1. THE 2012 MOBILISATION ACT

Over the years, securitisations in Belgium have been faced with a number of legal issues creating a certain level of uncertainty (and long qualifications in legal opinions …).

On 3 August 2012, Belgium adopted a law on the mobilisation of claims in the financial sector (the “Mobilisation Act”) aiming at solving a number of such problems.

After almost two years since its entry into force, it is possible to make a first assessment of the Mobilisation Act. While it indeed clarified a number of legal issues, certain of its provisions remain unclear.

  1. MORE CLARITY …

A number of issues have been solved by the Mobilisation Act, including the following:

  • Loans to public entities

Specific limitations to transfers of loans based on public procurement laws are disapplied.

  • Secured Loans

It is confirmed that the benefit of mortgages or other types of security interests is transferred with the loans, in principle without formality. Qualifications about the validity of the transfer of certain security interests are no longer needed. In case of partial transfer, the benefit of the security interest is split between the transferor and the transferee.

  • Partial transfer

Unless agreed otherwise, the transferred loans will be paid pari passu with the non-transferred loans in existence at the time of the transfer, but by priority before loans granted by the transferor after the transfer.

  • Mortgage mandates

Mortgage mandates (unregistered) are a widespread mean of avoiding/limiting the costs of mortgages in Belgium. Unless specified otherwise in the mandate, it is considered to be granted to the benefit of the transferee of the secured loan as well. In case of partial transfer, a mortgage created on the basis of the mandate will secure both transferred and non-transferred loans.

  • Set-off

When the transfer of a loan has been notified to the borrower, the latter may no longer invoke set-off with a claim it would have against the transferor bank (e.g., deposit), except if the conditions for set-off (including both claims having become payable) were met before the notification.

Since the provisions of the Mobilisation Act are not always as clear as one would hope, the application of these rules in each transaction must be carefully analysed.

  1. … BUT CERTAIN GREY AREAS REMAIN

However, as always, the devil is in the detail, and the Mobilisation Act remains unclear on certain issues, including the following examples:

Set-off after bankruptcy

Even if the transfer of the loan has not been notified to the borrower, the latter may no longer invoke set-off if its conditions have been met “at the occasion of, or as a consequence of,” the transferor’s bankruptcy. The exact meaning of this expression is unclear. It seems that the better view is that the conditions of set-off must be fulfilled upon or after the bankruptcy, but the bankruptcy does not need to have caused an immediate set-off.

Set-off and enforcement of pledge

The Mobilisation Act includes a number of exceptions to the borrower’s right to include set-off. However, these exceptions do not prevent a set-off “which would be invoked or made in view of the enforcement of a pledge over the claim to be set-off ”. This provision is particularly unclear: while a party may invoke a set-off in order not to pay a debt, it is unclear how a party may invoke a set-off “in view of” enforcing a pledge. In addition, it appears that such set-off could be invoked only by a person that has a pledge over “the claim to be set-off ”: is this the claim of the borrower against the bank or the claim of the assignee of the credit against the borrower ?

  1. CONCLUSION

While the Mobilisation Act makes securitisations in Belgium clearer and safer in a number of respects, the specifics of the transaction must always be carefully analysed in order to ensure that all issues are identified and either solved or clearly understood by the parties.

It is important to note that the Mobilisation Act does not only apply to the securitisation of loan portfolios, but also to the transfer (and pledge) of individual loans.