учебный год 2023 / Krupski, Connecting Security Rights in Receivables — A Canadian Perspective on the Rome Convention

Connecting Security Rights in Receivables

– A Canadian Perspective on the Rome Convention

JAN A. KRUPSKI

“Eine Succession in eine Forderung – kann man sich etwas Widersinnigeres denken?”1

Abstract: A regulation of the conflict of laws in receivables financing in Europe still remains incomplete. Unlike the uniform secured transactions statutes in Canadian provinces and the United States, the European Contracts Convention lacks a comprehensive evaluation of interests that would clarify the law applicable to competing creditors. Notwithstanding, courts do not seem prepared to reconsider whether the Convention could ever cover charges on claims. Instead of taking on a homogeneous interpretation they seem to neglect fundamentally diverging views on proprietary aspects of claims in the substantive law of Contracting States, and continue to uphold traditional national concepts. Consequently, the need for the enactment of harmonized and straightforward European law cannot be denied.

Résumé: Le droit applicable aux sûretés grevant une créance n’est codifiée que de manière incomplète en Europe. À la différence des lois uniformes sur les sûretés des provinces canadiennes et des États-Unis qui se basent sur une analyse exhaustive des intérêts pertinents, la Convention de Rome n’adopte pas d’approche claire pour établir les priorités entre créanciers concurrents. Cette lacune ne paraît guère inciter les tribunaux à reconsidérer les fondements mêmes de l’applicabilité de la Convention aux créances grevées. Au contraire, au lieu d’une interprétation de l’e- sprit de la Convention on constate un manque d’attention pour les qualifications divergentes de créances par le droit de propriété matériel des États signataires. Ceci amène les tribunaux à une observation de concepts exclusivement propres aux droits nationaux. On ne peut, par conséquent, ignorer le besoin d’harmonisation explicite du droit européen en ce domaine.

1 R. VON JHERING, Scherz und Ernst in der Jurisprudenz, Leipzig 1924, at 308. VON JHERING continues: “[W]ie in aller Welt soll man sich nun vorstellen, daß diese Qualität Gläubiger zu sein, auf einen anderen übertragen wird? Dann müßte ja auch Schönheit, Gesundheit, Kraft, Verstand sich übertragen lassen, was allerdings sehr wünschenswert wäre, aber leider unausführbar is[t] …”

740

Zusammenfassung: Die kollisionsrechtliche Anknüpfung von forderungsgebundenen Kreditsicherheiten ist in Europa nur unzureichend geregelt. Im Gegensatz zur umfassenden Interessenabwägung, die den einheitlichen Kreditsicherungsgesetzen der kanadischen Provinzen und der Vereinigten Staaten zugrunde liegt, entbehrt das Römische Vertragsrechtsübereinkommen einer Klarstellung für Prioritätskonflikte zwischen Gläubigern. Dies wird von den Gerichten jedoch kaum zum Anlaß genommen, an der Anwendbarkeit des Übereinkommens auf Sicherungrechte überhaupt zu zweifeln. Statt einer neutralen Auslegung, die sich am Geist der Konvention orientiert, werden ohne Rücksicht auf grundlegende Unterschiede in der eigentumsrechtlichen Zuordnung von Forderungen im Sachenrecht der Vertragsstaaten vielmehr nationale Rechtsvorstellungen fortgeführt. Vor diesem Hintergrund läßt sich die Notwendigkeit einer eindeutigen europarechtlichen Harmonisierung nicht mehr leugnen.

1.Introduction

The adoption of the Cape Town Convention on International Interests in Mobile Equipment in November 2001 upon groundwork within the International Civil Aviation Organisation (ICAO) and Unidroit has inaugurated a new era of internationally unified secured transactions law for claims for the payment of money (receivables).2 Its rules on receivables not associated with mobile equipment will be

