учебный год 2023 / Drobnig, Principles of European Law of Personal Security

Chapter 3: Independent Personal Security (Indemnities/Independent Guarantees)

I. Assignability of Proceeds

2.In all member states the assignability of the proceeds of the security contract is admitted unanimously (AUSTRIA: Avancini, Iro and Koziol/Koziol II no. 3/107; Jud/Spitzer 397; DENMARK: Andersen, Kaution og bankgarantier 59 s.; ENGLAND: Jack, Malek and Quest no. 10.34; GERMANY: BGH 12 March 1984, BGHZ 90, 287, 291; Graf Westphalen 149; FRANCE: Simler no. 886; ITALY: Bonelli, Le garanzie bancarie 68 s.; Calderale, Demand guarantees 130; NETHERLANDS: Pabbruwe, Bankgarantie 65; SPAIN: Carrasco Perera a.o. 366).

3.Even if the parties exclude the assignability of the security right, this prohibition may be interpreted narrowly as allowing the transfer of the right to the proceeds to the assignee (FRANCE: CFI Paris 22 Feb. 1989, D. 1990, Somm.Comm. 204, note Vasseur).

II. Assignment of the Security Right

4.Whether an assignment of the security right including the right to demand performance is possible and under which conditions is very controversial. The controversy centers around the issue whether or not that right is a highly personal one and therefore is transferable at all. It is also open to doubt whether the consent of the security provider (infra no. 9) and also that of the debtor is required (infra no. 10).

A.Assignability Denied

5.BELGIAN, DANISH, FRENCH, GREEK and SWEDISH legal writers do not permit an assignment of the security right (BELGIUM: RPDB, Les garanties bancaires autonomes no. 48 at 568; Van Malderen 3203; Dehouck 2; contra: Vliegen 205-207 and 213-215;

DENMARK: Pedersen, Bankgarantier 85; FRANCE: Simler no. 886; GREECE: CC art. 455; Georgiades 6 no. 157; Gouskou 91 ss.; SWEDEN: Walin, Borgen 52, 87). Two reasons are given. First, even an independent security functions like a security and therefore has to be accompanied by transfer of the underlying obligation. Second, the obligation of a provider of an independent security is regarded as highly personal, so that the right to demand its performance cannot be transferred to another creditor without the agreement of the security provider (infra no. 9).

B.Assignability Affirmed

6.In ENGLAND and GERMANY, in effect, such a personal character of the security provider’s obligation is in general denied. In both countries the right to enforce an independent security is assignable (ENGLAND: cf. Re Perkins, Poyser v. Beyfus [1898] 2 Ch 182 (CA); British Union and National Insurance Company v. Rawson [1916] 2 Ch 476 (CA); Halsbury/Salter para 353; GERMANY: BGH 25 Sept. 1996, ZIP 1997, 275, 278; 20 June 1987, NJW 1987, 2075; 12 March 1984, BGHZ 90, 287, 291; Staudinger/Horn no. 225 preceding §§ 765 ss. with further references).

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C.Assignability Controversial

7.In other countries, the matter is controversial: In AUSTRIA, the Supreme Court has

allowed it in two recent cases (OGH 23 May 2005, BA 2005, 902, 905 sub no. 4; 18 Jan. 2000, SZ 73 no. 10), but an influential writer has severely criticised this position (Avancini/Iro/Koziol no. 3/108-3/110). In ITALY, the opinions of writers are divided (against assignability Dolmetta and Portale 91 s.; Laudisa 16; pro, Bonelli, Le garanzie contrattuali 233 s.); but the famous Supreme Court decision legitimating independent personal security in ITALIAN law concerned a case where the right to demand performance had been assigned (Cass. plenary decision 1 Oct. 1987 no. 7341, Giur.it. 1988 I, 1, 1204). In the NETHERLANDS, courts and writers are also divided (against transferability CA Amsterdam 21 Feb. 1991, NJB 1992 no. 141; Boll 103; Pabbruwe, Bankgarantie 66; for transferability CFI Haarlem 12 Jan. 1993, NJB 1995 no. 53; Mijnssen 6669). In PORTUGAL, although case law seems to accept transferability (STJ 17 April 1970, BolMinJus no. 196, 275), writers tend to deny it because of the nature of the obligation (Pinheiro 451).

