Comparative_Property_Law

The Oxford Handbook of Comparative Law

Mathias Reimann and Reinhard Zimmermann

Print publication date: Sep 2012

Print ISBN-13: 9780199296064

Published to Oxford Handbooks Online: Sep-12

Subject: Law, Comparative Law

DOI: 10.1093/oxfordhb/9780199296064.001.0001

Comparative Property Law

Sjef Van Erp

DOI: 10.1093/oxfordhb/9780199296064.013.0033

Abstract and Keywords

The number of studies in comparative property law has recently been growing as a result of efforts to harmonize, or unify, certain aspects of property law in areas crucial for international business transactions.

Increasing regional and global economic integration has led to a growing awareness that the divergence of legal rules may lead to inefficiency and raise transactions costs. In Europe the four economic freedoms (free

movement of goods, persons, services, and capital), laid down in the treaty establishing the European Community, have a growing influence on property law. Comparative property law, once considered to be fairly static, is turning into an increasingly dynamic field of law. This is to a considerable degree a consequence of European and global economic integration, and the resulting legal integration. The national property laws, whether belonging to the civilian or the common law tradition, will all be affected by this change.

comparative law, property law, European Community, global economic integration

I. Introduction 1044

II. A View on the Future of Comparative Property Law 1048 III. Property Law in Civilian Systems and in the Common Law: A Traditional Static Comparative Analysis 1051

1.Civil Law 1051

(a)Personal versus Real Rights 1051

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(b)Numerus Clausus of Absolute Rights 1053

(c)Is the Civil Law as Dogmatic as it Seems? 1056

2.Common Law 1057

(a)Feudal Remnants: The Concepts of Tenure and Estate 1057

(b)Personal Rights versus Real Rights 1059

(c)Common Law and Equity 1059

3.Common Elements: Transparency Requirements, Transfer Systems 1060

4.An Example of a Static Comparison: The Numerus Clausus Debate in American Legal Literature 1061

IV. Civil and Common Property Law: A Dynamic Analysis 1062 V. The Osmosis of National, Regional, and Global Property Law 1065

VI. Final Remarks 1068 I. Introduction

Unlike the law of obligations, comparative lawyers seem to have avoided property law.1 From the nineteenth century onwards, after the codification movement on the European Continent following the French Revolution, property law in civilian and common law systems was seen, in contrast to the law of obligations, as being of a national (local) character. Both in the civil law and the common law tradition, property law became a highly technical area of law. In order fully to understand property law a precise knowledge of the relevant statutory provisions was (and still is) required together with a thorough knowledge of case law and legal literature. This area of the law is, therefore, generally regarded as a set of national, fairly rigid, and technical legal rules, either in statutory or case law format, which are largely of a mandatory character, thus limiting the parties' freedom to shape their legal relations, at least as far as these relations may have an effect vis-à-vis third parties. As a result, property law became a rather petrified legal area, rooted in a desire for legal certainty.

This had a direct impact on the comparative study of property law. Property lawyers from both civil and common law, in spite of having realized that they share the same political and economic ideas with regard to the political and economic infrastructure, also, however, accepted that as a result of historical divergences their systems differed at a technical level. Thus, they became rather introverted. They tended to analyse problems in property law only from the perspective of their own tradition and sometimes declined to

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look even at other national systems within that same tradition. The focus was on the national system and not so much on developments outside that system. Comparative analysis of property law, for that reason, did not attract much attention and whatever comparative studies were undertaken took a divergence perspective as their starting-point. In other words, if a comparative lawyer did indeed look at property law, he usually took it for granted that the two major legal traditions of the Western world (civil law and common law) had fundamentally different historical roots and that

the resulting conceptual differences were so deeply entrenched that any convergence would be impossible. The study of comparative property law was therefore more a matter of Auslandsrechtskunde (ie the study of foreign law) rather than of comparative—let alone critical-comparative—analysis.

Remarkably enough, contract law and tort law (in other words, liability issues) have always been perceived in a different light. They are regarded as the dynamic areas of private law, full of fascinating developments. The law of obligations is characterized by fundamental debates at a legal, philosophical, and moral level on leading principles and on resulting new paradigms. Exciting new questions are raised, such as whether contract law is ‘dead’.2 The only statement that raised comparable emotions among property lawyers was the socialist view that ‘la propriété cʼrest le vol’ (property is theft).3 After communism became the leading ideology in, for example, Russia, China, and the states of Central and Eastern Europe, a growing interest arose in studies of property law focusing on a comparison between the so-called ‘socialist legal systems’, where private ownership had been banned, and the legal systems of Western Europe and the United States. With the decline of communism this interest, however, quickly vanished.4

Apart from the Marxist challenge to existing Western property concepts, a further issue that provoked—and still provokes—fundamental debates on the nature of property law are land claims by the autochthonous population in countries such as Australia, Canada, South Africa and the United States. These land claims are based on the presence of native people who used their land before Western property law was brought to them by Western settlers and who perceive relations between people and land in a very different light than the inhabitants of Europe or the United States. Such claims are now recognized at least to a certain degree. This acceptance raises questions concerning both the nature of, and justification for, the Western type of ownership as well as whether and, if so, in what way these land claims

can be fitted into Western systems of property law.5 In essence, these are questions of comparative property law.