2 See arts 31(5), 32(2), 33 and 34 of the Cape Town Convention on International Interests in Mobile Equipment, 16 November 2001, Unidroit, Rome 2001, online: Unidroit <www.unidroit.org> (date accessed: 22 July 2002) [hereinafter Cape Town Convention] and art XV of the Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment, 16 November 2001, Unidroit, Rome 2001, online: Unidroit <www.unidroit.org> (date accessed: 22 July 2002) [hereinafter Aircraft Protocol]. See recently B.P. HONNEBIER, ‘The Convention of Cape Town on International Interests in Mobile Equipment – The Solution of Specific European Property Law Problems’, ERPL (European Review of Private Law) 2002, p 377; J.A. KRUPSKI, ‘Conflict of Laws in Aircraft Securitization’, 24 Ann Air & Sp L (Annals of Air and Space Law) 1999, p 91 with further references; R.M. GOODE, ‘The Unidroit Mobile Equipment Convention’, in M. BRIDGE & R. STEVENS (eds), Cross-Border Security and Insolvency, Oxford University Press, New York 2001 [hereinafter Cross-Border Security], p 228 et seq. Unidroit was founded in 1926 as an auxiliary organ of the League of Nations and re-established in 1940. See Charter of the International Institute for the Unification of Private Law, 15 March 1940, 15 UST 2494, TIAS 5743, UKTS 1965, 54. For its organisation and activities, see R. DAVID, ‘The International Unification of Private Law’, in R. DAVID ET AL (eds), International Encyclopaedia of Comparative Law, vol 2 – The Legal Systems of the World – Their Comparison and Unification, c. 5, J.C.B. Mohr [Paul Siebeck], Tübingen; Mouton, Den Haag and Paris; Oceana, New York 1971, at 133 et seq., paras 352 et seq. For its activities in secured transactions law, see N.B. COHEN, ‘Harmonizing the Law Governing Secured Credit – The Next Frontier’, 33 Tex Int’l L J (Texas International Law Journal) 1998, p 173 at 181 et seq.

741

supplemented by another forward-looking agreement, that is, the UNCITRAL Convention on the Assignment of Receivables in International Trade adopted by the General Assembly in December 2001.3

At the same time, national conflict of laws rules concerning receivables are being reformed on a world-wide scale. Particularly, the European need for an upgrade of its rules requires some scrutiny and clarification. Its driving forces parallel those advocating the modernization of substantive law whose technicalities shall not be dwelled upon in this forum.

Within Europe, the conflict of law rules of the Receivables Convention will prevail over or supplant conflict of laws rules of more general application insofar as the substantive rules of this Convention will not apply, or at least lead to an assimilation of existing precepts. The most important of such general conflict of laws rules is Article 12 of the Rome Convention on the Law Applicable to Contractual Obligations, concluded by Member States of the European Communities on 19 June 19804 as a sequel of the Brussels Convention on Jurisdiction and the Enforcement of Judgements in Civil and Commercial Matters of 27 September 1968.5

Indeed, the ambiguity of this provision is causing differing applications in both doctrine and legal practice with wide variations from one Contracting State to the other. Thus, a review of Article 12 of the Rome Convention is a matter of some

3See art 1(b) of the UNCITRAL Convention on the Assignment of Receivables in International Trade, 12 December 2001, G.A. doc. A/Res/56/81, UNCITRAL, Vienna 2001, online: UNCITRAL <www.uncitral.org> (date accessed: 22 February 2002) [hereinafter Receivables Convention]; F. FERRARI,’The Uncitral Draft Convention on Assignments in Receivables Financing – Critical Remarks on Some Specific Issues’, in J. BASEDOW ET AL (eds), Private Law in the International Arena – Liber Amicorum Kurt Siehr, T.M.C. Asser Press, Den Haag 2000 [hereinafter Private Law], p 179; C. WALSH, ‘Receivables Financing and the Conflict of Laws – the UNCITRAL Draft Convention on the Assignment of Receivables in International Trade’, 106 Dick L Rev (Dickinson Law Review) 2001, p 159. For the fields of activity and working methods of UNCITRAL, see, for example, J.O. HONNOLD, ‘The United Nations Commission on International Trade Law – Missions and Methods’, 27 Am J Comp L (American Journal of Comparative Law) 1979, p 201.

4EEC Convention on the Law Applicable to Contractual Obligations, 19 June 1980, 29 ILM 1980, 1492, OJ 1980 L 266, p 1 [hereinafter Rome Convention]. A shared conflicts of laws regime was felt necessary from the earlier days of the Common Market, inspired by the Restatement (Second) of the Law of Conflict of Laws (1971), even though the Communities did not have title of competence prior to the Treaty of Amsterdam. For the genesis of the Rome Convention, see R. PLENDER, The European Contracts Convention, 2nd ed by R. PLENDER & M. WILDERSPIN, Sweet & Maxwell, London 2001, at 15 et seq., paras 1-25 et seq.

