Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the law applicable to the third-party effects of assignments of claims
Date: 2018-03-12
Institutions: Directorate-General for Justice and Consumers, European Commission
Subjects: capital market, claim, commercial law, financial instrument, financial solvency, invoicing, principle of legal certainty, private international law

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   EUROPEAN COMMISSION  Brussels, 12.3.2018 COM(2018) 96 final 2018/0044 (COD)  Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the law applicable to the third-party effects of assignments of claims {SWD(2018) 52 final} - {SWD(2018) 53 final}  
 
 
EXPLANATORY MEMORANDUM 

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CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal 

The  Commission's  priority  is  to  further  strengthen  Europe's  economy  and  stimulate 
investment to create jobs and sustain growth. In order to reach this objective, there is a need 
for  stronger,  deeper  and  more  integrated  capital  markets.  Efficient  and  safe  post-trade 
infrastructures are key elements of such well-functioning capital markets. Following on from 
the 2015 Action Plan on Capital Markets Union (CMU), in May 2017 the Commission's Mid-
term  Review  set  out  the  remaining  actions  which  will  be  taken  to  put  in  place  the  building 
blocks  of  the  CMU  by  2019,  with  the  objective  of  removing  barriers  to  cross-border 
investment and lowering the costs of funding. Completing the CMU is an urgent priority. 

As  part  of  the  CMU  Action  Plan  and  the  Mid-Term  Review,  the  Commission  announced 
targeted  action  on  rules  on  the  ownership  of  securities  and  the  third-party  effects  of 
assignments  of  claims  to  reduce  legal  uncertainty  for  cross-border  transactions  in  securities 
and  claims.  This  proposal  and  the  Communication  on  the  law  applicable  to  the  proprietary 
effects  of  transactions  in  securities1,  presented  in  parallel,  implement  this  commitment.  The 
Communication clarifies the Commission's views on important aspects of the existing Union 
acquis with regard to the law applicable to the proprietary effects of transactions in securities 
and accompanies this legislative proposal on the third-party effects of assignments of claims. 
Matters  governed  by  the  Financial  Collateral  Directive2,  the  Settlement  Finality  Directive3, 
the  Winding-up  Directive4  and  the  Registry  Regulation5  are  not  affected  by  this  legislative 
proposal6. 

The general objective of this proposal is, in line with the objectives of the CMU Action Plan, 
to foster cross-border investment in the EU and, thereby, facilitate access to finance for firms, 
including SMEs, and consumers. The specific objective of this proposal is to help to increase 
cross-border  transactions  in  claims  by  providing  legal  certainty  through  the  adoption  of 
uniform conflict of laws rules at Union level.  

Indeed,  in  order  to  increase  cross-border  transactions  in  claims  and  securities,  clarity  and 
predictability as to which country's law applies to determine who owns a claim or a security 
after  a  cross-border  transaction  are  essential.  Legal  uncertainty  as  to  which  national  law 
determines who owns an asset further to a cross-border transaction means that, depending on 
which  Member  State's  courts  or  authorities  assess  a  dispute  concerning  the  ownership  of  a 

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COM (2018) 89. 
Directive  2002/47/EC  of  the  European  Parliament  and  of  the  Council  of  6  June  2002  on  financial 
collateral arrangements, OJ L 168, 27.6.2002, p. 43–50. 
Directive  98/26/EC  of  the  European  Parliament  and  of  the  Council  of  19  May  1998  on  settlement 
finality in payment and securities settlement systems, OJ L 166, 11.6.1998, p. 45–50. 
Directive  2001/24/EC  of  the  European  Parliament  and  of  the  Council  of  4  April  2001  on  the 
reorganisation and winding up of credit institutions, OJ L 125, 5.5.2001, p. 15–23. 
Commission Regulation (EU) No 389/2013 of 2 May 2013 establishing a Union Registry pursuant to 
Directive 2003/87/EC of the European Parliament and of the Council, Decisions No 280/2004/EC and 
No 406/2009/EC of the European Parliament and of the Council and repealing Commission Regulations 
(EU) No 920/2010 and No 1193/2011, OJ L 122, 3.5.2013, p. 1–59. 
See  Article  9(1)  and  (2)  of  the  Financial  Collateral  Directive  (FCD),  Article  9(2)  of  the  Settlement 
Finality Directive (SFD) and Article 24 of the Winding-Up Directive (WUD). While the FCD and the 
SFD  refer  to  book-entry  securities,  the  WUD  refers  to  instruments  the  existence  or  transfer  of  which 
presupposes the recording in a register, account or centralised deposit system (WUD). 

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claim  or  a  security,  the  cross-border  transaction  may  or  may  not  confer  the  expected  legal 
title.  In  case  of  insolvency,  when  the  questions  of  ownership  and  enforceability  of  rights 
resulting from cross-border transactions are put under judicial scrutiny, legal risks stemming 
from legal uncertainty may result in unexpected losses. 

The  uniform  rules  laid  down  in  this  proposal  will  designate  which  national  law  should 
determine  the  ownership  of  a  claim  after  it  has  been  assigned  on  a  cross-border  basis  and, 
thereby,  eliminate  legal  risk  and  potential  systemic  consequences.  The  introduction  of  legal 
certainty  will  promote  cross-border  investment,  access  to  cheaper  credit  and  market 
integration.  

The  assignment  of  claims  is  a  mechanism  used  by  companies  to  obtain  liquidity  and  have 
access to credit, as in factoring and collateralisation, and by banks and companies to optimise 
the use of their capital, as in securitisation. 

Factoring  is  a  crucial  source  of  liquidity  for  many  firms.  In  factoring,  a  company  (the 
assignor, most often an SME) assigns (sells) its receivables to a factor (the assignee, often a 
bank) at a discount price as a means for the assignor to obtain immediate cash. The factor will 
collect  the  money  owed  for  the  invoices  and  accept  the  risk  of  bad  debts.  The  majority  of 
users of factoring are SMEs: Small represent 76%, Medium 11% and Large 13%. Factoring 
for SMEs is thus regarded by the industry as a basis for economic growth, as SMEs may find 
sourcing  traditional  lending  more  challenging7.  Europe  as  a  region  is  the  largest  factoring 
market world-wide and represents 66% of the world market8. 

Example of factoring  

An SME C needs immediate cash to pay its suppliers. The invoices to its customers are 
only  due  for  payment  in  three  months.  SME  C  (assignor)  decides  to  assign  (sell)  its 
invoices  to  a  factor  (assignee),  bank  B,  at  a  discount  price  in  order  to  obtain  immediate 
cash from B. The discount price at which SME C sells its invoices to B account for B's 
fees and commission. 

In collateralisation, claims such as cash credited to a bank account (where the customer is the 
creditor  and  the  bank  is  the  debtor)  or  credit  claims  (that  is,  bank  loans)  can  be  used  as 
financial collateral to secure a loan agreement (for example, a consumer can use cash credited 
to a bank account as collateral to obtain credit, and a bank can use a credit loan as collateral to 
obtain  credit).  The  collateralisation  of  credit  claims  for  the  financial  industry  is  very 
important. About 22% of the Eurosystem9 refinancing operations are secured by credit claims 
as collateral10. 

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Factoring and Commercial Finance: A Whitepaper, p. 20, by The EU Federation for the Factoring and 
Commercial Finance Industry (EUF). 
Factoring in Europe as a region amounted to EUR 1,566 billion in 2015. The top European markets are 
the UK, France, Germany, Italy and Spain. The global factoring market was EUR 2,373 billion in 2015. 
Source: Factors Chain International FCI. 
The  Eurosystem  is  composed  of  the  European  Central  Bank  and  the  national  central  banks  of  the 
Member States which have adopted the euro. 
About  22%  of  the  Eurosystem  refinancing  operations  are  secured  by  credit  claims  as  collateral, 
amounting to some EUR 380 billion as at Q2 2017, of which about EUR 100 billion represented credit 
claims mobilised on a cross-border basis. Overall, the Eurosystem had mobilised some EUR 450 billion 
in cross-border collateral as at end-June 2017. 

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Example of collateralisation 

An  SME  C  (assignor)  wants  to  get  a  loan  from  bank  A  (assignee)  to  build  a  bigger 
warehouse, using the claims it has against its customers as collateral (or security). If SME 
C goes bankrupt and cannot pay the credit back, bank A (the collateral taker) will be able 
to recover its debt by enforcing the claims that SME C had against its customers.  

Securitisation enables the assignor, called  ‘originatorʼ (for example, a company or a bank) to 
refinance  a  set  of  its  claims  (for  example,  motor  vehicle  rents,  credit  card  receivables, 
mortgage loan payments) by assigning them to a ‘special purpose vehicle’ (SPV). The special 
purpose  vehicle  (assignee)  then  issues  debt  securities  (for  example,  bonds)  in  the  capital 
markets  reflecting  the  proceeds  from  these  claims.  As  payments  are  made  under  the 
underlying claims, the special purpose vehicle uses the proceeds it receives to make payments 
on  the  securities  to  the  investors.  Securitisation  can  lower  the  cost  of  financing  because  the 
special  purpose  vehicle  is  structured  in  such  a  way  as  to  make  it  insolvency-remote.  For 
companies,  securitisation  can  provide  access  to  credit  at  lower  cost  than  bank  loans.  For 
banks, securitisation is a way to put some of their assets to better use and free up their balance 
sheets  to  allow  for  further  lending  to  the  economy11.  As  part  of  the  Capital  Markets  Union 
Action  Plan,  the  Union  has  adopted  legislation  to  promote  a  safe  and  liquid  market  for 
securitisation.  These  rules  aim  to  re-establish  a  safe  securitisation  market  in  the  EU  by 
differentiating simple, transparent and standardised securitisation products from more opaque 
and costly ones. For all types of securitisation, legal certainty about who owns the assigned 
claim is crucial.  

Example of securitisation  

A large retail chain C (assignor) assigns its receivables arising from the use by customers 
of its in-house credit card to a special purpose vehicle A (assignee)12. A then issues debt 
securities  to  investors  in  the  capital  markets.  These  debt  securities  are  secured  by  the 
income stream flowing from the credit card receivables that have been assigned to A. As 
payments  are  made  under  the  receivables,  A  will  use  the  proceeds  it  receives  to  make 
payments on the debt securities. 

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The market volume of securitisation issuance was EUR 237.6 billion within the EU in 2016, with EUR 
1.27 trillion outstanding at the end of 2016 - AFME Securitisation Data Report Q4 2016. 
This example is an adaptation of the illustration used in the UNCITRAL Legislative Guide on Secured 
Transactions, pp. 16-17.   

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Why is legal certainty important? 

Ensuring the acquisition of legal title over the assigned claim is important for the assignee (for 
example,  a  factor,  a  collateral  taker  or  an  originator)  as  third  parties  could  claim  legal  title 
over the same claim. This would give rise to a priority conflict, that is, a situation in which it 
would need to be determined which of the two rights, the right of the assignee or the right of 
the  competing  claimant,  should  prevail.  A  priority  conflict  between  the  assignee  of  the 
claim(s) and a third party can arise in essentially two situations: 

if  a  claim  has  been  assigned  twice  (accidentally  or  not)  by  the  assignor  to  different 
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assignees, a second assignee could claim legal title over the same claim. The law applicable to 
the  third-party  effects  of  the assignment  of  claims  will  resolve  the  priority  conflict between 
the two assignees of the same claim; 

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in case the assignor becomes insolvent, the creditors of the assignor will want to know 
whether or not the assigned claim still forms part of the insolvency estate, that is, whether or 
not the assignment was effective and thus the assignee has acquired legal title over the claim. 
The  law  applicable  to  the  third-party  effects  of  the  assignment  of  claims  will  resolve  the 
priority conflict between the assignee and the creditors of the assignor. 

In  purely  domestic  assignments  of  claims,  it  is  clear  that  national  substantive  law  will 
determine  the  third-party  (or  proprietary)  effects  of  the  assignment  of  claims,  that  is,  which 
requirements must be met by the assignee in order to ensure that he acquires legal title over 
the  assigned  claims  in  case  a  priority  conflict  should  arise.  However,  in  a  cross-border 
scenario, several national laws can potentially apply and assignees need clarity as to which of 
such laws they must observe in order to acquire legal title over the assigned claims. 

Legal risk 

The  applicable  law,  that  is,  the  national  law  that  applies  to  a  given  situation  with  a  cross-
border  element,  is  determined  by  conflict  of  laws  rules.  In  the  absence  of  uniform  Union 
conflict of laws rules, the applicable law is determined by national conflict of laws rules.  

