On 11 July 2013, Parliament adopted the Law amending the Civil Code with regard to securities over movable property and to abolish certain provisions in this respect (Wet van 11 juli 2013 tot wijziging van het Burgerlijk Wetboek wat de zakelijke zekerheden op roerende goederen betreft en tot opheffing van diverse bepalingen ter zake / Loi du 11 juillet 2013 modifiant le Code Civil en ce qui concerne les sûretés réelles mobilières et abrogeant diverses dispositions en cette matière - the “Law”). The Law represents an overhaul of the existing securities on movable properties, and, most importantly, a modernisation of the pledge regime and its enforcement.
The most profound change effected by the Law is that it abolishes the requirement to dispossess a pledgor/debtor from the pledged asset(s). Under the old law, the assets pledged had to be placed beyond the control of the pledgor, and be kept by either the pledgee/creditor or a third party. This system was considered inefficient, as it prohibited the pledgor from making money with the pledged asset.
The Law now creates a system whereby each pledge must be electronically registered. The registration is the responsibility of the pledgee, who has to inform the pledgor of the registration and is liable for any erroneous information registered. As the register is electronic, it should be easily accessible to all interested parties. If the creditor and debtor agree, a traditional pledge by dispossession is still possible and no electronic registration is in that case required.
As the requirement to dispossess a pledge has been abolished, Parliament also abolished two variations on the pledge agreement which have now become superfluous: the pledge on the business (pand op handelszaak / gage sur fonds de commerce) and the agricultural privilege (landbouwvoorrecht / privilège agricole). Both variations are replaced by the new uniform pledge regime and existing pledges on the business or agricultural privileges will have to be registered electronically within twelve months after the entry into force of the Law. Moreover, as dispossession is no longer a necessity for a pledge, the Law now explicitly provides that future goods, being goods that will only be created or come into the pledgor’s possession after conclusion of the pledge agreement, may also be pledged.
Unlike in some surrounding jurisdictions, the Law provides for special protection for pledge agreements if the pledgor is a consumer. For instance, the Law provides that the value of the pledged asset(s) must not be higher than twice the value of the debt.
The procedure to foreclose a pledge has also been simplified. A prior court decision is no longer required. The pledgee wishing to foreclose the pledge may do so once the pledgor has breached the pledge agreement. To do so, the pledgee will have to give the pledgor 10 days’ notice by registered letter. Moreover, if the pledgor disagrees with the foreclosure of the pledge, he may bring an action for redress before the attachment judge (beslagrechter / juge des saisies). In any case, the foreclosure of the pledge must be economically justified, and the pledgee will remain liable for the foreclosure, regardless of any agreement to the contrary.
Besides reforming the pledge regime, the Law also codifies the right of reservation of ownership (eigendomsvoorbehoud / réserve de propriété) in case of a sale-purchase agreement, and the right of retention (retentierecht / droit de rétention), but makes no substantial changes in this respect.
The Law will enter into force on a date to be determined by Royal Decree but at the latest on 1 December 2014. The Law can be found at http://reflex.raadvst-consetat.be/reflex/pdf/Mbbs/2013/08/02/124865.pdf.
