A Comparison of German Moveable Property Law and English Personal Property Law

© 2010, Andreas Rahmatian*

A Comparison of German Moveable Property Law and English Personal Property Law

A. INTRODUCTION AND OUTLINE OF THE ARTICLE

It is a commonplace that, within commercial law, the law of personal property is particularly important, and it is also obvious that commercial law deals to a large extent with cross-border transactions and business relationships. This article gives an overview of German moveable property law, since some knowledge of moveable (personal) property law of a foreign major European jurisdiction is valuable to trade and commerce as well as to comparative studies. However, there does not seem to be a concise synopsis of this area available to the English lawyer, and this article wants to remedy this situation. Although the following account is not more than a slightly extended outline, it tries to cover all relevant and interrelated topics, from the law of possession to the various types of security rights in German law.

Apart from seeking to provide a concise but fairly comprehensive description of German moveable property law, this article offers an analysis of this area of German law from an English law-Common law perspective or at least for readers primarily familiar with English law. However, the method used is not to find a common core of both legal systems on a functional basis which is then explored, nor is the task approached with a presumptio similitudinis in mind1. Accordingly, the exposition of German law is not "anglicised" nor adapted to the Common law in some form, but sets out the structure and organisation of German property law as these appear in German textbooks, in the way in which it is taught, learned and in the minds of those using and developing legal doctrine. This will familiarise English common lawyers with the very different legal culture of German private law2. One would not learn French spelling by omitting the perhaps confusing accents and by rendering (originally) French words in an English spelling, to make it "easier" for the English beginner and to underline a "common core" of these two languages. The same should apply to the learning of new - sometimes quite alien - laws.

Although this article concentrates on German moveable property law, it also draws comparisons with the relevant areas in English personal property law. However, some familiarity with English personal property law is presumed3 and the emphasis in the English law sections is on highlighting contrasts and occasional similarities, not on comprehensiveness. The article will rarely ever touch upon immoveable property law, which is mainly for reasons of space. English lawyers are accustomed to this separation because they perceive real property law and personal property law as quite different entities and teach these areas independently, but that is actually not the approach taken in German law. German law has a unitary approach to property law, whereby immoveable property and moveable property follow the same rules in principle. Therefore, the general concepts of property, property rights and ownership in German law, which will be discussed in the first sections of the article, apply to land and moveable property alike.

There is another purpose of this comparative analysis. Personal/moveable property law is a good example of the incompatibility of different legal cultures in Europe. While the law of contract by its nature is more sympathetic to the impression of a strong resemblance of rules in different jurisdictions, because the underlying idea of a contract is an agreement which invariably requires some broad common understanding as to its conceptual foundations for its effectiveness, the law of property dispels the illusion of similarity quite quickly. The comparison of German moveable property law and English personal property law should make one realise that both systems rest on different and largely irreconcilable intellectual and epistemic frameworks, with different definitions of "property" (a term which can tellingly not be translated satisfactorily into German), different methods and techniques for the transfer of property and creation of security rights, different levels of abstraction in legal rules and different approaches to the organisation of a body of law4 (the Common law approach as opposed to a particularly highly abstract, comprehensive, coherent and logically well-developed system for which German law is renowned), and so forth. The truism that both systems may achieve a similar economic

outcome - notably though through their different techniques as a demonstration of their different mentalités - does not undermine their principal irreconcilability;5 and this irreconcilability is corroborated, albeit perhaps inadvertently, by occasional attempts at representing one legal system in the structural framework of another.6 Personal/moveable property law is at the heart of commercial law which apparently invites unification of the laws in Europe. But this commercially highly relevant area is a case which illustrates that the establishment of a new European ius commune7 as a preliminary stage to a harmonisation or convergence of the private laws of Europe is most likely to fail or can only be gained through forceful incisions into existing systems. The quite frequent proclamation of a rediscovery of a European ius commune tradition as a result of research into legal history and Roman law8 does not change that problem in the slightest. Historical research may rather reveal how fractured the old ius commune actually was.

What may strike the English lawyer immediately is the high level of theoretical abstraction in German law. There is a long tradition in German academic doctrine that reduces concrete cases to a few general and abstract principles, often successfully, sometimes less convincingly.9 Thus the principles of the strictly separated concepts of contract and conveyance, which are far more emphasised in German than in English law10, are not only important in relation to the derivative acquisition of ownership and

original acquisition in good faith11, but also in the context of possessory and non-possessory security

rights.12 Similarly, the four main categories of possession pervade the entire German property law13, as well as the different versions of transfer of possession: physical delivery, traditio brevi manu, constitutum possessorium etc.14 German Sachenrecht, as the whole of German private law, is a comprehensive and coherent body of interlinked and mutually dependent rules. However, one should not conclude that this comprehensive body of law is also exhaustive. Especially in the law of securities, German law developed several forms of security rights outside the system of codified rules and these security rights are still not at all or incompletely regulated by statute.15

In addition to the law, there is the language in which the law is expressed (or even created) and these two constituents are inextricably linked. Typical of German private law is the precise, but not always appealing, technical language and legal terminology which is very consistently applied throughout in the German Civil Code or BGB (Bürgerliches Gesetzbuch) and in legal doctrine. I have refrained from translating German legal terms into the nearest equivalent in English law, because often there is no nearest equivalent, and such a step would assist a somewhat casual approach to the comparison of laws in any case.16 Rather, I have supplied the German legal term in the original language in brackets and given a translation or explanation which tries to convey best its meaning.

