The principle of publicity of the pledge of property rights: problems of law enforcement practice and legislative risks

Lobashchuk Vladislav Evgenievich Postgraduate student; The Institute of Master Degree and Higher Qualification Personnel Training; Federal State Budgetary Educational Institution of Higher Education "All-Russian State University of Justice (RLA of the Ministry of Justice of Russia)" 121351, Russia, Moscow, Kuntsevo district, Molodogvardeiskaya str., 46, room 1 vlad.lobashchuk@gmail.com

The nature of the principle of public pledge (theoretical aspect). The principle of publicity of collateral is the fundamental principle of collateral law, which is undoubtedly confirmed at the level of modern scientific literature, which analyzes both the theoretical aspects of the principle of publicity of collateral and the practical implementation of the principle of publicity of collateral through the development of a system of public accounting of collateral encumbrances ^{[1, pp. 81-83; 6, pp. 96-97]}.

The implementation of the principle of publicity of collateral plays a key role in the system of collateral law and carries the following functional meaning: (a) to give the effect of "visibility" ("publicity") to collateral legal relations, i.e. to actually declare to third parties ("for the whole world") the established "regime of collateral encumbrance" in relation to the pledged property; (b) in conjunction with paragraph (a) to characterize the subject of the pledge for identification purposes; (c) to determine the order of satisfaction of collateral claims depending on the moment of giving the effect of "visibility" ("publicity") in relation to the pledged property; (d) is a necessary condition for the contrastability of the pledge to third parties, and therefore only having become "famous" (or able to become "famous"), the pledge acquires full-fledged effect as a real right.

Of course, the relevant scientific literature generally notes that the principle of publicity of collateral is a necessary condition for ensuring the sustainability of civil turnover, since it allows protecting the interests of both mortgagees and third parties ^{[9, pp. 41-49; 15, pp. 45-47]}. The effectiveness of the principle of collateral publicity is largely determined by the transparency of the accounting system and measures to prevent abuse when entering information about collateral encumbrances ^{[7, pp. 60-61]}.

Participants in civil turnover have the right and should be able to determine what rights encumber a particular property that falls within their sphere of interests or within the range of legal claims (both materialized and non-materialized). The implementation of the principle of publicity of collateral is necessary primarily to ensure that participants in the turnover are aware of existing encumbrances, including property rights, which avoids violating the rights of third parties ^{[3, p. 18-21; 5, p. 33-40]}. Without the implementation of the principle of publicity, the pledge loses its key functional property of opposability, turning into an "inferior limited property right." This position is confirmed by modern scientific doctrine, which emphasizes the risk of "hidden" collateral in the absence of an effective mechanism of publicity ^{[11, pp. 45-46; 14, pp. 75-77]}.

It is only from the moment of the public statement that the "unformulated" pledge is "finalized" into a full-fledged pledge, acquiring a key functional property and realizing the legal purpose for which the pledgor and the pledgee entered into a pledge legal relationship. Until this requirement is fulfilled, the pledge is "locked up" in the plane of the law of obligations, without realizing the will of the parties to the pledge legal relationship, aimed at achieving a certain substantive result.

Implementation of the principle of publicity (practical aspect). Initially, the Russian legislator provided for the following system of accounting for collateral encumbrances: the body registering the pledge is obliged to issue extracts from the register at the request of the pledgee, the pledgor and other interested parties (art. 14 of the Law of the Russian Federation No. 2872-1 "On Collateral"); pledgors – legal entities and sole proprietors, are required to keep a book of collateral records and provide the book for for review by any interested person (clause 1 of Article 18 of the Law of the Russian Federation No. 2872-1 "On Collateral"). Many authors emphasize that it was with the adoption of the aforementioned Law of the Russian Federation No. 2872-1 "On Collateral" that the foundations of the modern system of collateral publicity in the Russian Federation were laid ^{[10, pp. 27-28; 1, pp. 79-80]}.

