учебный год 2023 / Drobnig, Personal Security

Chapter 2: Dependent Personal Security (Suretyship Guarantees)

especially in Articles 10:101 (1) and 10:102. The creditor may choose to claim full performance from the debtor or the security provider. The creditor may also divide his request and claim one part from the one and the other part from the other person. Technically, in some countries this may not be solidary liability, since the legal bases of the two claims differ; but the effect is comparable in some respects.

3. Solidary liability is established by most modern legislation and has always prevailed in commercial relations. Where older laws provide for the security provider’s subsidiary liability, in practice this is usually replaced contractually by solidary liability.

B.Security on First Demand

4. If a suretyship is due on first demand it is a security with solidary liability. Typically, it will be an independent personal security, cf. Article 3:103, unless the parties have expressly designated it as a dependent personal security. However, any first demand security which has been assumed by a consumer, is considered as creating a dependent security, provided the requirements of the latter are met, cf. Article 4:106 (c).

C.Consumer as Security Provider

5.While for ordinary dependent security solidary liability of the security provider is the rule and subsidiary liability the exception, by virtue of Article 4:106 (b) this relationship is reversed for a consumer’s dependent security: the latter’s liability as a rule is subsidiary; however, the parties may expressly agree otherwise. This reversal is intended to grant better protection to the consumer who assumes a dependent personal security. The details of this subsidiary liability are laid down in Article 2:106.

6.The rule mentioned in preceding no. 5 applies to both a consumer’s assumption of an independent personal security (cf. Article 4:106 (c)) as well as to a consumer’s codebtorship for security purposes (cf. Art. 4:102 (1)).

7.Contrary to the general rule of Article 4:102 (2), the basic principle of subsidiary liability may be deviated from by express agreement of the parties. And in the context of a consumer security provider’s co-debtorship for security purposes the term “debtor” means the debtor whose obligation is secured.

National Notes

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Article 2:105: Solidary Liability of Security Provider

I. Solidary Liability as the General Rule

1.According to ITALIAN law, the security provider is solidarily liable with the debtor (CC art. 1944 para 1; Calderale, Fideiussione 33 ss.), whereas there had been subsidiary liability under the old CC of 1865 art. 1907. The meaning of solidarity is vividly discussed (see Giusti 45 ss.). According to the majority of legal authors as well as the Supreme Court, solidarity of the security means that several persons are liable for the same obligation, so that every one of them can be compelled to render the full performance and the performance by one discharges all others (Cass. 15 Dec. 1970 no. 2683, Giust.civ. 1971 I 569; Giusti 50). The securing obligation is due and payable together with the secured debt and the creditor can demand payment from the debtor and/or the security provider, as he wishes. The special features of the solidary security distinguish it from the obligation in solido; therefore, not all rules of the latter can be applied to solidary security (Busnelli 39 ss.; di Majo, Obbligazioni solidali 306 ss.; Casella 266 ss.; Giusti 50). Solidary liability of security provider and debtor is also the rule in both ENGLISH and SCOTS law: Although the liability under a security in ENGLISH law is contingent on the debtor’s default, the creditor is regularly not obliged to take any steps against the debtor before turning to the security provider (China and South Seas Bank v. Tan [1990] 1 AC 536 (PC); Moschi v. Lep Air Services Ltd [1973] AC 331 (HL)): Contrary to the Romanbased systems, the beneficium discussionis (see national notes on Art. 2:106) was never adopted in ENGLISH law (Andrews and Millett no. 11-002). In general, the security provider’s liability arises once the debtor defaults in the performance of the secured obligation (Andrews and Millett no. 7-002; O’Donovan and Phillips no. 10-07). A right to compel the creditor first to take steps against the debtor does not even exist in equity (see Ewart v. Latta (1865) 37 Sc Jur 418 = 1865 SC 36 (HL (Sc)); this decision in a SCOTTISH case is of highest authority in ENGLAND, too). The situation is similar in

IRELAND (White 541).

2.SCOTS common law, which is based on Roman law, knew the beneficium discussionis. This was abolished by the Mercantile Law Amendment Act (Scotland) 1856 sec. 8 in respect of securities for money debts. The beneficium discussionis is still recognized where the secured obligation is one ad factum praestandum, i.e. if the principal is obliged to perform a certain act. It suffices, however, that the creditor fruitlessly attempts to obtain satisfaction from the debtor; execution against the debtor’s estate is not required (Stair/ Clark nos. 923-926).

