Discussions

g e r m a n y

(a) As in case 10, the parties may use security transfer of ownership. In case 10, the security right related to specific property which was easily capable of identification. In such a context, the principle of specificity (the principle that real rights must always relate to a specific piece of property)1 did not present any problems. In respect of stock-in-trade, however, two questions must be considered: (1) How can stock that will be acquired in the future be included within the ambit of the security right? (2) How can the principle of specificity be complied with?

In respect of the first question, in German law, a transfer of security ownership of movables may extend to stock that will be acquired by the debtor in the future. Both the agreements necessary to transfer ownership, the real agreement (Einigung)2 and the constitutum possessorium (§ 868 BGB) as a substitute for delivery,3 may be concluded in advance.4 They become operative as soon as the debtor acquires ownership of the new stock.

So far as the second question is concerned, the test for compliance with the principle of specificity is whether a third party, who was aware of the contents of the agreement between the parties, would be able to point to the specific goods subjected to the security transfer of ownership, without having to refer to other documents, books, etc.5 Security transfer of ownership in stock-in-trade is usually undertaken in one of the following ways, both of which meet this requirement:6 (1) it is stipulated that the transfer relates to all stock stored in a specific room, or (2) the stock in question is stored separately and either marked or described by individual characteristics such as serial number, etc. By

1 See generally Van Vliet, Transfer of Movables 27 f. 2 See supra, German report, case 1(a).

3 See supra, German report, case 3(c) and Van Vliet, Transfer of Movables 53 ff.

4See Staudinger/Wiegand, Kommentar zum Bürgerlichen Gesetzbuch Anhang zu §§ 929--931 BGB n. 128; Baur/Stürner, Sachenrecht § 51 n. 31.

5Cf. BGH 31 Jan. 1979, BGHZ 73, 253 (254), with further references; BGH 3 Dec. 1987, JZ 1988, 471; BHG 4 Oct. 1993, NJW 1994, 133 (134); Reinicke/Tiedtke, Kreiditsicherung n. 460; Baur/Stürner, Sachenrecht § 57 n. 13; Staudinger/Wiegand Anhang zu §§ 929--931 BGB nn. 97--102.

6BGH 27 Sep. 1960, WM 1960, 1223 (1226); BGH 13 Jan. 1992, NJW 1992, 1161; BGH 18 Apr. 1991, NJW 1991, 2144 (2146); Reinicke/Tiedtke, Kreditsicherung n. 460; Baur/Stürner, Sachenrecht § 57 n. 13; Staudinger/Wiegand Anhang zu §§ 929--931 BGB n. 108; Palandt/Bassenge § 930 BGB nn. 3--5; Bülow, Recht der Kreditsicherheiten nn. 1109--1111.

482 s e c u r i t y r i g h t s i n m o va b l e p r o p e r t y

way of contrast, a security transfer is not valid if it relates to a certain percentage of stock or to stock equalling the value of the remaining debt.7 In the case of a security transfer of ownership of future stock, the newly acquired goods must be stored in the same separate room as the remaining collateral or must be marked and stored separately.8 It is only at this point that security ownership will pass from the debtor to the creditor.9

If these requirements are met, there is no need for any further publicity (registration or suchlike).

Stock-in-trade containing goods sold under retention of title

Security transfer of ownership of stock-in-trade gives rise to a special problem,10 due to the widespread use of retention of title clauses in simple or extended form.11 Often, goods acquired by C will be subject to a retention of title agreement and therefore will not (yet) be owned by C. C’s supplier will usually only have entitled C to transfer ownership in these goods in the normal course of C’s business, not for security purposes, as this would contravene the seller’s own security interest. A bona fide acquisition of ownership cannot take place, because that would require the transferee (A) to take direct possession of the goods (see § 933 BGB).12 The problem cannot be solved through an agreement to transfer title only to those goods (out of the pool of goods as a whole) which are owned by the debtor, since the BGH considers such an arrangement to be in conflict with the principle of specificity.13 Usually, therefore, the parties agree to transfer all goods marked or stored separately irrespective of whether they are already owned by the debtor or not.14 So far as such a transfer includes goods delivered under retention of title, A will only get a security right in the expectancy (Anwartschaftsrecht)15

7 BGH 13 June 1956, BGHZ 21, 52 (55); Baur/Stürner, Sachenrecht § 57 n. 13.

8Reinicke/Tiedtke, Kreditsicherung n. 466. For a thorough analysis of this requirement, see Staudinger/Wiegand Anhang zu §§ 929--931 BGB nn. 129--138.

9Reinicke/Tiedtke, Kreditsicherung n. 466; Baur/Stürner, Sachenrecht § 51 n. 32; Bülow,

Recht der Kreditsicherheiten n. 1116.

13BGH 13 June 1956, BGHZ 21, 52 (56); BGH 24 June 1958, BGHZ 28, 16 (20); BGH 20 Mar. 1986, WM 1986, 594 (595); BGH 12 Oct. 1989, NJW--RR 1990, 94 (95); contra: Staudinger/Wiegand Anhang zu §§ 929--931 BGB n. 110.

