Changes from report parliamentary committee draft to plenary report

Rules relating to the law applicable to third party effects of assignments of claims were included in the Commission proposal that later became Regulation (EC) No 593/208 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I) but they did not end up in the final text. The clear intention of the legislators when lifting these questions out of the Rome I regulation was that the Commission should return with a proposal at a later stage.

The questions were raised again in the light of the 2015 Action Plan on Capital Markets Union (CMU). In May 2017 the Commission's Mid-term Review set out the remaining actions which will be taken to put in place the building blocks of the CMU by 2019, with the objective of removing barriers to cross-border investment and lowering the costs of funding.

Scope of the report

The proposal of the Commission has fifteen articles. It follows closely the Rome I and II Regulations. In this report the provisions specific to this Proposal has been put in focus, whilst provisions only copied over from Rome I and II have been left unchanged. This position has been taken specifically with the view of possibly concluding this legislative file before the end of the Legislature.

The main rule

In the Commission Proposal, the main rule for the applicable law to assignments is the law of the habitual residence of the assignor. This is the rule in place in some Member States, whilst others apply for instance the law applicable to the claim assigned. The main negative consequences of an assignment may appear for the creditors of the assignor or for other third parties related to the assignor. For this law of the habitual residence of the assignor will give a high degree of transparency and predictability for the third parties possibly concerned.

Explicit exclusion of debtors

The law applicable to the consequences of an assignment for the debtor is regulated in Article 14 of the Rome I Regulation. Not explicitly excluding debtors from third parties under this Regulation would mean that the provision in Rome I applies by way of being lex specialist but that the question may arise to what extent this Regulation supplements Rome I. To make the third party consequences for debtors be solely regulated by Rome I, an explicit exclusion should be introduced in this Regulation.

Exclusion of insolvency proceedings

Regulation (EU) 2015/848 of the European Parliament ans of the Council of 20 May 2015 on insolvency proceedings contains rules relating to applicable law. For that reason, assignments done in the course of a collective proceeding according to that regulation should be excluded from the scope of application of this Regulation.

Securitisation

The Commission has proposed that the assignor and assignee would be able to choose the law applicable to third party consequences of an assignment. Such a rule goes across one of the fundamental principles of European civil law: that the parties to an agreement may not dispose over the rights of third parties by way of the agreement. To leave the parties to the assignment agreement in full discretion in the respect would, especially in the light of Article 3, go too far. However, a solution where the parties to the securitisation arrangement would be able to choose that the law applicable to the largest number of claims applies to all claims would achieve sufficient streamlining while it retains a sufficient level of protection for third parties.