Perfection of liens - is a reform from pledge to filing preferable?

Sammanfattning: The current Swedish rules regarding perfection of liens is fragmented. The system has only undergone partial reform and even then only because of extreme necessity. The U.S. had a security interest system that in many parts were very similar to the system that today is present in Sweden. A reform took place as a response to the fact that the system finally reached the level of intolerable complexity; thus arose UCC Article 9. Article 9 offers a security interest system that is uniform in a manner that it unifies all the different devices that de facto create security interests, it also extends to more than liens. One of its many benefits is that it allows the use of almost all personal property as collateral in a credit transaction. As the reader will beware of, it differentiates between a security interest’s validity inter partes and its validity against third parties. For a security interest to achieve validity inter partes, it is in most cases required that the parties have signed a security agreement, that the creditor gives value to the debtor and that the debtor has rights in the goods which become subject to the lien. Attachment is the terminology used to describe that the security interest has reached such validity. Validity against third parties requires fulfillment of the first three requirements, but also an additional step is necessary, perfection. The dominant perfection method within the UCC Article 9 is perfection via filing in a centralized filing system. This method is however supplemented with pledge, control, automatic perfection and sometimes a requirement of filing in other specific filing registers. The Swedish system does not differentiate between attachment and perfection in manner equivalent to the differentiation that occurs within the UCC Article 9. Perfection is instead achieved by the use of pledge, notification, filing and different special considerations such as the applicability of the Sale of Chattels Act and the use of transactions classified as conditional sales. The lack of adequate perfection instruments within the Swedish system must therefore be considered as one of its deficiencies and thus creativity has been necessary to create adequate security instruments. Pledge is the predominant perfection method in Sweden, the fundamental key to achieve a valid pledge is that the pledgor has lost control of the collateral. The loss of control does not have to be absolute, and its definition and requirements have given rise to very complex considerations for Swedish courts. The use of filing, as within the UCC Article 9, will offer a better perfection method in the manner that it offers a method that better reflects the needs and reality of the commercial market. Filing also fulfills the key purposes that have been seen to legitimize the existence of pledge to an extent that is far more generous and protective of third party interests. Conclusively, reform with a uniform system with filing as the predominant perfection method would create a more beneficial credit market climate.