The legislator also provided for sanctions against both the bodies registering the pledge (Article 16 of the Law of the Russian Federation No. 2872-1 "On Pledge") and the pledgors (paragraph 2 of Article 18 of the Law of the Russian Federation No. 2872-1 "On Pledge") for violations of obligations to account for collateral encumbrances. In practice, the liability provisions were not applied, the mechanisms provided by the legislator for accounting for collateral encumbrances did not meet the needs of turnover and could not prevent the possibility of abuse of rights.

This problem was also noted in the Concept for the Development of Civil Legislation of the Russian Federation (hereinafter referred to as the "Concept"), namely: "... the Civil Code should contain rules that form the basis for creating a system for recording mortgages of movable property, which would allow mortgagees to enter information about the pledge into it, and third parties to receive this information. The system of accounting for the pledge of movable property should be informational, not title-based, and protect the rights of third parties" (clause 3.1.5. of the Concept).

This position has also been developed in the scientific literature, which emphasizes that the effectiveness of collateral publicity is ensured not only by the very possibility of entering information into a public registry, but also by the extent to which this registry is able to really provide open, timely and reliable access to information for all interested participants in civil turnover ^{[12, pp. 52-54; 4, p. 415-416]}.

Taking into account the provisions of the Concept, active legislative activity was carried out to prepare amendments to Russian civil legislation in the field of collateral law. A draft Federal Law No. 47538-6 dated 04/03/2012 was submitted to the State Duma of the Russian Federation for consideration, which established provisions that a law may be adopted with respect to certain objects of movable property providing for the need to take into account the collateral encumbrances of the relevant property.

Subsequently, the system of state registration and accounting of collateral was clarified in the framework of Project No. 47538-6/8, on the basis of which Federal Law No. 367-FZ of December 21, 2013 was adopted, which entered into force on July 01, 2014 and contains current versions of Articles 339 and 339.1 of the Civil Code of the Russian Federation regulating the general provisions on registration and accounting. collateral encumbrances.

Thus, current Russian civil legislation in the field of collateral law presupposes two approaches to the procedure for giving the effect of "visibility" ("publicity") to collateral legal relations: (a) "title registration"; (b) "legal confirmation registration".

The difference between these approaches lies in the fact that "title registration" presupposes compliance with the mandatory procedure of a "public statement" regarding the rights of the mortgagee to the mortgaged property of the mortgagor. The legal consequences of "title registration" occur after the state registration of the pledge encumbrance, and therefore the effect of "visibility" ("publicity") occurs at the time of the state registration of the pledge, i.e. the state registration of the pledge in the public registry is inextricably linked with the acquisition of the effect of "visibility" ("publicity") by the pledge encumbrance.

In accordance with Article 339.1 of the Civil Code of the Russian Federation, the legislator identifies the following cases in which the parties to the lien are required to carry out "title registration" of the lien (compliance with the procedure of "title registration" applies both to liens arising under the contract and for liens arising from the provisions of the law):

(a) if, in accordance with the law, the rights securing the ownership of property to a certain person are subject to state registration (art. 8.1 of the Civil Code of the Russian Federation); (b) if the subject of the pledge is the rights of the participant (founder) LLC (Article 358.15 of the Civil Code of the Russian Federation); (c) if the subject of the pledge is undocumented securities (Article 358.16 of the Civil Code of the Russian Federation); (d) if the subject of the pledge is exclusive rights that are subject to state registration (Article 358.18 of the Civil Code of the Russian Federation).

"Legal confirmation registration" is characterized by the fact that a lien encumbrance in respect of pledged property arises from the moment of conclusion of an agreement between the parties to the lien relationship or in cases determined by law. The effect of "visibility" ("publicity") in relation to collateral encumbrances during "legal confirmation registration" occurs only if the fact of the pledge has been disclosed by posting a pledge notice in the notary register, which is maintained in accordance with the procedure established by the legislation on notaries (Clause 4, art. 339.1 of the Civil Code of the Russian Federation). According to the legislator, the absence of this notification does not mean that there is no collateral encumbrance; there is collateral encumbrance, but only in the relationship between the pledgee and the pledgor, as well as persons who reliably knew or should have known about the pledge. At the same time, the scientific literature draws attention to the risks associated with the "legal registration" of collateral ^{[13, pp. 39-40]}.