It has already been stressed that German private law is a codified system of a highly abstract level, whereby the removal of one element can lead to the dysfunction of other large areas of the law. Thus it will often be necessary to leaf back and forth when reading the following account. After a definition of property rights (section B) and a short outline comparison between some major principles of German moveable property and English personal property law (section C), the general concepts of both systems of property law, possession and ownership, with emphasis on moveable/personal property, will be discussed (section D), but the provisions on the protection of possession and ownership, which are of a strongly procedural nature, will be outlined briefly only. Then the derivative and original acquisitions of ownership will be dealt with under E, and finally, the restricted real rights, especially security rights (pledges and retention of title) will be discussed under F.

B. DEFINITION OF PROPERTY AND PROPERTY RIGHTS IN ENGLISH AND GERMAN LAWS

1. The meaning of the term "property"

For the present discussion, a rather practical definition of "property" without too much emphasis on legal theory17 may suffice. Property law defines objects of property for the purpose of the law, whether

tangible or conceptual18, and confers exclusive rights in these objects or "things" that are enforceable against the whole world. These rights, property rights, are socially recognised and legally protected or created exclusive powers over these objects, asserted against the world at large. Thus property law (Sachenrecht) creates "things" (Sachen) as normative concepts and assigns these things to natural or legal persons by way of conferring interests in them.19 The type of property right (ownership, pledge etc.) determines the extent of the granted exclusive power or interest.

The wonderfully ambiguous English legal term "property" is difficult to translate into German law and

language.20 It has at least three meanings:21 property objects or things, property rights, and assets or

wherewithal.22 Thus, where "property" would be used in the sense of an object, it will be referred to in the following as "thing" or "res" (Sache), or, in the appropriate context, "moveable" (bewegliche Sache), or also "chattel", when English law is discussed. When the word "property" is understood in the sense of a right in such a thing which is enforceable against the world at large, this right will be called "property right" or "proprietary right" or "real right" (Sachenrecht, dingliches Recht). The word "property" will only be used when it is meant to denote "assets in general" (Vermögen) without reference to a specific item within such assets.

In German law, the meaning of "thing" (res) is narrower than in other legal systems. For the purpose of the law, a thing (Sache) is defined in § 90 BGB as comprising physical objects only.23 Anything that has no corporeal existence as such can be a thing if it can be embodied in some kind of physical object, such as a computer program on a magnetic disk.24 However, all kinds of rights (obligations, debts) are

not things, because they are not corporeal. This is in contrast with, for example, Scots law,26 and Austrian law which states in § 285 ABGB that "everything that is distinguished from the person, and serves the use of men, is called a thing in the sense of the law." Both legal systems reflect the notion of property under the influence of Natural Law in 18th century Enlightenment in its re-interpretation of the meaning of property in Roman law.28 Thus in Austrian and Scots law, rights (obligations) are things, in German law, they are not. In English law a division between tangible things, intangibles and pure intangibles can be made, but this plays a more subordinate role than in Civil law jurisdictions, and there is no real correlation to the Civilian concept of moveable and immoveable property. The historically grown distinction follows the remedial treatment of objects of property as to their recovery and is still more important today for the classification of things into (a) real property (land), which can be claimed in specie, and (b) personal property, where only damages are principally available but no right to delivery in specie.29 Personal property has the two subdivisions of (i) chattels real (principally leasehold

interests in land) and (ii) chattels personal which comprise choses in possession and choses in action.30

Intellectual property rights are things in English and Scots law,31 but a sui generis category in German and Austrian law.32

As the automated handling of the order for payment procedure has been introduced with the view to replace the quite laborious system of manual processing by an effective, cost-efficient and - perhaps most pertinently - extremely fast procedure, § 689 I ZPO stipulates that in automated handling cases, submissions should have been dealt with no later than by the first business day after the day of filing.

