Convergence, Path-Dependency and Credit Securities: The Case against Europe-Wide Harmonisation

Within Europe in recent years there have been two pressure points for reform of the law governing secured transactions. The first pressure point arises out of the desire by some to create a European Civil Code, a common law for Europe as you will, and this Civil Code (or Common Frame of Reference as it is now less contentiously termed) is envisaged as extending to security rights over property. The second pressure point stems from lobbying to promote the merits of Article 9 of the American Uniform Commercial Code as the basis for European (and indeed International) harmonisation of the law of secured transactions. Behind the second point is the view that Article 9 is normatively superior to other systems and that, irrespective of national frontiers, the law should converge towards the best model. This paper suggests that these theories fail to take adequate account of the "path-dependent" nature of legal development. They also fail to pay sufficient regard to the role of national lawyers and other interest groups in the reform process. To illustrate my thesis, the English experience with an attempted transplant of Article 9 is singled out for discussion.The paper begins by examining the case that is being made for a European Civil Code and its extension to security rights over property. I suggest that the argument for such a code can only be understood in the context of a desire to promote an ever closer European Union. It is essentially a political, rather than an economic or a social project. The economic case, at best, is unproven. Insofar as the lack of uniformity of secured transaction laws across European frontiers is seen as presenting an obstacle to intra-community trade, there is no particular evidence of such a hindrance that needs removing by a European Civil Code. Moreover, such a code would substantially limit the scope for national autonomy and potentially fruitful experimentation at the local level.The paper then looks at theories of convergence and path dependency in the corporate and commercial law sphere. The English example provides an illustration of how a jurisdiction may successfully resist a transplant from a supposedly normatively superior system. The English example is also highlighted as illustrating the importance of lawyers and legal doctrine in shaping and muting the reform agenda.