Problems and disadvantages of "legal confirmation registration". Among the priority areas of modernization of the pledge law in scientific publications, the improvement of the structure and technological base of the pledge registers as a guarantor of the reliable implementation of the principle of publicity is highlighted ^{[8, pp. 154-155]}. Despite the unconditional progress in ensuring the effect of "visibility" ("publicity") of bail, judicial practice has revealed a number of problems and theoretical issues pointing to the imperfection of the current "law-based approach", namely:

(1) since the registration of notices is voluntary (it is not a prerequisite for the validity of the pledge), in practice some of the pledges remain unregistered ("hidden pledges"), therefore, the information in the public register of pledge notices is incomplete, which means that the absence of a record of the pledge does not guarantee the absence of collateral encumbrances in reality. The principle of public pledge is not respected, because only those pledges that are declared are recorded in the register of pledge notifications.

Here is a clear example of the manifestation of the situation of "hidden collateral": the SCG of the Armed Forces of the Russian Federation dated 05/28/2024 N 44-KG24-4-K7 (see also the similar Definition of the SCG of the Armed Forces of the Russian Federation dated 05/07/2024 N 69-KG24-1-K7; the Definition of the SCG of the Armed Forces of the Russian Federation dated 10/22/2019 N 23-KG19-6, 2-254/2017), having considered L.P.A.'s cassation appeal in the case, dismissed L.P.A.'s cassation appeal.

The essence of the matter was that on October 26, 2021, L.P.A. acquired a vehicle, which was mortgaged by C.K.A. to secure a loan agreement dated 07/02/2014. (with a pledge clause) concluded for the purchase of the vehicle (C.K.A. acquired ownership of the vehicle on 07/01/2014) before the Bank (the Bank registered the mortgaged vehicle in the notary register on 10/22/2015). Under the terms of the loan agreement, C.K.A. did not have the right to alienate the mortgaged vehicle, however, the Vehicle was repeatedly It was sold, having become the property of L.P.A. On the side of C.K.A., a debt was formed, which the Bank lost, C.K.A. could not pay the money, therefore, the Bank applied for recovery of the vehicle.

According to L.P.A., he was a bona fide acquirer of the disputed vehicle, since he acquired it for a fee under the transaction, and therefore believes that the pledge was subject to termination. When concluding the purchase and sale agreement, L.P.A. did not know and could not have known that the vehicle was secured by the Bank.

In turn, the Perm Regional Court (the appellate instance) explained the following: "... the absence of restrictions in the traffic police authorities when registering the transfer of ownership of a vehicle is not a reason for recognizing a bona fide buyer of a mortgaged disputed vehicle, since a special procedure is provided for recording the pledge of movable property by registering it in the notary register and the Bank. established by law and sufficient measures to inform all interested parties about the availability of collateral for a disputed vehicle ..." The conclusion was supported by the SCG of the Armed Forces of the Russian Federation: "... the courts came to the legitimate conclusion that L.P.A. did not show the necessary degree of care and prudence, did not take all reasonable measures aimed at verifying the information contained in the contract of sale about the absence of collateral, and therefore L.P.A. cannot be recognized as a bona fide acquirer of the disputed vehicle ...".

This argument exhaustively reflects the legal approach established by the legislator in art. 339.1 of the Civil Code of the Russian Federation. The Bank posted information in the notarial public registry about the pledge of the Customs Union, and therefore pretended the effect of "visibility" ("publicity") in relation to the collateral. This collateral encumbrance is absolutely opposed to the legal claims of third parties, L.P.A. is certainly an unscrupulous acquirer (dura lex, sed lex), however, did L.P.A.'s arguments about the absence of restrictions on the supply of vehicles in the traffic police not deserve a legal assessment? Is it possible that the repeated alienation of collateral, the alienation of which is prohibited by contract and law, and the repeated delivery of such collateral to the traffic police authorities cannot create a "sense of legal purity" of the disputed vehicle for the final buyer?

