Changes from plenary report to adopted text

RemovedDRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION

AddedEuropean Parliament legislative resolution of 13 February 2019 on the proposal for a regulation of the European Parliament and of the Council on the law applicable to the third party effects of assignments of claims (COM(2018)0096 – C8-0109/2018 – 2018/0044(COD))

Removedon the proposal for a regulation of the European Parliament and of the Council on the law applicable to the third party effects of assignments of claims

Removed(COM(2018)0096 – C80109/2018 – 2018/0044(COD))

▸5 unchanged paragraphs

(Ordinary legislative procedure: first reading)

The European Parliament,

– having regard to the Commission proposal to Parliament and the Council (COM(2018)0096),

– having regard to Article 294(2) and Article 81(2) of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C80109/2018),

– having regard to Article 294(3) of the Treaty on the Functioning of the European Union,

Added– having regard to the opinion of the European Central Bank of 18 July 2018,

Added– having regard to the opinion of the European Economic and Social Committee of 11 July 2018,

▸5 unchanged paragraphs

– having regard to Rule 59 of its Rules of Procedure,

– having regard to the report of the Committee on Legal Affairs (A8-0261/2018),

1. Adopts its position at first reading hereinafter set out;

2. Calls on the Commission to refer the matter to Parliament again if it replaces, substantially amends or intends to substantially amend its proposal;

3. Instructs its President to forward its position to the Council, the Commission and the national parliaments.

Change 1

RemovedRecital 3: (3) The proper functioning of the internal market requires - in order to improve the predictability of the outcome of litigation, legal certainty as to the law applicable and the free movement and recognition of judgments - for the conflict of law rules in the Member States to designate as the applicable law the same national law irrespective of the Member State of the court in which an action is brought.

AddedP8_TC1-COD(2018)0044

RemovedRecital 11: (11) No harmonised set of rules on the conflict of laws governing the third-party effects of assignments of claims currently exist at Union level. These conflict of laws rules are laid down at Member State level, but they are inconsistent - being based on different connecting factors to determine the applicable law - and therefore unclear, especially in those countries where such rules are not governed by separate legislative provisions. In cross-border assignments of claims, the inconsistency of national conflict of laws rules leads to legal uncertainty as to which law applies to the third-party effects of the assignments. The lack of legal certainty creates a legal risk in cross-border assignments of claims which does not exist in domestic assignments as different national substantive rules may be applied depending on the Member State whose courts or authorities assess a dispute as to the legal title over the claims; implicitly, the outcome of a priority conflict as to who owns a claim further to a cross-border assignment will vary, depending on the national law applied.

AddedPosition of the European Parliament adopted at first reading on 13 February 2019 with a view to the adoption of Regulation (EU) …/… of the European Parliament and of the Council on the law applicable to the third-party effects of assignments of claims

RemovedRecital 12: (12) If assignees are not aware of the legal risk or choose to ignore it, they may face unexpected financial losses. Uncertainty about who has legal title over the claims assigned on a cross-border basis can have knock-on effects and deepen and prolong the impact of a financial crisis. If assignees decide to mitigate the legal risk by seeking specific legal advice, they will incur higher transaction costs not required for domestic assignments.

AddedTHE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

RemovedRecital 12 a (new): (12a) This legal risk can also act as a deterrent. Assignees and assignors may choose to avoid it, thereby allowing business opportunities to pass. This lack of clarity does not therefore appear to be in line with the objective of market integration and the principle of free movement of capital enshrined in Articles 63 to 66 Treaty on the Functioning of the European Union.

AddedHaving regard to the Treaty on the Functioning of the European Union, and in particular Article 81(2) thereof,

RemovedRecital 13: (13) The objective of this Regulation is to provide legal certainty by laying down common conflict of laws rules designating which national law applies to the third-party effects of assignments of claims, increasing cross-border claims transactions, so as to encourage cross-border investment in the Union and facilitate access to finance for firms - including small and medium-sized enterprises (SMEs) - and consumers.

