The Supreme Court on the requirement of determinability
According to established case law of the Supreme Court, for the assignment or pledging of claims, it is both necessary and sufficient that the deed contains sufficient details to enable the specific claims concerned to be identified, if necessary retrospectively, on the basis of objective evidence.
In this case, the assigned claims are described in the deed of assignment as “claims in so far as these are known to the bankruptcy trustee in the bankruptcy proceedings or could reasonably be known to him”. According to the Supreme Court, such a description linked to knowledge does not automatically satisfy the requirement of determinability. The bankruptcy trustee’s knowledge is not, in itself, objective evidence. It is required that the trustee’s knowledge can be verified retrospectively on the basis of objective evidence. The judgment is in line with the insightful opinion of AG Bartels, who elaborates on what is meant by ‘objective evidence’.
Recommendation for practice
A completely generic description, such as the assignment of ‘all’ claims, consistently satisfies the requirement of determinability according to established case law, as its scope can be objectively determined, for example on the basis of the assignor’s records. In practice, this means that it is not necessarily advantageous to specify exhaustively in a deed of assignment or pledge which claims are being assigned or pledged. A detailed, exhaustive list increases the risk that claims not specifically mentioned will fall outside the scope of the assignment or pledge.
A reference to ‘all claims’ carries a considerably lower risk of claims falling outside the scope of the assignment or pledge than a reference to the subjective knowledge of the assignor or pledgor. After all, the assignor’s or pledgor’s claims can be verified on the basis of the accounts, the general ledger, underlying contracts, invoices, bank statements or insolvency reports.
If, nevertheless, a description is chosen based on the subjective knowledge of the assignor or pledgor, it is advisable to specify the objective evidence on the basis of which that knowledge can be established. If such data is missing, so that it cannot be determined which claims fall within the description, the requirement for determinability is not met and no valid assignment or pledge is effected.