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Although comparative property law, except for the influence of communism on property rights and the land claims of autochthonous peoples, has

not attracted as much attention from comparative lawyers as the law of obligations, there are notable exceptions. First of all, the International Encyclopedia of Comparative Law should be mentioned. This multi-volume work deals in volume VI with structural variations in property law, trust, apartment ownership, and recordation of interests in land.6 Some ten years ago an international comparative property law colloquium was organized in Maastricht under the title ‘Property law on the threshold of the twenty-first century’.7 Also the collections of papers presented at biennial conferences on comparative property law, organized by the Centre for Property Law at the University of Reading, should be noted.8 More recently, comparative property law has been at the heart of studies on mixed legal systems, such as the work collected in Mixed Legal Systems in Comparative Perspective.9

The essays on property law in that volume concern, among other topics, acquisition of ownership, co-ownership, servitudes and real burdens, rights in security, assignation/cession, and trusts.

The number of studies in comparative property law has recently been growing as a result of efforts to harmonize, or unify, certain aspects of property law in areas crucial for international business transactions.

Increasing regional and global economic integration has led to a growing awareness that the divergence of legal rules may lead to inefficiency and raise transactions costs. This is particularly true for the area of secured transactions.10

In Europe the four economic freedoms (free movement of goods, persons, services, and capital), laid down in the treaty establishing the European Community, have a growing influence on property law. This can be

seen in the case law developed by the European Court of Justice.11 The implementation of the economic freedoms demands increasing integration of the economies of the member states, and such economic integration

is hardly possible without legal integration. As a result there is a growing need to understand the various property law systems in Europe, in order to pave the way towards harmonization or even unification of those areas of property law that are relevant for cross-border business transactions within the European Union and the European Economic Area. This has led to various comparative publications, such as, in particular, the studies by

Eva-Maria Kieninger on security rights in movable property and by Graziadei et al on commercial trusts, published as the result of the Trento Common Core of European Private Law project.12 Then there is a comprehensive study

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by Christian von Bar and Ulrich Drobnig on the interaction of contract law and tort and property law in Europe.13 In that study, von Bar and Drobnig discuss transfer of title in movables, contractual security rights in movables, contractual security rights in immovables (mortgages), and trust law.14 Within the framework of the Study Group on a European Civil Code, which aims to draft a set of principles, inter alia, on core aspects of European property law, more publications in this area can be expected.15 Finally, reference should be made to the contributions on property law in a collection of essays entitled Towards a European Civil Code.16

A further recent development that has led to a growing interest in comparative property law is the constitutionalization of private law. Human rights may have a direct impact also on property law, as can be seen in the case law developed by the European Court of Human Rights concerning the protection of ownership, as laid down in Article ι of the first Protocol

to the European Convention on Human Rights.17 A striking example of the effect that the Court's case law may have on national property law can be found in the recent Pye decision.18 This case demonstrates that national rules on prescription of a claim to ownership which may lead to acquisition of ownership at the expense of the original owner, can be qualified as a violation of the right of ownership of the original owner, as secured by Article 1, Protocol 1 of the European Convention on Human Rights. Such loss would have to be adequately compensated. The full impact of this case is, as yet, unclear, but it is to be expected that it will lead to several comparative property law studies.

II. A View on the Future of Comparative Property Law

What this brief survey of the present state of affairs in comparative property law indicates is that, compared to the law of obligations, the number of studies devoted to the subject, although growing, is relatively small. In

my view, a major reason for this is the still prevailing static approach to property law and, as a consequence, to comparative property law. The existing divergence between civilian systems and the English common law is seen as an historical accident that has led to the existence of two

leading traditions in property law, coherent within themselves but difficult to reconcile. This approach to property law is the expression of a legal mentality that I would like to call technocratic conservatism. It is a legal mentality

that aims at preserving the status quo and that accepts changes only when these are completely unavoidable. This mentality is also typical of the way in which property law is often taught, that is, as a coherent set of mandatory

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and technical rules from which by an almost logical reasoning answers to individual problems can be deduced.

