French Civil Code

A pledge of a claim, present or future, takes effect between the parties and becomes enforceable against third parties on the date of the deed. In the event of a dispute, proof of the date lies with the pledged creditor, who may prove it by any means.

Where the same claim is the subject of successive pledges, the ranking of creditors is governed by the order of the deeds. The creditor who is first in line has recourse against the creditor to whom the debtor would have made a payment.

To be enforceable against the debtor of the pledged claim, the pledge of the claim must be notified to him or the debtor must intervene in the deed. Failing this, only the pledgor validly receives payment of the claim.

After notification, the pledged creditor enjoys a right of retention on the pledged claim and has the sole right to its payment both in principal and interest. The pledged creditor, like the pledgor, may pursue enforcement, with the other duly informed.

The debtor of the pledged claim may set up against the pledgee the defences inherent in the debt. He may also raise defences arising from his relationship with the pledgor before the pledge became enforceable against him.

Sums paid in respect of the pledged claim are deducted from the secured claim when it is due. If this is not the case, the pledged creditor retains them as security in a specially allocated account opened for this purpose with an institution authorised to receive them, with the responsibility for returning them if the secured obligation is performed. In the event of default by the debtor of the secured…

In the event of default by his debtor, the pledged creditor may have the pledged claim and all rights attached thereto assigned to him by the court or under the terms of the agreement. He may also wait until the pledged claim falls due.

If more has been paid to the pledgee than the secured debt, the pledgee owes the difference to the settlor.