3.In the NETHERLANDS, one writer holds a very broad view of solidarity by thinking that solidarity and subsidiarity do not exclude each other; in his view a “subsidiary solidarity” is possible and he regards the dependent personal security as a statutory example for this (Van Boom 25-29). However, this is a minority view (cf. infra national notes to Art. 2:106 no. 8)

II. Solidary Liability for Commercial Providers of Security

4.AUSTRIAN, GERMAN as well as FRENCH, BELGIAN and LUXEMBOURGIAN and

PORTUGUESE law distinguish between commercial and non-commercial providers of dependent personal security. A dependent personal security assumed by a merchant in the exercise of its business is solidary (AUSTRIAN and GERMAN Ccom § 349 juncto § 343). It is presumed that any legal act of a merchant is made in the exercise of its

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business (GERMAN Ccom § 344). In AUSTRIA suretyships of merchants incurred after the end of 2006 will create a merely subsidiary liability (Law amending commercial law of 27 Oct. 2005 art. I no. 132 abrogates present Ccom § 349 as of 1 Jan. 2007). In FRANCE and LUXEMBOURG the dependent security has a commercial character if the secured debt is of a commercial nature; this follows from the principle of accessority. In addition, a personal interest of the security provider in the secured debt of a commercial nature is required (FRANCE: Simler no. 98; LUXEMBOURG: CA Luxembourg 26 June 1985, Pas luxemb XXVI (1984-86) Jur. 352), contrary to BELGIUM (cf. T’Kint no. 738). In FRANCE and BELGIUM the presumption of solidary liability which is in general available for commercial debts applies also to a commercial security (FRANCE: since Cass.com. 28 April 1966, Bull.civ. 1966 III no. 209 p. 187; Simler no. 364; BELGIUM: since Cass.com. 25 April 1985, Pas belge 1985 I 1044). In PORTUGAL the security provider does not have to be a merchant, the commercial character of the obligation being sufficient (Ccom art. 101). In SPAIN, although there is no relevant legal provision, the Supreme Court has in various decisions assumed solidary liability for commercial providers of security (TS 4 Dec. 1950, RAJ 1951 no. 227; TS 14 Feb. 1997, RAJ 1997 no. 1419 commented by Marimo´n Dura´, 2065 ss.). But since there are also Supreme Court decisions to the contrary (TS 5 March 1990, RAJ 1990 no. 1665), the solidary nature of commercial securities cannot be regarded as settled in SPAIN.

III. Subsidiary Liability by Agreement

5.In the aforementioned countries the parties are free to agree that the provider of dependent security be charged only with subsidiary liability. This is expressly stated by ITALIAN CC art. 1944 para 2 (cf. also Ravazzoni 262). The same is also true in ENGLAND and SCOTLAND (ENGLAND: Holl v. Hadley (1828) 5 Bing 54 = 130 ER 980 (CFI); SCOTLAND: Mercantile Law Amendment Act (Scotland) 1856 sec. 8 at the end: “Provided always that nothing herein contained shall prevent any cautioner from stipulating in the instrument of caution that the creditor shall be bound before proceeding against him to discuss and do diligence against the principal debtor.”).

IV. Subsidiary Liability as the Rule

6.By contrast, in many other countries the security provider’s liability is, as a rule, subsidiary to the liability of the principal debtor and solidary liability must be agreed upon or, as an exception, prescribed by law (see infra national notes to Art. 2:106).

(Dr. Poulsen)

Article 2:106: Subsidiary Liability of Security Provider

(1)If so agreed, the security provider may invoke as against the creditor the subsidiary character of its liability. A binding comfort letter is presumed to establish only subsidiary liability.

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(2)Subject to paragraph (3), before demanding performance from the security provider, the creditor must have undertaken appropriate attempts to obtain satisfaction from the debtor and other security providers, if any, securing the same obligation under a personal or proprietary security establishing solidary liability.

(3)The creditor is not required to attempt to obtain satisfaction from the debtor and any other security provider according to the preceding paragraph if and in so far as it is obviously impossible or exceedingly difficult to obtain satisfaction from the person concerned. This exception applies, in particular, if and in so far as an insolvency or equivalent proceeding has been opened against the person concerned or opening of such a proceeding has failed due to insufficient assets, unless a proprietary security provided by that person and for the same obligation is available.

