учебный год 2023 / Drobnig, Personal Security

Chapter 2: Dependent Personal Security (Suretyship Guarantees)

the very beginning, e.g. by a personal counter security furnished by a third person or by a proprietary security, furnished either by the debtor or a third person.

B.Conditions

3.The conditions for requesting relief from the debtor are exhaustively enumerated in para (1) (a) and (b). The conditions of lit. (a) refer to the debtor’s situation: first, it has not performed the secured obligation upon maturity, since this may easily trigger the creditor’s demand upon the security provider; secondly, if the debtor is unable to pay (even if no insolvency proceeding has been opened) because this virtually precludes the creditor’s recovery from the debtor; and thirdly, if the debtor’s assets have been substantially diminished – a fact that threatens the creditor’s chances of successful recovery from the debtor and therefore increases the security provider’s risk of being held liable by the creditor on the one hand and of having small chances of recuperating from the debtor, on the other hand. The substantial diminution which is required must be measured by the amount of the creditor’s outstanding claims and the chances of realizing its claim for reimbursement from the debtor’s assets.

4.Paragraph (1) (b) refers – independently of the conditions sub lit. (a) – to an action for performance brought by the creditor against the dependent security giver. This clearly justifies relief by the debtor.

5.The chances of obtaining relief from the debtor personally will usually be small. But the debtor may be able to raise money or at least personal or proprietary security from a third party, e.g. a relative or a related company.

C.Form of Relief

6.Since in all the cases mentioned in para (1), the provider of a dependent security has not yet performed to the creditor, the security provider cannot demand payment to itself, although he may offer performance of the personal security to the creditor. Primarily the security provider is entitled to demand security for its future performance to the creditor (cf. para (2)). Such security may be granted by the debtor itself or by any third person on behalf of the debtor; the latter alternative will practically be the rule in the situations covered by para (1) (a) because the debtor itself in these cases usually will not be able to furnish security.

7.If an insolvency proceeding has been opened over the debtor, a claim for relief will in fact be without chances.

D.Consumer as Security Provider

8. Article 2:111 is directly applicable to consumer providers of dependent security. Since Article 2:111 is favourable for consumer security providers, the rule also applies to

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consumers who have assumed an independent personal security (cf. Article 4:106 (c)) as well as to consumers who have assumed a co-debtorship for security purposes (cf. Article 4:102 (1)).

9. According to Article 4:102 (2), the rules of Article 2:111 are mandatory in favour of the consumer. And in the context of a consumer security provider’s co-debtorship for security purposes the term “debtor” in Article 2:111 means the debtor for whom security is being provided.

National Notes

III. Conditions

A. Subjective: Dependent Security

Assumed with Debtor’s

Consent . . . . . . . . . . . . . . . . . . . . . . no. 4

B. Objective Conditions . . . . . . . . nos. 5-13

I. Security Provider’s Anticipated Recourse

1.In most European countries the provider of dependent security may have before performance a right of anticipated recourse against the debtor (AUSTRIAN CC § 1364; BELGIAN, FRENCH and LUXEMBOURGIAN CC arts. 2032 and 2039 (since 2006: FRENCH CC arts. 2309 and 2316); ENGLAND: Andrews and Millett nos. 10-024 ss.; FINNISH LDepGuar § 36 para 2; RP 189/1998 rd 75 s.; GERMAN CC § 775; GREEK CC art. 861; ITALIAN CC art. 1953; PORTUGUESE CC art. 648; SCOTLAND: Stair/Clark nos. 936-938; SPANISH CC art. 1843). However, such security provider’s recourse is in FRANCE very rarely practiced (Simler no. 611). In SPAIN the efficacy of such a right in practice is questioned by the authors (Guilarte Zapatero, Comentarios 297).

2.In the NETHERLANDS, the security provider’s anticipative recourse has been abrogated by the New Civil Code in 1992.

