The Law Applicable to Security Interests in Intermediated Securities Under OHADA Law

Front matter

JUSTIN MONSENEPWO

The Law Applicable to Security Interests in Intermediated Securities Under OHADA Law

Max-Planck-Institut für auslandisches und internationales Privatrecht

Preface

This book is the result of my doctoral research, accepted as a doctoral dissertation by the Faculty of Law of the Julius Maximilian University of Würzburg in January 2021. It aims at finding clear and efficient conflict of laws rules for the determination of the law governing proprietary rights in respect of security interests in intermediated securities under the law of the Organisation for the Harmonisation of Business Law in Africa (hereinafter referred to as OHADA). In the OHADA region, securities holding patterns have drastically changed in the last decades. Besides securities certificates that are held directly by an investor, there are an increasing number of securities that are held via an intermediary within a so-called “indirect holding system”. These securities that are indirectly held with intermediaries (or intermediated securities) are often provided as collaterals. However, if the intermediated system has increased the breadth and the depth of the securities markets in the OHADA regions, it has also allowed different and divergent applicable laws to occur within a cross-border securities holding chain. Unfortunately, there is no common and adapted legal approach in the OHADA region as to the determination of the law governing proprietary issues affecting intermediated securities. Consequently, an investor will suffer a risk if the adjudicating forum selects an unexpected law by which the validity of the collateral interest in the intermediated securities is to be ascertained.

From a substantive law perspective, the current rules governing the constitution, the perfection, and the realisation of the pledge of intermediated securities are enshrined in Articles 146 et seq of the OHADA Uniform Act on Security Interests. Unlike the Geneva Securities Convention, the Financial Collateral Directive, and Article 8 of the Uniform Commercial Code, the scope of Articles 146 et seq of the Uniform Act on Security Interests does not encompass title transfer collateral agreements, including repurchase agreements. Under Article 149 of the Uniform Act, the pledged securities account must take the form of a special account open in the name of the account holder and maintained by the issuing legal entity or a financial intermediary.

From a private international law perspective, the /ex rei sitae (or the lex cartae sitae) rule is currently applied in all OHADA Member States to determine the law applicable to security interests in intermediated securities. However, with the dematerialisation (Entmaterialisierung) of securities certifi-

VII Preface cates, the root of title is no longer either a piece of paper or the company’s register. Rather, it is an electronic book entry on the books of a central operator. Therefore, it is difficult to determine the “situs” of intermediated securities in an indirect holding system. In search for a more appropriate connecting factor, this book analyses the European PRIMA rule (Article 9(2) of the Settlement Finality Directive, Article 9 of the Finality Directive, and Article 24 of the Winding-up Directive), whereby the law applicable to book entry securities provided as collateral is the law of the jurisdiction where the relevant register, account, or centralised deposit system is located. However, the PRIMA rule leads to severe difficulties since there is no criterion able to determine beyond doubt the office of an intermediary which maintains a specific account or the location of a securities account. Indeed, a securities account is a legal relationship between two entities. Since (legal) relationships do not have a location, it is not possible to speak of the location of an “account” or even the location where the account is “maintained”. In addition, in modern global trading, some or even all the functions pertaining to the maintenance and servicing of a securities account are undertaken from more than one office or even outsourced to third parties in different locations. Therefore, any attempt to “localize” the securities account or the place where it is maintained would give rise to more legal uncertainty. In light of these difficulties, this book analyses the rules of the Hague Securities Convention and submits that they offer more legal certainty and predictability compared to the /ex rei sitae and the PRIMA rules, as Article 4 of the Hague Securities Convention focuses on the relationship between an account holder and its intermediary by looking to the law in force in the jurisdiction expressly chosen in the agreement between the investor and the intermediary to govern either the issues falling within the scope of the Convention or the account where the securities are held. In that regard, this book suggests several options, among which the most satisfactory is an accession by OHADA to the Convention.