Comments

A.Subsidiary Liability as Exception – Para (1)

1.Since according to Article 2:105 solidary liability of a provider of dependent security is the rule, subsidiary liability requires an agreement of the parties. In case of doubt the security provider has to prove that its liability is merely subsidiary. Exceptionally, according to Article 4:106 (b) a personal security given by a consumer (Article 1:101 (g)) is always subsidiary.

2.Binding comfort letter. A binding comfort letter is “presumed” to create only subsidiary liability. This presumption is derived from the fact that the author of such a letter does not assume a direct liability to make payment to the creditor; rather, typically it merely promises to see to it that the debtor has sufficient funds to satisfy its obligations towards the beneficiary(ies) of the letter. If it fails to keep this promise, it is merely liable in damages to the creditor. Of course, the presumption of a merely subsidiary liability of the patron can be disproved by the creditor.

B.Effects of Subsidiary Liability – Para (2)

3. The effect of subsidiary liability as intended by these Rules is defined by Article 2:106 (2). In the case of subsidiary liability, the security provider is protected against too early an imposition of liability towards the creditor. Before being allowed to turn against the security provider, the creditor is required to have undertaken appropriate attempts to obtain satisfaction from several other possible sources. It is important to note that the subsidiary nature of a security provider’s liability does not only protect it against a pri-

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mary demand for performance under the security by the creditor. Rather, subsidiary liability gives also provisional protection against attempts by other security providers who have assumed solidary liability, to hold the security provider with subsidiary liability internally liable on recourse (cf. Article 1:108 (3) second alternative).

4.The appropriate attempts to obtain satisfaction which have to be undertaken by the creditor (or another security provider who might seek internal recourse) before claiming from a security provider with only subsidiary liability consist of the following requirements:

5.Firstly, the creditor must have tried to obtain satisfaction from the debtor. Only after having attempted an execution against the debtor the creditor may turn against the security provider for any obligation of the debtor which is still outstanding. Especially if the debtor has provided a proprietary security right, the creditor must attempt to satisfy the debt from this source.

6.Secondly, the creditor must have tried to enforce any personal or proprietary security rights granted by third parties for the same obligation which are not subsidiary. If another security provider has assumed solidary liability this shows its willingness to answer any demand for payment even though the creditor could well turn e.g. against the debtor. It is appropriate that a security provider who has assumed only a subsidiary liability should have to pay only if satisfaction cannot be obtained from a security provider of the “first rank”.

C.Exceptions – Para (3)

7.In certain situations, a security provider who is only subsidiarily liable, is nevertheless not entitled to refuse performance to the creditor under the security even though the creditor has not undertaken all or some of the appropriate attempts to obtain satisfaction required under para (2).

8.One self-evident case presents itself where all personal and/or proprietary securities are only subsidiarily liable. Provided that he has undertaken appropriate attempts to obtain satisfaction from the debtor, the creditor is free in its choice to claim performance from any of the security providers since their liability towards the creditor is solidary (Article 1:107 (1)).

9.Other cases, in which it would be pointless to demand that the creditor first undertakes attempts to obtain satisfaction from the debtor or other security providers as required under para (2) before claiming from the security provider with only subsidiary liability are dealt with in para (3). This provision applies where it is obviously impossible or exceedingly difficult to obtain satisfaction from the debtor or other security providers who are solidarily or subsidiarily liable. In such a situation, a waste of time and money by the creditor must be avoided.

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10.The most important example of a situation where it is obviously impossible or exceedingly difficult to obtain satisfaction from other persons is given in the second sentence of para (3): insolvency or equivalent proceedings have been opened against the debtor or any other security provider or opening of such a proceeding has failed due to insufficient assets. The mere chance to obtain some quota from the insolvent person’s estate does not suffice since such quotas are, generally speaking, low or very low. The creditor may not be referred to such chances since full performance of its claim in the near future to which it is entitled is virtually excluded. And security is meant to prevent just such a result.

11.However, even if insolvency proceedings have been opened, the creditor still has chances of obtaining satisfaction from the insolvent person, if that person had provided proprietary security rights for the creditor; therefore the second sentence of para (3) provides for a counter-exception, where the creditor is not relieved from the requirements of para (2).

12.Other situations falling under para (3) first sentence not expressly mentioned could be cases where the asset which is subject to a proprietary security right is located outside the country of the debtor’s (or any other security provider’s) residence in a country outside the European Union and enforcement or execution would be difficult and/or time-consuming. Economic equivalents would be cases where the value of the encumbered asset has depreciated and/or where it is clearly inadequate to satisfy the creditor’s claim or if the encumbered asset is obviously worthless.

