What changed between the plenary report and the adopted text

Removed:EXPLANATORY STATEMENT

Added:(14) A claim gives a creditor a right to the payment of a sum of money or the performance of an obligation by the debtor. The assignment of a claim enables the creditor (assignor) to transfer his right to claim the debt against a debtor to another person (assignee). The laws that govern the contractual relationship between the creditor and the debtor, between the assignor and the assignee and between the assignee and the debtor are designated by the conflict of laws rules laid down in the Rome I Regulation.

Removed:Rules relating to the law applicable to third party effects of assignments of claims were included in the Commission proposal that later became Regulation (EC) No 593/208 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I) but they did not end up in the final text. The clear intention of the legislators when lifting these questions out of the Rome I regulation was that the Commission should return with a proposal at a later stage.

Added:(14a) This Regulation is not intended to alter the provisions of Regulation (EC) No 593/2008 regarding the proprietary effect of a voluntary assignment as between assignor and assignee or as between assignee and debtor. [Am. 6]

Removed:The questions were raised again in the light of the 2015 Action Plan on Capital Markets Union (CMU). In May 2017 the Commission's Mid-term Review set out the remaining actions which will be taken to put in place the building blocks of the CMU by 2019, with the objective of removing barriers to cross-border investment and lowering the costs of funding.

Added:(15) The conflict of laws rules laid down in this Regulation should govern the proprietary effects of assignments of claims as between all parties involved in the assignment (that is, between the assignor and the assignee and between the assignee and the debtor) as well as in respect of third parties, for example, a creditor of the assignor, excluding the debtor. [Am. 7]

Removed:Scope of the report

Added:(16) The claims covered by this Regulation are include trade receivables, claims arising from financial instruments as defined in Directive 2014/65/EU of the European Parliament and of the Council and cash credited to an account in a credit institution. Financial instruments as defined in Directive 2014/65/EU include securities and derivatives traded on financial markets. While securities are assets, derivatives are contracts which include both rights (or claims) and obligations for the parties to the contract. [Am. 8]

Removed:The proposal of the Commission has fifteen articles. It follows closely the Rome I and II Regulations. In this report the provisions specific to this Proposal has been put in focus, whilst provisions only copied over from Rome I and II have been left unchanged. This position has been taken specifically with the view of possibly concluding this legislative file before the end of the Legislature.

Added:(17) This Regulation concerns the third-party effects of the assignment of claims. It does not In particular, it covers the transfer of the contracts (such as derivative contracts), in which both rights (or claims) and obligations are included, and the novation of contracts including such rights and obligations. As this Regulation does not cover the transfer or the novation of contracts, trading in financial instruments, as well as the clearing and the settlement of these instruments, will continue to be governed by the law applicable to contractual obligations as laid down in the Rome I Regulation. This law is normally chosen by the parties to the contract or is designated by non-discretionary rules applicable to financial markets. [Am. 9]

Removed:The main rule

Added:(18) Matters governed by the Financial Collateral Directive Directive 2002/47/EC, the Settlement Finality Directive Directive 98/26/EC of the European Parliament and of the Council, the Winding-Up Directive Directive 2001/24/EC of the European Parliament and of the Council and the Registry Regulation Commission Regulation (EU) No 389/2013 should not be affected by this Regulation, since the scope of the conflict of laws rules contained in this Regulation and that of the conflict of laws rules contained in those three Directives do not overlap. [Am. 10]

Removed:In the Commission Proposal, the main rule for the applicable law to assignments is the law of the habitual residence of the assignor. This is the rule in place in some Member States, whilst others apply for instance the law applicable to the claim assigned. The main negative consequences of an assignment may appear for the creditors of the assignor or for other third parties related to the assignor. For this law of the habitual residence of the assignor will give a high degree of transparency and predictability for the third parties possibly concerned.

Added:(19) This Regulation should be universal: the law designated by this Regulation should apply even if it is not the law of a Member State.

