Floating Charges in Comparative Perspective: An Exploratory Study

Floating charges are, with good reason, most associated with English law. The English floating charge emerged in the nineteenth century and has been described by Professor Goode as one of equity’s ‘most brilliant’ creations. This form of security interest certainly has features that are particular to the law of England and Wales, or at least limited to ‘Common Law’ jurisdictions.

It is, however, possible to strip away ‘equitable’ aspects of floating charges and thereby identify core components of a category of security right that can be referred to as ‘floating security’ (or ‘revolving security’). This security can cover a class of assets, present and future, and allows the grantor to deal with those assets, including by way of disposal, free of the security and without obtaining the security holder’s permission for specific dealings. Scholars have pointed to the existence of this type of security in Roman law and other systems, historically and in the present day. On a more personal level, we have frequently encountered lawyers from other countries over the years who have confidently asserted that their systems have floating charges or an equivalent.

The Floating Security Project

We therefore decided to embark upon an exploratory and expansive study of floating security in jurisdictions around the world. Our intention was to discover the extent to which floating security is a widespread phenomenon, as well as the different forms that such security has taken in different contexts and systems and the variations in how it operates. Given the intended scope of the project, we built a network of experts encompassing a wide range of jurisdictions in Africa, the Americas, Asia, Australasia and Europe. Nevertheless, some geographical areas, especially Europe, are more heavily represented than others.

After obtaining the agreement of suitable individuals, we issued a questionnaire with questions regarding key aspects of floating charges and functional equivalents. These included whether the system in question has (or had) such a security and open questions relating to historical and doctrinal matters. The responses disclosed interesting features about floating security in particular jurisdictions that caused us to ask respondents to contribute individual chapters, sometimes also extending to other systems.

This work has ultimately culminated in a new edited collection, Floating Charges in Comparative Perspective (Elgar, 2025).

Floating Charges in Comparative Perspective

The book contains a comparative overview chapter (Chapter 1), which is the product of the evaluation of the questionnaire responses kindly provided by the selected experts. In total, 40 jurisdictions are represented. The chapter focuses on whether the jurisdictions have a floating charge or functional equivalent, the history and development of such security (including influences of other systems), creation and property rules, how it is enforced and how it ranks in competition with other rights.

The chapter shows the wide preponderance of floating security, using different models, demonstrating the desirability of such security in modern commercial environments. Even in the systems that are most resistant to floating security (particularly the Germanic legal tradition), there are mechanisms with floating characteristics, albeit that they are sometimes only available in limited contexts. The chapter also arrives at a layered definition of floating security, allowing for a more nuanced understanding, with reference to the scope of the security, the extent to which it is limited to businesses (at least in practical terms) and whether there is a special control-oriented enforcement mechanism available.

The remainder of the book contains 12 further chapters considering floating security in a specific jurisdiction or group of jurisdictions. Due to the perception of the English floating charge as the prototypical (modern) form of floating security, the first of these chapters, by Andreas Televantos, focuses on English law. Chapter 3, by Chike Emedosi, examines the extent to which the legal systems of Ghana, Kenya and Nigeria, that inherited the English floating charge, have diverged from English law and from one another.

Attention then turns to the counter-model(s) in the Civilian tradition, in a predominantly historical chapter by Vincent van Hoof. He tracks the availability across centuries of expansive non-possessory security rights over movable property in European jurisdictions. South Africa’s mixed legal system is largely Civilian in the area of property law, and Reghard Brits shows in Chapter 5 that the country’s broad functional equivalent of the English floating charge, the general notarial bond, has Civilian historical roots and some unusual features.

The USA’s ‘floating lien’, discussed by Christopher Odinet in Chapter 6, offers another influential approach to floating security. It includes a discussion of the relationship between this security and digital assets, a particularly topical issue.

China introduced floating security earlier this century to support the financing of SMEs, and there is some debate about the respective influences of English law and US law in this development. This topic is discussed by Zhicheng Wu and Hao Zhang in Chapter 7, along with various features of the Chinese form of security.

French law does not have a precise equivalent of the English floating charge, but Muriel Renaudin demonstrates in Chapter 8 that it does have security with floating characteristics. There are also arguments in favour of expanding the scope of such security. The law in Quebec, in turn, has been heavily influenced by both English law and French law, but Catherine Walsh shows in Chapter 9 that it has developed a distinct model of floating security.

Interestingly, Romania has a form of floating security, the hypothec over universitas facti, that is comparable to the form of floating security in Quebec. In Chapter 10, Radu Rizoiu discusses the arrival of such security in Romania, as the country emerged as a market economy in the 1990s. The Hungarian experience was similar, with floating security introduced after the fall of the socialist regime, but Tibor Tajti (Chapter 11) highlights Hungary’s unusual status as a country which subsequently abolished its closest equivalent to the English floating charge.

Chapter 12 covers the Nordic legal systems of Denmark, Norway, Sweden and Finland. The authors (Bjørn Løtveit, Astrid Millung-Christoffersen, Patrik Lindskoug and Teemu Juutilainen) show that while there is some comparability across the systems, Denmark and Norway are more closely related in terms of floating security, and the same is true of Sweden and Finland.

The final chapter focuses on Switzerland. Swiss law generally rejects floating security, but Alexandra Dal Molin-Kränzlin contends that in the context of intermediated securities, a form of security with floating characteristics is permitted. This is consequently an example for other systems that wish to introduce floating security in a limited but financially important context.

Building on the Project?

Despite the extensive treatment of floating charges and functional equivalents in this book, more comparative work could be usefully undertaken. Of course, there are many jurisdictions that are omitted from the work, and for those that are included in the comparative overview but not elsewhere, more detailed or focused analysis (eg, on treatment in insolvency law) can be carried out. There are also opportunities to extend the examination of security rights beyond merely floating security in the selected jurisdictions.

The findings in our exploratory project may provide a starting point for other methodologies or approaches in relation to floating security, including archival research, the use of scenario-oriented questionnaires and leximetric techniques. In practical terms, we hope that the study also offers insights and inspiration where reform of floating security is being considered, whether in England and Wales, the ‘home’ of floating charges, or in other systems seeking to further develop floating security or introduce it for the first time.

Alisdair MacPherson is a Senior Lecturer in Commercial Law at the University of Aberdeen.

Caroline Sophie Rapatz is Professor of Civil Law, European and International Private and Procedural Law and Comparative Law at Christian Albrechts University of Kiel.

The authors’ book Floating Charges in Comparative Perspective is available here.