There are many people whom I wish to thank for the completion of this work. First of all, I sincerely thank my supervisor (Doktorvater), Professor Dr. Christoph Teichmann, for his advice and guidance for my doctoral research and more generally for my life in Germany. I do count myself very fortunate to have worked under the supervision of such a tremendous mentor. I also extend my sincerest gratitude to Professor Dr. Eva-Maria Kieninger for her thoughtful and helpful comments on this work as the second examiner. During the entire period of my doctoral research, she was always ready to assist me and to share her invaluable time. I also wholeheartedly thank Professor Dr. Karl Kreuzer, Dr. Christophe Bernasconi, Professor Dr. Jean-Michel Kumbu, Professor Dr. Jan Neels, Prof. Dr. Marta Pertegas, and Dr. Karin Linhart for their excellent comments and orientations on different aspects of

Preface IX my doctoral research. I also extend my sincere appreciation to the staff of the editorial services department at the Max Planck Institute for Comparative and International Private Law, as well as to the publisher, Mohr Siebeck, for their skillful and heart-felt assistance for this publication.

31 July 2022 Justin Monsenepwo

Foreword

The core purpose of the Organisation for the Harmonisation of Business Law in Africa (OHADA) is not only to promote economic development and integration but also to guarantee legal certainty for investors and companies in its Member States. Its instruments (mainly Uniform Acts) and institutions (such as the Common Court of Justice and Arbitration) have enabled OHADA to reach a remarkably high level of legal harmonisation. Moreover, pursuant to the Treaty on the Harmonisation of Business Law in Africa, the OHADA Member States have transferred relevant parts of their legislative and judicial sovereignty to OHADA, making it one of the few regional economic integration organisations besides the European Union that may join the Hague Conference on Private International Law (HCCH) as a Member. OHADA itself may also become party to HCCH Conventions in areas which fall within OHADA’s competence.

Interestingly, in recent years the field of private international law has become increasingly prominent in the OHADA region. One need only look to the integration process in other parts of the world — such as within the European Union, the Association of Southeast Asian Nations (ASEAN), or the Southern Common Market (Mercosur) — to realise that there is a strong nexus between the facilitation of cross-border trade and the unification of private international law. This includes uniform rules on jurisdiction and choice of forum, the applicable law, recognition and enforcement of foreign judgments, and international cooperation. In 2013, the HCCH and OHADA concluded an agreement designed to enhance cooperation between the two organisations, increase the visibility of the work of the HCCH in the OHADA region, examine the possibility for HCCH instruments to be brought into effect in OHADA Member States, and for OHADA Member States to become Members of the HCCH. In addition, in 2019 OHADA launched the drafting of a Uniform Act on private international law. Against this background, the publication of this book on the law applicable to security interests in intermediated securities is not only timely but is also an important contribution to the development of private international law in Africa.

In recent decades, the OHADA region has witnessed a shift from securities being held directly by an investor to a system in which many securities are held via an intermediary. In that system, securities are held and transferred by

XII Foreword electronic book-entry debits and credits to securities accounts of primarily dematerialised or immobilised securities. However, neither OHADA nor its Member States have adapted their conflict of laws rules to the issues that are of crucial practical importance for holdings and dispositions of intermediated securities. To fill this gap, this book compares different solutions existing under national, regional, and international instruments. More specifically, it analyses the lex cartae sitae, the “look through approach”, and the “place of the relevant intermediary approach” (PRIMA). It demonstrates that these rules are deficient because they attempt to determine the situs of either the securities or the securities account. The book suggests that OHADA would greatly benefit from the legal certainty and predictability afforded by the HCCH Convention of 5 July 2006 on the Law Applicable to Certain Rights in Respect of Securities held with an Intermediary (HCCH 2006 Securities Convention). The HCCH 2006 Securities Convention does not attempt to formulate a conflict of laws rule based on the concept of situs. Rather, its primary rule is based on the relationship between an account holder and an intermediary. Supporting this approach, the book recommends that all OHADA Member States (or OHADA itself) become party to the HCCH 2006 Securities Convention.

This publication is essential reading for policy makers, academics, market participants, and legal practitioners in the OHADA region and beyond. I am convinced that its in-depth analysis of OHADA’s substantive and conflict of laws rules will go a long way in filling the gap in this area and encouraging further development in the future.

On a personal note, I have had the pleasure of knowing the author, Mr Justin Monsenepwo, since his early involvement with the HCCH Permanent Bureau in 2015. Over the years, I have been delighted to see him develop such a close relationship with the HCCH, contributing to the joint effort to facilitate the increased participation of African States in the work of the organisation. This publication is yet another of Mr Monsenepwo’s tangible contributions.

