4. Unallocated securities
4.1. The doctrine of specificity
As has been shown, identity is relevant in relation to repledge but also in relation to the classification of repos. A loss of identity risks a loss of the proprietary right in the asset.
The requirement for identity, or the doctrine of specificity as it also is called, applies to all types of assets: tangibles and intangibles as well as fungible and specific assets, and covers both title transfer and security arrangements <1>. It is also applicable irrespective of the type of property right <2>.
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<1>
Cf.: Lindskog S. Pant i egen skuld, SvJT, 1983. P. 537;
,
Svensk
I. P. 198 ff.;
,
problem
i en
,
in: Festskrift till Henrik Hessler (PA Norstedt &
,
Stockholm, 1985). P. 309 ff.
<2> The floating charge is an exemption.
The doctrine of specificity implies that it is not possible to create property or security rights in non-identified property <1>. The principle has been said to consist of two elements: i) that the claim should refer to a specified asset; ii) that the asset should be identifiable at all times <2>. If the asset has been exchanged for another asset or is mixed with other identical assets so it can no longer be identified, the property right is generally lost <3>. A right of separation can thus only be made in identifiable assets that are not destroyed or otherwise have vanished when the claim is made <4>. Should the requirement for identity not be met the owner is left with a claim which is unprotected in the debtor's bankruptcy.
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<1> . P. 152; Svensk I. P. 59 ff.
<2> . P. 152.
<3> Ibid. P. 152. The right to separate assets in the bankruptcy of a debtor despite surrogation or mixing of the assets, for instance in the case of a floating charge, is thus an exemption from this rule.
<4> Cf.: Millqvist G. grunder. P. 78 ff.; , Svensk I. P. 60 f.; Rodhe K. Handbok. P. 196.
The doctrine of specificity is, however, not without exception. Due to practical needs and considerations of reasonability and fairness, it has been departed from in certain cases <1>. In a few cases of substitutions and mixtures, the property rights remain in spite of the loss of identity (cf. below).
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<1> See for instance: Ch. 9, § 35 Real Estate Act (1970:994); NJA, II, 1908. P. 79 ff.; NJA, 193,5 p. 277; . P. 152, 162 ff.; see also: Ch. 7, § 23 Bankruptcy Act, which concerns the owner's right to separate payment for its asset that the debtor has sold prior to the bankruptcy and where the payment is received after the decision regarding the bankruptcy is taken. The provision was motivated by the argument that it would be unfair (Sw.: obilligt) not to give the owner a right of separation to payments made after the decision and that it correspondingly would be unfair to benefit the general creditors in the bankruptcy. It should be noted that the equivalent argument not was considered to apply to payments made before the bankruptcy (cf.: NJA, II, 1921. P. 619 ff.; . P. 165).