Party Autonomy in International Property Law - Peace Palace Library

A. General Aspects of Party Autonomy
rights, such as the trust and the charge, because it had categories of such
rights within its own domestic law. What if the question of the validity
of a charge came before the courts of a jurisdiction which did not recognise
these or analogous classes of rights? In all probability it will have no
choice of law rules specifically governing such a class of rights unknown
to its own law, and so they will create no more than personal obligations.
A state, such as Italy, can incorporate choice of law rules for such rights
even where they are not accurately reflected in its own domestic law, by
signing up to the Hague Trusts Convention, but this has proven to be an
unusual decision for states to take.
What of the Rome I Regulation? Article 14(3) states:
‘The concept of assignment in this Article includes outright transfers
of claims, transfers of claims by way of security and pledges or other
security rights over claims.’
This may be politely described as unhelpful. What is the law which determines
the proprietary validity of a charge over a claim? We are told that
Article 14 is intended to cover ‘security rights over claims’ 31 but what does
this mean? Is the validity of such security determined by Article 14(1) (the
law governing the relationship between chargor and chargee) as it should
be or by Article 14(2) (the law governing the underlying unaffected claim
right) which makes no sense? Article 14(3) is worse than useless as it fails
to tell us which of 14(1) or 14(2) applies to which issue.
The fear is that because the conceptual explanation as to why party autonomy
in relation to the creation of proprietary rights over other rights
is not only possible but completely unobjectionable has not been understood
at European level, we will see a disastrous codification of the private
international law rules in relation to property rights which denies such
autonomy. In England where commercial law is dependent upon such
autonomy, the result would be catastrophe.
However, it is necessary to separate the issue of proprietary validity from
that of priority. Because, as we have seen, multiple trusts or charges over a
single asset may be equally valid, a priority competition as between them
may arise. Say, A Ltd creates a first charge over its premises, its stock in
trade, and its receivables to B Bank. It then creates a second charge over
31
Emphasis added.
98
Robert Stevens
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