II. Reasons

3.In BELGIUM, FRANCE and SPAIN it is thought that the provider of dependent security has to be protected against additional risks of the debtor’s insolvency, since the assumption of a dependent security is in principle considered as an act of friendship (BELGIUM: Van Quickenborne no. 504; FRANCE: Simler no. 610; SPAIN: Guilarte Zapatero, Comentarios 295 s.). In ENGLISH law the right of the provider of dependent security to anticipated recourse is founded in equity and based on the equitable principle that an anticipated “injury” is to be prevented before it is suffered, “it being unreasonable that a

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man should always have such a cloud hang over him” (Earl Ranelaugh v. Hayes (1863) 1 Vern 189 = 23 ER 405 (CFI) per Lord Keeper North, 190). In SCOTS law the right to anticipated relief is based on an implied mandate between debtor and security provider, and the latter is entitled to relief once “liability is threatened to be imposed” on it (Cuningham v. Montgomerie (1879) 6 R 1333 (CA) per Lord President Inglis). GERMAN CC § 775 is intended to protect the provider of dependent security against special risks that may occur after assumption of the security and that may affect the claim for recourse against the debtor (Reinicke and Tiedtke, B4rgschaftsrecht no. 426). There is special need for this rule in GERMAN law since the rules on mandate that are generally applicable to the relationship between provider of dependent security and debtor are not suitable for this special situation (cf. Reinicke and Tiedtke, B4rgschaftsrecht no. 425; Staudinger/Horn § 775 no. 1). Also in ITALIAN law the anticipated security provider’s recourse is considered to be an instrument for its protection, mainly based on the principle rebus sic stantibus, which allows it to be secured from the debtor’s failure to perform or to avoid his own payment (Giusti 247).

III. Conditions

A.Subjective: Dependent Security Assumed with Debtor’s Consent

4.In AUSTRIA, FRANCE, BELGIUM and PORTUGAL the debtor must have agreed to the granting of a dependent security. If the dependent security is assumed without the debtor’s consent or without information of the debtor, the security provider has no anticipated recourse against the former (AUSTRIAN CC § 1364 sent. 1; BELGIUM:

Van Quickenborne no. 510; FRANCE: Simler no. 615; PORTUGAL: Almeida Costa 782). A presumed intent of the debtor by virtue of negotiorum gestio is not sufficient in FRANCE (Simler no. 615). Also in ENGLISH law anticipated relief may only be granted if the provider of dependent security had assumed the security on the express or implied request of the debtor (Andrews and Millett no. 10-025); the same seems to apply in SCOTS law because no mandate can be implied if the security provider has not acted on the debtor’s – at least: implied – request. The situation is similar in GERMANY since according to the wording of § 775 the provider of dependent security does have a claim for release only if it has assumed the security by reason of a mandate of the debtor or if it has the rights of a mandatory against the debtor under the provisions on negotiorum gestio; this means that there must be an express or at least implicit mandate of the debtor

(CC §§ 670, 683). A mandate is held to exist if a shareholder guarantees the company’s obligations; consequently, after leaving the company the shareholder may demand release from the security obligation (Palandt/Sprau § 775 no. 1; Staudinger/Horn § 775 no. 3). However, if the provider of dependent security cannot claim recourse against the debtor for a legal reason, e.g. due to Insolvency Act § 254 para 2 sent. 2, there is no claim for release (Reinicke and Tiedtke, B4rgschaftsrecht no. 426 s.).

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B.Objective Conditions

a.Debtor’s Default or Inability to Pay, Substantial Decrease of Debtor’s Property or Proceedings against the Provider of Dependent Security

5.In most European countries, at least two of the above-mentioned cases are dealt with: the debtor’s inability to pay and proceedings of the creditor against the provider of dependent security:

i.Debtor’s Default – cf. Para (1) Lit. (a)

6.According to GERMAN CC § 775 para 1 no. 3 and GREEK CC art. 861 no. 3 the provider of dependent security can demand from the debtor release from the security if the debtor is in default with the fulfillment of its obligation. It is irrelevant that the creditor extends maturity, unless the security provider has agreed (GERMANY: Reinicke and Tiedtke, B4rgschaftsrecht no. 438).

ii.Debtor’s Inability to Pay – Para (1) Lit. (a)