In turn, the court considers the opposite situation in the Definition of the CCGD of the Supreme Court of the Russian Federation dated 05/04/2021 N 53-KG21-1-K8, 2-2569/2020, namely: the essence of the case remains the same, the only difference is that the Bank entered information about the pledge of the Vehicle into the public notary register on 12/29/2016, while as the pledge was documented on 04.12.2014, the Bank sued the mortgagor's debt and applied to I.S.T. for recovery of the vehicle (the vehicle was also repeatedly alienated and passed from one owner to another). Litigation from March 2020 to March 2021, as a result of which I.Sh.T. had to apply to the SCG of the Supreme Court of the Russian Federation, because the previous three instances refused to recognize I.Sh.T. as a bona fide acquirer.

The essence of the case was resolved based on the following fact: the pledgor sold the mortgaged vehicle to V.I.V. on 04/15/2016 (V.I.V. sold the vehicle to I.S.T. on 02/10/2017) 8 months before the registration of the Banks' collateral encumbrances in the public notary register, and therefore V.I.V. was a bona fide buyer, since he did not know and He could not have known that the vehicle was the subject of collateral due to the absence of information about the collateral in the registry at the time of the transaction.

The conclusions of the SCG of the Supreme Court of the Russian Federation in both cases are logical and correct, however, why are such disputes allowed when there is a possibility of comprehensive interaction between all social and registration services (the ability to normalize the operation of a single public registry and establish a "title approach") and how many such disputes does current judicial practice contain?

The position on the need to improve the accounting procedure and publicity of collateral is also supported by scientists who note that only the integration of registries and increased mandatory registration can ensure real transparency in property relations ^{[2, pp. 417-419; 9, pp. 48-49]}.

(2) The register of pledge notices was originally conceived for materialized property (primarily movable property), and although it is possible to enter information about the pledge of non-materialized property (including property rights), in practice, the pledge of non-materialized property is registered less frequently than the pledge of materialized property. In general, current judicial practice contains a sufficient number of cases in which the relations on the pledge of unrealized property have been investigated. At the moment, the courts have not developed any other approach or regulation procedure for the pledge of unrealized property.

In the Resolution of the Administrative Court of the Ural District dated 06/15/2022, N F09-8203/21 in case N A60-32807/2020, the following situation was considered: in the framework of the Debtor's bankruptcy case, the Creditor filed claims in the amount of 219 million rubles, referring to securing these claims with a pledge of property rights under the contract dated 02/14/2018. The creditor insisted that for the purposes of establishing the collateral status in the case, the existence of a concluded pledge agreement is of legal importance, and not the fact of registration of the pledge notice, since the corresponding entry has no title value.

In turn, the Judicial Court of the Ural District supported the conclusions of the lower courts, pointing out the need for the publicity of the pledge in order to contrast it with third parties in bankruptcy proceedings, namely: "... the provisions of clause 4 of Article 339.1 of the Civil Code of the Russian Federation, which contain a rule not on title registration, in which the absence of a record of the pledge in the relevant registry excludes the very existence of the right as for the legal confirmation registration, the meaning of which is that the pledge becomes opposed to bona fide third parties from the moment the fact of the pledge is disclosed in the public register, and the commission or non-performance of these actions alone does not affect the relationship of the pledgee with the pledgor and other third parties aware of the fact of the pledge ...".

In the framework of case No. A60-32807/2020, the Administrative Court of the Ural District (see No. F09-8203/21 dated 05/12/2022) analyzed the following situation: in the bankruptcy case, the Bank declared its recognition as a collateral creditor on the basis of two pledge agreements of property rights (claims) concluded with the Debtor to secure obligations under bank guarantees. An entry on the pledge in the register of notices on the pledge of movable property was made only after the introduction of bankruptcy proceedings and after objections from another Creditor appeared.