Removed:Explicit exclusion of debtors

Added:(20) Predictability is essential for third parties interested in acquiring legal title over the assigned claim. Applying the law of the country where the assignor has its habitual residence to the third-party effects of assignments of claims enables the third parties concerned to easily know in advance which national law will govern their rights. The law of the assignor’s habitual residence should thus apply as a rule to the third-party effects of assignments of claims. This rule should apply, in particular, to the third-party effects of the assignment of claims in factoring, collateralisation and, where the parties have not chosen the law of the assigned claim, securitisation.

Removed:The law applicable to the consequences of an assignment for the debtor is regulated in Article 14 of the Rome I Regulation. Not explicitly excluding debtors from third parties under this Regulation would mean that the provision in Rome I applies by way of being lex specialist but that the question may arise to what extent this Regulation supplements Rome I. To make the third party consequences for debtors be solely regulated by Rome I, an explicit exclusion should be introduced in this Regulation.

Added:(21) The law chosen as a rule to apply to the third-party effects of assignments of claims should enable the determination of the applicable law where future claims are assigned, a common practice where multiple claims are assigned, such as in factoring. The application of the law of the assignor’s habitual residence enables the determination of the law applicable to the third-party effects of the assignment of future claims.

Removed:Exclusion of insolvency proceedings

Added:(22) The need to determine who has legal title over an assigned claim often arises when defining the insolvency estate where the assignor becomes insolvent. Coherence between the conflict of laws rules in this Regulation and those laid down in Regulation (EU) 2015/848 on insolvency proceedings is therefore desirable. Coherence should be achieved through the application as a rule of the law of the assignor’s habitual residence to the third-party effects of assignments of claims, as the use of the assignor’s habitual residence as connecting factor coincides with the debtor’s centre of main interest used as connecting factor for insolvency purposes.

Removed:Regulation (EU) 2015/848 of the European Parliament ans of the Council of 20 May 2015 on insolvency proceedings contains rules relating to applicable law. For that reason, assignments done in the course of a collective proceeding according to that regulation should be excluded from the scope of application of this Regulation.

Added:(23) The 2001 United Nations Convention on the Assignment of Receivables in International Trade provides that the priority of the right of an assignee in the assigned receivable over the right of a competing claimant is governed by the law of the State in which the assignor is located. The compatibility between the Union conflict of laws rules laid down in this Regulation and the solution favoured at the international level by the Convention should facilitate the resolution of international disputes.

Removed:Securitisation

Added:(24) Where the assignor changes its habitual residence between multiple assignments of the same claim, the applicable law should be the law of the assignor’s habitual residence at the time at which one of the assignees first makes his assignment effective against third parties by completing the requirements under the law applicable on the basis of the assignor's habitual residence at that time.

Removed:The Commission has proposed that the assignor and assignee would be able to choose the law applicable to third party consequences of an assignment. Such a rule goes across one of the fundamental principles of European civil law: that the parties to an agreement may not dispose over the rights of third parties by way of the agreement. To leave the parties to the assignment agreement in full discretion in the respect would, especially in the light of Article 3, go too far. However, a solution where the parties to the securitisation arrangement would be able to choose that the law applicable to the largest number of claims applies to all claims would achieve sufficient streamlining while it retains a sufficient level of protection for third parties.

Added:(25) In accordance with market practice and the needs of market participants, the third-party effects of certain assignments of claims should, as an exception, be governed by the law of the assigned claim, that is, the law that governs the initial contract between the creditor and the debtor from which which gives rise to the claim arises. [Am. 11]

Added:(26) The law of the assigned claim should govern the third-party effects of the assignment by an account holder of cash credited to an account in a credit institution, where the account holder is the creditor/assignor and the credit institution is the debtor. Greater predictability is provided to third parties, such as creditors of the assignor and competing assignees, if the law of the assigned claim applies to the third-party effects of these assignments as it is generally assumed that the claim that an account holder has over cash credited to an account in a credit institution is governed by the law of the country where the credit institution is located (rather than by the law of the habitual residence of the account holder/assignor). This law is normally chosen in the account contract between the account holder and the credit institution.

