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Law applicable to the third-party effects of assignments of claims ***I

TA-8-2019-0086 · P8_TA(2019)0086 · PE621.985

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Parliament's amended version of a proposed regulation sets uniform conflict-of-laws rules for the third-party effects of assignments of claims in civil and commercial matters. As a rule, the law of the assignor's habitual residence applies; the law of the assigned claim applies to cash in a credit institution and claims from financial instruments, and may be chosen for securitisations. The regulation governs effectiveness against third parties and priority conflicts, and is universal, applying even when the designated law is not that of a member state. It preserves overriding mandatory provisions, public policy, international conventions and other Union conflict-of-laws rules, and provides for a Commission review after five years.

Key points

  1. The regulation applies to the third-party effects of assignments of claims in civil and commercial matters, but not to third-party effects towards the debtor.
  2. It does not affect Union or national consumer protection law.
  3. It excludes assignments of claims from family relationships, matrimonial property, negotiable instruments, company law, trusts, certain life insurance contracts and collective proceedings under Regulation (EU) 2015/848.
  4. It defines assignor, assignee, assignment, claim, third-party effects, habitual residence, credit institution, cash and financial instrument.
  5. The law of the assignor's habitual residence at the time of the assignment contract governs third-party effects, including where the assignor changes residence between assignments.
  6. The law of the assigned claim governs assignments of cash credited to an account in a credit institution and claims arising from financial instruments.
  7. For securitisations, the assignor and assignee may expressly choose the law of the assigned claim to govern third-party effects.
  8. Priority conflicts between assignments governed by different laws are resolved by the law of the assignment that first became effective against third parties; if simultaneous, the assignor's habitual residence law prevails.
  9. The applicable law governs effectiveness against third parties, priority between assignees, priority over the assignor's creditors, and priority over beneficiaries of a transfer or novation of contract.
  10. The regulation preserves overriding mandatory provisions of the forum and of the member state of performance, and allows refusal of application only where manifestly incompatible with public policy.
  11. It excludes renvoi, treats each territorial unit of a multi-unit state as a state, and does not prejudice other Union conflict-of-laws rules or existing international conventions.
  12. Member states must notify the Commission of relevant conventions, which the Commission publishes; the Commission must report on the regulation's application after five years.

Who is affected

  • Assignors, assignees, creditors and other third parties in cross-border assignments of claims, who gain legal certainty on the applicable law.
  • Small and medium-sized enterprises and consumers, for whom the regulation aims to facilitate access to finance.
  • Credit institutions and parties to financial instruments, whose assignments of cash and financial-instrument claims are governed by the law of the assigned claim.
  • Securitisers, who may choose the law of the assigned claim for third-party effects in a securitisation.
  • Member states, which must notify the Commission of relevant international conventions and denunciations.

Figures and deadlines

  • The regulation applies from 18 months from the date of entry into force.
  • It enters into force on the twentieth day following publication in the Official Journal.
  • The Commission must submit a report five years after the date of application.
  • The Commission publishes the list of conventions within six months of receiving notifications.

Legal basis: Article 81(2) of the Treaty on the Functioning of the European Union.