учебный год 2023 / Morell, Helsen, The Interrelation of Transparency and Availability of Collateral. German and Belgian Laws of Non-possessory Security Interests

European Review of Private Law 3-2014 [393–438] © Kluwer Law International BV. Printed in Great Britain.

The Interrelation of Transparency and Availability of Collateral: German and Belgian Laws of Non-possessory Security Interests

ALEXANDER MORELL & FREDERIC HELSEN*

Abstract: This article compares German and Belgian laws with regard to security interests in corporeal movables, economically analysing the differences to reach a normative conclusion. Belgium is currently implementing a major reform in this field, which, combined with the different stance of both regimes on transparency of security interests, begs the question of whether the Belgian reform could serve as an example to Germany. This article starts by comparing the evolutions both legal systems have undergone in the last century and which have started from opposite positions. While Belgium principally opposed non-possessory security interests for fear that this would annihilate transparency, Germany allowed for a broad system of non-possessory security interests through retentions or transfers of title, without any kind of publicity. Both systems underwent significant changes, which can roughly be divided into two categories: allowing for a floating charge on the business and reacting to business’ legal innovations. These evolutions brought into focus the trade-off that used to exist between transparency and extension of the collateral base. These legal evolutions have set the stage for reform in Belgium, a reform that is based on the principle of register publicity of security interests. Next, this article explores the threat posed to non-possessory security interests by the possibility of acquisitions in good faith, in both regimes. Following the legal comparison, this article analyses the identified differences from an economic point of view, finding three key areas in which transparency can be beneficial. First, transparency reduces the social cost of using secured credit. Second, it makes collateral more effective in performing its function by reducing the scope for acquisitions in good faith taking precedence over security interests. Finally, transparency can also make collateral more effective by optimizing the functioning of the floating charge. In its final part, the article briefly goes into the challenges posed by setting up register publicity, more specifically with regard to privacy issues and gatekeeping. This article concludes that now that technology allows for transparency and the collateral base to be complements, economically speaking, Germany could, in fact, benefit from a reform following the Belgian model.

Resumé:

Cet article compare la loi belge et allemande concernant les sûretés mobilières sur des biens corporels, et analyse les différences du point de vue économique, afin d’arriver à

*The authors thank Prof. Dr Moritz Brinkmann, Prof. Jesse Fried, Prof. Dr Christoph Engel, Ilja Gibermann, Dr Kristoffel Grechenig, Stephan Luck, Dr Matthias Maetschke, Prof. Dr Matthias Storme & Prof. Dr Joeri Vananroye for helpful discussions of early stage ideas or comments on earlier versions of the paper. Any faults or omissions are our own.

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une conclusion normative. La Belgique est en train d’implémenter une réforme importante sur ce plan qui, combiné avec les différences entre les deux régimes sur la transparence des sûretés, incite la question si la réforme belge puisse servir comme exemple pour l’Allemagne. L’article commence par comparer les évolutions que les deux régimes ont subi pendant la dernière siècle, qui ont commencé de deux points de départ opposés. La Belgique était en principe opposé aux sûretés non-possessoires, craignant que cette sorte de sûreté anéantirait la transparence. L’Allemagne par contre a permis un système général de sûretés non-possessoires, par rétention ou cession du titre, sans quelconque publicité. Chaque système a subi des changements importants, qui peuvent être divisés en deux catégories : l’introduction d’une sûreté globale sur l’entreprise, et la réaction sur les innovations légales du monde des affaires. Ces évolutions ont mis au point le compromis qui existait nécessairement entre la transparence et l’expansion de la base des biens gageables. Ces évolutions légales ont préparé le terrain pour une réforme en Belgique, une réforme basée sur la principe de publicité par moyen de registre des sûretés. Ensuite, l’article adresse les acquisitions en bonne foi et les problèmes que ces acquisitions peuvent poser aux sûretés non-possessoires, dans les deux régimes. Suivant à la comparaison légale, cet article analyse les différences identifiés pendant la première phase du point de vue économique, trouvant trois domaines importantes dans lesquelles la transparence peut être avantageux. En premier lieu, la transparence réduit les coûts sociaux de l’utilisation des sûretés. Deuxièmement, la transparence aide les sûretés à remplir leur fonctions, par réduire la probabilité qu’une acquisition en bonne foi puisse précéder une sûreté. Finalement, la transparence peut aussi servir à l’effectivité des sûretés par optimiser le fonctionnement de la sûreté globale sur l’entreprise. La dernière partie s’agit des défis adhérents à l’installation d’une publicité par registre, spécifiquement en ce qui concerne les problèmes de privacy et la surveillance. La conclusion est que, comme la technologie permet la transparence et l’expansion des biens gageablesà être des compléments, d’une point de vue économique, l’Allemagne pourrait en effet bénéficier d’une réforme suivant le modèle belge.

