Экзамен зачет учебный год 2023 / Ramaekers, EU Property Law

Chapter 2

CONCLUSION

This chapter has explored the application of the rules on the four freedoms to property law. The boundaries of the scope of application of the free movement rules are not exactly known, but it follows from the CJEU’s case law that they are interpreted very broadly. In addition, the CJEU’s very narrow interpretation of what constitutes a so-called purely internal situation makes it difficult to argue that property law cases fall outside the scope of application of the free movement rules, because there is no cross-border element to them. Even with regard to property law, purely internal situations remain the exception and not the rule.

The purpose of this chapter was to determine whether the rules on the four freedoms can be applied to property law and if so, whether the differences between the national property law systems, in combination with the lex rei sitae rule, infringe the rules on free movement. A final step was then to see whether such infringements could be justified. To answer these questions, two sub-topics have been addressed.

The first sub-topic was the question, whether the Court applies a discrimination test or a market access test to determine whether a national rule infringes the rules on free movement. This is important because rules of national property law will generally apply equally to all goods and persons within a Member State’s territory, regardless of the country of origin. They are therefore non-discriminatory measures, which can only be caught with a market access test and not with a discrimination test. With regard to the free movement of capital, services and persons a market access test is indeed applied. The situation under the free movement of goods is less straightforward, due to the distinction that the Court has made in its Keck judgment between rules relating to product characteristics and rules relating to selling arrangements. Initially, the Court seemed to go back to a discrimination test for rules relating to selling arrangements – and property law rules must probably be classified as rules relating to selling arrangements. However, the Trailers case has re-drawn the lines between product characteristics, selling arrangements and other measures having an effect equivalent to quantitative restrictions and has confirmed the trend towards a market access test in the area of free movement of goods. A market access test can therefore be used across the board to determine whether or not property law and the lex rei sitae hinder any of the four freedoms.

The second sub-topic was the question whether there is a de minimis requirement when applying the rules on free movement. With regard to the free movement of goods, the starting point was always that there was no de minimis requirement. With the introduction of a market access test, however, a de minimis requirement seems to be applied by the Court sometimes to mitigate the potentially far-reaching effects of the market access test. With regard to the other freedoms, there also seems to be no de minimis requirement, except in cases that concern a national non-discriminatory measure, to which, again, a market access test is applied. One has to keep in mind, though, that, even if there is a de minimis requirement, this does not necessarily mean that property law rules cannot be caught under the rules on free movement. It is submitted that the effect on the internal market from the differing national property law systems in combination with the lex rei sitae rule is sufficiently substantial to fulfil a de minimis requirement.

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The Krantz case was the only case in which this was contested, but national cases show that cross-border trade is indeed substantially hindered by the differences between national systems of property law and the inability for traders to choose the applicable law to their property relationship due to the lex rei sitae.250

The CJEU held in Krantz that the effect of the national measure was indeed too indirect and uncertain to bring the case within the scope of the free movement of goods. It has however been argued that this holding was incorrect.251 The essence of the Krantz case was the recognition of a foreign property security right and thereby automatically the problem of ranking of several security rights – including a foreign security right – in insolvency proceedings. This ranking includes rights held by the tax authorities. Under Dutch law, the rights held by the tax authorities rank higher than a reservation of ownership clause. Because the German reservation of ownership clause held by Krantz GmbH was not recognized outright in the Netherlands but transferred into a Dutch reservation of ownership, Krantz GmbH lost their ownership when the tax authorities executed their rights and seized all the goods present at the debtor’s premises. When Krantz is considered from this perspective, it is not at all an ‘unusual constellation of facts’ as the Court referred to it. Rather, such property security rights frequently need to be taken into account in insolvency proceedings. I would agree with Klauer that

‘[i]f the seller assumed that the buyer would stay solvent and willing to pay, then he would not need to create a security right. It is simply naive to assume, that the actions of a supplier would not be affected, if he had to fear that his security right would be lost or that its effectiveness would be diminished when crossing the border.’252

