Barbara M. Goodstein
Barbara M. Goodstein ()

The securities markets have changed dramatically over the last 20 years. The vast majority of securities are now held through intermediaries rather than directly. The number of cross-border transactions has increased exponentially. But these developments have also created legal uncertainty. Different jurisdictions classify rights relating to securities in different ways, resulting in inconsistency in treatment. This raises transactions costs and systematic risk.1 It can also lower values of securities, and limit access to capital in times of financial distress.2

The Convention on the Law Applicable to Certain Rights in Respect of Securities Held with an Intermediary (HSC)3 attempts to remedy these concerns by offering a uniform set of conflict of laws rules to be applied on a global basis. The HSC has been adopted by the United States. When it goes into effect on April 1, 2017, the HSC will pre-empt the Uniform Commercial Code (UCC) choice of law rules in certain securities transactions, even for transactions that are not primarily international in character.4 Today we discuss the general framework of the HSC as well as how it will affect the choice of law rules under Articles 8 and 9 of the UCC in regard to certain securities, security entitlements and securities accounts.

Background

As a result of the shift from direct holdings to indirect holdings by clearing systems and other intermediaries, securities are now concentrated in centralized securities depositories (CSD) and international centralized securities depositories (ICSD).5 CSDs and ICSDs often maintain accounts for “participants” who hold those accounts for other investors and intermediaries.6 This allows for multiple tiers of ownership, making it extremely difficult to identify the true owner.

Once immobilized in the indirect holding system, securities are no longer physically exchanged.7 Instead, they change ownership through notations on the records of the intermediaries.8 Oftentimes there may be no record of the holder’s interest in the securities,9 as a change in one tier of ownership may not necessarily require notification or identification to a holder or intermediary at another tier. These modern realities have made choice of law determinations extremely difficult under the traditional “look-through” approach (lex rei sitae) applied in many foreign jurisdictions.10

Under the look-through approach, the governing law for granting a security interest is determined by looking to the law where the securities are located at the time of transfer. Of course this approach becomes muddled when there are no physical certificates. While some jurisdictions may look to the location of the underlying bearer certificates (assuming there are any), others may focus on the law of the place of the issuer’s organization, the law of the location of the intermediary or the place where the register is maintained at the time of transfer.11 The HSC attempts to bring order to this increasingly growing disorder.

HSC

The HSC was promulgated in 2006 by the Hague Conference on International Private Law12 and, as noted above, will become effective April 1, 2017. Thus far, only the United States, Mauritius and Switzerland have adopted the HSC. In general, the convention can apply to any transaction involving both a credit of securities to a securities account through a securities intermediary and a “choice between the laws of different States.”13 The convention doesn’t specify what it means by a “choice” (nor does it define “States” although that is understood to refer to nations14 (but note the concept of “Multi-unit States” discussed below)). In any event, a minimal existing or future international aspect could seemingly satisfy that test.

Scope of HSC. The HSC is solely a conflict of laws regime. It steers clear of changes to substantive rules. It applies only to securities held through an “intermediary.”15 But otherwise it applies to a broad list of issues itemized in Article 2(1) in determining the applicable law to securities held through an intermediary, including perfection and priority of a security interest in a security entitlement or securities account,16 with some specific exceptions. It does not determine the law applicable to the rights or duties of an issuer, or registrar or transfer agent, or to the contractual or other personal rights and duties of parties to a disposition of such indirectly held securities, nor to “the rights and duties arising from the credit of securities to a securities account to the extent that such rights or duties are purely contractual or otherwise purely personal.”17 With these carve-outs, it is conceivable that the governing law for an account securities arrangement could be determined, in part, based on rules of the HSC,18 but under another choice of law regime for other issues.

Two other noteworthy HSC principles are: (1) the law determined by the rules of the HSC need not be a country that has adopted the HSC19 and (2) the law chosen under its rules means the substantive law of such jurisdiction and not its conflict of law rules (avoiding a circularity problem)—except in the case of perfection by filing (discussed below).20

Basic Conflict of Laws Rules. The foundation for the HSC’s conflict of laws rules is the agreement between the account holder and its intermediary. In taking this approach, it has wisely abandoned any attempt to locate the security or securities account relating to the relevant transaction.