2. The available types of property rights

In line with other continental European legal systems,33 German law recognises only certain types of

property rights (numerus clausus of property rights, Typenzwang);34 the list of available property rights is conclusive and mandatory law. Thus the parties to a legal transaction can only choose the property rights in the way in which they are provided by the law, but they cannot create new ones. This applies both to a given category of property right as such (Typenzwang) and to its contents, at least in its broad outline (Typenfixierung).35 As property rights are absolute36 and bind third parties without their prior agreement, such parties must be able to ascertain the extent and quality of the rights they are expected to respect ("visibility" of the real right, Publizitätsprinzip37), and, if they acquire such rights, they must be certain as to the type and quality of the right they obtain, otherwise the safe transfer of property rights would be seriously impeded.38 That contrasts with the law of contract: a party to a contract has insider knowledge as to the true nature and extent of a (personal) right, thus in the law of contract there is no need for compulsory categories of (personal) rights.39 English law effectively operates a numerus clausus of real rights, obviously without a statutory basis, but with endorsement in case law and doctrine that has never seriously been challenged.40

The recognised property rights in German law are, in particular:41 (1) full real right (dingliches Vollrecht): this is ownership (Eigentum, § 903 BGB), the most comprehensive real right. It is strictly distinguished from possession (Besitz, § 854 BGB), which is not a (real) right, but the factual holding of a thing in one's power with the intention to do so.42 (2) restricted real rights (beschränkte dingliche

Rechte) are largely equivalent to proprietary rights less than ownership,43 or special property,44 or

subordinate real rights:45 These include servitudes, user rights (ususfructus), real burdens (Reallast, § 1105 BGB), uncompleted real rights, such as the right of an owner in waiting in a retention of title arrangement46 (Anwartschaftsrecht), and rights in security. These rights in security in relation to

moveables are pledges (Pfandrecht an beweglichen Sachen). Economically still very important, but not discussed here, are the rights in security in relation to immoveables: the Grundpfandrecht,47 a statutory security in land which can assume the type of (a) a hypothec (Hypothek, § 1113 BGB): security of a right (debt) without the creditor's possession of the land that serves as the security ("mortgage/charge"), or of (b) a Grundschuld (§ 1191 BGB): security similar to a hypothec but without the requirement of a right to be secured (although this will usually be the case), or of (c) a Rentenschuld (§ 1199 BGB): a kind of Grundschuld plus the obligation to make regular payments to a creditor-beneficiary (now obsolete).48 English law also developed several of these forms of property rights in its own way, but with a less sophisticated overarching doctrinal and conceptual framework, which is one effect of the generally more flexible English property concept. Moreover, English law has certain types of security rights over chattels which are unknown in German law, but even where they seem similar, they still have certain remarkable distinguishing features (e.g. the pledge). The purely economic functions and results of these different legal techniques are usually largely the same.49

C. AN OUTLINE COMPARISON OF PRINCIPLES IN GERMAN MOVEABLE PROPERTY LAW AND ENGLISH PERSONAL PROPERTY LAW

As the discussion on the definition of property and property objects (things) has already shown, German and English laws may obtain similar economic results, but operate on very different theoretical premises. The term "property" in English law is rather vague, while the German definition of thing (Sache) is more precise and also narrow, even narrower than in other Civil law jurisdictions. A legacy of Roman law in German law is the strict separation between possession, which is in principle a mere fact, and ownership, the most extensive property right.50 English law sees possession as a right,51 and especially as regards personal property, possession and ownership cannot be clearly divided: an owner of a chattel could be described as the person with the best possessory interest in it.52 Thus one proprietary interest flows into the other and forms part of it, and that is supported by the fact that both possession and ownership are relative in nature.53 This relativity is expressed in the notion of "title": the title measures the strength of a person's interest in relation to others. That interest in an object of property denotes the sum of rights over it which the person enjoys against others, but not always against all others:54 thus ownership is, compared to possession, a more comprehensive superior right

over a thing in a given dispute, but not an absolute right.55 In contrast, the German idea of ownership

is that it is absolute as in Roman law,56 conferring dominium over the thing, which is not qualified by the strength of entitlement vis-à-vis a contestant in a dispute over the thing. Possession in German law is however relative, as in Roman law, and that is demonstrated by the possession protection rules: the person with the better entitlement to possession relative to his opponent wins, and that is not necessarily the person with a better proprietary right over a thing; a right to possess is no defence against a possession protection remedy.57

This difference between absolute ownership in German law and relative ownership in English law also appears in the ownership protection rules. English law protects property rights in chattels, including ownership, through remedies in tort, in particular trespass and conversion,58 while German law has a special proprietary remedy which grows out of the absolute ownership right and is an essential part and expression of it: the action of delivery of the res or rei vindicatio.59

