Reforming Personal Property Security Law – Some Implications for the Baselines of Priority Regulation

The following text wants to add to the existing discussion on the reform of personal property security. It deals with an important aspect of regulation of secured transactions, i.e., how conflicts between creditors with interests in the same object of the debtor’s property should be solved. At the centre of the discussion are the baseline criteria used to order priority conflicts. In order to explore those basic criteria, the text compares two models of legislation in the field of personal property security: The unitary and functional approach and the so-called “formal” approach, the latter admitting the coexistence of different kinds of institutions of personal property security. Comparing those two approaches, the text focuses on the US-American law (Article 9 UCC) and the Canadian Personal Property Security Acts (PPSA) as prominent forerunners of today’s unitary and functional legislation, on the one hand, and on German and Swiss law of secured credit as prominent examples for continental European law, on the other hand. Using the example of German and Swiss law, the comparison wants to provide for some argumentation on how continental European law of secured credit could be amended in order to achieve effective and efficient use of security.

Amongst other things, the text will show, that the effects of the decision regarding priority regulation will be most visible in the field of title-security. US-American, Canadian and continental European law differ a lot regarding their treatment of title-security. Thus, regulation of priority conflicts necessarily has to take into account the choices made regarding the use of title-security.