Zusammenfassung: Dieser Artikel vergleicht das Deutsche und Belgische Recht der besitzlosen Sicherungsrechte an beweglichen Sachen, unterzieht die gefundenen Unterschiede einer ökonomischen Analyse und zieht daraus normative Schlussfolgerungen. Belgien setzt zur Zeit eine große Reform in diesem Rechtsgebiet um, die, zusammen mit den unterschiedlichen Haltungen der beiden Systeme zur Transparenz von Sicherungsrechten zur Frage führt, ob die Belgische Reform ein Beispiel darstellt, an dem sich Deutschland orientieren könnte. Dieser Artikel vergleicht zunächst die Evolutionen beider Systeme während des letzten Jahrhunderts, die von ganz unterschiedlichen Positionen ausgingen. Während Belgien, aus der Angst, dass sie jegliche Transparenz unterminieren würden, besitzlose Pfandrechte rundheraus ablehnte, ließ das Deutsche Recht mit Eigentumsvorbehalt und Sicherungsübereignung besitzlose Sicherungsrechte ohne jede Publizität zu. Beide Systeme durchliefen weitere Entwicklungen, die grob in zwei Kategorien geteilt werden können: Zulassung einer ‘Floating Charge’ am Unternehmen als solchem, und Reaktionen auf rechtliche Innovation durch Unternehmen. Diese Innovationen rückten den Tradeoff zwischen Transparenz einerseits und der Ausweiterung der verfügbaren Sicherungsgegenstände andererseits ins Blickfeld und bereiteten den Boden für die belgische Reform, deren Kernstück in der Einführung eines Registers besteht. Der Artikel legt auch ein besonderes Augenmerk auf die Bedrohung von Sicherungsrechten durch gutgläubigen Erwerb Dritter. Nach dem rechtsvergleichenden Teil, unterzieht der Artikel die

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gefundenen Unterschiede einer ökonomischen Analyse und identifiziert drei Bereiche, in denen die durch die Registerpublizität erhöhte Transparenz des Belgischen Systems besonders fruchtbar wirkt. Erstens reduziert Transparenz die sozialen Kosten der Nutzung von Kreditsicherungen. Zweitens macht sie Kreditsicherungen hinsichtlich der Funktionen, die sie erfüllen sollen, wirksamer, indem sie ihren gutgläubigen Wegerwerb erschweren. Schließlich kann Transparenz insbesondere auch helfen die nützlichen Funktionen von Globalsicherheiten zu entfalten, die in der Koordinierung der Überwachung des Schuldners liegen. In seinem letzten Teil geht der Artikel kurz auf die Herausforderungen ein, welche die Schaffung eines Registers stellt. Insbesondere werden Datenschutz und Zugangsregulierung erörtert. Das Papier schließt mit der Feststellung, dass aufgrund technologischer Neuerungen nunmehr eine Abwägung zwischen Transparenz und der Erweiterung der Sicherungsgegenstände nicht mehr erforderlich ist. Vielmehr erleichtert die Transparenz die Ausweitung verfügbarer Sicherungsgegenstände. Eine Reform nach Belgischen Vorbild könnte daher tatsächlich auch in Deutschland fruchtbar wirken.

1.Introduction

German law knows non-possessory security interests in movables, which are set up without any act of publicity. In contrast, Belgium has waited to lift its general principle of banning non-possessory security interests in movables until it could warrant publicity by means of a register. Inspired by this contrast, we investigate the legal differences between these two approaches to publicity. Furthermore, we ask whether the differences we find are of any economic significance. In our analysis, we will argue that indeed they are. On the basis of an economic analysis, we argue that the German system would benefit from adopting a system of transparency similar to that of Belgium.