Another most important difference is that German law does not recognise the division of ownership into legal and equitable (beneficial) ownership as the familiar feature of English law. However, even in English law the importance of equitable ownership in relation to personalty is limited. The only exception where equitable ownership is central, even as to chattels, is the trust.60 Real rights less than ownership introduce beneficial interests into the realm of personal property to a greater extent, for example the charge on chattels, which can only be equitable.61 But an equitable pledge is not

recognised because English law does not permit the concept of equitable possession.62 As for pledges, German law struggles somewhat when devising the legal technique for regulating the sale of a pledged res in satisfaction of a secured debt, where the concept of beneficial ownership could be of some assistance in the division of the entitlement to the proceeds of sale between the owner of the pledged thing and the creditor.63 Partly because equitable real rights do not exist in German law, an instrument

comparable to the fixed or floating charge in English law64 is not available.65

D. GENERAL CONCEPTS OF PROPERTY LAW: POSSESSION, OWNERSHIP, PROPERTY PROTECTION

1.Possession

At first glance, possession in English law does not differ much from German law. In both jurisdictions, possession is primarily a fact with legal consequences.66 This takes account of the factual side in which legal rules manifest themselves in the material world, but that is also as far as the similarity goes. As already noted, English law sees possession as a real right (the authors differ on that67 ), often

expressed in the ambiguous form of "possessory title",68 while German law does not. Because ownership and possession are relative rights in English law, especially in the law of personal property, they are closely connected to one another.69 Because of this close connection - possession typically

denotes ownership70 and both enjoy the same tortious protection71 - they are sometimes even dealt

with in reverse order in textbooks which would surprise a German lawyer: possession after ownership.72 English authors sometimes resort to the practical example of bailor and bailee when emphasising the difference between ownership (with the bailor) and possession (with the bailee),73 which is characteristic of this legal culture, because German lawyers would see that example as an application of an abstract rule, not as a concrete state of affairs (separation of possession from ownership) out of which abstract concepts could be developed. It has been stressed that possession in English law is incapable of precise or exhaustive definition.74 This fluidity of the English concept of possession contrasts strongly with German law, where ownership and possession are notionally separated with great care and where the incidents of possession are clearly defined.

(a) Types of possession

In German law, and in legal systems following Roman law generally, possession is the exercise of control or power over a thing with the intention to do so. Thus possession requires two elements: factual power over the res by way of exclusive physical control or detention (corpus possidendi), and intention to possess for oneself or another (animus possidendi).75 German law largely took over the

Roman concept of possession (see §§ 854 BGB et seq.):76 it is not a real or personal right but a fact with legal consequences.77

German law distinguishes between several types of possession, in the main, but not entirely, following Roman law. The most important scenarios will be discussed briefly. The principal category of possession is that of (a) possession suo nomine:78 the possessor has the intention to possess for himself (Eigenbesitz, "possession for one's own", animus rem sibi habendi, § 872 BGB), irrespective of whether or not he has a legal right to possession. In contrast, there is (b) possession alieno nomine, where actual physical control is exercised for the possessor by someone else (Fremdbesitz "possession for someone else", animus alieno nomine tenendi). Where the possessor himself exercises the act of possession, this is (c) unmittelbarer Besitz ("direct possession"). If the possessor has the intention to possess for himself, but physical possession is with someone else respecting the possessor's intention, then this is (d) "indirect possession" (mittelbarer Besitz, § 868 BGB). These four categories (a)-(d) can appear in several combinations. For example, a tenant/hirer or pledgee exercises physical control directly (is therefore "direct possessor", unmittelbarer Besitzer), and has the intention to possess, not for himself (thus he is Fremdbesitzer, "possessor for someone else"), but for the lessor or pledgor, the latter being indirect and suo nomine possessor (mittelbarer Eigenbesitzer).79 The tenant or pledgee (unmittelbarer Fremdbesitzer) who "mediates" possession in relation to an indirect possessor by exercising physical control over a thing as a direct possessor on behalf of that indirect possessor is also referred to as "Besitzmittler" ("mediator of possession") in German law.80 He is not merely holder of the res ("Inhaber") because he does not only hold the thing physically, but also has the intention to possess, albeit for someone else, and is therefore possessor.81 Contrary to the direct alieno nomine possession of pledgees, bailees and tenants who possess for their pledgors, bailors or lessors, respectively,82 an owner or a thief is possessor suo nomine (Eigenbesitzer), and also direct possessor suo nomine (unmittelbarer Eigenbesitzer) if he actually exercises physical control. The owner who is his tenant's sub-tenant is both direct possessor alieno nomine (as sub-tenant) and indirect possessor suo nomine (as owner).83

Besides, there is the distinction between sole possession (Alleinbesitz) and possession together with others, being (a) co-possession (Mitbesitz, § 866 BGB), where the whole res has more than one possessor, and (b) partial possession (Teilbesitz, § 865 BGB), where possessors possess only parts of the res if that is physically possible.

