Finnish Mortgage System for Means of Transport: Outdated and Overly Complex?
To date, Finland is not a party to the Cape Town Convention on International Interests in Mobile Equipment. This chapter focuses on Finnish domestic law on security over means of transport. It should be noted, though, that the Convention may significantly affect the future of domestic law (see Sect. 12.14).
As a general rule, to use an individual tangible movable object as security for credit under Finnish law, one has to settle for a possessory pledge. To make a possessory pledge effective against the pledgor’s other creditors, the pledgor has to surrender possession of the object to the pledgee, or at least be unable to independently decide on its whereabouts. This kind of security device is obviously unsuitable for situations where the security provider, usually the debtor, needs to use the encumbered object to conduct its own business.
As an exception to this general rule, special legislation exists establishing a mortgage system for certain types of means of transport. The key pieces of this statutory framework are the Vessel Mortgage Act (211/1927), the Aircraft Mortgage Act (211/1928), and the Vehicle Mortgage Act (810/1972). The Vessel Mortgage Act is a general act in that it also applies to aircraft and vehicle mortgages, unless otherwise provided by the other two acts (Aircraft Mortgage Act, Section 2; Vehicle Mortgage Act, Section 22).
Preconditions for mortgaging a means of transport are that it falls within the scope of application of the relevant mortgage act and is registered in the relevant register. These registers are the Register of Vessels governed by the Register of Vessels Act (512/1993), the Aircraft Register governed by Chapter 2 of the Aviation Act (864/2014), and the Vehicle Traffic Register governed by the Act on Vehicle Traffic Register (541/2003). They all are maintained by The Finnish Transport Safety Agency (Trafi), with the exception that the Register of Vessels regarding vessels registered in the Region of Aland is maintained by the State Department of Aland.
The purpose of this chapter is twofold: besides describing the main features of the current mortgage system for means of transport, it discusses the need for reform in this area of law.
-  In this chapter, references to statutes are given with their respective numbers in the Statutes ofFinland, for example, “the Vessel Mortgage Act (211/1927)”. The latter part of the number indicates the year when the statute was published, which is usually also the year of enactment. Most ofthe statutes have been amended on several occasions, but the numbers do not reveal amendments.The statutes can be found in their original form as well as in their amended and consolidated form,indicating the dates of amendment, in the Finlex Data Bank: http://www.finlex.fi/en. While Finnishstatutes are official only in the Finnish and Swedish languages, the data bank provides unofficialtranslations in other languages, mostly in English. These translations, when available, have beenused in this chapter. In addition, the terminology of the chapter has been supplemented by translations used by The Finnish Transport Safety Agency (Trafi), which functions as the main registerauthority. The author wishes to thank Janne Kaisto, University of Helsinki, for comments on anearly draft, and Christopher Goddard for language editing.
-  Jarno Tepora, Janne Kaisto, and Esa Hakkola, 2009, Esinevakuudet (Helsinki: CC LakimiesliitonKustannus), 39-40; Erkki Havansi, 1992, Esinevakuusoikeudet, 2nd ed. (Helsinki: LakimiesliitonKustannus), 141-145.
-  See generally Ulrich Drobnig, 2011, Security rights in movables, in Towards a European civilcode, 4th ed., ed. Arthur Hartkamp et al., 1025-1042 (The Hague: Kluwer Law International),1026-1031.
-  The Region of Aland is an autonomous part of the Republic of Finland. It is located on the AlandIslands, which are an archipelago in the Baltic Sea, at the entrance to the Gulf of Bothnia.
-  Of course, the mortgage system is not the whole of Finnish law on security over means of transport. For example, see Hans Wassgren, 2004, Rights of financiers in aircraft: A Finnish perspectiveon the 2001 Cape Town instruments, Uniform Law Review 9: 557-572, 562-565. He also discussesretention of title and financial leasing in the context of aircraft finance.