Secured Transactions Law Research Articles

The efficient enforcement challenge of secured transactions law reforms in civil law systems—self-help repossession, strict foreclosure, and other methods for the acceleration of enforcement of security interests

Abstract Although the forging of an efficient system for enforcement of security interest is one of the central expectations of secured transaction law reforms in civil law systems, the results hardly give reason for satisfaction. As the reforms tend to be supported and influenced by various international organizations’ projects (especially the World Bank, the European Bank for Reconstruction and Development, the International Institute for the Unification of Private Law, and the United Nations Commission on International Trade Law), most out-of-court methods of enforcement of security interests have played a central role. Yet due to civil law’s general hostility towards self-help as such, either the introduction of the concept has been rejected or the local limited-reach kin have been merely ‘paper tigers’. Similarly, although security interests on several types of collateral (accounts, investment property) or on the workhorse of the English financial system—the floating charge—have also been enforced extrajudicially (save the exceptions), little attention has been attributed to these enforcement modalities. The same applies to strict foreclosure in civil law systems still being prohibited, or restricted, and thus rarely resorted to, due to the inherited hostility towards the doctrine of lex commissoria. Rethinking local laws on preliminary and temporary court orders to match them with such globally known ex parte preliminary measures as the English Mareva Injunction or the French Saisie Conservatoire, which allow creditors to swiftly freeze debtors’ assets and thus substitute self-help repossession, has also been given short shrift. The enforcement segment, consequently, remains the Achilles’ heel of secured transaction law reforms in civil law systems. This article desires to contribute to reform literature by addressing these deficiencies and by offering tested, fully or partially fitting, functional equivalents of self-help repossession.

Comparative secured transactions law: how and to what extent do global standards affect the reform of Japanese inventory financing law

Abstract Since March 2021 Japan has been undertaking official legislative discussions at the Committee of Secured Transactions Law Reform under the Legislative Council of the Ministry of Justice Japan to draft a statute of secured transactions of personal property. These discussions are now in their final stages. Enhancing the reliability and feasibility of security devices for inventory financing is the core purpose of the proposed legislation. As a result of policy-making decisions, the conventional Japanese security device of ownership transfer for security purposes will not be replaced by a new regime which reflects the modern principles originating from the UCC9 and illustrated in the UNCITRAL Model Law on Secured Transactions. However, the significance of such global standards in the context of Japanese law has been two-fold. First, they illustrate what conventional Japanese law achieves through its own alternative rules. Second, the Council Committee is likely to propose several changes to refresh our conventional security device by adding new principles which have traditionally been of less concern to Japanese practitioners. In this article, the author substantiates the influence of these global standards on Japanese legislation. This article focuses on the functional approach taken by the ownership transfer type security interest, the rules relevant to publicity of security interests as modified by the first-to-register-or-possession rule as suggested by global standards, the concept of aggregate of inventory as collateral as modified by registration to cover perfection in security interests in goods joining the aggregate after a debtor's dishonest disposition, and the assignment of accounts receivables accompanied with ownership transfer of inventory which may be viewed as functionally close to security interests in proceeds of inventory.

Digital assets and private law: is there a need for a uniform law?

Abstract The various legislative initiatives around the world on the private law aspects of digital assets are a clear indication of both the importance and the urgency of preparing rules of law to adjust private law in general and secured transactions law in particular to address emerging technologies. All these initiatives raise the question whether principles would be sufficient or whether a uniform law would need to be prepared. The purpose of this article is not to attempt to answer this question but rather to advance the discussion setting out some arguments in favour and against, and to suggest a mechanism, a procedure through which States and industry could reach consensus on the most appropriate answers.

Van de Plas, Inge: Retention of Title in Secured Transactions Law from a Creditor's Perspective.

Van de Plas, Inge: Retention of Title in Secured Transactions Law from a Creditor's Perspective.

The Incompatibilities of the Secured Transactions Law Reform in Nigeria with Access to Credit: What Did the Lawmakers Get Wrong?