D.Default Security

13. Especially in commercial practice, performance by one security provider is frequently supported by a default security. This is furnished by a second security provider (often one residing in the creditor’s country) which is assumed towards the creditor and can be utilised by the latter if the first security provider is unable or unwilling to perform. In this setting, the default security is subsidiary since it may only be invoked if the creditor’s attempt to obtain satisfaction from the first security provider has failed.

E.Consumer as Security Provider

14.Contrary to the approach to ordinary dependent security (cf. Articles 2:105 to 2:106) a consumer who assumes a dependent personal security is as a rule liable only subsidiarily; cf. Article 4.106 (b) and also supra Comment C to Article 2:105.

15.The rule set out in preceding no. 14 also applies to a consumer who purports to provide an independent security (cf. Article 4:106 (c)) as well as to a consumer who has assumed a co-debtorship for security purposes (cf. Article 4:102 (1)).

16.Contrary to the general rule of Article 4:102 (2), the basic principle of subsidiary liability may be deviated from by express agreement of the parties (cf. Article 4:106 (b)).

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And in the context of a consumer security provider’s co-debtorship for security purposes the term “debtor” means the debtor whose obligation is secured.

National Notes

I. Subsidiary Liability of Security Provider as General Rule

1.In most CONTINENTAL and SCANDINAVIAN member states a dependent personal security establishes without agreement merely a subsidiary liability for the security provider (AUSTRIAN CC § 1355, 1351 para 1 sent. 2; BELGIAN, FRENCH and LUXEM-

art. 7:855 para 1; FINNISH LDepGuar § 3 para 1; RP 189/1998 rd 33; GERMAN CC § 771; GREEK CC art. 855; PORTUGUESE CC art. 638; SPANISH CC art. 1822 para 1; SWEDISH Ccom chap. 10 § 9). In most member states the liability of a security provider who assumes liability for another security provider (collateral or default-security) is also subsidiary (DENMARK: Pedersen, Kaution 40 s.; FINLAND: Nehrman 355; Ekstro¨m 27; FRANCE: Simler no. 504; GERMANY: Erman/Herrmann no. 15 preceding § 765; GREECE: Georgiades § 4 nos. 10 s.; ITALY: CC art. 1948; Bozzi, La fideiussione 258; SPAIN: CC art. 1836; Dı´ez-Picazo 460). This is true equally for BELGIAN, LUXEMBOURGIAN and DUTCH law where the security to secure another security is dealt with as any other security. PORTUGUESE CC art. 643 establishes a two level subsidiary liability of the security provider “subfiador” securing another security provider. By contrast, in commercial matters, solidarity is the rule and subsidiarity the exception (cf. supra national notes to Art. 2:105 no. 4).

II. Solidary Liability by Agreement

2.In most member countries, the principle of subsidiary liability is in reality very frequently derogated from by the parties.

3.Some countries expressly provide for the possibility of party agreement (AUSTRIAN

CC § 1357; FINNISH LDepGuar § 3 para 1; BELGIUM and FRANCE: CC art. 2021 (since 2006: FRENCH CC art. 2298); GERMAN CC § 773 para 1 no. 1; GREEK CC art. 857 lit. a) juncto art. 855; Georgiades § 3 no. 144; PORTUGUESE CC art. 640 lit. a); SPANISH CC art. 1822 para 2, 1831 no. 1).

4.In these and other countries, very frequently the parties make use of the possibility to agree on solidary liability (AUSTRIA: Schwimann/Mader and Faber § 1357 no. 1; SPAIN: Lacruz Berdejo 534; Guilarte Zapatero, Comentarios 30 ss.; TS 5 Dec. 1991, RAJ 1991 no. 8917 (the most frequent form of dependent personal security in both coun-

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tries). This is also true for DANISH law, at least for commercial relationships (Pedersen, Kaution 34). On the meaning of solidary liability, cf. supra national notes to Art. 2:105.

5.In GERMANY general conditions and terms for dependent personal securities very often provide for solidary liability of the security provider. However, the security provider is protected insofar as the exclusion of subsidiary liability must be in writing and signed by the security provider (CC § 766; BGH 25 Sept. 1968, NJW 1968, 2332), except if the latter is a merchant (cf. Ccom § 350).

