учебный год 2023 / Drobnig, Personal Security

Chapter 1: Common Rules

obligation or the same security purpose. In the context of these rules, these matters are dealt with in Arts. 2:113 and 1:108 respectively. The problems dealt with in this article, i.e. the distribution of rights against the debtor and of benefits received from the debtor among several security providers, are in fact a direct consequence of those two principles just mentioned. However, the rules governing this particular field of law typically feature much less prominently in the legal systems of the member states and relevant court decisions are scarce.

II. Entitlement of Other Security Providers to Rights against the Debtor

2.The idea of an outright transfer of the rights against the debtor to any security provider who has satisfied another security provider’s claim for reimbursement by way of an automatic subrogation as provided for in Art. 1:109 (2) seems to be unknown in most member states.

3.In ENGLAND, however, falling short of a transfer of the legal title in any rights against the debtor, at least an equitable entitlement of co-security providers arises in those rights that the security provider who has satisfied the creditor is subrogated into, i.e. the security provider holds these rights in trust for the co-security providers (cf. Re Arcedeckne; Atkins v. Arcedeckne (1883) 24 ChD 709 (CFI); O’Donovan and Phillips no. 12335).

III. Entitlement of Other Security Providers to Benefits Received from the Debtor or Third Parties

4.More generally accepted is the principle that benefits received by any of the co-security providers have to be shared with the others.

5.Especially benefits recovered from the debtor are regarded as having to be accounted for in relation to the other security providers. In ENGLAND, this follows, first, from the principle that the rights acquired by the security provider who has satisfied the creditor are held in trust for the other security providers (cf. supra nos. 2-3). Second, the equitable doctrine of contribution, i.e. the principle of internal recourse between several security providers as dealt with in these rules in Art. 1:108, is thought to demand that all benefits received by a security provider have to be shared pro tanto with the co-security providers (the so-called “hotchpot principle”, cf. O’Donovan and Phillips no. 12-248). Under these principles, benefits received under counter-securities provided by the principal debtor are available to the other security providers even if it had been agreed between the security provider originally entitled to that counter-security and the principal debtor that this counter-security should not be for the benefit of the other security

providers (cf. Steel v. Dixon (1881) 17 ChD 825 (CFI); Andrews and Millett no. 12-017).

6.Benefits received from third parties other than the debtor, however, need not to be shared with the other security providers (cf. O’Donovan and Phillips no. 12-249). Especially benefits secured on an individual security provider’s own initiative and at its own expenses such as an insurance policy do not fall under the “hotchpot principle” (cf. Re Albert Life Assurance Co (1870) LR 11 Eq 164, 172 (CFI); O’Donovan and Phillips no. 12249).

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Article 1:110: Subsidiary Application of Rules on Solidary Debtors

IV. Consequences of Conduct Disadvantageous to Other Security Providers

7.Whereas – in accordance with the approach chosen throughout this Part – in Art. 1:109 conduct by a security provider that is disadvantageous to the other security providers is regarded as giving rise to a liability for damages, ENGLISH law seems to prefer the loss of the right to internal recourse as a consequence of any such conduct. An analogy is drawn to the situation of the creditor holding several security rights, and thus it has been suggested that a security provider loses its right to internal recourse once it gives up any security rights against the debtor (cf. Rowlatt 160; Andrews and Millett no. 12-017). The idea of rights held in trust for the other security providers, however, makes it seem conceivable that in appropriate circumstances the liability for conduct that is disadvantageous to the other security providers could also be regarded as liability for breach of trust.

(Bo¨ger)

Article 1:110: Subsidiary Application of Rules on Solidary Debtors

If and insofar as the provisions of this Part do not apply, the rules on plurality of debtors in PECL Articles 10:106 to 10:111 are subsidiarily applicable.

Comments*

A.General

1.Contracts of personal security and plurality of debtors. Contracts of personal security frequently involve situations where several persons owe similar or even identical obligations to the same creditor. Such situations, which might be described as a plurality of debtors in a non-technical sense, can exist in relation to several debtors owing the same secured obligation, or several security providers securing the same obligation or even under certain circumstances in relation to a debtor owing the secured obligation and a security provider owing an obligation under the contract of personal security that is at least partly identical with the secured obligation.

