. Several options for resolving this issue have been discussed, but there is still no consensus among Member States.
The working group has already considered an option to include a specific conflict-of-laws rule designating the State where the asset is situated or under whose authority the register is kept as the applicable law, an option which was considered unacceptable by many delegations.
It also considered an option specifying that the common conflict-of-laws rule provided for in the Regulation will apply, without prejudice to the formalities or registration required in connection with the transfer of any security guaranteeing the payment of the assigned claim (see EUROPE 12516/9). Here again, however, this solution raised many questions.
According to the Portuguese Presidency of the EU Council, this lack of consensus stems from the fundamental differences between the legal orders and registration systems of the Member States. Thus, in order to break the deadlock, it believes that a compromise solution is needed that “takes into account the advantages and disadvantages of all the options discussed”.
To this end, the Presidency proposes a conflict-of-laws rule “with limited application”, only where the law of the State under whose authority the register is maintained imposes specific registration requirements affecting the priority of the secured claim. In this case, the law of the State under whose authority the register is kept would replace the law designated as applicable by the Regulation.
However, in order to activate this provision, the requirements imposed would have to be indispensable and would apply irrespective of the country where the assignment of the claim is concluded and irrespective of the law governing the contract.
In order to also take into account cases where the claim is secured by assets subject to registration under the laws of different States, this rule could point to two or more different laws. In this regard, the Presidency proposes to resolve these possible conflicts of laws by giving priority to the law of the State where the requirements were first met by the competing claimant.
According to the Presidency, this solution would guarantee “a higher degree of legal certainty” and would preserve Member States’ long-established registration rules, while preventing litigation.
See the Portuguese proposal: http://bit.ly/3qucQaP (Original version in French by Marion Fontana)