5EEC Convention on Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters,

27September 1968, OJ 1972 L 299, p 32, OJ 1998 C 27, p 3. See M. GIULIANO, Report on the Convention on the Law applicable to Contractual Obligations by M. GIULIANO & P. LAGARDE, OJ 1980 C 282, p 1 at

5.Based on art 65(b) of the EC Treaty, this Convention was revised and enacted as of 1 March 2002 as the Council Regulation (EC) No 44/2001 of 22 December 2000 on Jurisdiction and the Recognition and Enforcement of Judgements in Civil and Commercial Matters, [2001] OJ L 12, p 1 [hereinafter EC Regulation].

742

urgency. In a nutshell, nobody knows whether Article 12 regulates the proprietary aspects of an assignment, or what assignment in the sense of Article 12 really means, and especially, if the provision is applicable to secured transactions, as contended by many.

Article 12 has therefore become a paradigm for a failed unification of a conflict of laws rule, leading to unnecessary additional complications in a Common European Market without a uniform secured transactions law. Distortions are even greater when secured transactions systems outside Europe, especially the North American systems based on the creation of a security interest, form the substantive law of the assignment. Against this background, it is particularly unfortunate that the Protocols on the Interpretation of the Rome Convention6 that empower the European Court of Justice to clarify doubts, and perhaps bridge the Atlantic Ocean, have not come into force.

The enigma of Article 12 shall be explored a little further in this brief study, flagging a possible impact of the earlier cited modern instruments of uniform law on its interpretation.

2.Conflict solution in modern secured transactions statutes

Present day comparatists view the Personal Property Security Act (PPSA) system of Canadian Common law jurisdictions – improvements of the standard set in the 1950s by Article 9 of the Uniform Commercial Code (UCC) – and even the system established by the Civil Code of Quebec (CCQ) as exemplary of modern secured transactions law.7 Its characteristic features are economic efficiencies (see 2.1) and the certainty and predictability of its connecting factor in the conflict of secured transactions laws, i.e. the location of the assignor of a claim (see 2.2).

2.1 Economic efficiencies

Subject to minor policy differences among jurisdictions, transaction costs and superfluous burdens on assignors, assignees and debtors are kept to the absolute minimum, which facilitates credit at affordable rates. This approach was confirmed for the Cape Town Convention and the Aircraft Protocol by the basic scheme for

6First Protocol on the interpretation by the Court of Justice of the European Communities of the Convention on the law applicable to contractual obligations, opened for signature in Rome on 19 June 1980, 19 December 1988, OJ 1989 L 48, p 1; Second Protocol conferring on the Court of Justice of the European Communities certain powers to interpret the Convention on the law applicable to contractual obligations, opened for signature in Rome on 19 June 1980, 19 December 1988, OJ 1989 L 48, p 17.

7See, for example, H. KÖTZ, Europäisches Vertragsrecht (European Contract Law), vol 1, by H. KÖTZ & A. FLESSNER, J.C.B. Mohr [Paul Siebeck], Tübingen 1996 [hereinafter Vertragsrecht], at 415, trans T. WEIR, Clarendon Press, Oxford 1997, at 273, favouring, however, a “registry publicly accessible” that would bear a resemblance to the public notice of arts 2963 et seq. CCQ and of the land registries in the Canadian Common law provinces and European countries.

743

reducing transaction costs proposed by the Institut Européen d’Administration des Affaires (INSEAD) and the New York University Salomon Center:8 The ICAO/Unidroit instruments “[w]ill achieve significant economic gains. These gains will be widely shared among airlines and manufacturers, their employees, suppliers, shareholders, and the national economies in which they are located”.9 The provisions of this Convention are based upon three “asset-based financing principles”: (1) the “transparent priority principle”, which promotes clarity in the ranking of competing property interests; (2) the “prompt enforcement principle”, which advocates the ability of creditors to promptly enforce their rights against assets that generate proceeds and revenues; and (3) the “bankruptcy law enforcement principle”, which upholds the ability to enforce during insolvency.10 These fundamental standards will greatly enhance available financing capacities and improve export and employment levels. The Receivables Convention pursues the same objectives,11 covering a much wider array of transactions.

