The Publicity Principle: A Case of Two Competing Interests but One Law

The Publicity Principle: A Case of Two Competing Interests but One Law
2020-11-05

Mr Chike Emedosi presents the third contribution to the Centre for Commercial Law (CCL)’s blog series on “Seeing Commercial Law from Different Perspectives” launched to celebrate the University of Aberdeen’s 525 anniversary and to showcase CCL members thought-provoking standpoints on researching, teaching, or practising commercial law. Chike is doctoral researcher at the School of Law. His doctoral research, funded by University of Aberdeen's Elphinstone PhD Scholarship, is titled “The Creation of Security Interests in Securitisations after the Global Financial Crisis: A Comparative Analysis of the Law in England, Scotland, and France.” Chike’s research and teaching interests include asset securitisation, banking and financial regulation, debt finance and security, and bank Insolvencies.

“The publicity principle is an important aspect of Scots property law. This is especially true with respect to the creation and transfer of security rights. The principle requires rights that are enforceable against third parties to be discoverable by third parties. For example, a voluntary fixed security over corporeal moveables requires delivery of possession. For security over land, registration is required. A weaker form of publicity known as intimation is required for security over personal rights. The question of whether publicity is a solution, or a problem is a matter of perspective and context. It is a solution for third parties, such as creditors (existing and potential) and liquidators, who seek to determine the extent of the contracting parties’ patrimonies. On the other hand, the debtor who prefers to keep the transaction private for genuine commercial reasons will see publicity as a nuisance. Publicity is also problematic in certain commercial transactions, particularly those that involve multiple securities and future securities. For these transactions, publicity can be prohibitively costly or even impracticable. This conflict of interest gives rise to difficulties from the standpoint of law reform, given that neither of the interests can be easily ignored. Striking the right balance between the need to protect third parties and the need to allow commerce to thrive will be necessary. To achieve this balance, careful consideration must be given to the nature of the security property, the value of the transaction, and the status of the debtor.”

The next contribution to this series by Dr Qiang Cai is titled ‘Law of Taxation: Technicalities and Philosophies.’

Published by School of Law, University of Aberdeen

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