Conflict  of  laws  rules  on  the  third-party  effects  of  assignments  of  claims  are  currently  laid 
down at Member State level. Member States' conflict of laws rules are inconsistent as they are 
based  on  different  connecting  factors  to  determine  the  applicable  law:  for  example,  the 
conflict  rules  of  Spain  and  Poland  are  based  on  the  law  of  the  assigned  claim,  the  conflict 
rules of Belgium and France are based on the law of the assignor's habitual residence and the 
conflict  rules  of  the  Netherlands  are  based  on  the  law  of  the  assignment  contract.  National 
conflict of laws rules are also unclear, in particular where they are not laid down in statutory 
law. 

Inconsistency  in  Member  States’  conflict  of  laws  rules  means  that  Member  States  may 
designate the law of different countries as the law that should govern the third-party effects of 
the assignment of claims. This lack of legal certainty as to which national law applies to third-
party effects creates a legal risk in cross-border assignments which does not exist in domestic 
assignments. Faced with this legal risk, an assignee may react in three different ways:  

(i) 
if  the  assignee  is  not  aware  of  the  legal  risk  or  chooses  to  ignore  it,  it  may  end  up 
facing unexpected financial losses if a priority conflict arises and it loses legal title over the 
assigned claims. The legal risk stemming from the legal uncertainty as to who owns a claim 
further to a cross-border assignment emerged during the 2008 financial crisis, for example in 

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the  Lehman  Brothers  International  (Europe)  collapse,  where  the  inquiry  into  the  legal 
ownership  of  assets  is  still  ongoing  today13.  Uncertainty  about  the  ownership  of  claims  can 
thus have knock-on effects and deepen and prolong the impact of a financial crisis;  

(ii) 
if the assignee decides to mitigate the legal risk by seeking specific legal advice as to 
which  national  laws  can  potentially  apply  to  the  third-party  effects  of  the  cross-border 
assignment and comply with the requirements under all such laws to ensure legal title over the 
claims assigned, it will incur higher transaction costs of between 25% and 60%14 which are 
not required for domestic assignments;  

(iii) 
if  the  assignee  is  deterred  by  the  legal  risk  and  chooses  to  avoid  it,  it  may  forego 
business opportunities and market integration may be reduced. Given the current absence of 
common  conflict  of  laws  rules  regarding  the  third-party  effects  of  assignments  of  claims, 
assignments of claims are mainly done on a national rather than on a cross-border basis: for 
example, the dominant type of factoring is domestic and, in 2016, it represented around 78% 
of total turnover15. 

If the assignee decides to carry out the assignment, the inconsistency between Member States’ 
conflict  of laws rules  means that  the outcome of a priority conflict  as  to who owns a  claim 
further to a cross-border assignment will vary depending on the national law applied by the 
Member  State's  court  or  authority  assessing  the  dispute.  Depending  on  the  national  law 
applied,  the  cross-border  assignment  may  or  may  not  confer  the  expected  legal  title  on 
claimants.  

Added value of uniform rules 

Currently,  uniform  Union  conflict  of  laws  rules  determine  the  law  applicable  to  the 
contractual  obligations  of  transactions  in  claims  and  securities.  In  particular,  the  Rome  I 
Regulation16 determines the law applicable to the contractual relationships between the parties 
to an assignment of claims (between the assignor and the assignee and between the assignee 
and the debtor) and between the creditor/assignor and the debtor. The Rome I Regulation also 
determines the law applicable to the contractual relationship between the seller and the buyer 
in transactions in securities.  

Uniform  Union  conflict  of  laws  rules  also  determine  the  law  applicable  to  the  proprietary 
effects  of  transactions  in  book-entry  securities  and  instruments  the  existence  or  transfer  of 
which presupposes their recording in a register, an account or a centralised deposit system in 
three Directives, namely the Financial Collateral Directive, the Settlement Finality Directive 
and the Winding-Up Directive. However, no uniform Union conflict of laws rules have been 
adopted  on  the  law  applicable  to  the  proprietary  effects  of  assignments  of  claims.  This 
proposed Regulation aims at filling this gap.  

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See 

Joint  Administrators  of  Lehman  Brothers  International  Europe  (LBIE),  Fifteenth  Progress  Report, 
12.4.2016. 
http://www.pwc.co.uk/services/business-recovery/administrations/lehman/lehman-
brothers-international-europe-in-administration-joint-administrators-15th-progress-report-12-april-
2016.html   
See the responses to Question 23 of the public consultation by the EU Federation for the Factoring and 
Commercial Finance Industry (EUF); the French Banking Federation (France); the Asset Based Finance 
Association Limited (ABFA) (UK).  
The EU Federation for the Factoring and Commercial Finance Industry - EUF Yearbook, 2016-2017, p. 
13. 
Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the 
law applicable to contractual obligations (Rome I),  OJ L 177, 4.7.2008, p. 6–16. 

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The common conflict of laws rules laid down in the proposed Regulation provide that, as a 
general rule, the law of the country where the assignor has its habitual residence will govern 
the third-party effects of assignments of claims. However, the proposed Regulation also lays 
down exceptions which subject certain assignments to the law of the assigned claim where the 
general  rule  would  not  be  suitable  and  also  a  choice  of  law  possibility  for  securitisations 
aimed at expanding the securitisation market. 

The  adoption  of  uniform  conflict  of  laws  rules  at  Union  level  on  the  third-party  effects  of 
assignments of claims will bring significant added value to financial markets.  

First, the legal certainty brought by the uniform rules will enable assignees to comply with the 
requirements of only one national law to ensure the acquisition of legal title over the assigned 
claims.  This  legal  certainty  will  eliminate  the  legal  risk  currently  linked  to  cross-border 
assignments of claims in terms of unexpected losses and possible knock-on effects, increased 
transaction costs, missed business opportunities and reduced market integration. The uniform 
conflict of laws rules laid down, in particular, for securitisation, recognise the practice of large 
operators of applying the law of the assigned claim to the third-party effects of assignments of 
claims  but  aim,  at  the  same  time,  at  enabling  smaller  operators  to  enter  or  strengthen  their 
presence in the securitisation market by subjecting the third-party effects of their assignments 
to  the  law  of  the  assignor’s  habitual  residence.  The  flexibility  in  the  conflict  of  laws  rules 
applicable to securitisation will facilitate the expansion of the securitisation market with new 
market entrants and the creation of new business opportunities. 

Second, the uniformity of the conflict of laws rules among Member States will ensure that the 
same  national  law  will  apply  to  resolve  any  priority  conflict  which  arises  between  the 
assignee  and  a  competing  claimant  regardless  of  which  Member  State’s  court  or  authority 
examines the dispute. 

The introduction of legal certainty will in this way promote cross-border investment, which is 
the ultimate goal of this proposed Regulation pursuant to the Capital Markets Union Action 
Plan.  

What is a claim? 

A  claim  is  the  right  of  a  creditor  against  a  debtor  to  the  payment  of  a  sum  of  money  (for 
example, receivables) or the performance of an obligation (for example, delivery obligation of 
the underlying assets under derivative contracts).  

Claims may be classified in three categories: 

(i) 
The first category would cover 'traditional claims' or receivables, such as money to be 
received for unsettled transactions (for example, money to be received by a company from a 
customer for unpaid invoices). 

Financial  instruments  as  defined  in  MiFID  II17  include  securities  and  derivatives 
(ii) 
traded  on  financial  markets.  While  securities  are  assets,  derivatives  are  contracts  which 
include  both  rights  (or  claims)  and  obligations  for  the  parties  to  the  contract.  The  second 
category of claims would be claims arising from financial instruments (sometimes referred to 

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Financial  instruments  are  listed  in  Section  C  of  Annex  1  of  MiFID  II,  Directive  2014/65/EU  of  the 
European  Parliament  and  of  the  Council  of  15  May  2014  on  markets  in  financial  instruments  and 
amending Directive 2002/92/EC and Directive 2011/61/EU, OJ L 173, 12.6.2014, p. 349–496. 

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as  'financial  claims'),  such  as  claims  arising  from  derivative  contracts  (for  example,  the 
amount due after the calculation of the close-out in a derivative contract).  

(iii) 
The  third  category  of  claims  would  be  cash  credited  to  an  account  in  a  credit 
institution  (such  as  a  bank),  where  the  account  holder  (for  example,  a  consumer)  is  the 
creditor and the credit institution is the debtor. 

This proposal concerns the third-party (or proprietary) effects of the assignment of the above-
mentioned  claims.  It  does  not  cover  the  transfer  of  the  contracts  (for  example  derivative 
contracts),  in  which  both  rights  (or  claims)  and  obligations  are  included,  or  the  novation  of 
contracts including such rights and obligations. As this proposal does not cover the transfer or 
the  novation  of  contracts,  trading  in  financial  instruments,  as  well  as  the  clearing  and  the 
settlement  of  these  instruments,  will  continue  to  be  governed  by  the  law  applicable  to 
contractual obligations as laid down in the Rome I Regulation. This law is normally chosen 
by the parties to the contract or is designated by non-discretionary rules applicable to financial 
markets. 

Claims arising from financial instruments as defined in MiFID II, such as claims arising from 
derivative contracts, are relevant for the proper functioning of financial markets. Similarly to 
securities, trade in financial instruments such as derivatives generates large volumes of cross-
border transactions. Financial instruments such as derivatives are often recorded in book-entry 
form. 

The form of recording the existence or transfer of financial instruments such as derivatives, 
whether in book-entry form or otherwise, is governed by Member State law. In some Member 
States  certain  kinds  of  derivatives  are  recorded  in  book-entry  form  and  are  regarded  as 
securities  while,  in  other  Member  States,  they  are  not.  Depending  on  whether  or  not,  under 
national  law,  a  financial  instrument  such  as  a  derivative  contract  is  recorded  in  book-entry 
form and regarded as a security, the authority or court dealing with a dispute as to who has 
legal title over the financial instrument or over the claim arising from that financial instrument 
will  apply  the  conflict  of  laws  rule  on  the  proprietary  effects  of  the  transfer  of  book-entry 
securities or the conflict of laws rule on the proprietary effects of the assignment of claims. 

This proposal concerns conflict of laws rules on the third-party effects of the assignment of 
'traditional claims', 'financial claims' (that is, claims arising from financial instruments such as 
derivatives not recorded in book-entry form and not regarded as securities under national law) 
and ‘cash credited to a credit institution’, all of which are referred to as 'claims'.  

The third-party effects of transactions in financial instruments such as derivatives recorded in 
book-entry form and regarded as securities under national law are governed by the conflict of 
laws  rules  applicable  to  the  proprietary  effects  of  transactions  in  book-entry  securities  and 
instruments  the  existence  or  transfer  of  which  presupposes  their  recording  in  a  register,  an 
account  or  a  centralised  deposit  system  laid  down,  in  particular,  in  the  Financial  Collateral 
Directive, the Settlement Finality Directive and the Winding-Up Directive. The scope of the 
conflict of laws rules in this proposal and the scope of the conflict of laws rules in these three 
Directives do not therefore overlap as the former apply to claims and the latter apply to book-
entry securities and instruments the existence or transfer of which presupposes their recording 
in a register, an account or a centralised deposit system18. The three Directives are clarified by 

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See  Article  9(1)  and  (2)  of  the  Financial  Collateral  Directive  (FCD),  Article  9(2)  of  the  Settlement 
Finality Directive (SFD) and Article 24 of the Winding-Up Directive (WUD). While the FCD and the 

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the  Communication  on  the  law  applicable  to  the  proprietary  effects  of  transactions  in 
securities adopted today. 

What is the assignment of a claim? 

In  an  assignment  of  a  claim,  a  creditor  ("assignor")  transfers  his  right  to  a  claim  against  a 
debtor to another person ("assignee").  

Clarity  as  to  who  owns  a  claim  further  to  its  cross-border  assignment  is  relevant  for 
participants in financial markets and also for the real economy. This is because the assignment 
of claims is often used by firms as a mechanism to obtain liquidity or access to credit.  

In  factoring,  for  example,  a  company  (the  assignor)  sells  its  claims  at  a  discount  price  to  a 
factor (the assignee), often a bank, in exchange for immediate cash. The majority of factoring 
users are SMEs (87%)19.  

The assignment of claims is also used by consumers, companies and banks to have access to 
credit, for example in collateralisation. In collateralisation, claims such as cash credited to a 
bank account or credit claims (that is, bank loans) can be used as financial collateral to secure 
a  loan  agreement  (for  example,  a  consumer  can  use  cash  credited  to  a  bank  account  as 
collateral to obtain credit, and a bank can use a credit loan as collateral to obtain credit).  

Finally, the assignment of claims is also used by companies and banks to borrow money from 
capital markets through the assignment of multiple similar claims to a special purpose vehicle 
and the subsequent securitisation of such claims as debt securities (for example, bonds). 

19 

SFD  refer  to  book-entry  securities,  the  WUD  refers  to  instruments  the  existence  or  transfer  of  which 
presupposes the recording in a register, account or centralised deposit system (WUD). 
Factoring and Commercial Finance: A Whitepaper, p. 20, by The EU Federation for the Factoring and 
Commercial Finance Industry (EUF).  