6.Although the presumption in SWEDISH legislation (Ccom chap. 10 § 9) is for a subsidiary liability, even when the security provider is a commercial party, the creditor practically always provides for primary liability, also in relation to private persons assuming securities (contra Walin, Borgen 29). In BELGIUM, FRANCE and LUXEMBOURG, the subsidiary liability, although an important feature of dependent personal securities is of little practical importance nowadays as parties mostly agree to establish

solidary liability for the security provider (BELGIUM: Van Quickenborne no. 404; FRANCE: Simler no. 512). This solidary liability cannot be presumed (CC art. 1202 para 1). In FRANCE the presumption of solidary liability for commercial debts is applied also to commercial securities since 1966 (Cass.com. 28 April 1966, Bull.civ. 1966 III no. 209 p. 187).

III. Subsidiary Liability – Details

A.Requirements

8.In AUSTRIA, the NETHERLANDS and in SCOTLAND for a specific form of security a slight form of subsidiarity applies. The creditor has first to turn to the debtor and demand performance from it (AUSTRIAN CC § 1355; DUTCH CC art. 7:855 para 1; SCOTLAND, cf. supra national notes to Art. 2:105 no. 1 ss.), but need not do more than that. In AUSTRIA it is expressly provided that the parties may deviate from this rule also in favour of the provider of dependent security: they may agree upon a “strict” form of subsidiarity (CC § 1356). The same is true in the NETHERLANDS, except if the

security provider is a consumer (cf. CC art. 7:862 lit a)). According to DUTCH CC art. 7:855 para 1, the security provider need not perform until the debtor has violated its duty of performance. Therefore the creditor must first demand performance from the debtor; only if the latter does not perform can the creditor address the security provider (Pitlo/Croes 358; Hartlief 216). Since the creditor has not “the choice of claiming solidary performance from the debtor and/or... security provider”, the security provider’s liability is subsidiary only (cf. Nieuwenhuis/Castermans art. 855 no. 2; Dutch Business Law § 6.05 [2]; du Perron and Haentjens, Introduction no. 11 and art. 855 no. 1). The situation is similar in BELGIUM for consumer credits secured by consumer or other security providers. According to BELGIAN ConsCredA the preconditions for the con-

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sumer debtor’s default are increased: the creditor may only sue the security provider for a consumer credit if the debtor has defaulted at least on two payments or twenty percent of the total sum due or on the last due payment and if the debtor has not performed within one month after the creditor’s demand sent by registered letter (ConsCredA art. 36).

c.Strict Subsidiarity

9.In most legal systems of member states in case of a subsidiary dependent personal security the creditor must attempt to obtain satisfaction by execution from the debtor (BELGIAN, FRENCH and LUXEMBOURGIAN CC art. 2021 (since 2006: FRENCH CC art. 2298); DENMARK: Iversen 24; Pedersen, Kaution 33; Ussing, Kaution 85; FINLAND: LDepGuar § 21 lit a); RP 189/1998 rd; GERMAN CC §§ 771 s.; GREEK CC art. 855; PORTUGUESE CC art. 638; SPANISH CC arts. 1830, 1832, 1833 and 1834; SWEDEN: Walin, Borgen 157). In all these countries, the security provider’s subsidiary liability is not observed ex officio, but is an exception that must be raised by the security provider against the creditor (beneficium excussionis or discussionis; for the use of both terms in

ROMAN law sources cf. Zimmermann 130 fn. 104; BELGIAN, FRENCH and LUXEMBOURGIAN CC arts. 2022-2024 (since 2006: FRENCH CC arts. 2299-2301); GERMAN CC § 771 (exception of prior legal action against the principal debtor, Einrede der Vorausklage); GREEK CC art. 855; PORTUGUESE CC art. 638; SPANISH CC art. 1832). The raising of the exception forces the creditor first to bring action and execution against the debtor (FRANCE: Simler no. 501 ss.; GERMANY: Palandt/Sprau

§ 771 no. 1; GREECE: Georgiades § 3 no. 144; PORTUGAL: Almeida Costa 776).

