Экзамен зачет учебный год 2023 / Ramaekers, EU Property Law

Chapter 4

us what objects can be objects of those property rights under EU law; and some results show us the beginnings of an operating system that governs those rights. The picture is still fragmented, but there is more property law to be found at EU level than perhaps initially expected.

A distinction is made between rights in rem and rights in personam. Rights in rem are characterized as relating to a thing and being of an absolute nature, in the sense that they can be invoked erga omnes. There is no European-autonomous definition of rights in rem but they are functionally described. There are security rights and rights to use and there are specific remedies to protect these rights. Furthermore, a distinction is made between ownership/freehold and other rights/ entitlements/forms of tenure. The emphasis throughout EU legislation lies on security rights; rights to use are not often encountered. Apart from a general description of rights in rem in general, specific descriptions of property rights are also found. The Insolvency Regulation classifies a floating charge and rights registered by way of Vormerkung as property rights. The Late Payments Directive provides a definition of retention of title clauses. The Financial Collateral Directive provides security ownership and a possessory security right (pledge). Security ownership does not exist in all Member States. The Directive has, in that regard, introduced a level of harmonization, albeit restricted to the sector of financial collateral arrangements.266 The Regulation establishing the Community Customs Code also provides for a possessory and non-possessory pledge, available for both tangible and intangible objects.

The acquis also indicates what types of objects can be objects of these property rights. They can be movable or immovable, and immovable property can be considered to be included in a measure unless it is explicitly excluded. They can also be tangible or intangible (or in/corporeal). The acquis itself introduces a number of new, intangible, objects of property rights, such as the Community Trade Mark, the Community Design, and emission trading rights. By including intangible objects as objects in relation to which one can have a right in rem, including ownership, the acquis goes further than some Member States. In the Netherlands and in Germany, for instance, ownership of claims is not accepted (although claims can be pledged).

The acquis also shows the contours of a system of rules governing these property rights. It is aware that a power to dispose is an essential requirement when transferring ownership –this was seen in the Möllendorf judgment. It recognizes that there are different stages in the life of a property right – it distinguishes between the creation and transfer of a property right. It also provides a definition of assignment of claims. Further, it makes a distinction between possessor and holder which resembles the distinction made at national level. The Directive on Financial Collateral Arrangements stipulates that the creditor may keep the collateral in case of non-payment, something which is not usually allowed under national property law. Finally, the EU legislature adheres to the lex rei sitae rule.

Rules relating to third party effect can also be seen. The Regulation on the Community Trade Mark stipulates that the acquisition of such a trade mark can have no third party effect without registration. At national level, registration is

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usually the means by which publicity is achieved. The principle of publicity forms one of the underlying justifications for granting erga omnes effect to property rights, the principle of specificity forming the other justification. The Community Trade Mark Regulation also establishes a ranking. The Insolvency Regulation grants property effect to retention of title clauses, in the sense that they can be invoked against third parties, both in the case of insolvency of the buyer as well as in the case of insolvency of the debtor. The Directive on the return of stolen cultural objects restricts third party protection rules. Stolen cultural objects can be retrieved from parties who acquired them in good faith and who would otherwise be protected because they were in good faith.

Finally, it is worth noting that the property law rules and property law terms present in the acquis tend to be found in measures on specific issue areas. Property law rules and terms were primarily found in regulations and directives dealing with credit agreements and financial instruments or services, accountancy standards and taxes, insolvency proceedings, environmental issues, restrictions against certain countries or organizations and anti-terrorism measures, agricultural or farming matters, and consumer protection.

These results will be used as a starting point for the next two chapters, in which a framework for the future development of EU property law will be built. These chapters will deal with both form and content of future EU property law respectively. As Chapter 5 will show, a lot of research and discussion has already been devoted to the different forms in which European private law more generally could be shaped (e.g. an optional or mandatory instrument, a Regulation or a Directive, etc). Within this context the form that EU property law might take will be discussed first, in Chapter 5, before turning to content, in Chapter 6. Whereas Chapter 5 builds mainly on the pre-existing discussion concerning the possible forms for future European private law, Chapter 6 provides a new proposal specifically related to the content of future EU property law. It is for that reason that Chapter 6 forms the closing chapter of this study.