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8 

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The stakeholders directly affected by the legal risk in cross-border transactions in claims are 
borrowers  (retail  customers  and  companies,  including  SMEs),  financial  institutions  (such  as 
banks  engaged 
lending,  factoring,  collateralisation  and  securitisation),  financial 
intermediaries that transact in claims and end investors (funds, retail investors). 

in 

Development of the conflict of laws rules on assignments of claims 

With the increasing interconnectivity of national markets, assignments of claims often involve 
a  cross-border  element  (for  example,  the  assignor  and  the  assignee,  or  the  assignee  and  the 
debtor, are located in different countries). The laws of several countries can thus potentially 
apply  to  the  assignment.  Conflict  of  laws  rules  laid  down  at  Union  or  Member  State  level 
must  determine  which  national  law  applies  to  the  various  elements  of  a  cross-border 
assignment of claims. 

Conflict  of  laws  rules  on  cross-border  assignments  of  claims  concern  two  elements:  (1)  the 
contractual element,  which  refers to  the  parties’  obligations  towards  each  other;  and  (2)  the 
proprietary element, which refers to the transfer of property rights over the claim and which 
can therefore affect third parties. 

The Rome I Regulation on the law applicable to contractual obligations  harmonised conflict 
of  laws  rules  at  Union  level  with  regard  to  the  contractual  elements  of  the  assignment  of 
claims.  The  Regulation  thus  contains  uniform  conflict  of  laws  rules  with  regard  to  (i)  the 
relationship between the parties to the assignment contract - the assignor and the assignee20, 
and (ii) the relationship between the assignee and the debtor21. The conflict of laws rules of 
the  Rome  I  Regulation  also  apply  to  the  relationship  between  the  original  creditor  (the 
assignor) and the debtor22.  

In contrast, there are no conflict of laws rules at Union level with regard to the proprietary 
elements  of  the  assignment  of  claims.  The  proprietary  elements  or  third-party  effects  of  an 
assignment  of  claims  refer  in  general  to  who  has  ownership  rights  over  a  claim  and,  in 
particular, to: (i) which requirements must be fulfilled by the assignee in order to ensure that 
he  acquires  legal  title  over  the  claim  after  the  assignment  (for  example,  registration  of  the 
assignment in a public register, written notification of the assignment to the debtor), and (ii) 
how to resolve priority conflicts, that is, conflicts between several competing claimants as to 
who  owns  the  claim  after  a  cross-border  assignment  (for  example,  between  two  assignees 
where the same claim has been assigned twice, or between an assignee and a creditor of the 
assignor). 

The question of which law should govern the third-party effects of assignments of claims was 
first  considered  when  the  1980  Rome  Convention  was  being  converted  into  the  Rome  I 
Regulation23 and then during the legislative negotiations leading to the adoption of the Rome I 
Regulation.  The  Commission  proposal  for  the  Rome  I  Regulation  chose  the  law  of  the 
assignor's  habitual  residence  as  the  law  that  should  apply  to  the  third-party  effects  of  the 
assignment  of  claims24.  Ultimately,  no  conflict  of  laws  rule  on  the  third-party  effects  of 

20 
21 
22 
23 

24 

Article 14(1) of the Rome I Regulation.  
Article 14(2) of the Rome I Regulation. 
Articles 2 and 3 of the Rome I Regulation. 
Question  18  of  the  Green  paper  on  the  conversion  of  the  Rome  Convention  of  1980  on  the  law 
applicable to contractual obligations into a Community instrument and its modernisation,  COM(2002) 
654 final, p. 39–41. 
Art.  13(3)  of  the  Proposal  for  a  Regulation  of  the  European  Parliament  and  the  Council  on  the  law 
applicable to contractual obligations (Rome I), COM(2005) 650 final. 

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assignments was included in the Regulation25 due to the complexity of the matter and the lack 
of time to deal with it in the required level of detail.  

However,  Article  27(2)  of  the  Rome  I  Regulation  acknowledged  the  significance  of  this 
unresolved  issue  by  requiring  the  Commission  to  present  a  report  on  the  question  of  the 
effectiveness of assignments of claims against third parties accompanied, if appropriate, by a 
proposal  to  amend  the  Regulation26.  To  this  end,  the  Commission  contracted  an  external 
study27  and,  in  2016,  adopted  a  report  presenting  possible  approaches  to  the  matter28.  In  its 
report, the Commission noted that the absence of uniform conflict of laws rules determining 
which law governs the effectiveness of an assignment of a claim against third parties and the 
questions  of  priority  between  competing  claimants  undermines  legal  certainty,  creates 
practical problems and results in increased legal costs29.  

• 

Consistency with existing policy provisions in the policy area 

This  proposal  complies  with  the  requirement  laid  down  in  Article  27(2)  of  the  Rome  I 
Regulation that the Commission should publish a report and, if appropriate, a proposal on the 
effectiveness of an assignment of a claim against third parties and the priority of the assignee 
over  the  right  of  another  person.  The  proposal  harmonises  conflict  of  laws  rules  on  these 
issues as well as the scope of the applicable law, that is, the matters that should be governed 
by the national law designated as applicable by the proposal. 

The  proposal  is  consistent  with  existing  Union  instruments  on  applicable  law  in  civil  and 
commercial matters, in particular with the Rome I Regulation as regards the claims covered 
by the scope of the two instruments. 
The  proposal  is  also  consistent  with  the  Insolvency  Regulation30  as  regards  the  connecting 
factor  which  designates  the  law  applicable  to  insolvency  proceedings.  The  law  of  the 
assignor’s habitual residence chosen by the proposal as the law applicable to the third-party 
effects  of  assignments  of  claims  coincides  with  the  law  applicable  to  the  insolvency  of  the 
assignor  as,  under  the  Insolvency  Regulation,  the  main  insolvency  proceedings  must  be 
opened in the Member State where the debtor has its centre of main interests (COMI). Most 
questions relating to the effectiveness of the assignments of claims made by the assignor arise 
in case of the assignor’s insolvency. The insolvency estate of the assignor will vary depending 
on whether or not the legal title of assigned claims has been transferred to the assignee and 
thus  on  whether  or  not  the  assignment  of  claims  made  by  the  assignor  can  be  regarded  as 
effective  against  third  parties  (for  example,  its  creditors).  Subjecting  priority  issues  and  the 
effectiveness  of  the  assignments  of  claims  against  third  parties,  such  as  the  creditors  of  the 
assignor, to the same law that governs the assignor’s insolvency is intended to facilitate the 
resolution of the assignor’s insolvency.  

25 

26 
27 

28 

29 
30 

Cf. Article 13(3) of Proposal for a Regulation of the European Parliament and of Council on the law 
applicable to contractual obligations, COM(2005) 650 final and Article 14 of the Rome I Regulation.  
Article 27(2) of the Rome I Regulation. 
British Institute of International and Comparative Law (BIICL), Study on the question of effectiveness 
of  an  assignment  or  subrogation  of  a  claim  against  third  parties  and  the  priority  of  the  assigned  or 
subrogated claim over a right of another person, 2011 (‘BIICL Studyʼ). 
Report from the Commission to the European Parliament, the Council and the European Economic and 
Social  Committee  on  the  question  of  the  effectiveness  of  an  assignment  or  subrogation  of  a  claim 
against  third  parties  and  the  priority  of  the  assigned  or  subrogated  claim  over  the  right  of  another 
person, COM(2016) 626 final (‘Commission Reportʼ).  
Commission Report, p. 12.  
Regulation  (EU)  2015/848  of  the  European  Parliament  and  of  the  Council  of  20  May  2015  on 
insolvency proceedings, OJ L 141, 5.6.2015, p. 19–72. 

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• 

Consistency with other Union policies 

The aims of the initiative are coherent with Union policies on financial market regulation.  

To  facilitate  cross-border  investment,  the  Capital  Markets  Union  Action  Plan  envisages 
targeted  action  on  rules  on  the  ownership  of  securities  and  the  third-party  effects  of 
assignments of claims. The Action Plan further specifies that the Commission should propose 
a  legislative  initiative  to  determine  with  legal  certainty  which  national  law  should  apply  to 
securities ownership and the third-party effects of the assignment of claims.  

By reducing the legal uncertainty that may discourage cross-border assignments of claims or 
lead to additional costs for those transactions, this proposal will contribute to the objective of 
encouraging  cross-border  investment.  By  reducing  the  losses  that  might  occur  when  market 
participants are not aware of the legal risk stemming  from legal uncertainty, the proposal is 
fully  consistent  with  the  objective  of  investor  protection  set  out  in  a  number  of  Union 
financial market regulations. Finally, by harmonising conflict of laws rules on the third-party 
effects of assignments of claims, the proposal will provide legal certainty to parties involved 
in  factoring,  collateralisation  and  securitisation  and  thereby  facilitate  access  to  cheaper 
finance for SMEs and consumers. 

In  accordance  with  the  Capital  Markets  Union  Action  Plan,  this  proposal  on  claims  is 
complemented by a non-legislative initiative on the law applicable to the proprietary effects of 
transactions in securities. Currently, conflict of laws rules on the proprietary effects of cross-
border  transactions  in  securities  are  laid  down  in  the  Financial  Collateral  Directive,  the 
Settlement  Finality  Directive  and  the  Winding-Up  Directive.  As  indicated,  the  scope  of  the 
conflict of laws rules in this proposal and the scope of the conflict of laws rules in these three 
Directives  do  not  overlap  as  the  former  apply  to  claims  and  the  latter  apply  to  book-entry 
securities and instruments the existence or transfer of which presupposes their recording in a 
register, an account or a centralised deposit system31. 

Although uniform conflict of laws rules have been adopted in respect of securities in the three 
above-mentioned Directives, these rules do not use identical wording and are interpreted and 
applied differently in Member States. 

The Impact Assessment carried out in relation to both claims and securities showed that the 
total  absence  of  common  conflict  of  laws  rules  regarding  the  proprietary  effects  of 
assignments of claims is one of the factors that results in assignments of claims being made 
on  a  national  rather  than  on  a  cross-border  basis.  In  contrast,  with  regard  to  transactions  in 
securities,  the  residual  legal  uncertainty  resulting  from  the  different  interpretations  of  the 
existing  Directives  does  not  appear  to  hinder  the  development  of  substantial  cross-border 
markets.  This,  together  with  the  little  tangible  evidence  of  material  risk  in  respect  of 
securities, supported the choice of a non-legislative initiative as the preferred policy option for 
securities. 

In short, the main difference between the areas of claims and securities is that, while there is a 
complete  absence  of  EU  conflict  of  laws  rules  on  the  proprietary  effects  of  assignments  of 
claims  which  implies  a  need  for  a  legislative  measure  to  remove  the  legal  risk  from  cross-

31 

See  Article  9(1)  and  (2)  of  the  Financial  Collateral  Directive  (FCD),  Article  9(2)  of  the  Settlement 
Finality Directive (SFD) and Article 24 of the Winding-Up Directive (WUD). While the FCD and the 
SFD  refer  to  book-entry  securities,  the  WUD  refers  to  instruments  the  existence  or  transfer  of  which 
presupposes the recording in a register, an account or a centralised deposit system (WUD). 

EN 

11 

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border  assignments  of  claims,  three  Directives  already  include  conflict  of  laws  rules  on  the 
proprietary effects of transactions in securities which, even if not uniformly worded, require 
only the adoption of soft law measures. 

2. 

• 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

The  legal  basis  of  the  proposal  is  Article  81(2)(c)  TFEU  which,  in  the  area  of  judicial 
cooperation  in  civil  matters  having  cross-border  implications,  specifically  empowers  the 
Parliament  and  the  Council  to  adopt  measures  aimed  at  ensuring  “the  compatibility  of  the 
rules applicable in the Member States concerning conflict of laws (…)." 

By  reason  of  Protocol  No  22  to  the  TFEU,  legal  measures  adopted  in  the  area  of  freedom, 
security and justice, such as rules on conflict of laws, do not bind or apply in Denmark. By 
reason  of  Protocol  No  21  to  the  TFEU,  the  UK  and  Ireland  are  also  not  bound  by  such 
measures. However, once a proposal has been presented in this area, these Member States can 
notify  their  wish  to  take  part  in  the  adoption  and  application  of  the  measure  and,  once  the 
measure has been adopted, they can notify their wish to accept that measure. 