10.If in ITALY the beneficium excussionis has been agreed, the security provider must point out the assets of the debtor to be executed (ITALIAN CC art. 1944 para 2 in fine). In particular, under ITALIAN law the beneficium excussionis operates only if three conditions are given: a) it must be invoked by the security provider; b) the debtor’s assets to be executed must have been pointed out by the security provider and c) unless agreed to the contrary, the security provider has to pay in advance the costs of this execution (Distaso 112 ss.; Ravazzoni 262 s.). In BELGIUM, FRANCE, LUXEMBOURG and SPAIN, the security provider who has raised the exceptio discussionis must indicate to the creditor those assets of the debtor into which an execution can be brought (BELGIAN, FRENCH and LUXEMBOURGIAN CC arts. 2023-2024 (since 2006: FRENCH CC arts. 2300 and 2301); SPANISH CC art. 1832). The beneficium discussionis may also in PORTUGAL be raised with regard to property rights of a third party, which secure the same debt, if they were constituted before or simultaneously with the personal security (CC art. 639). In PORTUGAL the creditor is entitled in any case to demand performance only from the security provider or from the security provider together with the debtor. If performance is demanded from the security provider alone, in case both of solidary and subsidiary liability he has the right to call the debtor upon demand in order to defend or to be condemned together (CC art. 641 para 1). If the security provider omits to do this, a waiver of the beneficium discussionis will be presumed, unless the security provider declares the contrary in the proceedings (CC art. 641 para 2; Pires de Lima and Antunes Varela 658). Also according to SPANISH CC art. 1834, the creditor can sue the security provider together with the debtor, but the beneficium discussionis remains effective even if a judgement is rendered against both of them.

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11.When the creditor omits or is negligent in bringing execution against the debtor’s assets pointed out to him, it shall be liable, to the extent of the value of these assets, if these are lost in a subsequent insolvency of the debtor. Insofar the security provider is no longer liable (BELGIAN, FRENCH and LUXEMBOURGIAN CC art. 2024 (since 2006: FRENCH CC art. 2301); Simler no. 521; and SPANISH CC art. 1833).

12.In contrast to the aforementioned legal systems, in GERMANY and GREECE the security provider does not have to indicate assets of the debtor to the creditor. The creditor has to attempt execution against the secured debtor (GERMAN CC § 771; GREEK CC art. 855). However, according to GERMAN CC § 772 and GREEK CC art. 856 in most cases of securing money claims compulsory execution must only be attempted into the secured debtor’s movables and only into those that are situated at the debtor’s domicile or residence (in GERMANY including a place of business). Additionally, the creditor has in general also to seek satisfaction from a pledge or lien on the debtor’s movables (para 2 of the previously cited provisions).

B.Exceptions with Respect to Execution

a.Exception Based on Impossibility or Extreme Difficulty of Execution

13.In DENMARK the creditor is not obliged to attempt to obtain satisfaction by execution from the debtor’s assets if it either proves that this is impossible or if the security provider admits the impossibility (Ussing, Kaution 85; see Kæstel 1). In FRANCE, especially

if the debtor is overindebted (and even if the security provider is a consumer), the creditor is not obliged to attempt satisfaction by execution from the debtor (Simler no. 511). Rather the security provider is liable if the debtor’s assets are not sufficient (cf. Cass.com. 17 March 1969, Bull.civ. 1969 IV no. 96 p. 97). According to GREEK CC art. 857, the security provider’s liability ceases to be subsidiary, if it is obvious that execution on the debtor’s property would not yield results. The situation of obvious inability to pay of the debtor produces a factual impossibility of exercise of the beneficium excussionis also in ITALY (Distaso 116). Similarly, GERMAN CC § 773 para 1 no. 4 prescribes that “the exception of prior execution against the principal debtor is barred if it must be assumed that compulsory execution on the property of the principal debtor will not lead to the satisfaction of the creditor.” However, according to para 2 there is again only subsidiary liability if the creditor can satisfy himself from a pledge or lien which he holds in a movable asset of the debtor.

14.In PORTUGAL the security provider cannot invoke the beneficium discussionis if the debtor or the owner of the goods securing the debt cannot be sued or executed within the continental territory or the adjacent islands, due to a fact that arose after the creation of the security (CC art. 640 lit. b)). The same is valid for SPAIN when the debtor cannot be sued within the Kingdom (CC art. 1831 no. 4). In BELGIAN, FRENCH and LUXEMBOURGIAN law, the assets of the debtor to be executed may not be located outside the district of the court of appeal of the place where payment is to be made and may not be subject to a controversy or be pledged for the debt and therefore no longer in possession of the debtor (BELGIAN, FRENCH and LUXEMBOURGIAN CC art. 2023

FRANCE the requirement of proximity is considered to be anachronistic). These re-

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