The HSC is organized around two sets of rules: the “Primary Rule” under Article 4 and the “Fall-back Rules” under Article 5. The Primary Rule provides two options for parties to determine the governing jurisdiction for an “account agreement.”21 HSC Article 4(1) stipulates that if the account holder and its intermediary expressly agree in an account agreement on the governing law for that agreement, that jurisdiction’s law applies to all issues within the scope of the convention. Alternatively, if the agreement is governed by the laws of a particular jurisdiction, but the agreement expressly provides that the law of a different jurisdiction is applicable to all issues within the scope of the convention, then the latter jurisdiction will govern all such issues.22

The HSC adds one significant caveat to the Primary Rule—the so-called “qualifying office” requirement—the intermediary that maintains the securities account must have an office in the designated jurisdiction “at the time of the [account] agreement.”23 The office cannot be symbolic or serve mere administrative functions.24 That office must: (1) “effect or monitor entries to securities accounts,” (2) “administer payments or corporate actions relating to securities held with the intermediary,” or (3) be “otherwise engaged in a business or other regular activity of maintaining securities accounts.”25 The office that satisfies these conditions not need be the office where the securities related to the agreement are held.

It is also important to note that the HSC includes the concept of a “Multi-unit State.”26 A Multi-unit State is defined as a “State”27 within which two or more territorial units, or the State and one or more of its units, have their own laws in regard to convention matters. Not surprisingly, the United States is considered a “Multi-unit State.”28 This means that if a particular state (e.g., New York) is designated as the governing jurisdiction for an agreement, the “qualifying office” test is satisfied if the intermediary has an office anywhere within the Multi-unit State (i.e., anywhere within the United States).29

The HSC also provides three Fall-back Rules to help determine the governing law if the Primary Rule criteria are not satisfied.30 These rules send the parties to such alternatives as the location of the office of the intermediary, the law of its jurisdiction of organization or the law of its place of business or, if it has more than one place of business, principal place of business. It does, however, explicitly disregard the jurisdiction of the issuer of the securities, the place where certificates evidencing the securities are located, the place where a register is maintained, or the place where any intermediary other than the intermediary that maintains the security account is located.

Transition. There is no transition period under the HSC. Beginning April 1, 2017, it will apply to all agreements, regardless of when executed.31 Under the convention, a pre-effective date agreement that applies to any of the Article 2(1) issues will apply to all of the 2(1) issues so long as a qualifying office is involved,32 although it is unclear what happens if a governing law clause in an existing agreement selects one governing law regime for an Article 2(1) issue (e.g., perfection) and another regime for a different issue (e.g., foreclosure). If there is no governing law for an Article 2(1) issue, and the parties have agreed that the securities account is maintained in a jurisdiction, that jurisdiction’s laws apply to all Article 2(1) issues provided there is a qualifying office.33

HSC Versus UCC

As a treaty, the HSC will override inconsistent UCC provisions. The good news is that the HSC choice of law provisions under the Primary Rule parallel those laid out in UCC §§8-110(b), (e)(1) and (2), and 9-305(a). Like HSC’s Article 4(1), UCC §§8-110(e)(2) and 9-305(a)(3) provide that if an account agreement has an express governing law clause, then that jurisdiction’s law applies to issues within the scope of the UCC. Similarly, UCC §§8-110(e)(1) and 9-305(a)(3) provide that if an agreement states that a certain jurisdiction’s law will govern the issues within the scope of the UCC, then that law applies. These two stipulations mirror HSC’s Article 4(1).

A notable distinction here is in regard to the “qualifying office” requirement, for which there is no UCC equivalent. If the intermediary does not have an office in the designated jurisdiction engaged in the business or other regular activity of maintaining securities accounts, then the governing law principles will default to certain of the Fall-back Rules, which echo somewhat the requirements of UCC §8-110(e). It should also be noted, however, that the qualifying office requirement is somewhat of a low hurdle in that it can be satisfied by an office acting either “alone or together with … other persons acting for the relevant intermediary in that or another State” (emphasis added).34

Once that hurdle is cleared (and you are under the Primary Rule), there is an important instance in which the HSC will apparently have a different result than the UCC, assuming in both cases the account agreement designates a state in the United States as the jurisdiction for UCC and HSC purposes. This occurs in the event of perfection by filing rather than control by virtue of HSC Article 12(2)(b). If under the UCC the debtor is “located” outside the United States, and such jurisdiction of location has a public recordation system that satisfies the requirements of UCC §9-307(c), then the UCC would require filing in such location. However, the HSC would require filing in the jurisdiction governing the account agreement rather than in the location of the debtor.35 In this scenario it may be advisable to file in both the foreign jurisdiction and the jurisdiction governing the account agreement.