• 

Subsidiarity  

The current legal uncertainty and the legal risk stemming therefrom are caused by divergent 
Member  State  substantive  rules  governing  the  third-party  effects  of  assignments  of  claims. 
Member States acting individually could not satisfactorily remove the legal risk and barriers 
to cross-border assignments of claims as national rules and procedures would need to be the 
same or at least compatible in order to work in a cross-border situation. Action at Union level 
is  needed  to  ensure  that,  throughout  the  Union,  the  same  law  is  designated  as  the  law 
applicable  to  the  third-party  effects  of  assignments  of  claims  regardless  of  which  Member 
State’s courts or authorities assess a dispute on the ownership of an assigned claim. 

• 

Proportionality 

Currently,  each  Member  States  has  (i)  its  own  substantive  rules  governing  the  third-party 
effects  of  assignments  of  claims,  and  (ii)  its  own  conflict  of  laws  rules  designating  which 
national substantive law governs such third-party effects. Both  the  substantive rules and the 
conflict  of  laws  rules  of  the  Member  States  are  different  and,  in  a  number  of  cases,  the 
conflict of laws rules are unclear or not laid down in statutory legislation. These divergences 
create legal uncertainty which results in legal risk, as the substantive laws of various countries 
can potentially apply to one cross-border assignment.  

In order to provide legal certainty, the EU could propose to (i) harmonise the substantive rules 
of  all  Member  States  governing  the  third-party  effects  of  assignments  of  claims,  or  (ii) 
harmonise  the  conflict  of  laws  rules  applicable  to  the  third-party  effects  of  assignments  of 
claims.  The  solution  proposed  is  to  provide  legal  certainty  through  the  harmonisation  of 
conflict  of  laws  rules.  This  is  a  more  proportionate  solution  in  line  with  the  subsidiarity 
principle as it does not interfere with national substantive law and only applies to assignments 
of claims with a cross-border element.  

Such action relating to the third-party effects of assignment of claims is suitable to achieve the 
objective  of  providing  legal  certainty  and  removing  the  legal  risk  from  cross-border 

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12 

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assignments  of  claims,  thereby  facilitating  cross-border  investment,  access  to  cheaper  credit 
and market integration, without going beyond what is necessary to achieve the aim. 

• 

Choice of the instrument 

The desired uniformity of the conflict of laws rules can only be achieved through a Regulation 
as only a Regulation ensures a fully consistent interpretation and application of the rules. In 
line with previous Union instruments on conflict of laws rules, the preferred legal instrument 
is thus a Regulation. 

3. 

• 

RESULTS  OF  STAKEHOLDER  CONSULTATIONS  AND 
ASSESSMENT 

IMPACT 

Stakeholder consultations and collection and use of expertise 

The  Commission  actively  engaged  with  stakeholders  and  conducted  comprehensive 
consultations  throughout  the  impact  assessment  process.  The  consultation  strategy  set  out  a 
number  of  actions  to  be  organised  by  the  Commission,  in  particular  an  on-line  public 
consultation; two meetings with Member State experts, one with experts on conflicts of laws 
and  another  with  experts  on  financial  markets;  and  a  high-level  Expert  Group  composed  of 
academics,  legal  practitioners and industry  members  with  expertise on both  conflict of laws 
rules and financial markets. The consultation strategy also included a study contracted by the 
Commission  and  conducted  by  the  British  Institute  of  International  and  Comparative  Law 
(BIICL) on the question of the effectiveness of assignments of claims against third parties and 
priority conflicts between competing claimants. The Inception Impact Assessment, published 
on 28 February 2017, received no feedback from stakeholders. 

The study contracted by the Commission showed that the laws most commonly applied today 
to resolve conflicts of laws concerning the third-party effects of assignments of claims are the 
law  of  the  assignor's  habitual  residence  (for  example,  Belgium,  France,  Luxembourg  in 
respect of securitisation), the law governing the assigned claim (for example, Spain, Poland) 
and  the  law  of  the  contract  between  the  assignor  and  the  assignee  (for  example,  the 
Netherlands).  

The on-line public consultation opened on 7 April 2017 and closed on 30 June 2017, which 
complies with the standard of a minimum of 12 weeks for Commission public consultations. 
The objective of the public consultation was to receive input from all stakeholders concerned, 
in  particular  those  involved  in  factoring,  securitisation,  collateralisation  and  trading  of 
financial instruments, as well as from legal practitioners and experts on conflict of laws rules 
on the third-party effects of assignments of claims.  

The  Commission  received  39  responses  to  the  public  consultation.  Among  the  respondents 
were 5 governments, 15 industry associations, 4 companies, 2 law firms, 2 think tanks and 5 
private individuals. From the financial sector, the interests of banks, fund managers, regulated 
markets, central counterparties (CCPs), central security depositories (CSDs), securities issuers 
and investors were represented. No replies were received from consumer organisations. 

In  terms  of  geographical  coverage,  responses  came  from  different  Member  States:  13 
responses  from  stakeholders  located  in  the  UK,  9  responses  from  France  and  Belgium,  3 
responses  from  Germany  and  the  Netherlands,  2  responses  from  Spain,  1  response  from 
Finland, 1 response from the Czech Republic and 1 response from Sweden.  

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In  general,  when  stakeholders  were  asked  whether,  in  the  previous  five  years,  they  had 
encountered  difficulties  in  securing  the  effectiveness  of  cross-border  assignments  of  claims 
against  third  parties  other  than  the  debtor,  more  than  two  thirds  of  the  stakeholders  that 
responded stated that they had encountered difficulties. Out of the stakeholders that responded 
to the question whether Union action would bring added value in addressing the difficulties 
encountered, 59% answered positively and 22% responded negatively.  

Regarding the law that should be chosen in a Union legislative initiative, stakeholders were 
asked  to  indicate  their  preferences  in  three  separate  questions.  Out  of  the  stakeholders  that 
responded to each of the three separate questions, 57% of stakeholders favoured the law of the 
assignor’s habitual residence, 43% favoured the law of the assigned claim and 30% preferred 
the  law  of  the  assignment  contract.  Some  respondents  based  their  replies  on  the  conflict  of 
laws rules applicable in their Member State, while others based their replies on the law that 
they apply in their current practice.   

In  support  of  the  assignor's  habitual  residence,  stakeholders  argued  that  this  law  can  be 
determined  easily,  would  provide  greater  legal  certainty  and  respect  more  than  any  other 
solution the economic logic of important trade practices. Stakeholders that supported the law 
of the assigned claim argued that this law would respect the principle of party autonomy and 
potentially lower transaction costs.  

• 

Impact assessment 

The options analysed in the Impact Assessment are the following: 

 Option 1:  Law applicable to the assignment contract 

Under  this  connecting  factor,  the  law  that  governs  the  contract  of  assignment  between  the 
assignor  and  the  assignee  would  also  govern  the  proprietary  effects  of  the  assignment  of 
claims. The assignor and the assignee can choose any law to govern their assignment contract. 

 Option 2: Law of the assignor's habitual residence 

Under  this  connecting  factor,  the  third-party  effects  of  the  assignment  of  claims  would  be 
governed by the law of the country in which the assignor has its habitual residence.   

 Option 3: Law governing the assigned claim 

Under  this  connecting  factor,  the  third-party  effects  of  the  assignment  of  claims  would  be 
governed by the law that governs the assigned claim, that is, the credit in the original contract 
between the creditor and the debtor which is subsequently assigned by the creditor (assignor) 
to a new creditor (assignee). The parties to the original contract can choose any law to govern 
the contract which includes the claim subsequently assigned. 

 Option 4: Mixed approach combining the law of the assignor’s habitual residence and 
the law of the assigned claim  

This mixed option combines the application of the law of the assignor's habitual residence as 
a  general  rule  and  the  application  of  the  law  of  the  assigned  claim  to  certain  exceptions, 
namely (i) the assignment of cash credited to an account in a credit institution (for example a 
bank, where the consumer is the creditor and the credit institution is the debtor), and (ii) the 
assignment of claims arising from financial instruments. This mixed option also lays down the 

EN 

14 

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possibility for the assignor and the assignee to choose the law of the assigned claim to apply 
to the third-party effects of assignments in the context of a securitisation. The possibility for 
parties  in  a  securitisation  to  remain  subject  to  the  general  rule  based  on  the  law  of  the 
assignor’s habitual residence or choose the law of the assigned claim aims at catering for the 
needs of both large and smaller securitisation operators. 

 Option 5: Mixed approach combining the law of the assigned claim and the law of the 
assignor’s habitual residence  

This mixed option combines the application of the law of the assigned claim as a general rule 
and  the  application,  as  an  exception,  of  the  law  of  the  assignor's  habitual  residence  to  the 
assignment  of  multiple  and  future  claims.  Under  this  option,  the  third-party  effects  of  the 
assignment  of  trade  receivables  by  a  non-financial  company  (for  example,  an  SME)  in  the 
context of factoring would remain subject to the law of the assignor’s habitual residence. The 
third-party effects of the assignment of multiple claims by a financial company (for example, 
a  bank)  in  the  context  of  securitisation  would  also  be  subject  to  the  law  of  the  assignor’s 
habitual residence. 

This proposal is based on option 4, which chooses the law of the assignor's habitual residence 
as  a  general  rule  but  with  certain  assignments  subject,  as  an  exception,  to  the  law  of  the 
assigned claim and with a choice of law possibility for securitisation. Given that the proposal 
does not deal with relationships between the parties to a contract but with the rights of third 
parties,  applying  the  law  of  the  assignor’s  habitual  residence  as  a  general  rule  is  the  most 
suitable option because:  

- 
it is the only law that can be predicted and easily found by third parties concerned by 
the  assignment,  such  as  the  creditors  of  the  assignor.  In  contrast,  the  law  that  governs  the 
assigned  claim  and  the  law  that  governs  the  contract  of  assignment  cannot  be  predicted  by 
third parties as such laws are most of the times chosen by the parties to the contract;  

- 
in the case of bulk assignments of claims, it is the only law that responds to the needs 
of  factors  and  smaller  operators  of  securitisation,  who  are  not  always  equipped  to  check 
ownership  requirements  under  the  various  countries'  laws  which  govern  the  various  claims 
assigned in the bundle; 

it  is  the  only  law  that  makes  possible  the  determination  of  the  applicable  law  when 

- 
future claims are assigned, a common practice in factoring; 

it is the only law which is consistent with the Union acquis on insolvency, that is, the 
- 
Insolvency  Regulation.  The  application  of  the  same  law  to  the  third-party  effects  of 
assignments  of  claims  and  to  insolvency  facilitates  the  resolution  of  the  assignor’s 
insolvency32; 

- 
it is the only law which is consistent with the international solution enshrined in the 
2001  United  Nations  Convention  on  the  Assignment  of  Receivables  in  International  Trade. 
This  can  create  synergies  and  save  legal  due  diligence  and  litigation  costs  for  market 
participants who operate on a global basis.  

32 

For example, the French Banking Federation (FBF) states in its response to the public consultation that, 
as part of due diligence, French banks typically check the law applicable to the assignor’s insolvency, 

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In addition, even when, currently, the parties choose to apply the law of the assigned claim to 
the third-party effects of their cross-border assignment, most of the times they also look at the 
law of the assignor's habitual residence to make sure that the acquisition of legal title over the 
claims  assigned  will  not  be  prevented  by  overriding  mandatory  rules  of  the  country  of  the 
assignor's habitual residence, in particular the rules laying down publicity requirements such 
as the obligation to register the assignment of claims in a public register to make it known and 
effective towards third parties33.  

On the other hand, the mixed nature of this option provides for an exception based on the law 
of the assigned claim to apply to certain specific assignments, namely the assignment of cash 
credited  to  an  account  in  a  credit  institution  and  the  assignment  of  claims  arising  from 
financial instruments, which accommodates the needs of market participants in these specific 
areas.  This  mixed  option  offers  additional  flexibility  by  laying  down  the  possibility  for  the 
assignor  and  the  assignee  in  the  assignment  of  claims  in  a  securitisation  to  choose  the  law 
applicable to the third-party effects of the assignment, thereby enabling both large and smaller 
operators to engage in cross-border securitisations. 

A  joint  Impact  Assessment  report  covering  both  the  law  applicable  to  the  ownership  of 
securities  and  the  law  applicable  to  the  third-party  effects  of  assignments  of  claims  was 
submitted to the Regulatory Scrutiny Board (RSB) on 8 November 2017. The RSB issued a 
negative opinion on the impact assessment and made a number of common recommendations 
for improvements. With regard to claims, the RSB asked for more detailed information on the 
options  that  were  being  considered  as  to  the  law  applicable  to  the  third-party  effects  of 
assignments of claims. The impact assessment was revised and resubmitted to the RSB on 18 
January 2018. On 1 February 2018 the RSB issued a positive opinion with reservations. With 
regard  to  claims,  the  RSB  recommended  that  more  information  be  provided  on  the  one-off 
costs that some market participants would incur as a result of the adoption of uniform conflict 
of laws rules. The recommendations for improvement were taken into account in the impact 
assessment to the extent possible.   

