Recommendations of the draft legislative guide on secured transactions

(c ) Colloquium on Reform of Secured transactions Law the draft UNCITRAL Legislative Guide on Secured Transactions (Clermont Ferrand, France 23 April 2004)

K. Harmonize secured transactions laws, including conflict of laws rules

Subject to the limitations discussed in the following paragraph, the secured transactions law would apply to security interests in intellectual property rights.

These transactions are essentially non possessory security rights, and they are primarily used in States where the secured transactions law has not yet appropriately recognized non possessory security rights.

In this regard, the Guide adopts two of the most essential concepts of successful secured transactions laws, the concepts of priority and effectiveness against third parties.

(cc) Bank account means, subject to law other than secured transactions law, an account maintained by a bank into which funds may be deposited.

(dd) Consultations with German Ministry of Justice on the draft Legislative Guide on Secured Transactions (Berlin, Germany 15 November 2004)

A legal system that supports secured credit transactions is critical to reducing the perceived risks of credit transactions and promoting the availability of secured credit.

(b) The record of the registry is centralized that is, it contains all notices of security rights registered under the secured transactions law of the enacting State

Set forth below are short examples of the types of secured credit transactions that the Guide is designed to encourage, and to which reference will be made throughout the Guide to illustrate specific points.

These examples represent only a few of the numerous forms of secured credit transactions currently in use, and an effective secured transactions regime must be sufficiently flexible to accommodate many existing methods of financing, as well as methods that may evolve in the future.

(dd) Intellectual property right includes, subject to law other than the secured transactions law, patents, trademarks, service marks, trade secrets, copyright and related rights and designs.

Adoption of legislation based on the recommendations contained in the Guide will result in harmonization of secured transactions laws (through the adoption of similar substantive laws which will facilitate the cross border recognition of security rights).

Furthermore, to the extent complete harmonization of national secured transactions laws might not be achieved, conflict rules would be particularly useful to facilitate cross border transactions.

At the same time, the Guide takes into account that other legislation may protect the legitimate interests of consumers or other persons and specifies that a secured transactions regime should not override such legislation.

A key to a successful legal regime governing secured transactions is to enable a broad array of businesses to utilize the full value inherent in their assets to obtain credit in a broad array of credit transactions.

Valuation of secured claims

Reference was also made to the need to coordinate with the Hague Conference with respect to the conflict of laws chapter of the draft legislative guide on secured transactions, in particular with respect to the law applicable to the enforcement of security rights in the case of insolvency.

Note to the Working Group The insolvency chapter will need to address other terms used in the Insolvency Guide and the Secured Transactions Guide the definition of security interest and security right , for example, differ in the two texts.

Security rights in such assets are not excluded but, in the case of any inconsistency between such a special law and secured transactions law, the special law (e.g. the special registration system) prevails.

To best promote the availability of low cost secured credit, the Guide suggests that secured transactions laws should be structured to enable businesses to utilize the value inherent in their property to the maximum extent possible to obtain credit.

(w) Negotiable instrument means, subject to law other than secured transactions law, an instrument that embodies a right to payment, such as a promissory note or a bill of exchange, which satisfies the requirements for negotiability under the law governing negotiable instruments.

(x) Negotiable document means, subject to law other than secured transactions law, a document that embodies a right for delivery of tangibles, such as a warehouse receipt or a bill of lading, which satisfies the requirements for negotiability under the law governing negotiable documents.

However, the holder of a CDO or MBS would be unable to take these homeowners to court. And even if he succeeded, homeowners could simply return their house keys, as they, too, enjoy the protection of non recourse.

The concept of effectiveness against third parties, in the form of a system allowing, inter alia, the registration of a notice concerning security rights, is designed to promote legal certainty with regard to the relative priority status of creditors and thus to reduce the risks and costs associated with secured transactions.

(d) Simplification of the administration of transaction and lower transaction costs.

The Commission endorsed a suggestion made to revise the insolvency chapter of the draft legislative guide on secured transactions in light of the core principles agreed by Working Groups V and VI (see A CN.9 511, paras. 126 127 and A CN.9 512, para.

The Working Group, which is preparing a draft legislative guide on secured transactions, has held until the thirty eighth session of the Commission, in 2005, seven one week sessions during which it considered draft chapters of the legislative guide prepared by the Secretariat.

Because healthy competition among all potential creditors is an effective way of reducing the cost of credit, the Guide recommends that the secured transactions regime apply equally to various creditors, including banks and other financial institutions, as well as domestic and non domestic creditors.

Commercial transactions

The main conditions for success of decentralization include secure tenure and secure fiscal, revenue and taxation power, as well as control over decision making, resources, products and markets.

Transaction costs and efficiency

Financial transactions

The transaction log

Credit lines secured by home equity provided another new way to finance spending.

Decision 16 CP.10 renamed the independent transaction log as the international transaction log .

C. Transaction costs and efficiency

Coercive restructuring of insolvent banks unsecured debt would be next.

While a big US rating agency gave European companies, on average, only a triple B rating in recent years, CDOs based on MBSs easily obtained triple A ratings. According to the IMF, 80 of CDOs were in this category.

IEEE Transactions on Education, Vol.

(iii) Reporting of suspicious transactions?

(o) Suspicious transaction reporting

As with CDOs, however, this might be a Pyrrhic victory.

At its second session (Vienna, 17 20 December 2002), the Working Group considered chapters VI (Filing), VII (Priority) and IX (Default and enforcement) (A CN.9 WG.VI WP.2 and Add.6, 7 and 9) of the first preliminary draft guide on secured transactions, prepared by the Secretariat.