Party Autonomy in International Property Law - Peace Palace Library

12. Party Autonomy and Insolvency Law
rules. In this respect, it is important to determine which is the relevant lex
causae in the case of the transfer or encumbrance of assets.
The question arises as to whether in determining the lex causae relevant
for the application of Article 13 EIR with respect to the encumbrance or
transfer of assets effect must be given to the distinction that in some legal
systems – on the level of substantive national law as well as that of private
international law – is made between aspects pertaining to the law of obligations
and those pertaining to the law of property. The law governing
the contract in which the transfer or encumbrance of assets is agreed upon
is not necessarily the same as the law governing the proprietary aspects of
the transfer or encumbrance itself. A contract between a Dutch company
and a Spanish bank – pursuant to which the bank will extend credit and as
security for the repayment of the loans extended the debtor company will
provide a right of pledge in inventory and stock situated in the Netherlands
– may be governed by Spanish law. On the other hand, the right of
pledge in the inventory and stock will – under prevailing conflict of laws
rules – be governed by Dutch law as lex rei sitae. Which is the lex causae
against which the vulnerability of the creation of the right of pledge must
be tested? Under Dutch law, in the event there was an enforceable legal
obligation for the debtor to provide security (e.g. pursuant to a credit
agreement), the liquidator can only challenge the right of pledge if at the
time of its creation the bank knew that a petition for the opening of an
insolvency proceeding in respect of the debtor had been filed for, or there
was collusion between the bank and the debtor with the intent of giving
preference to the bank over other creditors. The liquidator will therefore
generally only be successful in challenging the provision of security if
he can successfully challenge the contract from which the obligation to
provide the security emanates: namely, the credit agreement, which, if reversed,
under Dutch law automatically leads to the reversal of the security
provided on the basis of that agreement. If, however, Spanish law, as the
law governing the credit agreement, were to provide that the agreement
itself cannot be challenged, the avoidance action would not be successful,
even if under Spanish law the right of pledge based on that agreement
itself were subject to reversal. Consequently, when, for purposes of Article
13 EIR, a distinction should be made between the contractual (obligatory)
and the proprietary aspects of the transfer or encumbrance of assets, the
liquidator would not be able to successfully challenge the right of pledge,
even in cases where under both legal systems the end result – that is, the
preferential position of the bank resulting from the security – were to be
subject to reversal.
P. M. Veder
269
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