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Secured credit law in Sweden - An analysis of the potential for a new regime in light of Canadian law and the European DCFR

Bjärtun, Sofie LU (2012) JURM02 20122
Department of Law
Abstract
Present Swedish law concerning security over movable assets is largely based on case law and legal literature, with some statutory intervention. Although the principal form of security is the possessory pledge, various security devices are used in practice, pursuant to legislative introductions of separate registration systems (e.g. floating charges) and the commercial use of ownership for security purposes (e.g. security transfer of ownership, financial leasing, retention of title, commission or consignment). Perfection requirement and priority status depend on what security device is applied. As registration is required only in relation to some asset and transaction types; as transfer of possession (i.e. the debtor’s ability to dispose... (More)
Present Swedish law concerning security over movable assets is largely based on case law and legal literature, with some statutory intervention. Although the principal form of security is the possessory pledge, various security devices are used in practice, pursuant to legislative introductions of separate registration systems (e.g. floating charges) and the commercial use of ownership for security purposes (e.g. security transfer of ownership, financial leasing, retention of title, commission or consignment). Perfection requirement and priority status depend on what security device is applied. As registration is required only in relation to some asset and transaction types; as transfer of possession (i.e. the debtor’s ability to dispose of the asset is cut off) is arguably deficient as publicity method; and as ownership may be used for security purposes without always being sufficiently visible to third parties, it is difficult for intending creditors and other third parties to grasp the full extent of encumbrances over a debtor’s assets. As ownership prevails over all other security rights on the basis of the formal notion that a debtor cannot grant security in an asset that is owned by someone else, ownership affects the determination of priority despite not being mentioned in the priority legislation. Due to the lack of a uniform secured credit regime in which all security devices are regulated, including those based on ownership, the Swedish system is uncertain and non-transparent.

In Canada, two similar legal patchworks were replaced by comprehensive regimes: one in the common law provinces and one in civil law Quebec. The common law version applies a functional security interest, which includes every transaction that functions to secure an obligation, irrespective of where ownership is vested, whereas Quebec’s civil code treats title-based transactions separate from its hypothec, although subjecting those title-based transactions when functioning as security to publicity rules and, sometimes, enforcement rules. Both regimes use registration as the principle perfection method. One central register coupled with the approach that all transactions that are recognised as ways to secure an obligation are registrable therein enable an integrated regulation of priorities between secured creditors and against third parties. Priority turns on the date of registration, subject to such creditors whose credit extensions directly finance the acquisition of assets.

In Europe, academic discussions on harmonisation in this field of law have resulted in the inclusion in the Draft Common Frame of Reference published in 2009 of a book on secured transactions in movable assets. The drafters propose an optional regime with a semi-functional approach to security and a European register for cross-border secured transactions.

On the basis of the current European evolvement and the learnings from the two Canadian successful regimes, there is a good case for a Swedish reform. The present system should be replaced by a comprehensive act, which would include all security devices, and the setting up of one central register. (Less)
Abstract (Swedish)
Nuvarande reglering av säkerhet i lös egendom i Sverige bygger, med undantag för några lagstiftningsåtgärder, på rättspraxis och juridisk doktrin. Även om pantsättning är huvudmetoden för att ställa säkerhet, används i praktiken flera olika typer av säkerhetsrätter då lagstiftaren infört separata registersystem (t.ex. företagshypotek) och då äganderätt i praktiken ofta används som säkerhet (t.ex. säkerhetsöverlåtelser, finansiell leasing, äganderättsförbehåll, kommission eller konsignation). Vilket sakrättsligt moment som krävs och vilken prioritet detta moment ger beror på vilken säkerhetsrätt som används. Då registrering krävs endast vid vissa tillgångs- eller transaktionstyper; då pantsättning (i bemärkelsen rådighetsavskärande) får... (More)
Nuvarande reglering av säkerhet i lös egendom i Sverige bygger, med undantag för några lagstiftningsåtgärder, på rättspraxis och juridisk doktrin. Även om pantsättning är huvudmetoden för att ställa säkerhet, används i praktiken flera olika typer av säkerhetsrätter då lagstiftaren infört separata registersystem (t.ex. företagshypotek) och då äganderätt i praktiken ofta används som säkerhet (t.ex. säkerhetsöverlåtelser, finansiell leasing, äganderättsförbehåll, kommission eller konsignation). Vilket sakrättsligt moment som krävs och vilken prioritet detta moment ger beror på vilken säkerhetsrätt som används. Då registrering krävs endast vid vissa tillgångs- eller transaktionstyper; då pantsättning (i bemärkelsen rådighetsavskärande) får anses otillräcklig ur ett publicitetssyfte; och då äganderätt kan användas som säkerhet utan att alltid till fullo komma till tredje mans kännedom, är det svårt för tredje man att uppfatta den fulla omfattningen av anspråk på en viss gäldenärs tillgångar. Då äganderätt har en prioriterad ställning på grundval av den formalistiska hållningen att en gäldenär inte kan bevilja säkerhet i en tillgång som ägs av någon annan, påverkar äganderätten prioritetsordningen trots att den inte omnämns i förmånsrättslagstiftningen. Bristen på en enhetlig reglering av alla säkerhetsrätter, inklusive de som baseras på ägande, gör det svenska systemet osäkert och svåröverskådligt.