Conclusion

The HSC provides the securities intermediary market with much needed legal certainty and added transactional efficiency. While implementing the HSC may cause some initial friction with agreements drafted to comply with the UCC, that is to be expected with the application of any new legal regime. The actual burden placed on parties to remedy any discrepancies between the two should be minimal. Parties may wish to include an express reference to the HSC Article 2(1) issues in their governing law clauses to the extent they are including (or would have included) an express reference to the UCC or the securities intermediary’s jurisdiction.

A helpful resource for practitioners on the interaction between the UCC and the HSC is the draft UCC Permanent Editorial Board Commentary issued in April 2013.36 We understand this commentary is in the process of being revised and finalized.

Endnotes:

1. Roy Goode et al., Explanatory Report on the Hague Convention on the Law Applicable to Certain Rights in Respect of Securities Held with an Intermediary (2005) at 4.

2. Id.

3. Convention on the Law Applicable to Certain Rights in Respect of Securities Held with an Intermediary, July 5, 2006, 46 I.L.M. 649.

4. See U.S. Const. art. VI, cl. 2.

5. Harry C. Sigman and Christophe Bernasconi, “The Hague Convention on the Law Applicable to Certain Rights in Respect of Securities held with an Intermediary (Hague Securities Convention),” 10 Unif. L. Rev. N.S. 117, 120 (2005).

6. Id.

7. Goode, supra note 1, at 9.

8. Sigman, supra note 5, at 119-120.

9. Goode, supra note 1, at 9.

10. Id. at 17.

11. Id.

12. The Hague Conference on Private International Law (HCCH) is an 82 member organization that works for the “progressive unification” of private international law. The HCCH became a permanent inter-governmental organization at the Hague in 1955. For more information see https://www.hcch.net/en/about.

13. HSC art. 3.

14. Carl S. Bjerre & Sandra M. Rocks, “A Transactional Approach to the Hague Securities Convention,” 3 Cap. Mkts L.J. 2, 109, 119 (2008).

15. “Intermediary” is defined in the HSC as “a person that in the course of a business or other regular activity maintains securities accounts for others or both for others and for its own account and is acting n that capacity. HSC art. 1(c).

16. See HSC art. 2(1)(b), (c) and (d).

17. HSC art. 2(3)(a)-(c).

18. See HSC art. 2(1).

19. See HSC art. 9.

20. See HSC art. 10 and HSC art. 12(2)(b).

21. Under the HSC, “account agreement” is defined as “in relation to a securities account, the agreement with the relevant intermediary governing that securities account.” See HSC art. 1(1)(e).

22. HSC art. 4(1).

23. Id. It is not clear whether this is the date the agreement is executed, dated or effective.

24. The HSC specifies activities that do not satisfy the office requirement under HSC art. 4(1), including technology support or data processing centers, call centers, mailing related to the securities accounts, or representational or administrative functions. HSC art. 4(2).

25. HSC art. 4(1).

26. HSC art. 1(1)(m).

27. “State” and “Contracting State” are used interchangeably in the HSC without definition in either case.

28. HSC art. 1(1)(m).

29. HSC art. 12(1).

30. HSC art. 5.

31. HSC art. 16(1) and (2).

32. HSC art. 16(3). Note that a qualifying office is not a requirement under certain of the HSC Fall-back Rules post-effective date.

33. HSC art. 16(4).

34. HSC art. 4(1).

35. See Goode, supra note 1, at 124-26. Under HSC Article 12(b)(2) perfection by filing is generally the only circumstance in which the HSC will give effect to internal conflict of law rules. However, Article 12(b)(2) only applies when internal conflict of law rules require filing within another unit in the Multi-unit State. If the debtor is “located” outside the United States and UCC §9-307(c) would require filing outside the United States, then Article 12(b)(2) would not apply. On the other hand, if UCC §9-307 would require filing against a foreign debtor in the District of Columbia, the requirements under the HSC would not differ from those of the UCC.

36. See Permanent Editorial Board for the Uniform Commercial Code, Hague Securities 5 (April 29, 2013) (draft), https://www.ali.org/media/filer_public/0b/03/0b038034-fc71-4e39-820d-6556102fc0e3/hague-convention-draft.pdf.

