Spain

Angel Carrasco

I.General background; structure of

national law relating security over tangibles

Security rights in movables as well as upon land are subject to the numerus clausus principle. There is Typenzwang,1 although no statutory rule explicitly says so.

Like most continental legal systems, Spanish law divides the field of security rights according to two criteria of classification: security rights in movables/immovables, and possessory/non-possessory security rights. Hereinafter we focus only on security rights in movables.

1.Assets which may be subject to security: general considerations

Theoretically, all kinds of assets may me subject to security. Spanish law does not differ from other jurisdictions with respect to assets such as land, houses, flats, specific goods and movables in general. The following presentation proceeds to discuss the difficult cases and tries to highlight the peculiarities of Spanish law and practice as to tangible movables.

When saying, that as a matter of principle, all assets may be subject to security, it should, however, be borne in mind that due to the characteristics of the registry (as described below, I.4.), and its requirements of as- set-description, 90% of the entries are in fact security rights on fully determinable assets (identifiable by number, marks or matriculation devices), only.

1 See L. Diez-Picazo, Fundamentos del Derecho Civil Patrimonial, Vol. II (1978),

p.101-2; N. Bouza, Las Garantías Mobiliarias en el Comercio Internacional (1991), p. 19.

2.Assets which may be subject to security: specific security rights

Every item that is not deemed as being real estate may be encumbered with a pledge and an assimilated right (movable mortgage, non-posses- sory pledge, financial leasing). As to reservation of title, the Ley 26/1998 de Ventas a Plazos de Bienes Muebles (LVPBM)2 renders ineffective reservation clauses concerning assets that are going to be resold or incorporated into land (or: “inventory and assets that become fixtures”).

Unlike the estates on land, limited rights on chattels – especially important is the lease on equipment – cannot be encumbered by way of a non-possessory pledge or through a movable mortgage. In my opinion, this prohibition (laid down in Art. 2 Ley de Hipoteca Mobiliaria y Prenda sin Desplazamiento (LHMPSD)3) makes no sense.

Generic goods only determined by weigh or measurement may be charged with a non-possessory pledge. Though there is no authoritative decision thereupon and though the extent to which such items can be included in Art. 52 and 53 of LHMPSD is still far from clear, I think there is no barrier to this purpose. In fact, practice knows non-possessory pledges on tons of iron or on cubic meters of stored juice. In favour of the admissability of such security rights one can cite Art. 381 C.c. which upholds the existence of real rights whose object is an ideal share in joint ownership of commingled goods.

Future assets may be pledged. Although the efficacy of the right depends on the future acquisition by the pledgor, later established security rights in the same assets are subject to the better ranking of the prior security right. As to the “financial security interest” (security rights upon money/money claims and financial securities, that secure the performance of a duty of cash “settlement” and delivery of financial instruments), this retroactive validity is today recognised by Art. 10 of the Royal Law Decree 5/2005 of 11 March 2005,4 which implements the Financial Collateral Directive.5

The extended retention of title, encompassing the buyer’s claim out of the resale, faces no objection in Spanish Law as a pledge of a claim, because pledges or assignments of future claims are well settled in case law and practice, regardless of any registration requirement.6 But the specification clause in the retention of title cannot be recognised, because

2BOE 14 July 1998.

3BOE 18 December 1954.

4BOE 14 March 2005.

6The clearest authority is TS 6 November 2006, Aranzadi Jur. 2006/9246.

of the registrability requirement imposed on all sorts of non-possessory charges subjecting movable goods. Generally speaking, every kind of security that requires physical delivery or registration, in order to get proprietary, cannot be anticipated by agreement as a proprietary right: the security effect requires that the parties deliver, when the assets come into existence, or register, regardless of the coming into existence. Nevertheless, there is no contradiction to what has been said above on future assets. There are assets like, for example, claims or shares where establishing a security right neither requires delivery nor registration. Also, registered pledges may attach future assets which do not yet exist. As a result, the pledgee already secures for himself a certain rank, even before the assets come into existence.

