Possession in security interest : a Maltese law perspective

Abstract

The increasing availability of movable property with substantial monetary value, useful as collateral to secure obligations in real consensual security interest, has, in recent years, highlighted the need, in various jurisdictions, of modifying their existing legislation so as to adapt to possible solutions for commercial difficulties. Some jurisdictions have not kept pace with the needs of trade and industry, insisting on maintaining traditional possessory modes of security or impractical non-possessory modes. This thesis attempts a critical analysis of the traditional possessory contract of pledge, and examines the possibility of introducing new and more practicable modes of securing interest. This thesis analyses the raison d’être of the element of possession in security interest, this is followed by an examination of the practicability and disadvantages of possession in the contract of pledge, in the light of recent commercial needs. Moreover, it delves into the Maltese legislative interventions, which sought to remedy certain deficiencies of possessory security interest in the area of security over movables. Yet the author concludes that most of these interventions were sector-specific or provided a limited alternative to the contract of pledge and, in turn, that there is a need for more legislative intervention in this area. Finally the author of the thesis, assesses and attempts to resolve the problems and weaknesses of the current modes of security interests, in the process, differentiating between fixed and current movable assets. In these sections reference is made to what other jurisdictions have attempted to achieve, whilst critically analysing and suggesting possible amendments to the current Maltese security legislation.