2.Solidary obligations according to PECL and effect of Article 1:110 in general. The concept of solidary obligations according to PECL Article 10:101 (1) is drafted in rather wide terms. Therefore, a number of situations described in the preceding paragraph would

*The Comments on Article 1:110 are by Ole Bçger, LL.M.

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Chapter 1: Common Rules

fall under the rules on solidary debtors in PECL Chapter 10 Section 1. On the one hand, this result has to be welcomed from the point of view of the law of personal security, since a number of these provisions of PECL Chapter 10 Section 1 fit the needs of this area of law perfectly well, so that a reference to these general provisions replaces the need to spell them out in detail here. On the other hand, the situations of solidary debtors (or: codebtorship) in the context of personal security often are governed by considerations that are different from those relevant for situations of solidary debtors in general. Therefore the reference to these general rules can only be made with caution: the general rules are applicable only subsidiarily, i.e. as long as the rules in this Part do not contain specific provisions concerning the relevant issue.

3.Plurality of debtors of the secured obligation. The reference can be made unconditionally, however, in so far as a plurality of debtors owing the same secured obligation is concerned. The rules on personal security do not contain any specific provisions governing this issue, i.e. the effects of events concerning the obligation of one debtor on the obligation of the other debtor(s) are governed by PECL Chapter 10 Section 1 only.

4.Plurality of security providers and co-debtorship between debtor(s) and security provider(s). More important is the reference to the provisions on solidary obligations contained in PECL Chapter 10 Section 1 in the following types of situations, which will be considered in greater detail infra in these Comments: firstly, in case of several security providers that are all securing the same obligation towards the creditor (cf. infra no. 6 ss.). It has to be emphasised that the provisions on solidary debtors may apply under this heading to providers of dependent and independent security alike, provided that in respect of each security provider concerned the conditions for liability towards the creditor are fulfilled. Secondly, there might be a co-debtorship between debtor(s) on the one hand and security provider(s) on the other hand (cf. infra no. 12 ss.). A co-debtorship of this type, however, cannot exist if there is an independent personal security only; even in cases of a dependent personal security, such a co-debtorship between the debtor and the security provider can exist only if the liability of the security provider is solidary or, should the latter’s liability be subsidiary, if the special conditions according to Article 2:106 (2) and (3) are fulfilled.

5.Co-debtorship for security purposes. A special situation concerns the co-debtorship for security purposes according to Article 1:106. This provision contains its own reference to PECL Chapter 10 Section 1.

B.Plurality of Security Providers

6. General. The rules on personal security contain in Articles 1:107 to 1:109 rules dealing specifically with a plurality of security providers. Concerning the topics covered by these specific Articles, PECL Chapter 10 Section 1 is applicable only if it is specifically referred to. However, in a number of other situations outside Articles 1:107 to 1:109 these general rules can be applied. It has to be emphasised in this context that the rules of PECL Articles 10:106 to 10:111 are applicable only if the requirements of PECL Article 10:101

(1) are fulfilled, i.e. if all debtors concerned are bound to render one and the same

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performance and if the creditor may require it from any one of them until full performance has been received. In relation to several security providers, such a co-debtorship arises only under the conditions set out in Article 1:107, especially the conditions for liability towards the creditor must be fulfilled for every security provider concerned.

7.PECL Article 10:106. As between several security providers that are solidarily liable, PECL Article 10:106 is applicable by virtue of the express reference contained in Article 1:108 (1) with the qualifications set out in paras (2) and (3).

8.PECL Article 10:107 (1). It follows already from Article 2:113 (3) (for providers of independent security, Article 3:108 applies), that a security provider that has performed its obligations under the contract of personal security is subrogated into the creditor’s rights against the other security providers. Consequently, these other security providers are no longer liable towards the creditor to the extent to which the former security provider has fulfilled the obligations under the security. Within its scope of application, PECL Article 10:107 (1) serves as a clarification of that implied consequence.

9.PECL Article 10:107 (2). This provision is applicable, i.e. the merger of debts between one security provider and the creditor discharges the other security providers only for the share of the security provider concerned (this share to be determined according to Article 1:108).

