SWEDEN Law and Practice Contributed by: Albert Wållgren, Henrik Ossborn and Lionardo Ojeda, Advokatfirman Vinge KB
in physical possession of the actual promissory note, a new creditor under a non-negotiable promissory note will obtain such protection first after the debtor has been notified of the transfer. Although there are no formal legal requirements regarding the form of such notice, it is usually made by the originator (ie, the transferor) in writ - ing to the debtor. True Sales A true sale is not an independently recognised concept under Swedish law – ie, it is not regu - lated as a specific type of sale transaction. This means that there are no formal requirements that must be fulfilled in order for a sale to be char - acterised as a true sale. Instead, a court would evaluate a transaction on the characteristics of that specific transaction. Generally, under Swedish law, the parties’ intention when entering into an agreement is an important factor when interpreting the agree - ment. A court would take such intention into account, but would also take into account the economic characteristics of the transaction (substance over form) when evaluating whether an intended sale of assets (a true sale) could instead be recharacterised as a security assign - ment. Factors that could affect such assessment include the extent to which the seller retains the following: • any credit risk; • the right to collect receipts on the receiva - bles; and • the right to repurchase the sold receivables. Although there is some uncertainty as to how a court would characterise a sale of assets under a securitisation structure, the situation whereby an originator transfers a non-negotiable promis - sory note to another company but maintains the
role as servicer towards the debtors has been subject to the scrutiny of the Swedish Supreme Court. The starting point under Swedish law in connection with a transfer of assets is that the physical possession and right to access and operate the assets shall pass from the transferor to the transferee, in order for the transfer to be fully perfected. A case from the Supreme Court (NJA 1995 Sec - tion 367) established a number of prerequisites that must be fulfilled in order to create a perfect - ed transfer and a valid right in rem ( sakrättsligt skydd ), where assets that have been transferred to another party continue to be serviced by the transferor. The general view of the Swedish mar - ket is that those prerequisites are as follows: • the debtors are duly notified of the transfer; • the notification to each debtor states that the transferor should continue to receive pay - ments under the transferred contract for and on behalf of the transferee (and not on its own behalf) and in accordance with the transfer - ee’s instructions; and • the notification states that the transferee (or its agent) could at any time revoke the trans - feror’s servicing assignment (and the terms of the servicing assignment shall include such right of revocation). Although these prerequisites are widely accept - ed and recognised in the Swedish market, it should be noted that they have been based on the facts and circumstances set out in one specific case tried by the Supreme Court, and it cannot be ruled out that a Swedish court would apply other principles in a similar but not identi - cal case. In addition to the above-mentioned principles and as briefly outlined in the preceding para -
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