7.In FRANCE, BELGIUM and LUXEMBOURG reference is made to the professional or civil insolvency of the debtor (FRENCH, BELGIAN and LUXEMBOURGIAN CC art 2032 no. 2 (since 2006: FRENCH CC art. 2309 no. 2)), in ITALY and SPAIN to its

bankruptcy or insolvency (ITALIAN CC art. 1953 para 1 no. 2 speaks of insolvency, meaning any inability to pay: Giusti 245 fn. 217; SPANISH CC art. 1843 para 1 no. 2), in PORTUGAL more generally to the increased risk of the provider of dependent security (CC art. 648 lit. b)). As a form of protection of anticipated recourse in FRANCE the Grimaldi Commission had proposed that the provider of dependent security will be entitled, before any performance, to declare its future or present claim at the opening of an insolvency proceeding of the debtor (CC new art. 2319 para 3); but this proposal was not adopted by the legislator in 2006. In SCOTS law the security provider can take precautionary measures in case the debtor is vergens ad inopiam (declining towards poverty; Kinloch v. M’Intosh (1822) 1 S 491 (NE 457) (CA)).

iii.Substantial Decrease of Debtor’s Property – cf. Para (1) Lit. (a)

8.According to GERMAN CC § 775 para 1 no. 1 and GREEK CC art. 861 no. 1, the provider of dependent security is protected if the financial position of the debtor has worsened. In addition, the claim for recourse must be endangered which is not the case if this claim is secured e.g. by a counter-security (Reinicke and Tiedtke, B4rgschaftsrecht no. 435). The same is true in AUSTRIA if the debtor’s proprietary situation has so seriously worsened that there is “founded fear of the debtor being unable to pay” (CC § 1365).

iv.Proceedings against the Provider of Dependent Security – Para (1) Lit. (b)

9.According to BELGIAN, FRENCH and LUXEMBOURGIAN CC art. 2032 no. 1 (since 2006: FRENCH CC art. 2309 no. 1), ITALIAN CC art. 1953 para 1 no. 1 and SPANISH

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CC art. 1843 para 1 no. 1, the provider of dependent security has the right to exercise the right to anticipated security provider’s recourse if proceedings are engaged by the creditor against the security provider. By contrast, GERMAN CC § 775 para 1 no. 4, GREEK CC art. 861 no. 4 and PORTUGUESE CC art. 648 lit. a require that the creditor has already obtained an enforceable judgment for satisfaction against the security provider.

b.Other Cases

i.Express Extension of Maturity of the Secured Debt

10.Generally, cf. supra national notes to Art. 2:102. In FRANCE, BELGIUM and LUXEMBOURG, the provider of dependent security is entitled to exercise its recourse in case of an express extension of the maturity of the secured debt (FRENCH, BELGIAN and LUXEMBOURGIAN CC art. 2039 (since 2006: FRENCH CC art. 2316)). The parties can derogate from this provision (BELGIUM: Van Quickenborne no. 510; FRANCE: Simler no. 469).

ii.Implied Extension

11.In FRANCE, BELGIUM, LUXEMBOURG, ITALY, PORTUGAL and SPAIN the rule on anticipated recourse applies if the debtor had promised to release the provider of dependent security within a certain period of time and this time limit has expired (FRENCH, BELGIAN and LUXEMBOURGIAN CC art. 2032 no. 3 (since 2006: FRENCH CC art. 2309 no. 3); ITALIAN CC art. 1953 para 1 no. 3; PORTUGUESE CC art. 648 lit. d); SPANISH CC art. 1843 para 1 no. 3) or if the secured debt falls due because the maturity date has been reached (FRENCH, BELGIAN and LUXEMBOURGIAN CC art. 2032 no. 4 (since 2006: FRENCH CC art. 2309 no. 4); ITALIAN CC art. 1953 para 1 no. 4; SPANISH CC art. 1843 para 1 no. 4). In AUSTRIAN, ENGLISH and SCOTS law the right of the provider of dependent security to anticipated relief arises once the secured debt is due and the security provider’s liability has accrued in the sense that it could be compelled to pay by the creditor (AUSTRIAN CC § 1364 sent. 1). In ENGLAND the provider of dependent security can apply for quia timet relief (Tate v. Crewdson [1938] Ch 869 (CFI); Morrison v. Barking Chemicals Co Ltd [1919] 2 Ch 325 (CFI)), and in SCOTLAND it has an actio mandati (Cuningham v. Montgomerie (1869) 6 R 1333 (CA); Scott v. Grahame (1830) 8 S 749 (CA)). In case of demand securities it is now accepted that the security provider’s right to anticipated relief is not dependent on a demand having been made by the creditor (ENGLAND: Thomas v. Nottingham Inc Football Club [1972] Ch 596 (CFI); SCOTLAND: Stair/Clark no. 936).

