In 2009 Afghanistan enacted the Law for Secured Transaction on Movable Property in Banking Transactions. Pursuant to Article 1 it aimed to regulate transactions which use movable property as security. One of its aims was to expand commerce and encourage investment by using movable property as security (Article 2).
There are many interesting nuances to the position which the law has taken in Afghanistan.
First, the scope is perhaps more limited than some other reforms or what is now the UNICITRAL model. The law applies to transactions which create a ‘securing charge’ over movable properties (Article 4(1)). A ‘securing charge’ is limited to real rights created in movable property, present or future, securing debts. Therefore, a securing charge can only be for monetary obligations or ones capable of being valued in money (Article 6). The law also explicitly extends the rules securing charges to, among other examples, reservation of title sale, leases of movable property for more than one year, and sale of an account also engage the provisions of the law (Articles 4(2) and 5).
Second, a securing charge requires a written securing agreement describing both the debt and the collateral (Article 7), though that may include more than one securing charge. It is also necessary to clearly identify the amount of the debt and the date of payment in the securing agreement (Article 8).
Finally, the reforms created a collateral registry, latterly transformed into a credit registry. The fully electronic registry was created in 2010. As of January 2014 $575m USD had been registered. To complete the charge there needs to be a securing agreement attaching the security and either the securing charge is registered or the chargeholder has taken physical possession (Article 12). The effect of an incomplete charge as between other chargeholders is the application of the priority rules of first registration or, if no charges registered, the first in time (Article 13(2)). However, an incomplete securing charge cannot defeat a claim of an ‘execution creditor’, if there was no registration before they became an execution creditor (Article 15).
The 2009 Law can be found here.