Party Autonomy in International Property Law - Peace Palace Library

11. Financial Collateral Arrangements and Party Autonomy
why this might not be the case would be that the document is governed
by English law and not by Dutch law and that to qualify as a Dutch law
deed of pledge, the document purporting to be a deed of pledge should be
governed by Dutch law. In my view, this is a very weak ground indeed for
invalidating the pledge. For one thing, this requirement is nowhere to be
found in the relevant provisions of the Dutch Civil Code and the Code
on Civil Proceedings. Any signed document that is intended to prove
something qualifies as a ‘deed’ 38 as a matter of Dutch law on the basis of
the explicit provisions of article 156 of the Code on Civil Proceedings. 39
Also, a more restrictive interpretation would be completely inconsistent
with the Collateral Directive and its requirements.
The pledge would take the form of a charge-back in our example. 40 The
cash balance is a claim owed by Alpha Bank to Rock Solid Bank and by
pledging this claim to Alpha Bank, Rock Solid Bank would have a pledge
over a claim against itself. Although the practice of charge-backs is controversial
under English law, there seems to be little doubt that these types
of arrangements are valid. As regards Dutch law, the validity of chargebacks
as such has never been subject to serious doubt. 41
38
Note that the sense of ‘deed’ is different under English law, where it means a
document in a specific form.
39
In my own translation, Article 156 of the Code on Civil Proceedings reads as
follows: ‘Deeds are signed documents, intended to be used as proof.’
40
For a discussion of the validity of charge-backs as a matter of English law see:
Roy Goode, Commercial Law in the Next Millennium, Sweet & Maxwell,
London 1998 (Goode 1998), pp. 69-71. See also Roy Goode and Louise Gullifer,
Goode on Legal Problems of Credit and Security, 4 th edition, Sweet &
Maxwell, London 2008 (Goode-Gullifer 2008), § 3-12; [[re] Bank of Credit
and Commerce International SA (No 8) [1998] AC 214; [1997] 4 All ER
568; Philip Wood, Comparative Law of Security Interests and Title Finance,
2 nd edition, Sweet & Maxwell, London 2007 (Wood 2007b), § 29-025; F. Oditah,
‘Financial Trade Credit: Welsh Development Agency v. Export Finance
Corporation’ [1992] J.B.L. 557; Roy Goode, ‘Charge-backs and legal fictions’,
Law Quarterly Review, 1998, 114 (Apr), pp. 178-181; and Edwin C. Mujih,
‘Legitimising Charge-Backs’, Insolvency Lawyer, 2001, 1 pp. 13-16 for an overview
of the arguments for and against charge-backs. The general view would
seem to be that charge-backs are in fact valid as a matter of English law.
41
See Wibier 2009, pp. 388-411 for a further discussion of this issue.
Reinout M. Wibier
241
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