Changes between two versions
What changed between the draft committee report and the plenary report
From · draft committee report· 3 May 2018
on the proposal for a regulation of the European Parliament and of the Council on the law applicable to the third party effects of assignments of claims
To · plenary report· 17 Jul 2018
on the proposal for a regulation of the European Parliament and of the Council on the law applicable to the third party effects of assignments of claims
Changes to the text itself, in document order. Cover page, citations and punctuation-only edits are left out; they are under “Every difference”.
The changes · 7
Change 1
Added:Recital 3: (3) The proper functioning of the internal market requires - in order to improve the predictability of the outcome of litigation, legal certainty as to the law applicable and the free movement and recognition of judgments - for the conflict of law rules in the Member States to designate as the applicable law the same national law irrespective of the Member State of the court in which an action is brought.
Added:Recital 11: (11) No harmonised set of rules on the conflict of laws governing the third-party effects of assignments of claims currently exist at Union level. These conflict of laws rules are laid down at Member State level, but they are inconsistent - being based on different connecting factors to determine the applicable law - and therefore unclear, especially in those countries where such rules are not governed by separate legislative provisions. In cross-border assignments of claims, the inconsistency of national conflict of laws rules leads to legal uncertainty as to which law applies to the third-party effects of the assignments. The lack of legal certainty creates a legal risk in cross-border assignments of claims which does not exist in domestic assignments as different national substantive rules may be applied depending on the Member State whose courts or authorities assess a dispute as to the legal title over the claims; implicitly, the outcome of a priority conflict as to who owns a claim further to a cross-border assignment will vary, depending on the national law applied.
Added:Recital 12: (12) If assignees are not aware of the legal risk or choose to ignore it, they may face unexpected financial losses. Uncertainty about who has legal title over the claims assigned on a cross-border basis can have knock-on effects and deepen and prolong the impact of a financial crisis. If assignees decide to mitigate the legal risk by seeking specific legal advice, they will incur higher transaction costs not required for domestic assignments.
Added:Recital 12 a (new): (12a) This legal risk can also act as a deterrent. Assignees and assignors may choose to avoid it, thereby allowing business opportunities to pass. This lack of clarity does not therefore appear to be in line with the objective of market integration and the principle of free movement of capital enshrined in Articles 63 to 66 Treaty on the Functioning of the European Union.
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Added:Recital 13: (13) The objective of this Regulation is to provide legal certainty by laying down common conflict of laws rules designating which national law applies to the third-party effects of assignments of claims, increasing cross-border claims transactions, so as to encourage cross-border investment in the Union and facilitate access to finance for firms - including small and medium-sized enterprises (SMEs) - and consumers.
Added:Recital 14 a (new): (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.
Change 2
Removed:Recital 28: (28) As regards assignments of claims in the context of a securitisation, they are normally from financial institutions to special purpose vehicles (SPV) created for the purpose of the securitisation. It is not common that several institutions from different Member States assign claims to the same SPV and that as a result the assignments to the SPV are subject to different legal orders. The general rule of the habitual residence of the assignor would give sufficient predictability in relation to assignment of claims for the purpose of securitisations.
Added:Recital 18: (18) Matters governed by Directive 2002/47/EC of the European Parliament and of the Council44, Directive 98/26/EC of the European Parliament and of the Council 45, Directive 2001/24/EC of the European Parliament and of the Council46and Commission Regulation (EU) No 389/201347 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 therefore overlap. / 44 Directive 2002/47/EC of the European Parliament and of the Council of 6 June 2002 on financial collateral arrangements (OJ L 168, 27.6.2002, p. 43). / 45 Directive 98/26/EC of the European Parliament and of the Council of 19 May 1998 on settlement finality in payment and securities settlement systems (OJ L 166, 11.6.1998, p. 45). / 46 Directive 2001/24/EC of the European Parliament and of the Council of 4 April 2001 on the reorganisation and winding up of credit institutions (OJ L 125, 5.5.2001, p. 15). / 47 Commission Regulation (EU) No 389/2013 of 2 May 2013 establishing a Union Registry pursuant to Directive 2003/87/EC of the European Parliament and of the Council, Decisions No 280/2004/EC and No 406/2009/EC of the European Parliament and of the Council and repealing Commission Regulations (EU) No 920/2010 and No 1193/2011 (OJ L 122, 3.5.2013, p. 1).
Added:Recital 25: (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 which gives rise to the claim.
Added:Recital 28: deleted
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Added:Recital 29: (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.
Added:Recital 30: (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 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).
Added:Recital 34: (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.
Change 3
Added:Article 1 – paragraph 1 a (new): 1a. This Regulation is without prejudice to Union and national law on consumer protection.
Added:Article 1 – paragraph 2 – point b: (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 including registered partnerships, wills and succession;
Change 4
Changed:Article 2 – paragraph 1 – point e: (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;
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Change 5
Changed:Article 4 – paragraph 1 – subparagraph4: 1:1. Unless otherwise provided for in this Article, the third-party effects of an assignment of claims shall be governed by the law of the country in which the assignor has its habitual residence at the time of the conclusion of the assignment contract. / Where the assignor has changed its habitual residence between two assignments of the same claim to different assignees, the priority of the right of an assignee over the right of another assignee shall be governed by the law of the habitual residence of the assignor at the time of the assignment which first became effective against other third parties under the law designated as applicable pursuant to the first subparagraph. / 2. Notwithstanding paragraph 1 of this article, the law applicable to the assigned claim shall govern the third-party effects of the assignment of: / (a) money credited to an account in a credit institution; / (b) claims arising from financial instruments. / (deleted) / (deleted) / . A priority conflict between assignees of the same claim where the third-party effects of one of the assignments are governed by the law of the country in which the assignor has its habitual residence and the third-party effects of other assignments are governed by the law of the assigned claim shall be governed by the law applicable to the third-party effects of the assignment of the claim which first became effective against third parties under its applicable law. Where both assignments become effective against third partie…
Change 6
Removed:Article 4 – paragraph 1 – subparagraph 2: Where the assignor has changed its habitual residence between two assignments of the same claim to different assignees, the priority of the right of an assignee over the right of another assignee shall be governed by the law of the habitual residence of the assignor at the time of the assignment which first became effective against other third parties under the law designated as applicable pursuant to the first subparagraph.
Removed:Article 4 – paragraph 2 – introductory part: 2. Notwithstanding paragraph 1 of this article, the law applicable to the assigned claim shall govern the third-party effects of the assignment of:
Removed:Article 4 – paragraph 2 – point a: (a) money credited to an account in a credit institution;
Removed:Article 4 – paragraph 3 – subparagraph 1: In respect of assignments of claims referred to in paragraph 2 for the purpose of securitisation, the assignor and the assignee may choose that the law applicable to the largest number of assigned claims shall apply as the law applicable to the third-party effects of all assignments of claims.
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Removed:Article 4 – paragraph 4: 4. A priority conflict between assignees of the same claim where the third-party effects of one of the assignments are governed by the law of the country in which the assignor has its habitual residence and the third-party effects of other assignments are governed by the law of the assigned claim shall be governed by the law applicable to the third-party effects of the assignment of the claim which first became effective against other third parties under its applicable law.
Change 7
Changed:Article 14 – paragraph 2: 2. The law applicable pursuant to this Regulation shall determine whether the rights of a third party in respect of a claim assigned after the date of application of this Regulation have priority over the rights of another third person acquired before this Regulation becomes applicable. In the case of competing claims based on assignments, the law applicable pursuant to this Regulation shall determine the rights of the respective assignees, solely in respect of assignments concluded after the... [the date of application of this Regulation.Regulation].