D.Additional Requirements

8.Several countries allow assignability if the security provider agrees to it (infra no. 9);

other voices even demand the debtor’s consent (infra no. 10).

9.According to FRENCH case law, an assignment is valid if the provider of independent security expressly agrees to the transfer (Cass.com. 7 Jan. 1992, Bull.civ. 1992 IV no. 3 p. 3). This has recently been confirmed by the legislator (CC new art. 2321 para 4 of 2006). The security provider’s consent can also be given by the clause “pay to order” in the security contract. A merely implied agreement of the security provider, resulting from the circumstances in the relationship between the security provider and a new creditor, does not seem to be sufficient. According to FRENCH case law the transfer of the security right, in contravention to a clause prohibiting the transfer constitutes a fraud (CA Paris 23 Sept. 1988, D. 1989, Somm.Comm. 156). The security provider is then discharged from the performance of the independent security. In PORTUGAL in the corresponding case of documentary credits an eminent writer considers that the consent of the security provider is always necessary because not only a credit, but the complete contractual position is transferred (Vaz Serra, Note on acord¼o de 16. 6. 1970, at 176).

10.Some DUTCH, ITALIAN and GREEK authors think that an assignment is only valid if the debtor agrees to the transfer (ITALY: when the possibility to transfer the security is convenient for the debtor, its consent suffices according to Calderale 236; references in

De Nictolis 151; GREECE: Georgiades 6 no. 157; Gouskou 91 ss.; NETHERLANDS: Ensink

553 – both debtor and security provider must agree).

E.Consequences of an Effective Assignment

11.In GERMANY where an assignment of the security right as such is allowed (supra no. 6) it has been held that the assignment does not per se also comprise the conditions for invoking the security; however, the assignor is obliged to request the assignee to observe

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those conditions and would otherwise be liable for damages (BGH 25 Sept. 1996, ZIP 1997, 275, 278 s.).

12.The GERMAN Supreme Court dealt in one case with the question which counterclaims can be set off after an assignment. It held that counter-claims arising from the relationship between the original creditor and the debtor cannot be set off against the security right, even if such claims had been assigned to the security provider (BGH 22 April 1985, BGHZ 94, 170 s.); by contrast, liquid counter-claims of the security provider can be set off against the assignee’s claim under the assigned security right (ibidem p. 172 s.).

13.AUSTRIAN courts have dealt with the question from whom the debtor may demand restitution if after the security provider’s performance it turns out that the independent security was invalid. Generally, the debtor may claim restitution from the original

creditor, i.e. the assignor (OGH 23 May 2005, BA 2005, 902, 905 sub no. 4; and 18 Jan. 2004, SZ 73 no. 10 p. 48 ss. with careful reasoning and broad references). However, if there is a clear case of abuse of rights, especially an obvious disproportion between the assignee’s personal interests and the interests of the other persons involved since it is clear that an underlying obligation does not (or no longer) exist and the assignee is aware of its defective title, then restitution must be claimed from the assignee as the new creditor (OGH 23 May 2005, BA 2005, 902, 905 sub no. 5 b). These rules correspond to those that apply when no assignment has taken place (cf. national notes on Art. 3:105 no. 7).

III. Assignment of the Secured Obligation

14.For the more frequent case of an assignment of the secured obligation the majority of authorities in ENGLAND, FINLAND, FRANCE, GERMANY and ITALY state that such an assignment does not automatically extend to an independent security. The numerous national provisions and rules under which an assignment extends to accessory rights do not apply to an independent security. PECL Art. 11:204 lit. (c) codifies this rule and requires specific assignment (FINLAND: LDepGuar § 9, RP 189/1998 rd 41; FRANCE: CC new art. 2321 para 4 of 2006; earlier: Simler no. 887; contra Malaurie and Ayn7s/ Ayne`s and Crocq, Les s ret s no. 347 : the transfer of the independent security occurs automatically with the transfer of the underlying obligation; GERMANY: Staudinger/ Horn no. 227 preceding §§ 765 ss.; Hadding, Ha¨user and Welter 717; but the interpreta-

tion of an assignment may show that the transfer is intended to comprise also the rights arising from the independent security (BGH 22 April 1985, BGHZ 94, 167, 169); GREECE: Gouskou 91; Demetriades 54; ITALY: Laudisa 17; in ENGLAND this rule applies both to dependent and independent securities, cf. O’Donovan and Phillips no. 10-178).