10.PECL Article 10:108. If the creditor releases, or reaches a settlement with, one of several providers of dependent security, the consequences are covered by Article 2:110: the liability of the other security providers is not affected, but the creditor is liable in damages towards them; this counter-claim can, obviously, be set off against the other security providers’ liability under the contract of dependent personal security. By contrast, there is no specific rule for the effect on the liability of providers of independent personal security; thus, PECL Article 10:108 (1) is applicable. This difference in treatment is due to the fact that independent security should be treated more formalistic than dependent security where a more flexible approach is preferable.

11.PECL Articles 10:109 to 10:111. These provisions are generally applicable in the situation of several security providers who are solidarily liable towards the creditor as prescribed by Article 1:108 (1).

C.Co-Debtorship between Debtor(s) and Security Provider(s)

12. General. The following Comments concern the situation where a co-debtorship exists between the debtor(s) on the one hand and the security provider(s) on the other hand, i.e. where debtor(s) and security provider(s) are solidary debtors as defined in PECL Article 10:101 (1). Apart from the co-debtorship for security purposes, which is dealt with by Article 1:106, such a situation can arise especially where there is a dependent personal security with solidary liability of the security provider, so that the creditor is free to claim performance from the debtor or the security provider as solidary debtors (Article 2:105). In a dependent personal security with subsidiary liability of the security provider,

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a co-debtorship exists between the security provider and the debtor only if the special conditions according to Article 2:106 (2) and (3) are fulfilled, i.e. if the security provider can no longer invoke the subsidiarity of its liability as a defence against the creditor. There can be no co-debtorship between security provider and debtor, if any, in the case of an independent security: The obligation of a provider of an independent personal security is conceptually distinct from any underlying obligation and thus performance of the former obligation cannot be regarded as “one and the same performance” (PECL Article 10:101 (1)) as that of the latter obligation.

13.PECL Article 10:106. If the security provider fulfils its obligation under the contract of personal security, its rights against the debtor are governed by Article 2:113, so that there is no need to have recourse to Article 10:106. If, however, the debtor fulfils the secured obligation, it can be derived from Article 10:106 that the debtor has no claim against the security provider: internally the debtor is of course liable for the whole obligation owed to the creditor so that the internal share of the security provider is nil.

14.PECL Article 10:107 (1). This provision is not applicable. If, on the one hand, the security provider performs its obligation towards the creditor, the debtor is not discharged, but Article 2:113 operates so as to subrogate the security provider into the creditor’s rights against the debtor. If, on the other hand, the debtor performs its obligation towards the creditor, the security provider may rely on this performance as against the creditor according to Article 2:103 (1). Thus, in this situation the principle of dependency of the secured obligation achieves the same result as PECL Article 10:107

(1). The same principles apply if there is a set-off as between the creditor and either security provider or the debtor.

15.PECL Article 10:107 (2). This provision is applicable; it has to be kept in mind, however, that internally the debtor is liable for the whole of the secured obligation. One has to distinguish between two situations: If the merger of debts takes place between the debtor and the creditor, the security provider(s) is (are) discharged completely. If, however, the merger of debts concerns one security provider (as solidary debtor) and the creditor, the debtor remains liable towards the creditor for the whole debt.

16.PECL Article 10:108. This provision is only in part applicable. It is not applicable in so far as the consequences of a release by the creditor of the debtor(s) on the liability of the security provider(s) are concerned: in such a situation it follows already from the principle of dependency in Article 2:103 (1) that such a release provides a defence for the security provider vis- -vis the creditor. If, by contrast, the security provider(s) is (are) released by the creditor, PECL Article 10:108 applies: since the debtor is internally liable for the whole of the secured obligation, the effect of the application of this provision is that the debtor is not discharged towards the creditor.

17.PECL Article 10:109. This provision is applicable only if this would not run counter to the principle of dependency as laid down in Article 2:103 (1). Thus, contrary to the rule in Article 10:109 a decision by a court as between the debtor and the creditor may affect the security provider’s obligation in so far as according to Article 2:103 (1) the security provider, too, may raise the defence of res judicata if it should be available to the debtor. If

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a court decides in proceedings between the debtor and the creditor in favour of the debtor

– even if only partly – the creditor is barred on the basis of the defence of res judicata from bringing another action for the same claim not only against the debtor, but also against the security provider. In other constellations, however, Article 10:109, is applicable, e.g. in so far as a court decides against the debtor or in proceedings between the creditor and the security provider.