The securities markets have changed dramatically over the last 20 years. The vast majority of securities are now held through intermediaries rather than directly. The number of cross-border transactions has increased exponentially. But these developments have also created legal uncertainty. Different jurisdictions classify rights relating to securities in different ways, resulting in inconsistency in treatment. This raises transactions costs and systematic risk.1 It can also lower values of securities, and limit access to capital in times of financial distress.2

The Convention on the Law Applicable to Certain Rights in Respect of Securities Held with an Intermediary (HSC)3 attempts to remedy these concerns by offering a uniform set of conflict of laws rules to be applied on a global basis. The HSC has been adopted by the United States. When it goes into effect on April 1, 2017, the HSC will pre-empt the Uniform Commercial Code (UCC) choice of law rules in certain securities transactions, even for transactions that are not primarily international in character.4 Today we discuss the general framework of the HSC as well as how it will affect the choice of law rules under Articles 8 and 9 of the UCC in regard to certain securities, security entitlements and securities accounts.

Background

As a result of the shift from direct holdings to indirect holdings by clearing systems and other intermediaries, securities are now concentrated in centralized securities depositories (CSD) and international centralized securities depositories (ICSD).5 CSDs and ICSDs often maintain accounts for “participants” who hold those accounts for other investors and intermediaries.6 This allows for multiple tiers of ownership, making it extremely difficult to identify the true owner.

Once immobilized in the indirect holding system, securities are no longer physically exchanged.7 Instead, they change ownership through notations on the records of the intermediaries.8 Oftentimes there may be no record of the holder’s interest in the securities,9 as a change in one tier of ownership may not necessarily require notification or identification to a holder or intermediary at another tier. These modern realities have made choice of law determinations extremely difficult under the traditional “look-through” approach (lex rei sitae) applied in many foreign jurisdictions.10

Under the look-through approach, the governing law for granting a security interest is determined by looking to the law where the securities are located at the time of transfer. Of course this approach becomes muddled when there are no physical certificates. While some jurisdictions may look to the location of the underlying bearer certificates (assuming there are any), others may focus on the law of the place of the issuer’s organization, the law of the location of the intermediary or the place where the register is maintained at the time of transfer.11 The HSC attempts to bring order to this increasingly growing disorder.

HSC

The HSC was promulgated in 2006 by the Hague Conference on International Private Law12 and, as noted above, will become effective April 1, 2017. Thus far, only the United States, Mauritius and Switzerland have adopted the HSC. In general, the convention can apply to any transaction involving both a credit of securities to a securities account through a securities intermediary and a “choice between the laws of different States.”13 The convention doesn’t specify what it means by a “choice” (nor does it define “States” although that is understood to refer to nations14 (but note the concept of “Multi-unit States” discussed below)). In any event, a minimal existing or future international aspect could seemingly satisfy that test.

Scope of HSC. The HSC is solely a conflict of laws regime. It steers clear of changes to substantive rules. It applies only to securities held through an “intermediary.”15 But otherwise it applies to a broad list of issues itemized in Article 2(1) in determining the applicable law to securities held through an intermediary, including perfection and priority of a security interest in a security entitlement or securities account,16 with some specific exceptions. It does not determine the law applicable to the rights or duties of an issuer, or registrar or transfer agent, or to the contractual or other personal rights and duties of parties to a disposition of such indirectly held securities, nor to “the rights and duties arising from the credit of securities to a securities account to the extent that such rights or duties are purely contractual or otherwise purely personal.”17 With these carve-outs, it is conceivable that the governing law for an account securities arrangement could be determined, in part, based on rules of the HSC,18 but under another choice of law regime for other issues.

Two other noteworthy HSC principles are: (1) the law determined by the rules of the HSC need not be a country that has adopted the HSC19 and (2) the law chosen under its rules means the substantive law of such jurisdiction and not its conflict of law rules (avoiding a circularity problem)—except in the case of perfection by filing (discussed below).20

Basic Conflict of Laws Rules. The foundation for the HSC’s conflict of laws rules is the agreement between the account holder and its intermediary. In taking this approach, it has wisely abandoned any attempt to locate the security or securities account relating to the relevant transaction.

