On 12 March 2018, the Commission published a proposal for a Regulation on the law applicable to third-party effects (proprietary effects) in relation to cross-border contracts of assignment of claims (hereinafter referred to as PCAs). The receivables whose assignment or subrogation is contemplated are those that contain monetary performance; those arising from factoringThe Proposal was accompanied by a Communication on the law applicable to third party effects ("the law applicable to third party effects"). The proposal was accompanied by a Communication on the applicable law for third party effects (proprietary effects) of cross-border securities transactions. Both initiatives have to be analysed together as they aim at the same objective: to determine clearly which national law decides who owns the underlying assets and what is the enforcement effect of collateral assignments or their collateralisation, when these contracts have a cross-border element.

The reason for the different regulatory treatment is due to operational and legal reasons. Securities contracts were regulated by three directives transposed into the different national systems with varying degrees of consistency: the directive on financial collateral arrangements (2002/47/EC); the directive on settlement finality in payment and securities settlement systems (98/26/EC); and the directive on the reorganisation and winding-up of credit institutions (2001/24/EC). The difficulty of altering the provisions they contain on the applicable law and the absence of a legal basis make it advisable to limit the action to a non-regulatory instrument in which the Commission, without prejudice to what the Court of Justice might consider in the future, since there is no European case law on the matter, makes some clarification of the place of location of the account, a relevant element in the three directives for determining the applicable law, which has some nuances in terms of terminology (maintained; located, hold...). An interesting precedent can be found in the failed accession of the European Union to the Hague Convention of 5 July 2006 on the law applicable to certain rights in relation to securities held with financial intermediaries, -a Convention in force but failed, as only the United States, Switzerland and Mauritius are parties-. The Task force The European Union, then created to examine the advisability or otherwise of such accession - in view of the Central Bank's report to the contrary - determined a systemic risk if the relocations of accounts entailed by the Convention's solutions were accepted. However, the practical problems regarding non-replicated securities accounts generated by the attack on the Twin Towers in September 2001 led to the express negotiation of the directive on financial collateral arrangements, transposed in Spain by Royal Decree Law 5/2005 of 11 March, subsequently amended on three occasions.

Assignment of receivables - the assignment of claimsAssignments of claims- is regulated as regards the effects between the parties - the transferor and the transferee - in Article 14 of Regulation (EU) 598/2008 (Rome I). There is no conflict rule for effects vis-à-vis third parties, although Article 27(2) provides for their articulation. In view of this gap in European law, recourse is had to national laws, which differ from one another. By way of example, in Spain, the law of the assigned claim is applied and in France, the assignor's habitual residence, which is the solution adopted in the proposal along the lines of the report. ad hoc of the 2016 Commission. This connection is considered to resemble the COMI - leading to the law of the State in which the transferor's centre of main interests is located - identified as a central element in Regulation (EU) 2015/848 on insolvency proceedings (Recast). In this way, the Commission believes that the connection between the different elements of the contract will be facilitated; the priority leading to the loss of its creditor position by the assignor and therefore assignee and the possible insolvency of the former with its related subjects. But this is not entirely true insofar as the applicable law can lead to any third country, whereas the Insolvency Regulation is limited to the Member States. The PCA, in fact, opts for a universal law criterion, which also leads to the relocation of the applicable law outside Europe (Art. 3).

This is undoubtedly an extremely important proposal for the Spanish legal system. In addition, assignments of mortgage loans and, in general, those whose underlying assets are real estate or goods subject to registration in public registers are not exempt, something that could seriously affect our system of legal security.. The Supreme Court has declared, in another context since its judgment of 19 June 2012 and in relation to Rome I, that ownership and rights in rem over immovable property located in Spain are governed by Spanish law. As in the other Regulations on applicable law, recourse to public policy is provided for in Article 7 of the proposal and to mandatory rules in Recital 32, but, of course, its exceptional and restrictive nature cannot lead to the exclusion of categories of property.

Finally, territorial units are designated in plurilegislative States (Art. 9), which constitutes an added complication for Spain (Vid. Law 3/2017, Art. 569-28 of the Civil Code of Catalonia or law 511 of the Fuero Nuevo Navarro).

The principles of subsidiarity and proportionality, which are required on the legal basis of Article 81 TFEU, could therefore perhaps be invoked by our Parliament.

This difficult proposal comes in the final stretch of the current Commission, which has less than fifteen months of effective work left, a time that is considered to be the minimum for the negotiation of a regulation. In the next few days, the publication of the so-called Company Law Package, not yet sufficiently specified.

Despite this ambition, for the time being, only the directive on contractual aspects of the supply of digital content, which has five trilogues behind it and is expected to be adopted in June with a significantly reduced outlook and linked more clearly to consumer law than to the Digital Agenda, will be adopted in the area of civil justice.