The courts of the first and appellate instances refused to recognize the Bank as a collateral creditor, pointing out that the lack of timely registration of the collateral in the registry does not allow such encumbrances to be opposed to other creditors, since the publicity of the collateral is a necessary condition for protecting the interests of all participants in the case. The Bank insisted that the absence of other mortgagees should allow its status to be recognized, and late registration did not indicate abuse of the right.

The cassation instance supported the conclusions of the lower courts, noting that bankruptcy is of a public law nature, and only a registered (before bankruptcy) pledge can be taken into account when determining the priority of creditors' claims. Thus, despite the existence of existing pledge agreements, the late registration of the pledge notification deprived the Bank of the opportunity to obtain the status of a pledge creditor and take advantage of the satisfaction of claims at the expense of the collateral.

Thus, the formal requirements for publicity and registration of collateral play a fundamental role in ensuring a balance of interests of participants in civil turnover. Even if there are actual agreements between the parties, the lack of timely public recording of collateral encumbrances can significantly limit the ability to protect the rights of stakeholders, thereby emphasizing the importance of transparency and predictability of legal mechanisms for the sustainability of economic relations.

(3) When registering a pledge notice, the notary does not verify the existence of the pledge and the powers of the pledgor – he proceeds from the information provided by the applicant, which simplifies the procedure, but carries the risks of errors and abuses. Theoretically, an unreliable entry may appear in the public registry: for example, fake or imaginary information about the pledge of property without the actual pledge is submitted. Although the legislator stipulates that an illegal or erroneous record is disputed, in any case, challenging such a record is a waste of time and legal costs.

For example, in the Resolution of the Seventh AAC dated 06/27/2019 N 07AP-3945/2019 in case N A45-46360/2018, the situation regarding the relationship between the pledge agreement and the information contained in the certificate of registration of the pledge notice was analyzed. The essence of the matter is as follows: Omega Trade LLC filed a lawsuit against Altaur LLC for debt collection under the contract, as well as for foreclosure on mortgaged property. The debt was incurred due to improper fulfillment by Altaur LLC of obligations to pay for the delivered goods. The court of first instance satisfied the plaintiff's claims, and also foreclosed on three NEW HOLLAND combine harvesters.

In turn, Altaur LLC pointed out the illegality of the collection of one of the three combines, due to its absence as collateral in the pledge agreement. During the trial, it turned out that only two combines were the subject of the pledge agreement, on the basis of which the court of first instance unreasonably levied a penalty on the third combine. As the Seventh AAC points out: "... the certificate of registration of the notification of the occurrence of a pledge of movable property, which is registered in the register of notices of pledge of movable property, cannot be recognized as the basis for such a recovery ... the notary does not register the pledge agreement of movable property itself, but notices of pledge of property, while registering notification of the pledge, the notary does not verify the accuracy of information about the subject of the pledge on the basis of the pledge agreement ...".

Here is another illustrative example of the abuse of the legislation on notaries by participants in civil law turnover in relation to the registration of notices on the pledge of property rights. As indicated in the Ruling of the First Court of Cassation of General Jurisdiction dated 06/05/2024 in case No. 88-14182/2024: D.Y.A. filed a lawsuit against S. (former spouse) and Avtolombard Number One LLC to invalidate the pledge agreement, invalidate the rights of the mortgagee and exclude information about the pledge of the vehicle. The plaintiff claimed that the vehicle had left her possession against her will, she had not agreed to pledge it, and she had not signed the contract of sale of the vehicle.

The courts of the first and appellate instances dismissed the claim, considering that Avtolombard Number One LLC acted in good faith, and the plaintiff's rights were not violated, since the vehicle was seized from Avtolombard Number One LLC and returned to the plaintiff (after the plaintiff contacted the police), and the loan and pledge agreement was terminated after the seizure. The vehicle.

The Court of Cassation overturned the decisions of the lower courts, pointing out violations of substantive and procedural law, in particular: "... when registering a pledge notice, the notary does not verify the accuracy of the information and the consent of the pledgor... however, this does not deprive the owner of the right to judicial protection if his rights are violated...".