14BGH WM 20 Mar. 1986, 594 (595); Staudinger/Wiegand Anhang zu §§ 929--931 BGB nn. 112 f. (general opinion).

15See supra, German report, case 3(c).

that C has under the retention of title.16 The rights of the seller thus take priority over those of the security owner, irrespective of the point in time when the agreements were concluded.

(b)A has the status of a security owner.17

(c)Security ownership of stock-in-trade is extremely common.

(d)According to property law principles, the existence and validity of security ownership does not depend on the existence of the secured claim,18 yet the secured creditor should not obtain more than the value of his claim. During the existence of a security agreement, a situation may arise where the value of the collateral exceeds that of the secured claim. This is especially prevalent where security ownership of revolving stock-in-trade is concerned, which, according to German law, may even extend into the proceeds of sale of such stock (security assignment of claims19). Such a situation is detrimental to the debtor, since he will no longer be able to use his property as collateral for other loans. The law could react in one of two ways: it could either consider an agreement void, if it does not adequately protect the debtor; or it may itself imply into the agreement the appropriate protection. Prior to a landmark decision of the BGH in 1997, the courts adopted the first solution. They held that a security transfer of ownership contained in general contract terms was invalid as a whole according to § 307 BGB,20 if the contract did not include a properly worded waiver of the transferee’s rights, in so far as their realisable value exceeded the outstanding debts by more than 20 per cent.21 This jurisdiction was widely criticised, since in practically all cases it was the insolvency administrator who invoked the invalidity of the security transfer in question for the benefit of the insolvency creditors, and thus for third parties, whom the rules on unfair contract terms do not aim to protect. Due to this criticism, the jurisprudence

18Bülow, Recht der Kreditsicherheiten nn. 944 f.

19See supra, German report, case 6(b) and infra, German report, cases 12 and 13.

20§ 307 BGB (prior to 1 Jan. 2002: § 9 AGBG) transposes article 3 n. 1 of the Directive 93/13/EEC of 5 Apr. 1993 on unfair contract terms in consumer contracts (O.J. No L 95/29 of 21 Apr. 1993) into German law.

21BGH 20 Mar. 1985, BGHZ 94, 105 (113/114); BGH 2 Dec. 1992, BGHZ 120, 300 (= NJW 1993, 533); BGH 9 Feb. 1994, NJW 1994, 1154; Bülow, Recht der Kreditsicherheiten nn. 1262 and 1297; Nobbe, ZIP 1996, 657.

intention was known to the other party to the transaction (§ 133 s. 1 InsO). The right of avoidance is now limited to transactions within ten years (instead of the former period of thirty years: see § 41 s. 1 sent. 3 KO) prior to the application for the commencement of insolvency proceedings. Knowledge by the other party is presumed if that party knew that the debtor would no longer be able to pay his debts as they fell due and that the transfer prejudiced other creditors.

Powers of avoidance also exist in the context of execution.23 According to § 3 s. 1 AnfG, a third-party creditor (on behalf of whom the execution is initiated and who does not get full satisfaction) can avoid a legal act performed by the debtor if (1) that act was performed within the last ten years; (2) the debtor acted with the intention of prejudicing thirdparty creditors; and (3) the favoured creditor knew of the intention at the time the act took place. Such knowledge is assumed if the favoured creditor knew that the debtor was close to being unable to pay his debts and that the act was detrimental to other creditors.

a u s t r i a

(a) According to Austrian law, it is possible to pledge a stock of goods. If it is not possible to hand the stock over to the pledgee,24 it is necessary that control over the stock is handed over to the pledgee in some other way25 and that signs are attached to the stock, making it evident to third persons that the stock has been pledged. In order to give the pledgee control over the stock, it is necessary to appoint a person of confidence on behalf of the pledgee, who is able to control whether items of the stock are taken away.26 If the signs are taken away, the pledgee will lose his

23See also infra, German report, case 15.

24The same rules (and especially, the publicity requirement) apply to security ownership.

25OGH 30 Jan. 1991, 8 Ob 678/89 ÖBA 1991, 594. A transfer of control over the stock to the pledgee means that the pledgee can decide whether goods are taken out of the stock or not. This was first decided in GlU 8592. In Rspr 1926/166, the OGH looked at the problem in a different way. In this case a wine cellar was pledged. The pledgor had the right to remove wine, but was obliged to replace the quantity taken out. The OGH held that this was sufficient for the pledge to be effective. In the legal scientific writing, some writers argue that an entitlement of the pledgor to remove goods does not affect the validity of the pledge; cf. Rummel/Spielbüchler § 303 ABGB n. 3. His argument, however, is conceptual: he argues that the stock is a universitas rerum, to which the strict rules for other objects do not apply.

26OGH 27 Apr. 1994, 3 Ob 45/94 ÖBA 1994, 992; OGH 18 Dec. 1996, 3 Ob 2442/96f ÖBA 1998, 216.