AddedHaving regard to the proposal from the European Commission,

RemovedRecital 14 a (new): (14a) This Regulation is not intended to alter the provisions of Regulation (EC) No 593/2008 regarding the proprietary effect of a voluntary assignment as between assignor and assignee or as between assignee and debtor.

AddedAfter transmission of the draft legislative act to the national parliaments,

RemovedRecital 15: (15) The conflict of laws rules laid down in this Regulation should govern the effects of assignments of claims in respect of third parties, for example, a creditor of the assignor, excluding the debtor.

AddedHaving regard to the opinion of the European Central Bank,

RemovedRecital 16: (16) The claims covered by this Regulation include trade receivables, claims arising from financial instruments as defined in Directive 2014/65/EU of the European Parliament and of the Council44 and cash credited to an account in a credit institution. Financial instruments as defined in Directive 2014/65/EU include securities and derivatives traded on financial markets. While securities are assets, derivatives are contracts which include both rights (or claims) and obligations for the parties to the contract. / 44 Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (OJ L 173, 12.6.2014, p. 349).

AddedHaving regard to the opinion of the European Economic and Social Committee,

RemovedRecital 17: (17) This Regulation concerns the third-party effects of the assignment of claims. In particular, it covers the transfer of the contracts (such as derivative contracts), in which both rights (or claims) and obligations are included, or the novation of contracts including such rights and obligations.

AddedActing in accordance with the ordinary legislative procedure,

RemovedRecital 18: (18) Matters governed by Directive 2002/47/EC of the European Parliament and of the Council44, Directive 98/26/EC of the European Parliament and of the Council 45, Directive 2001/24/EC of the European Parliament and of the Council46and Commission Regulation (EU) No 389/201347 should not be affected by this Regulation, since the scope of the conflict of laws rules contained in this Regulation and that of the conflict of laws rules contained in those three Directives do not therefore overlap. / 44 Directive 2002/47/EC of the European Parliament and of the Council of 6 June 2002 on financial collateral arrangements (OJ L 168, 27.6.2002, p. 43). / 45 Directive 98/26/EC of the European Parliament and of the Council of 19 May 1998 on settlement finality in payment and securities settlement systems (OJ L 166, 11.6.1998, p. 45). / 46 Directive 2001/24/EC of the European Parliament and of the Council of 4 April 2001 on the reorganisation and winding up of credit institutions (OJ L 125, 5.5.2001, p. 15). / 47 Commission Regulation (EU) No 389/2013 of 2 May 2013 establishing a Union Registry pursuant to Directive 2003/87/EC of the European Parliament and of the Council, Decisions No 280/2004/EC and No 406/2009/EC of the European Parliament and of the Council and repealing Commission Regulations (EU) No 920/2010 and No 1193/2011 (OJ L 122, 3.5.2013, p. 1).

AddedWhereas:

RemovedRecital 25: (25) In accordance with market practice and the needs of market participants, the third-party effects of certain assignments of claims should, as an exception, be governed by the law of the assigned claim, that is, the law that governs the initial contract between the creditor and the debtor which gives rise to the claim.

Added(1) The Union has set itself the objective of maintaining and developing an area of freedom, security and justice. For the progressive establishment of such an area, the Union is to adopt measures relating to judicial cooperation in civil matters having cross-border implications to the extent necessary for the proper functioning of the internal market.

RemovedRecital 28: deleted

Added(2) Pursuant to Article 81 of the Treaty, these measures are to include those aimed at ensuring the compatibility of the rules applicable in the Member States concerning the conflict of laws.

RemovedRecital 29: (29) Priority conflicts between assignees of the same claim may arise where the third-party effects of the assignment have been subject to the law of the assignor’s habitual residence in one assignment and to the law of the assigned claim in another assignment. In such cases, the law applicable to resolve the priority conflict should be the law applicable to the third-party effects of the assignment of the claim which has first become effective against third parties under its applicable law. Where both assignments of claims become effective against third parties at the same time, the law of the assignor’s habitual residence should prevail.

