Possession and Control in the Collateral Directive as English Law concepts?

Abstract EU directives adopt a functional method. This implies that they are drafted on the assumption that implementing laws are functionally equivalent and, crucially, that the concepts they contain are system-neutral and autonomous without doctrinal commitments. This article primarily tests these assumption by exploring the interpretation given to the possession and/or control requirement in the Financial Collateral Arrangement Directive (‘Collateral Directive’). The argument in the article is that based on the analysis of case law, the control/possession requirements in the Collateral Directive strongly aligns, and reflect, the control requirements under English law. Whereas in English law, much about fixed charges turn to whether the collateral taker has control and the collateral provider is prohibited from disposing of the securities, in Civil law systems, this is not important, as it is in the nature of security right that they are binding on successors and cannot be freely disposed. Thus, in Civil law systems, the completion of a security arrangement suffices without any need for dispossession or control. Moreover, this argument is boosted by the fact that contrary to the drafting of the Collateral Directive, the control requirement is not a perfection requirement – a view which aligns with the rationale for the control requirement for the fixed/floating charge characterisation. Essentially, the arguments in the article suggest that the interpretation of the possession and control requirement is not system neutral.