• 

Fundamental rights 

The objectives of this initiative fully support the right to property enshrined in Article 17 of 
the Charter of Fundamental Rights of the European Union34. By clarifying which law governs 
the proprietary effects of assignments of claims, this proposal would contribute to upholding 
the right to property as it would diminish the risk that the ownership of investors or collateral 
takers over claims might be hindered. 

By reducing cases of fall-outs and financial losses due to the absence of uniform provisions 
on the law applicable to the proprietary effects of assignments of claims, this proposal would 
positively impact the freedom to conduct a business set out in Article 16 of the Charter. 

By harmonising the conflict of laws rules on the proprietary effects of assignments of claims, 
this  proposal  would  discourage  forum  shopping  as  any  Member  State’s  court  or  authority 
hearing a dispute would base its judgement on the same national substantive law. This would 
facilitate the right to an effective remedy set out in Article 47 of the Charter. 

33 

34 

For example, the German Banking Industry Committee states in its response to the public consultation 
that,  in  securitisation  transactions,  parties  need  to  check  notice  or  registration  requirements.  The 
Association  for  Financial  Markets  in  Europe  (AFME)  states  in  its  response  that  parties  must  check 
whether the assignment will be effective under the law of the assignor. 
Charter of the Fundamental Rights of the European Union, OJ C 326 of 26/10/2012, p. 391. 

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4. 

BUDGETARY IMPLICATIONS 

The proposal will have no impact on the Union budget. 

5. 

• 

OTHER ELEMENTS 

Implementation plans and monitoring, evaluation and reporting arrangements 

The Commission will monitor the impact of the proposed initiative by way of a questionnaire 
sent to key stakeholders. The questionnaire will aim at gathering information on trends in the 
number of cross-border assignments, trends in due diligence costs further to the adoption of a 
uniform conflict of laws rule, and the one-off costs related to changes in legal documentation. 
The impact of the proposed solution will be evaluated in a report prepared by the Commission 
five years after the date of application of the proposed instrument.  

The monitoring of the impact of the adoption of a uniform conflict of laws rule will cover the 
areas  of  factoring,  collateralisation,  securitisation  and  the  specific  assignments  of  cash 
credited  to  an  account  in  a  credit  institution  and  the  assignment  of  claims  arising  from 
financial instruments such as derivative contracts.  

The analysis will take into account that the volume of assignments, the transaction costs and 
the nature of hidden risks in cross-border assignments of claims are influenced by a number of 
different  economic,  legal  or  regulatory  factors  unrelated  to  legal  certainty  on  the  law 
applicable to the third-party effects of such assignments.  

• 

Detailed explanation of the specific provisions of the proposal 

Article 1: 

Scope 

This article defines the scope of the proposed Regulation taking into account existing Union 
legislation and, in particular, the scope of the Rome I Regulation.   

Article  1(2)  contains  a  list  of  exclusions  from  the  scope  of  the  proposed  Regulation.  These 
matters will be governed either by existing Union legislation or by national conflict of laws 
rules.  

Article 2: 

Definitions 

This  article  first  defines  the  main  concepts  on  which  the  proposed  Regulation  is  based, 
namely  “assignment”,  “claim”  and  “third-party  effects”.  The  definition  of  “assignment”  is 
aligned with that contained in the Rome I Regulation. It refers only to a voluntary transfer of a 
claim, including contractual subrogation. It covers both outright transfers of a claim and also 
the transfer of a claim as collateral or security.  

The  definition  of  “claim”  in  the  proposed  Regulation  codifies  the  general  understanding  of 
what a claim is under the Rome I Regulation, namely a broad concept referring to a debt of 
whatever nature, whether monetary or non-monetary, and whether arising from a contractual 
obligation  governed  by  the  Rome  I  Regulation  or  a  non-contractual  obligation  governed  by 
the Rome II Regulation. The definition of “third-party effects” is determined by the material 
scope of the proposed Regulation. 

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The article defines “habitual residence” in line with the definition contained in Article 19(1) 
of the Rome I Regulation, that is, as the place of central administration for companies and as 
the  principal  place  of  business  for  a  natural  person  acting  in  the  course  of  his  business 
activity.  The  proposed  Regulation  does  not  include  a  definition  of  habitual  residence 
equivalent to the definition contained in Article 19(2) of the Rome I Regulation, that is, as the 
place of location of a branch, because of the uncertainty that such a rule would create if the 
same claim was assigned by the assignor’s central management and also by the management 
of a branch located in a different country. 

The concept of “habitual residence” will generally coincide with  the centre of main interest 
(COMI) used in the Insolvency Regulation.  

The article defines “credit institution” in accordance with Union legislation governing credit 
institutions;  “cash”  in  accordance  with  the  Financial  Collateral  Directive;  and  “financial 
instrument” in accordance with MiFID II. 

Article 3: 

Universal application 

This article establishes the universal character of the proposed Regulation by providing that 
the  national  law  designated  as  applicable  by  the  proposed  Regulation  can  be  the  law  of  a 
Member State or the law of a third country.  

Article 4: 

Applicable law  

This  article  provides  for  uniform  conflict  of  laws  rules  on  the  third-party  effects  of  the 
assignment of claims. The article lays down in paragraph 1 a general rule based on the law of 
the  assignor’s  habitual  residence,  two  exceptions  in  paragraph  2  based  on  the  law  of  the 
assigned  claim  and,  in  paragraph  3,  a  possibility  for  the  assignor  and  the  assignee  in  a 
securitisation to choose the law of the assigned claim as the law applicable to the third-party 
effects  of  the  assignment.  A  rule  applicable  to  priority  conflicts  between  assignees  arising 
from the application of the law of the assignor's habitual residence and the law of the assigned 
claim  to  the  third-party  effects  of  two  assignments  of  the  same  claim  is  laid  down  in 
paragraph 4. 

According to the general rule, the law that governs the third-party effects of assignments of 
claims is the law of the country where the assignor has its habitual residence at the material 
time.  

The article also deals, in the second subparagraph of paragraph 1, with  the so-called  conflit 
mobile, that is, the rare occurrence in which the assignor changes habitual residence between 
two assignments of the same claim as, in such cases, competing assignments could be subject 
to different national laws. The rule on conflit mobile provides that the applicable law will be 
the law of the assignor's habitual residence at the time at which one of the two assignments 
first becomes  effective against  third parties; in  other  words, at the time  at which one of the 
assignees  first  completes  the  requirements  to  make  the  assignment  effective  against  third 
parties.  

When, as in the case of a syndicated loan (a loan offered by a group of lenders - referred to as 
a syndicate - to a single borrower for large projects), each creditor within a group of creditors 
owns a share of the same claim, the law of the assignor’s habitual residence will govern the 
third-party effects of an assignment made by a creditor of his own share of the claim. 

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Paragraph 2 of the article provides that the third-party effects of certain assignments are, as an 
exception, subject to the law of the assigned claim. The law of the assigned claim refers to the 
law that governs the contract between the original creditor/assignor and the debtor from which 
the  claim  arises.  With  this  exception  the  proposed  Regulation  lays  down  a  conflict  of  laws 
rule which adapts to the needs of market participants involved in these specific assignments. 
The assignments whose third-party effects are subject to the law of the assigned claim are: (i) 
the assignment of cash credited to an account in a credit institution; and (ii) the assignment of 
claims arising from financial instruments.  

On the first exception: Where an account holder (for example, a consumer) places cash in an 
account  in  a  credit  institution  (for example,  a  bank),  there is  an  initial  contract  between  the 
account holder (the creditor) and the credit institution (the debtor). The account holder is the 
creditor  of  a  claim  against  the  credit  institution,  the  debtor,  for  the  payment  of  the  cash 
credited to the account in the credit institution. An account holder may wish to assign the cash 
credited to his account in a credit institution to another credit institution as security to obtain 
credit. In such cases, the law that will govern who has ownership title over the claim once the 
cash  has  been  assigned  as  collateral  will  not  be  the  law  of  the  habitual  residence  of  the 
account holder (the assignor) but the law that governs the assigned claim, that is, the law that 
governs the contract between the account holder and the first credit institution from which the 
claim  arises.  For  third  parties  such  as  creditors  of  the  assignor  and  competing  assignees, 
greater  predictability  is  provided  if  the  law  applicable  to  the  third-party  effects  of  the 
assignment of the cash credited to an account in a credit institution is the law applicable to the 
cash claim. This is because it is generally assumed that the claim that an account holder has 
over cash credited to an account in a credit institution is governed by the law of the country 
where  the  credit  institution  is  located.  This  law  is  normally  chosen  in  the  account  contract 
between the account holder and the credit institution. 

As  to  the  second  exception:  The  third-party  effects  of  assignments  of  claims  arising  from 
financial instruments, such as derivative contracts, should be subject to the law governing the 
assigned  claim,  that  is,  the  law  governing  the  financial  instrument  such  as  the  derivative 
contract. A claim arising from a financial instrument could be, for example, the amount due 
after the calculation of the close-out in a derivative contract. Subjecting the third-party effects 
of assignments of claims arising from financial instruments to the law of the assigned claim 
rather than the law of the assignor’s habitual residence is essential to preserve the stability and 
smooth  functioning  of  financial  markets  as  well  as  the  expectations  of  market  participants. 
These  are  preserved  as  the  law  that  governs  the  financial  instrument  from  which  the  claim 
arises, such as a derivative contract, is the law chosen by the parties or the law determined in 
accordance with non-discretionary rules applicable to financial markets. 

The  third  paragraph  of  the  article  deals  with  the  law  applicable  to  the  third-party  effects  of 
assignments of claims pursuant to a securitisation. Securitisation enables the assignor, called  
‘originatorʼ (for example, a bank or a company) to refinance a set of its claims (for example, 
motor vehicle rents, credit card receivables, mortgage loan payments) by assigning them to a 
‘special  purpose  vehicleʼ  (SPV).  The  special  purpose  vehicle  (assignee)  then  issues  debt 
securities  (for  example,  bonds)  in  the  capital  markets  reflecting  the  proceeds  from  these 
claims. As payments are made under the underlying claims, the special purpose vehicle uses 
the proceeds it receives to make payments on the securities to the investors. Securitisation can 
lower the cost of financing because the special purpose vehicle is structured in such a way as 
to  make  it  insolvency-remote.  For  corporates,  securitisation  can  provide  access  to  credit  at 
lower cost than bank loans. For banks, securitisation is a way to put some of their assets to 
better use and free up their balance sheets to allow for further lending to the economy. 

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Currently, large assignors and assignees (for example, large banks) involved in securitisations 
apply the law of the assigned claim to the third-party effects of the assignment. This means 
that the assignee (the special purpose vehicle) will need to comply with the requirements laid 
down  in  the  law  that  governs  the  assigned  claims  (that  is,  the  contract  between  the  original 
creditor/assignor and the debtor) to ensure that it acquires legal title over the assigned claims. 
This  reduces  costs  for  operators  that  are  able  to  structure  their  securitisations  such  that  all 
claims included in the package to be assigned to the special purpose vehicle are subject to the 
law  of  one  same  country.  The  special  purpose  vehicle  must  then  comply  with  the 
requirements laid down in the law of only one country to ensure that it acquires legal title over 
the bundle of assigned claims. Given that large operators often carry out securitisations on a 
cross-border  basis,  that  is,  with  the  originators  being  located  in  different  Member  States, 
applying  the  law  of  the  assignor’s  habitual  residence  to  the  third-party  effects  of  the 
assignment of claims in these cases would be more cumbersome for the assignee as it would 
need to comply with the requirements laid down in the laws of various countries, that is, the 
laws of each of the countries where an originator is located.  

In contrast, smaller operators (for example, smaller banks and corporates) most often need to 
apply the law of the assignor’s habitual residence to the third-party effects of the assignment 
of claims in a securitisation because the claims included in the package to be assigned to the 
special purpose vehicle are governed by the laws of different countries. In such cases, smaller 
assignees  could  not  apply  the  law  of  the  assigned  claim  to  the  third-party  effects  of  the 
assignment  as  they  would  not  be  equipped  to  comply  with  the  requirements  to  obtain  legal 
title over the assigned claims under each of the laws governing each of the claims included in 
the package. Instead, it is easier for smaller assignees to comply with the requirements under 
only one law, namely the law of the assignor’s habitual residence.  

In short, by providing for a choice of law, paragraph 3 of this article aims at not affecting the 
current  practice  of  large  banks  of  applying  the  law  of  the  assigned  claim  to  the  third-party 
effects of assignments in securitisations where the assigned claims are all subject to the same 
country's  law  but  the  assignors  (originators)  are  located  in  various  Member  States.  At  the 
same time, paragraph 3 aims at making it possible for smaller banks and corporates to enter or 
strengthen their position on the securitisation market by being able to become the assignees of 
multiple claims subject to different countries' laws. 

