Lecture 6 - Security Rights in Roman law and the ius Commune

What is a security interest?

A right created to secure payment or performance of an obligation, giving the creditor increased assurance.

• Either through Personal liability or a Proprietary right over an asset.

What does “bankruptcy” mean in Roman law and the ius commune?

A situation where the debtor’s assets are insufficient to satisfy all creditors’ claims.

What is paritas creditorum?

The principle that, in insolvency, all unsecured creditors are treated equally and paid proportionally, unless there is a legal ground for preference.

Why are security interests important in relation to paritas creditorum?

Because security interests allow certain creditors to escape equality and obtain priority in insolvency.

What is collateral?

The property given as security for a debt.

Who is the secured creditor?

The creditor who holds a security right over the collateral and has priority over unsecured creditors.

Who is the security provider?

The person who offers the collateral, usually the debtor but possibly a third party.

What are the two main types of security interests in Roman law?

1. Personal/Relative

2. Real/Absolute

What is a personal (relative) security interest?

A security interest based on an additional person becoming liable for the debtor’s obligation, without creating any right in property.

What Roman law institutions are examples of personal security?

• Sponsio

• Fidepromissio

• Fideiussio

What is suretyship in Roman law?

A form of personal security where a third party voluntarily becomes secondarily liable for the debtor’s obligation. (Personal Security)

What does the creditor gain from personal security?

An additional debtor, not a proprietary right in a thing.

Why do personal security interests belong to the law of obligations and not property law?

Because they create rights against a specific persons, not rights in the things enforceable against the world.

Main disadvantages of personal security?

Creditor has no priority and remains subject to paritas creditorum.

• The surety may also become insolvent, and enforcement requires personal litigation.

What is a real (absolute) security interest?

A security interest granting the creditor a proprietary right (ius in re aliena) over an asset.

Key advantage of real security interests?

They give priority over unsecured creditors, especially in insolvency.

What does it mean that a real security right “follows the thing”?

The right remains attached to the asset even if it is transferred to a third party.

Why do real security interests belong to property law?

Because they are rights in rem, enforceable against the world, not merely against a debtor.

Two varieties of Real Security in Roman law?

• Fiducia cum creditore

• Pignus/Hypotheca

What is fiducia cum creditore?

A security device where ownership of the asset is transferred to the creditor, with a promise to retransfer upon repayment.

How was ownership transferred in fiducia cum creditore?

Through formal conveyance, such as mancipatio or through delivery with intent (traditio / causa fiduciae).

But if possession stayed with the debtor, delivery is not needed.

Does fiducia cum creditore require transfer of possession?

No

• Possession could remain with the debtor even though ownership passed to the creditor.

What role did pacta (the agreement) play in fiducia cum creditore?

They were private agreements obliging the creditor to retransfer ownership upon repayment and regulating sale upon default.

Why were the pacta in fiducia legally weak?

Because they were personal agreements and did not limit the creditor’s real rights as owner.

Why is fiducia considered harsh?

Because the creditor became full owner and could sometimes keep the asset even if its value exceeded the debt.

Why was there no automatic retransfer of ownership in fiducia?

Because ownership had passed absolutely to the creditor, and repayment alone did not reverse the transfer.

What remedy did the debtor have if the creditor refused to retransfer?

Only a personal claim against the creditor, not a proprietary right.

Why could the creditor validly transfer the asset to a third party under fiducia?

Because the creditor was the full legal owner and could dispose of the thing despite breaching the private agreement.

What was the debtor’s position if the creditor sold the asset to a third party?

The third party became owner, and the debtor was left with only a personal claim against the creditor.

Why was the creditor’s bankruptcy especially dangerous for the debtor under fiducia?

Because the secured asset formed part of the creditor’s estate and could be claimed by the creditor’s own creditors.

How do the risks of fiducia explain the development of pignus and hypotheca?

They show why Roman law moved away from ownership-based security toward limited real rights that protected the debtor while still giving the creditor priority.

Why was fiducia replaced by pignus and hypotheca?

Due to its rigidity, harshness, and lack of adequate debtor protection.

What do pignus and hypotheca have in common?

They create limited real rights over an object, not full ownership.

What is pignus?

A pledge where the creditor receives possession of the thing, while ownership remains with the debtor.

What happens if the debtor defaults under pignus?

The creditor may sell the pledged item to satisfy the debt.

What is hypotheca?

A non-possessory security right where the debtor retains possession, but the creditor has a limited real right over the asset.

Why did hypotheca become especially important in later Roman law and the ius commune?

Because it allowed security without dispossession and was more flexible, especially for land and productive assets.

What is the key legal distinction between pignus and hypotheca?

Delivery of Possession

• Pignus require delivery

• Hypotheca does not

In a typical pignus transaction, who owns and who possesses the collateral?

• Debtor remains owner

• Creditor has possession

In a typical hypotheca transaction, who owns and who possesses the collateral?

• Debtor retains both ownership and possession

• Creditor holds a real security right