Rethinking Conflit Mobile. Applying the Law of COMI to Rights in Rem

One of the major issues raised by the application of the lex rei sitae to in rem rights is that the connecting factor on which the choice of law rule relies can be unstable. If the relevant asset is moveable, it can be moved to another jurisdiction, which would result in the connecting factor designating another law. This is a traditional problem in the conflict of laws, that French scholars have labelled conflit mobile. It is not peculiar to property law, as many other connecting factors (nationality, residence, seat of companies, etc…) can change and trigger a change in the applicable law. But it is probably in property law that the problem is the most acute, because assets cross borders routinely, in particular in the context of international trade (goods and raw materials for instance), international transportation (planes, trains and trucks for instance) or workers commuting (cars).
A change of the applicable law creates the need to delineate the respective scopes of the old and new applicable laws. In principle, this should mean that certain issues, which arose at the time when the old law applied, should be governed by the old law, and other issues, which arose after the change of applicable law, should be governed by the new law. Experience has shown, however, that this model can require a certain degree of similarity between the two laws and that, otherwise, the new law might simply ignore the prior applicability of the old law and claim exclusive application. In the context of in rem rights, the French Supreme court has famously held that a security interest unknown of French law could not produce effect in France after the relevant assets was moved to France . While the court left open whether the law of the old lex situs might govern the validity and constitution of the security interest, it held that “French law alone governs in rem rights over property situated in France” and that, as a result, a foreign security based on the transfer of the ownership of the asset to the creditor, could not produce effect in France. In effect, the French supreme court had applied French law to determine whether such security interest could exist, and had denied any room to the old lex situs. The two laws were simply too different.
The purpose of this paper is to explore whether the problem of conflit mobile could be addressed by moving away from the lex situs and applying instead the law of the centre of the main interests of the owner of the relevant asset .