2.2 Certainty and predictability of the location of the grantor

All of these legal systems – exception made for the Cape Town Convention covering only substantive law – stipulate that the location of the grantor should decide on the law applicable to the relationship between the assignor and third parties in a secured transactions context,12 as opposed to the law that governs the assigned claim or the law chosen by the assignor and the assignee. Its benefits in efficiency and commercial practice and the absence of unforeseen burdens for the account debtor generally justify this.

8See A. SAUNDERS & I. WALTER, Proposed Unidroit Convention on International Interests in Mobile Equipment as Applicable to Aircraft Equipment through the Aircraft Equipment Protocol: Economic Impact Assessment (A Study Prepared Under the Auspices of INSEAD and the New York University Salomon Center, September 1998), 23 Air & Sp L (Air & Space Law) 1998, p 339 (hereinafter cited to the unpublished version); T.J. GALLAGHER, ‘Assessment of the Anticipated Economic Benefits of the Unidroit Convention’, 23 Air & Sp L 1998, p 294.

9See A. SAUNDERS & I. WALTER, ibid, Executive Summary at i.

10See A. SAUNDERS & I. WALTER, ibid, Executive Summary at ii, 11 et seq., para 3.1.

11See Preamble of the Receivables Convention, supra note 3.

12See, for example, s 7(1)(a)(i) of the Ontario Personal Property Security Act, S.O. 1989, c. 16, R.S.O. 1990, c. P-10 as am, and s 7(2)(a) of the New Brunswick Personal Property Security Act, S.N.B. 1993, c. P-7.1, which reads: “The validity, perfection, and effect of perfection or non-perfection of a security right in an intangible are governed by the law, including the conflict of law rules, of the jurisdiction where the debtor is located when the security interest attaches”. Similarly, art 3105 of the Civil Code of Quebec (CCQ) stipulates: “The validity of a securit[y] … [c]harged on an incorporeal movable is governed by the law of the country where the grantor was domiciled at the time of creation of the security. Publication and its effects are governed by the law of the country in which the grantor is currently domiciled”. Last, arts 22 and 30(1) of the Receivables Convention, supra note 3 read: “The law of the State in which the assignor is located governs the priority of the right of an assignee in the assigned receivable over the right of a competing claimant”.

744

The following outline will identify problematic situations of multiple assignments (see 2.2.1), of incongruities between registry systems and other schemes (see 2.2.2), as well as of after-acquired claims (see 2.2.3).

2.2.1 Multiple Assignments

A rule supporting the location of the grantor as connecting factor is most adequate for the protection of creditors of the assignor, notably in cases of multiple assignments of the same claim. Creditors usually do not know the law applicable to the receivable, unless they obtain physical possession of a document stipulating a choice of law, provided that such contract exists. Not every legal system requires that a contract be done in writing or applies the written form to specific types of contract. Even if a written document exists, parties may simply forget to address choice of law issues. When a choice of law is actually made, the idea of having a creditor chase a contractual document to which it is not a party appears impracticable and would play as a factor augmenting transaction costs.

2.2.2 Registration

Moreover, if an assignment by way of security – common in the domestic laws of most Continental jurisdictions – was governed by the lex contractus of the receivable (Canadian contract law, for instance), and if this law stipulated a registration requirement for secured transactions having typically domestic transactions in mind (as a PPSA or the CCQ), then the creditor of the assignor (the assignee) would not have any realistic possibility of verifying whether the grantor of the security is still the owner of the claim. This assumption is based on the fact that the latter is not registered in the registry of the jurisdiction under whose law the receivable was constituted (again, Canadian contract law) since the original claim was not subject to a secured transaction. Neither can the assignee consult a registry of the jurisdiction whose law governs the assignment (Germany, for example) because there is no registration requirement in this law and no registry to consult. Yet, a search by the name of the grantor would be the only feasible way to use a registration system. This situation shows that jurisdictions with and such without a registry are incompatible, should the law of the assigned claim be applied.

A way out of the dilemma just described could be the registration of the secured transaction in the registry of the receivable at the outset (for example in the Quebec Registry of Personal and Movable Real Rights),13 provided that this is permitted or contemplated by the law constituting the registry. Still, it appears unrealistic and impracticable, especially for a competing creditor, to check on the grantor in the Registry of the jurisdiction of the receivable if the assignor is located in another jurisdiction because no ordinary domestic lawyer would ever conceive of the existence of a registry for assignments by way of security, neither would he or she

13 See art 2980 CCQ and the Règlement sur le registre des droits personnels et réels mobiliers, Décret 1594-93, 17 November 1993, (1993) 125 G. O. II 8058.