It was unfortunate that the CJEU applied a de minimis test in Krantz because it brought the case outside the scope of application of the free movement of goods, thereby precluding the possibility to discuss possible justification grounds and their proportionality to the aim pursued.253

These two sub-topics form the foundation to the argument that the rules on the four freedoms can indeed be applied to national rules of property law. The rules on free movement of goods are more likely to deal with situations involving movable objects; the rules on the other freedoms are more likely to deal with situations involving immovable objects.254 It was thereafter established that the differences between the national systems of property law, in combination with the lex rei sitae rule, can cause obstacles to the internal market. Because movables cross

250Kieninger 2004b contains 15 case studies on this exact problem.

251Supra, section 3.4.5. See also Kieninger 1996, p. 157: ‘Selbst wenn man also eine de minimisRegel für richtig halten würde, könnte die Spürbarkeit in den hier interessierenden Fällen nicht verneint werden.’

252Klauer 1998p. 91: ‘Ginge der Verkäufer davon aus, dass der Käufer zahlungsfähig und zahlungswillig bleibt, so bräuchte er kein Sicherungsmittel zu vereinbaren. Es ist geradezu naiv anzunehmen, es habe keinen Einfluss auf die Handlungsweise eines Lieferanten, wenn dieser befürchten muss, dass seine Sicherungsmittel beim Überschreiten der Grenze untergehen oder in ihrer Wirksamkeit beeinträchtigt werden.’ [Translation in text by ER]

253See also supra, section 7.1.

254So far, there has been no case law concerning free movement law and claims; cf Kieninger 2004b, p. 18 et seq.

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borders, the seller of those goods is confronted with a possible loss of his property rights in relation to those goods, resulting in an increase in costs for the seller or price for the buyer,255 because more expensive security rights are needed or because the seller calculates the risk that he loses his rights to the goods into the price of the goods. That can also mean that the seller looses a competitive edge on the market, which he might otherwise have had. He may even decide not to conduct crossborder business anymore. We have also seen that the rules on free movement of capital, persons and services can have an effect within national property law because they prohibit certain national rules that limit the possibilities of acquiring immovable property (e.g. Reisch) or because they prohibit certain national rules that limit the possibilities of providing or acquiring financial or other services related to the acquisition of immovable property (e.g. Parodi).

However, the fact that national property law rules can fall under the scope of application of the rules on free movement does not necessarily mean that they need to be changed or removed at national level. It is very likely that the Court will accept grounds for justification offered by the Member States to maintain those rules. The most likely grounds for justification are public policy, to maintain the coherence of the national property law system and to protect creditors. Whether these justification grounds can be invoked, and whether the way in which Member States try to achieve these aims is proportionate, is for the Court to decide on a caseby case-basis. In any case, it is important to go through all these steps instead of taking a shortcut, like the Court did in Krantz, in order to fulfil the ‘signal function’ towards the Commission that harmonization might be needed.256

Finally, every section on one of the four freedoms was concluded with an explanation of how the rules on that particular freedom (potentially) affect national property law. They may lead to the recognition of foreign property rights by receiving Member States and may broaden the possibilities to acquire and use immovable property in another Member State.

255Cf Strese 2006, p. 194.

256Supra, section 7.

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Chapter 3

THE EU’S COMPETENCE TO REGULATE PROPERTY LAW

INTRODUCTION – THE RELATIONSHIP BETWEEN EUROPEAN LAW AND PROPERTY LAW

The previous chapter, which explored the relationship between the rules on free movement within the European Union’s internal market and national rules of property law, showed that the differences between the Member States’ national property laws and their mandatory character can and do lead to obstacles to the internal market. This can be seen as an indication that the EU should become involved in property law so as to reduce or remove these obstacles to the internal market. This chapter therefore investigates whether and to what extent the European legislature would have the competence to regulate matters of property law. Article 345 of the Treaty on the Functioning of the European Union (TFEU) is crucial in this respect. The Article reads: ‘The Treaties shall in no way prejudice the rules in Member States governing the system of property ownership.’