Dr. Christophe Bernasconi Secretary General, HCCH

Summary of Contents

Preface en. see M Ce e ROMA ARENT ae te Ati ie VII POTS WORM dan a ee a ane ait XI COLE TIS AT Re en 7 nn Den ne deh as estas XV Tables And Bisüres sale XXXI ADI VIATIONS ranne An dale Ra nn ni XXXII General Introduction aussehen 1

Chapter 1: The Organisation for the Harmonisation of Business Law

110 09.5 i 8 (61: PT AIR AR EENAA A E EE TS NE 11 Chapter 2: Basic Structure and Functioning of the Indirect Holding System in the OHADA Region ae a en 43

Part II — Reports on National, Regional, and International Substantive Law Rules in Respect of Security Interests in Intermediated Securities

Chapter 1: The Pledge of Securities Accounts under the OHADA

Chapter 2: Security Interests in Intermediated Securities under the

Geneva Securities Convention rss eedekenkeseeuede 97 Chapter 3: The EU Legislation on the Collateralisation of

Intermediated Secutities;. susanne aaa 123

Chapter 4: Collateralisation of Intermediated Securities under the Law inthe United States ae ee 156

XIV Summary of Contents

Part III — Conflict of Laws Analysis

Chapter 1: The lex rei sitae (lex cartae sitae) Rule in the OHADA

REDON AR ee N ea Chapter 2: The Place of the Relevant Intermediary Approach

Chapter 3: Conflict of Laws Rules for Intermediated Securities under

the Uniform Commercial Codes. 2a a ea Chapter 5: Alternative Conflict of Laws Rules and Connecting

Factors lan aa EE A EEE E EA AaS Chapter 6: Comparison of the Operation of the Different Conflict of

General Conclusion...

A. Indicative List of the Travaux Préparatoires for the

Financial Collateral Directive aa sl A et B. Indicative List of the Travaux Préparatoires for Directive

2009/44/ EC of 6 May 2009: u unse C. Proposal of a Uniform Act on the Law Applicable to Certain

Tee ree oven Ae EE RE Eee

Contents

Pielace en ee CR ete Se OT Miele ee VII POG WORD ee ae Rn sn ea Rainer XI Summary Of CONS ea aa XIII Tablesand Fas res sense XXXI Abbreviations eek Diele XXXII General Introduction u... 1

Chapter 1: The Organisation for the Harmonisation of Business Law

MAJICA as Mae ans A ddan ead ag seed ashen eae 11 Pes Historical Perspectives Le AA nt RR 11 Bi Pútpose of OHADA cs vivre eae a een 16 I. Contribution to Regional Integration in Africa... 16 II. Facilitating Investments and Improving the Economies of Its Members „erstes. nei lub 17 I. The Conference of Heads of State and Government... 21 II. The Council of Ministers ana ar 21 le COMPOSITION annee a eae Gane ele eee ak 21 25. TF UTC LION ss Ann in NEG aan 22 SUES hose cine, caer EN cera Oe Beate dee Gua Re nett chad 23 II. The Permänent.Seeretariat. ana a vs titre 23 1. ORGANISATION aan al 23 2: Dita E ET EEA ET 23 L COMPOSITION ass E a aias 24 >> Bünctions a Rata ane a a A A R 25

3. Challenges faced by the CCJA and Trends in the CCJA’s Case Law lens es yay dc nos den eee ces Uase 26

XVI Contents a) Challenges faced by the CGJA 200 26 b) Geographical Origins of the Appeals lodged before the CCE ec hha ds sca res leeren 28 D. Instruments of OHADA cei alos cakes a Research 30 L UMO ACtS nee es ade magenta meena amas 30 1. Object of the Uniform A Cts en 30 a) DANS ur aiaa eaa ET AE E E inne 31 G) Final Adoption ange et lu 32 3. Effects of the Uniform Acts on National Law... 33 4. Current Uniform Acts ann 36 5. Uniform Acts “in the Pipeline” „use. 37 H. ‚Regulatons..a..n. sans nn E ee E 40 E. Summary and Evaluation 4eme cae nn Nr caine: 41

Chapter 2: Basic Structure and Functioning of the Indirect Holding

System in the OHADA Region is wack cis lens 43 A. Development of Commercial Practices in the OHADA Region regarding the Holding of Securities... 43 1. Presentation of the Traditional Direct Holding System under QHADA Law. eb anne as 43 2. Advantages and Disadvantages of the Direct Holding SE COL RE sa ace 45 II. The Intermediated System under OHADA Law... 46 2. Regional and National Legislative Developments in Respect of the Law of Securities... 49 a) Status Quaestionis under OHADA Law... 49 (3) Dematerialisation of Securities... 52 b) The New Act on the Dematerialisation of Securities under the Law of Cameroon ss 52

(1) Presentation of the New Act on the

Contents XVII

B. Basic Structure of OHADA’s Indirect Holding System Compared Jz- "Introdsetion 2c nacre cite Re Se ahaa Lab ait abla ueh IL The Individual Ownership Model...

