Lost in Transplantation: Modern Principles of Secured Transactions Law as Legal Transplants

This manuscript will appear as a chapter in a forthcoming edited volume published by Hart Publishing, Secured Transactions Law in Asia: Principles, Perspectives and Reform (Louise Gullifer & Dora Neo eds., forthcoming 2020). It focuses on a set of principles (Modern Principles) that secured transactions law for personal property should follow. These Modern Principles are based on UCC Article 9 and its many progeny, including the UNCITRAL Model Law on Secured Transactions. The chapter situates the Modern principles in the context of the transplantation of law from one legal system to another. It draws in particular on Alan Watson’s pathbreaking book, Legal Transplants.

After describing the Modern Principles and their antecedents, the chapter summarizes relevant aspects of Watson’s Legal Transplants, including the positions of significant adherents and critics of his theses and conclusions. It explains the potential relevance and utility of Watson’s rich historical perspectives for the practical transplantation of the Modern Principles. It considers the transplantation of the Modern Principles from several important perspectives, including the role of legal elites and legal culture, governmental and regulatory influences, opposition of entrenched interests, the role of insolvency law and proceedings, registration in public registries, descriptions of collateral in the context of registration and creation of security interests, and the market for business credit. In particular, it addresses various impediments to the adoption of the Modern Principles by States, obstacles to the use and acceptance of Modern Principles-based laws in the markets for business credit, and hurdles for both adoption and use. Finally, the chapter explains that the Modern Principles offer potential benefits beyond the more obvious goals of expanding access to credit and lowering the cost of credit. They harbor potential for coherence, certainty, and ease of application and use — considerations that generally have been overlooked or underappreciated.