The HSC is organized around two sets of rules: the “Primary Rule” under Article 4 and the “Fall-back Rules” under Article 5. The Primary Rule provides two options for parties to determine the governing jurisdiction for an “account agreement.”21 HSC Article 4(1) stipulates that if the account holder and its intermediary expressly agree in an account agreement on the governing law for that agreement, that jurisdiction’s law applies to all issues within the scope of the convention. Alternatively, if the agreement is governed by the laws of a particular jurisdiction, but the agreement expressly provides that the law of a different jurisdiction is applicable to all issues within the scope of the convention, then the latter jurisdiction will govern all such issues.22

The HSC adds one significant caveat to the Primary Rule—the so-called “qualifying office” requirement—the intermediary that maintains the securities account must have an office in the designated jurisdiction “at the time of the [account] agreement.”23 The office cannot be symbolic or serve mere administrative functions.24 That office must: (1) “effect or monitor entries to securities accounts,” (2) “administer payments or corporate actions relating to securities held with the intermediary,” or (3) be “otherwise engaged in a business or other regular activity of maintaining securities accounts.”25 The office that satisfies these conditions not need be the office where the securities related to the agreement are held.

It is also important to note that the HSC includes the concept of a “Multi-unit State.”26 A Multi-unit State is defined as a “State”27 within which two or more territorial units, or the State and one or more of its units, have their own laws in regard to convention matters. Not surprisingly, the United States is considered a “Multi-unit State.”28 This means that if a particular state (e.g., New York ) is designated as the governing jurisdiction for an agreement, the “qualifying office” test is satisfied if the intermediary has an office anywhere within the Multi-unit State (i.e., anywhere within the United States).29

The HSC also provides three Fall-back Rules to help determine the governing law if the Primary Rule criteria are not satisfied.30 These rules send the parties to such alternatives as the location of the office of the intermediary, the law of its jurisdiction of organization or the law of its place of business or, if it has more than one place of business, principal place of business. It does, however, explicitly disregard the jurisdiction of the issuer of the securities, the place where certificates evidencing the securities are located, the place where a register is maintained, or the place where any intermediary other than the intermediary that maintains the security account is located.

Transition. There is no transition period under the HSC. Beginning April 1, 2017, it will apply to all agreements, regardless of when executed.31 Under the convention, a pre-effective date agreement that applies to any of the Article 2(1) issues will apply to all of the 2(1) issues so long as a qualifying office is involved,32 although it is unclear what happens if a governing law clause in an existing agreement selects one governing law regime for an Article 2(1) issue (e.g., perfection) and another regime for a different issue (e.g., foreclosure). If there is no governing law for an Article 2(1) issue, and the parties have agreed that the securities account is maintained in a jurisdiction, that jurisdiction’s laws apply to all Article 2(1) issues provided there is a qualifying office.33

HSC Versus UCC

As a treaty, the HSC will override inconsistent UCC provisions. The good news is that the HSC choice of law provisions under the Primary Rule parallel those laid out in UCC §§8-110(b), (e)(1) and (2), and 9-305(a). Like HSC’s Article 4(1), UCC §§8-110(e)(2) and 9-305(a)(3) provide that if an account agreement has an express governing law clause, then that jurisdiction’s law applies to issues within the scope of the UCC. Similarly, UCC §§8-110(e)(1) and 9-305(a)(3) provide that if an agreement states that a certain jurisdiction’s law will govern the issues within the scope of the UCC, then that law applies. These two stipulations mirror HSC’s Article 4(1).

A notable distinction here is in regard to the “qualifying office” requirement, for which there is no UCC equivalent. If the intermediary does not have an office in the designated jurisdiction engaged in the business or other regular activity of maintaining securities accounts, then the governing law principles will default to certain of the Fall-back Rules, which echo somewhat the requirements of UCC §8-110(e). It should also be noted, however, that the qualifying office requirement is somewhat of a low hurdle in that it can be satisfied by an office acting either “alone or together with … other persons acting for the relevant intermediary in that or another State” (emphasis added).34

Once that hurdle is cleared (and you are under the Primary Rule), there is an important instance in which the HSC will apparently have a different result than the UCC, assuming in both cases the account agreement designates a state in the United States as the jurisdiction for UCC and HSC purposes. This occurs in the event of perfection by filing rather than control by virtue of HSC Article 12(2)(b). If under the UCC the debtor is “located” outside the United States, and such jurisdiction of location has a public recordation system that satisfies the requirements of UCC §9-307(c), then the UCC would require filing in such location. However, the HSC would require filing in the jurisdiction governing the account agreement rather than in the location of the debtor.35 In this scenario it may be advisable to file in both the foreign jurisdiction and the jurisdiction governing the account agreement.

