One Registry to Rule ‘Them’ All:
A New Strategy for Reforming Secured Transactions Law in Europe

By Dr. Giuliano G. Castellano, Assistant Professor (University of Warwick, School of Law)


The role of secured transactions law in stimulating growth and diversifying lending activities is well explored. In particular, through non-possessory secured transactions, borrowers may gain access to credit by using as collateral tangible or intangible assets that are integral to their businesses activities. This allows borrowers to retain possession whilst continuing to profit from the collateral used to repay outstanding debt. However, in many European countries there is an intricate nexus of rules and exceptions, increasing costs associated with secured credit. National and international policymakers have embarked on ambitious legal reform projects aiming to establish a more coherent, accessible and internationally harmonized set of rules. Nonetheless, numerous legal systems have found this process of reform arduous due to an original scepticism hardwired in various national legal systems. In a recent publication, I have argued that there could be an alternative solution to overcoming the practical difficulties encountered by law reformers and offering a more viable legal regime for such a critical component of modern economies.1 The solution traces a new reform strategy consisting in the implementation of a single, electronic, and publicly available registry for secured transactions, without changing the legal categorisation adopted in any given legal system.2 This short contribution illustrates the core argument of my research and offers an overview of the current reform projects and practical difficulties of various European countries.

A Problem of Path-Dependence 

The common features and policy patterns underlying secured transactions laws in European countries are here considered before discussing the reform strategies pursued. Although non-possessory security interests are common, dispossession remains a basic provision codified in Napoleonic and Germanic legal systems, such as France, Germany and Italy. In contrast to a more flexible legal regime operating in ancient times,3 18th century European legal systems developed the idea that dispossession is a fundamental requirement; it represented the most basic form of publicizing the existence of a right over a collateral. Hence, the pledge became in the civil codes of continental Europe, and, to some extent, in English law the most basic legal instrument to secure a lending operation.

Modern lending, however, reveals that there are many instruments to secure a debt through a collateral without requiring dispossession and pledges are not that common. In fact, especially in most European countries, there are too many legal instruments. Secured transactions may be created through contractual liens, company charges, or chattel mortgages. Proprietary rights over a pool of present and future assets might also be created to secure an obligation, e.g., through ‘floating charges’ in the United Kingdom or ‘bank charges’ in Italy or France. Trust and fiduciary schemes are increasingly used to protect lenders against the risk of debtors’ default. Retention of title clauses and conditional transfers of ownership, more commonly used in continental European countries, operate as security devices: a seller-creditor transfers ownership to the buyer-debtor, who acquires full ownership only upon payment of the debt. Secured lending may also follow separate asset-based provisions, say, for ships, to finance the production process of assets that do not yet exist but require a substantial initial investment. The list of legal instruments and their different labels further enlarges when acquisition financing agreements and financial leases are considered.

If pledge and dispossession are the basic forms of securing an obligation in many legal systems, where did this puzzle of rules and exceptions originate? The question is particularly relevant in light of the various law reforms currently debated in many countries, such as the Czech Republic, Italy, and the UK, to name a few. Compounding the current variety of legal instruments is an intricate set of rules and legal requirements affecting the validity of the transaction or its enforceability against competing claims in insolvency. The cost of secured credit is undoubtedly impacted by this legal complexity; the result is an opaque legal regime with high transaction costs. From a cross-border financing perspective, the problem is further aggravated given that each country is characterised by a unique set of (stratified) rules.

The puzzle of rules and exceptions characterizing modern secured transactions laws originated precisely in an attempt to circumvent the requirement of dispossession. By recognizing the need to facilitate access to credit, European legal systems developed a wide range of legal rules, judicial interpretations and theories to allow secured lending without imposing dispossession.

The legal rules governing “publicity” are understood as the core mechanism which enabled circumventing dispossession. These consist of a set of requirements allowing the existence of a priority right over a collateral to be known, such as the apposition of seals and signatures over specific collateral. The most common publicity systems are collateral registries, which record information concerning the secured transaction, the parties, and the collateral and make it publicly available. Registries, however, have been originally conceived as a substitute for dispossession, protecting public faith and contrasting the concealment of debt. As a result, the process of registration is often burdensome, requiring the filing of a copy of the transaction and notarial deeds. Even more, such formalities are often necessary to validly create a security interest. Although these requirements have progressively relaxed, different countries do not have a single registry system and different publicity requirements, together with various formalities, have to be followed depending on the collateral, the parties, and the legal qualification of the secured transaction.