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Chapter 5

OPTIONS FOR THE FUTURE DEVELOPMENT OF EUROPEAN UNION PROPERTY LAW

INTRODUCTION

The previous chapters have shown that national rules of property law could, and do, infringe the European internal market rules; to what extent the EU may have the competence to regulate property law; and the extent to which the EU has already created property law. This chapter explores the possible forms in which European Union property law could be shaped in the future, should the European legislature decide to approach this field of law more directly and coherently. The different options include a legislative instrument containing substantive EU property law, an Inter-Institutional Agreement, case law from the CJEU and an international agreement. The possible legislative measures for EU property law are discussed based on the presumption that the EU has the competence to enact them. Whether this is actually the case has already been discussed in greater detail in Chapter 3. Nevertheless, some elements of competence, subsidiarity and proportionality, will be revisited here, now in the specific context of each of the different options for future EU property law as discussed in this chapter. This chapter focuses on the possible forms for future EU property law. What could or should be the content of EU property law will be discussed in the next and final chapter of this study.

It was argued in Chapter 2 that it is not just the differences between the national substantive property law rules that cause obstacles to free movement but that it is the combination with the private international law rule of lex rei sitae which leads to these hindrances.1 Therefore, the discussion of the different forms for future substantive EU property law rules in this chapter will be preceded by an analysis of whether the problems in intra-Union trade could be (partially) solved by changing or replacing the lex rei sitae rule.

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1.Explanation of Terms

The term ‘European Union (EU) property law’ is used to denote that this study focuses on the European acquis. The term ‘European property law’ sometimes seems to give the impression that this study consists of comparative law research, but comparative law is not the main focus, the acquis communautaire is.

Furthermore, a number of terms are used in literature and documents of the EU institutions in relation to harmonisation: full harmonization, maximum harmonization, partial harmonization, targeted harmonization, and minimum harmonization. These terms are not always used in the same way by everyone. For the purposes of this study, these terms are interpreted as follows: minimum harmonization means harmonization laying down a minimum standard, leaving room for the Member States to adopt stricter measures. Maximum harmonization means harmonization laying down a maximum standard, leaving no room for the Member States to adopt stricter measures. This is now often referred to as full harmonization but I would interpret full harmonization as the harmonization of a whole area of law (for instance, property law), as opposed to harmonizing only a part of that area (for instance, only the rules on security rights), which would be partial or targeted harmonization. To avoid the confusion inherent in having two meanings of the term full harmonization, I only use it in the sense of harmonization of a whole area of law.

2.The Commission’s 2010 Green Paper

The options presented in this chapter for future EU property law are structured along the same lines as the policy options presented by the Commission in the ‘Green Paper on policy options for progress towards a European Contract Law for consumers and businesses’.2 At the end of the chapter, two additional options will be discussed – namely the conclusion of an international agreement, and harmonization through CJEU case law – which were not mentioned in the Green Paper but which are nevertheless worth exploring. While the Green Paper specifically dealt with contract law, it can provide inspiration for this research project in which the options for a future EU property law are explored. The Green Paper listed seven options3 for a future instrument for European contract law,4 the first of which would be to publish the results of the Expert Group.5 These results could be a source of inspiration for national and European legislatures and for

2COM(2010) 348 final.

3The Impact Assessment mentions the baseline scenario – maintaining the status quo – as option 1, but this option is not listed in the Green Paper; Impact Assessment Accompanying the document ‘Proposal for a Regulation of the European Parliament and of the Council on a Common European Sales Law’, SEC(2011) 1165 final, section 4.1. The Impact Assessment concludes, as regards the baseline scenario, that transaction costs and opportunity costs would continue, as well as legal complexity for businesses and consumers, and that the practice to refuse to sell cross-border would not decrease: section 5.1.

42010 Green Paper, section 4.1.

5The progress made by the Expert Group and the Draft rules so far developed can be found at: <http://ec.europa.eu/justice/policies/consumer/policies_consumer_intro_en.htm>.