In turn, if a notary were required to verify the accuracy of information and the right to pledge property, a situation where the property would have been mortgaged by a third party without the knowledge and consent of the owner, and information about the pledge appeared in the notary registry, would be impossible or extremely unlikely.

(4) In addition to the notarial register of pledge notices, legal entities are required to publish information on the pledge of movable property on the portal of the Unified Federal Register of Information on the Facts of Activity of Legal Entities (hereinafter referred to as "Fedresurs") within 3 (three) business days. The Fedresource acts as the second public database on collateral and operates in parallel, which may lead to data inconsistencies, which may result in third parties being affected. Moreover, even if there is an entry on the Federal Resource, formally the rule of art. 339.1 of the Civil Code of the Russian Federation is tied to the notarial register, and the absence of notarial registration deprives the mortgagee of protection against third parties. Thus, the Federal Resource cannot replace the public notary registry in terms of legal consequences, but can serve as an additional channel for information disclosure, in turn, there is judicial practice in which courts do not take such a strict position.

The Decision of the Fourth AAC dated 01/15/2024 N 04AP-954/2017 in case N A19-21264/2015 analyzed the issue of choosing a registry for disclosing information about collateral, namely: the creditor did not agree with the ruling of the court of first instance, indicating that the norms of paragraph 4 of art. 339.1 of the Civil Code of the Russian Federation were not correctly applied when resolving the dispute, and in particular The court of first instance considered it permissible to notify K.V.A. of third parties about the encumbrance of the debtor's property by publishing information on the occurrence of collateral in the Federal Resource on 15.12.2015.

The creditor indicated that the Federal Resource cannot replace or replace the obligation to fulfill the requirement to disclose information about the pledge by publishing it in the notary register, since the law provides for the only source of publication of this information.

In turn, the Fourth AAC pointed out: "... taking into account the fact that the message of 15.12.2015, published in the Federal Resource, contains a list of movable property transferred under the pledge agreement, the court of first instance came to the correct conclusion that K.V.A. ensured the awareness of third parties about the encumbrance of the debtor's property in his favor by publishing in The federal resource of information about the occurrence of the right of pledge... Despite the absence of publication in the register of notices on the pledge of movable property, the information of third parties about the encumbrance of the debtor's property in favor of K.V.A. in the case in question took place before the date of the debtor's bankruptcy proceedings, and creditors knew or should have known about the existence of the pledge ...".

The Court of Justice of the East Siberian District dated 03/26/2024 N F02-812/2024 in case N A19-21264/2015 noted the following: "... upon a new review, the courts established that a notice on the occurrence of the right of pledge was published in the Federal Resource on 12/15/2015 ... having established the fact of making a corresponding entry on encumbrances in the Federal Resource on pledge, the courts reasonably concluded that the right of pledge made public in accordance with the established procedure (as an exception), may be opposed in the bankruptcy case of the pledgor to other creditors...". In substantiating their conclusions, the above-mentioned courts refer to paragraph 12, paragraph 3, of the Review of Judicial Practice in Disputes concerning the Establishment of claims of mortgagees in the bankruptcy of Mortgagors (hereinafter referred to as the "Review"): "... the court recognized the mortgagee has the status of a secured creditor in a bankruptcy case in the absence of a record of the registration of collateral in the register of notices of pledge of movable property, based on the fact that the parties to the pledge agreement have agreed to transfer the pledged object to the mortgagee and such transfer actually took place before the initiation of bankruptcy proceedings... the very fact that the mortgagee owns the pledged object creates a presumption that the civil law community of creditors of the mortgagor is aware of the existence of the pledge, which has not been refuted by interested parties."

In turn, in the court case under consideration N A19-21264/2015 on 12.01.2016, a bankruptcy case was initiated, the property pledge agreement was concluded on 10.07.2015, under the terms of which the debtor transferred the property to K.V.A.; in the Federal Resource, the pledge entry was published on 15.12.2015, while the pledge entry was not published in the notary register. It is also interesting that in the Decision of the Administrative Court of the East Siberian District dated 06/28/2023 N F02-2782/2023 in case N A19-21264/2015, canceling the decisions of the court of first instance and sending the case to the court of first instance for a new hearing, the court states: "... the courts did not establish the circumstances of the inclusion (non-inclusion) of information about movable property by the creditor add the debtor to the Register of Pledge Notifications." Why did the court of cassation subsequently change its mind and recognize the publication in the Federal Resource as a proper publication in order to give the collateral the effect of "visibility" ("publicity")?