IV. Combined Assignment of Security Right and Secured Obligation

15.Both AUSTRIAN courts and writers allow a combined transfer of both obligations, the debtor’s contractual payment and the security provider’s obligation, since this does not aggravate the situation under the independent security with respect to those obliga-

tions, as agreed by the parties (OGH 29 Jan. 1997, BA 1997, 826; Avancini/Iro/Koziol no. 3/111). FRENCH law allows a combined assignment only if the parties so agree (CC new art. 2321 para 4 of 2006 “Sauf convention contraire, cette suˆrete´ ne suit pas l’obligation

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garantie”). In the NETHERLANDS, prevailing opinion also allows a combined assignment (CFI Utrecht 10 Sep. 1997, JOR no. 34; Mijnssen 69-73; contra Pabbruwe, Bankgaranties 66, although with a reservation at 67).

(Hauck/Drobnig)

Article 3:108: Security Provider’s Rights After Performance

Article 2:113 applies with appropriate adaptations to the rights which the security provider may exercise after performance.

Comments

A.General Remarks

1.Chapter 3 does not establish explicit rules on the rights which the provider of an independent personal security may exercise after having performed the creditor’s demand. Instead, Article 3:108 refers to Article 2:113 which deals with a similar issue, i.e. the rights which the provider of a dependent personal security may exercise after performance to the creditor. However, in view of the differences between dependent and independent securities the rules of Article 2:113 are to apply only “with appropriate adaptations”.

2.The general justification for this rather novel approach is that the true differences between dependent and independent personal securities reside in the prerequisites for demanding performance from the security provider (cf. Articles 3:102-3:104). However, after the security provider has performed to the creditor, its position towards the debtor and towards other security providers is very akin to that of the provider of a dependent security. In order to simplify and to achieve internal consistency it is justified to apply essentially the same rules to the after-performance stage of both instruments of personal security.

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3.These Comments deal successively:

–first, with the security provider’s rights against the debtor, i.e. its claim for reimbursement against the debtor (infra B), its subrogation to the creditor’s rights against the debtor (infra C) including the creditor’s personal and proprietary security rights (infra D);

–and second, in case of a mere part performance with the rank of the security provider’s rights as against those of the creditor (infra E).

4.Cf. also Comment A, especially no. 2, and Comment B on Article 2:113.

B.Security Provider’s Claim for Reimbursement

5.The first sentence of Article 2:113 (1) lays down the security provider’s right to be reimbursed by the debtor. Obviously, the same right pertains to the provider of independent security who had assumed on the debtor’s instruction the security and has performed it.

6.Obviously, a claim for reimbursement presupposes that the security provider furnished the security against a promise to be reimbursed. While this is the normal situation, exceptionally a security may have been granted gratuitously; then, of course, there is no recourse against the debtor. Cf. Comment D on Article 2:113.

7.Another equally peculiar and rare situation is present if the debtor is incapable or, as a purported legal entity, in truth non-existent, cf. Comment G on Article 2:113.

8.The debtor may be able to set off counterclaims against the claim of the provider of an independent security for reimbursement. In particular, the debtor may invoke claims arising from non-performance (in the wide sense of the word) by the security provider (cf. Comment H to Article 3:102).

9.In addition, cf. Comments B to D to Article 2:113.

C.Subrogation to the Creditor’s Rights against the Debtor

10.In order to strengthen the position of the provider of a dependent security, the second sentence of Article 2:113 (1) subrogates the provider of a dependent security to the creditor’s rights against the debtor. In conformity with the laws of some member states, this subrogation is extended by Article 3:108 juncto Article 2:113 (1) to the provider of an independent security.

11.Of course, this subrogation is subject to the same exclusions that affected the creditor’s original rights against the debtor. On exclusions, cf. Comment D on Article 2:113.

12.In addition, cf. succeeding Comment D.