Formerly, there was a clear trade-off between transparency, on the one hand, and a large collateral base, on the other hand. This was when possession was the only means by which to generate transparency of security interests in movables. Either a legal system made sure that it was easy to assess whether an asset was encumbered by requiring dispossession for such encumbrance or it allowed small businesses to encumber assets they could not relinquish. In this clear trade-off, allowing non-possessory security interests was irreconcilable with transparency.

The evolution of non-possessory security interests in Germany and Belgium (sec. 2) can be read as a constant struggle with this trade-off. However, even though the two countries’ economies were similar, Germany started the struggle from a maximized collateral base and Belgium from a commitment to transparency. After accumulating suboptimal compromises, Belgium recently enacted a fundamental reform trying to overcome this struggle. The key feature of the reform is a register of non-possessory security interests. The question of this article is, could a reform of this kind serve as an example for Germany – as the

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Belgian legislator had hoped.1 The comparative perspective on the evolution of the German and Belgian laws of non-possessory security interests reveals three2 major differences between the respective laws that could inspire the German legislator. First, the Belgian register yields a higher degree of transparency than the opaque German system of transfer of title, or Sicherungsübereignung. Second, the German transfer of title displays a key instability that the Belgian non-possessory pledge merely shares to a lesser degree. Third, Belgium offers a registered floating charge, while Germany offers a very extensive unregistered transfer of title.

When assessing the relevance of these differences through the lens of the economics literature on secured lending (sec. 3), it turns out that the Belgian reform finds support in the insight that today there is not only no more trade-off between transparency and a large collateral base. In fact, due to the low cost of running a register, transparency and extended collateral base have become complements. The higher the transparency in the system, the lower the social cost of extending secured credit. Likewise, the higher the transparency, the better secured lending can serve the purpose it has been set up to serve: Preventing asset substitution by means of security interests is easier in a transparent system than in a non-transparent system, and allocating monitoring by means of security interests is more effective if transparency is high.

However, the Belgian register is not yet set up and there remain many challenges on the way to implementing the Belgian reform. Certainly, if Germany was to consider setting up a similar register, it would have to carefully tailor it to its needs. There are a number of pitfalls in putting the register into practice some of which have the potential to spoil the reform as a whole (sec. 4).

1Preparatory Works of the New Belgian Pledge Law, Parl. St. Doc. 53, 2463/001, 11: ‘notre pays pourra servir de modèle pour la suite de l’harmonisation juridique en Europe’.

2We omit one difference that, although important, is beyond the scope of this article: A register would render German transfers of title to be honored abroad. This is a crucial advantage of register publicity. However, it has been treated extensively elsewhere. That is why we omit it here. See, for instance, E.-M. KIENINGER, ‘Die Zukunft des deutschen und europäischen Mobiliarkreditsicherungsrechts’, Archiv fuer die civilistische Praxis 2008, pp. 187 et seq.; A. SCHLÜTER, ‘Der Eigentumsvorbehalt im europäischen und internationalen Recht – Zu den Grenzen besitzloser Mobiliarsicherheiten im grenzüberschreitenden Handel’, Internationales Handelsrecht 2001, pp. 141–152.

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2.The Differences between Non-possessory Security Interests in Belgium and Germany: The Old Trade-off between Extending Credit and Preserving Transparency

The ultimate goal of policymakers in secured lending was and still is to promote access to and affordability of credit.3 It seems that policymakers share the view that a way to achieve this goal is to make as many assets as possible available to serve as collateral.4 The extension of pledgeable assets would require making even those assets available as collateral that are indispensable for the debtor. On the other hand, allowing for security interests in assets in the debtor’s possession would be in conflict with the publicity principle,5 which governs most continental property laws.6 Indeed, separating security interests from possession makes it very difficult to know which assets are encumbered and which are not. Introducing non-possessory security interests would decrease transparency. In the past, legislator and jurisprudence had to make a choice – either extend the collateral base or preserve transparency.