3.Enterprises as chargeable assets

Ongoing Businesses may be charged as security by way of a Movable Mortgage. This security right extends to the equipment and inventory and to in-and-out stock-in-trade in the normal course of business. Equipment is also available to be encumbered as part of the mortgaged land, through the so-called “accession clause”. To the extent the debtor keeps the possession of the encumbered equipment, and parties do not agree to charge the whole business, they may create a non-possessory pledge upon them. The goods and stock-in-trade forming part of the commercial inventory may be also charged as a whole with a non-possessory pledge, acting as a “continuous lien” (which means a non-possessory pledge over stored goods in trade and raw material as such, not as a part of the business, Art. 53.2º LHMPSD). Non-possessory pledge is also the easiest way to charge livestock and harvest as a part of an agricultural undertaking. However, this sort of floating charge cannot encumber future equipment of the charged enterprise in advance; and new fixed charges must be created to this purpose.

4.Parties

Leaving out consumer transactions, there is, as a matter of principle, no difference between legal and natural persons. The only exceptions are Collateral Financial Securities, as regulated in the Royal Law Decree 5/2005, implementing the Financial Collateral Directive. This exceptional body of law is applicable to financial transactions entered into by financial corporations (banks, investment companies and so on) and entrepreneurial corporations, excluding – but for the netting agreements – natu-

ral persons. Therefore it can be said, that regulated financial institutions are granted a more suitable legal regime for creating and enforcing security interests.

5.Priority Rules

a)Super-preferred claims

Outside an Insolvency Proceeding, employees’ salaries, taxes and duties to the Social Security System are super preferred credits, though posterior in time. The creditor can execute against any asset but the superprivileged creditor may intervene in the execution process by way of a “claim from better right” and get the proceeds up to the superprivileged amount with priority. Inside an Insolvency Proceeding, creditors who hold security interests are deemed to have the same priority as a pledgee. The pledge is ranked above any other insolvency creditor up to the price the creditor is able to get by selling the encumbered asset. There are no su- per-preferred claims in insolvency. Although it might be regarded as inconsistent, to protect superpreferred creditors only outside but not inside insolvency, this decision was taken by the legislator.

b)General priority rules

Among creditors holding competing registered and possessory security rights, the leading rule is the first in time rule. However, there is an exception regarding the non-possessory pledge. According to the most authoritative scholarly opinion, the LHMPSD deprives the first in time registered pledge of any priority vis-à-vis the later possessory pledgee who acquires its right in good faith, at least when the affected asset is removed from the place, which is stated in the deed of registration as being the location of the asset.7

7J. Vallet de Goytisolo, Planteamiento y cuestiones generales de la ley de 16 de diciembre de 1954 sobre hipoteca mobiliaria y prenda sin desplazamiento, Rev. der. Not. 8 (1955), 104. The reason for this opinion is that the non-possessory pledge is “stored” through a debtor-based system – not through an asset-based one and that the goods for which this pledge is available are not determined enough as to permit a droit de suite against a third party who takes possession. Lack of confidence in the success of this new security technique might have been another reason. J. Vallet de Goytisolo was the inspirer of the Law.

Prior security holders upon equipment, machinery and inventory loose priority vis-à-vis a later real mortgagee (who has agreed an extension to fixtures), provided they have omitted to file the security interest also in the Land Registry (Art. 75 LHMPSD).

II. Security devices denominated as such

1.Possessory devices

Pledge is the classical form of possessory right in movable goods (Art. 1863 C.c. et seq.; Art. 12 et seq. of the Catalonian Act 19/2002 on Security Rights). Non-possessory (and not-registered) pledge of movables is today only accepted as a way to encumber receivables and intangible rights.

2.Non-possessory devices

From 1954 onwards, Spanish Law broadened the classical security right framework in order to enable the debtor to grant security rights in movables without relinquishing possession of the charged goods, because, regularly possession is necessary for the debtor to earn the revenue which he needs to discharge the debt. Entry in Public Registries (since 1998, the Movable Goods Registry) has been the substitute for possession for this type of goods. Depending on the nature of the encumbered goods, non possessory pledge and mortgage over movables are the allowed forms of non possessory right security in movables.8 The rules governing these two kinds of registered security rights are slightly different, as we will see later, but the underlying principles and rules of operation follow the same logic.

