Europeanisation of non-possessory security on movables; a report on the annual meeting of the Dutch Association for Civil Law.

Last Tuesday the Dutch Association for Civil Law convened in the building of the Supreme Court in The Hague to discuss papers written by Prof. Keirse and Prof. Veder, both from the University of Utrecht, on the Europeanisation of patrimonial law. Keirse discussed the Europeanisation of the law of obligations and Veder the Europeanisation of (non-possessory) security rights on movables. I will focus on the paper written by Veder.

For a long time now, legal scholars are of the opinion – though this is not supported by substantial empirical research – that the different regimes with regard to non-possessory securities are an impediment to the functioning of the internal market. Veder gives the example of a German autobus manufacturer who retained title to the autobus supplied to a customer in Spain. When the German manufacturer tried to prevent a seizure of the bus, the retention of title was held invalid because it was not registered in Spain. This was the case in spite of the fact that at the time of delivery of the goods, such a registration was not possible according to Spanish law, as the autobus was still in Germany.

Veder assesses a long list of failed European initiatives in this area and comes to two possible solutions for the problem. The first could be the creation of uniform rules of private international law to deal with the recognition and enforcement by a member-state of security rights created in another member-state. Veder distinguishes the possibility of converting a foreign security right into a local equivalent and the possibility of assimilating a foreign security right as much as possible according to the local law. Veder opts for the latter option, as it would leave the security right intact, be it that it cannot be exercised in so far as that would be contrary to the law of the member-state where the goods are situated. A second solution would be the creation of an optional European security right, after the example of book IX of the DCFR and the UNIDROIT treaty of Cape Town of 16 November 2001, which include the creation of a registry. A question that remains is whether such a European security right would only be valid in cross-border situations.

Intervening on the behalf of the Association were Prof. Struycken and prof. Van Erp. Van Erp regretted the more dogmatic-technical character of the advice and urged a far more fundamental review of the law in order to come to a solution. An example would be the approach taken by Louis d’Avout in France, who is of the opinion that the principle of numerus clausus only serves to prevent the creation of new property rights internally, but should not hamper the recognition of security rights created abroad (Louis d’Avout, Sur les solutions du conflit de lois en droit des biens, Paris: Economica, 2006). Van Erp also signals that a European security right as described by Veder, would be based on Article 9 of the Uniform Commercial Code. The US legislator has emphatically chosen for a single uniform solution, as lawyers were of the opinion that an optional solution would be a dead end. Struycken, in his turn, paints the debate as being one between the realists and the European idealists, himself in the realist camp. A European solution would be politically unfeasible. Moreover, creditors are not looking for legal theories but for legal certainty.

I would agree with this viewpoint in as far as it is true that economic actors cannot be expected to experiment with uncertain solutions. Being as that may, this can hardly be an argument against Van Erp’s call to more fundamental solutions. Whether or not a European security right would be politically feasible is another question. Taking the example of the European rules on financial collateral arrangement, one can argue that this has had quite some influence on the national property regimes of different member-states. Moreover, it is presumably not so much politicians who are interested in preserving national property law dogma’s, but rather nationally-oriented legal scholars who advise these politicians.

Finally, in reaction to the advice of Veder, I have my doubts whether a solution based on uniform rules of international private law would be the way to proceed. A uniform solution on the basis of assimilation of foreign security rights, for instance, would not have prevented the invalidity of the German retention of title, in the example given by Veder.

Willem Loof

read more