The courts of appeal and cassation in case N A19-21264/2015 cite in support of their position paragraph 3 of the Review, which indicates the legal possibility to recognize the mortgagee as a secured creditor in the actual possession of the pledged property, but the courts, unlike other examples from current judicial practice, do not analyze the parties' relations regarding the actual possession of the pledged property before dates when the bankruptcy case was initiated? In particular, there is the following judicial practice in which paragraph 3 of the Courts Review is interpreted in a different manner:

(a) the information about the pledge was posted in the public notarial register of pledge notices after the bankruptcy case was initiated, and therefore there are no grounds for recognizing the Applicant's claim as having collateral priority over all claims of other creditors (see Resolution of the Administrative Court of the North-Western District of 06/15/2023 N F07-6139/2023 in case N A56-115807/2021). This conclusion is also rational and similar in its legal regulation to the provision of paragraph 3, paragraph 4, Article 339.1 of the Civil Code of the Russian Federation, namely: in the case of a non-public pledge in the event of bankruptcy of the pledgor (at the time of the initiation of bankruptcy proceedings), the pledge claim can only be opposed to the claims of those creditors who knew about the existence of collateral.

(b) in fact, finding the pledged object with the mortgagee is an alternative to using the registry of pledge notifications (see Resolution of the Administrative Court of the North–Western District of 12.26.2024 N F07-16600/2024 in case N A56-68435/2019; Resolution of the Administrative Court of the Volga District of 08.22.2024 N F06-7560/2023 in case N A65-19059/2022). In these cases, the courts apply the provisions on the actual ownership of the thing until the initiation of bankruptcy proceedings. Based on paragraph 3 of the Review, these conclusions of the courts are rational and most applicable to the legal position set out in paragraph 3 of the Review.

In addition to the above, the provisions of paragraph 3, paragraph 4, Article 339.1 of the Civil Code of the Russian Federation sound interesting from the point of view of practical application.: "... in relations with third parties, the pledgee has the right to invoke the right of pledge belonging to him only from the moment of making an entry on the registration of the pledge, except in cases where the third party knew or should have known about the existence of the pledge earlier than that..."; paragraph 5, paragraph 17, Resolution of the Plenum of the Supreme Court of the Russian Federation dated 06/27/2023, No. 23"On the application by the courts of the rules on the pledge of things": "... in the absence of a record of the pledge in the register of notifications or in case of non-transfer of ownership, the pledgee has the right to present any evidence to confirm that a third party knew or should have known about the existence of the pledge ...".

Does this mean that if the mortgagee is able to confirm the effect of "visibility" ("publicity") in a different way than by entering a notification into the public registry, then it will not be necessary to enter a notification into the public registry? How does this provision work in law enforcement practice?

In case no. A31-1405/2023, the Administrative Court of the Volga-Vyatka District (see similar case no. A40-266851/2023) investigated the following situation: LLC filed a claim with the Bank to declare the pledge on the Vehicle terminated from the moment of the acquisition of the vehicle by LLC from Ch.E.V. On 05/20/2022. Before concluding the contract of sale of LLC, the information contained in the notary register was verified, according to which on 05/18/2022 the vehicle was excluded from the pledge. On 06/24/2022, LLC became aware that the vehicle was pledged by the Bank (the pledgor is G.I.I., the basis is the pledge agreement dated 04/30/2022).

During the trial, it became clear that a vehicle pledge agreement dated 30.04.2022 was concluded between the Bank and G.I.I. in order to secure a consumer loan agreement, a notice was registered in the public register on 05/01/2022. According to the response of the Ministry of Internal Affairs of Russia in the Kostroma region dated 06/09/2023. The vehicle was registered on 05/17/2022 for part of the year; 05/22/2022. The vehicle was registered abroad on 07/17/2022. Registration was terminated due to the sale; currently, the vehicle is not registered.