III. Title-based security devices

1.Reservation of title

Up to now it remains still dubious whether reservation of title, which is statutorily regulated since 1956 by the Instalment Sales Law (LVPBM 1956, abrogated by the LVPBM 1998), is a security device or simply retained full ownership. Furthermore, it is also under discussion whether

8For an overview see A. Carrasco/E. Cordero/M. Marín, Tratado de los derechos de garantía (2002), p. 727 et seq.

Spanish Law recognises some third party effect to retention of title on movable goods when the right is not registered in the Movable Goods Registry (see below, para. IV.1.). The new Bankruptcy Act 2003 (“Ley Concursal (LC)”)9 and the implementation of Art. 4 of the Directive 35/2000/EC on combating late payment in commercial transactions10 through the Act 3/2004 of 29 December 2004,11 have not solved these questions but rather added more confusion to the past obscurities.

2.Security ownership

Security ownership is a security device commonly used in Spain for financial transactions, both commercial and private (consumer). However, the body of case law relating to security ownership is still inconclusive as to the effect of this contract and the rights which the security owner has in case of the debtor´s default. This is especially paradoxical when traditionally the Common, as well as the Catalan and the Navarre civil legislation, upheld the validity of the contract of sale to which the parties add a clause of sale-back. The distinction between security transfers and sale- and-resale contracts has become one of the most obscure fields of private law,12 and has given rise to contradictory judicial statements.13

3.Lease back

In accordance with the existing ambiguities, also the lease back contract is still a figure immersed in doubts. If we ought to give now a conclusive answer as to the question of validity of this security transaction, Spanish case law condemned this security transaction as an ineffective device of transferring ownership from the owner (debtor) to the creditor.14 However, the recent Supreme Court Judgement of 2 February 200615 seems to be a definitive recognition of the validity of the lease-back transaction.

9BOE 10 July 2003. See A. Carrasco, in R. Bercovitz (ed.), Comentarios a la Ley Concursal (2004), p. 586 et seq.

10OJ 8 August 2000, L 200/35 et seq.

11BOE 30 December 2004.

12See A. Carrasco, Los derechos de garantía en la Ley Concursal (2004), p. 204-205.

13For references see A. Carrasco, Los derechos de garantía en la Ley Concursal (2004), p. 204 and R. Rosado, Fiducia y pacto de retro en garantía (1998), especially p. 148 et seq.

14TS 10 February 2005, No. de Recurso 3559/1998, available at http://www.poderjudi cial.es/jurisprudencia (1 August 2007).

15Aranzadi Jur. 2006/494.

4.Trust

Spanish Law neither recognises nor uses trust as security device. Security ownership by way of fiducia is the nearest approximation to the trust available in transactions subject to Spanish Law. Doubts casting upon the security transfer are applicable to the trust.

IV. Existing Registries

1.Kinds of Registries for Tangible Movables

Currently, Spanish Law has two different kinds of registries. The first is the Mercantile Registry (as regulated by the Decree of 14 December 195616) in which transfers of ownership and mortgages (as well as other legal privileges) on ships and aircrafts are to be registered. The second is the Movable Goods Registry (as regulated in a recent Regulation of 19 July 199817). It is reserved for movable mortgages on movable assets in general, copyrights, vehicles and other transportation devices aircrafts18 and enterprises. The Movable Goods Registry also covers nonpossessory pledges upon machinery, cattle, raw material and stock-in- trade. Also, reservation of title clauses relating to movables ought to be registered in this Registry. Registration of financial leasing is optional for the creditor.

Securities over company shares and receivables do not have access to the Registry, unless the attached item is to be deemed as a financial security in the sense of Art. 2 of the Security Market Law of 28 July1988.19 In this case, transfers and security transactions should be entered into the private financial book-accounts held by an intermediary institution (intermediated securities in the sense of the Hague Convention of 5 July 2006 on the Law Applicable to Certain Rights in respect of Securities held with an Intermediary).

16BOE 7 March 1957.

17BOE 20 July 1999.

18The registration of aircrafts is regulated in two ways. Ownership, limited rights and liens are to be registered in the Mercantile Registry. But movable mortgages have to be registered in the Movable Goods Registry before they can be registered in the Mercantile Registry.