IHI. The Co-Ownership Modélisme dal LY... “The Trst Model. anal V. The Security Entitlement Modélisme VI: ThëCortractual Model una VII. Identifying the Investor: Transparent and Non-transparent SA AIS a a EP lee ee EEEE 1, Inroduchon ses ea el 2. Transparent Systems in Which the Holdings are Held in an ACCOUNT with theCSD aea ei Se nn ns Rs 3. Transparent Systems in Which the Holdings of the Investor are Identified in an Intermediary Account with the ESD. nn ran aeaa ES R a ei 4. Transparent Systems in Which an Investor’s Holdings are Held by an Intermediary in an Omnibus Account at the CSD 61 C. Summary and Evaliilien u.a kann

Part II — Reports on National, Regional, and International Substantive Law Rules in Respect of Security Interests in Intermediated Securities

Chapter 1: The Pledge of Securities Accounts under the OHADA Uniform Act on Security Interests...

A. Introduction: Relevance of the 2010 Revision of the Uniform Act on Security Interests rue B. Scope of Application of Articles 146 et seq of the Uniform Act on ECU Interests nenne etais I. Definition of the Pledge of Securities Accounts... 1. Limited Material Scope sccsiistzisdiatvesls porscstiatiaieitnscsnascs 2. Pledges of “Securities Accounts” rather than of “Intermediated Securities”...

II. Relationship between the Provisions of the Different Uniform Acts applying to the Pledge of Securities Accounts... 2. Prevalence of the Uniform Act on Security Interests...

XVIII Contents

2. Elements to Be Included in the Declaration establishing the PTS Gera veal se sl a) Date of the Dechiratiothis 6 un ae DD BASIS of the-Pledge os tests i ra a rain I. The Contents of the Securities Account... a) Financial Instruments recorded in the Pledged Securities ACCOUNT ee i a e a it nn bj. Inalienable Securities. ss aa en de c) Securities Whose Transfer is Subject to an Approval Clausenin oie nenn EEE NEON a E 2. The Certificate of Pledee.unce sata.

E. Evolution of the Pledged Securities Account...

Le SURO CC HOt users II. Inclusion of Products and Benefits deriving from the Pledged SECUMIICS ACCOMM ee Ne II. Substituted Securities. tices RNA AUS To ne ne

2. Sums of Money resulting from the Sale of Securities F. Right to Use the Intermediated Securities recorded in the Pledged

SÉCURITÉ ACCOMM su, iS L- Bisktof Verne za TE eco Saar GA ae a 1. Scope of the Right of Use under Article 151(1) First

2. Absence of Provisions in Respect of the Replacement of the Used Collateral Securities ee tt de en H Rightof Retentions: un a nach

2. The Relationship between the Right of Retention and the Right of Üse u... nee G. Realisation. of the Pledae: u... ea anna Rn Ie, WMO CC Oia Here ae es M Ori Noel es HR. Enforcement SSSR ere a ee a dd de ce

Contents XIX

3. Realisation by Appropriating the Intermediated Securities H. Summary and Eyahliation. a aussi

Chapter 2: Security Interests in Intermediated Securities under the

Geneva Securities CONVENTION randos wed ine eet A. Presentation of the Geneva Securities Convention... I. The Geneva Securities Convention...

