When claims are assigned across borders, it's not always easy for investors, credit providers and other market participants to know which national law applies to determine who owns the assigned claims. Different national rules about the third-party (or ownership) effects of assignments of claims complicate the use of claims as collateral and make it difficult for investors to price the risk of debt investments.

Removing legal uncertainties about the ownership of claims after they have been assigned on a cross-border basis is important for the assignor and the assignee of the claims. However, it is also essential for market participants who are not party to the assignment but who interact with any of the parties and need certainty about who has legal title over the assigned claims.

Commission initiatives

The Action plan on building a capital markets union, adopted by the Commission in September 2015, envisaged targeted action on securities ownership rules and third-party effects of assignments of claims.

In order to consult all interested parties, in February 2017 the Commission published an inception impact assessment providing an overview of the problems to be addressed and the possible solutions.

In April 2017, the Commission launched a public consultation (consultation on conflict of laws rules for third party effects of transactions in securities and claims) and established an Expert group on conflict of laws regarding securities and claims. The members of the Expert group assisted the Commission by providing specialist advice on private international law and financial markets as a sound basis for policymaking.

On 12 March 2018, the Commission proposed the adoption of common conflict of laws rules on the third-party effects of assignments of claims. The proposal provides that, as a rule, the law of the country where the assignor has its habitual residence will govern the third-party effects of the assignment of claims. As an exception, the law of the assigned claim will govern the third-party effects of the assignment of specific claims. By introducing legal certainty, the new rules will promote cross-border investment, enhance access to credit and contribute to market integration. The proposal, which deals with the law applicable to the ownership questions of assignments of claims, complements the rules in the Rome I Regulation, which deal with the law applicable to the contractual questions of assignments of claims.

Previous work in relation to claims

The question of the third-party effects of assignments of claims was raised when the Rome Convention was being transformed into the Rome I Regulation (Regulation (EC) No 593/2008). The Rome I Regulation did not address the issue, but required the Commission to prepare a report on the matter. To that effect, the Commission asked the British Institute of International and Comparative Law (BIICL) to carry out a study and the Commission presented its report in September 2016