Added:(27) The third-party effects of the assignment of claims arising from financial instruments should also be subject to the law governing the assigned claim, that is, the law governing the contract from which the claim arises (such as a derivative contract). Subjecting the third-party effects of assignments of claims arising from financial instruments to the law of the assigned claim rather than the law of the assignor’s habitual residence is essential to preserve the stability and smooth functioning of financial markets. These are preserved as the law that governs the financial instrument from which the claim arises is the law chosen by the parties to the contract or the law determined in accordance with non-discretionary rules applicable to financial markets.

Added:(28) Flexibility should be provided in the determination of the law applicable to the third-party effects of assignments of claims in the context of a securitisation in order to cater for the needs of all securitisers and facilitate the expansion of the cross-border securitisation market to smaller operators. Whilst the law of the assignor’s habitual residence should apply as the default rule to the third-party effects of assignments of claims in the context of a securitisation, the assignor (originator) and the assignee (special purpose vehicle) should be able to choose that the law of the assigned claim should apply to the third-party effects of the assignment of claims. The assignor and the assignee should be able to decide that the third-party effects of the assignment of claims in the context of a securitisation should remain subject to the general rule of the assignor’s habitual residence or to choose the law of the assigned claim in function of the structure and characteristics of the transaction, for example the number and location of the originators and the number of laws which govern the assigned claims. [Am. 12]

Added:(29) Priority conflicts between assignees of the same claim may arise where the third-party effects of the assignment have been subject to the law of the assignor’s habitual residence in one assignment and to the law of the assigned claim in another assignment. In such cases, the law applicable to resolve the priority conflict should be the law applicable to the third-party effects of the assignment of the claim which has first become effective against third parties under its applicable law. Where both assignments of claims become effective against third parties at the same time, the law of the assignor’s habitual residence should prevail. [Am. 13]

Added:(30) The scope of the national law designated by this Regulation as the law applicable to the third-party effects of an assignment of claims should be uniform. The national law designated as applicable should govern in particular (i) the effectiveness of the assignment against third parties, that is, the steps and procedures that need to be taken followed by the assignee in order to ensure that he acquires legal title over the assigned claim (for example, registering the assignment with a public authority or registry, or notifying the debtor in writing of the assignment); and (ii) priority issues, that is, the resolution of conflicts between several claimants as to who has title over the claim following a cross-border assignment (for example, between two assignees where the same claim has been assigned twice, or between an assignee and a creditor of the assignor). [Am. 14]

Added:(31) Given the universal character of this Regulation, the laws of countries with different legal traditions may be designated as the applicable law. Where, further to the assignment of a claim, the contract from which the claim arises is transferred, the law designated by this Regulation as the law applicable to the third-party effects of a claim assignment should also govern a priority conflict between the assignee of the claim and the new beneficiary of the same claim further to the transfer of the contract from which the claim arises. For the same reason, the law designated by this Regulation as the law applicable to the third-party effects of a claim assignment should also apply, where novation is used as a functional equivalent of the transfer of a contract, to resolve a priority conflict between an assignee of a claim and the new beneficiary of the functionally equivalent claim further to the novation of the contract from which the claim arises.

Added:(32) Considerations of public interest justify giving the courts of the Member States the possibility, in exceptional circumstances, of applying exceptions based on public policy and overriding mandatory provisions, which should be interpreted restrictively.

Added:(33) Respect for international commitments entered into by the Member States means that this Regulation should not affect international conventions to which one or more Member States are parties at the time when this Regulation is adopted. To make the rules more accessible, the Commission should publish the list of the relevant conventions in the Official Journal of the European Union on the basis of information supplied by the Member States.

Added:(34) This Regulation respects the fundamental rights and observes the principles recognised in the Charter of Fundamental Rights of the European Union. In particular, this Regulation seeks to promote the application of Articles 17 and 47 concerning, respectively, the right to property and the right to an effective remedy and to a fair trial, as well as Article 16 concerning the freedom to conduct a business. [Am. 15]

Added:(35) Since the objectives of this Regulation cannot be sufficiently achieved by the Member States and can rather, by reason of the scale and effects of this Regulation, be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. The desired uniformity of the conflict of laws rules on the third-party effects of assignments of claims can only be achieved through a Regulation as only a Regulation ensures a consistent interpretation and application of the rules at national level. In accordance with the principle of proportionality, as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve that objective.

