Cross-border transactions are now commonplace. One of the issues
often raised in these transactions is where to register a security
interest in the collateral of the debtor. Where a debtor has assets
in both Canada and the United States, each of which has slightly
different rules for determining where to register and different
choice of law rules, resolving the issue of where to register can
be very confusing.
Let us take an example of a debtor that is an Ontario
corporation with its head office in Ontario and inventory located
in New York State. If we look at the Personal Property Security
Act (Ontario) (the "PPSA"), section 5 tells us that
the validity, perfection and effect of perfection or non-perfection
is governed by the jurisdiction where the collateral is situated at
the time the security interest attaches. Section 8.1 of the PPSA
states that, for the purposes of sections 5 to 8, a reference to
the law of a jurisdiction is a reference to the internal law
