Applicable Law Of Foreign Retention Of Title

ROT refers to the buyer purchasing subject matter, to which enjoying the right of occupying, using, proceeding and disposing conditionally. Ownership of the subject matter belongs to buyer who completes stipulations. Otherwise seller can recall the right of the ownership of subject matter or its conversion, remuneration in order to guarantee the realization of the subject matter’s creditor’s right. ROT is able to satisfy the sellers guarantee of creditor’s right of market price and the demand of buyer possession, utilize, gain of subject matter. It is frequently used during the international trade practices. In the field of international trade, ROT contains many factors concerning foreign element, so the foreign ROT legal relationship has appeared. The claim relations and property relations of the foreign ROT should be characterized as a whole entity. Differences on system design of ROT stipulates by various national legislation causes many legal conflicts on the issue of ROT, which specifically involves ROT’s type set time and manner, methods of publication, object scope potency and so on. The ROT can be divided into two parts, the simple ROT and the complex ROT. The complex ROT includes prolonged ROT, aggregation ROT, expanded ROT. During the process of realizing the ROT, it need to pay attention to differentiate some similar conception among conditional sale, transferring guarantee, chattel mortgage, financial lease and etc. The nature of ROT can be recognized as the process of transfer of title or guarantee of obligation, this will lead the foreign ROT to different conflict rules, and its legal consequences also are different. The effectiveness of ROT is effectiveness of both the buyer and seller. The seller has ownership, recall right, and compensation for damages right to retention, and the buyer has equity of redemption, possession right, the right to use, usufruct, and expectant right to the retention.Comparing and analyzing ROT’s relevant provisions of applicable law to the world legislation and international conventions, we find potency of foreign ROT provisons generally applies to the proper law of the contract; to the effectiveness problem of buyer and seller, there are different practices of foreign ROT, some are suitable for Lex situs principle, some apply the principle of party autonomy; foreign ROT issues applicable law regarding the validity of the third person when the content of the occurrence location method. The validity affair of the foreign ROT clause belongs to the contract problem, and it should apply the principle of party autonomy to determine the applicable law. Foreign ROT effectiveness problem to both buyer and seller belongs to the real right issue, about the applicable law of real right principle includes both of the traditional Lex situs principle and the principle of party autonomy recently promoted. Through analyzing several aspects from setting the ROT remain the nature of retention’s location law, the real right alteration model of ROT, the nature of ROT real rights for security and establish model method, the ROT applicable effectiveness to the Lex situs of the both sides. But meanwhile, we should realize that through ROT to set real rights for security need to synchronously complete with concluding the ROT sales contract. Characteristic of ROT’s property rights claims is obvious, its creditor can not do without contract in which concurrence of claim of rights and claim of obligatory right always exists. It will increase the tedious degree of case dealing if separate the contract behavior and juristic act of real right and apply to different applicable law respectively. Thus, there is enough reason can be account for that foreign ROT remain effectiveness to both sides, but during the applying process, it should not ignore that do not damage the interests of third person. Foreign ROT also has property relations to effectiveness to the third person. Real right alteration except act of cause that legal and effective, it also needs result behavior. Registration or delivery results behavior belongs to the category of property law forcibly method, when foreign ROT refers the third person interests, it should according to the Lex situs law when legal factors occur to judge that whether foreign ROT has effectiveness to the third person.The problem of application of laws in ROT frequently occurs in cross-border insolvency, the spirit of creditor’s equal discharge rights embedded in Bankruptcy law is in conflict which the value pursuit of ROT’s system design in which seller attains the priority in compensation. Therefore, any party in international goods trade goes through bankruptcy procedure, the system that guaranteed goods payment will prioritize in compensation shall be challenged by Bankruptcy law. Once one party is going into bankruptcy proceedings, ROT clause repayment priority of guarantee mechanism would be challenged by Bankruptcy Law. For the high frequency of cross-border bankruptcy and international ROT, so law application problems of ROT frequently happen in cross-border bankruptcy. The attention attached to ROT problems, pay by insolvency proceedings of EU Council, fully show the practical significance the problem. In the process of transnational bankruptcy, the bankruptcy property should apply bankruptcy law that be formulated by the bankrupt country to determine. The buyer has option to determine whether continue to perform the contract when the buyer was bankrupt, the seller must add restrictions to retrieve the retention. When the seller was bankruptcy, the retention should not be regard as the bankruptcy property and deny the validity of the ROT, as long as the buyer according to the content of the local law, in accordance with the contract between the seller and the buyer to perform the corresponding obligations, it will obtain the ownership of the object.After analyzing application of law of several cases involve foreign ROT that are trialed by the court in our country, those cases are all handled the ROT as foreign contract relation, and all applying to Chinese law during the trial process. When a case refers to the real right alteration effectiveness issues, it is not proper to handle according to contract relation to choose applicable law. In the future, the administration of justice should legislate the foreign ROT applicable law as soon as possible, to solve the difficulties that applicable law is basis in foreign ROT cases. Treating the trend of "homeward trend" of applicable law, as long as strictly according to the applicable law that conflict rules are quoted, it shall be respected. And throughout the depecage doctrine concept into the applicable law in foreign ROT, to solve the problem of the law applicable to the foreign ROT scientifically and reasonably.