The first instance and the appellate instance refused to satisfy the claim of the LLC. LLC indicated that as of the date of the conclusion of the contract of sale of the LLC vehicle, all necessary and possible means of verifying the vehicle for the purity of the transaction had been taken. As of the date of conclusion of the agreement, there were no entries on the current pledge in the notary register in relation to the disputed vehicle. Subsequent entry of information about such property into the notarial register is not a basis for restoring the right of the pledgee, and subsequent purchasers of such property do not bear the responsibilities of the pledgor, regardless of their awareness that this property was previously the subject of pledge.

In turn, the Court of Justice of the Volga-Vyatka District indicated the following: "... the conclusion of the courts that the LLC, as a professional participant in the legal relationship for the purchase and sale of a vehicle, should have known (having shown due diligence) about the availability of the vehicle's collateral (without indicating by the courts the possible sources of obtaining relevant information by the LLC) cannot be considered justified. about the pledge of the disputed vehicle), taking into account the fact that there was no information about the pledge of the vehicle at the time of the transaction in the registry ...".

In this case, a logical question arises: why does the absence of a pledge notice in the public registry not in itself confirm the fact that the buyer of movable property is in good faith? The legislator came up with this notification procedure, justifying it by the fact that the risks for not being included in the public register are usually borne by the mortgagee, i.e. it is the mortgagee who is motivated to make notifications in this register as soon as possible. At the same time, at the moment, in addition to the registry, the courts check the circumstance "...knew or should know ...". If there is no information in the public registry, then the pledge is not incompatible with the rights of third parties, however, judicial practice has not yet developed a special procedure for making decisions in such situations.

Conclusions

Based on the results of the analysis of law enforcement practice, it can be concluded that the current mechanism for implementing the principle of publicity of the pledge of property rights needs to be improved accordingly.:

Firstly, the voluntary nature of registration leads to the preservation of "hidden liens" – a significant part of the liens of property rights remains unregistered, which undermines the guarantee of the rights of bona fide purchasers and creditors.

Secondly, the parallel existence of several information resources on collateral (the notary registry and the Fedresurs portal) is fraught with inconsistencies in information and uncertainty in law enforcement. In addition, the lack of verification by a notary of the accuracy of the information provided for registration creates risks and opportunities for abuse of the imperfection of the mechanism of "legal confirmation registration".

Current judicial practice reflects these problems: higher courts confirm that unregistered collateral is generally not incompatible with third parties, but there are also solutions that recognize alternative ways of disclosing information as sufficient for publicity purposes. Such a discrepancy in approaches indicates the presence of gaps and ambiguities in the current legislation that prevent the full implementation of the principle of publicity. It is necessary to improve the collateral legislation in order to eliminate the identified shortcomings, ensure the reliability and accessibility of information on all collateral property rights, and in particular:

(1) to establish mandatory registration of the pledge of property rights – to switch from the principle of "law-confirming registration" to the principle of "title registration", in which the pledge of property rights is subject to entry into the unified public register in order to acquire the property of the pledge legal relationship as opposed to the legal claims of third parties.

(2) to combine information resources on property rights pledges into a single register – to eliminate duplication of information by integrating the notarial register of notices of pledge of movable property and the Fedresurs portal into a single system for recording collateral encumbrances; to ensure the interaction of the register of pledge notifications with property accounting systems (for example: with the traffic police database for vehicles) for automatic disclosure information about the availability of collateral when making transactions.

(3) assign to notaries the obligation to verify the accuracy of information when registering a pledge notice – the notary must verify the existence of the right of pledge and the consent of the owner, which will exclude the entry of false or fraudulent entries in the register.

(4) to introduce a mechanism for the prompt correction of registry entries and liability for violations – to provide for a simplified procedure for excluding erroneous or illegal entries on the pledge of property rights from the register and to establish legal liability for knowingly false entry of information.