учебный год 2023 / Rutgers, A Registered European Security Instrument in a Multilingual European Union

distinguished from its effectiveness.9 It can be created without any requirements as to form, by mere agreement (art. IX. 2:101: Methods of creation of security rights). However, to have effect vis à vis third parties, it must be registered in the electronic register (art. IX 3:102 I DCFR) or the object which is secured must be in the possession of the debtor (art. IX 3:102 II DCFR).

The operation of the register is provided in Section 3 of Chapter 3, Book IX DCFR entitled ‘Registration’. These rules presuppose a European online register10, which is to be operated as a personal portfolio system against identified security providers (art. IX 3:302 DCFR). A personal portfolio system implies that the secured providers are listed in the register, rather than the goods which are encumbered with the security interest.11 Apart from this characteristic, the register is a notice filing system. Notice filing implies that the entry in the register provides only that a security interest may exist.12 If more information is wanted, the secured creditor can be approached directly by the person seeking information (art. IX. 3:319 DCFR) . Moreover, it is directly accessible, since there is no interference from a registrar. Parties can enter the data directly onto the register (art. IX 3:302 (2) DCFR).13

Publicity is the underpinning of the register. Amongst its aims are legal certainty, prevention of fraud, the operation of the rules on priority, the protection of the registered secured creditor, information for, inter alia, prospective creditors and other third parties dealing with the security provider.14 In the law and economics literature, the reduction of transaction costs for third parties is also mentioned as a rationale.15 However, the question

9 Comment A, Art. IX. 2:101 DCFR, fn 7 above.

10Comments C, E, Art. IX. 3:301 DCFR, fn7 above.

11Comment, Art. IX. 3:302 DCFR, fn 7 above.

12Comments C, Art. IX. 3:301 DCFR, fn 7 above.

13Comments C, Art. IX. 3:301 DCFR, fn 7 above.

14Comments B, Art. IX. 3:301 DCFR, fn 7 above. See about this issue also: T.H. D. Struycken, De numerus clausus in het goederenrecht, Serie Onderneming en Recht, deel 37 (Kluwer: 2007) p. 290 ff.

15See about this debate: J. Armour, The Law and Economics Debate about Secured Lending: Lessons for EuropeanLawmaking? in: The Future of Secured Credit in Europe, H. Eidenmüller, E. M. Kieninger (eds.), European Company and Financial Law Review, Special Volume 2 (De Gruyter: 2008), p. 26 ff.See also about the relationship between the numerous clausus of real rights and transactions costs: B. Akkermans, The Principle of Numerus Clausus in European Property Law (Intersentia: 2008) p. 446 ff;Struycken, fn 14 above, p. 332.

3

is whether these aims can be achieved taking into account the provisions concerning entries in the register and in particular those concerning language.

To answer this question, first it is necessary to analyse which information must be entered onto the register and in which language. The information to be entered in the register is listed in Article IX. 3:308 DCFR, according to which, the name and contact details of the security provider and the creditor, the moment the entry was made and a minimum declaration concerning the encumbered assets must be registered. Neither these rules nor the Comments provide any reference to language requirements.16 The secured creditor is responsible for the registration. Probably, it will not be very difficult to provide information with respect to name and contact details in all the official EU languages in an electronic register. The issue of a minimum content of encumbered assets may be more problematic. Arguably, this issue could be solved by images.

However, in the case of searches in the register, the question is whether the rules included in the DCFR meet the requirements set by the comments. As stated above, one of the underpinnings of a register is to provide information to third parties. The DCFR provides that the request for information must be either in the language of the place of incorporation, the residence ofthe secured creditor or in English (art. IX 3:319 (2) DCFR). The answers to these questions should be in the same languages (art. IX 3:320 (4) DCFR). This may result in the following. A German company sells a tractor to a Hungarian farmer. The goods are secured by a reservation of title clause. Put differently, imagine a German company is the secured creditorand the Hungarian farmer is the debtor, who provides the security. Then here is another Hungarian company that sells potato seeds to the Hungarian farmer, but is not sure of his credibility. To consult the register, the Hungarian seller must make his inquires in either German or English, whereas the company may only be active on the Hungarian market and does not run its business internationally and, more importantly, does not have any command of English nor German.

