On June 21, 2020, the sixth lecture of Civil Code Forum of Wuhan University, hosted by Wuhan University School of Law, was held.

Xie Hongfei, vice president of Civil Law Research Association of China Law Society and director of the Civil Law Department of the Institute of Law of the Chinese Academy of Social Sciences, gave the sixth lecture on the theme of “Institutional Innovation and Evaluation of Chattel Security Rights”. The lecture was moderated by Professor Zhang Shanbin of Wuhan University Law School.

Prof. Zhang first extended a warm welcome to arrival of Prof. Xie, and then introduced Prof. Xie’s academic achievements and his contribution to the codification of the Civil Code.

At the beginning of the lecture, Prof. Xie expressed his gratitude for the invitation of Wuhan University School of Law, and gave a comprehensive account of the institutional innovation of the system from the changes in the concept and rules.

First of all, Prof. Xie introduced the reform background of the system. First, chattel security system has become an important standard to judge the style of civil code. Second, the background of the reform is diverse. Third, the reform should perfect unified registration system and unify the rules of the establishment, effect and realization of Chattel Security. It is very important to introduce the concept of substantial guarantee, but it may conflict with the traditional concept of formal guarantee in Civil law system.

Secondly, Prof. Xie summarized several innovations in the rules of Chattel Security. First, the Civil Code property rights set aside the space for a unified registration system of Chattel Security. Although the Civil Code has no direct provisions, it has clearly reflected this idea. Second, the Civil Code provides for a unified rule of priority in the payment of Chattel Security. Third, the civil code eases the effect of fluidity contract, the invalidity of fluidity contract does not affect the validity of the other parts.

Thirdly, as the institutional reform and application on mortgage, Prof. Xie said two points are worth mentioning. First, article 416 of the Civil Code adds the super priority when the chattel price creditor's rights are mortgaged. This super priority completely breaks through the general provisions of article 414. In the future, we need to consider its impact on the transaction cost and transaction security of the secured party. The second new system can be called “Buyer in ordinary course” (BIOC). Article 404 of the Civil Code has made corresponding provisions, but the scope of application is extended from floating charge to general fixed mortgage of movable property. Prof. Xie believes that China should also consider the balance of interests between mortgagees and buyers.

Fourth, Prof. Xie talked about the conflict between the system of Chattel Security Interests and the contract section in the Civil Code. The contract section introduces the concept of the substantive guarantee of movable property, which is mainly embodied in articles 641, 642, paragraph 2, and article 745 of the Civil Code. This is an important measure to unify the system of guarantee of movable property and rights.

Finally, Prof. Xie pointed out the bottleneck of the development of Chattel Security Interest System in the Civil Code. As far as the Chattel mortgage system is concerned, there are two obvious disadvantages. One is that the mortgaged property registered and the real mortgage property can not be matched, and the other is the mortgagee can not control the mortgage property. In this regard, we can consider through the Internet of Things, blockchain and other technologies to solve.

Prof. Zhang spoke highly of Prof. Xie’s lecture. Subsequently, Prof. Zhang Suhua of Wuhan University School of Law commented on the lecture, pointed out that how to reconcile the contradiction between transaction security and transaction convenience remains to be solved in judicial practice. Zhang Hong, a professor of Wuhan University School of Law, pointed out that Chattel Security System is the best embodiment of the Civil Code’s characteristics of the era.

At the end of the lecture, Prof. Zhang once again extended sincere thanks to Prof. Xie for his arrival, and further appealed that in the era of the Civil Code, we should respond to general secretary Xi’s call to learn the Civil Code, use the Civil Code, let the Civil Code go to the masses, into the hearts of the masses.

Edited by Yuan Yuhang & Wu Liuqing