Added(3) The proper functioning of the internal market requires, in order to improve the predictability of the outcome of litigation, legal certainty as to the law applicable and the free movement and recognition of judgments, for the conflict of law rules in the Member States to designate as the applicable law the same national law irrespective of the Member State of the court in which an action is brought. [Am. 1]

RemovedRecital 30: (30) The scope of the national law designated by this Regulation as the law applicable to the third-party effects of an assignment of claims should be uniform. The national law designated as applicable should govern in particular (i) the effectiveness of the assignment against third parties, that is, the steps and procedures that need to be followed by the assignee in order to ensure that he acquires legal title over the assigned claim (for example, registering the assignment with a public authority or registry, or notifying the debtor in writing of the assignment); and (ii) priority issues, that is, the resolution of conflicts between several claimants as to who has title over the claim following a cross-border assignment (for example, between two assignees where the same claim has been assigned twice, or between an assignee and a creditor of the assignor).

Added(4) Regulation (EC) No 593/2008 of the European Parliament and of the Council does not cover the questions of third-party effects of assignment of claims. However, Article 27(2) of that Regulation required the Commission to submit to the European Parliament, the Council and the European Economic and Social Committee a report on the question of the effectiveness of an assignment or subrogation of a claim against third parties and the priority of the assigned or subrogated claim over a right of another person which should be accompanied, if appropriate, by a proposal to amend that Regulation and an assessment of the impact of the provisions to be introduced.

RemovedRecital 34: (34) This Regulation respects the fundamental rights and observes the principles recognised in the Charter of Fundamental Rights of the European Union. In particular, this Regulation seeks to promote the application of Articles 17 and 47 concerning, respectively, the right to property and the right to an effective remedy and to a fair trial, as well as Article 16 concerning the freedom to conduct a business.

Added(5) On 18 February 2015 the Commission adopted a Green Paper on Building a Capital Markets Union which stated that achieving greater legal certainty in cases of cross-border transfer of claims and the order of priority of such transfers, particularly in cases of insolvency, is an important aspect in developing a pan-European market in securitisation and financial collateral arrangements, and also of other activities such as factoring.

RemovedArticle 1 – paragraph 1 – subparagraph 1: This Regulation shall apply, in situations involving a conflict of laws, to the third-party effects of assignments of claims in civil and commercial matters other than third-party effects to the debtor of the claim assigned.

Added(6) On 30 September 2015 the Commission adopted a Communication with an Action Plan on Building a Capital Markets Union. This Capital Markets Union Action Plan noted that differences in the national treatment of third-party effects of assignment of debt claims complicate the use of these instruments as cross-border collateral, concluding that this legal uncertainty frustrates economically significant financial operations, such as securitisations. The Capital Markets Union Action Plan announced that the Commission would propose uniform rules to determine with legal certainty which national law should apply to the third-party effects of the assignment of claims.

RemovedArticle 1 – paragraph 1 a (new): 1a. This Regulation is without prejudice to Union and national law on consumer protection.

Added(7) On 29 June 2016 the Commission adopted a report on the appropriateness of Article 3(1) of Directive 2002/47/EC of the European Parliament and of the Council on financial collateral arrangements focusing on the question whether this Directive works effectively and efficiently as regards formal acts required to provide credit claims as collateral. The report concluded that a proposal of uniform rules regarding the third-party effects of assignment of claims would allow determining with legal certainty which national law should apply to the third-party effects of the assignment of claims, which would contribute to achieving greater legal certainty in cases of cross-border mobilisation of credit claims as collateral.

