Appropriation and relief from forfeiture

The Financial Collateral Arrangements (No.2) Regulations introduced a new means for a security holder to enforce its security in respect of financial collateral (meaning, very broadly, cash, shares and other financial instruments and credit claims). Provided the parties agree in the security document the remedy of appropriation will be available, the collateral taker may ‘appropriate’ the financial collateral without the need for a court order or foreclosure.

If exercised, the collateral taker must ‘value the financial collateral in accordance with the terms of the arrangement an in any event in a commercially reasonable manner’. Once valued, the collateral taker or provider, as applicable, must account for any difference in value between the secured liabilities and the financial collateral.

‘Appropriation’ is not defined in the regulations. In a Privy Council decision in 2009, Lord Walker described the remedy as ‘much closer to sale than it is to foreclosure’. The effectiveness — or otherwise — of the remedy has not been apparent, although a Privy Council decision from earlier this year suggests the answer may be ‘not very’…

If you are registered and logged in to the site, click on the link below to read the rest of the Walker Morris briefing. If not, please register or sign in with your details below.

Briefings from Walker Morris

  • Luxury fashion items and trademark infringement

    Intellectual property disputes involving retailers and fashion are all too common; another one to have troubled the courts in recent months is Thomas Pink v Victoria’s Secret UK.

  • Cookies as registered Community designs

    In Biscuits Poult SAS v OHIM, the applicant for invalidity challenged the registration on the basis that the design in question was not new and lacked individual character. 

View more briefings from Walker Morris

Analysis from The Lawyer

View more analysis from The Lawyer


Kings Court
12 King Street

Turnover (£m): 42.00
No. of Lawyers: 181