учебный год 2023 / Van Erp, Accessority of Suretyship-1

must then be sought in the contracting process. Through contract law accessority can be replaced by implying contractual clauses into security agreements that create accessority-like consequences. Radke calls this ‘Ersatzakzessorietät’ (substitute accessoriness).21 The example given by Radke is that the actual giving of credit (not just the promise) can be made a condition precedent with regard to the coming into existence of the security right, whereas paying off the credit can be made a condition subsequent leading to termination of the security right.22 If accessority-like clauses are not included in the surety agreement, inequality of bargaining power could be presumed and the law should react in order to strike a fair balance of interests between the principal creditor and the surety.

After this rather, as I called it in the beginning of my article, ‘idealistic’ analysis, it might be useful to follow a more positivist approach, aimed at analysing the existing and future European private law. I will first analyse the present acquis communautaire to see if it is perhaps a principle of European private law that a surety should be protected by application of the accessority principle. I will then analyse the draft consumer credit directive to see what the position of the surety will be under the future acquis communautaire.

3 Suretyship and the (New) Acquis Communautaire

3.1General Remarks

Within the acquis communautaire de lege lata hardly anything on surety law can be found. In Berliner Kindl Brauerei v. AG Andreas Siepert23 the European Court of Justice decided that on a proper construction of the consumer credit directive, the directive does not cover a contract of guarantee for repayment of credit where neither the guarantor nor the borrower was acting in the course of his trade or profession. In the acquis communautaire de lege ferenda this will be different. The draft proposal for a Directive on the harmonisation of the laws, regulations and administrative provisions of the Member States concerning credit for consumers repealing Directive 87/102/EC and modifying Directive 93/13/EC of October 2004 (2002/0216

21W.W. RADKE, Bedingungsrecht und Typenzwang. Eine Untersuchung zu Grundlagen und Grenzen privatautonomer Gestaltung, p 108. See also the remarks made by P. ROTT, ‘Consumer guarantees in the future consumer credit directive: Mandatory ban on consumer protection?’ in this issue of ERPL, paragraph III (3). In this paragraph he discusses how the Unfair Contract Terms Directive 93/13/EEC could be used to control the use of contract clauses aimed at abolishing the accessority principle.

22W.W. RADKE, Bedingungsrecht und Typenzwang. Eine Untersuchung zu Grundlagen und Grenzen privatautonomer Gestaltung, p 108 et seq.

23European Court of Justice 23 March 2003,Case 208/98 (Berliner Kindl Brauerei v. AG Andreas Siepert).

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(COD)), not only contains rules concerning agreements covering credit granted to consumers, but also surety agreements entered into by consumers.24

3.2ECJ Case Law

Habersack has defended the accessority principle by stating that it is a ‘Strukturprinzip der europäischen Zivilrechte und eines künftigen europäischen Grundpfandrechts’ (a leading principle of the european private law systems and of a future European land mortgage law). This conclusion is based on an analysis of national legal systems.25 This raises the question whether the accesority principle is also seen as such a leading principle in the acquis communautaire, more particularly the case law of the European Court of Justice (ECJ) and any legislative measures. I will start by discussing the ECJ case law, followed by a discussion of European (draft) legislation.

24Brussels, 28.10.2004, COM(2004)747 final, 2002/0222 (COD). In the following I will refer to this draft as the ‘draft new consumer credit directive’. Cf. for the ambit of the draft directive article 1.

With regard to this directive the legislative process has been very long. After the publication of a discussion paper by the European Commission, hearings took place in summer 2001 during which the opinions of stakeholders were heard. The European Commission then adopted a proposal for a Directive of the Parliament and of the Council on harmonisation of the laws, regulations and administrative provisions of the Member States concerning credit for consumers (Brussels, 11.9.2002, COM(2002) 443 final, 2002/0222 (COD)). The Commission further published for clarification Questions and Answers on the proposal (MEMO/02/252, Brussels, 13 November 2002). This was followed by a policy debate on a few major issues in the Council of 19 May 2003. The Commission then adopted the above-mentioned modified proposal on 28 October 2004, following the European Parliament’s 1st reading opinion. On 4 November 2004 the Commission published Questions and answers on its revised proposal for a new EU consumer credit law (MEMO/04/252). For an overview of these developments with further references see: <http://europa.eu.int/comm/consumers/index_en.htm> (search under ‘consumer credit directive’), <http://wwwdb.europarl.eu.int/oeil/oeil_viewdnl.ProcedureView?lang=2&procid=2347> (European Parliament, the Legislative Observatory), <http://iff.money-advice.net/index. php?id=1846> (sub web site of the Institut für Finanzdienstleistungen) and <http://www.ecri.be/> (The European Credit Research Insitute).I have used the consolidated version published by the Institut für Finanzdienstleistungen, published on their above-mentioned web site.

25M. HABERSACK, note 12 above. See also for Dutch law under the new Civil Code ASSER-VAN SCHAICK, p 167 et seq. (with various references to European legal literature), H.J. SNIJDERS, ‘Bürgschaft nach dem neuen niederländischen Bürgerlichen Gesetzbuch’, in: U. DROBNIG, H.I. SAGEL-GRANDE & H.J. SNIJDERS (eds), Neuere Entwicklungen im Recht der persönlichen Kreditsicherheiten in Deutschland und den Niederlanden, Sellier/European Law Publishers, München, 2003, p 77 at 86 and K. BROEKHUISEN, ‘Suretyships and independent guarantees under Dutch law’, in: U. DROBNIG, H.I. SAGEL-GRANDE & H.J. SNIJDERS, Neuere Entwicklungen, p 91 et seq. Accessority is generally seen as a guiding principle, which should be applied in a flexible manner, taking into account policy considerations. Under the old Dutch Civil Code a comparable approach to the application of the accessority principle in the area of real property mortgage was already defended in 1922 by A.F. VISSER, Credieten bankhypotheek, Eduard Ijdo, Leiden, 1924. He explicitly discusses other European legal systems (France, Belgium, Germany and England), as in his view the ‘present time’ is characterised by internationalism and the lawyer who limits himself to his own legal system is not doing sufficient research. See, VISSER, p 129.

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The ECJ has not dealt directly with the question whether the principle of accessority is a principle of European law. Indirectly, however, the court did address this question. Three cases can be mentioned: the Dietzinger case (Bayerische Hypothekenund Wechselbank AG v. Edgar Dietzinger), the Heininger case (Georg Heininger and Helga Heininger and Bayerische Hypound Vereinsbank AG) and the Siepert case (Berliner Kindl Brauerei v. AG Andreas Siepert) mentioned earlier.26

The facts of the Dietzinger case are as follows. Mr. Dietzinger had given a direct recourse written guarantee to the Bayerische Hypothekenund Wechselbank, which covered his parents’ obligations to the bank. His father ran a building firm in respect of which the bank, had granted a current account overdraft facility. The guarantee was not to exceed DM 100.000. The contract of guarantee had not been concluded in the offices of the bank, but at the house of Mr. Dietzinger’s parents. An employee of the bank had visited their house after his mother had agreed to such a visit over the telephone. