In French law, the principle is clear: movable property cannot be mortgaged. This rule, summarised by the adage "meubles n'ont pas de suite par hypothèque", is justified by the very nature of these assets. Their mobility makes it difficult, if not impossible, to organise a reliable publicity system to inform third parties of the existence of a security interest. In addition, the protection of bona fide purchasers, enshrined in article 2276 of the Civil Code, which states that "in the case of movable property, possession is equivalent to title", is an obstacle to the right of resale, an essential prerogative of any mortgage. However, given the growing economic importance of certain movable assets, the legislator has had to create exceptions. For high-value assets that are sufficiently individualised and identifiable to allow some form of registration, special movable mortgage systems have been introduced. These special securities mainly concern ships, inland waterway vessels and aircraft. They are essential financing tools for companies in these sectors, enabling them to offer productive assets as collateral without being dispossessed of them. These mechanisms lie at the crossroads of securities law, commercial law and regulations specific to transport, forming a singular branch within the legal arsenal of security interests in movable property.
Introduction to special moveable mortgages: exceptions to the principle of unseizability
The principle that there is no general moveable hypothec
Mortgages are traditionally the "queen of real estate securities". It enables a creditor to obtain payment from the sale price of a property in preference to other creditors, and to follow the property through all hands. This mechanism is based on a rigorous land registration system that ensures that third parties are kept informed and secure. Transposing this model to movable property has long come up against a major obstacle: its fungible nature and mobility. How can you keep track of movable property that can be moved, sold or transformed without a reliable register to track these movements? French law has therefore enshrined the principle that movables cannot be seized by way of mortgage, thereby protecting the fluidity of commercial transactions and the security of bona fide purchasers.
Justifying security interests in high-value movable assets
Economic development has seen the emergence of movable assets of considerable value, whose strategic importance to businesses has required appropriate financing solutions. Aircraft, ships and river boats are the most striking examples. These assets, although mobile, share an essential characteristic with buildings: they are identifiable and subject to administrative registration. An aircraft has a unique identification number, while a ship is registered under a flag with a name and a home port. This "fictitious location" makes it possible to organise reliable publicity, in the same way as land registration. It was this possibility of legally tracking the asset that enabled the legislator to depart from the general principle and create special movable mortgages. These securities enable economic operators to mobilise the value of their most important assets to obtain credit, while retaining their use, which is essential to their business.
The river mortgage: security for inland waterway vessels
Definition and scope: vessels concerned, minimum tonnage
A river mortgage is a special security interest in boats used for inland navigation, i.e. on rivers and lakes. The French Transport Code defines a boat as "any floating structure intended primarily for inland navigation". To be eligible for a mortgage, the vessel must be of a certain size. The river mortgage system only applies to goods vessels with a deadweight of at least twenty tonnes, or to any other vessel with a displacement of ten cubic metres or more. Smaller boats are considered to be ordinary movable property and cannot therefore benefit from this special regime; their pledging will follow the rules of ordinary law, often with dispossession.
Creation of a river mortgage: form of deed and publication
The creation of a river mortgage is a formal act. It must be evidenced in writing, which may take the form of a notarial deed or a private deed. The deed must specify the boat (or boats) concerned and the debt secured. The effectiveness of the security against third parties depends on its publication. This is ensured by an entry in a special register held at the registry of the commercial court in whose jurisdiction the boat is registered. This registration makes the mortgage enforceable against all parties, in particular subsequent purchasers of the boat or other creditors of the owner. It is this formality that gives the mortgagee its rank and the security of its guarantee.
Effects of river mortgages: preferential right, resale right, term
Once validly registered, a river mortgage has powerful effects for the creditor. It confers on the creditor a preferential right, which enables him to be paid in priority from the sale price of the boat in the event of forced realisation. It also grants him a right of resale, giving him the possibility of seizing the boat even if it has been sold to a third party. This right of resale is the keystone of the guarantee, as it neutralises the effects of any transfer of the asset by the debtor. The protection offered by a river mortgage is limited in time. The registration is valid for ten years and may be renewed before it expires. The guarantee covers the principal amount of the debt as well as two years' interest. The combination of these effects makes it an effective guarantee tool, but one that can lead to complex procedures, such as seizure of inland waterway vessels.
