Through law No. 2022-011/P.R. of 15 June 2022, Mauritania introduced an ambitious and innovative reform of its law on conventional security interests in moveable property (sûretés réelles mobilières conventionnelles).

The following analysis aims to address the key features of this new law, through a non-exhaustive review of the objectives it appears to pursue and a presentation of the general principles emerging from this reform.

The main objectives of the reform

While the distinction between security interests in moveable property (sûretés mobilières) and security interests in real property (sûretés immobilières) is not challenged, the new law (article 3) makes no distinction between tangible and intangible collateral. All moveable properties are subject to the pledge (gage), which now includes (i) possessory pledge (gage avec dépossession) (restricted to tangible property) and (ii) non-possessory pledge (gage sans dépossession) which are subject to publicity and can be granted over intangible or future property.

Although the primary objective of the new law is to establish a unified security interests regime for all moveable properties, it seems that the legislator has not been able to consolidate all the relevant provisions within the new law. Accordingly, the new regime for security interests is qualified as "special" (article 1), while article 2 of the law defines the "general rules" as being those "(...) relating to pledge, provided for in articles 1100 to 1113 of the Code des Obligations et Contrats and in Articles 190 and 191 of the Code des Droits Réels, insofar as they are not in contradiction with the present law". The said rules remain applicable for ordinary pledges. It is unfortunate that these few articles, often redundant or inconsistent with those of the new law, have been maintained.

The law therefore follows the reform on security interests carried out by the Belgian legislator in 2014, rather than that of the OHADA legislator. The latter having considered it useful to separate security interests in moveable property into two categories, i.e. the pledge over tangible moveable property (the so-called gage de meubles corporels) and the pledge over intangible moveable property (the so-called nantissement de meubles incorporels), in order to more effectively take into account the specific legal status of these categories. However, law No. 2015-032 of 10 September 2015 introduced into the Code de Commerce (articles 1156 (new) to 1156 vicies septies (new)) several pledge regimes relating to intangible property (receivables, bank accounts, transferable securities, intellectual property), following the 2011 reform of the OHADA uniform act organising security interests.

In order to avoid any uncertainty as to the scope of the reform, the legislator was careful, under article 1, to specify that conventional security interests on moveable property (sûretés réelles mobilières conventionnelles) are listed exhaustively in the new law ("no other legal transaction whose purpose or effect is to create a security interest over moveable property is authorised").

Once the principle known as the "numerus clausus” of security interests had been reminded, it then remained to ensure that no provision which would establish a security interest competing with the pledge provided for under the new law, subsisted under Mauritanian law.

Articles 86, 87 and 88 illustrate the extent of the "tidying up" carried out by the legislator. With the exception of the "general rules" mentioned above, all the provisions relating to pledges (civil and commercial) and to the various specific regimes of pledges have been repealed.

This applies, for example, to pledges over business (nantissement de fonds de commerce) (formerly governed by articles 144 to 148 of the Code de Commerce), pledges over shares (nantissement de titres) (formerly governed by articles 1088 to 1095 of the Code de Commerce), warrants on goods (warrants sur marchandises) (formerly governed by articles 1095 bis (new) to 1095 quindecies (new) of the Code de Commerce) and all other pledges over intangible property introduced by the aforementioned law No. 2015-032.

It is worth noting that the distinction between civil and commercial security interests is no longer relevant, which is not the case for the distinction between consumers and professionals, which appears in an article dedicated to the enforcement of pledges (article 57 relating to the contractual right of the creditor to enforce the pledge by way of foreclosure (also known as “Pacte Commissoire”)).

However, the new law has not repealed articles 1080 to 1087 of the Code de Commerce, on the assignment of professional receivables by way of security (cession de créances professionnelles à titre de garantie). When it comes to security interests over receivables, the parties should therefore have the choice, under Mauritanian law, between the security assignment provided for in the Code de Commerce and the new pledge over receivables (gage de créances) provided for in articles 65 to 72 of the new law. Each of these security interest has its own specific legal regime (exclusive in certain aspects) which must be well understood before any decision is made.

Although a single form of security interest was retained for all moveable properties, the legislator did not disregard the specific nature of certain intangible assets for which the new pledge (gage) is not entirely appropriate. This is the case for receivables, bank accounts and intellectual property, which are covered by specific derogatory provisions set out in articles 65 to 78 of the law.

One will have to wait to see how this reform is applied in practice in order to ascertain whether, regarding certain categories of intangible assets (such as  securities (valeurs mobilières) and other dematerialised instruments for which the special pledge regime on intangible property introduced by law No. 2015-032 had already proved its effectiveness and flexibility to use), the use of the pledge (gage) introduced by the new law will not raise difficulties in its application.