19BOE 29 July 1988.

2.Depossession and Registration requirements

Looking into the classical kinds of security rights regulated in the Civil Code (possessory pledge and mortgage), Spanish Law must be counted among those legal systems that impose strict publicity requirements for security rights in rem being able to affect third parties. Pledge requires both transfer of possession (Art. 1863 C.c.) and public notary deed (Art. 1865 C.c.). There is neither case law nor scholarly construction trying to “weaken” this requirement by allowing some spiritualised forms of delivery (like the constitutum possessorium).

This feature of the Spanish legal system has been confirmed during the 20th century by the regulation of Non-Possessory Pledge and Mortgage on Movables. In both cases, the law requires registration in the Movable Goods Registry.

This homogeneous legal picture shifts into the more confused and partly illogical current situation, if we regard the lack of publicity requirements for the pledge of receivables, reservation of title and leasing.

a)Pledge of receivables

The encumbrance of receivables by way of pledge does not require any additional step for being perfected; the contract itself suffices thereto. Although the Spanish Civil Code does not contain any special provision referring to this sort of pledge (unless, marginally, in Art. 1868 C.c.), scholars and courts – since 199720 – unanimously agree on the possibility for debtor and creditor to assign as security receivables or claims that the latter holds against a third party (which may be a private or public body).21 The contract as such is regarded as sufficient. Like the assignment of receivables, the pledge of receivables may be brought about solo consensu. Nonetheless, the Supreme Court Judgement of 19 April 199722 left the question open as to whether the opposability vis-à-vis third parties requires notification of the account debtor. The Civil Code does not

20 TS 19 April 1997, Aranzadi Jur. 1997/3429; TS 7 October 1997, Aranzadi Jur. 1997/7101; TS 13 November 1999, Aranzadi Jur. 1999/9046 and the note of C. A. Martin, CCJCiv. 53 (2000) § 1437; TS 12 December 2002, Aranzadi Jur. 2003/305.

21As for the assignment of claims against the Public Administration, see Art. 100 of the Public Contracts Act, as amended by the Act 44/2002 (Financial System Reform Act).

22Aranzadi Jur. 1997/3429. See comments by J. M. Finez, CCJCiv. 45 (1997) § 1210;

F. Pantaleón, La Ley 1997-6, 1460 et seq. and J. M. Fugardo, CDC 25 (1998), 265 et seq.

contain any provision to that effect. However, the analogy with Art. 1527 C.c.23 suggests that the only consequence of a lack of notification is that the bona fide third debtor who pays the chargor, is freed from the debt.24 Article 90.6º LC25 supports this solution by giving the creditor a privileged rank in the liquidation regardless of whether the pledge on claims satisfies any form of publicity.

Several professional and corporate associations have for some years tried to have the pledge of claims and intangible movables in general submitted to the registration system. The recent enactment of the Bankruptcy Law proves the failure of this attempt.

In connection to these last remarks, it should be emphasised that the transfer of property by way of security and the granting of pledges on financial instruments and securities,26 in the framework of inter-bank settlement systems or in netting agreements, are effective regardless of any formality, apart from registration in the book entry securities´ registries created by the Securities Market Act of 28 July 1988. These sorts of pledges can be created by written (but not publicly authenticated) contracts or by unilateral statement made by the grantor, including electronic devices.27 This regime has been recently extended to guarantees settled before the Bank of Spain, the European Central Bank and other national EU central banks.28 Recently, the Royal Law Decree 5/2005, implementing the Directive 47/2002, confers the Financial Collateral Agreements the privilege of being effective against third parties “without any other requirement for their perfection, validity, efficacy as to third

23This provision refers to the full assignment of receivables and states that the debtor becomes liberated when he pays to the original creditor, if it does not get any notice of the transfer.

24Recent scholar contributions agree thereon. See F. Pantaleón, Cesión de Créditos, An. der. civ. 1988, 1044, at 1065; J. M. Fínez, Garantías Sobre cuentas y depósitos bancarios, La prenda de créditos (1994), p. 159, at p. 162; M. Peña, Derechos Reales, Vol. II (1999), p. 70; A. Carrasco/E. Cordero/M. Marín, Tratado de los Derechos de Garantía (2002), p. 875.

