Once again: Agreements Prohibiting Cession

• Jurisdiction: South Africa
• Citation: (2008) 19 Stell LR 483
• Published date: 27 May 2019
• Pages: 483-494
• Author: Susan Scott
• Date: 27 May 2019

483

ONCE AGAIN: AGREEMENTS PROHIBITING

CESSION

Susan Scott

BA LLB LLD

Professor of Private Law, University of South Africa

1 Introduction

A re cent judgment1 renewed my i nterest in the topic of agreements pro-

hibiting cession ( pacta de non cedendo).2 The judg ment deals with the effect

of s uch agreements in the event of the creditor’s in solvency (a n issue that

I discuss fully elsewhere).3 Recent developments in international nancing

law, particularly the emergence of factoring and, more recently, securitisation,

necessitated a new look at the validity and consequences of agre ements pro-

hibiting cession in many count ries. It also prompted me to rethink the issue.4

Claims h ave become increasingly impor tant as valuable nancing instr u-

ments. In commerce, claims have become the most impor tant class of asset in

a business. It is therefore of the ut most import ance for creditors that they can

freely deal with these assets. However, the nature of this class of asset, namely

the fact that its fruition depends on perfor mance by the debtor, r equires dif-

ferentiated treatment. I n addressing the needs of creditor s to dispose freely of

their assets, the law therefore cannot neglect t he interests of the debtor. Both

creditors and debtors comprise a variety of entities ranging from multinational

companies to private individuals. In relaxing traditional views on the transfer-

ability of claims, emphasis is placed on  nancial expediency. The effective use

of commercial commodities and the smooth functioning of legal inst itutions

are of paramount impor tance for the optimization of nancial succe ss.

Although the year 1900, the date of the adoption of the Germa n Civil Code

(Bürgerliches Ge setzbuch or BGB), was a h igh-water m ark in the historical

development of ce ssion as a Roman legal institution, it became apparent by

the late 1980’s that the adoption of new nancial techniques and demands for

unication a nd globalization necessitated reforming some inh ibiting aspects

of the law of cession.

The his torical development of ces sion from its Roman r oots (insisting on

the int ransferability of clai ms) climaxed in paragraph 398 of the BGB. Th is

paragraph provides for the complete transfer of claims by means of agreement

1 Capespan (Pty) Ltd v Any N ame 451 (Pty) Ltd 2008 4 SA 510 (C).

2 This can either be in the form of a tota l prohibition on transfe r or a limitation on the tran sfer. The transfer

may, for example, only be made under cer tain circu mstances, suc h as subject to the d ebtor’s permission.

The latter t ype of prohibition is of ten included in li fe insurance co ntracts.

3 Scott “Sessieverbied ende Ooreenkom ste en die Posisie van d ie Kurator by Ins olvensie – Capespan (Pty)

Ltd v Any Name 451 (Pty) Ltd CPD 14-03 -2008 case no: A454/2007” 2008 T SAR 776.

4 For my earlier approach, se e Scott “Pacta de non cede ndo” 1981 THRHR 148; Scott “Sessie en Fac toring

in die Suid-Afrika anse Reg” 1987 De Jure 15; Scott The Law o f Cession 2 ed (1991) 205 ff, especially

266-267.

(2008) 19 Stell LR 483

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