16 Comment, Art. IX. 3:308 DCFR, fn 7 above.

4

The DCFR rules give English a rather dominant role. This role is not reflected in empirical research concerning the use of languages among businesses, and in particular among SMEs, in the internal market. There is empirical evidence that English is not the ‘world language’ or the overall dominating working language among businesses; the situation is more complicated.17 This is one of the findings in the 2006 study by CILT18, upon the request of the European Commission, which concerned the effects on the European economy of shortages of foreign language skills in enterprises.19 51 % of the interviewed SMEs used English as a language. In addition, 13 % uses German, 9 % French, Russian 8 % and Spanish 4 %.20 Russian is still used as lingua franca together with German and Polish in the Baltic states, Poland and Bulgaria.21 Frenchis used in trade in the Southern European countries, whereas Spanish is used in trade with Portugal. Two observations or inferences can be drawn from these findings. The first, whether a register which considers English as the dominant language does justice to reality. Secondly, whether it meets the requirement of providing information to third parties. Apart from this, thereis also the issue as to whether European law imposes obligations as to the language in which information must be provided.

III Language and the European Union

English can be regarded as a rather dominant language in the draft of the ESI. However, as pointed out, this may result in the situation that the party who seeks information, receives it in a language which he does not understand. This raises the issue as to whether European law imposes requirements with respect to the language in which information is to be provided. There is no clear cut rule which deals with this issue. However, there are rules and judgments of the Court which concern the use of language. Hereafter they will be

17CILT, ELAN, fn 3 above, p. 6, 19. Cf concerning the use of English in the EuropeanUnion: V. Ginsburgh, S. Weber, ‘Language Disenfranchisement in the European Union’, Journal of Common Market Studies 43(2005) p. 273 286.

18CILT, the national center for languages in the UK.

19CILT, ELAN, fn 3 above.

20CILT, ELAN, fn 3 above, p. 19. Cf about theknowledgeof major languages in Europe: R. Rose, ‘Political Communication in a European Public Space: Language, the Internetand Understanding as SoftPower’, Journal of Common Market Studies 46(2008) p. 451, at p. 461.

21CILT, ELAN, fn 3 above, p. 19.

5

discussed to examine whether requirements as to the use of language with respect to a ESI could be inferred from European Union law.

To discuss this question, first European enactments concerning the use of language will be discussed. In Article 342 TFEU (art. 290 old EC), it is provided that the use of languages by the institutions of the Union will be established by the Council by unanimity by regulation. In its first regulation adopted in 1958, the then Economic European Community established that there were four official and working languages.22 At the time, they were French, German, Dutch and Italian.23 In this regulation the difference between an official and a working language is not explained.24 Rather it is stated that regulations and other documents of general applications as well as the Official Journal (art. 5) will be drafted in the four official languages (art. 4). However, the institutions of the Community are free to choose their rules of procedure in specific cases (art. 6).

As stated above, it is not entirely clear which rights are linked to the status of official language.25 Neither the TEU nor the TFEU answer the question whether a citizen is entitled to information in any official language, if the European Union or one of its institutions publishes a document.

However, the TEU and the EU Charter on Human Rights provide that the European Union ‘shall respect its rich cultural and linguistic diversity, …’ (Art. 3 of the TEU, Art. 22 of

the EU Charter on Human Rights).

In addition, discrimination on the basis of language is forbidden (Art. 21 of the Charter on Human Rights). The EU institutions are bound by the Charter on Human Rights.26 However, the question is to what extent the ECJ is willing to strike down EU legislation which is contrary to the Charter. In this respect, Chalmers, distinguishes between administrative

22Regulation No 1 determining the languages to be used by the European Economic Community, OJ special edition 1952 1958, p. 59. (reg. 1/58).

23Regulation No 1 determining the languages to be used by the European Economic Community, OJ special edition 1952 1958, p. 59. (reg. 1/58).

24Ginsburgh, Weber, fn 17 above, p. 274.

25Ginsburgh, Weber, fn 17 above, p. 274

26T. Tridimas, The General Principles of EU Law (Oxford: OUP, 2006) p. 66.