Added:(36) In accordance with Article 3 and Article 4a(1) of Protocol No 21 on the position of the United Kingdom and Ireland in respect of the area of freedom, security and justice, annexed to the Treaty on European Union and the Treaty on the Functioning of the European Union, the [United Kingdom] [and] [Ireland] [have/has notified their/its wish to take part in the adoption and application of the present Regulation] [are/is not taking part in the adoption of this Regulation and are/is not bound by it or subject to its application].

Added:(37) In accordance with Articles 1 and 2 of Protocol No 22 on the position of Denmark, annexed to the Treaty on European Union and the Treaty on the Functioning of the European Union, Denmark is not taking part in the adoption of this Regulation and is not bound by it or subject to its application.

Added:HAVE ADOPTED THIS REGULATION:

Added:CHAPTER I

Added:SCOPE AND DEFINITIONS

Added:Article 1 Scope

Added:1. This Regulation shall apply, in situations involving a conflict of laws, to the third-party effects of assignments of claims in civil and commercial matters other than third-party effects to the debtor of the claim assigned. [Am. 16]

Added:It shall not apply, in particular, to revenue, customs or administrative matters.

Added:1a. This Regulation is without prejudice to Union and national law on consumer protection. [Am. 17]

Added:2. The following shall be excluded from the scope of this Regulation:

Added:(a) assignment of claims arising from family relationships and relationships deemed by the law applicable to such relationships to have comparable effects, including maintenance obligations;

Added:(b) assignment of claims arising from matrimonial property regimes, property regimes of relationships deemed by the law applicable to such relationships to have comparable effects to marriage, and including registered partnerships, wills and succession; [Am. 18]

Added:(c) assignment of claims arising from bills of exchange, cheques and promissory notes and other negotiable instruments to the extent that the obligations under such other negotiable instruments arise out of their negotiable character;

Added:(d) assignment of claims arising from questions governed by the law of companies and other bodies, corporate or unincorporated, such as the creation, by registration or otherwise, legal capacity, internal organisation or winding-up of companies and other bodies, corporate or unincorporated, and the personal liability of officers and members as such for the obligations of the company or body;

Added:(e) assignment of claims arising from the constitution of trusts and the relationship between settlors, trustees and beneficiaries;

Added:(f) assignment of claims arising from life insurance contracts arising out of operations carried out by organisations other than undertakings referred to in Article 2(1) and (3) of Directive 2009/138/EC of the European Parliament and of the Council the object of which is to provide benefits for employed or self-employed persons belonging to an undertaking or group of undertakings, or to a trade or group of trades, in the event of death or survival or of discontinuance or curtailment of activity, or of sickness related to work or accidents at work.

Added:(fa) assignment of claims in the course of a collective proceeding under Regulation (EU) 2015/848. [Am. 19]

Added:Article 2 Definitions

Added:For the purposes of this Regulation:

Added:(a) ‘assignor’ means a person who transfers his right to claim a debt against a debtor to another person;

Added:(b) ‘assignee’ means a person who obtains the right to claim a debt against a debtor from another person;

Added:(c) ‘assignment’ means a voluntary transfer of a right to claim a debt against a debtor. It includes outright transfers of claims, contractual subrogation, transfers of claims by way of security and pledges or other security rights over claims;

Added:(d) ‘claim’ means the right to claim a debt of whatever nature, whether monetary or non-monetary, and whether arising from a contractual or a non-contractual obligation;

Added:(e) 'third-party effects' means proprietary effects, that is, the right of the assignee to assert his legal title over a claim assigned to him towards other assignees or beneficiaries of the same or functionally equivalent claim, creditors of the assignor and other third parties, excluding the debtor; [Am. 20]