25BOE 10 July 2003.

26And whatever sort of security right, such as deposit accounts, lien, “repos”, seizure right, “and other transaction that attaches to any realizable asset, including cash” (Art. 7 Financial System Reform Act 44/2002).

27Securities Market Reform Act 37/1998 (Additional Provisions 6ª and 10ª, as amended by the Financial System Reform Act 44/2002, in compliance of the Directive 2002/47/EC of 6 June 2002 on financial collateral arrangements (OJ 27 June 2002 L 168/43 et seq.); Settlement Finality in Payment and Securities Settlement System Act 14/1999.

28Bank of Spain Autonomy Act 13/1994, as amended by Art. 7 of the Financial System Reform Act 44/2002.

parties, enforcement or means of evidence”. Beyond these legal institutions, pledges and charges on securities and financial instruments held in private financial accounts are subject to the registration system created by the Securities Market Act 1988. However, the filing in private financial book accounts held by financial intermediaries does not confer sufficient publicity.

b)Movable mortgages/Non-possessory pledges

Non-possessory pledge on tangible goods requires registration in the Movable Rights Registry. As already said, there are two sorts of nonpossessory contractual charges regulated in this Act (LHMPSD). The mortgage on movables is the non-possessory charge that can be created upon aircrafts, machinery, vehicles, enterprises, copyrights, patents and trademarks. The public deed is a condition for the transaction’s validity, also among the parties to the contract; registration is only an opposability requirement with regard to third parties.29 Every clause laid down in the contract has to be recorded in the file, provided that it may have effects towards third parties. The contract must be embodied in public (notary) deed. By way of agreement, the non-possessory pledge can attach other movable assets excluded from the movable mortgage, provided that they are identifiable.30 This pledge has limited effects; presumably (the question remains undecided) the charge is not opposable to bona fide purchasers, and does not hinder the acquisition of priority rights by subsequent creditors who acquire possessory pledges upon the charged property.31 Neither mortgages nor pledges confer priority against prior creditors who have taken possession as pledgee or seized the assets in a judicial enforcement procedure. Purchase money creditor, even unregistered, also prevails against the secured finance creditors.

In the discussions held during the reform of Spanish Bankruptcy Law (enacted July 2003) it has been (unsuccessfully) proposed to submit the pledge on receivables to the rules of the Mortgage on Movables and NonPossessory Pledge Act, as requirement for getting prior rank among other creditors. There is a widespread opinion that held inefficient and unfair granting priority to charges that lack any publicity device. However,

29However, this question is not unanimously resolved. See references in N. Bouza, Garantías Mobiliarias en el Comercio Internacional (1991), p. 32.

30There is no legal definition of the word “identifiability”.

31See J. Vallet de Goytisolo, Planteamiento y cuestiones generales de la Ley de 16 de diciembre de 1954 sobre hipoteca mobiliaria y prenda sin desplazamiento de posesión, Rev. der. Not. 8 (1955), p. 96 et seq; A. Carrasco/E Cordero/M. Marín, Tratado de los derechos de Garantía (2002), p. 958.

others believe that the foreseen costs caused by filing in the Public Registry must be higher than the benefits arising out of an increase in publicity.

c)Reservation of title

Reservation of title lacks any validity in rem (against third parties) if not registered, according to the LVPBM.32 It is doubtful whether this registration requirement likewise impairs the validity as regards the contractual parties.33 Pursuant to the Supreme Court Judgement of 22 June 1992,34 lack of registration doest not hinder inter partes the validity of the reservation, but impedes efficacy as regards third creditors and subsequent purchasers. In other words, registration becomes inter partes a lex contractus subject matter, and, as regards third parties, a lex rei sitae issue.35 It seems to be the most plausible opinion.36 The current Movable Rights Registry is the merger of the former Registry of Mobile Reservation of Title and the historical Registry of the Mortgage on Movables and Pledges. Finally, registration requires the contract to conform to the official model published or approved by the General Directorate of the Registry.