RemovedArticle 1 – paragraph 2 – point b: (b) assignment of claims arising from matrimonial property regimes, property regimes of relationships deemed by the law applicable to such relationships to have comparable effects to marriage including registered partnerships, wills and succession;

Added(8) On 29 September 2016 the Commission adopted a report on the question of the effectiveness of an assignment or subrogation of a claim against third parties and the priority of the assigned or subrogated claim over the right of another person. The report concluded that uniform conflict of law rules governing the effectiveness of assignments against third parties as well as questions of priority between competing assignees or between assignees and other right holders would enhance legal certainty and reduce practical problems and legal costs relating to the current diversity of approaches in the Member States.

RemovedArticle 1 – paragraph 2 – point f a (new): (fa) assignment of claims in the course of a collective proceeding under Regulation (EU) 2015/848.

Added(9) The substantive scope and the provisions of this Regulation should be consistent with Regulation (EC) No 864/2007 of the European Parliament and of the Council, Regulation (EC) No 593/2008 and Regulations (EU) No 1215/2012, and (EU) 2015/848 of the European Parliament and of the Council. The interpretation of this Regulation should as much as possible avoid regulatory gaps between these instruments.

RemovedArticle 2 – paragraph 1 – point e: (e) 'third-party effects' means the right of the assignee to assert his legal title over a claim assigned to him towards other assignees or beneficiaries of the same or functionally equivalent claim, creditors of the assignor and other third parties, excluding the debtor;

Added(10) This Regulation implements the Capital Markets Union Action Plan. It also fulfils the requirement laid down in Article 27(2) of the Rome I Regulation that the Commission should publish a report and, if appropriate, a proposal on the effectiveness of an assignment of a claim against third parties and the priority of the assignee over the right of another person.

RemovedArticle 2 – paragraph 1 – point h: deleted

Added(11) ConflictNo harmonised set of rules on the conflict of laws rules governing the third-party (or proprietary) effects of assignments of claims do not currently exist at Union level. These conflict of laws rules are laid down at Member State level, but they are inconsistent and often - being based on different connecting factors to determine the applicable law - and therefore unclear, especially in those countries where such rules are not governed by separate legislative provisions. In cross-border assignments of claims, the inconsistency of national conflict of laws rules leads to legal uncertainty as to which law applies to the third-party effects of the assignments. The lack of legal certainty creates a legal risk in cross-border assignments of claims which does not exist in domestic assignments as different national substantive rules may be applied depending on the Member State whose courts or authorities assess a dispute as to the legal title over the claims; implicitly, the outcome of a priority conflict as to who owns a claim further to a cross-border assignment will vary, depending on the national law applied. [Am. 2]

RemovedArticle 4: 1. Unless otherwise provided for in this Article, the third-party effects of an assignment of claims shall be governed by the law of the country in which the assignor has its habitual residence at the time of the conclusion of the assignment contract. / Where the assignor has changed its habitual residence between two assignments of the same claim to different assignees, the priority of the right of an assignee over the right of another assignee shall be governed by the law of the habitual residence of the assignor at the time of the assignment which first became effective against other third parties under the law designated as applicable pursuant to the first subparagraph. / 2. Notwithstanding paragraph 1 of this article, the law applicable to the assigned claim shall govern the third-party effects of the assignment of: / (a) money credited to an account in a credit institution; / (b) claims arising from financial instruments. / (deleted) / (deleted) / . A priority conflict between assignees of the same claim where the third-party effects of one of the assignments are governed by the law of the country in which the assignor has its habitual residence and the third-party effects of other assignments are governed by the law of the assigned claim shall be governed by the law applicable to the third-party effects of the assignment of the claim which first became effective against third parties under its applicable law. Where both assignments become effective against third partie…

Added(12) If assignees are not aware of the legal risk or choose to ignore it, they may face unexpected financial losses. Uncertainty about who has legal title over the claims assigned on a cross-border basis can have knock-on effects and deepen and prolong the impact of a financial crisis. If assignees decide to mitigate the legal risk by seeking specific legal advice, they will incur higher transaction costs not required for domestic assignments. If assignees are deterred by the legal risk and choose to avoid it, they may forego business opportunities and market integration may be reduced. [Am. 3]