Home Law Implementing the Cape Town Convention and the Domestic Laws on Secured Transactions
Security Interests and Title-Based Devices
As regards types of security agreements (security interests and title-based devices) as provided by the Convention, traditional pledges and mortgages, non-possessory security schemes, leasing agreements, and title reservation sales are known and, more widely or succinctly regulated, in Spanish legal system.
Rules governing such security agreements and title-based schemes are scattered in a selection of laws and regulations. An overview of most relevant rules may better illustrate the afore-mentioned fragmented image of the in force legal framework. Traditional possessory pledge and (real state) mortgage are essentially regulated in the Civil Code of 1889 along with the mortgage-related provisions of the Mortgage Act of 1946. The need to facilitate access to credit without dispossessing the debtor of most valuable assets devoted to his/her business activity led to the adoption of rules on non-possessory pledge and movable mortgage in 1954 (Ley sobre Hipoteca Mobiliaria y prenda sin desplazamiento de posesion, of 16 December 1954). Leasing agreements lacks however a systematic regulation with a succinct description in an additional provision of supervisory legislation of financial markets (Ley 26/1988, of 29 July 1988, de Disciplina e Intervencion de las Entidades de
Credito). Title reservation clauses are laterally referred in the legislation of hire purchase agreements of 1998 (Ley 28/1998 de Venta a Plazos de Bienes Muebles). More recently, and among others, Royal Decree-Law 5/2005, of March 11, on financial collateral arrangements, which implements in Spain Directive 2002/47/EC of the European Parliament and of the Council of June 6, 2002, has been adopted. Likewise, a set of rules on registration issues and defining the role of Registrars and Public Notaries in secured transactions, as set out in different texts, is part of the full regulatory image.
Needless to say, a systematizing effort to unify, provide coherency and modernize domestic rules on secured transactions is very much desirable, to my mind, on an urgent basis. Despite some legislative proposals for a general law on secured transactions, aimed to devise a unified legal framework based on registered pledge, have limitedly circulated, no specific legislative initiative seems to be at present in the legal horizon.
Surprisingly, even if Spanish legal system seems to be based on a formal more than a functional model, functional approach is not unfamiliar and is indeed adopted in certain issues. Even more, the distinction between traditionally pure security interests and title-based devices is not totally undisputed. So, although both leasing agreements and conditional sales would be traditionally deemed title-based devices, today, the legal nature of title reservation or of the title held by the lessor in a leasing agreement is disputed among scholars (and in case law) - ownership or security interest.
Likewise, an express reference to “functional equivalence” can be even found in Spanish legal rules for the purposes of registration. Thus, it is laid down that, along with pure hire purchase agreements on identifiable assets, any other agreement by virtue of which parties pursue same economic goals as a hire purchase agreement will be registered in the Registry of Movables. These examples reveal that even if Spanish model cannot be described as a functionalist one on secured transactions, it can be asserted that a functional approach is not totally unknown and that the equivalence of economic effects in legal transactions is not certainly disregarded in Spanish jurisdiction.
|< Prev||CONTENTS||Next >|