Interpretation About The Rules Of The Agreement Restricting The Transfer Of Collateral In PRC Civil Code

Subparagraph 1 of article 406 of Civil Code of the People’s Republic of China(hereinafter referred to as the Civil Code)stipulates the rules on the transferability of collateral,but it also stipulates that the parties can agree to prohibit and restrict the transfer.However,the Civil Code has no specific provisions on the effectiveness and legal effects of this agreement,which need to be explained.The scientific choice of the interpretation path of the rule determines the scientific practice of transfer of collateral in the future,so that is very important.In this regard,the interpretation of the Supreme People’s Court on the application of the relevant security system of the civil code of the People’s Republic of China makes the agreement between the mortgagee and the mortgagor have universal effect.Therefore,the mortgagee tends to prohibit or restrict the transfer first to protect the realization of his creditor’s rights.However,it is doubtful whether such a provision will overhead the transferability rule of collateral established in article 406 of the civil code and reduce the logistics mobility of collateral.According to the dichotomy of real right and obligation right,the existing research and legal norm on the interpretation of the rule can be summarized into the interpretation path of real right effect,obligation right effect and the mixed interpretation path of the two.The interpretation path of the real right effect and the mixed interpretation path deviate from the essence of the agreement as an obligation right act in the nature identification,overlap with the function of retroactivity of mortgage right,and the coordination between the guarantee practice and the current mortgage registration system is insufficient.At the same time,there are still questions about the legitimacy of creating rules in judicial interpretation.The interpretation path of obligation right effectiveness will not break through the rules of privity of contract and the transferability of collateral,coordinate with the recovery and effectiveness function of collateral,and can also avoid possible disputes in the practice of mortgage registration.In this way,it maintains the transaction security,promotes the realization of the legislative purpose of making the best use of everything,and does not encourage the parties to breach the contract.It reasonably protect the interests of the mortgagee,but it does not give excessive protection to avoid the impact on the current rules of the civil code.which is a better choice.According to this path.the provisions giving the ability to prohibit and restrict the registration of transfer agreements shall be deleted:Delete the provision that if the transferee knows that the agreement exists.the transfer of the mortgaged property will be ineffective;Delete the provision that "if the mortgagee claims that the transfer does not have the effect of property right,the people’s court will not support it":It is stipulated that the mortgagee can request the mortgagor to bear the liability for breach of contract after the mortgagor transfers the mortgaged property in breach of contract,whether the mortgagee realizes the existing of the security right or not.