745

assume the application of such law. Last, the function of registration may vary from jurisdiction to jurisdiction. For example, some registration systems create public faith of the record while others just wish to alert competing creditors.14 These approaches produce differences in reliability and in specificity requirements that domestic lawyers may not expect.

All of the preceding aspects lead to uncertainty in international transactions and distortions in the priority system, with the potential of a “deal killer”. The international registries contemplated by the Receivables and Cape Town Conventions may, however, mitigate this fear.15

2.2.3 Future claims and bulk assignments

Another illustrative problem in this area is that an application of the law of the receivable may unduly limit the assignability of a claim. This is the case where – with regard to the debtor – requirements are set that do not regard the relationship between the assignor and one or several assignees, as in Article 1690 of the French Code civil, or if certain types of assignments are not allowed, such as the assignment of future claims. Even if the assignment of future receivables is allowed, the assignee may not be able to predict what law might apply and therefore cannot conform to its requirements.

In addition, a situation of a clash of securities may frequently occur in practice, where the bulk assignment of accounts receivable and the assignment of an afteracquired claim (sometimes included in an agreement with a reservation of title) are competing for priority. In this case of an assignment of future claims there is no debtor interest that could possibly be impaired. The assignment of a universality of claims owed by account debtors in several countries would instead force a creditor to scrutinize the relevant contracts and to conform to priority rules of all relevant States. On top, the varying laws for each contract augment the cost of dispute resolution and insolvency administration. “These devices illustrate the fact that priority is a matter connected with the assignor rather than with the debtor”.16 Hence, the

14See, for example, arts 2941, 2944, 2962 and 2964 CCQ, which read: “2941. Publication of rights allows them to be set up against third person[s]… 2944. Registration of a right in the register of personal and moveable real right[s] … [c]arries, in respect of all persons, simple presumption of the existence of that right. 2964. Absence of publication may be set up by any interested person against any perso[n],…” They can be opposed to s 47 of the New Brunswick PPSA, supra note 12, which reads: “Registration of a financing statement in the Registry by itself does not constitute notice or knowledge to any person of the existence or contents of the financing statement or of the existence of the security interest or the contents of any security agreement to which the registration relates”. An additional conceptual problem arises in this area because “good faith” is a rather civilian notion that is traditionally less perceptible in systems of the Common law.

15See art 5(2) of the Receivables Convention, supra note 3 and art 24 of the Cape Town Convention, supra note 2, which conform to the system of the PPSAs.

16E. RABEL, The Conflict of Laws – A Comparative Study, vol 3, 2nd ed, University of Michigan Press, Ann Arbor 1964, at 428.

746

UCC,17 the Canadian PPSAs, and the CCQ18 stipulate that perfection is governed by the law at the principal place of business of the debtor under the agreement to assign. Thereby, they submit the question of priority to the law of the assignor.

The law of the grantor provides for a statute that takes account of creditor interests and embraces different types of security assignments in a single system. The conditional vendor, the assignee of the accounts receivable and unsecured creditors rely on the protection granted by the legal order at the location of the assignor in the case of his or her insolvency. This constitutes the only connecting factor that is sufficiently stable and predictable.19

Critics may still allege that connecting creditor-related aspects of such assignments to the law of the assignor would entail a severage of the law applicable to the mutual rights and obligations of the assignor and the assignee on the one hand, and the law applicable to the rights and obligations of the assignee and the debtor on the other. However, since the debtor usually is not concerned about the ownership of the claim, a separation along the lines of commercial relations appears possible even with regard to legal systems such as France, in which a particular legal mechanism provides for regulation in the relation between the debtor and third parties.20 Should the assignment be invalid, such is unlikely to affect the debtor.