In any event, the flexibility offered by paragraph 3 enables securitisation operators to decide 
for each securitisation whether to choose the law of the assigned claim or remain subject to 
the  general  rule  based  on  the  law  of  the  assignor’s  habitual  residence  depending  on  the 
structure of their securitisation, in particular on whether the assigned claims are subject to the 
law of one or various countries, and on whether there is one or more originators and they are 
located  in  one  or  various  countries. Paragraph  4  of  this  article  lays  down  a  conflict  of  laws 
rule  to  resolve  priority  conflicts  between  assignees  of  the  same  claim  when  the  third-party 
effects of the assignment of the claim have been subject to the law of the assigned claim in 
one assignment and to the law of the assignor’s habitual residence in another assignment. This 
situation can occur (normally accidentally and in no particular order) in case a claim has been 
first assigned in factoring, collateralisation or a (first) securitisation in which no choice of law 
has been made and, subsequently, in a (second) securitisation in which the parties chose the 
law  of  the  assigned  claim  as  the  law  applicable  to  the  third-party  effects  of the assignment. 
The  third-party  effects  of  assignments  of  claims  in  factoring,  collateralisation  or  a  (first) 
securitisation in which no choice of law has been made would all be subject to the law of the 
assignor’s habitual residence. In contrast, the third-party effects of assignments of claims in a 
(second) securitisation where the parties chose the law of the assigned claim would be subject 

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to the law of the assigned claim. The proposed Regulation provides for an objective factor to 
determine which law should apply to resolve the priority conflict between assignees: the law 
that should apply would be the law applicable to the third-party effects of the assignment of 
claims which first became effective against third parties under its applicable law. This rule is 
consistent with the rule applicable to conflit mobile under paragraph 1 of this article and, like 
that  rule,  is  based  on  the  time  at  which  the  assignment  of  claims  first  becomes  effective 
against third parties because the proposed Regulation concerns third-party effects. 

Article 5: 

Scope of the applicable law  

This article harmonises a non-exhaustive list of issues that should be governed by the national 
substantive law designated as the law applicable to the third-party effects of the assignments 
of claims. This article therefore spells out the content of the concept “third-party effects” (or 
proprietary effects) of the assignment of claims. In general, the applicable law will determine 
who has acquired legal title over the assigned claim. In particular, the applicable law should 
govern two main issues in order to determine whether a person has acquired legal title over 
the assigned claim:  

(i) 
the effectiveness of the assignment of the claim against third parties: that is, the steps 
that  need  to  be  taken  by  the  assignee  in  order  to  be  able  to  assert  his  right  over  the  claim 
towards  third  parties  –  for  example,  registering  the  assignment  with  a  public  authority  or 
registry, or notifying the debtor in writing of the assignment; and  

(ii) 
priority issues: that is, the determination of whose right has priority in cases of conflict 
between  competing  claimants  –  for  example,  between  competing  assignees  when  the  same 
claim has been assigned more than once, or between an assignee and another right-holder, for 
example a creditor of the assignor or the assignee in insolvency cases.  

The  term  ‘third  parties’  should  be  understood  as  third  parties  other  than  the  debtor,  as  all 
aspects affecting the debtor are, pursuant to Article 14(2) of the Rome I Regulation, governed 
by the law of the assigned claim (that is, the law that governs the original contract from which 
the assigned claim arises).  

The modalities  for the creation of rights  and the transfer  of rights may  vary under the legal 
orders  of  the  Member  States.  Given  that  the  proposed  Regulation  has  a  universal  character 
and can therefore designate as the law applicable to the third-party effects of assignments of 
claims the law of any country, the proposed Regulation aims at covering a variety of possible 
priority  conflicts  between  competing  claimants.  The  proposed  Regulation  covers  priority 
conflicts arising not only from assignments of claims (for example, between two assignees of 
the same claim) but also from legally or functionally equivalent mechanisms, in particular the 
transfer of a contract and the novation of a contract, which can be used to pass on a contract 
and  thus  both  the  rights  (the  claim)  and  obligations  arising  from  that  contract.  The  law 
designated as applicable by the proposed Regulation should therefore govern not only priority 
conflicts between competing assignees but also priority conflicts between an assignee and a 
competing  claimant  who  has  become  the  beneficiary  of  a  claim  further  to  the  transfer  of  a 
contract  or  the  novation  of  a  contract.  It  should  be  stressed  that  the  proposal  does  not 
designate  the  law  applicable  to  the  transfer  of  contracts  or  the  novation  of  contracts  (for 
example,  the  law  applicable  to  the  novation  of  derivative  contracts),  but  only  the  law 
applicable to possible priority conflicts over a claim first assigned and then transferred again 
(the same claim or the economically equivalent claim) by means of a transfer of contract or a 
novation  of contract. If the proposed Regulation did  not  cover priority conflicts between  an 
assignee and a beneficiary of a claim further to the transfer of a contract or the novation of a 
contract,  a  situation  of  legal  uncertainty  could  arise  whereby  both  an  assignee  and  the 

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competing  beneficiary  of  the  claim  further  to  the  transfer  or  novation  of  a  contract  would 
require payment from the debtor and no common conflict of laws rule could apply to resolve 
that conflict. 

Article 6: 

Overriding mandatory provisions / Article 7: Public policy 

These  articles  provide  for  possibilities  to  apply  the  law  of  the  forum  instead  of  the  law 
designated as  the applicable law  by Article 4. Overriding mandatory  provisions could  refer, 
for example, to the obligation to register the assignment of claims in a public registry. 

Articles 8 to 12: 

General issues of application of conflict of laws rules 

These  articles  deal  with  general  issues  of  application  of  conflict  of  laws  rules  in  line  with 
other Union instruments on applicable law, in particular the Rome I Regulation.  

Article 10: 

Relationship with other provisions of Union law 

This article aims at safeguarding the application of lex specialis laying down conflict of laws 
rules  on  the  third-party  effects  of  assignments  of  claims  in  relation  to  particular  matters.

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2018/0044 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on the law applicable to the third-party effects of assignments of claims 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 81(2) thereof, 

Having regard to the proposal from the European Commission, 

After transmission of the draft legislative act to the national parliaments, 

Having regard to the opinion of the European Economic and Social Committee35, 

Acting in accordance with the ordinary legislative procedure, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

The  Union  has  set  itself  the  objective  of  maintaining  and  developing  an  area  of 
freedom,  security  and  justice.  For  the  progressive  establishment  of  such  an  area,  the 
Union  is  to  adopt  measures  relating  to  judicial  cooperation  in  civil  matters  having 
cross-border  implications  to  the  extent  necessary  for  the  proper  functioning  of  the 
internal market. 

Pursuant  to  Article  81  of  the  Treaty,  these  measures  are  to  include  those  aimed  at 
ensuring the compatibility of the rules applicable in the Member States concerning the 
conflict of laws. 

The  proper  functioning  of  the  internal  market  requires,  in  order  to  improve  the 
predictability  of  the  outcome  of  litigation,  certainty  as  to  the  law  applicable  and  the 
free  movement  of  judgments,  for  the  conflict  of  law  rules  in  the  Member  States  to 
designate as the applicable law the same national law irrespective of the Member State 
of the court in which an action is brought. 

Regulation  (EC)  No  593/2008  of  the  European  Parliament  and  of  the  Council  of  17 
June 2008 on the law applicable to contractual obligations (Rome I) does not cover the 
questions of third-party effects of assignment of claims. However, Article 27(2) of that 
Regulation  required  the  Commission  to  submit  to  the  European  Parliament,  the 
Council and the European Economic and Social Committee a report on the question of 
the effectiveness of an assignment or subrogation of a claim against third parties and 
the priority of the assigned or subrogated claim over a right of another person which 
should be accompanied, if appropriate, by a proposal to amend that Regulation and an 
assessment of the impact of the provisions to be introduced. 

35 

OJ C , , p. . 

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(5) 

(6) 

(7) 

(8) 

(9) 

36 
37 
38 
39 

40 

41 

42 

On 18  February  2015 the Commission  adopted a  Green  Paper on Building a Capital 
Markets Union36 which stated that achieving greater legal certainty in cases of cross-
border  transfer  of  claims  and  the  order  of  priority  of  such  transfers,  particularly  in 
cases  of  insolvency,  is  an  important  aspect  in  developing  a  pan-European  market  in 
securitisation and financial collateral arrangements, and also of other activities such as 
factoring. 

On  30  September  2015  the  Commission  adopted  a  Communication  with  an  Action 
Plan on Building a Capital Markets Union37. This Capital Markets Union Action Plan 
noted that differences in the national treatment of third-party effects of assignment of 
debt  claims  complicate  the  use  of  these  instruments  as  cross-border  collateral, 
concluding  that  this  legal  uncertainty  frustrates  economically  significant  financial 
operations, such as securitisations. The Capital Markets Union Action Plan announced 
that  the  Commission  would  propose  uniform  rules  to  determine  with  legal  certainty 
which national law should apply to the third-party effects of the assignment of claims. 

On 29 June 2016 the Commission adopted a report on the appropriateness of Article 
3(1)  of  Directive  2002/47/EC  on  financial  collateral  arrangements38  focusing  on  the 
question whether this Directive works effectively and efficiently as regards formal acts 
required to provide credit claims as collateral. The report concluded that a proposal of 
uniform  rules  regarding  the  third-party  effects  of  assignment  of  claims  would  allow 
determining  with  legal  certainty  which  national  law  should  apply  to  the  third-party 
effects of the assignment of claims, which would contribute to achieving greater legal 
certainty in cases of cross-border mobilisation of credit claims as collateral. 

On  29  September  2016  the  Commission  adopted  a  report  on  the  question  of  the 
effectiveness of an assignment or subrogation of a claim against third parties and the 
priority  of  the  assigned  or  subrogated  claim  over  the  right  of  another  person.  The 
report  concluded  that  uniform  conflict  of  law  rules  governing  the  effectiveness  of 
assignments  against  third  parties  as  well  as  questions  of  priority  between  competing 
assignees or between assignees and other right holders would enhance legal certainty 
and  reduce  practical  problems  and  legal  costs  relating  to  the  current  diversity  of 
approaches in the Member States. 

The substantive scope and the provisions of this Regulation should be consistent with 
Regulation  (EC)  No  864/2007  on  the  law  applicable  to  non-contractual  obligations 
(Rome  II),39  Regulation  (EC)  No  593/2008  on  the  law  applicable  to  contractual 
obligations  (Rome  I),40  Regulation  (EU)  No  1215/2012  on  jurisdiction  and  the 
recognition and enforcement of judgments in civil and commercial matters (recast),41 
and Regulation (EU) 2015/848 on insolvency proceedings.42 The interpretation of this 

COM(2015) 63 final. 
COM(2015) 468 final. 
COM(2016) 430 final. 
Regulation (EC) No 864/2007 of the  European Parliament and of the Council of 11 July 2007 on the 
law applicable to non-contractual obligations (Rome II), OJ L 199, 31.7.2007, p. 40-49. 
Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the 
law applicable to contractual obligations (Rome I), OJ L 177, 4.7.2008, p. 6-16. 
Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on 
jurisdiction  and  the recognition  and  enforcement  of judgments  in  civil and  commercial matters,  OJ  L 
351, 20.12.2012, p. 1-32. 
Regulation  (EU)  2015/848  of  the  European  Parliament  and  of  the  Council  of  20  May  2015  on 
insolvency proceedings, OJ L 141, 5.6.2015, p. 19-72. 

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Regulation  should  as  much  as  possible  avoid  regulatory  gaps  between  these 
instruments. 

(10)  This Regulation implements the Capital Markets Union Action Plan. It also fulfils the 
requirement laid down in Article 27(2) of the Rome I Regulation that the Commission 
should  publish  a  report  and,  if  appropriate,  a  proposal  on  the  effectiveness  of  an 
assignment  of  a  claim  against  third  parties  and  the  priority  of  the  assignee  over  the 
right of another person. 

(11)  Conflict of laws rules governing the third-party (or proprietary) effects of assignments 
of  claims  do  not  currently  exist  at  Union  level.  These  conflict  of  laws  rules  are  laid 
down  at  Member  State  level,  but  they  are  inconsistent  and  often  unclear.  In  cross-
border assignments of claims, the inconsistency of national conflict of laws rules leads 
to  legal  uncertainty  as  to  which  law  applies  to  the  third-party  effects  of  the 
assignments.  The  lack  of  legal  certainty  creates  a  legal  risk  in  cross-border 
assignments  of  claims  which  does  not  exist  in  domestic  assignments  as  different 
national  substantive  rules  may  be  applied  depending  on  the  Member  State  whose 
courts or authorities assess a dispute as to the legal title over the claims. 

