Volume 23 (2015) / Issue 6
Abstract: This paper compares Belgian law pertaining to the granting of security interests in movables to US law on this subject. The Belgian system is currently still in the implementation stage, leaving it less detailed but benefiting from stronger coherence and a fresh start. The US system, set forth in Article 9 of the Uniform Commercial Code (UCC), is much older and highly detailed and, therefore, better equipped to deal with the intricacies of practice, but at the cost of a loss of clarity and second-best solutions largely caused by path dependence. This study tries to identify the areas where one system might learn from the other. As the UCC system was a major source of inspiration for the Belgian reform, leading to the shared basic foundation of a functional approach to security interests, which are to be made publicly knowable by way of register publicity, the systems are ideally suited for a straight comparison. As the basic premises are identical, the focus can be shifted to their implementation. After setting out the boundaries within which security interests operate in terms of assets and debts covered, this paper follows the lifetime of the security interest, from the way they are set up between the parties, to how they are made enforceable against third parties, down to the way they meet their end in a possible bona fide purchase or foreclosure, comparing the two systems every step of the way. Given that the Belgian government is currently designing how the system will actually work and the difficulty of making changes to such a vast system once it is in place, this kind of analysis is of key importance for the future proper functioning of secured lending in Belgium. The lessons taken from this comparative analysis are therefore translated into actionable proposals and best practices for the implementation and application of the Belgian Pledge law. These range from the judicial adoption of similar guidelines on what constitutes a sufficient description of collateral, over the freedom to negotiate default clauses and the limitations to that freedom, to a broad conception of forced dispositions of collateral. This study anticipates judicial interpretation of the new Pledge law in order to provide Belgian practitioners and judges with the necessary tools ahead of time. From the other point of view, it shows those weaknesses of the UCC system that could be remedied through an overhaul of the system.
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