Secured Transactions Law in Asia

Principles, Perspectives and Reform

Louise Gullifer, Dora Neo, Louise Gullifer, Dora Neo

• Publisher: Hart Publishing
• Year: 2021
• ISBN:
  9781509926510
• Edition: 1
• Topic: Law
• Subtopic: Financial Law
• Index: Law

This collection of essays offers a unique insight and overview of the secured transactions law in many of the most important countries in Asia, as well as reflections on the need for, benefits of and challenges for reform in this area of the law. The book provides a mixture of general reflections on the history, successes and challenges of secured transaction law reform, and critical discussion of the law in a number of Asian countries. In some of the countries, the law has already been reformed, or reform is under way, and here the reforms are considered critically, with recommendations for future work. In other countries, the law is not yet reformed, and the existing law is analysed so as to determine what reform is desirable, and whether it is likely to take place. First, this book will enable those engaging with the law in Asia to understand better the contours of the law in both civil and common law jurisdictions. Second, it provides analytical insights into why secured transactions law reform happens or does not happen, the different methods by which reform takes place, the benefits of reform and the difficulties that need to be overcome for successful reform. Third, it discusses the need for reform where none has yet taken place and critically assesses the reforms which have already been enacted or are being considered. In addition to providing a forum for discussion in relation to the countries in question, this book is also a timely contribution to the wider debate on secured transactions law reform which is taking place around the world.

1

Introduction

LOUISE GULLIFER AND DORA NEO

I.General Introduction

This book is the third in a series looking at secured transactions law around the world, with a particular focus on reform. The first book,¹ of which one of the editors of this book was an editor, was a general discussion of reform so far, with particular focus on Europe and the possibility of reform in European countries. As well as discussion of the position in many European countries, it included chapters on the history of reform in the US and its transplant into Canada, Australia, New Zealand and the first African country to undertake wholesale reform, Malawi.

The second book² concentrated on African countries, in many of which there has been a relatively rapid take-up of the idea of reform. As in the first book, countries with different legal cultures (civil law, common law and mixed jurisdictions) were examined, and the existing law (reformed or unreformed) and proposed changes were critically examined.

This third book focuses on selected countries in Asia. As with the first two books, both civil and common law jurisdictions are examined. There are also some more general reflections on secured transactions law reform, which draw out themes illustrated in the country-specific chapters, and which analyse, from a transnational perspective, the benefits and challenges of introducing legal and institutional reform. These reflections will be beneficial to future reformers, and will inform the debate in the future not only in Asian countries, but globally.

The book is first and foremost an academic study, and a critical and analytical approach is taken throughout. It will be of interest to all who are involved in considering secured transactions law reform, its content, the process by which it is achieved and its operation in practice. In addition, the in-depth and critical studies of the secured transactions laws in thirteen Asian countries³ form a resource for all those operating within the Asian credit markets, and those who are learning about these laws, whether as students or those engaging with the law as a matter of practice. The countries were chosen carefully to include many important economies in Asia, and also to provide a range of different legal cultures and different economies and to include countries at many different stages of the reform process.

The genesis of the book was in a conference held at the National University of Singapore Faculty of Law in 2018, which was a joint initiative between the Centre for Banking & Finance Law, and the EW Barker Centre for Law & Business (both of the National University of Singapore) and the Commercial Law Centre at Harris Manchester College, University of Oxford. Those contributing chapters to the book presented their initial drafts and ideas at the conference for feedback and discussion. Since then, the chapters have been significantly reworked, and, in many cases, brought up to date to reflect developments in particular countries, including the enactment of some legal reforms.

This introductory chapter not only introduces the subject matter of the book, but also provides some information about matters which will be dealt with throughout the book, such as the definition of, and types of, secured transactions law reform, terminology, benchmarks for legal systems and the different legal cultures in Asia.

