New regime of security on movables
Published on 19/09/2013
Context of the reform
The laws of 24 June and 11 July 2013 seek to reform the current system of in rem security on movable assets. The stated purpose is « to achieve a legal regime of security which is efficient, flexible and predictable, which is capable of encouraging the extension of credit in order to reinforce our economy ».
To date, Belgian private law is characterised by the distinction between civil law and commercial law. Even if it is acknowledged that specific rules must be provided for the benefit of consumers (the latter will indeed benefit from a more favourable regime of proof), the legislator has deemed it no longer necessary to maintain the distinction between a civil pledge and a commercial pledge in security law. The opportunity has also been taken to reinsert, to the extent possible, the legal rules on security interests in the Civil code.
The legislator has also sought to contribute to the harmonisation of the law in Europe by adhering as much as possible to the evolutions in this field. Comparative law has thus played an important role in the conception of the new regime. Respecting the Belgian legal tradition, which is based on the Civil code, the recent French reform has been a major source of inspiration. As regards the European dimension, the Belgian legislator hopes that « thanks to the successful implementation of the new rules, our country will serve as a model for the continued legal harmonisation in Europe ».
The aforementioned law of 11 July 2013 modifies the current rules of the Civil code relating to the pledge by making it possible to create a pledge without dispossession (gage sans dépossession), and to perfect the security by merely registering the pledge in a newly to be established register of pledges (“Registre des gages”). In other terms, a pledge on movable objects, duly registered in the Register of Pledges, will no longer require the creditor (or an agreed third party holder) to take possession of the pledged object in order to make the pledge effective gains third parties. However, a traditional pledge, perfected by the delivery of the physical possession of the object to the creditor (or the agreed third party) will remain an valid alternative.
Moreover, the new law provides for a simplified procedure to enforce a pledge, which no longer requires the creditor to obtain an executory title (he can enforce the pledge without advance court authorisation) and which is entrusted exclusively to the judge of seizures (juge des saisies).
Finally, the multiple issues relating to the law of pledges which are presently dealt with by jurisprudence are now settled by express provisions.
The reform of the regime of pledges is completed by new provisions relating to the retention right and reservation of title, the latter being transferred from the bankruptcy law to the civil code.
The introduction of a regime of pledge without dispossession, coupled with the implementation of a national register of pledges, constitutes a true novelty in our legal system, which will benefit in particular the creditors of owners of valuable objects such as works of art, seeking to take security over such objects to guarantee the performance of an obligation or to protect themselves against their debtor’s insolvency.
Indeed, it will suffice for creditors of art collectors, for example, to register all of part of an art collection in the register of pledges to enjoy an effective security interest in these goods without recourse to an often artificial construction aiming to grant possession to the pledgee.
The financial and art market practitioners will hence be offered a range of new possibilities in the field of art finance. We are eager to witness how they will accommodate the new law into their practices.
As a final note, the new regime of in rem security on movables will not affect the Belgian financial collateral law. The latter - which implements the European Directive on financial collateral arrangements - creates a specific regime for security interests in financial instruments or cash as well as for netting arrangements.
The new laws will enter into force on a date determined by royal decree but no later than 1 December 2014.
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