English law tends to define possession in a similar way as (a) the exercise of factual control and (b) the simultaneous "intention to control"84 or "intention to exclude others from the exercise of control".85 The latter formulation chosen by one author points towards notions of ownership ("exclusion") and is another example that shows the proximity of these two concepts. English law is aware of different incidents of possession, sometimes referred to as "degrees of possession",86 but sees them much more in connection with practical applications which illustrate them (e.g. bailment, pledge). Actual possession means that the possessor has physical control and the intention to control.87 This is contrasted with constructive possession, where the possessor has intention to control but the factual control is carried out by someone else. The constructive possessor has the right to take actual possession.88 This recalls the German notion of direct and indirect possession (unmittelbarer/mittelbarer Besitz). But is it direct/indirect possession suo nomine (Eigenbesitz) or alieno nomine (Fremdbesitz)? Bailor and bailee,89 for example, exercise possession in some way, the bailor having constructive possession, and the bailee factual control which goes beyond mere custody.90 This has been expressed as the bailee exercising control in a dual capacity, for himself and as agent for the bailor, which denotes "dual possession", or "joint actual possession",91 or "relativity of possession".92 The term "constructive possession" is not entirely clear on that point, and that may have contributed to the fact that the usefulness of this term has been questioned.93 According to some English authors, "constructive possession" only covers cases where the bailee holds possession to the bailor's order, so that possession is shared between the two, while where the bailee is holding for an interest of his own (e.g. as a hirer under a rental agreement), he has exclusive possession and the bailor merely a right to possess but no actual possession.94 The

idea of regarding constructive possession as a joint interest like a joint tenancy in case of ownership,95 because of the nature of possession as being indivisible, is arguably even more confusing than the traditional view on constructive possession. There is dual possession, but the quality of possession is different with the bailor and the bailee (or pledgor, pledgee and the like).

Actual control short of possession is custody; for example the employee is regarded as having custody of his employer's chattels. The employer is possessor.96

(b) Acquisition/transfer of possession

Following the neat differentiation of the types of possession, German law distinguishes between acquisition of direct possession and of indirect possession. Direct possession is acquired by obtaining factual power over a thing (§ 854 BGB), either in a derivative or original way, that is, either with or without the previous possessor's intention to transfer.97 Indirect possession can arise in two ways (§§ 868 - 870 BGB): either a direct possessor becomes indirect possessor (an owner lets his res to another: owner - indirect possessor, lessee - direct possessor), or a direct possessor, who remains direct possessor, provides another with the indirect possession over a thing (a typical example is the transfer of ownership in a moveable for security purposes, whereby the prior owner retains possession 98).99

Obtaining possession is also a prerequisite for obtaining ownership.100 However, while the basic type of derivative acquisition of possession (and ownership) is by way of physical delivery, German law also recognises methods of surrogate delivery as a replacement of physical delivery: the traditio brevi manu (Übergabe kurzer Hand, short-handed delivery, § 929 BGB, sentence 2), and the constitutum possessorium (Besitzkonstitut, § 930 BGB). German law regulates these types of delivery in the context of ownership. Where the acquirer of the thing has already got the res in his/her possession, ownership can be transferred by the mere agreement between the parties that the new owner (acquirer) who has hitherto held the thing with the intention to possess for the transferor, shall now exercise possession for himself: traditio brevi manu. Thus the possessor for another (alieno nomine) becomes a possessor for himself (suo nomine).101 In contrast, transfer of ownership by way of the constitutum possessorium is effected by the previous owner retaining direct possession of the thing but giving someone else indirect possession, for example through a sale and lease back agreement.102 Thus the previous owner who was

possessing for himself now possesses for another, the acquirer.103 In both cases of surrogate transfer, a physical transfer and retransfer of the res can be avoided by changing the possessor's intention to possess.104

A possessor loses possession when he loses his factual control permanently, either unintentionally or deliberately (§ 856 BGB), irrespective of a possible continuing right to possess, e.g. as owner.105

The principal rules of the acquisition of possession are similar in English law. There is actual delivery,

where actual possession is conferred to the deliveree.106 Besides that, English law recognises constructive delivery, which encompasses situations that resemble closely the methods of surrogate delivery in German law in all but name. Thus it is constructive delivery if the deliveror in actual possession of the res agrees with the deliveree to hold the res as his bailee, whereby the deliveree becomes constructive possessor;107 or if the deliveree already in actual possession as bailee for the

deliveror agrees with the deliveror to hold the res from now on in his own right.108 If a third party is in actual possession, the third party can attorn to the deliveree with the deliveror's consent, that is, acknowledge that he now holds as a bailee for the deliveree instead of the deliveror, and through this constructive delivery the deliveree acquires constructive possession.109

There is also the category of symbolic delivery, where a symbol is delivered or an act symbolising delivery is performed,110 although English authors tend to hold that where the symbol (e.g. a key) is capable of giving actual possession, it is actual delivery, and where it is not, it tends not to be seen as delivery at all, or is constructive delivery, which suggests that the category of "symbolic delivery" is superfluous.111

Possession is lost by way of transfer to a third person or if possession is deliberately surrendered by abandonment of intention and control in fact.112 Abandonment of possession is generally considered to

be accompanied by a loss of ownership.113 It is interesting to note that the English courts, usually in the context of theft cases, tend not to assume abandonment without very strong evidence, but do not consider the potentially different legal situation as regards actual possession (which has been lost 114)

and ownership (which may continue),115 which shows again how much possession and ownership are intertwined in English law.