II.Plan of Book

The book is divided into three parts, plus this introduction and a conclusion, which draws together all the themes and issues discussed earlier in the book. The first part comprises of four chapters which consider secured transactions law, and its reform, generally. In chapter 2, Charles Mooney identifies modern principles which have become generally accepted around the world as epitomising best practice to which a reformed secured transactions law should adhere. This chapter considers the role of the modern principles in legal transplant, and discusses examples of failure to follow the modern principles even in countries where secured transactions law is partly reformed. It also serves to introduce the modern principles, which are used in many chapters of the book as a benchmark to assess the current law in a country, whether reformed or unreformed. Chapter 3 discusses the experience of reformed law in developed jurisdictions, and the challenges that continue to arise even though law reform has been fully embedded within the legal system. Chapter 4 discusses the United Nations Commission for International Trade Law (UNCITRAL) Model Law, which exemplifies the modern principles, and which provides a more detailed model with which reformed law in a particular jurisdiction can be compared. Chapter 5 gives an overview of secured transactions law reform in East Asia, from the point of view of the author who has worked on secured transactions law and infrastructure reform on the ground for over twenty years. This chapter, in particular, stresses the importance of the way in which reform is undertaken, the critical significance of cooperation and collaboration between many different actors and the need for infrastructure and market practices to be developed in order for legal reform to be effective. Reference is made in this chapter to Lao PDR, Cambodia, Philippines, Indonesia, Thailand and Malaysia in particular.

The second part of the book focuses on civil law jurisdictions. As can be seen from V D below all the jurisdictions included here have had at least some limited reform,⁴ and many are considering further reform. The first chapter in the part, chapter 6, considers reform from a general civil law perspective. It identifies the civil law concepts which have to be accommodated in a law which corresponds with the modern principles and analyses the rules and practices which would need to be changed in order to comply with those principles. The competing policies behind the existing civil law rules and practices, and those of the modern principles are examined, and suggestions are made as to how a civil law jurisdiction can attain some of its existing policy objectives while obtaining the benefits of a reformed law. Many of the themes identified in this chapter are picked up in some of the country-specific chapters which follow. Of the countries discussed in these chapters, two have introduced wholesale reform (the Philippines, discussed in chapter 10 and Vietnam,⁵ discussed in chapter 14). China (chapter 7), South Korea (chapter 11) and Thailand (chapter 13) have introduced partial reform, while even more limited reform has been introduced in Indonesia and Taiwan, including the introduction of electronic registration of some security interests. Japan (chapter 9) has introduced legislation overriding anti-assignment clauses, but, although a research group is considering at least partial reform, no firm proposals have yet been put forward.

Part 3 of the book focuses on common law jurisdictions. Chapter 15 considers reform in common law jurisdictions with particular reference to Brunei, a common law jurisdiction which recently carried out wholesale legal reform. As with the equivalent civil law chapter, this chapter discusses the conceptual and practical differences between a common law system and a system according with the modern principles, and identifies areas in which the law needs to be changed, and those which merely need ‘translating’, in order to comply with the principles. Many of these themes are picked up in the chapters in this part. Of the four countries discussed, only Pakistan (chapter 18) has introduced wholesale reform, although reform is also pending in Bangladesh (chapter 16). There has been extensive, but still partial, reform in India (chapter 17), while Singapore (chapter 19) is a largely unreformed common law system, despite having reformed its registration system for company charges.

Each of the country-specific chapters in Parts 2 and 3 gives a critical account of the current law in that country, as well as identifying challenges in the future, and, in many cases, making proposals for further change. These themes, as well as the arguments about reform made in Part 1, are drawn together in the conclusion, which provides a thematic overview of the reform process and the substantive law, with close reference to the arguments made in the book and to examples from the country-specific chapters.

III.Secured Transactions Law Reform

A.What is Meant by ‘Secured Transactions’ Law

The title of the book, and the headings of a number of chapters, assume that there is such a thing as ‘secured transactions law’, which can be reformed. This section explores the concept of ‘secured transactions’ and ‘secured transactions law’.

The phrase ‘secured transactions’ appears to have originated in the United States, as a result of the legal reform adopted in Article 9 of the Uniform Commercial Code. It is now used globally, for example, as the title of many university courses,⁶ in the title of many books⁷ and, more recently, the title of national legislation⁸ and international instruments.⁹

On its face, the phrase might be thought to cover every transaction in which a security interest is taken to secure an obligation. The reason why t...