II. Objectives and Guiding Principles of the Geneva Securities COTY CIES ee ce ne cn IH. Current Status of the Geneva Securities Convention... B. Scope of Application of Chapter V of the Geneva Securities CONSO SR Se NT uareaacscaenimerasiaeuewiceueaeete L: Jntrodüctiom RSS Pr cn a a A ar Pee Re LE: Personal Scope. ein MI: Material 8 00pE.\.a ans mate tn taie detail 1. Types öf Cortal ASE Te fa are TR ne 2 Relevant Oblioations „une ee I. History ofthe Provision in Article 32 ofthe Geneva Securities Convention, a nec enr cer pa Te II. Analysis of the Enforcement Provision in the Geneva Securities Convention. „nungen hassen 1. Overview of the Realisation Methods... 4: CAGSE-OUPINGTHING erlassen 5. Obstacles to the Realisation of the Collateral in Some Jurisdielonsn cheats E. Right to Use Collateral Securities under Article 34 ofthe Geneva SECUNUIES Conventio: nn ae dre De den 1. Use of Collateral Securities une area

XX Contents

I. General Overview and History of the Top-Up Rule in II. Analysis of Top-Up Rule in Article 36 of the Geneva SECULILIESCOHYENTTONG ee Reein tan 1. Rule Number 1: Top-Up 22 nn here 3) INDIE DD Nee TE T ATN b) The Situation provided in Article 36(1)(a)(i) of the Geneva Securities Convention... c) The Situation provided in Article 36(1)(a)(ii) of the Geneva Securities Convention... d) The Situation provided in Article 36(1)(a)(iii) of the Geneva Securities Convention. skin 2. Rule Number 2: Substitution. ass SO COPE of Protections ise area G. Summary and Evaluation. nana ans

Chapter 3: The EU Legislation on the Collateralisation of Intermediated Securities u.a inne hal

A. A Bird’s Eye View ofthe EU Legislative Framework on Intermediated Securities eee B. The Collateralisation of Intermediated Securities under the

Settlement Finality Dreeives.s ln anal II. System and Participants. ini dei ea II. ‘Collateral Transaction... nen ans

C. Collateral Agreements on Intermediated Securities under the

Financial Collateral Directive.. uses ass Li Preparatory Work sanieren 2. Adoption and Implementation 2.0.0.0... cece ccccsceceeeceeeeeentteeeeeees 3o Amendments;, rei ee Hi- Scope of Appheatien. res ann 1: Personal Cope cis, neun

a) History of the Provision in Article 1(2) of the Financial Collateral Directive aus Lois eden et ne te hia

b) Description of the Personal Scope of Application of the Directive sn er

Contents XXI 2, Material Scope. a. nn nasse 140 Vie ABACITOE ISERE RAS A ae RO eevee 148 1. The Right of Use throughout the Elaboration Process of 2. Description of the Right of Use under Article 5 of the Financial Collateral Directive shit yet 149 VI. Recognition of Title Transfer Financial Collateral Arrangements santa banale deal ea 150 IX. Top-Up and Substintionss nasse 153 D. Summary and Évaluations nes HE 155 Chapter 4: Collateralisation of Intermediated Securities under the Law in the United States... rise Sas ee 156 À, General OVEIVIEW en Te nn tentant ent ets E 156 1... Introduction. u ser 156 11,2 Historical Evolution u.a ne ee 157 1. History of UCG Article Saar 157 a) The 1962 Version of UCC Article 8... 157 b) The 1977 Version of UCC Article 8... 158 c) The 1994 Version of UCC Article 8... 167 2, Brief History of UCC Article I reale 169 a) Pre-Article 9 Law applying to Security in Personal Property. a E AAE an 169 b) The 1962 Version of UCC Article 9... 170 d) The 1994 Amendments to UCC Article 9... 172 e) The 1999 Official It re neh 172 B. Key Features of the Intermediated System in the US... 173 J; Inkodaection. ann 181 2: The Property Rights Aspect case 182 a) Pro Rata Property Interests. sans si ar ns at 182 3. Aspects of Personal Rights sn 185 Le TOC OR esses wit tect erento ana muir San rente 188 il? Attachment and Perfection. u en nee 189

XXII Contents

Part III — Conflict of Laws Analysis

Chapter 1: The lex rei sitae (lex cartae sitae) Rule in the OHADA

REGION ana at A ne Tee eae ai aaa A. General Overview of OHADA’s Private International Law... I. Lesser Importance of Conflict of Laws Issues in OHADA’s Legislative A@end a iiisss:0necceseissanasaiedaathaiacas staveavieeacsaniearaaaaaianes otsaaas II. Scarce Conflict of Laws Rules under OHADA Law...