In 2017, the Nigerian National Assembly passed the Secured Transactions in Movable Assets Act (STMA), which is predicated on the theoretical underpinnings of Article 9 of the U.S Uniform Commercial Code (UCC Article 9), precisely its unitary-functional approach to secured financing. The STMA claims that its overall aim is to expand access to affordable credit especially for individuals and small businesses. Yet, despite this laudable ambition, certain provisions of STMA significantly betray its aim and objectives, mainly due to the reformers ostensible lack of a proper understanding of STMA’s ancestry, i.e., the UCC Article 9 and its case law jurisprudence that has developed over a period of seven decades. One of STMA’s defects which largely ignore the realities faced by most of the small businesses and individuals in need of credit financing, is its requirement of them to provide an insurance cover as a precondition for concluding a valid security agreement. Similarly, its private enforcement mechanism which requires an advance notice as well as the unwise involvement of the Nigeria Police in repossession of collateral is problematic: this could be a fertile ground for more cases of police brutality and corrupt practices. Through a doctrinal analysis, comparing the STMA provisions with those of UCC Article 9, the paper shows how certain provisions of the former are inimical to its overall aim and objectives. The paper also suggests transplantable solutions that are likely to assist Nigerian lawmakers in reforming this important legislation.

Reform of the secured transactions law in Japan: the form and function tested against the global standard

Abstract Since 2021, the reform of the secured transactions law is officially tabled before the Legislative Council of Japan. Prior to this official deliberation, three preparatory study groups, each sponsored by the Ministry of Justice, Small and Medium Enterprise Agency and Financial Services Agency, discussed the agenda. With differences in the details, these three groups have proposed introducing the new approach to secured transactions, namely enabling the creation of security interests in all the debtor’s assets without specifying each piece of asset included. These arguments indicate that the modern principles of secured transactions that have emerged from the global efforts towards unification and harmonisation affect domestic law reform.

The overlooked building blocks of secured transactions law reforms: policing and the role of organized industries

Abstract Two interlinked building blocks of secured transactions law have often been overlooked during the most recent round of secured transactions law reforms: the role of policing (monitoring) of the debtor and its affairs, and the role of institutionalized industries in the efficient working of secured transactions systems. Policing is often ignored because Article 9 of the Uniform Commercial Code (UCC)—the top global benchmark—made policing optional by discarding the ‘Benedict rule’, which had conditioned the validity of liens upon the secured creditor’s strict monitoring the debtor’s affairs. This shift was perceived as a positive development because it made the recognition of the most comprehensive security device—the floating (blanket) lien—possible. However, what many sources overlook is that parallel with this volte face, the risks corollary to the failure to monitor were transferred entirely onto secured creditors (banks and other financiers). In the USA, professional industries offering policing services were developed prior to the promulgation of the UCC, thanks precisely to the 1925 Benedict v Ratner case from whence the Benedict rule was derived. Moreover, these policing practices—the so-called ‘Benedict ritual’—had already become customary in the industries that were reliant on secure transactions law. This ‘know-how’ and the act of professional industries implementing it simply do not exist in many recipient reform countries. Similar to policing, equally disregarded is that the success of US secured transaction law is fundamentally attributable to the existence of ‘non-banking financial organizations’ specialized in various financing practices that exploit this branch of law, from the industries specializing in independent equipment leasing to those engaged in receivables financing. In contrast, the financial systems of countries interested in implementing major reforms tend to be dominated by conservative universal banks with limited capabilities. This article aims to cast a closer light on these neglected yet pivotal corollaries of secured transactions law.

Uniform secured transactions law: the Model Inter-American Law and the UNCITRAL Model Law on Secured Transactions compared

Abstract In an effort to assist in the better understanding and implementation of the UNCITRAL Model Law on Secured Transactions (including its provisions on the registration of notices with respect to security interests) and the Model Inter-American Law on Secured Transactions with the Model Inter-American Registry Regulations, this article compares and briefly explains their key provisions.

The ends and means of banking: the Royal Bank of Scotland after the 2008 crisis

ABSTRACT The distress wreaked on small businesses by the Royal Bank of Scotland’s turnaround division, the Global Restructuring Group, is one of the most egregious examples of bank misconduct in recent decades. Such misconduct invites reflection on the role of commercial banks in the creation and use of money. To what ends and by what means do commercial banks perform this role? This article considers ends in the sense of whose interests banks ought to serve; and it considers means in the sense of the allocation of decision-making authority. It then turns to the drama of RBS after 2008 to document how allocations of decision-making authority by corporate law and secured transactions law benefited short-term financial interests to the detriment of RBS’s small business customers. It concludes by suggesting an alternative distribution of decision-making authority to counteract such short-term financial interests.

