Commission opens draft Moveable Transactions Bill to comments

A draft bill dealing with transactions in moveable property has been published by the Scottish Law Commission with an invitation to comment before it reports oin the subject.

The draft Moveable Transactions (Scotland) Bill follows consultation on the Commission's discussion paper on the subject, published in 2011. The project, one of the largest ever carried out by the Commission, began with a focus on assignation and security over incorporeal moveable property, but was extended to cover security over corporeal moveable property, and now extends to the range of assets from book debts, loan books (sums due on mortgage, credit cards, car loans etc) and intellectual property rights to stock in trade and equipment such as vehicle fleets etc.

All three areas, the Commission states, are important to the smooth running of the Scottish economy but in each case Scots law is out of date, insufficiently business-friendly and from an international perspective in need of radical reform.

It is proposed that there should be a new type of security right which could cover both corporeal and incorporeal moveable property. The security right would be created by registration in a new online register. An online register of assignations would also be established for the assignation of claims. Registration would be an alternative option to the current means of effecting transfer. Some ideas have been adopted from the Uniform Commercial Code of the USA, which is also used with variations in some Commonwealth countries.

The Commission is also monitoring reform work in England & Wales, in particular the Secured Transactions Law Reform Project and the work of the Financial Law Committee of the City of London Law Society. It recognises that there is little appetite in Scotland for fundamental reform such as requiring registration of retention of title clauses, which is a feature of the USA code but is not required in England & Wales.

It also wants its bill to be within the legislative competence of the Scottish Parliament. This means avoiding areas such as corporate insolvency law, the law of business associations and the rules on registration of company charges, along with intellectual property legislation, consumer credit and security over financial collateral.

Its report will appear in three volumes: (1) assignation of claims; (2) security over moveable property; and (3) draft bill with explanatory notes. Work is at an advanced stage, and publication is anticipated before the end of 2017.

Click here to access the draft bill and related papers. Comments are requested by 11 August 2017.