The International Comparative Legal Guide to: Securitisation 2011 A practical cross-border insight into securitisation work Published by Global Legal Group, with contributions from: Arendt & Medernach Ashurst LLP Baker & McKenzie – CIS, Limited Bizlink Lawyers & Consultants Blake Dawson BORENIUS / Švirinas & partners Caspi & Co. Cervantes Sainz Chapman Tripp Chiomenti Studio Legale Cleary Gottlieb Steen & Hamilton LLP Dave and Girish and Co. Debarliev, Dameski & Kelesoska attorneys at law Delphi Drew & Napier LLC Estudio Beccar Varela Eversheds Fellner Wratzfeld & Partners FenXun Partners Freshfields Bruckhaus Deringer LLP Gárdos Füredi Mosonyi Tomori J.D. Sellier + Co. Kim & Chang Latham & Watkins LLP Liepa, Skopina/BORENIUS Loyens & Loeff N.V. Luiga Mody Hääl Borenius M. & P. Bernitsas Law Offices Maric & Co Morais Leitão, Galvão Teles, Soares da Silva & Associados NautaDutilh Nishimura & Asahi Pachiu & Associates Patton, Moreno & Asvat Pestalozzi Attorneys at Law Ltd Philip Law Firm Roschier, Attorneys Ltd. Schulte Roth & Zabel LLP SNR Denton Tonucci & Partners Torys LLP Uría Menéndez Abogados, S.L.P. Weil, Gotshal & Manges Chapter 41 Sweden Delphi Erica Johansson 1 Receivables Contracts The Swedish Interest Rates Act provides a right to interest on late payments. 1.1 Formalities. In order to create an enforceable debt obligation of the obligor to the seller, (a) is it necessary 1.3 Government Receivables. Where the receivables that the sales of goods or services are evidenced by a contract has been entered into with the government or a formal receivables contract; (b) are invoices alone government agency, are there different requirements and sufficient; and (c) can a receivable “contract” be deemed laws that apply to the sale or collection of those to exist as a result of behaviour of the parties? receivables? No formal receivables contract is needed under Swedish law in In general, the requirements and laws that apply to the sale or order to create a debt obligation. Hence an invoice alone (or even collection of receivables contracts entered into with the government an oral agreement) is sufficient. An implied act by a party can also or a government agency are the same as any receivables contract create a contract between parties. It is recommended though that a entered into with a commercial entity, see question 1.1 above. written agreement is entered into in order to evidence what has been agreed. 2 Choice of Law – Receivables Contracts As for consumers, there is a requirement that the credit arrangement shall be documented but it does not necessarily have to be documented through an agreement. 2.1 No Law Specified. If the seller and the obligor do not specify a choice of law in their receivables contract, what are the main principles in Sweden that will determine the 1.2 Consumer Protections. Do Swedish laws (a) limit rates of governing law of the contract? interest on consumer credit, loans or other kinds of receivables; (b) provide a statutory right to interest on late Swedish private international law is, to a large degree, based on the payments; (c) permit consumers to cancel receivables for Rome Convention. The EU Rome 1 Regulation (593/2008) a specified period of time; or (d) provide other noteworthy converts the Rome Convention into Community regulation and rights to consumers with respect to receivables owing by them? applies to agreements entered into after 17 December 2009. The answers provided for below are based on the assumption that the contract has been entered into after this date. There are no limitations on rates of interest on consumer credits, loans or other kinds of receivables. Under general contract law, a If no choice of law has been made, a Swedish court would look to contractual term or condition may be modified or set aside if such Swedish private international law in order to determine which term or condition is unreasonable on the basis of the contents of the jurisdiction the contract bares the greatest connection to. There is a agreement, the circumstances prevailing when the agreement was presumption that the contract is most closely connected to the entered into, subsequent circumstances and the circumstances in jurisdiction where the party required to effect the characteristic general. Particular attention is paid to the need to protect performance of the contract had his habitual residence at the time of consumers. There is also a specific provision in the Swedish entering into the contract. If that person is a legal entity, one will Contracts Act prohibiting usury. look to the jurisdiction where the legal entity had its principal place of business. Based on the EU Consumer Credit Directive (2008/48/EG), Sweden has implemented a new Consumer Credit Act which came There are specific rules stipulating which law governs consumers into force on 1 January 2011. A new provision has been and insurer contracts in the