(c) Protection of possession

As already mentioned, English law regards both possession and ownership as relative rights, whereby the best title prevails against competing titles, and it protects both interests by the same set of torts ("property torts").116 Accordingly, the protection of possessory interests in English law will be discussed

in the context of the protection of ownership.117 English lawyers distinguish, both in relation to possession and to ownership, between interest in property, which measures the quality of the rights which can be exercised over the thing, and title to property, which indicates the strength of an interest in the thing as against other parties asserting conflicting interests.118 The distinction in German law between "petitory remedies" (based on ownership and being absolute) and "possessory remedies" (based on possession and being relative)119 has no equivalent in English law. The possessory remedies in German law with be discussed below.

The general rule in German law is that unauthorised trespass or interference with possession is prohibited (§ 858 BGB, "Verbotene Eigenmacht"). When this happens, the possessor (whether as direct possessor suo nomine or alieno nomine) has the right to self-defence to counteract the impending loss of possession ("Besitzwehr"). If the possessor has been dispossessed, he can take the res from the trespasser ("Besitzkehr"), provided that happens without delay as a result of the trespasser being caught red-handed (§ 859 BGB).120 Beyond these cases, self-help is not available and the possessor has to enforce his claim for restoration of possession (Anspruch auf Wiedereinräumung des Besitzes, § 861 BGB) through the courts. A similar claim exists to fend off unauthorised interference with possession, and the possessor can also seek an injunction that the defendant cease and desist further interferences (§ 862 BGB).121 Both claims are statute-barred one year after the unauthorised interference or dispossession (§ 864 BGB). Damages can only be claimed under the general rules of tort (§ 823 BGB, especially fault requirement) and are not part of the possession protection remedies.122 The defendant has the defences of permission of interference (§ 863 BGB), and of the defective possession of the claimant vis-à-vis himself, the defendant, because the claimant has unlawfully dispossessed him before (§ 861 (2) BGB). However, a right to possess is not a valid defence against a possession protection remedy; the defendant must bring a separate action based on his contractual right (e.g. sale) or real right (e.g. ownership). 123

If the direct possessor suffers the trespass, his indirect possessor suo nomine, if there is one, also enjoys the possession protection rules outlined above against the trespassing third party, but not against his own direct possessor alieno nomine. Thus the lessor has no possession restoration remedy against his lessee; he has to sue on the basis of the lease or hiring agreement between the parties. The

lessee/hirer, however, as direct possessor, can fend off the unauthorised interference by his lessor under § 859 or sue under § 862 BGB.124

2. Ownership

(a) Nature, extent, content of ownership (use, exploitation)

The contemporary idea of ownership is the liberal concept of full individual ownership. English and German law concur on this point.125 The legal systems generally do not differ much in professing the

extensive nature of ownership and in being fairly unspecific as to its concrete quality and content.126 The substance of a real or proprietary right can be split into a number of attributes that turn the real right into concrete individual real rights, commonly referred to as a "bundle of rights".127 These concrete real rights are determined and delineated as to their existence and quality/content by an external and internal aspect, which both meet as coinciding sides of the same coin. The external aspect becomes manifest in the remedies for the protection of ownership. The internal side of real rights materialises in the powers over a thing which these real rights entail; and the widest possible legal power in relation to a thing is ownership (dominium). In the Romanist tradition, ownership is typically defined as (theoretically) the right (as in principle an unfettered power) to the substance and the use of a thing in whichever manner, and the right to dispose of the thing, all within the limits of the law. From a Common Law angle, one may say that "ownership is the greatest possible interest in a thing which a mature legal system recognises".128 Ownership ("dominium" in a Roman law-based system) is therefore the most comprehensive property right the law provides. Ownership is considered as the standard, and residuary,129 real right conferring (ideally) the most absolute power over a thing. In comparison with the ownership right, any other real rights (restricted real rights) have a more defined and limited ambit.

German private law reflects these principles. § 903 BGB defines ownership (Eigentum) as the owner's right to deal with the res at his will and to exclude everyone else from any influence over the res, subject to legal restrictions or rights of third parties. In particular, this most comprehensive real right entitles the owner to possession, to dispose of the thing, or to grant subordinate rights in relation to it, to use and exploit it, and to reap the fruits or other benefit of its use (jus utendi, fruendi, et abutendi).130 The owner also has the most comprehensive remedies, especially the right to recover the

res in someone else's possession without entitlement in an action of delivery131 (Eigentumsklage,

Eigentumsherausgabeanspruch, rei vindicatio, § 985 BGB).132 In German law, ownership only refers to

specific things, not to assets in general, such as a warehouse or a business.133

The main differences between the ownership concept in English law and in German law have already been stated.134 The concept of ownership in English law benefits from the elusiveness of the notion of "property", which can, at the same time, refer to assets in general as well as to individual things and real rights in them. Thus ownership and also real rights less than ownership do not necessarily have to refer to specific objects.135 English ownership rights can be split into legal and equitable rights; the term equitable ownership can refer to rights which only equity recognises as property, or, more commonly, equitable ownership denotes the situation where equitable ownership rights are held by (a) legal owner(s) under a trust.136 English ownership rights are relative,137 rather than absolute, conferring title rather than dominium, and are much more bound up with possession, which is reflected in the way in which ownership rights are protected.138 This will be shown in the following.

