Home Law Implementing the Cape Town Convention and the Domestic Laws on Secured Transactions
The creditor securing his interest in the form of the registered pledge has a limited set of remedies provided to him. Priority is given to the judicial enforcement proceedings (art. 21 of the Registered Pledge Act). However, the Act allows for other remedies in certain situations. First of them being transfer of ownership, which is possible in some situations. Particularly, if in a contract of the registered pledge a value of a movable has been strictly set the creditor may be remedied by vesting the ownership to him, under the condition that the contract provided for such remedy (art. 22 of the Registered Pledge Act). Moreover, a contract of registered pledge may call for sale by tender conducted by an official - a notary or bailiff. In both cases before commencement of the remedy proceedings the creditor is requested to inform about intended activity the pledgor who may choose to satisfy the pledgee or commence the court proceedings in order to establish that the secured interest does not exist or a claim is not mature (art. 25 of the Registered Pledge Act). There has been a debate whether lack of such information renders those remedies invalid or merely imposes a duty to compensate the debtor. Majority of scholars seem to favor the former solution . Additionally, a contract of pledge may call for satisfaction from the profits of an enterprise in cases where pledge has been established on a group of things or rights constituting a single economic unit. Then an enterprise is taken under the administration of the creditor or other receiver. Alternatively, the creditor may ask for lease of such enterprise. Above options are available only when provided for in a contract of pledge. Moreover a contract of pledge may require pledgees consent for conclusion of a lease agreement (art. 27 of the Registered Pledge Act).
In relation to the balance payment generally all contracts (of leasing, conditional sale and registered pledge) allow for satisfaction up to the value of due interest. Nevertheless, parties are free to create their contractual relation as they wish, for example excluding the obligation of paying the balance by the creditor. Provisions on the registered pledge though are of a ius cogens character. According to art. 23 of the Registered Pledge Act, in cases of vesting an ownership to a pledgee when the value of a movable is higher than the amount of the secured obligation the creditor is obliged to pay the balance to the pledgor. He is not required to distribute the surplus among holders of subsequently ranking interests which have been registered. In the case of the leasing agreement when the financing party terminates the contract of leasing due to the circumstances for which the user is liable, the financing party may demand that the user forthwith pay him all the instalments stipulated in the contract and not having been paid yet, reduced by the benefits the financing party obtained as a result of the payment of the instalments before their due date and the dissolution of the contract of leasing (art. 709 of the Civil Code).
|< Prev||CONTENTS||Next >|