Party Autonomy in International Property Law - Peace Palace Library

11. Financial Collateral Arrangements and Party Autonomy
with the collateral as though its absolute owner’. 52 This might be problematic
under Dutch law in cases where a security right has been created
(as opposed to transfer arrangements) because a pledgee may generally
only sell the relevant assets and keep the proceeds of the sale up to the
amount of the secured liabilities. However, if the arrangement qualifies
as a financial collateral arrangement, the Dutch legislation implementing
the Collateral Directive would enable the secured party to appropriate
the collateral or to set off the secured obligations against the value of the
collateral. The most important Dutch law provision that has been disapplied
for this purpose is the prohibition on appropriation 53 of the pledged
securities which would normally apply pursuant to article 3:235 of the
Dutch Civil Code. 54 Consequently, there appear to be no restrictions in
comparison with the possibilities that the secured party has under English
law in this respect. Even in terms of enforcement, there would seem to be
party autonomy and very few restrictions indeed (if any).
11.3.7. Final remarks
There are three further issues that have not yet been discussed and that
will only be briefly touched upon here. The first is that a choice of jurisdiction
for applicable law should preferably be accompanied by a submission
to the jurisdiction of the relevant courts. An English court applying English
law is probably preferable to a Dutch court having to apply English
law (simply because it will be more difficult for the Dutch court to fully
grasp what English law entails). This generally does not cause any prob-
52
Hudson 2009, § 45-61.
53
The term ‘appropriation’ is used here to indicate that the collateral taker takes
the relevant collateral as his or her own upon enforcement and sets off the
secured obligations against the value of the collateral, without being under
the obligation to sell or otherwise realize the collateral.
54
Nor is there a general right of appropriation under English law. Appropriation
as a new remedy for the secured creditor has been introduced in England pursuant
to the Collateral Directive. See Joanna Benjamin, ‘Financial Collateral
Arrangements: Lessons from Cukurova’, Insolvency Intelligence, 2008, 21(5),
pp. 65-72. The article also offers a view on what is required for the appropriation
of financial collateral.
Reinout M. Wibier
247
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