Secured Credit in Europe: From Conflicts to Compatibility

by Teemu Juutilainen

Overview

This monograph seeks the optimal way to promote compatibility between systems of proprietary security rights in Europe, focusing on security rights over tangible movables and receivables. Based on comparative research, it proposes how best to tackle cross-border problems impeding trade and finance, notably uncertainty of enforceability and unexpected loss of security rights. It offers an extensive analysis of the academic literature of more recent years that has appeared in English, German, the Scandinavian languages and Finnish. The author organises the concrete means of promoting compatibility into a centralised substantive approach, a centralised conflicts-approach, a local conflicts-approach and a local substantive approach. The centralised approaches develop EU law, and the local approaches Member State laws. The substantive approaches unify or harmonise substantive law, while the conflicts approaches rely on private international law. The author proposes determining the optimal way to promote compatibility by objective-based division of labour between the four approaches. The objectives developed for that purpose are derived from the economic functions of security rights, the conditions for legal evolution and a transnational conception of justice.

This book is an important contribution to the future of secured transactions law in Europe and more widely. It will be of interest to academics, policymakers and legal practitioners involved in this field.

Product Details

ISBN-13:	9781509910069
Publisher:	Bloomsbury Academic
Publication date:	03/22/2018
Pages:	360
Product dimensions:	6.14(w) x 9.21(h) x 0.81(d)

About the Author

Teemu Juutilainen is Postdoctoral Researcher at the University of Helsinki, Faculty of Law.

Table of Contents

Acknowledgements v

Table of Cases xiii

Table of Legislation xvii

Table of International Instruments xxiii

Introduction 1

I Overview 1

II Security Rights as Relational Legal Positions 6

III Incompatibility: Cross-border Problems in Trade and Finance 12

IV The Quest for Compatibility 19

1 Options: The Variety of Means to Promote Compatibility 27

I Introduction 27

II Thesis: The Centralised Substantive Approach 28

A The 'Eternal Crisis' of Private International Law 28

i All-Sided Conflict Rules and Loss of Predictability 28

a Europe: Flexible Choice of Law and Result-Selective Motives 31

b The US: A Multitude of Choice-of-Law Methods 32

ii Critique and Consequences for the European Discourse on Security Rights 33

B Proposals for EU Unification or Harmonisation of Substantive Law 37

i Comprehensive Means 37

a UCC Article 9 as a Model 38

b DCFR Book IX as a Blueprint 43

c Eliminating the Need for Choice of Law 46

ii Partial or Piecemeal Means 47

iii Optional or Supplementary Means 49

III Antithesis: Gentler Approaches 54

A Critique of the Centralised Substantive Approach 54

i Unnecessity 55

ii Detrimental Effects 56

B The Centralised Conflicts-Approach 57

C The Local Conflicts-Approach 63

D The Local Substantive Approach 65

IV Search for Synthesis: The Integrated Approach 66

A An Inclusive Third Way 66

B Gentler Approaches: 'Eternal Crisis' or Unused Potential? 70

C Interrelations and Interaction between the Approaches 75

D Conformity with Internal Market Law 77

i The Structure of Reasoning 77

ii Trade Barrier 78

iii Ground for Justification 87

iv Proportionality of Justification 90

v Implications for the Integrated Approach 97

V Conclusion 98

2 Objectives: The Essence of Desirable Development towards Greater Compatibility 101

I Introduction 101

II Epistemic Issues: Criteria for Choosing Objectives 102

III The Objective of Foreseeability 105

A Content and Importance 105

B The Variety of Solutions: The Preference for Comprehensive Means 105

C The Economic Functions of Security Rights 107

i The Standpoint of Secured Creditors 107

ii The Standpoint of Security-Provider Debtors 113

iii The Standpoint of the Whole Economy 115

iv Cross-border Problems Impeding Economic Functions 118

v Solutions through Foreseeability 121

D Foreseeability in Justifying the Priority of Secured Claims 122

E Institutional Support for Foreseeability 128

i The Late Payment Directive 130

ii The Financial Collateral Directive 131

iii DCFR Book IX 133

IV The Objective of Responsiveness 135

A Content and Importance 135

B Controversial Policy Choices 136

i Concerns about Economic Efficiency and Distributional Fairness 136

ii Priority Questions 142

a Carve-outs: Full or Partial Priority? 142

b The Scope of Security Devices: A Broader Notion of Priority 149

c Priorities between Different Security Devices: The Treatment of Acquisition Financing 153