The LVPBM only covers identifiable and non-consumable goods. Neither claims nor commingled, nor future or non-identifiable goods, may be subject to retention of title regulated by this Act. Goods acquired for resale are also excluded. Since 1965 (the date on which the first Instalment Sale Act was enacted) that situation has brought about a lot of confusion and dispute, because some economically important goods and assets were not covered by the Act, and the legal rules did not afford any clear answer to the question as to whether parties in a contract of sale could create a retention of title, that would be valid and grant them priority as against third creditors, if the asset in question was not covered

32As to whether the buyer in bad faith is also protected against the not registered reservation of title, see, with contrary opinions, R. Bercovitz, Comentarios a la Ley de Ventas a Plazos de Bienes Muebles (1977), p. 276 and S. Sánchez, Garantías Reales en el Comercio Internacional (1993), p. 124.

33According to the opinion sustained by R. Bercovitz interpreting the old Instalment Act of 1965 (Comentarios a la Ley de Ventas a Plazos de Bienes Muebles (1977), p. 172-173). In the recent doctrine, M. Peña, Derechos reales, derecho hipotecario, Vol. 2 (4th edn. 2001), p. 397.

34Aranzadi Jur. 1992/5459.

35See S. Sánchez, Garantías Reales en el Comercio Internacional (1993), p. 79.

36See the clear challenge in this sense in TS 23 October 1991, Aranzadi Jur. 1991/7235.

by the Act and thus the retention of title could not be registered. This confusion was deepened by a discontinuous, contradictory, and up to now not completely abandoned, chain of court decisions, that grant full validity to not registered retention of title clauses, provided these are settled in contracts whose date were certain as to third parties.37

Surprisingly, the recent Act to implement the Late Payment Directive into Spanish law (Act 3/2004 of 29 December 200438) has changed this situation and now enables creditors and debtors to agree on reservation of title with respect to goods which are not subject to the Instalment Sales Act, making them free of any registration requirements.39 However, this kind of informal reservation of title has only effect among the contracting parties. It is easy to discover the profound absurdity of such a rule.

The Instalment Sales Act does not provide for any regulation of the transfer of risk, and the best solution continues to be that the risk passes with the delivery of the goods, whether this occurs before or after registration of the retention of title.

d)Financial leasing

Registration of leasing in movables is optional for the lessor. But in this latter case the question is still under discussion as to whether the nonregistered lease enjoys efficacy against a third registered or unregistered party. The answer would probably be negative as regard third acquirers in good faith. To the contrary, there is a large body of judicial decisions that grant the lessor the right to take the good out of the individual or collective creditor’s enforcement procedure.40 Nevertheless the position

37See TS 10 June 1958, Aranzadi Jur. 1958/2142, TS 26 March 1984, Aranzadi Jur. 1984/1434. The opposite doctrine in TS 24 November 1970, Aranzadi Jur. 1970/543, TS 22 June 1982, Aranzadi Jur. 1982/3436, TS 20 June 1983, Aranzadi Jur. 1983/3635. See for a summary of this debate in German E.-M. Kieninger, Der Eigentumsvorbehalt im Wirtschaftsverkehr mit Spanien nach der Novellierung des spanischen Abzahlungsgesetzes, RIW 1994, 287 et seq.

38BOE 30 December 2004.

39But “offsetting” this advantage with the new burden of these clauses being incorporated in notarial deeds.

40See TS 18 November 1983, Aranzadi Jur. 1983/6487; TS 26 Februar 2000, Aranzadi Jur. 2000/1019; TS 28 May 2001, Aranzadi Jur. 2001/3873. Likewise in the scholar literature F. Blasco, Las ventas a plazos de bienes muebles (2000), p. 43; M. A. Parra, CCJCiv. 46 (1998), § 1260; J. Alfaro, Leasing, in A. M. Melgar (ed.), Enciclopedia Jurídica Básica Civitas, Vol. III (1995), p. 3920; criticising this trend R. Bercovitz, El Pacto de reserva de Dominio y la Función de Garantía del Leasing Financi-

and privileges of the lessor are far from clear, because Courts continually “check” the leasing contracts in order to decide whether “untrue” leasing “disguises” a true security interest and, therefore, must be subject to the requirements laid down in the Instalment Sale Act (LVPBM). It is also quite controversial under which circumstances a judge can legitimately rule that a leasing contract circumvents the requirements for a secured transaction strictly speaking.41