18.PECL Article 10:110. This provision is not applicable in so far as the consequences of a prescription of the creditor’s right to performance against the debtor are concerned: in such a situation it follows again from the principle of dependency as laid down in Article 2:103 (1) that the security provider can rely on a prescription of the secured obligation vis- -vis the creditor. PECL Article 10:110 is applicable, however, as far as the effect of prescription of the creditor’s claim against the security provider on the obligation of the debtor towards the creditor is concernced: according to PECL Article 10:110 (a) prescription of the creditor’s claim against the security provider does not operate as a defence for the debtor vis- -vis the creditor.

19.PECL Article 10:111 (1). This provision is not applicable. In so far as the possibility of the security provider to invoke a defence of the debtor is concerned, this situation is specifically dealt with in Article 2:103 (1). Since the security provider’s obligation is merely an additional claim for the creditor, the debtor may not rely on any defence of the security provider.

20.PECL Article 10:111 (2). This provision is not applicable. As between the security provider and the debtor, contribution can only be demanded by the security provider from the debtor (cf. Article 2:113) after the former has fulfilled its obligations towards the creditor. Should the security provider have failed to raise vis- -vis the creditor any personal defence of the debtor towards the creditor that was available to the security provider according to Article 2:103 (1), the security provider may nevertheless claim full reimbursement according to Article 2:113. The interests of the debtor are protected by the security provider’s liability for damages according to Article 2:112 (2).

National Notes

1.It is a common legal technique in many member states to provide for the subsidiary applicability of the rules on plurality of debtors in specific matters of personal security. DUTCH law even provides that “Suretyship is governed by the rules on co-debtorship, except in so far as the present subchapter [on suretyship] does not deviate from them” (CC art. 7:850 para 3; in addition, there are express references to the rules on co-debt- orship in arts. 7:866, 7:868 and 7:869).

2.Specific references to the law of co-debtorship can especially be found with respect to the internal relationship between several security providers (cf. AUSTRIA: CC § 1359 second sentence; DENMARK: Andersen, Møgelvang-Hansen and Ørgaard 35 ss.; FINLAND: RP 189/1998 rd 7; Ekstro¨m 73; GERMANY: CC § 774 para 2; BGH 24 September 1992, NJW 1992, 3228; M4nchKomm/Bydlinski § 426 no. 46; ITALY: CC art. 1954; SWEDEN: Walin, Borgen 26 ss.).

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Chapter 2:

Dependent Personal Security

(Suretyship Guarantees)

Article 2:101: Presumption for Dependent Personal Security

(1)Any undertaking to pay, to render any other performance or to pay damages to the creditor by way of security is presumed to be a dependent security as defined in Article 1:101 lit. (a), unless the creditor shows that it was agreed otherwise.

(2)A binding comfort letter is presumed to be a dependent personal security.

Comments

A.Definition and Central Role

1. Historically and still today, dependent personal security, as defined in Article 1:101 (a), constitutes the core institution of personal security. This becomes even more obvious if one recurs to the different national names for the most important type of dependent personal security in all the member states (to mention only suretyship, cautionnement, Bu¨rgschaft etc.). All other modern types of personal security, be they dependent (such as the binding comfort letter) or independent (such as indemnities/independent guarantees or stand-by letters of credit) have been developed by modifying the one or the other element of the dependent personal security.

B.General Presumption

2. Paragraph (1) establishes a presumption for assuming a dependent personal security. This presumption is based upon the extremely risky nature and implications of any personal security: the security provider becomes liable with all its present and future assets for the liabilities which another person, the debtor, has incurred or may incur in future. By virtue of the dependency upon the secured claim, these risks can to some degree be limited. Therefore any personal security in favour of the creditor of another person is presumed to be dependent and therefore to be subject to Chapter 2.