Concerning the future of comparative property law I have asked myself the question whether the area is indeed still so static, or whether the underlying mentality is not beginning to change as a result of the regional and global integration of markets. Market integration is becoming a strong undercurrent in national economies, causing changes in the legal framework, including property law. What will be the impact of this undercurrent of regional and global economic integration on the comparative study of property law? In the next paragraphs I will show that a change of mentality is imminent, which will lead to a rapidly increasing role of comparative property law.

It can, of course, be doubted whether the static description of property law was at all ever fully justified. Systems of property law have been far more open to change than might appear at first glance. One clear example are the changes in Continental property law systems after the French Revolution and the ensuing abolishment of the feudal system of land holding. Furthermore, Scotland only recently abandoned the feudal system; and now even in England, where property law is still based on feudal property law notions, the Law Commission is considering how to abolish the remnants of feudalism.19 These are very fundamental changes. In addition, it should be pointed out that, although in civilian systems property law is generally laid down today in statutory form, it has, to a considerable degree, been further developed by the courts, just as much as in common law jurisdictions case law has been reformed by statutes. In other words, although civilian property law is generally laid down in statutes, yet considerable changes take place through case law, whereas in common law systems, property law is often deeply affected by the enactment of statutes.

An example of the first phenomenon is the acceptance of a transfer of ownership for security purposes by the German and, inspired by them, also by the Dutch courts. This was done because the rules on pledge did not allow the creation of a non-possessory security interest. Grave difficulties were caused by these rules, especially for small and medium-sized businesses, which could hardly obtain credit, as the only real security they had to offer was usually their inventory. Pledging the inventory was only possible either by handing it over to the creditor (frequently a bank) or to a third person. Except for a few Italian banks that had cellars to store the wine from wine growers to whom they had given credit, banks were not interested in having their customers' goods in their possession. Pledging also prevented business

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people from selling the inventory freely and creating a cash flow, which would have allowed them to pay off the loan. The case law remedying the lack of non-possessory security interests in the civil codes of Germany and the Netherlands by allowing a transfer of ownership for security purposes changed the German and Dutch law on security interests in movables fundamentally.20

The other leg of our proposition above, that is, that property in the common law systems can be deeply affected by the enactment of a statute, can

be illustrated by the English Law of Property Act 1925. This Act attempted to streamline English land law in the light of the introduction of land registration. A land registry does not function efficiently if the information that is made available is not—at least to a certain degree—standardized. The Law of Property Act attempted to do that by standardizing and limiting the number of common law ‘estates’ (property rights), thus effectively

introducing a numerus clausus into English land law, a concept well-known in civil property law systems.21

To show how dynamic property law, and hence also the comparative analysis of property law, have become I will, first of all, give a brief outline from a more static viewpoint of the two major Western property law traditions:

civil law and common law. I will focus on the leading principles, underlying policies, fundamental concepts, and basic rules (in other words, the basic thought patterns) of these two traditions. It will be seen that these basic thought patterns, partly rooted in a common history, resemble one another quite closely. To demonstrate this at a more specific level I will then examine two related problem areas: (1) new objects of property rights and (2) new types of property rights. The two problem areas are related, because sometimes a new object of property law can only adequately be protected through property law by the creation of a new property right.

These more explorative paragraphs on new objects and new types of property rights will be followed by an attempt to place property law in a broader economic context and by examining the possible consequences for property law of economic, and the ensuing legal, integration. In this part the focus will be on movable and immovable real security. I will adopt what I would like to call an open critical-comparative approach. By ‘open’ I mean that it is not the aim and object of my research to reach specific results from a given limited policy perspective. Rather, I attempt to understand property law systems from the point of view of their historical development and their internal dynamics in the light of external influences coming, for

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example, from such supranational integration structures as the European Union. I do not intend to give an analysis guided by the policy perspective of harmonization, or unification. If the results of comparative analysis are that there is indeed a gap between various legal systems, particularly civil law and common law, then my follow-up question will not be how to bridge this gap. On the other hand, a critical analysis of the technical differences may show that similarities do exist at the level of underlying policies, leading principles, and basic rules, which would make convergence possible. My perspective, therefore, is not a priori the convergence paradigm. My approach is also not a priori the cultural diversity paradigm. A lawyer, of course, has to be very careful when studying a legal system in which he has not been educated. This does not, however, mean that it will never be possible to grasp a foreign legal system more than superficially. That quite the contrary can be true is demonstrated by the way in which German legal scholars who fled to the United States in the 1930s were able to become ‘American’ lawyers. It is from a critical-comparative perspective that in

the final paragraph of this chapter the question will be revisited whether property law is of a static nature and, as such, will be resistant to calls for change. A negative answer to that question would mean that comparative property law has a bright future.