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D.Subrogation to the Creditor’s Personal and Proprietary Security Rights

13. The security provider’s subrogation to the creditor’s rights against the debtor also extends to the personal and proprietary security rights which the creditor holds against the debtor or a third person. This subrogation comprises both the “dependent and independent personal and proprietary security rights”, as Article 2:113 (3) expressly confirms. On the justification for not limiting this rule to dependent security rights, but extending it to independent security rights and further details, cf. Comment F to Article 2:113. Article 3:108 has the specific effect of extending the aforementioned subrogation to providers of an independent security.

E.Creditor’s Priority in Case of Part Performance

14. The rule laid down in Article 2:113 (2) applies mutatis mutandis also to the case of partial performance of an independent security. Cf. Comment E on Article 2:113.

National Notes

I. Introduction

1.The provider of independent security may acquire two sets of rights by reason of its performance under the security: there may be claims for reimbursement against the debtor (infra nos. 2 ss.); and, in addition, the security provider may be subrogated to the creditor’s secured claim against the debtor (infra nos. 8 ss.) and to the security rights securing this claim (infra nos. 13 s.).

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II. Reimbursement

A.Legal Bases for Reimbursement

2.The different jurisdictions use four different bases for the right to reimbursement.

a.Mandate

3.In AUSTRIA, GERMANY, GREECE, ITALY, the NETHERLANDS and PORTUGAL the basis is mandate. In GREEK law the provisions on mandate (CC art. 722) are applied by analogy to the relationship between provider of independent security and debtor (Georgiades § 6 no. 125). The same is true according to the majority of ITALIAN scholars who base the reimbursement of the provider of independent security on an action mandati contraria (Giusti 346; for a summary of other views, which mainly apply by analogy the rules on dependent personal security, see De Nictolis 95; against this view Calderale, Fideiussione 265). In AUSTRIAN, DUTCH, GERMAN and PORTUGUESE law the relevant provisions on the principal’s obligation to reimburse the agent’s outlays (AUSTRIAN CC § 1042; DUTCH CC art. 7:406 para 1; GERMAN CC § 670; PORTUGUESE CC art. 1167 lit. c) are directly applicable. Therefore the debtor as principal is obliged to reimburse the expenses incurred by the provider of independent security in fulfilling his obligation against the creditor. However, only such expenses are covered which the provider of independent security reasonably could regard as necessary, so that the security provider is not entitled to reimbursement if it did not act as directed by the debtor as principal (Staudinger/Horn no. 329 preceding §§ 765 ss.). In AUSTRIA, it has been held that the claim for reimbursement comes into existence, under a suspensive condition, already when the independent security is granted and can therefore be secured as

of that time (OGH 6 April 2005, BA 2005, 649, 650).

b.Analogy to Dependent Security

4.In FINLAND and SPAIN the right to reimbursement is based upon an analogy to the relevant specific provisions on dependent securities (FINNISH LDepGuar §§ 28 ss.; SPANISH CC art. 1838; Sanchez-Calero, El contrato aut+nomo 401). Cf. national notes on Art. 2:113 nos. 1 ss.

c.Relationship between Debtor and Provider of Independent Security

5.In BELGIUM, ENGLAND and FRANCE the right to reimbursement is not based on mandate. In BELGIAN and FRENCH law the right is said to arise from the agreement between the debtor and the provider of independent security; the latter performs its own obligation (BELGIUM: RPDB, Les garanties bancaires autonomes no. 173 at 605; Vliegen nos. 206, 220-221; Wymeersch, Garanties 98; FRANCE: Simler no. 995). In ENGLISH law reimbursement is granted because the provider of independent security has acted at the request and for the benefit of the debtor (Duncan Fox & Co v. North and South Wales Bank (1880) 6 App.Cas. 1, 13-14 (HL); Sheffield Corpn v. Barclay [1905] AC 392 (HL);

O’Donovan and Phillips no. 12-21; Chitty/Whittaker no. 44-114).

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d.Operation of Law

6.In DENMARK and SWEDEN the right to reimbursement arises by operation of law without a specific legal justification being named (DENMARK: Pedersen, Bankgarantier 70; SWEDEN: Walin, Borgen 198).