It is not entirely clear what the meaning of this provision is and whether or not it says anything about the competence of the EU to legislate in the field of property law. It is therefore important, before discussing to what extent the EU should regulate or harmonize property law, to uncover the meaning of Article 345 TFEU. This chapter presents the results of extensive research into the origins of Article 345 and its present-day use by the European Institutions. The chapter ends with an analysis of the potential legal bases which the European legislature could use to enact rules of property law, provided that Article 345 does not prevent it from doing so.

1.Article 345 of the Treaty on the Functioning of the European Union1

The meaning and scope of Article 345 TFEU are not entirely clear. Not much is known about the origins of the Article, nor about its exact meaning and effect on the rest of the Treaty or on national law. The phrasing of the Article is unfortunate, its wording is so broad that the meaning becomes difficult to determine. Looking

1Part of the research underlying this chapter was previously published in the European Law Journal, in an article co-authored with Bram Akkermans: Akkermans & Ramaekers 2010.

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purely at the wording of Article 345, it could be argued that property law is exempted from the influence of European law.2 The Article seems to indicate that property law is exclusively for the Member States to regulate and, therefore, that the European legislature has no competence to legislate in this area. However, reality shows a different picture than a literal reading of the Article would suggest. There is existing European legislation that deals with property law – as will be seen in Chapter 4 –, there is proposed legislation that will deal with property law and there are several decisions of the Court of Justice of the European Union (CJEU) that deal directly and indirectly with matters of property law.3 In other words, it seems that Article 345 does not prevent the European legislature from acting, nor does it seem to prevent the CJEU from making a ruling that has far-reaching effects in the area of property law.4

The uncertainty surrounding the Article’s scope and meaning could be the reason that legal scholars, the European Commission and the CJEU all seem uncertain how to handle this Article. Moreover, the cases where Article 345 TFEU comes up are not usually fundamental cases in the development of EU law. Perhaps these reasons also explain why literature and case law on Article 345 is hardly available.5

This chapter purports to provide more clarity concerning the meaning of Article 345 as well as to investigate its use and interpretation in both legislation and case law. In order to do so, several steps will be taken in line with the methodology followed by the CJEU as outlined in Chapter 1.6 In subsequent order, this chapter will deal with the linguistic interpretation of the Article, its historical development, as well as its current application by the European Commission, European Parliament and, finally, the European Court of Justice. The Article will be evaluated both from the point of view of European law and from the point of view of property law.

Taking a look at the existing legislation as well as future legislation is increasingly becoming more relevant with the nationalization of banks by Member States in the current financial crisis. One of the questions in the work of the

2See for a discussion of Art. 345 TFEU inter alia Van Erp 2006b, p. 6-7; Akkermans 2008, p. 508-509; Caramelo Gomes 2008, p. 239; Sagaert 2007, p. 301-333.

3See, for instance, Dir. 2002/47/EC of the European Parliament and the Council of 6 June 2002 on financial collateral arrangements; Green Paper Mortgage Credit in the EU, COM(2005) 237 final; White Paper on Mortgage Credit Markets; COM(2007) 807 final; Reg. 650/2012/EU on international successions, [2012] OJ L 201/107; and CJEU Case C-367/98, Commission v Portugal [2002] ECR I-4731, para. 48; Case C-483/99, Commission v France [2002] ECR I-4781, para. 44; Case C-503/99, Commission v Belgium [2002] ECR I-4809, para. 44; Case C-302/97, Klaus Konle v Republik Österreich [1999] ECJ I-3099; and Joined Cases C-515/99, C-519/99 to C- 524/99 and C-526/99 to C-540/99 Hans Reisch and others v Bürgermeister des Landeshauptstadt Salzburg and others [2002] ECR I-2157.