The Relationship between the MAC and the Rail (Luxembourg) Protocols to the Cape Town Convention and Domestic Secured Transactions Law

The Relationship between the MAC and the Rail (Luxembourg) Protocols to the Cape Town Convention and Domestic Secured Transactions Law

Secured Transactions Laws and Economic Development on American Indian Reservations

Harmonized commercial laws are considered an essential ingredient to commerce and trade and have been called the backbone of American commerce. Key components of these laws are those governing secured transactions. In recent years, Native American tribal governments have moved to adopt commercial codes to increase economic development on their reservations, but many have modified these codes to address challenges to tribal sovereignty and culture. This paper compares reservations that adopted modified secured transaction acts to reservations that adopted uniform laws. We demonstrate that reservations can potentially experience substantial economic gains from either form of adoption.

Ethiopian Law of Security Rights in Movable Property

Preface In 2019, Ethiopia enacted its first comprehensive law of security rights — the Movable Property Security Rights Proclamation (MPSRP) — drafted under the aegis of the International Finance Corporation (IFC). Although the official narrative is that the MPSRP is based on the UNCITRAL Legislative Guide on Secured Transactions Law, the MPSRP is dominantly influenced by Article 9 of the Uniform Commercial Code (UCC Article 9) — the model law governing security rights (secured transactions) in the United States (US). Thus, the reform in Ethiopia is a radical departure from the French Civil Code-based law of security rights that has been in place since 1960. The reform effort in Ethiopia is commendable as the country abandoned an obsolete law, unfit for modern secured financing schemes. Nonetheless, the MPSRP is not without flaws. The underlying policies of some of its provisions appear unsuitable for the legal and commercial/economic contexts while some provisions present interpretive dilemmas. This book provides an early interpretive and policy analysis by explaining the key principles, policies, and rules of the MPSRP and highlighting some of the potential challenges around its implementation and interpretation. This is chapter four of Ethiopian Law of Security Rights in Movable Property, a thirteen chapter book the provides detailed analysis of the new law based on examples and comparative analysis. The whole book can be freely accessed at http://www.asressgikay.org/2021/08/07/ethiopian-law-of-security-rights-in-movable-property-3/?fbclid=IwAR3VQ_SCO8U8UR5YQkJKRGXjGU1nPaq_OdulXsMDGs7pghFIyUIoPEx40Vs#dearflip-df_755/39/.

Secured transactions and patterns of legal change: the contribution of comparative law

Abstract The article analyses the many actors and initiatives that, in the last decades, have pursued the goal of worldwide harmonization of secured transaction laws, scrutinizing the achievements and the limits of these experiments. In light of such results, the article also outlines the methodological contribution that comparative law can offer to legal change in the sector of secured transactions law, by way of confronting positive law models with meta-legal elements such as culture, society, economy, law-making processes, and geopolitics.

Non‐performing loans and the harmonisation of extrajudicial collateral enforcement across Europe

AbstractThe European Union plans on partially harmonising the extrajudicial enforcement of collateral in order to reduce the stocks of nonperforming loans. This article discusses the proposed regime and its background. After examining its impact on the national secured transactions law of Austria, Belgium, France, Germany and The Netherlands, the authors comment on the appropriateness of the proposed harmonisation.

Floating Charges and Blanket Liens

Considering evolution of floating charges in England and blanket liens in America; different institutional structures shaping balances of rights between secured creditors, other creditors, and debtors; and implications of the institutionalist view on the current debates over English secured transactions law reform and on the proposal to abolish the fixed/floating charge distinction.

Identifying borrowed sources in secured transactions law reform

Abstract The enactment of Article 9 of the Uniform Commercial Code in the USA has had a profound influence on the reform of secured transactions law in other countries. The operational principles that animate Article 9 were first transplanted into Canada and later into New Zealand. In the last two decades, at least 25 countries have passed personal property security legislation (PPSA) based on these principles. On one level, one could claim that Article 9 has been transplanted into each of these 25 countries. However, on another level this story is far too simplistic. If one examines the various statutes, it becomes clear that a more complex process has been at work in which there has been innovation as well as borrowing. These innovations, in turn, influence the borrowings of other countries that enact a PPSA. In this highly dynamic environment the source of borrowing can be difficult to identify. This article examines the nature and extent of the borrowings that occur in connection with the reform of secured transactions in countries that have enacted a PPSA. It will identify three major templates that are available—namely, the most recent version of Article 9, the Canadian/New Zealand model, and the UNCITRAL Model Law. These templates will be reviewed in order to find markers that are present only in that template and not in the other two. These markers will be used to ‘fingerprint’ the PPSA legislation in other countries in order to measure the extent to which the jurisdiction has borrowed from each of the three templates. The article will conclude with a number of observations about the path of secured transactions law reform on an international level.

