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Treatment of Security Interests Under the Insolvency Procedure

The international interest, created by the Cape Town Convention, as a supranational substantive law instrument, supersedes any conflict of laws rule. Nevertheless, Cape Town Convention is not an all-inclusive codification of asset-based secured financing. Therefore, there is room for application for domestic substantive law rules, which will be determined either directly by uniform conflict of laws rules of the Cape Town Convention, or indirectly by domestic conflict of laws rules.[1]

In case of a company’s insolvency the international insolvency law and the private international law of real rights, of proprietary rights, are on a crossroad.[2] So, when a creditor claims having a contractual security that confers to him a proprietary right, that is, a security interest, according to the Greek law he will be able to exercise it, without it being automatically or by order of the insolvency administrator stayed. Publicity of this security interest is absolutely required.

As far as the title reservation agreement is concerned, some decades ago, the predominant view in the case law (courts’ decisions) was that this agreement had no effect whatever in case of the purchaser’s insolvency. However, the view of part of theoreticians of law was that if the title reservation agreement had no effect in case of the purchaser’s insolvency, in the name of the creditors’ protection, then this agreement would practically have no validity in transactions between merchants and this would be a “coup dur” for the credit agreements, which are of vital importance for the national economy.

Actually, it is accepted by both theory and courts, that title reservation agreement is “saved” in case of the purchaser’s insolvency and that the seller - proprietor of the asset may take possession of the asset, since the insolvent purchaser had never acquired the ownership of it and therefore it could not be included in the insolvency


  • [1] Kreuzer, K. (2013), Jurisdiction and choice of law under the Cape Town Convention and theProtocols thereto, Cape Town Convention Journal, 156-157 (149-164).
  • [2] Moustaira, E.N. (1998), La mise en reuvre des suretes dans le cadre d’une faillite internationale,Revue Hellenique de Droit Internationale 89, 96.
  • [3] Rokas, N. (1974), Title reservation agreement in case of bankruptcy of the purchaser [in Greek],Nomiko Vima 449, 456-460; Moustaira, E.N. (1998), La mise en reuvre des suretes dans le cadred’une faillite internationale, Revue Hellenique de Droit Internationale 89, 97-98.
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