residence or business as the most adequate connecting factor.76 Since this rule is not contemplated by article 12 Rome Convention, it has not yet met with approval in European courts but it is gaining ground on the broader international stage. It is the general private international law rule in the revised Article 9 UCC77 and in the United Nations Convention on the Assignment of Receivables in International Trade (articles 22 and 30(1)).78 In the European context, at least a uniform rule could and should indeed be achieved in the future either through the ECJ according to article 68 EC Treaty once the Rome Convention is re-enacted as a regulation or, preferably, through the European legislature itself in the course of such re-enactment.79 For the time being, it seems safe to conclude that apart from the Dutch courts, the national courts of the Member States will not allow the parties to an assignment to choose the applicable law beyond their relationship inter partes.

IV. The need for harmonisation within the EU

The differences with respect to the substantive law which will be outlined in Part II, combined with the rules of private international law that have just been discussed, frequently lead to a discontinuity of security rights once the collateral moves across borders. This may happen in circumstances within the contemplation of the parties, for example in the context of an international sale where the subject matter is

76Kieninger, RabelsZ 62 (1998) 677 (702 ff.); Lorenz, in: Czernich/Heiss, EVÜ -- Das Europäische Schuldvertragsübereinkommen -- Kommentar, article 12 nos 46 ff.; Struycken, Lloyd’s Maritime and Commercial Law Quarterly 1998, 345 (357 ff.); von Wilmowsky,

Europäisches Kreditsicherungsrecht 429 ff. Limited to bulk assignments and/or security assignments: Goode, Commercial Law 1128; Staudinger/Stoll, Internationales Sachenrecht, nos 349 f.; Münchener Kommentar/Kreuzer, nach art. 38 EGBGB Anh. I no 93.

77See infra, Sigman, p. 68.

78The Convention received the approval of the General Assembly on 12 Dec. 2001 (A/RES/56/81). The text is available on UNCITRAL’s website: http://www.uncitral.org. See, on the convention, Bazinas, Unif. L. Rev. 2002, 49; Sigman/Smith, The Business Lawyer 57 (2002) 727; Kieninger/Schutze,¨ ZIP 2003, 2181 ff.

79As to the possibility of transforming the Rome Convention into a regulation on the basis of article 65 lit. b EC Treaty, cf. Basedow, CMLR 2000, 687; Israël, MJ 7 (2000) 81; Leible/Staudinger, The European Legal Forum 1 (2000) 225. In response to the Commission’s Green Paper on the conversion of the Rome Convention of 1980 on the law applicable to contractual obligations into a Community instrument and its modernisation (COM (2002) 654 final, question 18), the majority of contributions have opted for introducing into art. 12 Rome Convention a new rule which subjects the priority questions to the law at the place of the assignor’s place of business or habitual residence.

used as a purchase money security interest, or without such contemplation when the transaction was originally conceived to be a purely domestic one. There are numerous decisions by courts of EU Member States where secured parties suffered a complete or at least partial loss of their security rights due to the fact that the collateral was moved from one Member State to another.80 It goes without saying that this state of affairs is antipathetic to the concept of an internal market. In fact, it has been frequently stated by academic writers and practitioners alike, that the field of security rights in movables is among those where a European measure of harmonisation is most urgently needed.81 In a recently published draft report on the approximation of the civil and commercial law of the Member States, the European Parliament Committee on Legal Affairs and the Internal Market identified security rights in movables together with general contract law as one of the areas on which a further development of European private law should focus.82 It has even been suggested by some authors that the present regime may in certain circumstances violate the principle of free movement of goods and services if it leads to the loss of a security right that had been validly created in the country of origin.83 Irrespective of whether this proposition is well founded or not, it cannot be doubted that the EU has the competence, on the basis of article 95 EC Treaty, to legislate in this field. Contrary to an argument recently put forward in the European Council of Ministers in the debate on the late payment directive,84 article 295

80See the summaries by Graue, German Yearbook of International Law 26 (1983) 125; Kaufhold, Internationales und europäisches Mobiliarsicherungsrecht 80 ff.; Kreuzer, Recueil des Cours 259 (1996) 9 (230 ff.); Schilling, ICLQ 34 (1985) 87; restricted to retention of title: Kieninger, Mobiliarsicherheiten im Europäischen Binnenmarkt 41 ff.

81Bonomi, in: Franz Werro (ed.), L’européanisation du droit privé. Vers un Code civil européen?, 497--515; Drobnig, in: Europäisches Parlament, Generaldirektion Wissenschaft,

Arbeitsdokument: Untersuchung der Privatrechtsordnungen der EU im Hinblick auf Diskriminierungen und die Schaffung eines Europäischen Zivilgesetzbuches, JURI 103 DE (1999) 173 (175 ff.); Goode, ICLQ 23 (1974) 227 (250 ff.); Hinz, ZEuP 1994, 553 (558); Kreuzer, Rev.crit.d.i.p. 84 (1995) 465 (503).

82European Parliament, Committee on Legal Affairs and the Internal Market, Draft Report on the Approximation of the Civil and Commercial Law of the Member States 2044/2000 (INI), section IV no 11.

83Basedow, RabelsZ 59 (1995) 1 (41 ff.); Kieninger, Mobiliarsicherheiten im Europäischen Binnenmarkt 122 ff.; Kieninger, ERPL 1996, 41 ff.; Leible, Wege zu einem europäischen Privatrecht (forthcoming) § 4 D. IV. 3. b) cc). Rutgers, International Reservation of Title Clauses 167 ff.; von Wilmowsky, Europäisches Kreditsicherungsrecht. Contra Kaufhold, Internationales und Europäisches Mobiliarsicherungsrecht 281 ff.; Sonnenberger, ZVglRWiss 95 (1996) 3 (27 ff.).

84Cf. Schulte-Braucks, NJW 2001, 103 (108). As to article 4 of the late payment directive see infra, V.1.