Third Workshop on the Holding of Securities through an Intermediary

The third workshop on the holding of securities through an intermediary took place on 16 June 2017 at Harris Manchester College in Oxford.

The first and second workshops, held on 15 September 2016 and 25 March 2017, focused on the enforcement of debt securities held through an intermediary and on voting and governance issues in relation to intermediated equity securities.

The third workshop addressed conflict of law issues in relation to intermediated securities. It was opened by Professor Louise Gullifer and Mr Guy Morton, who welcomed attendees and introduced the debate. Guy Morton gave a historical introduction to the issues being discussed, including the growth and internationalisation of securities trading and investment holding and the problems which the law has faced in keeping pace with these changes. In particular, he noted the importance of securities finance and the very real problems caused by any uncertainty regarding the applicable legal rules, including those determining the applicable law.

The introduction was followed with presentations from Professor Sir Roy Goode and Dr Philipp Paech. In his presentation, Professor Sir Roy Goode discussed the Hague Convention on the law applicable to indirectly held securities. He considered the background to the Convention, the basic approach taken by the Convention and the primary and fall-back rules for determination of the applicable law. Dr Philipp Paech’s presentation, entitled ‘Securities conflict of laws and material law’, set out the need for clear conflict of laws rules for intermediated securities and considered the ‘look-through’ approach, the law of the issuer, ‘consensual PRIMA’ and ‘factual PRIMA’.

In the second part of the workshop, presentations were given by Dr Thomas Keijser and Professor Charles Mooney. In a presentation entitled ‘The Current EU rules and the EU Consultation’, Dr Thomas Keijser considered the European Commission Consultation Document on conflict of law rules for third party effects of transactions in securities and claims. He gave an overview of the history to the Consultation Document, including previous reports and consultations, before discussing the various issues with the current law and the approaches which the Consultation Document suggests for addressing these. Professor Charles Mooney’s presentation, ‘Choice-of-Law/Private International Law Rules for Secured Transactions: Towards an Analytical Framework’, focused on the broader context of intermediated securities choice-of-law rules, in particular the effects on third parties and the importance of considering the differing interests of different stakeholders.

All presentations were followed by discussion of the issues among participants. A particular focus of the discussion was the potential use of distributed ledger technology such as blockchain, the conflict of law issues which this might present and potential ways to address these issues.