III. Property Law in Civilian Systems and in the Common Law: A Traditional Static Comparative Analysis

Comparative property law still frequently focuses on a description of the basic characteristics of civil law and common law, and such description is not usually followed by an open critical-comparative analysis. What I would like to demonstrate in this paragraph is how such a traditional, descriptive approach can and should be the basis of a truly comparative study, focusing on the search for common leading principles, policy choices, and concepts. I will start with a description of the basic features of civilian property law, followed by the basic features of common law property law. Based upon this description, an example of a traditional static comparative property analysis will be given. The example will be whether in the common law, as in the civil law, a numerus clausus of property rights can be found.

1. Civil Law

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(a) Personal versus Real Rights

The summa divisio of civil law is the distinction between personal rights and real rights or, as they are also called, relative rights and absolute rights.22 A relative right is a right that a specific person has against one or more specific other persons. This other person, or these other persons, are under a corresponding obligation. The name of this area of the law is based on the duty aspect of the legal relationship: the law of obligations. The most important sources of relative rights are contracts and torts. The content

of the obligation and the freedom to shape that content vary. With regard to contractual obligations the parties have an enormous freedom, the socalled ‘freedom of contract’. With regard to tort matters are different. What constitutes a tort is laid down by the law, and the resulting obligation is generally one to make good the loss that has arisen.

An absolute right is a right against the world or, as it is also called, a right erga omnes.23 This means that these rights are extremely strong.

Interestingly enough, the area of the law dealing with rights erga omnes is called property law, meaning the law of property rights. The term, therefore, focuses on the right, not, as in the case of contract and tort, on the duty.

It may be appropriate, at this point, to look at the duty side of absolute rights. The duty rests on everyone: he must not violate the absolute rights of others. If he does so, the person whose right has been infringed has an

option. He can either demand to be restored in his right. If that right is a right of ownership, the claim is called the rei vindicatio. He can also claim that

the violation of his right constitutes a tort, which entitles him to a personal damages claim. He can even bring both claims. An important difference arises in an insolvency situation. A claim based on an absolute right also binds the trustee in bankruptcy. The damages claim, on the contrary, is only a personal claim against the bankrupt. Whether it will be paid depends upon the funds available after the secured and preferential creditors have been paid.

Even in the civil law, as scholastic as it might appear at first sight, the summa divisio between real rights and personal rights is not absolute. An important example of this assertion is provided by the law of lease.

According to the civilian tradition, lease is a contract from which mutual obligations arise. The lessor has to provide the lessee with the use of an object, and the lessee has to pay the price that has been agreed upon.

However, the lessee is granted special protection in a situation where a lessor, who also owns the object of the lease, sells and transfers that object

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to a third party. According to general principle, the lessor would still be bound by the lease agreement, even though he is no longer able to perform. Only the new owner can provide the lessee with the use of the object. But then, he is not a party to the contract of lease and thus not bound by it. If the new owner were to use his right of ownership as the basis for a rei vindicatio

to evict the lessee, the latter would only have a personal claim for nonperformance against his lessor. Civilian systems have, however, protected the lessee against eviction by allowing him to assert his right even against the new owner. The legal maxim that has been coined in that respect is that ‘sale does not break lease’24 Effectively, therefore the lease has been turned into a legal status. The moment someone other than the original owner/lessor acquires ownership of the object of the lease, the legal status of lessor also passes to the new owner. The latter will not only be bound by the contract of lease, but will also have the corresponding rights. That the contract of lease has effectively turned into a status is, however, only

true from the perspective of the lessor, not from that of the lessee. From the lessee's point of view his right to the object of the lease is still personal, and hence not freely transferable or otherwise marketable. English law has gone further and also given the lessee a legal status, resulting in a right that the lessee can transfer. The consequence is that under English law (as well as under other common law systems) lease has developed into an ‘estate’, a right that is not strictly personal, but valid ‘against the world’.

The summa divisio of relative and absolute rights, therefore, is a convenient starting-point for legal analysis. It is an important distinction for civilian legal systems, but it is not a dogma. A further example are the so-called ‘qualitative’ rights and duties, also known as Reallasten or Realobligationen. These are rights and duties attached to, for example, the quality of being the owner of an object. The new Dutch Civil Code has introduced this concept

as a special type of legal relationship that has effect against certain, but not necessarily all, third parties.25 This effect can arise with respect to either the creditor's or the debtor's side of the relationship or sometimes both. An example of a qualitative right is a guarantee; an example of a qualitative duty is the duty not to build a brick wall to fence off one's land. Qualitative duties have been much restricted by the Dutch Code. They can only be created with regard to immovable property and can only be of a negative kind, that is, consist in a duty not to do something. Qualitative duties, therefore, closely resemble servitudes.26

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