6

acts and European legislation. With respect to the former the ECJ annuls them, whereas concerning the latter, the ECJ does not do so.27

Also the TFEU includes a non discrimination provision, according to which discrimination on the basis of gender, race, religion is not allowed. (Art. 18 and 19 TFEU). However, language is not listed in this enumeration.28 However, the non discrimination provisions are elaborated in the rules on free movement of persons, services and the freedom of establishment. The ECJ dealt with language issues in this context, together with the prohibition of discrimination.

From these rulings, two types of cases can be identified. First, there are cases on the basis of which nationals of Member States are entitled to certain language rights. Secondly, there is a group of cases, in which Member States set language requirements to protect and to promote their language which are obstacles to the internal market. Arguably, this categorization corresponds to the distinction between positive and negative language rights in the international law debate as to whether language rights are human rights or part thereof.29 The former relate to rights which entitle a citizen to information in a certain language; the latter imply that discrimination on the basis of language is forbidden. It could also be argued that both groups of cases deal with the negative rights, since in both types of cases, discrimination is at stake. However, in the former group, the result is that someone is entitled to the same right as a national of another Member State, whereas in the latter rules must be set aside because of discrimination. In the literature, it is highlighted that language rights have different underpinnings. They aim, inter alia, at the preservation of language and cultural identity, providing information, or the right to a fair trial.30

27D. Chalmers, G. Davies, G. Monti, European Union Law (Cambridge: CUP, 2010) p. 250. Chalmers submits that in Kadi (joined cases C 402/05 P, C 415/05 P, ECJ 3 9 2008 [2008] ECR II 3019) a regulation was struck down. However, in his view, this regulation could be regarded as an administrative act, since it only involves particulargroups of persons (p. 251).

28T. Ahmed,‘Demanding Minority (Linguistic) Rights from the EU:Exploiting Existing Law, European Public Law 15(2009) p. 379, at p. 388.

29X. Arzoz,‘Language Rights as Legal Norms’, European Public Law 15(2009) p. 541, at p. 544 ff.

30J.S. Conrad, ‘Drets lingüístics in a Babylonian marketplace? An Essay on Language and Contract in a Diversity Enhancing European Union, European Review of Private Law (2008) p. 693, at p. 716. See about this issue also: Arzoz, fn 29 above.

7

As to the first category of cases, the ECJ held that a citizen can deduce language rights in certain circumstances. 31 In Bicker and Franz, two cases which were treated together, the question was whether German speaking nationals were entitled to speak German in criminal proceedings in the Italian region Trentino Alto Aldige. Under Italian law, only German speaking citizens in that region have the right to communicate in German with the authorities of that region. Franz, a German national, was caught in the Italian region carrying a forbidden knife. Bicker, an Austrian lorry driver, was caught driving while drunk. Both were brought before the criminal court in Trentino. They wished to conduct the proceedings in German, which was denied. The referring court asked the ECJ whether the language rights of the German speaking population resident in that region should also be extended to nationals of other member states. The ECJ referred to its earlier decision Mutsch and held:

’13 … in the context of a Community based on the principles of freedom of movement for persons and freedom of establishment, the protection of linguistic rights and privileges of individuals is of particular importance…’

The ECJ continued that in both situations, the facts fell within the free movement of services and that Article 6 old EC (Now Art. 18) did not allow for the application of the Italian rules according to which Franz and Bicker were not entitled to conduct the proceedings in German.

In the other group of cases, Member States or other institutions had set language requirements and the issue was whether these language requirements were an obstacle to trade or, differently put, an infringement of the free movement of goods, services, capital or persons.32 For instance, in Groener, the Irish minister for education refused to appoint Anita Groener, a Dutch citizen, as a permanent full time lecturer of painting after she had

31Case 137/84 Mutsch, ECJ 11 July 1985 [1985] ECR 2681; Case C 274/96 H.O. Bickel, U. Franz, [1998] ECR I 7637.

32Case C 379/87 A. Groener v Minister for Education and the City of Dublin Vocational Education Committee, [1989] ECR I 3967; Case C 250/06 United Pan­Europe Communications Belgium SA et al. v Etat belge et al. ECJ

13December 2007 [2007] ECR I 11135; Case C 222/07 Unión de Televisiones Comerciales Asociadas (UTECA) v Administración General del Estado 5 March 2009 [2009] ECR I 1407.