(12) 

If  assignees  are  not  aware  of  the  legal  risk  or  choose  to  ignore  it,  they  may  face 
unexpected  financial  losses.  Uncertainty  about  who  has  legal  title  over  the  claims 
assigned  on  a  cross-border  basis  can  have  knock-on  effects  and  deepen  and  prolong 
the impact of a financial crisis. If assignees decide to mitigate the legal risk by seeking 
specific legal advice, they will incur higher transaction costs not required for domestic 
assignments.  If  assignees  are  deterred  by  the  legal  risk  and  choose  to  avoid  it,  they 
may forego business opportunities and market integration may be reduced.   

(13)  The objective of this Regulation is to provide legal certainty by laying down common 
conflict of laws rules designating which national law applies to the third-party effects 
of assignments of claims.  

(14)  A claim gives a creditor a right to the payment of a sum of money or the performance 
of  an  obligation  by  the  debtor.  The  assignment  of  a  claim  enables  the  creditor 
(assignor)  to  transfer  his  right  to  claim  the  debt  against  a  debtor  to  another  person 
(assignee). The laws that govern the contractual relationship between the creditor and 
the  debtor,  between  the  assignor  and  the  assignee  and  between  the  assignee  and  the 
debtor  are  designated  by  the  conflict  of  laws  rules  laid  down  in  the  Rome  I 
Regulation43. 

(15)  The conflict of laws rules laid down in this Regulation should govern the proprietary 
effects of assignments of claims as between all parties involved in the assignment (that 
is, between the assignor and the assignee and between the assignee and the debtor) as 
well as in respect of third parties (for example, a creditor of the assignor).   

(16)  The  claims  covered  by  this  Regulation  are  trade  receivables,  claims  arising  from 
financial  instruments  as  defined  in  Directive  2014/65/EU  on  markets  in  financial 
instruments44  and  cash  credited  to  an  account  in  a  credit  institution.  Financial 
instruments  as  defined  in  Directive  2014/65/EU  include  securities  and  derivatives 

43 
44 

In particular Articles 3, 4 and 14. 
Directive 2014/65/EU  of  the European Parliament  and of  the  Council  of 15  May 2014 on  markets  in 
financial  instruments  and  amending  Directive  2002/92/EC  and  Directive  2011/61/EU,  OJ  L  173, 
12.6.2014, p. 349–496. 

EN 

25 

  EN 

 
                                                 
 
traded on financial markets. While securities are assets, derivatives are contracts which 
include both rights (or claims) and obligations for the parties to the contract. 

(17)  This  Regulation  concerns  the  third-party  effects of  the  assignment  of  claims.  It  does 
not  cover  the  transfer  of  the  contracts  (such  as  derivative  contracts),  in  which  both 
rights (or claims) and obligations are included, or the novation of contracts including 
such  rights  and  obligations.  As  this  Regulation  does  not  cover  the  transfer  or  the 
novation of contracts, trading in financial instruments, as well as the clearing and the 
settlement of these instruments, will continue to be governed by the law applicable to 
contractual obligations as  laid down in  the Rome I  Regulation.  This law is  normally 
chosen  by  the  parties  to  the  contract  or  is  designated  by  non-discretionary  rules 
applicable to financial markets. 

(18)  Matters  governed  by  the  Financial  Collateral  Directive45,  the  Settlement  Finality 
Directive46,  the  Winding-Up  Directive47  and  the  Registry  Regulation48  should  not  be 
affected by this Regulation. 

(19)  This  Regulation  should  be  universal:  the  law  designated  by  this  Regulation  should 

apply even if it is not the law of a Member State.  

(20)  Predictability  is  essential  for  third  parties  interested  in  acquiring  legal  title  over  the 
assigned  claim.  Applying  the  law  of  the  country  where  the  assignor  has  its  habitual 
residence  to the third-party effects of assignments  of claims enables the third  parties 
concerned to easily know in advance which national law will govern their rights. The 
law of the assignor’s habitual residence should thus apply as a rule to the third-party 
effects  of  assignments  of  claims.  This  rule  should  apply,  in  particular,  to  the  third-
party effects of the assignment of claims in factoring, collateralisation and, where the 
parties have not chosen the law of the assigned claim, securitisation. 

(21)  The law chosen as a rule to apply to the third-party effects of assignments of claims 
should  enable  the  determination  of  the  applicable  law  where  future  claims  are 
assigned, a common practice where multiple claims are assigned, such as in factoring. 
The  application  of  the  law  of  the  assignor’s  habitual  residence  enables  the 
determination  of  the  law  applicable  to  the  third-party  effects  of  the  assignment  of 
future claims. 

(22)  The  need  to  determine  who  has  legal  title  over  an  assigned  claim  often  arises  when 
defining  the  insolvency  estate  where  the  assignor  becomes  insolvent.  Coherence 
between the conflict of laws rules in this Regulation and those laid down in Regulation 
(EU) 2015/848 on insolvency proceedings is therefore desirable. Coherence should be 
achieved  through  the  application  as  a  rule  of  the  law  of  the  assignor’s  habitual 
residence  to  the  third-party  effects  of  assignments  of  claims,  as  the  use  of  the 
assignor’s habitual residence as connecting factor coincides with the debtor’s centre of 
main interest used as connecting factor for insolvency purposes. 

45 

46 

47 

48 

Directive  2002/47/EC  of  the  European  Parliament  and  of  the  Council  of  6  June  2002  on  financial 
collateral arrangements, OJ L 168, 27.6.2002, p. 43–50. 
Directive  98/26/EC  of  the  European  Parliament  and  of  the  Council  of  19  May  1998  on  settlement 
finality in payment and securities settlement systems, OJ L 166, 11.6.1998, p. 45–50. 
Directive  2001/24/EC  of  the  European  Parliament  and  of  the  Council  of  4  April  2001  on  the 
reorganisation and winding up of credit institutions, OJ L 125, 5.5.2001, p. 15–23. 
Commission Regulation (EU) No 389/2013 of 2 May 2013 establishing a Union Registry pursuant to 
Directive 2003/87/EC of the European Parliament and of the Council, Decisions No 280/2004/EC and 
No 406/2009/EC of the European Parliament and of the Council and repealing Commission Regulations 
(EU) No 920/2010 and No 1193/2011, OJ L 122, 3.5.2013, p. 1–59. 

EN 

26 

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(23)  The  2001  United  Nations  Convention  on  the  Assignment  of  Receivables  in 
International Trade provides that the priority of the right of an assignee in the assigned 
receivable over the right of a competing claimant is governed by the law of the State in 
which  the  assignor  is  located.  The  compatibility  between  the  Union  conflict  of  laws 
rules laid down in this Regulation and the solution favoured at the international level 
by the Convention should facilitate the resolution of international disputes. 

(24)  Where the assignor changes its habitual residence between multiple assignments of the 
same claim, the applicable law should be the law of the assignor’s habitual residence 
at the time at which one of the assignees first makes his assignment effective against 
third parties by completing the requirements under the law applicable on the basis of 
the assignor's habitual residence at that time. 

(25) 

In  accordance  with  market  practice  and  the  needs  of  market  participants,  the  third-
party effects of certain assignments of claims should, as an exception, be governed by 
the law of the assigned claim, that is, the law that governs the initial contract between 
the creditor and the debtor from which the claim arises. 

(26)  The law of the assigned claim should govern the third-party effects of the assignment 
by an account holder of cash credited to an account in a credit institution, where the 
account holder is the creditor/assignor and the credit institution is the debtor. Greater 
predictability  is  provided  to  third  parties,  such  as  creditors  of  the  assignor  and 
competing assignees, if the law of the assigned claim applies to the third-party effects 
of these assignments as it is generally assumed that the claim that an account holder 
has over cash credited to an account in a credit institution is governed by the law of 
the  country  where  the  credit  institution  is  located  (rather  than  by  the  law  of  the 
habitual residence of the account holder/assignor). This law is normally chosen in the 
account contract between the account holder and the credit institution. 

(27)  The third-party effects of the assignment of claims arising from financial instruments 
should  also  be  subject  to  the  law  governing  the  assigned  claim,  that  is,  the  law 
governing  the  contract  from  which  the  claim  arises  (such  as  a  derivative  contract). 
Subjecting  the  third-party  effects  of  assignments  of  claims  arising  from  financial 
instruments  to  the  law  of  the  assigned  claim  rather  than  the  law  of  the  assignor’s 
habitual  residence  is  essential  to  preserve  the  stability  and  smooth  functioning  of 
financial markets. These are preserved as the law that governs the financial instrument 
from which the claim arises is the law chosen by the parties to the contract or the law 
determined in accordance with non-discretionary rules applicable to financial markets.  

(28)  Flexibility should be provided in the determination of the law applicable to the third-
party effects of assignments of claims in the context of a securitisation in order to cater 
for  the  needs  of  all  securitisers  and  facilitate  the  expansion  of  the  cross-border 
securitisation  market  to  smaller  operators.  Whilst  the  law  of  the  assignor’s  habitual 
residence should apply as the default rule to the third-party effects of assignments of 
claims  in  the  context  of  a  securitisation,  the  assignor  (originator)  and  the  assignee 
(special purpose vehicle) should be able to choose that the law of the assigned claim 
should apply to the third-party effects of the assignment of claims. The assignor and 
the assignee should be able to decide that the third-party effects of the assignment of 
claims in the context of a securitisation should remain subject to the general rule of the 
assignor’s habitual residence or to choose the law of the assigned claim in function of 
the  structure  and  characteristics  of  the  transaction,  for  example  the  number  and 
location of the originators and the number of laws which govern the assigned claims. 

EN 

27 

  EN 

 
(29)  Priority conflicts between assignees of the same claim may arise where the third-party 
effects  of  the  assignment  have  been  subject  to  the  law  of  the  assignor’s  habitual 
residence  in  one  assignment  and  to  the  law  of  the  assigned  claim  in  another 
assignment. In such cases, the law applicable to resolve the priority conflict should be 
the law applicable to the third-party effects of the assignment of the claim which has 
first become effective against third parties under its applicable law. 

(30)  The scope of the national law designated by this Regulation as the law applicable to 
the third-party effects of an assignment of claims should be uniform. The national law 
designated  as  applicable  should  govern  in  particular  (i)  the  effectiveness  of  the 
assignment against third parties, that is, the steps that need to be taken by the assignee 
in  order  to  ensure  that  he  acquires  legal  title  over  the  assigned  claim  (for  example, 
registering the assignment with a public authority or registry, or notifying the debtor in 
writing  of  the  assignment);  and  (ii)  priority  issues,  that  is,  conflicts  between  several 
claimants  as  to  who  has  title  over  the  claim  (for  example,  between  two  assignees 
where the same claim has been assigned twice, or between an assignee and a creditor 
of the assignor). 

(31)  Given the universal character of this Regulation, the laws of countries with different 
legal  traditions  may  be  designated  as  the  applicable  law.  Where,  further  to  the 
assignment of a claim, the contract from which the claim arises is transferred, the law 
designated by this Regulation as the law applicable to the third-party effects of a claim 
assignment  should  also  govern  a  priority  conflict  between  the  assignee  of  the  claim 
and the new beneficiary of the same claim further to the transfer of the contract from 
which the claim arises. For the same reason, the law designated by this Regulation as 
the law applicable to the third-party effects of a claim assignment should also apply, 
where  novation  is  used  as  a  functional  equivalent  of  the  transfer  of  a  contract,  to 
resolve a priority conflict between an assignee of a claim and the new beneficiary of 
the functionally equivalent claim further to the novation of the contract from which the 
claim arises. 

(32)  Considerations  of  public  interest  justify  giving  the  courts  of  the  Member  States  the 
possibility,  in  exceptional  circumstances,  of  applying  exceptions  based  on  public 
policy and overriding mandatory provisions, which should be interpreted restrictively. 

(33)  Respect for international commitments entered into by the Member States means that 
this  Regulation  should  not  affect  international  conventions  to  which  one  or  more 
Member States  are parties  at the time  when this Regulation is  adopted. To make  the 
rules  more  accessible,  the  Commission  should  publish  the  list  of  the  relevant 
conventions in the Official Journal of the European Union on the basis of information 
supplied by the Member States. 

(34)  This Regulation respects the fundamental rights and observes the principles recognised 
in  the  Charter  of  Fundamental  Rights  of  the  European  Union.  In  particular,  this 
Regulation  seeks  to  promote  the  application  of  Articles  17  and  47  concerning, 
respectively,  the  right  to  property  and  the  right  to  an  effective  remedy  and  to  a  fair 
trial. 

