Home Law Implementing the Cape Town Convention and the Domestic Laws on Secured Transactions
Finnish Mortgage System for Means of Transport: Outdated and Overly Complex?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.
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