The conceptual underpinnings of secured transactions and the reform of personal property security laws

• Jurisdiction: South Africa
• Author: Esangbedo, G.
• Published date: 31 March 2021
• Citation: (2020) 6(2) JCCL&P 166
• DOI: https://doi.org/10.47348/JCCL/V6/i2a6
• Date: 31 March 2021
• Pages: 166-189

https://doi.org/10.47348/JCCL/V6/i2a6 166

THE CONCEPTUAL UNDERPINNINGS

OF SECURED TRANSACTIONS

AND THE REFORM OF PERSONAL

PROPERTY SECURITY LAWS

GREGORY ESANGBEDO*

Barrister and Solicitor of the Supreme Court of Nigeria. Principal Partner,

Greg Esangbedo & Associates, Lagos, Nigeria

ABSTRACT

Law reforms typically epitomise the need to effect positive change.

The reform of personal property security laws which has attained

increased prominence amongst common-law states in recent years

is by no means different. However, there appear to be mixed views

about the exact impact of these reforms including whether and to

what extent they achieve their stated objectives. This article explores

the connection between the reforms of personal property security

law and the conceptual underpinnings of secured transactions in

order to ascertain the extent to which such reforms actually reflect

such underpinnings as a preliminary step in evaluating their impact

on society.

Keywords: law reform; personal property security law; secured

transactions.

I INTRODUCTION

States’ adoption of the unitary system of secured transactions

in the reform of their personal property security laws (PPSL) has

undoubtedly assumed immense global significance in recent years.1

Added to the commendable role of the United Nations Commission

* MPhil in Law (University of Oxford).

1 A 2012 survey by the International Finance Corporation published by the

International Monetary Fund (IMF) as a diagnostic tool and informational

source for policymakers, development practitioners and legal experts in collateral

registries reform notes that about 300 countries have implemented PPSL reforms

since 2002 although the survey covered the actual implementation of collateral

registries in just 35 countries. See International Finance Corporation, ‘Making

Security Interests Public: Registration Mechanisms in 35 Jurisdictions’ 7, available

at www.doingbusiness.org/content/dam/doingBusiness/media/Special-Reports/Making-

Security-Interests-Public.pdf, accessed on 21 July 2020.

(2020) 6(2) JCCL&P 166

© Juta and Company (Pty) Ltd

167

THE CONCEPTUAL UNDERPINNINGS OF SECURED TRANSACTIONS AND

THE REFORM OF PERSONAL PROPERTY SECURITY LAWS

https://doi.org/10.47348/JCCL/V6/i2a6

on International Trade Law (UNCITRAL) in driving these reforms

globally,2 a further catalyst for the proliferation of states’ PPSL

reforms is the vast belief that reforms enable hitherto inhibited

business entities access to loans, thereby fostering their growth and

invariably states’ and global economic advancement.3

However, in the absence of a holistic method for empirically

measuring the impact of these reforms, whether they actually achieve

the objective of stimulating economic development is debatable.4 As

an alternative, it is suggested that an atomistic, simplistic evaluation of

the impact of reform can be undertaken by first examining how PPSL

reforms reflect the conceptual underpinnings of secured transactions

– an approach justified by the very essence of jurisprudence. If

jurisprudence involves the study of the general theoretical questions

about the nature of laws and legal systems, of the relationship of

law to justice and morality and about the social nature of law5 it is

undeniable that law has a social aspect measurable by assessing how

well it fulfils societal needs; considering man’s dynamic nature, any

assessment of the social impact of law must necessarily align with the

world’s evolving needs.

Perhaps more than in any other endeavour, law reforms best

exemplify the law and societal needs analytics as they are typically

driven by the need to effect positive change to reflect these needs.

Several illustrations abound such as the call for the reform of the

common law of secured transactions, culminating in the adoption of

the unitary system by several common-law states, this lends credence

to law’s social significance as such calls have been influenced by the

need to ameliorate the inadequacies in the common-law system to

make credit transactions more easily available to business entities.6

Some of these inadequacies that have militated against borrowers’

access to loans, include creditors’ dissatisfaction with the common-

law priorities’ scheme, as these schemes offer no synchronised or

predictive basis for determining priorities amongst competing

interests. This appears exacerbated by the fact that competing

2 UNCITRAL’s contribution to the reform process includes the development of

what may be considered its twin mantra i.e., UNCITRAL, UNCITRAL Legislative

Guide on Secured Transactions (United Nations, 2010) and UNCITRAL Model Law

on Secured Transactions (United Nations, 2016) developed to guide states to meet

their reform objectives.

3 See L Gullifer & I Tirado ‘Financing Micro-businesses and the UNCITRAL Model

Law on Secured Transactions’ (2017) Oxford Legal Studies Research Papers 1.

4 See e.g. V Vig ‘Access to collateral and corporate debt structure: evidence from a

natural experiment’ (2013) 68 Journal of Finance, 881.

5 M D A Freeman Lloyd’s Introduction to Jurisprudence 8 ed (2008) 3.

6 For a discussion of the imperatives that drove the evolvement of floating charges

see R Pennington ‘The genesis of the floating charge’ (1960) 23 Modern Law Review

6.

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