iii.Debt Without Time Limit

12.If the principal debt is agreed without time limit, the right to recourse may be exercised under FRENCH, BELGIAN, LUXEMBOURGIAN law after expiration of ten years (CC art. 2032 no. 5 (since 2006: FRENCH CC art. 2309 no. 5)). A similar provision exists in ITALIAN and PORTUGUESE law where, however, only a period of five years must have passed (ITALIAN CC art. 1953 para 1 no. 5; PORTUGUESE CC art. 646 lit. e)). In PORTUGAL this rule applies even to a debt agreed with time limit, if there is a legally

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imposed extension of time (CC art. 646 lit. e in fine). The same is true under SPANISH CC art. 1843 para 1 no. 4. However, the rule does not apply if according to the nature of the secured obligation it cannot be extinguished but after this period.

iv.Change of Domicile or Residence of Debtor

13.In PORTUGAL, if after the conclusion of the dependent security the debtor cannot be sued or executed within the national territory and its adjacent islands (CC art. 648 lit. c)), the rule on anticipated recourse applies. A similar rule obtains in AUSTRIA (CC

§1365). In GERMANY and GREECE if the taking of legal action against the debtor has become difficult to a substantial degree by reason of a change of its domicile or residence that occurred after the issue of the dependent security, the security provider may demand security from the debtor even before the debt has become due (GERMAN CC

§775 para 1 no. 2, para 2; GREEK CC art. 861 no. 2).

IV. Consequences

A.Damages

14.In FRANCE, BELGIUM and LUXEMBOURG, the provider of dependent security may claim from the debtor compensation for damages (CC art. 2032; (since 2006: FRENCH CC art. 2309)) or it may in case of the extension of time force the debtor to pay (CC art. 2039 (since 2006: FRENCH CC art. 2316)). In practice however, according to the FRENCH majority opinion (Marty/Raynaud/Jestaz no. 60; Aubry/Rau/Ponsard no. 236) the debtor’s liability cannot be enforced since there is no present damage, whereas a minority of FRENCH writers and court decisions maintain that a present damage may well be caused by an undue extension of the security provider’s obligation (CA Paris 2 March 1971, GazPal 1971, 2, 824). FRENCH majority opinion considers that the security provider cannot obtain any payment or any reimbursement as compensation for many other reasons: on one hand, there cannot be reimbursement without any payment by the security provider; on the other hand, the payment is mostly impossible due to the debtor’s inability to pay. According to BELGIAN opinion, CC art. 2032 tends to avoid damage that would arise from the impossibility of the guarantor-solvens to obtain any recourse from the debtor (Van Quickenborne nos. 504-505).

B.Release or Security – cf. Paras (1) and (2)

15.In ITALY, PORTUGAL and SPAIN the provider of dependent security may claim release or require security for its own claims against the debtor (ITALIAN CC art. 1953 para 1; PORTUGUESE CC art. 648 para 1; SPANISH CC art. 1843 para 2). In SPAIN it is asserted that the non-release entitles the provider of dependent security to claim damages but this is also considered inefficient in practice since the damage is difficult to specify and prove (Guilarte Zapatero, Comentarios 298, 299). By virtue of the quia timet action under ENGLISH law the security provider can either apply for a declaration that he is entitled to be exonerated and an order that the debtor should pay whatever is due to the creditor (Ascherson v. Tredegar Dry Dock & Wharf Co Ltd [1909] 2 Ch 401 (CFI)), or for an order that the debtor is to set aside a particular fund to pay the creditor (Andrews and

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Millett no. 10-025; O’Donovan and Phillips nos. 11-147 ss.). In case of a corporate debtor established under the Companies Act 1985, the provider of dependent security can further make a petition for winding-up of the debtor company by virtue of Insolvency Act 1986 sec. 124 para 1. The same principles apply in SCOTLAND (Stair/Clark nos. 936 s.). Additionally, in SCOTLAND the security provider is entitled to apply for a court order of precautionary execution into the debtor’s estate (Kinloch v. M’Intosh (1822) 1 S 491 (NE 457) (CA)).