3.Conflict multiplication in the Rome Convention

The preceding thoughts show that there is a clear tendency to apply the law of the location of the grantor of the security in a claim to the relationship between the assignor and the assignee, including the proprietary aspects of the assignment. Yet, the majority of doctrine and the jurisprudence in Europe entirely discard such a possibility within the ambit of Article 12 of the Rome Convention. Their interpretations are based on the inconclusive wording of Article 12 as well as on an erroneous

17See s 9-103(3)(b) UCC (1994), as well as s 9-301(1) of the Revised UCC (2001), which provides: “Except as otherwise provided in this section, while a debtor is located in a jurisdiction, the local law of that jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in collateral”. See also s 9-307 of the Revised UCC (2001) as far as the determination of the debtor’s location is concerned, and R.E. BULL, ‘Operation of the New Art. 9 Choice of Law Regime in an International Context’, 78 Tex L Rev (Texas Law Review) 1999, p 679.

18See supra note 12.

19For a general critique of the German jurisprudence, see H. STOLL, ‘Anknüpfung bei mehrfacher Abtretung derselben Forderung’, Case comment on Bundesgerichtshof (German Federal Supreme Court, BGH) 20.6.1990, IPRax (Praxis des Internationalen Privatund Verfahrensrechts) 1991, p 223 at 226; id, “Internationales Sachenrecht”, in H. AMANN & G. BEITZKE (eds), Einführungsgesetz zum Bürgerlichen Gesetzbuch, J. von Staudingers Kommentar zum Bürgerlichen Gesetzbuch mit Einführungsgesetz und Nebengesetzen (Staudinger), 12th ed, Sellier – de Gruyter, Berlin 1992, at paras 291, 292 [hereinafter “Sachenrecht”]; R.A. LEFLAR, L.L. MCDOUGAL III & R.L. FELIX, American Conflicts Law, 4th ed, Michielo, Charlotteville, Va 1986, at 526: “Uniformity and predictability based on commercial convenience are the prime considerations in making the choice of governing law for this problem”.

20See E.-M. KIENINGER, ‘Das Statut der Forderungsabtretung im Verhältnis zu Dritten’, RabelsZ (Rabels Zeitschrift für ausländisches und internationales Privatrecht) 1998, p 678 at 704 et seq.

747

reading of the explanatory, albeit indeterminate comments by Giuliano.21 In reality, therefore, hidden biases based on diametrically opposite concepts of property in different jurisdictions would appear to dominate the discussion whether proprietary effects of an assignment were the subject matter of Article 12.

3.1 Lex contractus of the original contract

It is widely accepted in European jurisdictions that the law that governs the relations between the assigned debtor (debitor cessus) and the assignor should apply to singular assignments. This law is notably relevant for the determination of the creditor in order to protect the debtor from disadvantages that may arise as a consequence of the application of a law foreign to his or her contractual relationships. It is also of considerable interest to the parties to the assignment, who are normally prepared to see the law of the assigned claim employed, and expect that the assignment remains enforceable against the debtor under the same law.22 For that reason, Article 12(2) of the Rome Convention generally stipulates that the proper law of the debtor’s chose in action governs the

“assignability, the relationship between the assignee and the debtor, the conditions under which the assignment can be invoked against the debtor and any question whether the debtor’s obligations have been discharged”.23

The application of this law is certainly an adequate and sufficient safeguard for purposes of debtor protection.24

A majority view submits all legal aspects affecting assignment but the contractual agreement to assign between assignor and assignee to Article 12(2) of the Rome Convention. This conclusion would seem to result a contrario from the wording of Article 12(1), which reads:

“The mutual obligations of assignor and assignee under a voluntary assignment of a right against another person (“the debtor”) shall be governed by the law which under this Convention applies to the contract between the assignor and assignee”.25

However, Article 12(2) explicitly addresses only the relationship to the debtor and the “assignability” of claims under a particular law generally, i.e. the question as to

21See GIULIANO, supra note 5 at 34 et seq.

22For German and Swiss law, see RABEL, supra note 16 at 395.

23Art 12(2) of the Rome Convention, supra note 4.

24See STOLL, supra note 19 at 226.

25Art 12(1) of the Rome Convention, supra note 4.