General principles and main innovations of the reform

The provisions of articles 3 to 8 include the general principle of the pledgee's right of pursuit (droit de suite, articles 4 and 19), the right to secure a future obligation (article 5), the recognition of a security interest granted by a third party (article 6), the indivisibility of the pledge (article 7) and, finally, the extension of the pledge to any moveable property which might become physically attached to the collateral initially charged (article 8).

Regarding the status of encumbered property, it should be noted that the specific nature of the security over fungible property (choses fongibles) (article 35) or property undergoing transformation (articles 37 to 40) has been taken into account.

Following the reforms carried out in France in 2006 and in the OHADA member states in 2011, the pledge (gage) is no longer an in rem contract (contrat réel), but a contract validly entered into between the parties by notarial deed (acte authentique) or private agreement (acte sous seing privé) (subject to nullity, according to article 13).The security interest can be perfected either by registration on the security interests register (registre des sûretés mobilières), which preserves the pledgee's right over the pledged property for a period of five years (article 20), or by dispossession of the pledgor in the hands of the creditor or an agreed third party holder (article 22). It should also be noted that pledges over bank accounts can also be enforceable against third parties if the secured creditor obtains the control of the bank account (article 75).

Non-possessory pledge is risky for the creditor. This is particularly the case when the pledged asset is sold to a third party without the creditor's consent. Only the recognition of a right of pursuit (droit de suite) is therefore able to protect the creditor. Article 19 provides that "where the pledge has been duly published, the successors in title of the pledgor shall not be considered as holders in good faith, and the pledgee may exercise his right of pursuit against them...". It should also be noted that the creditor benefiting from a non-possessory pledge (gage sans dépossession) does not benefit from a retention right, unlike the pledgee who has taken possession of the property (article 36). In the event of the pledgor's insolvency, the creditor will have to compete with creditors who have a higher ranking lien than his own, in accordance with the order of distribution of proceeds from the enforcement of movable property in force under Mauritanian law.

The legislator has provided transitional provisions to settle the question of security interests perfected prior to the entry into force of the law (article 85). This should ensure legal certainty for creditors while ensuring that the situation of debtors is not worsened. Indeed, Article 85 paragraph 2 provides that: "where the conditions for opposability provided for in this Law are satisfied before the security ceases to be opposable in accordance with paragraph 1, the benefit and ranking of the security shall be maintained unless they are unfavourable to the debtor".

The main innovations of the law are the enforcement methods for the security interests.

In addition to the recognition of the contractual right of the creditor to enforce the pledge by way of foreclosure (known as “Pacte Commissoire”) (which is however only permitted if the pledge (gage) is granted in favour of a bank and by a professional pledgor (article 57)), the “backdoor clause” (clause de voie parée) is also available, with the same restriction regarding its beneficiary, regardless of whether the pledgor is a professional or a consumer.

Indeed, under article 54 of the law, the secured creditor may enforce the pledge by way of a private sale of the pledged property, without having to obtain a enforcement title (titre exécutoire), provided that the sale is carried out "in a commercially reasonable manner" (according to the expression used in the Civil code of Quebec). In order to do so, the creditor is required to notify the pledgor, indicating the minimum price at which he undertakes to sell the property. If the pledgor disputes the proposed sale price, the sale will be handled by a bailiff (huissier).

Finally, the new law contains provisions on retention of title (réserve de propriété), defined under article 79 as follows: "ownership of an asset may be retained as security by a seller by virtue of a retention of title clause that stays the transfer effect of the sale contract until full payment of the price by the purchaser".

The retention of title must be agreed in writing, and is effective against third parties upon its publication in the security interests register (Registre des sûretés mobilières). While the legality of the contractual clause has never been debated, it was essential to ensure its effectiveness in the event of the purchaser's insolvency, which registration enables (article 81). Finally, the fact that the retention of title is deemed to be a security interest allows the seller to transfer it as an accessory to the price claim in the event of an assignment of the latter.

Conclusion

This note only provides an overview of the provisions of this law (some of which we have seen are particularly innovative), which would deserve a more in-depth analysis that would also enable it to be put into perspective with Mauritanian insolvency law.

While the legislator's ambition is commendable, particularly regarding the unification of the law, this reform still needs to be compared with market practice and banking practices in particular.

Given its importance in the new legal framework, the operational nature of the security interests register (Registre des sûretés mobilières) (for which an implementing decree is announced in article 14), and its availability at a reasonable price (we understand that the registration fees will be of 0.1% of the secured obligations amount), will be one of the keys to the success of this law.

Authored by Olivier Fille-Lambie, Alexandre Salem, and Erika Hubert.