4Cf Case C-117/06, Möllendorf and Möllendorf-Niehuus [2007] ECR I-8361 and its discussion in Van Erp 2009a and Lavranos 2008.

5Riegel exclaimed in 1979 already: ‘Es ist erstaunlich, dass es zu diesen Fragen kaum Literatur gibt, obwohl sie doch von zentraler Bedeutung sind für die bisherige und künftige Rechtsund Integrationsentwicklung der EWG.’ (It is astonishing, that there is hardly any literature regarding these questions, even though they are of crucial importance for the current and future legal and integration development.) [translation ER]; Riegel 1979, p. 744-749. See however Caramelo Gomes 2008, p. 239; Devroe 1997; Bartels 1995.

6Chapter 1 at 3. Linguistic roblems: the method of the Court of Justice of the European Union.

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European Commission is whether such nationalization is to be considered as State aid under Article 106 TFEU. If Article 345 would prevent the application of European law to national property law, the measure nationalizing a financial institution would possibly be exempted from scrutiny under European law and therefore also from the supervision of the European Commission under Article 106.

2.Methodology of the CJEU

The Treaty of Rome, also known as the E(uropean)E(conomic)C(ommunity) Treaty, was originally drafted in French. The predecessor of Article 345 in the EEC Treaty was Article 222. As this thesis is written in English, emphasis will lie on a comparison between the French and English language versions of Article 345 TFEU. However, the comparison will not stop there. Given that all language versions of the Treaties are equally authentic, a linguistic comparison based solely on the French and English language versions would constitute an insufficient basis for any conclusion that would be drawn concerning the meaning of Article 345.7 The Courts of the European Union have to take into account all language versions when interpreting a provision of the Treaties.8 This causes very particular problems of a linguistic nature. The method of legal interpretation adopted by the CJEU to cope with these problems has been described in Chapter 1 and it will now be applied to Article 345. With the use of the Court’s method, the meaning of Article 345 may be uncovered. It is however important to note at this point that it would be very difficult, if not practically impossible, to research all the different language versions of Article 345. Furthermore, it would not be necessary to do so as the wording of the Article has not changed since it was drafted in 1957 and the wording has barely changed since its early predecessor – Article 83 of the Treaty establishing the European Coal and Steel Community (ECSC), which was only authoritative in French – was drafted. What is even more, Article 345 ‘is in the unique position of deriving its authority directly from the Schuman Declaration of 9 May 1950, on which it has been based’.9 The key terms in Article 345, which will be discussed below, have literally been taken over from the Schuman Declaration, at least as far as the French version is concerned: ‘L'institution de la Haute Autorité ne préjuge en rien du régime de propriété des entreprises.’10

It is for these reasons that the research into the meaning of Article 345 will be limited to the four original drafting languages – French, German, Dutch and Italian

– with special emphasis on French; the English version, being a later translation, will be reviewed against the four original versions.

7This follows from Article 314 EC, which lists the 23 authentic versions of the Treaty. See also EEC Council Regulation no. 1, 6 October 1958, OJ L 17/385.

8The Treaty on European Union and the Treaty on the Functioning of the European Union [2010] OJ C 83/13 and 83/47.

9A.G. Colomer’s Opinion to joined cases C-367/98, C-483/99 and C-503/99 [2002] ECR I-4731, para. 45.

10The full text of the Declaration can be found at: <http://www.robert-schuman.eu/declara tion_9mai.php>.

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3.Interpretation of Article 345 TFEU

Research that has been conducted over the last decades shows that neither the scope of application nor the exact meaning of Article 345 is clear from its wording.11 In this paragraph, Article 345 is dissected into three different parts. These parts are evaluated together in an attempt to determine the precise meaning of the Article. For reasons outlined above,12 I rely mostly on the French version of Article 345, which reads: ‘Les traités ne préjugent en rien le régime de la propriété dans les États membres.’ [emphasis added]

The term préjugent is evaluated in subsection 3.1; subsection 3.2 is devoted to the evaluation of the expression régime de la propriété; and the expression Les traités is dealt with in subsection 3.3.