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academic study. However, as the Commission indicated, its lack of formal authority would mean that this option ‘could not address the internal market barriers’6 caused by divergences between the national systems.7 As a second option the Commission proposed the adoption of an act that would incorporate the results of the Expert Group as a ‘toolbox’ to be used for future legislation.8 Such an act could be an inter-institutional agreement.9 The third option would be for the Commission to issue a Recommendation for the Member States including an instrument of European Contract Law, encouraging the Member States to incorporate the instrument into their national law or make it available as an optional instrument to contracting parties.10 As a fourth alternative the Commission suggested the adoption of a Regulation setting up an optional instrument.11 Such an instrument could be beneficial to parties who are currently facing problems when conducting cross-border trade in the internal market but without interfering further with the national systems.12 From the point of view of subsidiarity and proportionality, therefore, an optional instrument may be a preferable alternative to full harmonization of national laws.13 The fifth option would be the enactment of a Directive on European Contract Law, ‘on the basis of minimum common standards’.14 However, the downside to minimum harmonization Directives is that they cannot, and do not always, eliminate the obstacles in the internal market caused by diverging national legislation, given that Member States are allowed to maintain stricter rules than the minimum level of harmonization.15 That problem could be circumvented if unification is created by way of a regulation (Option 6).16 However, opting for a regulation might be more difficult to justify when it comes to subsidiarity and proportionality.17 These difficulties only increase with Option 7, namely that of

62010 Green Paper, p. 8.

7What these barriers are exactly has been discussed in Chapter 3.

82010 Green Paper, p. 8.

92010 Green Paper, p. 8. See also infra, section 5.1.

102010 Green Paper, p. 8-9.

112010 Green Paper, p. 9-10.

122010 Green Paper, p. 10. Whether there would really be no further interference with the national systems – as the Commission contends – remains to be seen if a Regulation is chosen as the form for an optional instrument. See, for instance, Smits 2002, p. 10: ‘[A] disadvantage is that the Member State is not able to influence the way the regulation is grafted onto the national legal order. This may very well lead to a problematic relationship between Community law and the national legal system, into which it is directly parachuted.’ A similar disadvantage can be encountered with the use of directives, which can lead to the introduction of Fremdkörper (Smits 2002, p. 10) into the national systems. The non-interference with the national systems that the Commission speaks of might be a result of the optional nature of the envisaged instrument, but not necessarily of the form of the envisaged instrument, whether regulation or directive.

132010 Green Paper, p. 10. For more about subsidiarity and proportionality, see also Chapter 2, section 7.1.

142010 Green Paper, p. 10.

152010 Green Paper, p. 10; Basedow et al. 2011, p. 24.

162010 Green Paper, p. 11: ‘A Regulation establishing a European Contract Law could replace the diversity of national laws with a uniform European set of rules’; see also p. 10 of the Green Paper, at footnote 29.

172010 Green Paper, p. 11.

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adopting a European Civil Code which would cover not only contract law but also other types of obligations and even other areas of private law.18

3.EU Private International Law – Changing the Lex Rei Sitae?

I have argued in Chapter 2 that the lex rei sitae rule – by which the proprietary status of an object is determined by the law of the place where the object is situated – is not always suitable in an EU setting where there is free movement of goods and capital.19 Property rights validly created in relation to an object in the home Member State may be altered or lost when that object crosses the border into another Member State.20 This situation is called conflit mobile or Statutenwechsel.21 The host Member State will either try to adapt the foreign property right into the most similar property right that can be found in its own numerus clausus or, if this is not possible, will refuse to recognize the foreign property right.22 It must be noted, however, that the term ‘recognize’, when discussing the recognition of foreign property rights, is not always used in the same way. Often, it means recognizing a foreign property right by way of transposing it into a national equivalent. ‘Recognize’ may in such cases also refer to the vested rights theory under which rights can only be recognized if they have been validly created (vested) under the law of the country where the object was at the time of creation of the right.23 Such recognition is an essential prerequisite before a property right can be transposed into a national equivalent.24 It can be debated whether this is truly recognition. Recognition may also mean the recognition of a foreign property right as such, i.e. without changing it into a national equivalent.25 I would consider the latter as a purer form of recognition than the former. Such outright recognition would, for instance, be the case if the internal market concept of ‘mutual recognition’ were applied to property rights,26 about which more below.27 Another example is the Hague Convention on the Law Applicable to Trusts and their Recognition, which entails that a trust