Conflicts of rank with other liens (Treasury)
The effectiveness of the mortgagee's preferential right may be challenged by the existence of competing liens. In the case of river mortgages, a particularly notable conflict of rank is that between the river mortgage and the general movable lien of the Treasury. Under article 1920 of the General Tax Code, the Treasury has a lien for the collection of certain direct taxes. Case law has consistently ruled in favour of the tax authorities: the Treasury's lien takes precedence over the rights of a creditor holding a river mortgage, even if the mortgage has been registered previously. This solution highlights an important limitation of the river mortgage and reminds us that, even when properly constituted, a security may be less effective against certain claims that the law deems to have priority.
Air mortgages: securing aircraft
Definition and scope: aircraft concerned
An aircraft mortgage is a security interest governed by the French Transport Code, which allows aircraft to be charged as collateral for a debt. The notion of aircraft is broad and covers any device capable of rising or circulating in the air, be it a commercial airliner, business jet, helicopter or other type of flying machine. One of the special features of this system is its flexibility. A single mortgage deed can cover an entire fleet of aircraft belonging to the same owner. What's more, the scope of the guarantee can be extended to include spare parts (engines, specific equipment), provided that these items are specifically identified in the deed of mortgage. This flexibility meets the needs of airlines and aviation finance companies, for whom the fleet represents a central and dynamic asset.
Creation of an aerial mortgage: form and publicity
Like river mortgages, the creation of an aerial mortgage is subject to strict formalities, which must be complied with on pain of nullity. The agreement must be drawn up in writing, either in an authenticated or private document. To be enforceable against third parties, the mortgage must be published. This is ensured by an entry in a special register, the aircraft registration register, which was traditionally kept by the ministry responsible for civil aviation. This registration is fundamental: it is what makes the security effective erga omnes, by informing any third party of the existence of the charge on the aircraft. Without such publicity, the security would remain a simple agreement between the parties, with no effect against other creditors or a potential buyer.
Effects of the aerial mortgage: preferential right, right to follow, duration, interest guarantee
The effects of an aircraft mortgage are comparable to those of other special mortgages. The registered creditor has a preferential right to the sale price of the aircraft and a right of pursuit enabling it to seize the aircraft wherever it may be. These prerogatives are essential for securing financing, which is often very substantial, in the aeronautical sector. The mortgage is registered for a renewable period of ten years. One notable difference with the fluvial system lies in the extent of the interest guarantee: the air mortgage guarantees payment of not only the capital of the debt, but also the interest for a period of three years, in addition to the current year. This increased protection of interest reflects the value and complexity of financing in this area. The existence of such security is intrinsically linked to the recovery mechanisms, in particular seizure of aircraft and its regime specific legal framework.
Comparison and link with the maritime mortgage
Similarities and differences in terms of scheme and tax base
River, air and maritime mortgages share the same fundamental logic: they are exceptions to the principle that movables are not mortgaged, made possible by the registration of their object. All three require a written deed and publication to be enforceable against third parties, and confer on their holders a preferential right and a right of resale. However, there are significant differences. Maritime mortgages apply to ships, i.e. seagoing vessels, including equipment such as tugs and pontoons, regardless of tonnage, and can even be applied to ships under construction. By default, it extends to all the ship's accessories (machinery, equipment) but, unlike maritime liens, it does not include freight. The registration systems also differ: the register of maritime mortgages was traditionally kept by the customs services at the home port, while river mortgages are registered with the clerk of the commercial court and air mortgages with the civil aviation authorities. The duration of protection of the interests in the claim also varies, reinforcing the specific nature of each system.
The importance of publicity for third-party effectiveness
The essential point in common and the very condition of existence of these special securities lies in the publicity mechanism. It is registration in a public register that materialises the security and makes it effective against all parties. This publicity fulfils the function of providing information and security that physical possession provides in the case of pledges under ordinary law. It enables any potential buyer or other creditor to know the legal status of the property and the existence of the encumbrances on it. Without such publicity, the resale right would be ineffective and the security interest would be deprived of its substance. This link between movable property and a publicity system similar to that for immovable property is the great originality of these mortgages. It illustrates the law's ability to adapt to economic realities by creating tailor-made credit tools for strategic assets. The oldest and most detailed system in the field, the maritime mortgageThis was the model for the development of other special mortgages.
Setting up a river or air mortgage is subject to rigorous formalities and raises complex technical issues, particularly in the event of conflict with other creditors. To secure the financing of your high-value assets and benefit from tailored advice on these special securities, our firm and its expertise in complex security interests are at your disposal.
Sources
- Civil Code
- Commercial code
- Transport Code
- Civil Aviation Code
- Code of the public river domain and inland navigation
- Customs Code
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