Secured credit law in Sweden - An analysis of the potential for a new regime in light of Canadian law and the European DCFR

Sammanfattning: Present Swedish law concerning security over movable assets is largely based on case law and legal literature, with some statutory intervention. Although the principal form of security is the possessory pledge, various security devices are used in practice, pursuant to legislative introductions of separate registration systems (e.g. floating charges) and the commercial use of ownership for security purposes (e.g. security transfer of ownership, financial leasing, retention of title, commission or consignment). Perfection requirement and priority status depend on what security device is applied. As registration is required only in relation to some asset and transaction types; as transfer of possession (i.e. the debtor’s ability to dispose of the asset is cut off) is arguably deficient as publicity method; and as ownership may be used for security purposes without always being sufficiently visible to third parties, it is difficult for intending creditors and other third parties to grasp the full extent of encumbrances over a debtor’s assets. As ownership prevails over all other security rights on the basis of the formal notion that a debtor cannot grant security in an asset that is owned by someone else, ownership affects the determination of priority despite not being mentioned in the priority legislation. Due to the lack of a uniform secured credit regime in which all security devices are regulated, including those based on ownership, the Swedish system is uncertain and non-transparent. In Canada, two similar legal patchworks were replaced by comprehensive regimes: one in the common law provinces and one in civil law Quebec. The common law version applies a functional security interest, which includes every transaction that functions to secure an obligation, irrespective of where ownership is vested, whereas Quebec’s civil code treats title-based transactions separate from its hypothec, although subjecting those title-based transactions when functioning as security to publicity rules and, sometimes, enforcement rules. Both regimes use registration as the principle perfection method. One central register coupled with the approach that all transactions that are recognised as ways to secure an obligation are registrable therein enable an integrated regulation of priorities between secured creditors and against third parties. Priority turns on the date of registration, subject to such creditors whose credit extensions directly finance the acquisition of assets. In Europe, academic discussions on harmonisation in this field of law have resulted in the inclusion in the Draft Common Frame of Reference published in 2009 of a book on secured transactions in movable assets. The drafters propose an optional regime with a semi-functional approach to security and a European register for cross-border secured transactions. On the basis of the current European evolvement and the learnings from the two Canadian successful regimes, there is a good case for a Swedish reform. The present system should be replaced by a comprehensive act, which would include all security devices, and the setting up of one central register.