182010 Green Paper, p. 11.

19Cf Kieninger 2008a, p. 187. Similarly, as Flessner stated about the numerus clausus: ‘Die strikte Doktrin des Typenzwangs ist im heutigen internationalen Sachenrecht aber schon grundsätzlich fehl am Platz. Sie unterstellt eine Rechtsordnung, die nach au en und in sich geschlossen ist und dadurch ihr Sachenrechtssystem »rein« halten kann. Diese Vorstellung ist unrealistisch und unangemessen in einer Welt, in der internationale Freiheit des Warenverkehrs herrschen soll. Hier kann der einzelne Staat nicht mehr erwarten, dass sich auf seinem Gebiet nur Sachen befinden, die nach seinem geschlossenen System der dinglichen Rechte erworben und belastet wurden’; Flessner 2010, p. 135.

20This may for instance be the case with liens, which are known to English law but not to Dutch law. Therefore, liens are not likely to be recognized in the Netherlands, because there is no equivalent in the Dutch numerus clausus. See also Verhagen 2007a, p. 35 with reference to Wilmowsky 1996.

21Rauscher 2009, p. 323.

22A more detailed description of how the lex rei sitae rule is interpreted and applied by different countries can be found in Akkermans & Ramaekers 2012b.

23Kuipers 2009, p. 75.

24Polak 2006, p. 128.

25Cf Van der Weide 2006, p. 230.

26See Chapter 2, section 3.2. Mutual recognition of property rights?

27Section 3.1.5.

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validly created under the Convention must be recognized as such in all the countries that ratified the Convention (Art. 11). Whenever the term recognition is used in the following paragraphs, it will be made clear which interpretation of recognition is meant.

Transformation of a foreign property right into the national equivalent may lead to a change in the rights and powers of the holder of the property right; an outright refusal of a foreign property right which has no national equivalent leads to a loss of the property right at the border. A company may, for that reason, choose to no longer conduct cross-border business, to ensure payment of the purchase price through different, more expensive (contractual) means than a property security right,28 or to increase the price of the object to cover the risk of losing a security right. In every one of these instances, there is an obstacle to the internal market. Either a company no longer trades with businesses in other Member States or its costs increase and therefore potentially also the price of the object, giving the company a competitive disadvantage. Furthermore, a person wishing to acquire immovable property in another Member State is forced to create a right of mortgage or hypothec under the law of that Member State. The unfamiliarity of a foreign mortgage and the additional costs of becoming familiar can form an obstacle to the free movement of capital, given that the acquisition of immovable property in another Member State is considered to be a capital movement.29

In principle, the lex rei sitae finds its justification, for immovables, in the nature of the object, making it inextricably linked to a State’s territory;30 and for movables, in the protection of third parties who should not be confronted with property rights that could not exist under the law of the country where the object is situated.31 As far as movables are concerned, it has been shown in Chapter 2 that third party protection is not always a valid justification for not recognizing a foreign property right.32 Moreover, an object’s current situs may be purely a coincidence.33 Whilst being transported to its country of destination, it may pass through one or several countries with which it has no connection.

Van der Weide, in his doctoral thesis, sees three ways out of the conflit mobile problem.34 The first option would be harmonization or unification of property law.35 A second option would be to choose a connecting factor for proprietary relationships that is ‘immune’ to conflit mobile problems.36 Possible alternatives for the lex rei sitae are the lex registrationis, the lex destinationis or the lex contractus. A third

28Cf Verhagen 2007a, p. 31.

29Annex I to Dir. 88/361/EEC, Nomenclature of capital movements, at II: ‘Investments in Real Estate’; [1988] OJ L 178/5.

30Verhagen 2007a, p. 7.

31Kieninger 2002, p. 83. Claims and other intangible objects normally do not have a situs and are therefore not subject to the lex rei sitae rule; Van der Weide 2006, p. 221. Under the Rome I Regulation, the assignment of claims is governed by the law applicable to the contract between assignor and assignee: Art. 14, Reg. 593/2008/EC on the law applicable to contractual obligations (Rome I), [2008] OJ L 177/6.

