Okla. Stat. tit. 12A § 1-9-702
Okla. Stat. tit. 12A, § 1-9-702
Oklahoma Code Comment
As the Official Comment to uniform section 9-701 (establishing an effective date--Oklahoma uses a different section) notes, revised Article 9 poses several transition issues. The first can be denominated as the "choice of law" problem, and arises if a jurisdiction had not enacted and made effective revised Article 9 by the uniform effective date set forth in section 185 of S.B. 1519, which is July 1, 2001. There are three exceptions to this date in Oklahoma (in S.B. 1519 sections 105 through 107), which deal with the duty and authority of the filing office to promulgate administrative rules for and report on the filing system. These provisions, as provided in S.B. 1519 section 186, are effective on January 1, 2001, in order that the rules can be formulated and studied before the general effective date. Those rules are effective no later than May 29, 2001, and can be found at http://www.oklahomacounty.org/countyclerk. In Oklahoma, revised section 9-701 was left blank as another provision sets the effective dates.
The "choice of law" problem relates to the concern that a litigation outcome relating to an Article 9 secured transaction may be determined by the location of the litigation. If litigation relating to an Article 9 secured transaction takes place in a court located in a state that has adopted revised Article 9, the revised Article 9 choice of law rules apply. But, if the litigation takes place in a court located in a state where revised Article 9 is not effective on July 1, 2001 (there are four such states), the former Article 9 choice of law rules will apply. For example, if the collateral is ordinary goods, and perfection of a lender's security interest in the goods is claimed by means of the filing of a Uniform Commercial Code financing statement, revised Article 9's choice of law rules require that the lender perfect its security interest in the goods by filing the financing statement under the laws of the jurisdiction of the debtor's location. The debtor's location would usually be, in the case of a business debtor that is a legal entity, the state under whose laws the debtor is incorporated or otherwise organized as a registered organization. However, former Article 9 requires that the lender perfect its security interest in the goods by filing the financing statement under the laws of the jurisdiction where the goods are located. Litigation might take place in a state court or in a bankruptcy or other federal court in either state.
This choice of law issue was ameliorated when all U.S. states enacted revised Article 9 before the uniform effective date of July 1, 2001. Nonetheless, four states (Alabama, Connecticut, Florida and Mississippi) delayed their effective dates beyond July 1, 2001, so secured parties must recognize the choice of law problem if it exists, and take appropriate action. For example, lenders that otherwise extend credit under the revised Article 9 rules are not likely to want to take the risk of litigation occurring in a court that, under the choice of law rules of the state in which the court is located, would apply former Article 9 to determine perfection. Lenders extending credit under revised Article 9 rules applicable elsewhere in the country in deciding whether to extend it where revised Article 9 is not yet effective may wish to consider protecting themselves by complying with both sets of rules--former Article 9 and revised Article 9--so long as there is a possibility of litigation occurring under former Article 9, which will mean duplicate or at least more complex documentation and, in many instances, additional filing fees for Uniform Commercial Code financing statements. It will also mean that the lender's legal fees passed on to the debtor will be higher. Alternatively, lenders extending credit to debtors under revised Article may put restrictive covenants in their loan documents limiting a debtor's ability to open an office in the non-enacting state or to have goods located in that state. That would be because the lender, having complied with the rules under revised Article 9, would not want to incur the initial or ongoing monitoring costs of compliance with former Article 9, merely because the debtor opens or might open an office or has goods or might have goods located in a state with a deferred effective date. The Permanent Editorial Board for the UCC has issued a report that goes into considerable detail and provides guidance on this issue. The issue will be resolved as to new transactions occurring after January 1, 2002, when the revisions will be effective in all states.
Complex legal rules deal with another transition issue, which involves transactions and relationships entered into under former Article 9 or non-UCC law (revised Article 9 includes transactions not before included) which still exist on July 1, 2001. This problem is the substance of Part 7, and is dealt with as follows.
Revised section 9-702 provides that revised Article 9 generally applies to a transaction or lien, even if entered into or created before the effective date, except transactions and liens that were not covered under former Article 9 but now are covered and are valid under revised Article 9 and (if entered into prior to the effective date) could be completed under revised Article 9, or the prior law. Actions, cases or proceedings commenced before the effective date are not affected. For example, a pre-effective date security interest in a bank account excluded under former Article 9 but covered under revised Article 9 can be enforced under either law. Presumably the clarity of Article 9 rules would suggest using revised Article 9.