The transfer of receivables in securitisations under Scots and French law

Abstract

Modern business requires a convenient, cost-effective method of transferring ownership in bulk debts to facilitate securitisations. Under Scots and French law, where notice to the debtors is a constitutive element in the transfer under the law of assignation (assignment), this goal has not been attained and legal practitioners have had to find ways of circumventing the law of assignation to help business to obtain finance. This unsatisfactory situation has been addressed in France by the legislature. There are now statutory exceptions to general rules on assignation found in the French Civil Code to encourage securitisation, but in Scotland the law remains unreformed and out-of-date. The Scots law of assignation is a 500-year old legal transplant from French law. This paper suggests that the law on the transfer of bulk debts should be modernised in Scotland and it examines the French solutions and other relevant law reform options.