Thus, the current complexity characterising secured transactions law in different countries stems from the solutions adopted to overcome the requirement of dispossession through various publicity rules. However, these solutions have nowadays become part of the problem legal reforms are trying to address. For instance, Germany features unregistered (and unpublicised) security interests, posing relevant problems for lenders. In France and in Italy special laws established various forms of “bank charges”, whereby a different set of rules applies if a credit institution is involved. However, these sector-specific solutions may result in incongruences, as it is often unclear how new special provisions coordinate with existing rules. In this regard, the Cour d’Appel of Paris ruled that it is left to the parties to decide whether a given transaction involving a credit institution should follow the specific provisions for “bank charges” or the general rules.4 

The Italian law governing security interests on geographically-protected ham and cheese – infamously referred to as the “ham and cheese laws” – is another example of special laws enacted to facilitate access to credit.5 While the rationale justifying special laws for dairy and cured-meat products appears odd, a closer look reveals that legislative interventions were intended to facilitate access to credit for a relevant sector of the domestic economy. In fact, parmesan cheese (parmigiano reggiano) represents a valuable market that sustains a local economy involving 50,000 people and a global retail market of more than 2 billion Euros (in 2013). Hence, special provisions substituted dispossession through a publicity system that requires both the registration in a special registry and a seal engraved on each item. However, the legal consequences if only one of the two requirements (registration or sealing) is met are not clear.6 Similar considerations may be given when the English courts are asked to determine whether a charge is fixed or floating, with material consequences on the priority status of the secured lender.

This nexus of legal rules and exceptions is the result of a series of corrective adjustments through special laws or judiciary interpretations, creating a fragmented legal regime for secured credit. Ultimately, a path-decency issue surfaces: incremental adjustments reinforce the complexity of the legal regime for secured lending and render comprehensive reforms much harder (and expensive) to attain. In other words, any new reform addressing an immediate problem, whilst providing an immediate fix, increases the costs for future changes. As a result, countries that are more in need of a reform are less likely to embark on the project due to the costs associated with a comprehensive legal reform. This aspect has to be taken into account in the reform strategies currently debated in various European countries.

The Reform Strategies in European Countries
The main strategies available to law reformers can be boiled down to a choice between two options:

(i) a unitary approach, which implies a unification of existing legal categories into a single category. Under this approach, functionally-similar transactions are subjected to the same legal treatment.

(ii) a non-unitary approach, which, in practical terms, consists in maintaining the existing regimes based on a variety of legal categories.

Most notably, the United States is one country following the first strategy. A solution (at least partial) to the maze of rules was provided with the implementation of Article 9 of the Uniform Commercial Code (UCC Art 9). Art 9 not only merged various legal instruments into a broad category (defined as ‘security interests’), but also offered a tool to harmonise state-based legal regimes. For this reason, the US experience has been an insightful source for driving a process of international legal harmonisation.7 A similar, more refined path has been followed with the Personal Property Acts (PPSAs) enacted recently in Australia, Canada, and New Zealand. Belgium and Ukraine also opted for this route, although in a different fashion. In the UK, the idea of enacting a Secured Transactions Code, with a single category, is currently being considered by The City of London Law Society.8 The United Nations Commission on International Trade Law (UNCITRAL) is following a similar approach in the draft Model Law on Secured Transactions.9 

However, this strategy may pose a number of problems, ultimately discouraging a reform or frustrating its simplification and modernisation aims. First, there is a political resistance. When legal reform – even more if carried out through international standards – adopts a legal concept closely connected to a particular legal system, a fear of hegemonic control over international finance may arise. Second, on a more practical note, there might be a problem related to a phenomenon known as “legal transplant”. Legal history is fraught with failures – and some success – in transferring legal rules from one country to another. A legal reform that aims to transplant a unitary conception of secured transactions has to redefine domestic legal categories, which are often rooted in cultural and historical developments. Furthermore, the adoption of a unitary approach requires a change in complementary rules governing contracts, insolvency procedure, and also consumer protection and banking law. Designing this new set of rules requires extensive resources and a strong will shared amongst lawyers, policymakers and the national industry.

When it comes to the second strategy, other problems emerge. Maintaining a non-unitary approach may incentivise countries to add new special laws to the existing set of rules, depending on contingent economic need. Thus, where a non-unitary approach is maintained, reforms are likely to be incremental, at the risk of falling into the aforementioned ‘path-dependency trap’. A solution is implementing a non-unitary but functionally-based approach, as recommended by the UNCITRAL Legislative Guide. According to this middle-ground solution, different national categorisations to qualify secured lending are retained as long as they are subjected to the same legal treatment.10 Other solutions have been advanced, intending to simplify current legal regimes and foster access to credit without imposing excessive reform costs. For instance, in the UK, the Secured Transactions Law Project aims to isolate an “irreducible core” to define an efficient secured transactions law regime.11

An Alternative Strategy: One Registry to Rule Them All

A different solution, advanced through my research, consists in the implementation of a registry system, governing priority, for all secured transactions performing the same function (including ROT).12 Thus, through the implementation of new publicity rules – which are relatively easy to change – the same result of overhauling the secured transactions law regime can be attained at a lower cost.

