Principle 15 Control as a Method of Achieving Third-Party Effectiveness

Abstract This chapter analyses Principle 15, titled Control as a method of achieving third-party effectiveness. After examining the Principle, its Commentary, and use cases, the discussion focuses on key points related to the constitution of security interests over digital assets, emphasising the fundamental importance of the concept of control, as analysed in Principle 6. Control serves as a means to achieve general effectiveness erga omnes in security in digital assets. In this regard, the Principle is critiqued by comparing it to systems of security interests that rely on methods of public registration via public institutions other than control, where control is understood as a form of possession or holding of the asset. From a theoretical perspective, the utility of this Principle is examined in relation to the different categories of digital assets encompassed by the broad definition provided in the Principles. This analysis yields more favourable results when applied to natively digital assets. Still, it raises greater concerns in the case of non-natively digital assets, in which the asset is linked to a real-world asset. Finally, practical issues are proposed to refine further the suitability, or lack thereof, of this effectiveness system.