8

failed an oral exam in Irish. According to Irish regulation she should have had a Ceard Teastas Gaeilge, which is proof of the command of the Irish language, and in the absence thereof she should have passed the exam in Irish to be appointed as a permanent full time lecturer. Notwithstanding, the school tried to appoint Groener as a part time lecturer after she failed the exam. However, this was to no avail or did not succeed. Then the ECJ had to deal with the question whether this language requirement was contrary to the free movement of persons. The ECJ held that the requirement that Groener had a considerable command of the Irish language was an infringement, but justified, since Irish is Ireland’s first official language and there is a policy encouraging the use of that language, provided that the national measure is employed proportionally and in a non discriminatory fashion.

Another instance occurred in 2009 when the ECJ had to consider Spanish rules which compelled Spanish broadcasting companies to provide 5 % of their annual revenue to the prefunding of European cinematographic and TV films.33 60 % of that funding was aimed at works in one of the official languages of Spain. The proceedings were started by an association of commercial Spanish broadcasters against the royal decree which imposed these conditions. The ECJ held that the requirement to reserve 60 % for films in one of the Spanish official languages is contrary to the free movement of services, the freedom of establishment, the free movement of workers and the free movement of capital. Also in this case the ECJ held that the defense and promotion of one of the official languages in Spain is an overriding reason in the public interest which justified these Spanish rules. As to the conditions for the justification test, Davies points out that there does not seem to be a very strict line of case law.34

In addition, there is secondary legislation which deals, inter alia, with the question in which language information is to be provided. There is, for instance, Regulation EC 1393/2007 on the service in the Member States of judicial and extrajudicial documents in civil or

33Case C 250/06 United Pan Europe Communications Belgium SA et al. v. Etat belge et al. ECJ 13 December 2007 [2007] ECR I 11135; Case C 222/07Unión de Televisiones Comerciales Asociadas (UTECA) v. Administración General del Estado, ECJ 5 March 2009 [2009] ECR I 1407.

34Chalmers et al., fn 27 above, p. 811.

9

commercial matters (service of documents).35 This regulation deals with the service of writs and other documents in cross border situations, which means that a document must be sent from one Member State to another (art. 1 reg. 1393/2007). If the document is neither drafted in a language which the addressee understands nor in the official language of the Member State where it is to be distributed or if there are more official languages in that Member State in the official language of the place where the service of the document must take place, the addressee may either refuse or return it to the sender (art. 8 reg. 1393/2007). If the addressee refuses to accept the document, the sender may remedy this by sending a translation (art. 8 para III reg. 1393/2007). The ECJ has not dealt yet with the issue of language requirements concerning regulation 1393/2007.

However, with respect to the enforcement of taxes, the ECJ had to address the language issue in Kyrian. This case concerned the interpretation of Directive 76/308/EEC of 15 March 1976 on mutual assistance for the recovery of claims relating to certain levies, duties, taxes and other measures36.37 The German Hauptzollambt Weiden (principal customs office), had established that Kyrian, who lived in the Czech Republic, had to pay duties amounting to DEM 316.500, . This was notified to the Czech Ministry for finance. According to the Directive, the German warrant for execution had to be recognized in another EU Member State without any formalities. Subsequently, the Czech authority authorized another Czech agency to recover the taxes from Kyrian, which did so by deducting it from his salary. Kyrian appealed this decision. One of his argument was that the warrant of enforcement was in German, a language with which he was not familiar. Therefore, he was not able to prepare himself properly to enforce his own rights and this decision should not be enforced. The Czech courts at first instance and on appeal rejected Kyrian’s arguments. The Czech supreme court asked the ECJ for a preliminary ruling. The Court stressed that the Directive had to interpreted in an autonomous manner. As to the

35Regulation EC 1393/2007 on the servicein the Member States of judicial and extrajudicial documents in civil or commercial matters (service of documents), and repealing Council Regulation (EC) No 1348/2000 of the Council, OJ 2007, L 324/79 120. Hereafter also Regulation 1393/2007. See about this issue also C 443/03, Götz Leffler v. Berlin Chemie AG, ECJ 8 November 2005, [2005] ECR I 9611.

36OJ 1976 L 73/18, as amended by Council Directive 2001/44/EC of 15 June 2001 (OJ 2001 L 175, p. 17, ‘Directive 76/308).

37C 233/08 Milan Kyrianv Celní úřad Tábor, ECJ 14 January2010 (nyr).

10