iii Publicity Questions 158

a The Functions of Publicity 158

b Is Publicity Necessary? 160

c Variations of Registration 162

iv The Virtues of Local Choices 168

a The Responsiveness to Economic and Social Circumstances and Value Choices 168

b Against the Technicality Thesis: Continuum of Policies and Values 173

c Unknowability of the Optimal Features of Law on Security Rights 179

C The Potential of Competition between Jurisdictions 180

i Theoretic Fragments 181

ii General Account of Competition between Jurisdictions 184

a Starting Point: The Tiebout Model 184

b Modifications Needed to the Tiebout Model 185

iii Competition as to the Law on Security Rights: Mapping the Dynamics 188

a Actors and Incentives 188

b Formation of Content 193

c A Slow Race to the Top? 198

D Institutional Support for Responsiveness 199

V The Objective of Dividing Unforeseeability Costs 203

A Content and Importance 203

B The Transnational Conception of Justice 204

i Justice Pluralism 204

ii Conflicts Justice or Material Justice? 205

iii Theories on the Division of Conflict Mobile Costs 207

C Institutional Support for the Division of Unforeseeability Costs 212

i The Swedish Supreme Court: Starting Point and Exceptions 213

ii The Danish Supreme Court: The Principle of Import Country Law 216

iii The German Federal Court of Justice: Resolving the Problem of Initial Invalidity 219

iv EU Internal Market Law: 'Structural' Institutional Support 221

VI Interrelations between Objectives 222

A Coexistence and Reconciliation Required 222

B Process Perspective: Potential Integration 223

VII Conclusion 224

3 Choices: Options Reviewed in the Light of Objectives 227

I Introduction 227

II The Centralised Substantive Approach 228

A Deciding on the Preservation of Responsiveness 228

i Prerequisite: Competence 229

a Potential Legal Bases 229

b Subsidiarity and Proportionality: Beyond Enforceable Legal Principles 233

ii Who Should Decide on the Preservation of Responsiveness? 234

iii Envisioning Procedures for the Preservation of Responsiveness 236

B Comprehensive Unification or Harmonisation of Substantive Law 238

i The Prospect of Significantly Increased Foreseeability 239

ii The Risk of Severely Impeded Responsiveness 240

iii Ways Forward: Enhanced Cooperation or a 'Strongly Recommended' Model Law 241

C Partial or Piecemeal Unification or Harmonisation of Substantive Law 244

i Dealing with the Threat of Fragmentation 245

ii Spontaneous Convergence as a Starting Point: Simple Retention of Title 250

iii The Separation of Cross-border and Domestic Security Arrangements 252

D Optional or Supplementary Instruments 254

i The 'European Security Right' 254

a Content 254

b Critique 260

ii 'Community Security Right' 263

a Content 263

b Critique 264

III The Centralised Conflicts-Approach 267

A Uniform Conflict Rules and Other Means of Coping with Substantive Diversity 267

B Competence 270

C General Design Requirements for Conflict Rules on Third-Party Relations 272

i Definite and Predictable Choice of Law 272

a Choice of Connecting Factors 272

b The Exclusion of Renvoi 274

ii Rejection of Party Autonomy as a General Solution 275

iii Asset Type-Specificity in Choosing Connecting Factors 280

D Conflicts Treatment for Security Rights over Tangible Movables 281

i The General Conflict Rule: Lex Rei Sitae Challenged by Security-Provider Location 281

ii Improvement through the Unification of Conflict Rules 286

iii The Grace Period 287

E Conflicts Treatment for Security Rights over Receivables 289

IV The Local Conflicts-Approach 292

A Residual Nature 292

B Security Rights over Tangible Movables 292

i The Treatment of Conflit Mobile Situations 292

ii The Scope of the Lex Registrationis Rule 295

C Security Rights over Receivables 295

V The Local Substantive Approach 296

VI Conclusion 299

Conclusions 301

Bibliography 305

Index 325

Editorial Reviews

"Overall, there is a plethora of resources used here to construct the work, which is testimony to its origin as a serious academic endeavour ... In summary, the text would be particularly useful to policy-makers and those involved in the process of law reform from academic, judicial, practitioner or stakeholder backgrounds. For that reason, it can come recommended to all those interested in the asset-security and related fields." --International Insolvency Review and Journal of International Banking Law and Regulation

"Dr Juutilainen's monograph provides a clear and useful theoretical analysis of the need for the modernisation of secured transactions laws in Europe." --Cambridge Law Journal

From the Publisher