748

whether the subject matter is capable of assignment.26 Even now, Article 12(2) is drafted in a very negligent manner.27 According to Giuliano, Article 12(1) refers to the law of obligations only in order to clarify that the choice of law – as may be assumed in jurisdictions, in which property is transferred solo consensu, i.e. by mere consent28 – does not regulate the effects on the account debtor because an assignment includes effects on the debtor in German law.29 This is true because the debtor is not affected by defects of the obligation to assign between assignor and assignee under German law, due to the in rem character of the transfer of the claim, which is regarded as being separate from the law of obligations.30 Apart from this reference to strong German influence, number of authors and judges allege that the question of proprietary aspects be very intimately linked to assignment, and that drafters wished to achieve a comprehensive regulation of the area: they simply must have included them “implicitly” in Article 12(2).31

26This indication is also given by T.H.D. STRUYCKEN, ‘The Proprietary Aspects of International Assignment of Debts and the Rome Convention, Art. 12’, Ll M C L Q (Lloyd’s Maritime and Commercial Law Quarterly) 1998, p 345 at 357 note 51. The term “assignability” remains vague from a comparative perspective and is certainly an additional irritant in this confusion. See also WALSH, supra note 3 at 202; P. KAYE, The New Private International Law of Contract of the European Community, Dartmounth, Aldershot, UK & Brookfield, Vt 1993, at 323.

27See C. VON BAR, ‘Zessionsstatut, Verpflichtungsstatut und Gesellschaftsstatut’, Case comment on BGH 26.11.1990, IPRax 1992, p 20 at 22.

28See, for example, art 1453 CCQ, arts 1107, 1138 and 1583 of the French Code civil, as well as art 1376 of the Italian Codice civile.

29See GIULIANO, supra note 5 at 34 et seq.

30The separation between the two levels (in German Trennungsprinzip) exists in Switzerland, Austria, the Netherlands, Poland and Croatia, too. See A. STADLER, ‘Der Streit um das Zessionsstatut – eine endlose Geschichte?’, IPRax 2000, p 104 at 105 with further references; K. ZWEIGERT & H. KÖTZ,

Einführung in die Rechtsvergleichung auf dem Gebiete des Privatrechts (An Introduction to Comparative Law), 3rd ed, J.C.B. Mohr [Paul Siebeck], Tübingen 1996, at 442 et seq., trans T. WEIR, Clarendon Press, Oxford 1998, at 445 et seq.; KÖTZ, Vertragsrecht, supra note 7 at 406 note 14, trans at 267 note 14.

31See, for example, A.V. DICEY & J.H.C. MORRIS, The Conflict of Laws, vol 2, 13th ed by L. COLLINS ET AL, Sweet & Maxwell, London 2000, at 983, para 24-059; G.C. CHESHIRE, Cheshire and North’s Private International Law, 13th ed by P.M. NORTH & J.J. FAWCETT, Butterworths, London 1999, at 958 and 962; PLENDER, supra note 4 at 229, para 11-25; R. STEVENS, ‘The English Conflict of Laws Rules’, in Cross-Border Security, supra note 2, 205 at 214 et seq.; Raiffeisen Zentralbank Österreich AG v. Five Star General Trading LLC and others, [2000] 2 Ll L R (Lloyd’s Law Reports) 684, QB; BGH 8.12.1998,

IPRax 2000, 128; BGH 20.6.1990, IPRax 1991, 248 and BGHZ 111, 376 [Germany]. According to the BGH the law governing the relations between the assigned debtor and the assignor also has to be applied to the question of whether the assignment of a future claim is valid in the bankruptcy of the assignor. See also A. HELDRICH, Legislative comment on art 33 of the Einführungsgesetz zum Bürgerlichen Gesetzbuch in der Fassung vom 27. Juni 2000, BGBl. I, 1986 at 1142, BGBl. I, 1994 at 2494, and BGBl. I, 2000 at 897 (German Code on the Conflict of Laws) [hereinafter EGBGB], incorporating art 12 of the Rome Convention, in O. Palandt, Bürgerliches Gesetzbuch, 60th ed, C.H. Beck, München 2001, at 2402, Art 33 para 2; D. MARTINY, Internationales Vertragsrecht, 5th ed by D. MARTINY & G. REITHMANN, Dr. Otto Schmidt, Köln 1997, at paras 300, 309 et seq.; J. KROPHOLLER, Internationales Privatrecht, 3rd ed, J.C.B. Mohr [Paul Siebeck], Tübingen 1997, at 438; G. KEGEL, Internationales Privatrecht, 8th ed by G. KEGEL & K. SCHURIG, C.H. Beck, München 2000, at 654, § 18 VII 1; R. HAUSMANN, Legislative comment on Art 33 EGBGB, in Staudinger, supra note 19 Art 33 para 8; C. VON BAR, ‘Abtretung und Legalzession