3.1.Linguistics: Prejudice, Prejudge or Preclude?

Article 345 states that the Treaties shall in no way prejudice Member States’ rules governing the system of property ownership. The term ‘prejudice’ is a vague term and it is unclear whether or not it means that the EU legislature will refrain from interfering in the property law systems of the Member States. The examination into this is further complicated by the fact that the different language versions of Article 345 and its surrounding provisions do not always match. For example:

The English version of Article 345 reads: ‘The Treaties shall in no way prejudice the rules in Member States governing the system of property ownership.’ [emphasis added]

The French version reads: ‘Les Traités ne préjugent en rien le régime de la propriété dans les États membres.’ [emphasis added]

The German version reads: ‘Die Verträge lassen die Eigentumsordnung in den verschiedenen Mitgliedstaaten unberührt.’ [emphasis added]

The Dutch version reads: ‘De Verdragen laten de regeling van het eigendomsrecht in de lidstaten onverlet.’ [emphasis added]

The Italian version reads: ‘I trattati lasciano del tutto impregiudicato il regime di proprietà esistente negli Stati membri.’ [emphasis added]

First of all, it is doubtful that ‘to prejudice’ is the most correct interpretation of the French préjugent. Article 55 TFEU (which used to be Article 294 EC, directly preceding Article 295 EC which is now 345 TFEU) uses the French term préjudice, which is also translated into English as prejudice.13 One would think that the drafters had reasons for using different terms in French, but this difference in terminology between these Articles cannot be seen in the English language version. As a result, the English version uses a term with an uncertain sense, whereas the

11Bartels 1995, p. 244-51; Sagaert 2007, p. 302 et seq.

12Section 2.

13Art. 55 reads: ‘Member States shall accord nationals of the other Member States the same treatment as their own nationals as regards participation in the capital of companies or firms within the meaning of Article 54, without prejudice to the application of the other provisions of the Treaties.’

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corresponding term in the four original language versions is clearer.14 A comparison with the original language versions will have to indicate how the term prejudice is to be understood.

The precursor of Article 345 TFEU is Article 83 ECSC. Unlike the TFEU, the ECSC Treaty is only authoritative in French: Article 100 ECSC states that the treaty is ‘rédigé en un seul exemplaire’.15 Article 83 ECSC reads: ‘L’institution de la communauté ne préjuge en rien le régime de propriété des entreprises soumises aux dispositions du présent Traité’. The term préjuge is used in the French version of both Article 83 ECSC and Article 345 TFEU.16 It was already used in the Schuman Declaration. The equivalents of préjugent in the German and Dutch versions of Article 295 EC are lassen unberührt and laten onverlet respectively. These two expressions match; they both mean that something remains unaffected. The same goes for the Italian lasciano impregiudicato. Together they all match the original French expression. The French term préjugent is even a bit stronger in the sense that not only the systems of property ownership in the Member States remain unaffected after the entry into force of the Treaties, but it also seems to imply that the Treaties did not prejudge17 the systems of property ownership of the Member States as they existed when the Treaties were first drafted to create the European Communities. The compatibility of the national systems of property ownership with the Treaties at that moment was assured, as was the neutral stance of the European Communities towards these systems after entry into force of the Treaties.18

A comparison between Article 345 TFEU and Article 346 TFEU (ex Art. 296 EC) reveals more about the use of the term prejudice. Article 346, which is also an Article that deals with exceptions to the Treaties, uses the English term preclude. It seems therefore that there is a difference between the term prejudice and the term preclude in the terminology of the EU Treaties. The French version uses the words préjugent in Article 345 and ne font pas obstacle in Article 346. This different wording could be the result of a difference in subject of the sentence: le présent Traité in 295 EC, les dispositions du présent Traité in 296 EC, but the difference in terminology seems to suggest a different meaning. The translation of ne font pas obstacle with preclude in the English version is accurate as preclude means preventing something from happening before it even takes place. It is therefore different from prohibiting, banning or disallowing. The term préjugent, which translates into the English version as prejudice, is more complicated. Prejudice as a verb generally means to cause harm to. Therefore a negative wording with the verb prejudice should be interpreted as ‘without causing harm to something’.19

When applied to the Treaties, there is therefore a difference: preclude, preventing the application of the provisions of the Treaties in the first place is stronger than prejudice, just not causing harm to national legal systems. With

14Van Calster 1997, p. 374.

