Secured Transactions Law Reform: Principles, Policies and Practice published


Secured Transactions Law Reform: Principles, Policies and Practice has recently been published by Hart Publishing (Bloomsbury). The book grew out of two conferences held by the Secured Transactions Law Reform Project in 2014, and the book was written and edited under the auspices of the project.

Secured transactions law has been and continues to be subjected to close scrutiny globally. One of the main reasons for this is the importance of availability of credit and the consequent need to reform collateral laws in order to improve access to finance. The ability to give security effectively influences not only the cost of credit but also, in some cases, whether credit will be available at all. This requires rules that are transparent and readily accessible to non-lawyers as well as rules that recognise the needs of small and medium-sized enterprises.

The book critically engages with the challenges posed by inefficient secured credit laws. It offers a comparative analysis of the reasons and the needs for a secured transactions law reform, as well as discussion of the steps taken in many common law, civil law and mixed law jurisdictions, written by world renowned experts from many countries.

The book, edited by Professor Louise Gullifer, Professor of Commercial Law at the University of Oxford Law Faculty and Dr Orkun Akseli, Senior Lecturer in Commercial Law at Durham University Law School, reflects the attention paid by the project to secured transaction reform in other jurisdictions. It is intended that the book should be the first in a series reflecting the ongoing reform initiatives around the world.

More details of the book can be found on the publisher’s website.

UNCITRAL Model law on Secured Transactions adopted on 1st July 2016

On 1st July 2016 the Commission for International Trade Law adopted the Model Law on Secured Transactions.  This is the culmination of a long term project of Working Group VI of the Commission, which first produced a legislative guide, and has since been working on a Model Law to assist States to implement the recommendations of that guide.  Working Group VI will continue to work on a Guide to Enactment of the Model Law.  

The purpose of project has been to help states, particularly those with developing and transitional economies, reform and modernise their secured transactions law so as to increase access to, and reduced the cost of, credit and thus to stimulate international trade.   The legislative guide has already been used by a number of states in the modernisation of their law, and the Model Law should help many others.  The text of the Model Law is designed to work in jurisdictions of all legal traditions, which has been possible because of the involvement of delegations from all legal traditions in its development.  The adopted text will be translated into a number of key languages, and is designed to work in all those languages, although it will, of course, have to be further translated into the language(s) of an enacting state.  


It applies to all types of assets except intermediated securities (which are dealt with by a UNIDROIT Convention), IP rights which are governed by the particular law of the state, and some other payment rights which are the subject of other Conventions.   It enables security to be taken over present and future assets, which can be described generically, and there is a single concept of a security right, which applies regardless of the label put on the transaction by the parties.  Third party effectiveness) of security rights can be by possession or registration, or, in the case of certain types of assets, by control.   The basic priority rule is first to register or achieve third party effectiveness, but there are special rules for purchase money security interests (called acquisition security rights).   Registration is by registration of a notice, which can be in advance of the creation of the security interest: the Model Law includes detailed provisions about registration.   A wide range of enforcement mechanisms are provided for, and there are also provisions covering the conflict of laws.


More information is available here. 


Professor Louise Gullifer, UK delegate to the Commission on International Trade Law

Secured Transaction Law Reform Project replies to Insolvency Service consultation paper.

The Insolvency Service has recently issued a consultation entitled ‘A Review of the Corporate Insolvency Framework: A Consultation on Options for Reform’, which includes certain proposals for priority of rescue finance. This directly relates to the work currently being carried out by Working Group C of the STR project.

Although the consultation concentrates on post-filing financing arrangements, an equally important source of insolvency funding comes from assets within the business. An administrator is free to use assets which are subject to a floating charge without the consent of the creditor or the consent of the court. Working Group C has been told that lenders demand detailed advice as to whether charges will be fixed or floating, which may be difficult to give definitively because of the opacity of the tests. It is feared that that at best this increases transaction costs in the finance market for healthy companies and, at worst, reduces the availability of finance. One vital aspect of Working Group C’s work is to explore the case for the current English law position and for the various options for reform, which impacts directly on the proposals for priority for rescue finance in the consultation. The response to the consultation is available here.

The current thinking of the STR project is explained in a draft policy paper.

This paper, which can be found in the ‘about us’ section, sets out what the project considers to be the irreducible core aspects of a modern secured transactions law: these form the agreed basis of the STR’s proposals.  The parameters for debate in relation to other (non-core) aspects of the law are also set out and considered in the paper, and further papers exploring the non-core issues will be produced later in the year.    Comments and contributions to the debate are warmly encouraged from all interested parties: contact details are here.


Professor Louise Gullifer nominated as UK delegate to UNCITRAL working group VI

Professor Louise Gullifer, Director of the Secured Transactions Law Reform Project, has been nominated as the UK delegate to attend the February meeting of UNCITRAL Working Group VI in New York. The Working Group VI focuses on security interests, and has already produced a draft Legislative Guide on Secured Transactions. It is now working on producing a Model Law on Secured Transactions, to provide help and guidance to states which are seeking to reform their law in this area, and to complement the Legislative Guide, particularly (but not just) states with developing and transitional economies. The Model Law project is reaching its final stages, and work is also underway to prepare a Guide to Enactment, which will explain in more detail the reasoning behind the drafting of the Model Law and the various options open to states when enacting reformed legislation. Details of the drafts and the deliberations of previous working groups are available here.

Ban on assignment clauses: views from the coalface. Hugh Beale, Louise Gullifer and Sarah Paterson. B.J.I.B. & F.L. 2015, 30(8), 463-466.

This article summarizes the findings of two studies which assess the effect of anti-assignment clauses in trade receivables financing. It reviews the law applicable to receivables  financiers, noting the uncertainty over the effect of a anti-assignment clauses. It then considers whether anti-assignment clauses adversely affect the availability of finance to small businesses and result in the use of workarounds, thereby increasing the cost of finance.