I Kanada har två liknande rättsliga lapptäcken ersatts av omfattande kreditsäkerhetssystem. I common law-provinserna tillämpas ett funktionellt security interest, inbegripande varje kreditarrangemang som syftar till att säkra en förpliktelse, oavsett vem ägandet tillkommer. I civil law-provinsen Quebec tillämpas istället ett formalistiskt synsätt i det att transaktioner baserade på ägande regleras separat från säkerhetsrätten hypothec medan de underkastas publicitetsregler (och ibland realisationsregler) när de används i säkerhetssyfte. I båda systemen är registrering det huvudsakliga sakrättsliga momentet. Ett centralt register där alla transaktioner som används för att säkra en förpliktelse ska registreras för sakrättslig verkan möjliggör en enhetlig reglering av prioritetsordningen mellan flera säkrade anspråk och gentemot tredje män. Prioritetsordningen avgörs utifrån registreringsdatum, med undantag för de borgenärer som direkt finansierar förvärv av tillgångar.

I Europa har akademiska diskussioner om harmonisering inom detta område resulterat i införandet av en bok om säkerhet i lös egendom i Draft Common Frame of Reference, som publicerades 2009. Författarna föreslår ett system med ett semi-funktionellt synsätt till säkerhetsrätter och ett europeiskt register i vilket gränsöverskridande säkerhetsrätter ska kunna registreras.

Mot bakgrund av det pågående europeiska arbetet och lärdomar från de två kanadensiska framgångsrika systemen finns det goda grunder för en svensk reform. Det nuvarande svenska systemet bör ersättas av en omfattande ny lag som reglerar alla olika säkerhetsrätter, även de som baseras på ägande, och inrättandet av ett nytt centralt register för alla dessa säkerhetsrätter. (Less)
Please use this url to cite or link to this publication:
author
Bjärtun, Sofie LU
supervisor
organization
course
JURM02 20122
year
type
H3 - Professional qualifications (4 Years - )
subject
keywords
Secured Credit Law, Comparative Law, Property Law, Canadian law, DCFR
language
English
id
3348483
date added to LUP
2013-02-05 08:44:55
date last changed
2013-02-05 08:44:55
@misc{3348483,
  abstract     = {{Present Swedish law concerning security over movable assets is largely based on case law and legal literature, with some statutory intervention. Although the principal form of security is the possessory pledge, various security devices are used in practice, pursuant to legislative introductions of separate registration systems (e.g. floating charges) and the commercial use of ownership for security purposes (e.g. security transfer of ownership, financial leasing, retention of title, commission or consignment). Perfection requirement and priority status depend on what security device is applied. As registration is required only in relation to some asset and transaction types; as transfer of possession (i.e. the debtor’s ability to dispose of the asset is cut off) is arguably deficient as publicity method; and as ownership may be used for security purposes without always being sufficiently visible to third parties, it is difficult for intending creditors and other third parties to grasp the full extent of encumbrances over a debtor’s assets. As ownership prevails over all other security rights on the basis of the formal notion that a debtor cannot grant security in an asset that is owned by someone else, ownership affects the determination of priority despite not being mentioned in the priority legislation. Due to the lack of a uniform secured credit regime in which all security devices are regulated, including those based on ownership, the Swedish system is uncertain and non-transparent. 

In Canada, two similar legal patchworks were replaced by comprehensive regimes: one in the common law provinces and one in civil law Quebec. The common law version applies a functional security interest, which includes every transaction that functions to secure an obligation, irrespective of where ownership is vested, whereas Quebec’s civil code treats title-based transactions separate from its hypothec, although subjecting those title-based transactions when functioning as security to publicity rules and, sometimes, enforcement rules. Both regimes use registration as the principle perfection method. One central register coupled with the approach that all transactions that are recognised as ways to secure an obligation are registrable therein enable an integrated regulation of priorities between secured creditors and against third parties. Priority turns on the date of registration, subject to such creditors whose credit extensions directly finance the acquisition of assets. 

In Europe, academic discussions on harmonisation in this field of law have resulted in the inclusion in the Draft Common Frame of Reference published in 2009 of a book on secured transactions in movable assets. The drafters propose an optional regime with a semi-functional approach to security and a European register for cross-border secured transactions.

On the basis of the current European evolvement and the learnings from the two Canadian successful regimes, there is a good case for a Swedish reform. The present system should be replaced by a comprehensive act, which would include all security devices, and the setting up of one central register.}},
  author       = {{Bjärtun, Sofie}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Secured credit law in Sweden - An analysis of the potential for a new regime in light of Canadian law and the European DCFR}},
  year         = {{2012}},
}