Setting a new standard for the harmonization of secured transactions law: the new Belgian Pledge Registry

Abstract At present, the notice filing system under Article 9 of the United States Uniform Commercial Code is seen as the most influential model worldwide for a registry of security rights in movables. However, the US system, established in 1952 and currently still in transition towards electronic filing, does not meet state-of-the-art technology standards. By contrast, the Belgian Pledge Registry, operational since 1 January 2018, is a fully automated electronic registry system that benefits from the advantages of modern technology. The question therefore arises whether the Belgian Pledge Registry has the potential to become a new additional leading model for registration of security interests in movables. To answer this question, we will test the extent to which the Belgian Pledge Registry meets the current international standards for a modern and efficient registry of security rights in movables, as set out in United Nations Commission on International Trade Law instruments and the European Draft Common Frame of Reference.

Identifying Borrowed Sources in Secured Transactions Law Reform

The enactment of Article 9 of the Uniform Commercial Code in the United States has had a profound influence on the reform of secured transactions law in other countries. The operational principles that animate Article 9 were first transplanted into Canada and later into New Zealand. In the last two decades, at least 25 countries have passed personal property security legislation (a “PPSA”) based on these principles. On one level, one could claim that Article 9 has been transplanted into each of these 25 countries. However, on another level this story is far too simplistic. If one examines the various statutes, it is becomes clear that a more complex process has been at work in which there has been innovation as well as borrowing. These innovations in turn influence the borrowings of other countries that enact a PPSA. In this highly dynamic environment the source of borrowing can be difficult to identify. This paper examines the nature and extent of the borrowings that occur in connection with the reform of secured transactions in countries that have enacted a PPSA. It will identify three major templates that are available, namely, the most recent version of Article 9, the Canadian/New Zealand model and the UNCITRAL Model Law. These templates will be reviewed in order to find markers that are present only in that template and not in the other two. These markers will be used to “fingerprint” the PPSA legislation in other countries in order to measure the extent to which the jurisdiction has borrowed from each of the three templates. The paper will conclude with a number of observations about the path of secured transactions law reform on an international level.

Jordan: Second Review Under the Extended Arrangement Under the Extended Fund Facility, Requests for a Waiver of Nonobservance of Performance Criterion, an Extension of the Arrangement, and Rephasing of Access-Press Release; Staff Report; and Statement by the Executive Director for Jordan

This paper discusses Jordan’s Second Review under the Extended Arrangement under the Extended Fund Facility, Requests for a Waiver of Nonobservance of Performance Criterion, an extension of the arrangement, and rephasing of access. Discussions highlight that the Jordanian authorities have preserved macroeconomic stability, maintain a prudent monetary policy, and ensured a sound financial system. Jordan faces a challenging environment—including low economic growth, high unemployment, and elevated public debt—underscoring the importance of swiftly implementing policies and reforms to bring public debt on a downward path, boost investment and productivity, and enhance inclusive growth. The enactment of long needed growth-enhancing reforms is encouraging, including the secured transactions law, the bankruptcy law, and the business-inspections law. The international community has strongly supported the new government’s commitment to maintain the reform momentum, strengthen growth, and reduce public debt. The London Initiative in February 2019 has helped unlock essential budget grants and concessional financing to support the authorities’ reform program.

The Interface Between Sales Law and Secured Transactions Law

Problems of interaction frequently arise when two bodies of law based on fundamentally different concepts come into contact. Prior to the reform of personal property security law, there was a high degree of compatibility between sales law and secured transactions law since both depended heavily on traditional property law principles. There is not the same degree of compatibility between sales law and personal property security legislation. The PPSA discards much of the 19th century thinking on secured transactions law and diminishes the significance of title. There are fewer problems of interaction between sales law and secured transactions law in the United States because the Uniform Commercial Code (“UCC”) revised both bodies of law at the same time and this made it possible to coordinate them to a much greater extent. Although a sales law reform project in Canada proposed the reform of sales law along the same line as in the United States, this project died on the vine due to lack of support. The challenge for the future is to achieve through non-legislative means some measure of coordination between two statutes that employ strikingly different foundational principles. This article examines four basic questions that arise as a result of this lack of compatibility, namely: What is a conditional sale? What is reservation of a right of disposal? What is a right to sell? What is a consignment?