On 12 March 2018, the Commission proposed the adoption of common conflict of laws rules on the third-party effects of assignments of claims.

This will be of significant importance in the context of Brexit, and will need to be addressed by any Financial institutions based in jurisdictions having a 3rd State relationship with the EU financial markets.

It will take the form of a Regulation within the European legal space, more specifically within the developing Capital Markets Union (CMU).

The proposal provides that, as a rule, the law of the country where the assignor has its habitual residence will govern the third-party effects of the assignment of claims.

As an exception, the law of the assigned claim will govern the third-party effects of the assignment of specific claims.

By introducing legal certainty, the new rules will promote cross-border investment, enhance access to credit and contribute to market integration. The proposal, which deals with the law applicable to the ownership questions of assignments of claims, complements the rules in the Rome I Regulation, which deal with the law applicable to the contractual questions of assignments of claims.

A link to the proposed Regulation can be found here.

A link to the Commission Report can be found here.

 

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