Conclusion

The HSC provides the securities intermediary market with much needed legal certainty and added transactional efficiency. While implementing the HSC may cause some initial friction with agreements drafted to comply with the UCC, that is to be expected with the application of any new legal regime. The actual burden placed on parties to remedy any discrepancies between the two should be minimal. Parties may wish to include an express reference to the HSC Article 2(1) issues in their governing law clauses to the extent they are including (or would have included) an express reference to the UCC or the securities intermediary’s jurisdiction.

A helpful resource for practitioners on the interaction between the UCC and the HSC is the draft UCC Permanent Editorial Board Commentary issued in April 2013.36 We understand this commentary is in the process of being revised and finalized.

Endnotes:

1. Roy Goode et al., Explanatory Report on the Hague Convention on the Law Applicable to Certain Rights in Respect of Securities Held with an Intermediary (2005) at 4.

2. Id.

3. Convention on the Law Applicable to Certain Rights in Respect of Securities Held with an Intermediary, July 5, 2006, 46 I.L.M. 649.

4. See U.S. Const. art. VI, cl. 2.

5. Harry C. Sigman and Christophe Bernasconi, “The Hague Convention on the Law Applicable to Certain Rights in Respect of Securities held with an Intermediary (Hague Securities Convention),” 10 Unif. L. Rev. N.S. 117, 120 (2005).

6. Id.

7. Goode, supra note 1, at 9.

8. Sigman, supra note 5, at 119-120.

9. Goode, supra note 1, at 9.

10. Id. at 17.

11. Id.

12. The Hague Conference on Private International Law (HCCH) is an 82 member organization that works for the “progressive unification” of private international law. The HCCH became a permanent inter-governmental organization at the Hague in 1955. For more information see https://www.hcch.net/en/about.

13. HSC art. 3.

14. Carl S. Bjerre & Sandra M. Rocks, “A Transactional Approach to the Hague Securities Convention,” 3 Cap. Mkts L.J. 2, 109, 119 (2008).

15. “Intermediary” is defined in the HSC as “a person that in the course of a business or other regular activity maintains securities accounts for others or both for others and for its own account and is acting n that capacity. HSC art. 1(c).

16. See HSC art. 2(1)(b), (c) and (d).

17. HSC art. 2(3)(a)-(c).

18. See HSC art. 2(1).

19. See HSC art. 9.

20. See HSC art. 10 and HSC art. 12(2)(b).

21. Under the HSC, “account agreement” is defined as “in relation to a securities account, the agreement with the relevant intermediary governing that securities account.” See HSC art. 1(1)(e).

22. HSC art. 4(1).

23. Id. It is not clear whether this is the date the agreement is executed, dated or effective.

24. The HSC specifies activities that do not satisfy the office requirement under HSC art. 4(1), including technology support or data processing centers, call centers, mailing related to the securities accounts, or representational or administrative functions. HSC art. 4(2).

25. HSC art. 4(1).

26. HSC art. 1(1)(m).

27. “State” and “Contracting State” are used interchangeably in the HSC without definition in either case.

28. HSC art. 1(1)(m).

29. HSC art. 12(1).

30. HSC art. 5.

31. HSC art. 16(1) and (2).

32. HSC art. 16(3). Note that a qualifying office is not a requirement under certain of the HSC Fall-back Rules post-effective date.

33. HSC art. 16(4).

34. HSC art. 4(1).

35. See Goode, supra note 1, at 124-26. Under HSC Article 12(b)(2) perfection by filing is generally the only circumstance in which the HSC will give effect to internal conflict of law rules. However, Article 12(b)(2) only applies when internal conflict of law rules require filing within another unit in the Multi-unit State. If the debtor is “located” outside the United States and UCC §9-307(c) would require filing outside the United States, then Article 12(b)(2) would not apply. On the other hand, if UCC §9-307 would require filing against a foreign debtor in the District of Columbia, the requirements under the HSC would not differ from those of the UCC.

36. See Permanent Editorial Board for the Uniform Commercial Code, Hague Securities 5 (April 29, 2013) (draft), https://www.ali.org/media/filer_public/0b/03/0b038034-fc71-4e39-820d-6556102fc0e3/hague-convention-draft.pdf.