(b) Co-ownership

The concept of co-ownership highlights the different ideas of "split ownership"139 in English and in German law. The principal position of co-ownership in German private law is that of ownership in common (§ 1008 BGB) whereby the co-owners hold notional - not factual - shares or fractions in the res (Miteigentum nach ideellen Bruchteilen). Each owner can dispose of his share, but only the community of owners can dispose of the whole res (§ 747 BGB). The regulations concerning the community of owners determine the rights of management and the rules regarding expenses and return in relation to the res (§§ 741 BGB et seq.). Each owner can require the termination of the community of owners, subject to special agreement (§ 749 BGB). This community of owners has to be distinguished from the (non-commercial) partnership according to private law under the BGB (Gesellschaft bürgerlichen Rechts, BGB-Gesellschaft, §§ 705 BGB et seq.): in the latter case ownership is held jointly (Gesamthandseigentum) between the partners (§§ 718-719 BGB).140

This account already shows the great conceptual differences to English law. Quite often a trust arises in case of a co-ownership situation, where one then has to consider a "vertical" split of ownership between the co-owners and, simultaneously, a "horizontal" split between the different qualities of ownership at law and in equity. Co-ownership is especially the domain of land law,141 but also exists in personal

property law (then often also with a trust behind it).142 Co-ownership at common law can have the form of the joint tenancy (where survivorship or the ius accrescendi applies), and the tenancy in common, where there is a notional division in shares of the same or different sizes.143 Joint tenancy is similar to the German holding of ownership in the BGB Gesellschaft as Gesamthandseigentum (§ 719 BGB), while tenancy in common resembles the concept of Miteigentum nach ideellen Bruchteilen (§ 1008 BGB) in German general private law. This similarity does not go further because co-ownership at common law is often combined with a trust in equity, which is alien to German law. In the present context, such a trust typically comes into existence (apart from its express creation) where one party contributes money to the purchase of a res which is in the ownership of (only or also) another or others. In such a case, a resulting trust144 in favour of the contributing party normally145 arises, whereby the legal owner(s) hold(s) as trustee(s) a beneficial share in equity, which is commensurate with the beneficiary's contribution,146 unless an agreement to the contrary can be inferred.147 The beneficiary can also be legal owner and trustee partly holding the beneficial interest for himself alongside the other trustee(s) who may also be beneficiaries, as the case may be.148 Thus there may be trustee A and B, who hold

jointly the legal title (because common law presumes joint tenancy 149) who hold the beneficial interest for themselves, A and B, in equity in the form of a tenancy in common (since equity presumes tenancy in common) because both contributed to the purchase of the res. The size of the equitable shares is supposed to equate the size of A's and B's contribution, subject to agreement, and in the absence of any indication, will be presumed as equal.150 This complicated network of real rights in equity behind co-ownership at common law cannot not be emulated in German law; in fact, it would be quite difficult to explain its workings to a German lawyer.

(c) Relationship between possession and ownership

In German law, possession is not a real right, but essentially a fact with legal consequences. These consequences depend entirely on the existence of a factual control of the res.151 In contrast, ownership

is the fullest and most comprehensive real right.152 However, this strict conceptual separation, which is

rooted in Roman law,153 is somewhat overstated, and possession can assume a role which really amounts to a right or at least a legal relationship. One of the major effects of possession is the presumption of ownership (§ 1006 BGB), provided the presumed acquisition of ownership occurred together with the acquisition of possession, not earlier or later.154 Furthermore, a dispossessed possessor has a claim for delivery of the res against the possessor (§ 1007 BGB, petitorischer Besitzschutzanspruch),155 but only against a possessor who obtained possession in bad faith, or if the claimant has lost the res before. In these two situations the presumption of ownership (§ 1006 BGB) applies in favour of the prior possessor. This effectively amounts to a real right based on earlier possession or a better right to possession.156 The claim comes close to the real action of delivery (rei vindicatio) under § 985 as the central claim for the protection of ownership, and an owner may choose to resort to the action under § 1007 if proof of ownership for an action of delivery is too difficult.157

It has already been emphasised that in English law the relationship between possession and ownership is closer than in German law, which is particularly well shown by the way in which English law protects ownership.

