The law applicable to proprietary issues relating to intermediated securities

Abstract

The intermediation, immobilisation, and dematerialisation of securities have put the laws of various countries under stress, particularly private international law rules. The increasingly global character of securities markets has made the provision of clear choice of law rules imperative to ensure legal certainty in cross-border situations. This is particularly so, within the limited context of the Internal Market. The need for clear choice of law rules was highlighted by the Giovannini Group, but unfortunately the EU approach to the problem remains to date limited and fragmented. The main objective of this thesis is to critically analyse the choice of law rules present in EU legislation and to determine whether legal certainty is guaranteed. This thesis will be concerned solely with proprietary aspects relating to intermediated securities, but those rules will be framed within the choice of law process as formally understood by the common traditions of European private international law systems. This thesis will consider the characterisation or qualification of the issue, and its importance to distinguish proprietary issues from contractual ones. The author will argue that the approach taken in the Settlement Finality Directive and the Financial Collateral Directive vis-à-vis the legal nature and characteristics of intermediated securities is a functional one. The analysis on the choice of law rules will expose further weaknesses of the ?law where the account is located or maintained?, notably, linguistic differences in the language versions of the Directives. After analysing the provisions of the Hague Securities Convention, and other recent proposals published by the European Commission, the idea that an arbitrary and fixed choice of law rule will be floated. The discussion proceeds to investigate the scope of the applicable law determined by these choice of law rules, particularly its interaction with other choice of law rules set for insolvency and for contractual issues. The (quasi) private international law rules in the Insolvency Regulation, Winding-up of Credit Institutions Directive, and the Winding-up of Insurance Undertakings Directive, will be analysed in the context of intermediated securities.