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Agreement on Private Enforcement

In the case of debtor default, a creditor holding a charge over a mortgaged means of transport does not have an independent power of realisation directly by operation of law. In contrast, this power exists, by virtue of Chapter 10 Section 2 of the Trade Code (3/1734), with respect to possessory pledges over ordinary tangible movable objects or negotiable documents.[1] The normal way to go about enforcement in the case of a charge over a mortgaged means of transport is through the district court. The chargee is supposed to bring a so-called “hypothec action” against the owner of the means of transport. In that action, the chargee requests the court to order the owner to pay a certain amount of money out of the value of the means of transport. If the court makes this order, the chargee still needs to turn to the enforcement authority, which will take care of selling the means of transport.[2]

A chargee of a mortgaged means of transport may wish to acquire an independent power of realisation by agreement with the owner of the means of transport. This could be arranged so that the owner authorises the chargee to sell the means of transport and satisfy the secured claim out of the proceeds of sale. However, this arrangement involves two kinds of uncertainty for the chargee: First, the law probably does not allow irrevocable authorisation. The owner might thus be able to revoke the independent realisation power at will. Second, authorisation would probably not survive transfer of ownership of the means of transport, or remain valid in the owner’s bankruptcy (collective liquidation proceedings).[3]

  • [1] HE 1/1988, Hallituksen esitys Eduskunnalle laiksi kauppakaaren 10 luvun muuttamisesta, laiksielinkeinonharjoittajan oikeudesta myyda noutamatta jatetty esine ja laiksi merilain 215 §:n muuttamisesta [Government Proposal 1/1988], 9. The provision probably also applies, for example, tocharges over book-entry securities and intellectual property rights. Saarnilehto et al. 2012, 1211;Havansi 1992, 389-399; Markku Tuominen, 2001, Teollisoikeudet vakuutena (Helsinki: WSLT),220-221.
  • [2] Saarnilehto et al. 2012, 1214; Tepora, Kaisto and Hakkola 2009, 183-185; Tuula Linna and TatuLeppanen, 2007, Ulosmittaus ja myynti (Helsinki: Talentum), 89.
  • [3] Tepora, Kaisto and Hakkola 2009, 178-179.
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