32Chapter 2, section 7.1 Proportionality.

33Verhagen 2007a, p. 10; Weide 2006, p. 222. Verhagen 2007a, p. 10; Van der Weide 2006, p. 222.

34Van der Weide 2006, p. 231 et seq.

35Van der Weide 2006, p. 231.

36Van der Weide 2006, p. 231.

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possibility would be to allow choice of law in property law.37 The possibilities for harmonization or unification of property law will be discussed in the remainder of this chapter. The possible content of such harmonizing rules will be explored in Chapter 6. The second and third options mentioned by Van der Weide will be discussed hereafter.

3.1.Alternatives to the Lex Rei Sitae Rule

3.1.1. Lex Registrationis

The lex registrationis generally seems to be interpreted as the law of the place of registration of the object, as opposed to the place of registration of the property right resting on the object. Several examples illustrate this. The Geneva Convention on the International Recognition of Rights in Aircraft states that certain rights in aircraft must be recognized by the contracting states if these rights have been created in accordance with ‘the law of the Contracting State in which the aircraft was registered as to nationality’.38 The Cape Town Convention on International Interests in Mobile Equipment is also based on the lex registrationis.39 Finally, the Dutch Wet IPR zee-, binnenvaarten luchtrecht40 designates, in Article 3(2), ‘the law of the State where the ship […] was registered’.41

Suppose all Member States were to adhere to the lex registrationis instead of the lex rei sitae. In that scenario, it would be easier for parties to predict which law will apply to their proprietary relationship, namely the law of the place where the object is registered. However, once an object has been registered in a Member State, it is only possible to create property rights in relation to that object under the law of the State of registration. Just as with the lex rei sitae, only one national law, i.e. one numerus clausus applies. The lex registrationis thus provides more predictability for the parties as to what will be the applicable law but it does not provide them with much more choice than the lex rei sitae. Parties might choose where to register an object – if that choice is even available – but once the object is registered, the only property rights available to the parties are the ones from the numerus clausus of the country of registration.

A next step to solve this problem could be to create a European registry where you would not register the object but the rights created in relation to the object. Rights registered in this European registry would have to be recognized throughout the EU. However, even though such a European registration might provide for recognition of the registered right throughout the EU, the type of right that can be created in the first place will still be determined by either the place where the object is situated or by the place where the object is registered, depending on the national rule of private international law. In other words, the result would be the application

37Van der Weide 2006, p. 231-232.

38Geneva Convention of 19 June 1948, 310 UNTS 151, Art. I(1)(i). Polak 2006, p. 126.

39Polak 2006, p. 126.

40Private International Law Act relating to maritime law, inland navigation law and aviation law. [translation ER]

41‘[H]et recht van de Staat waar het schip […] teboek stond.’ Van der Weide 2006, p. 231.

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of the lex rei sitae (or lex registrationis of the object) with mutual recognition of the property rights existing in relation to that object throughout the EU, justified through the European registry.

A more effective way in which the lex registrationis could solve the problems in the internal market caused by the lex rei sitae, in combination with the national numerus clausus, would be to create a European registry in which property rights can be registered and to make European law the applicable law as the lex registrationis of the property right. The content of the European law, as the applicable law, would have to be a European property right, for instance, a European right of ownership or a European Security Right.

3.1.2. Lex Destinationis

The lex destinationis is the law of the country of destination of the object.42 Also here several examples can be mentioned, where the lex destinationis is applied instead of the lex rei sitae. Article 133(1) of Book 10 of the Dutch Civil Code applies the lex destinationis to objects that are being transported.43 Article 128(2) of Book 10 of the Dutch Civil Code allows parties to agree that the property law consequences of a reservation of ownership clause are governed by the law of the country of destination, provided that the object is actually imported into that country.44 This provision allows parties a limited choice of law with which they can deviate from the lex rei sitae.45 The lex destinationis can also be found in Article 103 of the Swiss

Bundesgesetz über das Internationale Privatrecht (IPRG).46 This Article states: ‘Der Eigentumsvorbehalt an einer zur Ausfuhr bestimmten beweglichen Sache untersteht dem Recht des Bestimmungsstaates.’47 Article 104(1) IPRG goes one step further by stating that parties may subject the acquisition or loss of property rights in relation to movable objects to the law of the country of origin or the country of destination or to the law that governs the underlying agreement (i.e. the lex

42Cf Verhagen 2007a, p. 13.