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Chapter 2: Dependent Personal Security (Suretyship Guarantees)

3.The presumption in favour of a dependent security applies vis- -vis all other types of personal security including both the independent personal security regulated in Chapter 3 and the co-debtorship for security purposes (cf. Article 1:106). If the parties intend to agree upon an independent personal security or a co-debtorship for security purposes, this must expressly be said or unambiguously result from the agreement of the parties. Otherwise, it will be assumed that the parties intended to agree upon a dependent security, which is in general the most favourable for the security provider.

4.It goes without saying that the presumption in favour of a dependent security should also apply, and for particularly good reasons because of its protective function, to a personal security assumed by a consumer; cf. infra nos. 9-11.

C.Binding Comfort Letter

5.For the general description of a “binding comfort letter”, cf. Comments nos. 4-7 on Article 1:102.

6.Paragraph (2) establishes merely a presumption as to the classification of a binding comfort letter which can, of course, be rebutted. The presumption is based upon the typical interests pursued by a “patron” in issuing a binding comfort letter of a commercial type: If the promise to the creditor to support financially the debtor (company) is not held, the breach of that promise is sanctioned by an obligation to compensate the creditor for its damage. On the other hand, the “patron” generally will not be willing to be liable for those obligations of the debtor which are subject to objections or defences.

7.The preceding two reasons speak for classifying the binding comfort letter, in the context of the present Rules, as a dependent personal security – unless the contrary is proved.

8.In the case of a non-commercial binding comfort letter where the author promises to reimburse the creditor for any expenses it may incur in assisting the debtor (supra Comment no. 4 on Article 1:102), this is the typical straight situation of a dependent personal security.

D.Consumers as Security Providers – General Remarks

9. The rules on consumer protection for providers of personal security must be based, in order to fulfil their purpose of being protective for the security provider, on that regime of personal security which is most protective for security providers. Generally speaking, this is the regime of dependent personal security laid down in Chapter 2. However, sometimes doubts may arise where exceptionally the application of rules on other security devices is, or may seem to be, more protective for the security provider. Such instances have to be analysed in detail.

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Article 2:101: Presumption for Dependent Personal Security

10.The rules on dependent personal security are not only to be applied to a consumer’s dependent personal security, but also to all other types of personal security assumed by a consumer: Specifically, they also apply to a consumer’s independent personal security (cf. Article 4:106 (c)) and to a consumer’s co-debtorship for security purposes (cf. Article 4:102 (1)).

11.In applying the rules on dependent personal security to any type of personal security provided by a consumer, it is to be noted that in this context the rules on dependent personal security are mandatory and may not be deviated from to the disadvantage of the consumer security provider (Article 4:102 (2)). This purpose is achieved in two ways which, however, converge in the end: If a consumer assumes a dependent personal security, the rules of Chapter 2 are not only directly applicable, but are made mandatory in favour of the consumer by Article 4:102 (2). If a consumer assumes an independent personal security or if it acts as a co-debtor for security purposes the same result is achieved in two steps: firstly, by declaring applicable to these cases the rules of Chapter 2 (cf. Articles 4:106 (c) and 4:102 (1), respectively). On this basis Article 4:102 (2) becomes applicable which, as said supra, provides for the mandatory character of the rules on dependent personal security. Thus, even where the presumption of para (1) is rebutted, every personal security by a consumer security provider will be subject to Chapter 2.

National Notes

I. Ordinary Dependent Security

A.No Presumption

1.In most member states no presumption for a dependent personal security exists (as to general principles of construction cf. supra national notes to Article 1:105; for the principles of classification of dependent and independent personal securities cf. supra national notes to Article 1:101 nos. 5-18).

B.Presumption for a Dependent Security

2.However, in FRANCE if it is doubtful whether a dependent personal security or another kind of personal security has been assumed, the qualification with the weaker effect, i.e. a dependent personal security will be chosen (cf. the general rules on interpretation CC art. 1156 ss.; Simler no. 895). If the security provider is a consumer, this interpretation guideline is even more strictly respected (Simler no. 921; CA Paris 26 Jan. 1993, D. 1993, I.R. 93). Also under GERMAN law, if after applying the principles of interpretation (CC §§ 133, 157) a doubt remains, a dependent personal security is assumed since this is the

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