B.Differences between Dependent and Independent Personal Securities

7.Although the right to reimbursement in the case of an independent security is rather similar to the respective right in the case of a dependent security, there are situations where the solutions may differ in some member states: Firstly, if an independent personal security secures the debt of a minor, the latter will not be under any obligation to indemnify the provider of independent security (ENGLAND: Chitty/Whittaker no. 44114; O’Donovan and Phillips no. 12-21; for the position in the case of a dependent personal security cf. national notes to Art. 2:113 no. 36). Secondly, if the obligation of the provider of an independent security surpasses that of the debtor, the security provider has nevertheless a right to full reimbursement (ENGLAND: Chitty/Whittaker no. 44114; O’Donovan and Phillips nos. 12-21 s.; FRANCE: Simler no. 1001).

III. Subrogation to Creditor’s Personal Rights against the Debtor

8.The provider of an independent personal security is not in all member states subrogated to the creditor’s personal rights against the debtor, if any; moreover, even where such a subrogation takes place, it is based upon various grounds.

A.No Subrogation unless Stipulated for by the Parties

9.In BELGIUM, GERMANY, the NETHERLANDS, PORTUGAL and SPAIN, according to prevailing opinion there is no subrogation by operation of law. The relevant provisions for dependent personal securities (BELGIAN CC art. 2029; DUTCH CC art. 6:142; GERMAN CC § 774; PORTUGUESE CC art. 644; SPANISH CC art. 1839) are said to be inapplicable to independent personal securities (BELGIUM: RPDB, Les garanties bancaires autonomes no. 173 at 605; Wymeersch, Garanties 97; contra CFI Gand 12 Feb. 1999, RDC 1999 727, note Buyle and Delierneux in a controversial case where an independent security was assumed by a consumer acting outside of any professional activity and intended to grant a dependent security; GERMANY: Staudinger/Horn no. 228 preceding §§ 765 ss.; M4nchKomm/Habersack no. 19 preceding § 765; contra: Canaris no. 1112; NETHERLANDS: CA Amsterdam 18 Aug. 2000, JOR 2000 no. 205; Dutch Business Law § 6.05 [4] [c]; PORTUGAL: STJ 13 Nov. 1990, CJ XV, V-187; SPAIN: Sanchez-Calero, El contrato aut+nomo 401). In BELGIUM it is not possible either to base subrogation on the general rules on subrogation laid down in CC art. 1251 (RPDB, Les garanties bancaires autonomes no. 174). In GERMANY, however, in most cases the parties will have – impliedly – stipulated for the transfer of the secured obligation; in the absence of such a stipulation the beneficiary may in view of the security purpose be obliged to assign the secured obligation (Staudinger/Horn no. 228 preceding §§ 765 ss.).

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B.Subrogation by Analogy to Dependent Personal Security

10.In AUSTRIA, FRANCE, GREECE and ITALY prevailing opinion bases subrogation on the analogous application of the relevant provisions for dependent personal securities.

These provisions may be of a general nature (AUSTRIAN CC § 1358; OGH 9 Dec. 1997, SZ 60 no. 266, p. 694, 698-700; Avancini/Iro/Koziol no. 3/64; FRENCH CC art. 1251 no. 3; pro Simler no. 1001; contra Gavalda and Stoufflet no. 29) or may be specific for dependent personal securities (GREEK CC art. 858; ITALIAN CC art. 1949; but sometimes the subrogation is thought to be based upon the more general provision of CC art. 1203 no. 3: Portale, Fideiussione 1071; Calderale, Fideiussione 265, 267 s.). In GREEK law, however, there is a subrogation only if the provider of independent security has a right of reimbursement against the debtor or if it can prove justified negotiorum gestio (CC art. 736; Georgiades § 6 no. 126 no. 19; CA Athens 3573/1970, EEN 38, 655656).

11.Also in DANISH and SWEDISH law the provider of independent security is subrogated to the creditor’s rights against the debtor (DENMARK: Pedersen, Kaution 86; SWEDEN: Walin, Borgen 183 ss., 198 ss.), since especially in SWEDEN (as well as in FINLAND) the independent personal security is more or less identified with the dependent personal security (cf. supra Introduction to Chapter 3 no. 3).