16.In GERMANY, if the secured obligation is due, the provider of dependent security may demand release from the debtor (cf. Staudinger/Horn § 775 no. 4). Contrary to earlier court practice, the GERMAN Supreme Court no longer allows the provider of dependent security to convert its claim for release against the debtor into a claim for reimbursement, not even if the debtor’s inability to pay and the security provider’s future performance to the creditor are certain (BGH 14 Jan. 1999, BGHZ 140, 270, 272 ss. overruling RG 12 Jan. 1934, RGZ 143, 192, 194). If the debtor, even after being condemned to release the security provider, does nothing, the security provider can pay the creditor and on the basis of the judgment demand these costs from the debtor by means of execution according to CCP § 887 (Reinicke and Tiedtke, B4rgschaftsrecht no. 442; Staudinger/Horn § 775 no. 5). If the secured obligation is not yet due, the debtor is entitled to give security to the security provider instead of relieving it (CC § 775 para 2).

C.Security Only – cf. Para (2)

17.In AUSTRIA, the only remedy available to the provider of dependent security is a demand for security from the debtor (CC §§ 1364 sent. 1, 1365). Security may be furnished primarily by creating a proprietary security right for the security provider, otherwise by a third person’s personal security (§§ 1373 s.). Also pursuant to the majority of BELGIAN, FRENCH, PORTUGUESE and SPANISH writers, the furnishing of adequate security (proprietary or personal) is the only remedy that is available and reveals the true nature of the anticipated recourse as a measure of preservation of rights (BELGIUM: Van Quickenborne no. 504; FRANCE: cf. Simler no. 613 ss.; PORTUGAL:

Pires de Lima and Antunes Varela 664; SPAIN: Guilarte Zapatero, Comentarios 299). As a result of this opinion, according to the FRENCH Grimaldi Commission’s proposal (CC new art. 2319 para 2) the provider of dependent security may require the furnishing of adequate security; however, the legislator of 2006 did not adopt this proposal. According to GREEK literature, the request for security must be asserted by the provider of dependent security by a legal action or a request to the competent court (GeorgiadesStathopoulos AK/Vrellis art. 861 no. 8). According to a minority opinion in GREECE, if the security provider is in a position to know about the worsening of the debtor’s financial situation and nevertheless does not exercise this right, then it should share the damage with the creditor, if the latter has been negligent in collecting the debt from the debtor (cf. Doublis, Metavivasi pistosis 55 ss., 62).

(Hauck)

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Article 2:112: Security Provider’s Obligations Before Performance

Article 2:112: Security Provider’s Obligations Before Performance

(1)Before performance to the creditor, the security provider must notify the debtor and request information about the outstanding amount of the secured obligation and any defences or counterclaims against it.

(2)If the security provider performs without the request provided for in paragraph (1) or neglects to raise defences communicated by the debtor or known to the security provider from other sources, it is liable as against the debtor for the resulting damage.

(3)The security provider’s rights against the creditor remain unaffected.

A.Basic Idea – Para (1)

1.Article 2:112 imposes certain obligations of inquiry upon the provider of a dependent security in order to enable it to make effectively use of the rights granted by Articles 2:102 and 2:103 to invoke defences that are available to the debtor. While Articles 2:102 and especially 2:103 grant rights to the security provider to avoid or diminish its own obligations, Article 2:112 imposes duties upon the security provider in order to protect the rights of the debtor.

2.The duty of notification and inquiry imposed by para (1) must be interpreted in the light of the rights pertaining to the debtor that according to Articles 2:102 and 2:103 may be invoked by the provider of a dependent security on the strength of the principle of dependency (or accessority).

B.Sanctions – Para (2)

3. If the provider of a dependent security performs to the creditor without having informed the debtor and made inquiry from him, this does not only contravene his selfinterest, but may damage the debtor’s rights. The same is true if the security provider neglects to raise debtor’s defences which are available to the security provider. In all these cases, any damage suffered by the debtor must be compensated by the security provider. Accordingly, his rights for reimbursement and/or subrogation against the debtor according to Article 2:113 will, in effect, be reduced correspondingly.

