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II. Security rights where some elements of convergence are present but where significant differences continue to subsist

1. Security rights in entities of property -- enterprise charge

Case 11 has shown that more and more jurisdictions provide the possibility to charge the property of an enterprise as a whole or significant parts of it, or at least furnish practicable means to create a charge in entities of assets, such as stock-in-trade. This is the case in England, Ireland and Scotland (f loating charge), Sweden, Finland and Greece (enterprise charge), Belgium and France (nantissement de fonds de commerce), Germany (Globalsicherungsübereignung and Globalzession) and the Netherlands (stil pandrecht). A common feature of such security rights is that the charged property may at least in part be changing without affecting the nature of the charge. However, there are also a number of notable differences concerning the following points: the floating or fixed character of the charge, the extent to which the property may be charged (all assets of an enterprise, only a certain percentage or only certain kinds of assets), the requirements as to formalities and registration and the priorities conferred upon the chargee in the case of the chargor’s insolvency.42

2. Security assignment of claims or charge over claims (outside retention of title)

Where the claim has already come into existence or where its legal foundation has at least been laid, all jurisdictions conclude that in principle such claims can be used as collateral.43 Differences subsist mainly in two respects, the first of which is the legal form of the security right. It may take the form either of an assignment or of a charge. More important than this formal distinction is the question whether requirements that exist for a charge over claims, namely the notification of the third-party debtor, are extended to security assignments. This is the case in, for example, Austria, whereas in Germany only the rules on assignment are applied. This leads to the second area of subsisting differences, which relates to the prerequisites for an assignment or a charge to be valid and enforceable as against the third-party debtor and other third parties such as the assignor’s or chargor’s other creditors. Here, a

42See in detail comparative observations, case 11(a)--(c).

43See for this and the following: comparative observations, case 12.

marked difference exists between those jurisdictions which require no more than a formless agreement between assignor and assignee/chargor and chargee (e.g. Germany), others which do adhere to requirements of registration or notification of/acceptance by the third-party debtor but have developed a practicable method for their fulfilment (e.g. Belgium, the Netherlands, Austria, France as far as assignments under the Loi Dailly are concerned) and yet others where the notification or registration requirements are construed in a way that makes security assignments or charges over claims unduly burdensome in commercial reality (e.g. Italy, France outside the scope of application of the Loi Dailly).

The diversities are even greater when it comes to assignments of or charges over truly future claims, that is claims where the legal relationship out of which they will arise is not yet existent.44 Some jurisdictions allow future claims to be included within an enterprise charge (nantissement de fonds de commerce in France and Belgium, f loating charge in England, Scotland and Ireland). Outside the enterprise charge, the possibility to assign or charge a future claim largely depends on the notification or registration requirements. Notification is clearly impossible with claims where the debtor is not yet known. Registration on the other hand is possible; here, it depends on how the legal system organises such registration. Austrian law (book-entry)45 and Dutch law (periodical registration of master-lists)46 provide examples where the registration requirement has been adapted in such a way that the charging of future claims is made practicable.

3. Extensions of retention of title

(a) All-sums clauses: Among the various extensions of retention of title, the all-sums clauses perhaps present, relatively speaking, the greatest degree of harmony:47 most jurisdictions see them as a fruitless attempt to create a non-possessory security right in movable property which does not share the preferential status accorded to simple retention of title.48 Only English, Scots and Irish law regard the retained title as ‘normal’ ownership, irrespective of whether the purchase price for the particular

44 See in detail comparative observations, case 13(a)--(c).

47See for the following: comparative observations, case 9(a) (i) and (ii).

48See above, note 39.

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goods sold under an all-sums clause has already been paid. In German and Portuguese law, which are the other two jurisdictions where allsums clauses are held to be effective, the retained title is transformed into security ownership once the purchase price for the goods sold under the particular contract has been paid.

(b)Proceeds clauses: With respect to the question of whether retention of title extends to proceeds arising out of sub-sales, we can find elements of convergence side by side with old and newly developed divergences.49 It is difficult to detect any common pattern other than perhaps a tendency potentially to extend the security right into proceeds. With the introduction of the opposability of retention of title in insolvency, French and Belgian law also introduced real subrogation: as long as the claim arising out of the sub-sale is still existing, the buyer’s rights against his sub-buyer are by operation of statute transferred to the seller. This leads to roughly the same results as an anticipatory security assignment of such claims which is practised in Germany and Greece. The notification requirements which often stand in the way of a security assignment or a charge have been relaxed in Belgium and in Austria, where notification can be replaced by a book entry which can be made before the claims come into existence. In most jurisdictions, however, there are no practicable means to extend retention of title into proceeds, which are typically claims the legal foundation of which does not yet exist at the time of creating the charge or concluding the assignment. Registration and notification requirements are either construed in such a way that they cannot be satisfied in the case of truly future claims or render the operation too costly (e.g. England, Scotland, Ireland, the Netherlands, Italy, Finland).

(c)Products clauses: With respect to products clauses, there are still marked differences between the European jurisdictions.50 There are systems which allow the parties effectively to derogate from the rules on specificatio (Germany, Greece, Scotland and -- with reservations -- Italy and South Africa), whereas other systems regard such derogation as the creation of a non-possessory charge which is hence invalid as against third parties (France, Belgium and Austria) or subject to registration (England, Ireland and the Netherlands), or require the seller who purports to be

49See for the following: comparative observations, case 5(c).

50See for the following: comparative observations, case 7(c).

the manufacturer effectively to carry the business risk (Austria, France, Italy, Denmark, Sweden and Finland).

4. Non-possessory security rights in individualised property (other than retention of title and leasing)

Most EU Member States only allow non-possessory security rights (other than simple retention of title and leasing) within the framework of special legislation.51 Usually, such legislation prescribes a system of publicity via asset-based registration, replacing the traditional means of publicity through transfer of possession. Some jurisdictions (e.g. France, Belgium, Italy) have adopted specific pieces of legislation, each for a different kind of collateral, ranging from Parma ham52 to agricultural equipment53 or cars.54 Such legislation is often the product of lobbying by specific branches of trade or industry. The more modern approach is to provide for a single type of non-possessory security interest, which in principle encompasses all kinds of tangible movables (Dutch stil pandrecht,55 Spanish hipoteca mobiliaria or prenda sin desplazamiento56). Currently, only a small minority of Member States (Germany,57 Greece58) allow the security transfer of ownership as a way to contract around the restrictions of the traditional rules on pledge (general prohibition of non-possessory security rights, prohibition of the pactum commissorium) and to set up non-possessory security rights that are enforceable as against third parties. A special midway route is followed by English law,59 which, on the one hand, adheres to the principle of freedom of contract, including within the field of secured transactions, thereby allowing a creditor to take a fixed charge in practically all kinds of collateral, but which, on the other hand, requires such charges to be registered if the debtor is a company, which in the commercially important instances is almost invariably the case.

51For the following, see also Introduction, pp. 10 ff.

52Law of 24 July 1985, no 401, Norme sulla costituzione di pegno sui prosciutti a denominazione di origine tutelata. See Greving, Der Treuhandgedanke bei Sicherungsübertragungen im italienischen und deutschen Recht 60 f.

53See French report, case 11(a). For Belgium see Kieninger, Mobiliarsicherheiten im Europäischen Binnenmarkt 25 f. with further references.

54See French report, case 5(c) and Italian report, case 10(a).

55See Dutch report, cases 5(c) and 12(a).

56Act of 16 Dec. 1954, BOE no 352 of 18 Dec. 1954. See further Hellmich,

Kreditsicherungsrechte in der spanischen Mehrrechtsordnung 80 ff.