Ill. Lack of Conflict of Laws Provisions regarding Intermediated Securities at the OHADA Level en Morte Re de ns

C:

The Law Applicable to Security Interests in Intermediated I. The lex rei sitae Rule under the Laws of the OHADA

Member States... nes rt a a ea II. Rejection of the lex rei sitae Rule and the “Look-Through

Approach une en nn Relier Summary and Evaluation. nasse

Chapter 2: The Place of the Relevant Intermediary Approach

(PRIMA) under European Law aa. RR Éd

A. Analysis of the EU PRIMA Rule a. an

B.

I. Contents of the EU PRIMA Rule... 1. First Variation of the Fact Pattern: Collateral Provider and

Collateral Taker Hold through the Same Intermediary and 2. Second Variation: Collateral Provider and Collateral Taker Hold through Different Intermediaries and Collateral Is Provided by way of Pledge an an Naar 3. Third Variation: Collateral Taker and Collateral Provider Hold through Different Intermediaries and Collateral Is 4. Fourth Variation: Collateral Provider Holds through Collateral Taker as Intermediary and Collateral Provided by. way of PIC Ge ae. aa ana user Evaluation of the EU PRIMA Rule...

Contents

IV. Uncertainty as to How Many Laws Apply in the Holding

Chain under PRIMA idee eee Vo. RENVOL Lien ee E E ENA lei Anl sn ns

VI. The Location of the Securities Account and European

Chapter 3: Conflict of Laws Rules for Intermediated Securities under the Uniform Commercial Codes ente A. Conflict of Laws Issues under UCC Article 8...

E- HNO CHOU Se südl II. Issues governed by the Applicable Law... 1. Issues governed by the Local Law of the Issuer’s Jurisdicnon Sys RS Ra nn ser 2. Issues governed by the Local Law of the Securities Intermediary’s Jurisdiction 12.4 22.

II. Determination of the “Securities Intermediary’s Jurisdiction” 1. roducfionn.e ade ak 2. Specification of the Securities Intermediary’s Jurisdiction by Agreement ee ee ehe 3. Additional Default Rules for Determining the Securities Intermediary sJanSdionsis cessent 4. Exclusion of Certain Connecting Factors...

B. Choice of Law Provisions concerning Security Interests in Security ITED ELC TING TUS ren rar re E. 2 General Rules Ser kassieren Hy Exceptions ar ne 2 nn D adore IT. Change in Law Governing Perfection...

C. Entry into Force of the Hague Securities Convention in the United State See nd ets ee I. Background and Applicability of the Hague Securities CONVENTION aaa 1. Signature and Ratification ua. 2. Implementing Lessons. a Rn

IH. Comparison of Hague Securities Convention and UCC

Choice of Law Rules... nennen

XXIV Contents

D. Summary and Evalüation. aueh res 255 Chapter 4: The Hague Securities Convention... 257 A. History of the Negotiations leading to the Hague Securities CONV CIO Tes Sea reas sees N E en ne 257 I. Focus Solely on Choice of Law Questions... 262 1. Article 2(1) of the Hague Securities Convention... 263 a) The Nature of the Last unse 263 b) Analysis of the Content of the List in Article 2(1) of (1) Legal Nature and Effects of Rights resulting from (2) Legal Nature and Effects of a Disposition... 268 (3) Perfection Requirements. gear 270 (4) Priority. ISSUES nee 271 (5) Duties of an Intermediary Against a Person Asserting a Competing Interest... 271 (6) RAS HOME ne nn asada 272

(7) Entitlements to Dividends, Income, or Other Distributions, or to Redemption, Sale, or Other

Proceeds a a i esc E AO a a a 272 IH. Limitations of the Scope of the Convention Solely to

Intermediated Securities nennen 212 1- Introduction. ass MN AN RMS 272 3. Contractual Claims ns nel 274 a) Introduction... 274

b) Disposition of an Interest in Securities in case of c) Exclusion of Purely Contractual or Otherwise Personal Rights between an Account Holder and its

Intermediary Inter Sen uud 276 4. Rights and Duties of an Issuer of Securities or of an

5. Relationship between Article 2(1), (2), and (3) ofthe Hague Securities Convention. „anne 277 IV; TANCE ATI OTA ICY es ER TR tr E a a en 278

V. Temporal Scope of Application of the Hague Securities CO TV CMON e: a eee e TR ne es 280

Contents XXV a) Entry into Force on the International Plane

Article IN Diese ass NI A nn muse, 280

(1) For the States Bringing the Hague Securities

(2) For Subsequent States and REIOs (Regional Economic Integration Organizations) under

