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Kenya: Movable Property Security Rights Act Enacted

(May 18, 2017) On May 10, 2017, Kenyan President Uhuru Kenyatta signed into law the Movable Security Rights Bill 2017, legislation aimed at facilitating the use of movable property as collateral for securing a credit line.  (President Kenyatta Signs Movable Property Security Rights Bill into Law, OFFICIAL WEBSITE OF THE PRESIDENT (May 10, 2017).)  It does this mainly by establishing the Office of Registrar of security rights and by providing for the registration of security rights in movable property.  (Id.)  The Act will be implemented once the Cabinet secretary responsible for the registration of security rights issues a notice in the Kenyan Gazette to that effect.  (Movable Property Security Rights Act, 2017, § 1 (May 10, 2017), IKM Advocates website.)

Security Rights and Borrowing

Under the Act, a “security right” is:

(a) a property right in a movable asset that is created by an agreement to secure payment or other performance of an obligation, regardless of whether the parties have denominated it as a security right, and regardless of the type of asset, the status of the grantor or secured creditor, or the nature of the secured obligation; and

(b) the right of the transferee in an outright transfer of a receivable; … .  (Id. § 2.)

The Act makes it easier for persons who do not own real property to secure a credit line by facilitating borrowing against their various types of movable assets.  It states that

(2) A security right may encumber—

(a) any type of movable asset, whether tangible or intangible [including future assets];

(b) parts of assets and undivided rights in movable assets;

(c) generic categories of movable assets; and

(d) all of a grantor’s movable assets.  (Movable Property Security Rights Act, § 7.)

The term intangible asset includes “receivables, choses in action (a right to sue), deposit accounts, electronic securities and intellectual property rights,” whereas tangible asset means “all types of goods and includes motor vehicles, crops, machineries, livestock.”  (Id. § 2.)

Notification of Security Rights and Creditor Rights

The function of the Office of Registrar is “to receive, store and make accessible to the public information on registered notices with respect to security rights and rights of non-consensual creditors” (creditors that obtained the right in the collateral by operation of law).  (Id. §§ 2 & 19.)  An initial notice must include the following content:

  • information about the guarantor and the creditor;
  • a description of the collateral in a manner that makes it possible to identify it;
  • effective dates of the registration; and
  • any other information relevant for statistical purposes.  (Id. §§ 8 & 27.)

Rules on the process for registering a notice and accessing the information collected by the Registrar will be enacted through regulations.  (Id. § 26.)

Application of a security right to a third party requires the registration of the right.  According to the Act, a “security right in any movable asset is effective against third parties if a notice with respect to the security right is registered with the Registrar.”  (Id. § 15.)

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Germany: Constitutional Right to Reimbursement for Uncovered Health Care Services Only Exists in Emergencies

(May 17, 2017) On May 11, 2017, the German Federal Constitutional Court (Bundesverfassungsgericht, BVerfG) declined to accept a case for review that challenged a lower court’s decision not to obligate the applicant’s statutory health insurance to pay for intravenous immunoglobulin therapy (antibody infusions) not covered under her plan, to treat her autoimmune disease. (BVerfG, 1 BvR 452/17, May 11, 2017, BVerfG website (in German).)

The applicant was diagnosed in 1993 with systemic lupus erythematosus (SLE), an autoimmune disease that is associated with several complications and secondary diseases. In 2008, she was diagnosed with urticarial vasculitis, which causes swelling of the tongue that can lead to suffocation.  (Id. at 2.)  In October 2009, she requested that her statutory health insurance reimburse the costs for an “off label” use of immunoglobulin to treat the tongue swelling, as other therapies had proven unsuccessful.  (Id. at 3.)  The treating hospital stated that the treatment was strongly indicated to avoid the general risk of suffocation and that the patient had a diminished quality of life and had to carry an emergency kit with her at all times.  (Id.)  The statutory health insurance refused to reimburse her for the costs, because it felt that the requirements for an off label use of the medication were not fulfilled.  (Id. at 4.)