This choice was made both by Belgium and by Germany. However, the two countries made very different choices (sec. 2.1). Both choices were amended soon to extend the scope of collateralizable assets (sec. 2.2). The following piecemeal reaction to legal innovation by business revealed some inconsistencies in both systems as they had evolved (sec. 2.3). Non-possessory security interests share an inherent weakness in Germany and Belgium, which seems more pronounced in Germany (sec. 2.4). Finally, the tensions in the two systems led to the adoption of a major reform in Belgium, while Germany stuck to its approach of incremental improvements (sec. 2.5). As this review of the legal development will show, the major differences between the two systems can be summed up under three labels – transparency, acquisition in good faith, and floating charge (sec. 2.6).

3UNCITRAL Legislative Guide on Secured Transactions, 2010, www.uncitral.org, para. 1; Preparatory Works to the Belgian reform of the law governing security interests on movables,

Parl. St. 2012–2013, Doc. 53 2463/001, 6.

4 E.-M. KIENINGER, ‘Die Zukunft des deutschen und europäischen Mobiliarkreditsicherungsrechts’, Archiv fuer die civilistische Praxis 2008, p. 207; UNCITRAL Legislative Guide on Secured Transactions, 2010, www.uncitral.org, para. 50; Preparatory Works of the New Belgian Pledge Law, Parl. St. Doc. 53, 2463/001, 14.

5W. WIEGAND, in Staudinger (ed.), Kommentar zum Bürgerlichen Gesetzbuch mit Einführungsgesetz und Nebengesetzen, Sellier de Gruyter, Berlin 2011, after sec. 930, paras 20,

30, and 33.

6U. DROBNIG, ‘Empfehlen sich gesetzliche Maßnahmen zur Reform der Mobiliarsicherheiten?’, in Ständige Deputation des DJT, Verhandlungen des 51. Deutschen Juristentags, C.H. Beck, München 1976, pp. F56 et seq.; E.-M. KIENINGER, ‘Die Zukunft des deutschen und europäischen Mobiliarkreditsicherungsrechts’, Archiv fuer die civilistische Praxis 2008, pp. 188 and 195; Art. IX. – 3:301 Comments A and B of the Draft Common Frame of Reference.

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2.1.Transparency versus Extension of Collateral

At the outset – i.e., with the two respective codifications – Belgium chose transparency, and Germany chose an extended collateral base.

Before the current reform, the Belgian Civil Code, as introduced in 1804 under French rule, gave priority to the preservation of transparency. Similar to many civil law countries, this was implemented by requiring the debtor to relinquish possession of the pledged asset as a requirement for the creation of the pledge.7 Possession in this respect is used as a means of publicity. This rule has the obvious advantage of limiting the scope for misleading ostensible ownership by protecting transparency. Any creditor therefore could be confident that all the assets in the debtor’s possession were unencumbered. Monitoring whether and to what extent the debtor reduced his assets from which to pay his creditors by handing out security interests therefore was easy. Unfortunately, however, this choice also severely limits the scope of collateralizable assets and therefore access to credit. For instance, a tailor whose sole asset was the sewing machine on which he was running his business could not encumber this asset. He could not dispense with the machine without closing his business. The bank, on the other hand, would like some collateral to cover its lending risk; however, it would not want to store the machine.

German law originally knew a non-possessory pledge adopted from Roman law.8 In the mid-19th century, however, it was abolished to bring the benefit of the transparency as possessory pledge would yield to full bloom. However, then only some 50 years later, with the Bürgerliches Gesetzbuch entering into force in 1900, Germany reverted to the other option. Although leaving the non-possessory pledge abolished and not explicitly stipulating a non-possessory security interest

in movables, the Code provided the necessary institutions to use the transfer or retention of full ownership (transfer of title = Sicherungsübereignung, retention of title = Eigentumsvorbehalt) as a non-possessory security interest.9 Generally, the

transfer of ownership in movables requires the parties to consent on the transfer

and also to relinquish possession to the acquirer. In Germany, however, the

acquirer can acquire possession by mere contractual means (sec. 930 BGB,

7For a brief historical overview, see R.M. PLANTIN, Bezitloos pandrecht. Rechtsvergelijkende studie, ICVR, Brussel 1970, p. 4. See also, in the context of the reform, E. DIRIX, De hervorming van de roerende zakelijke zekerheden, Kluwer, Mechelen 2013, p. 5.