3.Characteristics of the Registries

Every registry existing in Spanish Law is a documentfiling registry. There are very complete and burdensome deeds of registration (in case of movable mortgage and real right on ships) and slightly lighter requirements for the reservation of title and financial leasing transactions. Deeds of registration – but for reservation of title and financial leasing, which may adopt simple written form, provided that the form of the contract conforms with that approved by the General Directorate of Registries – must be documented by a notary. Registration of a movable mortgage or a non-possessory pledge requires that every clause laid down in the contract has to be recorded in the file, in order to have effects against third parties.

As to the description of assets, it may be said that the registration system in Spain is mainly limited (90% of the entries) on fully determinable assets, identified by number, marks or matriculation devices. The pledge on inventory and goods in trade is scarcely practised, due to the monitoring cost borne by creditors, the limited scope of protection for the creditors42 and the difficulty to trace the encumbered goods in case of enforcement or insolvency. In this kind of pledges, goods are described by identification of the warehouse or site in which the goods should be deposited.

Future and global description (all assets clause) are forbidden in Spanish Law, but for inventory, raw material and stock-in-trade. Art. 22

ero, in U. Nieto/M. Munoz (eds.) Tratado de Garantías en la Contratación Mercantil, Vol. II (1996), p. 377 et seq. and M. Ureña, Tercería de Dominio y Tercerías de Mejor Derecho en el Contrato de Leasing (2001), p. 56.

41As instances of the confusing method of deciding the cases, see TS 28 May 1990, Aranzadi Jur. 1990/4092, TS 21 November 1998, Aranzadi Jur. 1998/8750, TS 29 May 1999, Aranzadi Jur. 1999/4383, TS 29 May 2001, Aranzadi Jur. 2001/3874.

42This pledge has limited effects; presumably (the question remains undecided) the charge is not opposable to bonae fidei purchasers, and does not hinder the acquisition of priority rights by subsequent creditors who acquire possessory pledges upon the charged property.

LHMPSD states that the mortgage on ongoing business embraces intellectual property rights, equipment, furniture, tools and any other “instrument” of production or working, and, as stock-in-trade, the present and future goods for reselling .

Other difficulties remain. In my opinion, there is no objection to create a non-possessory pledge upon a quantity of commingled goods, on the basis of Art. 52.2 LHMPSD, although no authoritative decision can be afforded thereon.

Unregistrable pledges and security rights in movables are normally subject to a so called omnibus (all sums) clause. This is today expressly permitted in Catalan Law, provided the parties agree on an maximum amount. However, as to the registrable security rights on movables, (basically, movable mortgage) it rules the (developed by the General Directorate of the Registries in the field of the real mortgage) principle according to which omnibus clauses are not authorized.

Spanish commercial practice has not followed the German example to allow the creditor to use the reservation clause to cover claims other than the purchase claim. “Extended reservation of title” is known in academic circles/literature, but unknown in daily financial practice and not yet discussed before courts. However, bearing in mind that in Spanish statutory law, the reservation of title is regarded as a kind of undisclosed pledge, there should not be any objection to extend the scope of the reservation of title so as to cover non-purchase claims.

As to the searching devices, there is electronic access for searching in the Movable Goods Registry, though still limited to motor vehicles. The searcher has to know the license plate or chassis number. Cost for searching ranges between € 6 and € 9. There is no electronic filing up to now unless for motor vehicles, but steps are taken to enlarge the scope of electronic filing. The electronic net is run by the Colegio de Registradores de la Propiedad y Mercantiles,43 and it is foreseen that in the imminent future it will cover any registrable items and concerned persons (debtors, guarantors). The question, how searching is to be organised if it cannot be done by number plate or chassis number, is still undecided. For the remainder of items and rights, the electronic filing requires the electronic signature of a public notary. The time to file does not exceed five days.

Unlike under the UCC system, everyone may have access to the whole body of clauses and conditions of the registered contract. The purpose is to spare third parties the search for more information outside the Registry.

43 Through a publicly accessible website at http://www.registradores.org (1 August

2007).