The Constitutional Court held that a direct constitutional right to receive a reimbursement from one’s health insurance for treatments not generally covered is an exception and has to be narrowly interpreted. The Court reiterated that such a constitutional right derives from the principle of general freedom of action (art. 2 ¶ 1), the social state principle (arts. 20 & 28), and the right to life (art. 2 ¶ 2, sentence 1) codified in the German Basic Law. (Id. at 22; Basic Law for the Federal Republic of Germany (May 23, 1949), BGBl. I at 1, as amended, GERMAN LAWS ONLINE (unofficial English translation).) According to the Court, the constitutional right to reimbursement only exists if the patient’s statutory health insurance does not cover any treatment methods for the patient’s life-threatening or generally fatal disease. Moreover, the therapy chosen by the patient must promise more than just an abstract chance of recovery; there must be a possibility supported by evidence that it will at least positively impact the symptoms of the disease. In addition, the right to reimbursement for such a treatment is limited to near-death, individual emergency situations.  (BVerfG, supra, at 22.)  Without such an emergency situation, the Court stated, there are no sufficient grounds to override the legislative discretion to set out the conditions for statutory health insurance.  (Id. at 25.)  In the Court’s view, the applicant did not sufficiently substantiate that such an emergency situation existed.  (Id. at 26.)

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Brazil: Federal Supreme Court Rules All Couples Have the Same Inheritance Rights

(May 17, 2017) In a ruling issued on May 10, 2017, the Brazilian Federal Supreme Court (Supremo Tribunal Federal, STF) determined that, for the purpose of inheritance rights, “stable unions” and marriages have the same legal value, providing partners in stable unions the same rights as those of  married persons.  (STF, Recurso Extraordinário (RE) 646721, STF website.)  In a related ruling, the STF further determined that, for the purposes of inheritance rights, the equivalence of partners in a stable union and married persons also includes homosexual couples. (STF, RE 878694 (May 10, 2017), STF website; Felipe Pontes, STF: União Estável e Casamento São Iguais para Herança, Incluindo Homoafetivos, AGÊNCIA BRASIL (May 10, 2017).)

In addition, the STF determined that the decision has general repercussions and applies to all inheritance disputes in the different instances of the courts.  According to the ruling putting stable unions and marriages on the same legal footing, article 1,790 of the Civil Code, which determined different rules for inheritance in the case of stable unions, is considered unconstitutional.  (Pontes, supra; Código Civil, Lei No. 10.406, de 10 de Janeiro de 2002, PLANALTO.)

Stable Union

Article 1,723 of the Brazilian Civil Code recognizes as a family entity a stable union between a man and a woman that is configured in a public, continuous, and lasting relationship for the purpose of forming a family.  (Código Civil, art. 1,723.)

Extraordinary Appeal (Recurso Extraordinário)

An extraordinary appeal is an appeal filed with the Federal Supreme Court contesting the decision (acórdão) of a lower tribunal that contradicts a constitutional norm, declares unconstitutional a federal law or treaty, or considers valid a law or act of a local government contested under the Constitution.  Its main purpose is to preserve the violated constitutional provision.  (4 MARIA HELENA DINIZ, DICIONÁRIO JURÍDICO 77 (2005).) 

General Repercussion (Repercussão Geral)

Constitutional Amendment No. 45 of December 30, 2004, included as a prerequisite for the admission of an extraordinary appeal the requirement that the constitutional question being raised present an issue with general repercussions. (Emenda Constitucional No. 45, de 30 de Dezembro de 2004, PLANALTO.)

In order for the Federal Supreme Court to examine the admissibility of an extraordinary appeal, which may be rejected only by agreement of two-thirds of its members, the appellant must demonstrate the general repercussions of the constitutional questions argued in the case, as provided by law.  (Constituição Federal, art. 102 § 3, PLANALTO.)

