Party Autonomy in International Property Law - Peace Palace Library

D. Assignment; Financial Instruments; Insolvency Law
sions of Dutch property law. In particular, if the security interest takes the
form of the pledge of a cash balance in a bank account held with a Dutch
bank, it is unlikely that Dutch provisions on pledging cash balances can
be avoided altogether.
There are basically two forms that a pledge might take. The first would be
for the collateral provider (Rock Solid Bank) to open an account with the
collateral taker (Alpha Bank) and post the relevant cash amount into this
account. The account would be in the name of Rock Solid Bank, which
would consequently be the owner of the balance held in this account.
Subsequently, the account should be pledged to Alpha Bank to effect the
collateral arrangement. As a matter of Dutch law, this would require a
deed of pledge, followed by giving notice to the debtor of the claim, which
in this example would be Alpha Bank itself. 35 These requirements have
not been amended or simplified by the implementation of the Collateral
Directive in the Netherlands. Instead, the Dutch legislature has taken the
view that requiring a deed of pledge and giving notice to the debtor of
the claim is not inconsistent with the Collateral Directive. I have argued
elsewhere 36 that this view might not be correct, because the Collateral
Directive does not allow for any formalities other than placing collateral
within the control of the collateral taker, which might be effected through
a mere transfer of the funds to Alpha Bank. Requiring the execution of
a deed of pledge, which must be signed by the pledgor, may be seen as
an additional formality inconsistent with the Collateral Directive. From
a practical perspective this may not be too significant since in any event
the parties are likely to execute a document – probably the standard form
credit support deed issued by ISDA. 37 The execution of this document
would almost certainly be sufficient to meet the Dutch law requirements
for pledging an account balance, provided that it has been signed by the
collateral provider (Rock Solid Bank in our example). The only argument
35
These requirements follow from Article 3:94(1) of the Dutch Civil Code
which deals with the assignment of contractual rights. It is applicable to
pledges pursuant to Article 3:236(2) of the Dutch Civil Code.
36
R.M. Wibier, ‘Financial Collateral in the Netherlands, England and under
the EU Collateral Directive – Traditional and novel ways of taking security
over cash and securities’, Journal of International Banking Law and Regulation,
Volume 24, 8, 2009 (Wibier 2009), pp. 388-411, available at ssrn.com / ​
abstract=1287095.
37
Which it might then be useful to amend for the avoidance of doubt so as to
indicate that a pledge is being created; see Hudson 2009, § 45-52.
240
Reinout M. Wibier
© sellier. european law publishers
www.sellier.de