8On the following, see M. BRINKMANN, Kreditsicherheiten an beweglichen Sachen und Forderungen, Mohr Siebeck, Tübingen 2011, pp. 90 et seq.; W.J. ZWALVE, ‘A Labyrinth of Creditors: A Short Introduction to the History of Security Interests in Goods’, in E.-M. Kieninger (ed.), Security Rights in Movable Property in European Private Law, Cambridge University Press, Cambridge 2004.

9W. WIEGAND, in Staudinger (ed.), Kommentar zum Bürgerlichen Gesetzbuch mit Einführungsgesetz und Nebengesetzen, Sellier de Gruyter, Berlin 2011, after sec. 930, para. 7.

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constructive delivery, Besitzkonstitut).10 Therefore, although lawyers still speak of some kind of possession, in fact the asset remains in the hands of the transferor and not in those of the acquirer. To use this institution for a security interest, it is combined with a consensual obligation that the creditor has to transfer ownership back in case of payment. Additionally, the preparatory works make clear that the legislator actually intended the transfer of ownership to be used in such a manner.11 This meant and still means today that any movable can serve as collateral without ever leaving the debtor’s possession. This increases the collateral base by all movable assets that are indispensable for the debtor’s activity. On the other hand, nobody can ever know whether assets in the debtor’s possession are actually encumbered or not,12 rendering the system highly intransparent.

Notwithstanding its intransparency, this security interest is fully enforceable against third-party creditors both before and in bankruptcy, independently of the third parties’ knowledge.13

At the outset, therefore, the two countries laid very different foundations on which to build their respective laws on secured credit. Germany aimed at a large collateral base, largely sacrificing transparency. Belgium, on the other hand, seemed prepared to forego opportunities of secured lending, placing transparency centre stage, partially backing out of this decision later on.

2.2.Amending the Choices to Extend Scope: Floating Charge

As indicated, both German and Belgian laws amended their systems to extend the scope of collateral about a century ago. As a consequence, both jurisdictions allow using large parts or even the totality of a business’s value as collateral. The German jurisprudence developed this amendment by extending the scope of non-possessory security interests case by case. In Belgium, the legislator changed

10M. BRINKMANN, Kreditsicherheiten an beweglichen Sachen und Forderungen, Mohr Siebeck, Tübingen 2011, pp. 109 et seq. and pp. 113 et seq. On the history of constitutum possessorium and its rejection, for instance, by Dutch and Scottish laws, see W.J. ZWALVE, ‘A Labyrinth of Creditors: A Short Introduction to the History of Security Interests in Goods’, in E.-M. Kieninger (ed.), Security Rights in Movable Property in European Private Law, Cambridge University Press, Cambridge 2004, p. 46.

11See M. BRINKMANN, Kreditsicherheiten an beweglichen Sachen und Forderungen, Mohr Siebeck, Tübingen 2011, pp. 116 et seq. Arguing along the same lines, saying that the German legislator could have prevented the Sicherungsübereigung, as the Swiss did, W. WIEGAND, in Staudinger (ed.), Kommentar zum Bürgerlichen Gesetzbuch mit Einführungsgesetz und Nebengesetzen, Sellier de Gruyter, Berlin 2011, after sec. 930, para. 7.

12M. BRINKMANN, Kreditsicherheiten an beweglichen Sachen und Forderungen, Mohr Siebeck, Tübingen 2011, p. 16.

13To be precise: Priority is granted independently of any knowledge of a third-party creditor. If the third-party creditor had tried to acquire a security interest in the same good, things would be a little more complex. On bona fide purchase, see below at sec. 4.

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the law to make a business’s going concern value available as collateral by creating a floating charge on the business.14 In both Belgium and Germany, business seemed to demand security interests of a wider scope in the time as well as in the collateral-type dimension.