absence of a choice of law clause. As a implemented in the Act providing that consumers have the right to general rule, consumer contracts are governed by the law of the cancel any credit agreement within 14 days from entering into it. jurisdiction where the consumer has his habitual residence provided Another noteworthy provision gives the consumer the right to repay that the consumer contract has been concluded as a result of the the credit before the end of the term of the agreement. Generally professional pursuing his commercial or professional activities in the seller is in such situation not entitled to any compensation for that particular country. Insurance contracts are generally governed any lost interest. It should also be noted that the interest rate may by the law of the jurisdiction where the insurer has his habitual only be altered if it was agreed when the agreement was entered residence. into. 362 WWW.ICLG.CO.UK ICLG TO: SECURITISATION 2011 © Published and reproduced with kind permission by Global Legal Group Ltd, London Delphi Sweden 2.2 Base Case. If the seller and the obligor are both resident receivables must be the same as the law governing the receivables in Sweden, and the transactions giving rise to the themselves, irrespective of which law governs the receivables. receivables and the payment of the receivables take place in Sweden, and the seller and the obligor choose the law of Sweden to govern the receivables contract, is 3.2 Freedom to Choose Other Law. If (a) the receivables are there any reason why a court in Sweden would not give governed by one country’s laws (whether Swedish laws or effect to their choice of law? foreign laws), (b) the seller sells the receivables to a purchaser located in a third country, and (c) the seller and No, there is no reason for a Swedish court not to apply Swedish law the purchaser choose the law of the purchaser’s country to govern the receivables purchase agreement, will a eden under these circumstances. court in Sweden give effect to their choice of foreign law? w Are there any exceptions to this rule that would apply to S 2.3 Freedom to Choose Foreign Law of Non-Resident Seller receivables sale transactions? or Obligor. If the seller is resident in Sweden but the obligor is not, or if the obligor is resident in Sweden but The parties to the receivables purchase agreement may choose the the seller is not, and the seller and the obligor choose the law that will govern their agreement irrespective of which law foreign law of the obligor/seller to govern their receivables governs the receivables contract. contract, will a court in Sweden give effect to the choice of foreign law? Are there any limitations to the If Swedish law governs the receivables contract, either by choice or recognition of foreign law (such as public policy or through mandatory Swedish rules being applicable, a Swedish court mandatory principles of law) that would typically apply in would take that into consideration when ruling over the receivables commercial relationships such that between the seller and purchase agreement. This may become relevant in a securitisation the obligor under the receivables contract? of consumer credits. Mandatory rules of Swedish consumer protection law provides, for example, that a consumer is entitled to Parties to a contract are generally free to choose the law that make the same claims towards a purchaser of the consumer credit governs their contracts. Hence, a Swedish court would generally as towards the seller. This rule may not be derogated from by way recognise the parties’ choice of law regardless of the nationality of of a choice of law clause in a receivables purchase agreement. the parties. However, there are limitations to this general rule such Likewise, if there is applicable mandatory consumer protection as if the application of foreign law would be contrary to Swedish provided for by the foreign law governing the receivables, it may public policy. not be derogated from through a choice of law clause in the It is not possible to derogate from the consumer protection provided receivables purchase agreement (see further question 2.3). for by Swedish law. Consequently, a Swedish court would not honour Furthermore, a Swedish court would not apply foreign law if its the parties’ choice of foreign law if that choice of law would deprive application would be contrary to Swedish public policy. the obligor of its mandatory rights, provided that the obligor is a consumer and habituates in Sweden. Conversely, a Swedish court 3.3 Freedom to Choose Home Country Law. Conversely, if would not honour a choice of law clause depriving a foreign obligor (a) another country’s law governs the receivables (e.g., a of applicable mandatory consumer protection provided for by the laws foreign obligor’s country), and (b) the seller and purchaser of the jurisdiction where the obligor is habituated.