3.2. The registration process

Under the new Russian pledge registration law, registration means the entry of information contained in a notice into the record of the registry maintained by the N otaries Chamber (its seems that the N otary Chamber is the operator of the registry) <1>. Any person that wishes to have a notice registered has to apply to a notary (its seems that there is no other personnel, office or other infrastructure involved). The notary identifies the applicant on the basis of a passport or other reliable public document, except if a notarial act is completed with the applicant's electronic signature <2>. If a notarial act takes place, the notary has also to read it out and the applicant has to sign it <3>. Based on the paper application, the notary enters the information into the registry record (as if the notary were part of the registry staff); if the application is electronic, the notary simply enters it as is into the registry record (it is not clear why the electronic notice has to go through a notary). Finally, the notary issues a certificate that registration took place. However, the notary does not verify the authenticity of the information contained in a notice <4> and is liable only for damages caused in the entry of data in the registry record <5>. Both the registration notice and the registration certificate may be submitted in paper or in electronic form, but their exact form is to be established by a different law <6>.

--------------------------------

<1> Article 103.1.

<2> Article 42.

<3> Article 44.

<4> Article 103.2.

<5> Article 16.

<6> Ibidem.

Under the Guide, registration has the same meaning and it involves the registration of a notice only, not the entire security agreement. However, a registrant needs no intermediary, at least, where electronic registration is possible. Where the registrant can submit a paper notice to the registrar, the registrar will enter it into the registry record. But where online registration is possible, there is no need for the registrar (notary) to do anything. This is extremely important to avoid unnecessary delays and expenses, but also potential for error (which would create liability). So, direct, online registration, without the intervention of a notary or other registry staff member, should be, at least, possible.

Under the Guide, the registry has to request and maintain the identity of the registrant, but need not verify it <1>. Some kind of verification may be made through the details the registrant has to give to the registry for the payment of registry fees, in particular if the registry requires registrants to open an account to be given access to the registry <2>. There is not need for any other verification by the registrar (notary or other). This process requires no intermediary between the registry and the pledgee. The registry can require pledgees to establish account agreements, giving their details, and obtaining the necessary passwords to obtain access to the registry. This would be sufficient to ensure that the registry has the identity of the registrant and that they are bona fide persons using the registry for legitimate purposes. This is extremely important as any delay or cost added because of registration will increase the cost of the transaction and with it the cost of credit for the borrower.

--------------------------------

<1> Recommendations 54, subpara. (d), and 55, subpara. (b).

<2> Guide, chapter IV, para. 48.

The registrant can obtain a registration record from the registry and has to forward it to the grantor. The registry must send copies of any changes to the registrant <1>. In an electronic registry, the registry is designed to offer these functions automatically. As the involvement of the registry in the registration process is so limited, in the case of an electronic registry, the responsibility of the registry is limited to system malfunction <2>. This means that the registry fee need not be increased to cover the cost of an insurance policy for the risks to which the registry might be exposed. This is another reason why direct registration, with no involvement on the part of the registry, is so important.

--------------------------------

<1> Recommendation 55, subparas. (c) to (e).

<2> Recommendation 56.

The recommendations in the Guide are intended to be implemented in the form of a national secured transactions law. So, all these issues should be addressed in the pledge law. But there are other practical registration-related issues that need to be addressed. They are normally addressed in administrative regulations that may be revised more easily than law. The matters that may be dealt with in such regulations include, for example, the purpose of the registry to receive, store and make available to the public information relating to security rights in movable assets; the appointment of the registrar (a person or entity) by and administrative decision or by law; the functions of the registry. The draft Registry Guide that is currently being prepared by UN CITRAL includes commentary and recommendations that deal with all these practical issues <1>. It also includes, in an annex, examples of registry forms <2>.

--------------------------------

<1> A/CN.9/WG.VI/WP.52 and Add. 1 - 5 (http://www.uncitral.org/uncitral/en/commission/working_groups/6Security_Interests.html).

<2> A/CN.9/WG.VI/WP.52/Add.6.