In Belgium, non-possessory security interests were inexistent at the outset, leaving a large amount of assets unavailable as collateral. Small businesses in particular were often restricted to two types of assets, both of which they could not encumber: movables that they needed to perform their business and the going concern value of their business as a whole. This predicament was recognized by the Belgian legislator, culminating in a proposition of law dating back to 1911, which was not adopted until 1919 due to external circumstances. This law created a registered floating charge on the business, with the express purpose of allowing small businesses to reap the benefits of being able to grant a non-possessory security interest in what was often the only important asset they had: their business.15 The object of the charge is the ‘business’, and therefore, the extent of the security interest was not defined by the law of 1919 but left to doctrine, case law, and the freedom of contract of the parties within the boundaries set by the former two. The business includes the entirety of means used to carry on the commercial activity at hand and attract and keep clientele. Immovable assets are excluded from this charge, with the exception of goods that are only deemed immovable because they serve the economic purpose of an immovable good. A second limitation set by the law of 1919 is that stocks of merchandise can only be covered by the floating charge up to a maximum of 50 per cent. The other half is carved out of the floating charge to allow other creditors to recover some of their claims. The charge can be designed by the parties to cover corporeal as well as intangible movables, including present and future debt claims, clientele, intellectual property, and the lease to the premises where the business is located, allowing the business’s going concern value to serve as collateral.16 As indicated by the term ‘floating charge’, the object of this security interest covers a collection of assets that can fluctuate freely until bankruptcy, at which time the secured creditor’s rights are ‘fixated’. Whatever assets are part of the ‘business’, as defined in the security agreement, at that time will primarily serve to satisfy the secured claim.

14Law of 25 Oct. 1919, BS 5 Nov. 1919. In addition to this charge, Belgium introduced specific regimes for agriculture and coal. In Germany, too, the legislator created special security interests for particular industry sectors. We will only treat security interests available in all sectors in both Germany and Belgium.

15Proposition de loi sur le crédit professionnel en faveur de la petite bourgeoisie commerçante et industrielle, Séance du 5 Décembre 1913, Doc. No. 28, www.dekamer.be, 3.

16H. COUSY, B. TILLEMAN, A. BENOIT-MOURY (eds), De handelszaak, Die Keure, Brugge 2001, p. 36; E. DIRIX & R. DE CORTE, Zekerheidsrechten, Kluwer, Mechelen 2006, p. 350.

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This concept of the business, which can be covered by a registered pledge, has remained unchanged in the new regime, with the exception of the 50 per cent carve-out of stocks, which has been abolished. Under the new Pledge Law, all stocks can be pledged as part of the business.

Although the German system provided for non-possessory security interests, allowing small businesses to encumber their machinery, certain types of assets remained impossible to encumber. Future assets of the debtor could not be easily used as collateral for present transactions. Universalities of movables were considered unsuitable for use as collateral as such, rendering transaction costs of encumbering stocks of many small items prohibitive. Finally, the going concern value of a business could not easily be used to secure transactions.

A possible indirect way to encumber an entire business was to take a security interest on the real estate property, which would, in fact, extend to many movables considered to serve the economic purpose of that real estate.17

However, the movables considered to serve the economic purpose of the real estate only encompass machinery and similar items, leaving out stocks of merchandise or raw material. In addition, granting such a security interest would require the debtor to actually own the property, while in fact many businesses are run on rented property. Therefore, security interests on real estate leave large parts of a business’s value uncovered. Another alternative would be pledging shares, which would, in some way, cover the going concern value; however, it would not grant priority over the business’s creditors but rather over the shareholders’ creditors. Therefore, pledging shares would not be a real substitute for a floating charge-like security interest.

In Germany, instead, jurisprudence extended the scope of non-possessory security interests, both with respect to the encumbered collateral and with respect to the secured claim. The courts accepted that universalities of assets meaning things and claims (1) and future assets (2) could serve as collateral. These extensions allowed turning the proceeds of collateral into collateral themselves, as soon as the original collateral left the debtor’s estate. The courts also permitted creditors to use one and the same security interest to secure today’s and future claims against the debtor (3). As a result, extended versions of the German retention and transfer of title, rightly called ‘global security interests’ in the literature, could cover most of a firm’s value permanently (4).