Article OZ) ne es 283 2. Temporal Scope of Application and Pre-convention Br Article LG GL): ee nm Net 284 DI ATTICS LT ent 284 (1) Guidelines as to the Application of Articles 16(3) C (LS ee 284 (2) Declaration: Mechanismen ai] 285 MAMI Nessie 285 (1) Interpretative Rule. u.a 285 (2) Declaration Mechanism nn. san 285 dy- Article: 6A). un. nen 286 e) When the Applicable Law Is Not Determined using Article 16(3) or Article 16(4) 0... ceeesceessceeesneceseeeeeseeeeees 286 C. Applicable Law under the Hague Securities Convention... 287 I. Introduction: Determining the Applicable Law... 287 1 Operation msn 289 2. The “Law in Force” and the “Law of” a State... 291 6. The Qualifying Office Requirement}. ccs near 294 a) The Debate between the Common Law and the Civil Law Approaches) ua ui 294 b) The Conditions for a Qualifying Office... 295 c) Definition of the Term “Office” een 299 d): The Time Factora Na 299 e) The Qualifying Attivitya.aniansekshnenana 300 8. Explanatory Rules for Transfers by an Account Holder in favour of its Intermediary ars rear 301 II. Fall-Back Rules under Article 5 of the Hague Securities VORNE Tr At SR Ne es tees 302 1, LU RO LEE T6 a east 302

XXVI Contents a) “Written” Agreement „anne een b) Express and Unambiguous Statement in the Account Agreement as to a Particular Office... 5- The Page JT broblem Sn ee A nn ra ay Introduction... eana iaaa EAE EEEE AS €). “The Unitary Solition....nuescesuntenniin aan D. The Black List of Immaterial Factors...

IL- Scope ofthe PrONISION ae RO ON ieee ANS Ré Bee Ae M Old and NEW AN een akt Lh SCOPE: tannins dirt V. ‘Priority Issues: Article TO) een ae Be InsolveneV insel nenne 1; OCT ONE ra aa ue er st 2. Insolvency PIOCÉ MOST una Rens II. Recognition of Interests Acquired prior to an Insolvency PPO COCCI OS, antun Aus IH. Effects in an Insolvency Proceeding of Previously Acquired INeres ssl RE E E ras canal eat kd tastes and I. Public Policy Exception under Article 11(1) of the Hague D'ÉCOLE Convento sia aaa ne IH. An Important Limitation under Article 11(3) of the Hague Securities CONVERSE ana lei I. Evaluation of the Hague Securities Convention...

I. Protection of Third-Party Rights... t; Transpatetey Re 2; AbUSe anne ly INCE OCCT Ol euere ee ea eellas

2. Interaction of the Hague Securities Convention with Company Laws ner este eutectic

A.

Contents XXVII

3. Interaction of the Hague Securities Convention with

COMPILES DAMES RE Re Minglnaped A EE nn te 327 II. Relationship with Public Law... 329 SUR AIN sce Soa. A ee ne et el Ve ie ena Rok ee 330 Chapter 5: Alternative Conflict of Laws Rules and Connecting Fator ine sn ia ath ee en a ee 332 I. Regional Unification of Substantive Law in Respect of the Col- 1. Inefficiency of the Substantive Law Solution from a Purely Legal Perspectives anna Maier 334 2. Practical Difficulties resulting from the Substantive Law SOON RARE M M te NN un 334 Ehe Law GE the SV Steins ee tam nm di ea 338 I. Introduction to the Rule of the Law of the System... 338 II. Evaluation of the Law of the System Rule... 339 I. Towards Recognition of Party Autonomy in the Law of POP SR ee Re er ry nr ene One ET ere ee 340 1. “In Dubio pro Libertate”: Choice of Law in Current European Developments u.a aaa 340 2. Looking for Models for a Reform of International Property LAW AS NE UE Dade En ee 345 a) The Russian Civil Code u.a aha 345 b) The Dutch Private International Law Act... 346 II. Choice of Law in Collateral Agreements regarding Įntermediated Securities fac rear ee 348 1. Party Autonomy in Collateral Agreements regarding Intermediate U. Securities LR once eae eee 348 Summary and Evalaation Sein ns nt net alt ei 350