The Filing System For Non-Possessory Security Over Movables: A Comparative Analysis

With the rapid development of global economy, non-possessory security over movables has emerged as one of the main enterprise finance devices, and thus greatly spurred social economy. Apart from its economic benefits, it is still faced with reluctant acceptance of traditional security law regime: in civil law theory, possession of collateral is a prerequisite for priority enjoyed by the secured party to resist any non-party's claim, while this new device is characterized by separation of ownership/mortgage and possession, and thus was once rejected as fraudulent secret lien. On the other hand, a well-designed registration, adopted as a way for disclosure of property right to the public not only justifies the existence of the new device, but also greatly promotes secured financing economy.The current registration system for chattel mortgage in China is far from perfect. The requirement of staple part of valuable personal property to register has seriously blocked the development of secured financing in China. Moreover, China has adopted a mixture system of both "required" and "volunteer" registrations, creating conflicting effectiveness of registration as to chattel mortgage, and consequently causes turbulence to China's security priority order. "Secured Transactions" of UCC Article 9 in the United States, which presents a practical, flexible and simplified filing system, has so met the U.S. business community's expectations that it proved to be a great success. The great impact of "secured transactions" of UCC-9 on the world trade warrant the same kind of high-level attention that other common law legal systems have received in China.This thesis aims at discussing "notice filing" of UCC Article 9 "Secured Transactions" and providing reference for the improvement of China's existing registration for chattel mortgage. The article begins in chapter twowith the introduction of ownership security, retention of ownership and chattel mortgage as non-possessory security over movables in civil law nations and the reasons for their lack of filing system. Then the author focuses in the following three chapters on the development of UCC Article 9 filing system, the fundamental purpose and function of filing, and the specific requirement for filing. On the basis of those analysis, the author expounds in chapter two and six on the merits and demerits of China's existing registration of chattel mortgage, and recommends its improvement by referring to the "notice filing" of UCC Article 9. In the last part of the article, the author also made some comparison on the public-notice filing system between German law and American law, in order to reveal different value underlying the two legal systems. These comparative analyses are made with expectation to provide a model for modernizing registration rules of chattel mortgage in China, and help its unification with the prevalent legal practice in the world.