(1) A transfer of title of a universality of things only identified by class, location, or the like was at odds with the German property law principle of precision. This principle generally requires any agreement that changes the status

17These are deemed to be immovable by intention, Arts 522–525 Belgian Civil Code, sec. 1120 et seq. BGB; see also J. BAUR & R. STÜRNER, Sachenrecht, C.H. Beck, München 2009, p. 9, sec. 39, paras 1 et seq.

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of an asset in terms of property law to identify the asset with precision.18

Nonetheless, determining a plurality of assets by mere location (e.g., all barrels in a particular room) was successively accepted by German courts, gradually allowing debtors to transfer ownership of universalities of things for the purpose of granting credit security.19 The courts reduced the required precision by stating that it is sufficient that any objective third party could reasonably identify the asset to be transferred, at the moment of transfer.20 Thereby, courts allowed transferring the totallity of assets in a certain room, a pile of assets on a certain property, or everything in a certain building.

(2) The courts accepted that parties could agree on the transfer of ownership in anticipation of the debtor acquiring ownership. This agreement would then automatically yield legal effect as soon as the debtor acquires ownership.21 The same principle was accepted for the assignment of future claims.22

Having met these two challenges, the courts could then accept that parties combine transfer or retention of title with assignments, in order to generate a ‘prolonged’ retention or transfer of title on changing assets, plus their substitutes and proceeds. As a consequence, a debtor could transfer his changing inventory of merchandise plus his expected earnings to a creditor as a security interest. From a doctrinal point of view, this is a complicated construction. On top of the regular retention or transfer of title, the secured party entitles the securing party to transfer ownership of the collateral in the normal course of business (sec. 185 BGB). As compensation, the debtor assigns to the creditor in advance his claims

18 W. WIEGAND, in Staudinger (ed.), Kommentar zum Bürgerlichen Gesetzbuch mit Einführungsgesetz und Nebengesetzen, Sellier de Gruyter, Berlin 2011, after sec. 931, para. 95.

19 Reichsgericht Urt. v. 15.6.1911, JW 1911, 762, Urt.v. 14 Nov. 1911, JW 1912, 144; M. BRINKMANN, Kreditsicherheiten an beweglichen Sachen und Forderungen, Mohr Siebeck, Tübingen 2011, p. 122; W. WIEGAND, in Staudinger (ed.), Kommentar zum Bürgerlichen Gesetzbuch mit Einführungsgesetz und Nebengesetzen, Sellier de Gruyter, Berlin 2011, after sec. 931, para. 97 et seq.

20M. BRINKMANN, Kreditsicherheiten an beweglichen Sachen und Forderungen, Mohr Siebeck, Tübingen 2011, p. 123. J. BAUR & R. STÜRNER, Sachenrecht, C.H. Beck, München 2009, sec. 57, para. 12 et seq.; W. WIEGAND, in Staudinger (ed.), Kommentar zum Bürgerlichen Gesetzbuch mit Einführungsgesetz und Nebengesetzen, Sellier de Gruyter, Berlin 2011, after sec. 931, para. 97 et seq.

21RGZ 140, 223, 225; M. BRINKMANN, Kreditsicherheiten an beweglichen Sachen und Forderungen, Mohr Siebeck, Tübingen 2011, pp. 125 et seq.; H.J. WIELING, Sachenrecht, Springer, Berlin, Heidelberg, New York 2007, p. 107; H. OECHSLER, in Münchener Kommentar zum Bürgerlichen Gesetzbuch, C.H. Beck, München 2013, after sec. 936, paras 8 and 20.

22RG Urt. v. 29 Nov. 1903 – Z VII 198/03, cited from juris; BGH, Urt. V. 25 Oct. 1952 – I ZR 48/52, cited from juris, para. 16 et seq.; BGH, Urt. v. 7 Jul. 2003 – II ZR 271/00 – cited from juris, para. 5 et seq.; J. BUSCHE, in Staudinger (ed.), Kommentar zum Bürgerlichen Gesetzbuch mit Einführungsgesetz und Nebengesetzen, Sellier de Gruyter, Berlin 2011, after sec. 398, para. 63.

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