Study recommends revision of Swiss chattel insurance law
Swiss chattel mortgage law today is largely at the level of 1907, when the Civil Code was adopted. A study concludes that a revision would have a positive impact on the competitiveness of the business environment.
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Under Swiss chattel mortgage law, security over movable assets can only be created by transferring possession of the security from the debtor to the creditor (so-called Faustpfand principle). As a result of this legal situation, Swiss companies can hardly use mobile means of production such as machines, vehicles, raw materials, inventories or other movable goods as collateral for receivables or loans. This affects trade credits in particular, but also traditional bank loans. This initial situation is likely to impair the efficient use of capital and lead to a competitive disadvantage for Swiss companies. Numerous foreign legal systems have been modernized with regard to chattel mortgage law in recent decades, and non-possessory collateral has largely been permitted.
Against this backdrop, the Federal Council envisaged conducting an in-depth regulatory impact assessment (RIA) as part of its 2020 annual targets. The Study was commissioned by the State Secretariat for Economic Affairs (SECO) and the Federal Office of Justice (FOJ) from Interface Politikstudien Forschung Beratung. Its aim was to provide the basis for a possible revision of the Swiss mobile insurance law. The focus was on the analysis of the corporate sector, in particular the impact of a revision on small and medium-sized enterprises (SMEs).
Construction of a digital register recommended
The analysis shows that Swiss SMEs face severe restrictions in accessing secured debt financing compared to virtually all foreign jurisdictions. The authors recommend a gradual revision of the chattel mortgage law limited to companies. Important elements are the admission of a chattel mortgage with register publicity, a modernization of the retention of title and the right of assignment as well as a modernization with regard to intangible property rights or intangible assets. The authors further recommend the establishment of a digital, central registry as well as a rapid ratification of the Cape Town Convention, which creates a uniform security interest for high-value, cross-border means of production (in particular aircraft, railroad rolling stock and satellites).
The authors expect positive economic impulses from a reform. Depending on the content of the revision, the one-off economic revenue increases are estimated at between CHF 0.5 billion and CHF 14 billion. Innovation effects as well as an increase in the international competitiveness of SMEs are likely to further strengthen the estimated revenue effects. The authors see by far the greatest potential of a revision in the collateralization of supplier credits.
Source: SECO
