of the former owner.146 Italian law follows the same line of thinking. The Spanish Código civil has taken over article 2279 C.civ. almost literally (see article 464 section 1 C.c.). In recent years, however, legal literature as well as the courts have reinterpreted article 464 section 1 C.c. in a way that moves the present law on bona fide acquisition into close vicinity to the German §§ 932 ff. BGB.147 Swedish and Finnish law require both possession on the side of the transferor prior to the transfer and actual delivery leading to possession on the side of the transferee. In England, Ireland and especially in Scotland, the old Roman rule that nobody can transfer a better right than he has himself, still survives as a basic principle, although the English common law has developed a principle of apparent ownership. Today, there are a considerable number of statutory exceptions to the ‘nemo-dat’ rule as it is called, among them section 25 of the Sale of Goods Act 1979 which basically applies if goods sold under retention of title are resold to a bona fide purchaser. Austrian law resembles English law in so far as it does not seem to work with one general principle but rather regulates certain typical situations where the acquirer in good faith is regarded as deserving of protection.

Part (b)

On the facts of case 5, the ultimate buyers have paid for the cars before B’s bankruptcy and the contract provides for no more than simple reservation of title coupled with an entitlement to resell. In such circumstances, all jurisdictions conclude that the money paid belongs to B’s insolvency estate. A number of jurisdictions draw a distinction between the case where the money has been paid to B before he has been declared bankrupt and the case where the money is still due or has been paid to the insolvency estate. The second situation, and the possible distinctions between the two, will be explored in case 6.

Part (c)

This part was deliberately drafted in an open-ended way, in order to allow every contributor to set out the ways in which a seller might

146Cf. von Gerlach, Der Einf luß des deutschen und französischen Rechts auf den Eigentumserwerbsschutz beweglicher Sachen im spanischen Recht 23 ff. with further references.

147See further ibid., 90--139.

346 s e c u r i t y r i g h t s i n m o v a b l e p r o p e r t y

obtain better protection, irrespective of the construction or the wording of specific clauses.

(i) Solutions which do not require additional clauses or transactions

Obviously, a seller in Portugal does not need greater protection than that provided by a simple retention of title clause under article 880o C.c.:148 his ownership simply survives the resale. In South Africa, the best way for the seller to secure himself is not to include a power of resale into his contract with the buyer, as this will preserve his ownership of the goods, the reason being that South African law does not protect bona fide purchasers except by the doctrine of estoppel which is of rather limited application. Equally in German law, the seller might achieve a better position by not providing for a power of resale. Yet, this rests on a totally different ground, namely the right to claim proceeds arising from an unlawful transaction by the debtor (who later becomes insolvent), if that transaction has invalidated the creditor’s retention of title. However, this improves A’s position only if B has kept the monies paid by the subpurchasers in a separate account. In France and Belgium, the seller may benefit from a real subrogation into the proceeds. In order to be effective, however, the claims against the sub-purchasers must still be subsisting at the point at which insolvency proceedings commence.149

(ii) Charge over the proceeds

A charge over the proceeds is possible principally in Belgium, the Netherlands, England, Ireland and Finland. However, with the exception of Belgium, where the relevant provision (article 1690 C.civ.) was changed in 1994,150 a charge over proceeds would only accord to A priority over B’s insolvency creditors if further requirements were met. In Finland, the third-party debtors (in this case, C1--C5) must be notified of the charge in order for it to be opposable towards third parties, a requirement which renders the charge impractical in all situations where the identities of

150Before the Act of 6 July 1994 (Moniteur Belge 15 July 1994, 18625), Belgian law was the same as French law in requiring a formal notification of the assignment or its formal acceptance by the third-party debtor (‘signification’) in order for the assignment or the charge over claims to be valid as against third parties in general. According to the new article 1690 s. 2 (Belgian) C.civ (informal) notification is only necessary to prevent the debitor cessus validly from paying the assignor.

the third-party debtors (sub-purchasers) are not yet known. In the Netherlands, a charge over claims must be registered or the third-party debtors must be notified of its existence. Again, this is not feasible in respect of future claims where even the framework under which the claims will arise has not been created. In England and Ireland charges over book debts of a company have to be entered on the Companies Register. If the chargor is a private person, a duty to register exists under the Bills of Sale Acts. Although the mere fact that the claims will arise only in the future does not seem to be an obstacle to registration, this procedure appears to be too time-consuming and costly to be practicable for sellers granting short-term trade credit.

(iii) Assignment of the proceeds

In Germany, Austria and Greece, sellers usually employ an anticipated security assignment of the proceeds. In German and Greek law, this requires no more than an adequately drafted retention of title clause, whereas in Austria, security assignment is subject to the same requirements as the charge of a claim. Therefore, in order to be effective as against third parties, the assignment must either be entered into the books of the debtor (B), or the debitor cessus (in this case, C1--C5) must be notified of it. Notification can only take place when the identity of debitor cessus is known but, according to a view in legal doctrine that is not undisputed, the book entry method may be used in respect of claims where the legal foundation is not yet laid.

Yet, even in Germany, Austria and Greece, a proceeds clause framed as a security assignment cannot protect a seller who permits his buyer to collect the claims and mix the proceeds of realisation with his other funds. Although notification of the assignment is not a requirement for its effectiveness vis-à-vis third parties, it is a way for the seller to protect himself as soon as he realises that his customer is getting into financial difficulties.

In Belgium, the Netherlands, England, Ireland and Finland, a security assignment of the claims against the sub-purchasers would be held ineffective or, at best, be regarded as a charge (see (ii)).

(iv) Employing the law of trusts to gain a right over the proceeds

In the famous Romalpa case of 1978, the English Court of Appeal for the first and the last time held that a fiduciary relationship existed