(35)  Since the objectives of this Regulation cannot be sufficiently achieved by the Member 
States and can rather, by reason of the scale and effects of this Regulation, be better 
achieved  at  Union  level,  the  Union  may  adopt  measures,  in  accordance  with  the 
principle of subsidiarity as set out in Article 5 of the Treaty on the European Union. 
The  desired  uniformity  of  the  conflict  of  laws  rules  on  the  third-party  effects  of 
assignments of claims can only be achieved through a Regulation as only a Regulation 

EN 

28 

  EN 

 
ensures  a  consistent  interpretation  and  application  of  the  rules  at  national  level.  In 
accordance  with  the  principle  of  proportionality,  as  set  out  in  that  Article,  this 
Regulation does not go beyond what is necessary in order to achieve that objective. 

(36) 

In accordance with Article 3 and Article 4a(1) of Protocol No 21 on the position of the 
United  Kingdom  and  Ireland  in  respect  of  the  area  of  freedom,  security  and  justice, 
annexed  to  the  Treaty  on  European  Union  and  the  Treaty  on  the  Functioning  of  the 
European  Union,  the  [United  Kingdom]  [and]  [Ireland]  [have/has  notified  their/its 
wish to take part in the adoption and application of the present Regulation] [are/is not 
taking part in the adoption of this Regulation and are/is not bound by it or subject to its 
application]. 

(37) 

In  accordance  with  Articles  1  and  2  of  Protocol  No  22  on  the  position  of  Denmark, 
annexed  to  the  treaty  on  European  Union  and  the  Treaty  on  the  Functioning  of  the 
European Union, Denmark is not taking part in the adoption of this Regulation and is 
not bound by it or subject to its application. 

HAVE ADOPTED THIS REGULATION: 

CHAPTER I 

SCOPE AND DEFINITIONS 

Article 1 

Scope 

This  Regulation  shall  apply,  in  situations  involving  a  conflict  of  laws,  to  the  third-

1. 
party effects of assignments of claims in civil and commercial matters.  

It shall not apply, in particular, to revenue, customs or administrative matters. 

2. 

(a) 

(b) 

(c) 

(d) 

The following shall be excluded from the scope of this Regulation:  

assignment of claims arising from family relationships and relationships deemed by 
the  law  applicable  to  such  relationships  to  have  comparable  effects,  including 
maintenance obligations; 

assignment of claims arising from matrimonial property regimes, property regimes of 
relationships deemed by the law applicable to such relationships to have comparable 
effects to marriage, and wills and succession; 

assignment of claims arising from bills of exchange, cheques and promissory notes 
and other negotiable instruments to the extent that the obligations under such other 
negotiable instruments arise out of their negotiable character; 

assignment of claims arising from questions governed by the law of companies and 
other  bodies,  corporate  or  unincorporated,  such  as  the  creation,  by  registration  or 
otherwise, legal capacity, internal organisation or winding-up of companies and other 
bodies,  corporate  or  unincorporated,  and  the  personal  liability  of  officers  and 
members as such for the obligations of the company or body; 

(e) 

assignment  of  claims  arising  from  the  constitution  of  trusts  and  the  relationship 
between settlors, trustees and beneficiaries; 

EN 

29 

  EN 

 
 
 
(f) 

assignment of  claims  arising  from  life  insurance  contracts  arising  out  of  operations 
carried  out  by  organisations  other  than  undertakings  referred  to  in  Article  2(1)  and 
(3)  of  Directive  2009/138/EC  on  the  taking-up  and  pursuit  of  the  business  of 
Insurance and Reinsurance (Solvency II)49 the object of which is to provide benefits 
for  employed  or  self-employed  persons  belonging  to  an  undertaking  or  group  of 
undertakings, or to a trade or group of trades, in the event of death or survival or of 
discontinuance or curtailment of activity, or of sickness related to work or accidents 
at work. 

Article 2 

Definitions 

For the purposes of this Regulation: 

(a) 

(b) 

(c) 

(d) 

(e) 

(f) 

(g) 

‘assignor’ means a person who transfers his right to claim a debt against a debtor to 
another person;  

‘assignee’ means a person who obtains the right to claim a debt against a debtor from 
another person; 

‘assignment’ means a voluntary transfer of a right to claim a debt against a debtor. It 
includes outright transfers of claims, contractual subrogation, transfers of claims by 
way of security and pledges or other security rights over claims; 

‘claim’ means the right to claim a debt of whatever nature, whether monetary or non-
monetary, and whether arising from a contractual or a non-contractual obligation; 

'third-party  effects'  means  proprietary  effects,  that  is,  the  right  of  the  assignee  to 
assert  his  legal  title  over  a  claim  assigned  to  him  towards  other  assignees  or 
beneficiaries of the same or  functionally  equivalent claim, creditors of the assignor 
and other third parties; 

‘habitual  residence’  means,  for  companies  and  other  bodies,  corporate  or 
unincorporated, the place of central administration; for a natural person acting in the 
course of his business activity, his principal place of business; 

‘credit  institution’  means  an  undertaking  as  defined  in  point  (1)  of  Article  4(1)  of 
Regulation  (EU)  No  575/201350,  including  branches,  within  the  meaning  of  point 
(17) of Article 4(1) of that Regulation, of credit institutions having their head offices 
inside  or,  in  accordance  with  Article  47  of  Directive  2013/36/EU51,  outside  the 
Union where such branches are located in the Union; 

(h) 

‘cash’ means money credited to an account in a credit institution in any currency; 

49 

50 

51 

Directive  2009/138/EC  of  the  European  Parliament  and  of  the  Council  of  25  November  2009  on  the 
taking-up  and  pursuit  of  the  business  of  Insurance  and  Reinsurance  (Solvency  II),  OJ  L  335, 
17.12.2009, p. 1–155. 
Regulation  (EU)  No  575/2013  of  the  European  Parliament  and  of  the  Council  of  26  June  2013  on 
prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 
648/2012, OJ L 176, 27.6.2013, p. 1-337. 
Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the 
activity of credit institutions and the prudential supervision of credit institutions and investment firms, 
amending  Directive  2002/87/EC  and  repealing  Directives  2006/48/EC  and  2006/49/EC,  OJ  L  176, 
27.6.2013, p. 338-436. 

EN 

30 

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(i) 

‘financial instrument’ means those instruments specified in Section C of Annex I of 
Directive 2014/65/EU52. 

CHAPTER II 

UNIFORM RULES 

Article 3 

Universal application 

Any law specified by this Regulation shall be applied whether or not it is the law of a Member 
State. 

Article 4 

Applicable law 

1. 
Unless otherwise provided for in this Article, the third-party effects of an assignment 
of claims shall be governed by the law of the country in which the assignor has its habitual 
residence at the material time. 

Where the assignor has changed its habitual residence between two assignments of the same 
claim to different assignees, the priority of the right of an assignee over the right of another 
assignee shall be governed by the law of the habitual residence of the assignor at the time of 
the assignment which first became effective against third parties under the law designated as 
applicable pursuant to the first subparagraph. 

The  law  applicable  to  the  assigned  claim  shall  govern  the  third-party  effects  of  the 

2. 
assignment of: 

(a) 

(b) 

cash credited to an account in a credit institution; 

claims arising from a financial instrument. 

3. 
The assignor and the assignee may choose the law applicable to the assigned claim as 
the  law  applicable  to  the  third-party  effects  of  an  assignment  of  claims  in  view  of  a 
securitisation.  

The  choice  of  law  shall  be  made  expressly  in  the  assignment  contract  or  by  a  separate 
agreement.  The  substantive  and  formal  validity  of  the  act  whereby  the  choice  of  law  was 
made shall be governed by the chosen law. 

A priority conflict between assignees of the same claim where the third-party effects 
4. 
of one of the assignments are governed by the law of the country in which the assignor has its 
habitual residence and the third-party effects of other assignments are governed by the law of 
the  assigned  claim  shall  be  governed  by  the  law  applicable  to  the  third-party  effects  of  the 
assignment of the claim which first became effective against third parties under its applicable 
law.  

52 

Directive 2014/65/EU  of  the European Parliament  and of  the  Council of 15  May 2014 on  markets  in 
financial  instruments  and  amending  Directive  2002/92/EC  and  Directive  2011/61/EU,  OJ  L  173, 
12.6.2014, p. 349–496. 

EN 

31 

  EN 

 
 
                                                 
Article 5 

Scope of the applicable law 

The  law  applicable  to  the  third-party  effects  of  assignment  of  claims  pursuant  to  this 
Regulation shall govern, in particular: 

(a) 

(b) 

the  requirements  to  ensure  the  effectiveness  of  the  assignment  against  third  parties 
other than the debtor, such as registration or publication formalities; 

the priority of the rights of the assignee over the rights of another assignee of the same 
claim; 

(c) 

the priority of the rights of the assignee over the rights of the assignor’s creditors; 

(d) 

(e) 

the priority of the rights of the assignee over the rights of the beneficiary of a transfer 
of contract in respect of the same claim; 

the priority of the rights of the assignee over the rights of the beneficiary of a novation 
of contract against the debtor in respect of the equivalent claim. 

Article 6 

Overriding mandatory provisions 

Nothing  in  this  Regulation  shall  restrict  the  application  of  the  overriding  mandatory 

1. 
provisions of the law of the forum. 

Overriding mandatory  provisions  are  provisions  the  respect  for  which  is  regarded  as 
2.  
crucial by a Member State for safeguarding its public interests, such as its political, social or 
economic  organisation,  to  such  an  extent  that  they  are  applicable  to  any  situation  falling 
within  their  scope,  irrespective  of  the  law  otherwise  applicable  to  the  third-party  effects  of 
assignments of claims pursuant to this Regulation. 

CHAPTER III 

OTHER PROVISIONS 

Article 7 

Public policy (ordre public) 

The application of a provision of the law of any country specified by this Regulation may be 
refused  only  if  such  application  is  manifestly  incompatible  with  the  public  policy  (ordre 
public) of the forum. 

Article 8 

Exclusion of renvoi 

The application of the law of any State specified by this Regulation means the application of 
the rules of law in force in that State other than its rules of private international law. 

EN 

32 

  EN 

 
 
Article 9 

States with more than one legal system 

1. 
Where  a  State  comprises  several territorial  units,  each  of  which  has  its own  rules  of 
law in respect of the third-party effects of assignments of claims, each territorial unit shall be 
considered as a State for the purposes of identifying the law applicable under this Regulation. 

2. 
A Member State  which comprises several territorial  units each of which has its own 
rules of law in respect of the third-party effects of assignments of claims shall not be required 
to apply this Regulation to conflicts of laws arising between such units only. 

Article 10 

Relationship with other provisions of Union law 

This  Regulation  shall  not  prejudice  the  application  of  provisions  of  Union  law  which,  in 
relation to particular matters, lay down conflict of laws rules relating to the third-party effects 
of assignments of claims. 

Article 11 

Relationship with existing international conventions 

This  Regulation  shall  not  prejudice  the  application  of  international  conventions  to 
1. 
which one or more Member States are parties at the time when this Regulation is adopted and 
which  lay  down  conflict  of  laws  rules  relating  to  the  third-party  effects  of  assignments  of 
claims.  

2. 
However,  this  Regulation  shall,  as  between  Member  States,  take  precedence  over 
conventions  concluded  exclusively  between  two  or  more  of  them  in  so  far  as  such 
conventions concern matters governed by this Regulation.  

Article 12 

List of Conventions 

1. 
By  [date  of  application],  Member  States  shall  notify  the  Commission  of  the 
conventions  referred  to  in  Article  11(1).  After  that  date,  Member  States  shall  notify  the 
Commission of all denunciations of such conventions. 

Within  six  months  of  receipt  of  the  notifications  referred  to  in  paragraph  1,  the 

2. 
Commission shall publish in the Official Journal of the European Union: 

(a) 

a list of the conventions referred to in paragraph 1; 

(b) 

the denunciations referred to in paragraph 1. 

Article 13 

Review clause 

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By  [five  years  after  the  date  of  application],  the  Commission  shall  submit  to  the  European 
Parliament,  the  Council  and  the  European  Economic  and  Social  Committee  a  report  on  the 
application of this Regulation. If appropriate, the report shall be accompanied by proposals to 
amend this Regulation. 

Article 14 

Application in time 

This  Regulation  shall  apply  to  assignments  of  claims  concluded  on  or  after  [date  of 

1. 
application]. 

The law applicable pursuant to this Regulation shall determine whether the rights of a 
2. 
third party in respect of a claim assigned after the date of application of this Regulation have 
priority  over  the  rights  of  another  third  person  acquired  before  this  Regulation  becomes 
applicable. 

Article 15 

Entry into force and date of application 

This Regulation shall enter into force on the twentieth day following that of its publication in 
the Official Journal of the European Union. 

It shall apply from [18 months from date of entry into force]. 

This Regulation shall be binding in its entirety and directly applicable in the Member States in 
accordance with the Treaties. 

Done at Brussels, 

For the European Parliament 
The President 

For the Council 
The President 

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