International and European Perspectives - UNCITRAL Model Law and DCFR on Priority and Taking Free

Sep 17, 2026

Analysis of priority and “taking free” in secured transactions across international and European legal perspectives, focusing on the UNCITRAL Model Law and the DCFR (Book IX). The discussion clarifies the function of priority/taking-free rules in resolving conflicts between competing rights in the same asset, contrasts nemo dat principles with good-faith acquisition, and examines assignment of receivables. It also evaluates superpriority for acquisition finance devices, with particular attention to retention of title and differences in unitary versus non-unitary approaches.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages12

Reading Time30 min

AccessFree to download

Overview

Introduction

Secured transactions regimes under DCFR Book IX and UNCITRAL Model Law

General rule of priority: prior tempore potior iure

Taking free under good faith acquisition

Assignment of receivables and priority

Superpriority of acquisition finance devices and retention of title

Detailed regime comparison (DCFR Book IX vs UNCITRAL Model Law)

International and European Perspectives: UNCITRAL Model Law and DCFR on Priority and Taking Free Dr. Ole Böger Hanseatic Court of Appeal in Bremen (Hanseatisches Oberlandesgericht in Bremen) Conference on Secured Transactions Law Reform: Priority Rules and the Impact on Consumers Leeds, 06 January 2017 Overview I. Introduction: Rules on priority and taking free in secured transactions law in general II. The secured transactions regimes of the DCFR Book IX and the UNCITRAL Model Law on Secured Transactions III. General rule of priority: prior tempore potior iure (first in time prevails) IV. Taking free under the rules on good faith acquisition V. Assignment of receivables and priority VI. Superpriority of acquisition finance devices, especially retention of title I. Introduction: Rules on priority and taking free in secured transactions law in general General function of rules on priority and taking free: determining whether one person ´s rights in a specific asset take precedence over another person ´s conflicting rights in the same asset Broad concept of priority and taking free covers different types of rules: -priority rules in the strict sense (ranking of several competing existing rights in the same asset) -principle of nemo dat quod non habet (transferor cannot transfer better rights than held by himself) -rules on good faith acquisition (exceptions to nemo dat, protecting the transferee even where the transferor lacked good title) Rules on priority and taking free are of increased relevance: -where no transfer of possession to secured creditor is required (non-possessory security) -where secured creditor ´s rights not based upon ownership (proprietary security as limited prop. right) Different legal consequences of these rules: -nemo dat/good faith acquisition rules determine whether competing rights are lost or can be acquired -priority rules in the strict sense allow competing rights to exist; priority status has consequences as regards enforcement and distribution of proceeds -> Results are often similar in practice where there are only two competing secured creditors and the proceeds of the collateral do not surpass the secured obligation -> Application of priority rules allows for more flexibility compared to nemo dat/good faith acquisition rules II. The secured transactions regimes of the DCFR Book IX and the UNCITRAL Model Law on Secured Transactions European Draft Common Frame of Reference (DCFR) of 2008: -in the format of a codification, the DCFR covers in ten Books with approx. 1000 Articles most areas of Contract and Personal Property Law, the Law of Unjust Enrichment and the Law of Delict (Non-Contractual Liability) -Book IX of the DCFR covers a regime for proprietary security in movable assets, laid out in 131 Articles -originally an academic project, based upon the Principles of European Contract Law (PECL) -intended both to reflect the acquis communautaire and existing traditions in the Member States and to promote best modern legislative and judicial practices -from 2003 onwards, the EU Commission proposed the preparation of a Common Frame of Reference (CFR) -publication of the DCFR as an academic draft in 2008 (notes on Book IX on Prop. Security publ. in 2015) -current status: -DCFR incl. Book IX not likely to be adopted as EU Regulation or Directive in the near future -Possible use as toolbox for European legislator -Soft Law status: -persuasive authority or common point of reference as pan-European academic text -inspiration for autonomous law reform on national level (e.g. Belgium 2013) UNCITRAL Model Law on Secured Transactions (2016): -based upon the UNCITRAL Legislative Guide on Secured Transactions (2010), intended to assist states in developing modern secured transactions laws with a view to promoting the availability of credit -Model Law developed as concise text: to be used as tool for implementation of the G

FAQs

What is the general function of priority and taking free rules in secured transactions?

They determine whether one person’s rights in a specific asset take precedence over another person’s conflicting rights. They can also decide whether competing rights are lost or may be acquired.

How do nemo dat and good faith acquisition rules relate to taking free?

Nemo dat limits the transferor to transferring no better rights than held. Taking free is achieved through good faith acquisition rules, which protect the transferee even when the transferor lacked good title.

How do the DCFR and UNCITRAL Model Law address retention of title and functional security approaches?

The DCFR uses a non-unitary approach where ownership is retained and does not rely on re-characterisation, while the Model Law follows a unitary approach treating retention of title as a (limited) security right with specific priority status.

Sep 17, 2026

Uploaded by Lucas Martin