According to the Federal Supreme Court, the purpose of the requirement for the admissibility of an extraordinary appeal being based on a constitutional issue of general repercussions is to define the jurisdiction of the Federal Supreme Court in trials of extraordinary appeals that have social, political, economic, or legal relevance that transcends the subjective interests of the case and, as a practical matter, to standardize the constitutional interpretation without requiring the Court to decide multiple identical cases on the same constitutional issue.  (Finalidades, Apresentação do Instituto, STF website (last updated Dec. 5, 2016).)

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Iceland: Central Bank Eases Currency Restrictions, Ends Financial Crisis Capital Controls

(May 16, 2017) On March 12, 2017, the Icelandic Central Bank announced that it had adopted new currency exchange rules and entered into agreements to purchase Icelandic krónur from foreign holders. (Central Bank of Iceland Concludes Agreement with Owners of Offshore Króna Assets, ICELANDIC CENTRAL BANK (Mar. 12, 2017); New Rules on Foreign Exchange, ICELANDIC CENTRAL BANK (Mar. 12, 2017).)

The move repeals most of the capital controls that the Icelandic Central Bank put in place in the wake of its 2008 financial crash. (See Elin Hovferberg, Iceland: Easing of Capital Controls and Banking Regulations, GLOBAL LEGAL MONITOR (July 16, 2015).)  The new currency exchange rules took effect on March 14 and will mostly allow Icelandic krónur to be transferred freely.  (Rules on Foreign Exchange (Mar. 12, 2017), ICELANDIC CENTRAL BANK.)

Under an initial agreement with foreign holders, the Icelandic Central Bank bought one billion offshore Icelandic krónur (ISK) (about US$9,450,000, at an exchange rate of 137.5 per €1 (about US$ 1.1)). On April 4, 2017, the Icelandic Bank announced that it had offered to buy offshore krónur (not previously purchased through the one billion agreement) at the same exchange rate, provided the terms were accepted  and the transfer requested prior to April 28, 2017.  (Purchase of Offshore Krónur by the Central Bank of Iceland, ICELANDIC CENTRAL BANK (Apr. 4, 2017).)

Certain Restrictions Still in Force

While most capital controls have been lifted, certain regulations will remain in force.  According to the Icelandic Central Bank, restrictions on so-called offshore króna assets, and special reserve requirements for specified investments in connection with new inflows of foreign currency, will remain in place.  (New Rules on Foreign Exchange, supra.)  For example, the requirements to notify the Icelandic Central Bank of international purchases of Icelandic krónur or derivative transactions are still in force as are the rules requiring a special reserve when there is an inflow of a foreign currency into Iceland.  (Rules on Foreign Exchange, arts. 12, 14, & 17; Rules on Special Reserve Requirements for New Foreign Currency Inflows, No. 490/2016 (June 4, 2016, as amended), arts. 3 & 8, ICELANDIC CENTRAL BANK; Rules Amending the Central Bank of Iceland Rules No. 490/2016 on Special Reserve Requirements for New Foreign Currency Inflows, with Subsequent Amendments (Mar. 12, 2017), ICELANDIC CENTRAL BANK.)  Restrictions will also remain in place on ”i) derivatives trading for purposes other than hedging; ii) foreign exchange transactions carried out between residents and non-residents without the intermediation of a financial undertaking; and iii) in certain instances, foreign-denominated lending by residents to non-residents.” (New Rules on Foreign Exchange, supra.)

The European Free Trade Association (EFTA) Surveillance Authority (ESA) has examined and made a ruling on the permissibility of the prohibitions, and in 2016 ESA made a determination on whether the Icelandic capital controls were allowed under the European Economic Area (EEA) Agreement and found that the controls were consistent with the EEA Agreement. (Press Release, EFTA Surveillance Authority,  Internal Market: Iceland’s Restrictions on Offshore Króna Markets Are Not in Breach of the EEA Agreement (Nov. 23, 2016); EFTA Surveillance Authority Decision of 23 November 2016 Closing a Complaint Against Iceland in the Field of Free Movement of Capital (Capital Controls), Case No:79250, Document No. 821093, Decision No. 207/16/COL (Nov. 23, 2016).)

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