C.Subrogation by Nature of the Independent Personal Security

12.In ENGLISH law subrogation results from the nature of the contract of independent personal security and is founded on equitable principles (Morris v. Ford Motor Co Ltd [1973] QB 792 (CA)). Subrogation in this context does not amount to an assignment of the (legal) right of action to the security provider (Morris v. Ford Motor Co Ltd, supra;

John Edwards & Co v. Motor Union Insurance Co [1922] 2 KB 249, 253 (CFI)). In the absence of an agreed assignment proper, rights against the debtor can only be pursued in the creditor’s name (Morris v. Ford Motor Co Ltd, supra; Esso Petroleum v. Hall Russell &

Co [1989] AC 643, 674 (HL)). The security provider may upon tender of a proper indemnity as to costs compel the creditor to allow the use of its name (John Edwards

& Co v. Motor Union Insurance Co, supra; Yorkshire Insurance Co v. Nisbet Shipping Co

[1962] 2 QB 330, 339 (CFI); see generally O’Donovan and Phillips nos. 12-357 ss.), either in separate proceedings or by joining the creditor as defendant in the action against the debtor (cf. Mitchell 37).

IV. Subrogation to Security Rights Held by the Creditor

13.In addition to subrogation to the creditor’s personal rights against the debtor, in AUSTRIA, DENMARK, FINLAND and FRANCE the provider of independent security is equally subrogated to the personal and proprietary security rights held by the creditor, as a surety is (AUSTRIA: CC § 1358 sent. 2; DENMARK: Pedersen, Bankgarantier 83 ss.; FINLAND: LDepGuar § 30; FRANCE: Malaurie and Ayne`s, Les obligations no. 1213). In ENGLAND, the provider of independent security is thought to be in a similar situation (cf. O’Donovan and Phillips nos. 12-357 ss.); however, here the provider of independent security cannot enforce the creditor’s rights in his own name, but is merely entitled to sue in the name of the creditor, cf. preceding no. 12.

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14.According to GREEK CC art. 458 and GERMAN CC §§ 412, 401 – if the secured obligation is transferred according to the preceding rules (supra nos. 9 ss.) – the provider of independent security is ex lege subrogated only to the accessory security rights held by the creditor (Georgiades § 6 no. 126). Independent security rights have to be transferred by agreement of the parties.

V. Part Performance: Priority of Creditor’s Remaining Rights – Art. 2:113 (2)

15.In case of part performance FRANCE and DENMARK attribute priority to the creditor’s remaining rights over the rights of the provider of independent security (FRENCH CC art. 1252; cf. Simler nos. 592 and 1001; DENMARK: Pedersen, Kaution 87).

16.In GERMANY, opinions on the corresponding application of the relevant provision for dependent security are divided (cf. Staudinger/Horn no. 228 preceding §§ 765 ss.), but a majority refuses it. Therefore, in case of partial payment, the relevant rule in CC § 774 para 1 sent. 2 does not apply (Staudinger/Horn § 774 no. 61)

17.There is no equivalent to the above-mentioned FRENCH or DANISH rule in ENGLISH law, since it is the prevailing view that subrogation only occurs if the creditor is paid in full (cf. more fully national notes on Art. 2:113 no. 32).

VI. Application to Documentary Credits

18.The issuing bank’s right to reimbursement in (stand-by) letter of credit transactions is evident (BELGIUM: De Vuyst nos. 96-97 at 53-54; ENGLAND: Goode, Commercial Law 954; FRANCE: Ripert and Roblot no. 2428; GERMAN CC § 670; Schu¨tze no. 116; Canaris no. 968; GREEK CC art. 722; Georgiades § 11 no. 85; PORTUGAL: Vaz Serra, Note on acord¼o de 16. 6. 1970, at 173).

19.It is less clear whether an additional right of subrogation exists. In ENGLISH and GREEK law this question is not discussed since the paying bank acquires a legal pledge on the goods represented by the bill of lading (ENGLAND: Sale Continuation Ltd v. Austin Taylor & Co Ltd [1968] 2 QB 861 (CFI); Jack, Malek and Quest nos. 11.3 s.;

GREECE: DL 17 July/18 Aug. 1923 art. 25 § 2). Similarly, in GERMANY subrogation is denied because the bank is regarded as sufficiently secured by the principal’s advance (CC § 669) and the security rights agreed upon in the bank’s standard terms (Schu¨tze no. 118; Canaris nos. 968, 970).

(Bisping/Bo¨ger)

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