The implementation of such a registry system could be based on the recommendations elaborated in UNCITRAL’s Registry Guide. This would not reshuffle existing legal categories; instead, it would ensure the same legal treatment for functionally-similar consensual arrangements, notably for insolvency purposes. Registration would determine priority on the date of filing whilst at the same time preserving national legal categorizations. As the evolution of secured transactions law in Europe demonstrates, publicity rules (especially registries) are not only a core element of secured transactions law regimes, they could also help resolve the policy dilemma between knowledge of the existence of a priority right and the need to facilitate access to secured credit. Indeed, current technological development and the dynamics of modern financial transactions require a collateral registry to be electronic, with minimum formalities. The intention is to ensure that the parties willing to enter into a secured transaction are able to acquire sufficient information over the existence of prior rights.

The implementation of a registry system may be achieved through regulatory interventions, which are relatively less expensive to implement. Even if a legislative (parliamentary) act is required, the issues related to legal transplants are less likely to arise. Legal scholars have in fact acknowledged that changes in legal rules that are “mechanical” are less likely to generate conflicts with longstanding business and legal practices.13 My article proposes that registry rules are an example of mechanical rules.14

Once such a registry system is implemented, a series of other aspects could be discussed. One example is the level of control attributed to different security devices, such as charges.15 Furthermore, this route may lead to more comprehensive reforms and thus complement projects like the Secured Transactions Law Reform Project and the City of London Law Society’s Secured Transactions Code, in the UK. At the international level, the idea of implementing a single registry system as a standalone device or as a first step for more comprehensive reforms appears to be in line with works of UNCITRAL or the European Bank for Reconstruction and Development (EBRD). The main advantage of this strategy – at the moment partially, and successfully, followed by Mexico – is that it allows steering away from the path-dependency trap, whilst implementing a reform with immediate benefits.

Giuliano is an Assistant Professor at the University of Warwick, School of Law, where he teaches 'International Insolvency & Debt Restructuring’ and ‘Financial Services Regulation’. He is a Research Associate at the Ecole Polytechnique (i3-CRG, CNRS, Paris-Saclay) and, since 2010, he serves as a Legal Expert for the Italian delegation at the United Nations Commission on International Trade Law (UNCITRAL), Working Group VI (security interests).

Giuliano holds a Law Degree from Bocconi University (Milan), a PhD in Law (University of Turin), a PhD in Economics and Social Sciences from the Ecole Polytechnique ((i3-CRG, Paris-Saclay), and he passed the Bar Exam in Milan (Italy). Before joining Warwick Law School, Giuliano was a Research Fellow at the Law Department of the London School of Economics. He has been holding various visiting positions in France, Italy, Russia, the UK and the US. He publishes in the field of financial law and financial regulation. 

The views expressed in this contribution and in related research outputs are the author’s own and do not represent the views of any of the institutions with which the author is affiliated.



1 G. G. Castellano, ‘Reforming Non-Possessory Secured Transactions Laws: A New Strategy?’ (2015) 78(4) The Modern Law Review 611.

2 At the University of Warwick’s Law School, I am currently leading a project exploring the applicability of this reform strategy in different legal systems. The project is sponsored by ESRC Impact Acceleration Account (ESRC0018-2015).

3 Notably Roman law allowed for the creation of a security interest without dispossession.

4 CdA Paris, 2011, 10/13656.

5 Law 24 July 1985 n. 401 and Law 27 March 2001 n.122.

6 For an analysis of the different reform strategies in the context of the Italian legal system see: G. G. Castellano, ‘Reverse Engineering the Law – Reforming Secured Transactions in Italy’, in O. Askeli & S. Bazinas, International and Comparative Secured Transactions Law’, (Hart Publishing: Oxford, forthcoming 2016).

7 NB Cohen, ‘Harmonizing the Law Governing Secured Credit: The Next Frontier’ 33 (1998) Texas International Law Journal 173.

8 Accessible at: (last accessed January 2016).

9 For further information see (last accessed January 2016).

10 The approach, however, is not anymore contained in the UNCITRAL draft Model Law.

11 For further information see (last accessed January 2016).

12 Castellano (2015) above (n 1).

13 See O. Kahn-Freund, ‘On Uses and Misuses of Comparative Law’ (1974) 37 The Modern Law Review 1. 

14 Castellano (2015) above (n 1).

15 For instance clarifying the different treatment for fixed and floating.