43Art. 10:133(1) reads: ‘Het goederenrechtelijke regime met betrekking tot een zaak die krachtens een overeenkomst van internationaal vervoer wordt vervoerd, wordt beheerst door het recht van de staat van bestemming.’

44Art. 10:128(2) reads: ‘In afwijking van de eerste zin van het eerste lid kunnen partijen overeenkomen dat de goederenrechtelijke gevolgen van een eigendomsvoorbehoud van een voor uitvoer bestemde zaak worden beheerst door het recht van de staat van bestemming indien op grond van dat recht het eigendomsvoorbehoud niet zijn werking verliest totdat de prijs volledig is betaald. De aldus overeengekomen aanwijzing heeft slechts gevolg indien de zaak daadwerkelijk in de aangewezen staat van bestemming wordt ingevoerd.’

45Van der Weide 2006, p. 222. According to Flessner, this Statute shows that the location of the object as connecting factor is not always an unüberwindbarer Naturzustand, but rather a conscious choice by the legislature, a choice that could also be made differently, in favour of choice of law for the parties; Flessner 2010, p. 130.

46Federal Statute on Private International Law.

47A reservation of ownership in relation to a movable object meant to be exported is subject to the law of the country of destination. [translation ER]

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contractus).48 Article 104(2) takes the bite out of this provision, however, by stating that a choice of law made under 104(1) cannot be invoked against third parties.

3.1.3. Lex Contractus

Whenever a property right is created or transferred it would also be a possibility to let the law that governs the underlying contractual agreement also govern the proprietary aspects of the legal relationship. For instance: if two parties conclude a contract of sale, and that contract is governed by English law, then a retention of title clause contained in the same contract could also be governed by English law, even if the goods sold are moved outside of England. The risk involved in this possibility is of course that parties can essentially choose any law to govern their contract and consequentially any law to govern their proprietary relationship. This could certainly be undesirable for courts that would then be faced with having to apply any number of foreign, possibly little-known, property regimes. Whether this would be more undesirable on a global scale than on a European scale remains to be seen.

3.1.4. Choice of Applicable Property Law

If parties could make a choice of applicable property law – e.g. for the law also applicable to their contract – a conflit mobile would no longer arise. As a result, infringements of the freedom of movement would be prevented,49 and parties would no longer be confronted with the legal uncertainty and unpredictability caused by objective connecting factors.50 However, as Van der Weide points out, choice of law is generally not compatible with the numerus clausus of property rights.51 Furthermore, it may become difficult for third parties to find out what the content of the rights created under the chosen law is. For instance, if parties create a right of hypothec on a ship under Romanian law, they thereby make a choice for Romanian law as the applicable law to their proprietary relationship. If the ship is then sailed to Germany, how are third parties in Germany to find out about the Romanian hypothec? They could consult the Romanian registry, provided that the hypothec has been registered, but the time and costs involved in travelling to Romania to consult the registry – if the registry is not available electronically – may pose an obstacle to the German third party. Moreover, the registry will probably be in Romanian, which the German third party may not be able to read. These problems could be overcome by making the information in the registry available online, but a translation would be needed. Would the translation be in German? Or in English? These issues are currently being tackled by the EULIS project,52 which

48Die Parteien können den Erwerb und den Verlust dinglicher Rechte an beweglichen Sachen dem Recht des Abgangsoder des Bestimmungsstaates oder dem Recht unterstellen, dem das zugrundeliegende Rechtsgeschäft untersteht.

49Flessner 2010, p. 143.

50Von Wilmowsky 1998, p. 4.

51Van der Weide 2006, p. 232. See also Polak 2006, p. 124.

52European Land Information Service at: <http://eulis.eu>.

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