15The English version states ‘drawn up in a single original’. See also Van Calster 1997, p. 366.

16Because of the change from ‘This Treaty’ to ‘The Treaties’, Art. 345 now uses the word préjugent instead of préjuge.

17‘Prejudge’ is incidentally the (non-official) translation of préjuge in the Schuman Declaration.

18Groeben 1997, 5/386-5/387.

19The meaning of the terms used in English in this section have all been derived from the Oxford English Dictionary.

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respect to Article 345, therefore, the Treaties may apply but just as long as they do not cause harm to the rules governing the system of property ownership in the Member States. This seems to match the conclusion drawn above, that préjuge/lässt unberührt/laat onverlet/lascia impregiudicato means that nothing in the Treaties will affect the systems of property ownership in the Member States. However, to prejudice, understood as will not cause harm to, is less neutral than préjuge; it is more negative. Nevertheless, when compared to the original four language versions, it can be understood that the expression ‘shall in no way prejudice’ refers to the neutral stance that is taken by the European Union with regard to the way in which Member States regulate their system of property ownership.

3.2.History of the Article: Relating to Undertakings or not?

In the Treaty of Rome that was negotiated during 1955 and 1957 and signed in Rome on 25 March 1957, Article 222 EEC stated in French, as English was not yet an official language:20 ‘Le présent Traité ne préjuge en rien le régime de propriété dans les Etats Membres.’

It is unclear what is exactly meant by the words régime de propriété or, in English, system of property ownership. A look at the Travaux Préparatoires of the EEC Treaty may provide more insight into the meaning of Article 345 (ex Art. 222 EEC). First of all, the search shows that the wording of the Article has differed in earlier versions of the draft of the Treaty. During the negotiation process, there were several groups dealing with the wording of the Article. The Groupe de Rédaction proposed the first wording on 5 December 1956:21 ‘Le présent Traité ne préjuge en rien le régime de propriété des moyens de production existant dans la Communauté.’22

On 18 January 1957 a special group of experts (the Groupe du Marché Commun (GMC)) created to assist the Comité des Chefs de Délégation, the gathering of delegation leaders that made most of the decisions on the content of the draft Treaty, proposed a revised version: ‘Le présent Traité ne préjuge en rien le régime de propriété des entreprises soumises aux dispositions du Traité.’23

In the text of the GMC the archaic use of the words ‘means of production’ had been changed to ownership of undertakings, most likely modernizing the text but not substantially altering the content of the Article. On 21 January 1957, the same group of experts deleted the last part of the sentence soumises aux dispositions du

20French was the original drafting language. However, the initial four official languages in which the Rome Treaty was drafted were French, German, Dutch and Italian. Due to the principle of equality of languages, all four versions were – with retroactive effect as it were – equally authentic; Cf Van Calster 1997, p. 369. The languages of the acceding Member States became equally authentic to the others upon the moment of their accession, following the Accession Treaties and Art. 55 TEU, ex Art. 314 EC.

21Conseil des Communautés Europeennes, Archives Historiques, Negociations des Traités Instituant la communauté Economique Europeenne et la communaute europeenne de l’energie atomiche, CM 3, N. 0261, Conférence intergouvernementale: Historique des articles 210 à 225 du traité instituant la CEE.

22Doc. MAE 641/56 (Art. 9).

23Doc. MAE 177/57 and Doc. MAE 243/57 (Art. 43 quater).

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