Lex situs
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A word about credit risk mitigation
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Latin for “the law of the place”. Relevant when contemplating the deep magic of taking security over assets in far-off places.
In a nutshell, international conventions of security law say that it is best to have security interests governed by the “lex situs” – the prevailing domestic law where the secured assets are physically located.
So, if your assets are held in a tri-party collateral arrangement in Luxembourg, for example, even if your trading contract is an English law 2010 GMSLA, you ought to have a Luxembourg law pledge to go with your English law fixed or floating charge.
Lex situs for a chose in action like an assignment by way of security
Where the thing you are taking security over is a disembodied legal right — a “chose in action” and not a “chose in possession” — then what is the lex situs, seeing as this thing floats free of the ghastly, rusting mortal world of territorial boundaries? It is a Platonic right, and ethereal, idealised, utopian thing and as such as stateless, existing as it does on another plane, in another geometry, that that of tawdry earthly things like regulatory perimeters.
Here the lex situs is — in the absence of any other worldly place for it — the governing law of the right being assigned.