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B. Convergences and divergences in relation to specific security rights

I. Security rights with strong convergence

1. Simple retention of title

Case 3 has shown that with respect to simple retention of title, a marked convergence has occurred over the last twenty-five years. For most Member States it is sufficient that seller and buyer have mutually agreed that title is to be retained until full payment of the purchase price and that this agreement has been entered into orally prior to the delivery of the goods. A written document is required by French, Belgian and Portuguese law. According to Italian and Spanish law, the agreement to reserve title must, in addition, carry a ‘certain date’ (data certa or fecha cierta) to prevent fraudulent antedating. In Italy, this requirement must be complied with in order to render the retention of title enforceable as against third parties such as creditors of the buyer (article 1524 C.c.); in Spain, the question whether, in relation to third parties, the certain date could possibly be substituted through other means of proving that the agreement to retain title has been entered into prior to delivery, is not yet finally settled.37 Compulsory registration for retention of title exists only in Spain, if the contract is subject to the Ley sobre venta a plazos de bienes muebles,38 and in Portugal and Denmark for certain high-value equipment (motor vehicles, vessels, aircraft).

In all Member States bar Sweden, retention of title gives the seller the right to vindicate the goods as their owner in the event of the buyer’s insolvency. In Sweden and South Africa, the seller’s rights are also upheld in insolvency, but they are reduced to those of the holder of a security right.

Case 4 has brought out a final difference which concerns retention of title in goods which are meant to be resold by the buyer. If the agreement does not comply with the relatively strict requirements of a credit consignment or commission agreement as set out by the Danish, Swedish

37See Hellmich, Kreditsicherungsrechte in der spanischen Mehrrechtsordnung 166 with references to STS 16 May 1996 (Aranzadi 1996 n. 4348), STS 29 Mar. 1995 (Aranzadi 1995 n. 2333), STS 22 Jan. 1995 (Aranzadi 1995, n. 177): fecha cierta no constitutive element of retention of title; but see for the opposite opinion STS 24 Oct. 1995 (Aranzadi n. 7846).

38See Hellmich, Kreditsicherungsrechte in der spanischen Mehrrechtsordnung 164 f.

and Finnish reporters, the title retention agreement will be considered to be invalid from the beginning, including with respect to goods that are still unsold in the hands of the first buyer.

The reason why all jurisdictions regard simple retention of title more favourably than other non-possessory security rights in movables39 is threefold: sellers are often forced to extend credit in order to stay in business; they can be said to enhance the assets of the buyer’s business; and there usually is no other available, unencumbered collateral apart from the sold goods.

2. Leasing

Next to simple retention of title, sale and lease-back is the second security device which is roughly regarded as valid and enforceable under similar preconditions in the large majority of Member States.40 Only French and Greek law require public registration of the leasing contract; Italian law extends the preconditions for retention of title to leasing contracts (data certa as a requirement for the agreement to be opposable towards third-party creditors). Otherwise, a simple leasing contract will suffice for the lessor to remain the owner of the leased assets and thus be secured in the case of execution or the insolvency of the lessee. Surprisingly, sale and lease-back transactions are treated as valid and enforceable despite their obvious function to provide security even in jurisdictions which would not consider the transaction as valid and opposable if framed as a security transfer of ownership.41

39The French report, case 3(e), calls simple retention of title the ‘queen of security’. The favour accorded to retention of title in many of the jurisdictions covered here lies in the fact that the usual requirements for the enforceability of a security interest in movables, such as dispossession, registration or special formalities, are not applied to it. A more favourable treatment may also lie in the fact that the seller under retention of title enjoys priority over other secured creditors contrary to the usual rules on priority. This is the case, for example, in Germany, where sellers under retention of title with products clauses are preferred to assignees (usually banks) under a security assignment even if the security assignment was agreed upon prior to the retention of title (see e.g. BGH 8 Dec. 1998, JZ 1999, 404 (note Kieninger)). Likewise in the US, where retention of title is in principle subjected to the general rules on security rights of Article 9 UCC, it nevertheless enjoys a so-called super-priority: see Sigman, supra, chapter 3, pp. 74 f.

40See case 14, national reports and comparative observations.

41See comparative observations, case 14(c) and especially Dutch report, case 14(c).