(d)Protection of ownership

In English law, there is the rebuttable presumption that the possessor will also be the owner.158 This presumption is similar to the German rule in § 1006 BGB, but it has more extensive consequences. Unlike in German law, ownership as such does not confer a title to sue.159 It is possession, or the immediate right to possess, which does that, and in an action against a wrongdoer, possession counts as title.160 Only in so far as the ownership right confers, or is combined with, possession161 or an

immediate right of possession,162 can action be taken (indirectly) on the basis of ownership. As a logical consequence, English law does not protect ownership through a vindication right (action of delivery, rei vindicatio),163 a remedy which emanates from the very nature of the right as being a real right. The vindication, a feature of Roman law-based jurisdictions, is regarded as an indispensable element of the real right, which is also shown by the fact that, for example, in German law, an independent assignment

of the vindication right separately from a transfer of ownership itself is impossible.164 English law

protects ownership through the law of torts,165 and these property torts require possession (or an

immediate right to possess) for their applicability.166 Moreover, for the protection of interests in personal property, there is the common alternative route of an action in negligence alleging damage to the claimant's property which caused loss suffered by the claimant.167

The details of the English property torts need not be discussed here.168 The relevant torts are trespass to chattels and conversion. The tort of trespass to chattels protects possessors (owners) against direct interference with their possession of the chattel.169 This possession must be physical possession or a

right to immediate possession.170 The interference has to be a direct, not merely indirect, act, like

taking away the chattel, and the act has to be wilful, not merely involuntary.171 The tort of conversion is an ancient and complex remedy which has arguably three functions: (a) it can act as a kind of substitute for a rei vindicatio, (b) it compensates owners for losses, (c) it may reverse unjust enrichment arising from the chattel or its proceeds.172 Conversion requires that the defendant deals with goods in a manner inconsistent with the right of the true owner, and by doing so also intends to deny the owner's right or to assert a right which is inconsistent with the owner's right.173 Many different acts can amount to conversion, such as the wrongful taking of the claimant's property, its bailment, sale, loss or destruction. The claimant needs to be in possession of the chattel or must have right to immediate possession. An owner out of possession and without the right to immediate possession cannot sue in conversion, but he can seek to be joined in an action with someone who has entitlement to sue.174

It is common to both torts that the owner can only sue if he is in possession (which is interfered with) or has a right to immediate possession (if he is out of possession). The relative right of ownership is protected through the protection of the relative possessory title. This mirrors in Lord Campbell's statement that "the person who has possession has the property".175 Furthermore, the primary relief is damages, not re-delivery of the chattel to the owner. However, the claimant has the choice between two types of relief: either he can claim damages,176 or the delivery of the chattel, but in the latter case, the defendant has the alternative whether he wants to pay damages to the value of the goods instead.177 Apart from these two forms of relief, there is a third, discretionary, remedy: the court has a

discretion to order the delivery of the converted property instead of damages.178 However, the owner can never recover his chattel in specie as of right.

In stark contrast to English law, ownership in German law is protected by a proprietary, not tortious, remedy which is directed at the recovery of the res in specie. The owner has especially two claims which result from his real right of ownership: (i) the action of delivery of the res against the possessor, whereby the possessor has not or no longer a right to possession vis-à-vis the owner (Eigentumsherausgabeanspruch, rei vindicatio, § 985 BGB); and (ii) a claim against interference with the enjoyment of the ownership right, whereby the interference does not amount to a dispossession of the owner. This latter claim against interference with ownership (Eigentumsstörungsanspruch, actio negatoria, § 1004 BGB), thus something which English lawyers would associate with a kind of owner's remedy against nuisance or trespass, is particularly important in respect of land, but also applies to moveables.

The rei vindicatio under § 985 BGB is the dispossessed owner's action of delivery of the res against a possessor to restore the owner's possession. The possessor has a successful defence if he has a right to possess the res, based either on a contract with the owner (e.g. hiring agreement, loan) or on a real right (e.g. pledge) (§ 986 BGB).179 Otherwise, the possessor has to return the res to the owner, so that the latter can obtain direct possession again. There are several additional rights the owner and the possessor may have against each other.180 For example, the possessor in good faith (redlicher Besitzer) can claim reimbursement from the owner for his expenses made in the meantime, provided these expenses were necessary (notwendig) or useful (nützlich) for the res (§§ 994 (1), 996 BGB), and he can keep the benefits (gezogene Nutzungen) he has obtained from the res. The possessor in bad faith (unredlicher Besitzer, that is someone who knows or due to gross negligence does not know that he has no right to possession181 ), can only claim the necessary expenses made in the meantime, and he must

hand over the benefits from the res.182 The possessor in good faith is not liable to the owner for destruction or damage of the res (§ 993 BGB), whereas the possessor in bad faith is (§§ 989, 990 BGB).183 Besides the rei vindicatio, the owner may have claims resulting from contract or unjust enrichment or tort against the possessor. The real action of delivery is not subordinate to these claims,