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4.If the debtor fails to reply to the security provider or gives incomplete or incorrect information, the sanctions indicated by para (2) are not justified. Alternatively, they may be justified only in part if the debtor had given some wrong information, but other information, although correct, had been overlooked or disregarded by the security provider.

5.The sanction imposed by para (2) on the security provider is a claim for damages by the debtor. This claim be reduced in cases where the damage was partly or fully due to the debtor’s own negligence (cf. supra no. 4). The debtor may set off this claim against the security provider’s claim for reimbursement if it has performed to the creditor, cf. PECL Chapter 13.

C.Preservation of Rights as against Creditor – Para (3)

6. Any mistakes which may be committed by the provider of the dependent security vis- -vis the debtor do not affect the security provider’s rights as against the creditor. The conditions and details of a claim for damages are laid down in PECL Article 9:501 ss.

D.Consumer as Security Provider

7.Consumer’s dependent personal security. Article 2:112 is directly applicable to consumer providers of a dependent personal security, which are not treated differently from non-consumers in this respect; the only difference is that the provision is mandatory in favour of the consumer security provider according to Article 4:102 (2).

8.Although Article 2:112 does not create rights but imposes obligations upon a security provider, nevertheless these rules also apply to all consumer security providers. They apply directly to consumers who provide a dependent personal security. By virtue of Article 4:106 (c) they also apply to consumer providers of an independent security and by virtue of Article 4:102 (1) to consumer providers of a co-debtorship for security purposes. The obligations laid down in Article 2:112 are necessary ingredients of a well-balanced system of personal security where the security provider also must respect the legitimate interests of the principal debtor. Not the least: the information by the security provider may be beneficial to the latter since in appropriate cases it may prevent or reduce a performance by the security provider if it turns out that the principal debtor has already made partial or even full performance to the creditor or that it disposes of defences of which the security provider also may avail itself (cf. Articles 2:102 (1) and (2) as well as Article 2:103).

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National Notes

I. Legal Basis

1.Although there is no general provision or rule in any member state that requires the provider of dependent security to give information to the debtor, all legal systems seem to agree that the security provider should not be reimbursed if it had not informed the debtor and by this omission caused harm. For this reason there are in some countries specific statutory provisions on the security provider’s duty to inform the debtor about the creditor’s request or about its own intention to perform, in order to prevent unjustified payment (AUSTRIAN CC § 1361; BELGIAN, FRENCH and LUXEMBOURGIAN CC art. 2031 para 2 (since 2006: FRENCH CC art. 2308 para 2); GREEK CC art. 859; ITALIAN CC art. 1952 para 2; PORTUGUESE CC art. 645 para 1 and 647; SPANISH CC art. 1840). Furthermore in some countries specific rules exist sanctioning the security provider if it had not notified the debtor of its payment to the creditor and therefore the debtor also pays the creditor (BELGIAN, FRENCH and LUXEMBOURGIAN CC

art. 2031 para 1 (since 2006: FRENCH CC art. 2308 para 1); DUTCH CC art. 7:867;

ITALIAN CC art. 1952 para 1; PORTUGUESE CC art. 645 para 1; SPANISH CC art. 1842).

2.In GERMANY, however, the legislator expressly rejected such specific provisions (Motive, in: Mugdan II 377) so that – in the absence of any contractual stipulation – the

solution of these cases must be based upon the principle of bona fides (CC § 242) and the underlying relationship (cf. Soergel/Mu¨hl § 774 no. 8; Staudinger/Horn § 765 no. 106, § 768 no. 41; cf. also already Motive, in: Mugdan II 377 s.; similarly BGH 19 Sept. 1985, BGHZ 95, 375, 388).

3.Two countries expressly sanction the provider of dependent security if it does not raise against the creditor defences of the debtor which the security provider knew or ought to have known. In this case GREEK CC art. 859 denies a claim of recourse against the debtor, while DUTCH CC art. 7:868 allows the debtor to raise these defences against the security provider. In all other countries a sanction for this neglect of the debtor’s interests must be derived from the general rules concerning the relationship between security provider and debtor.

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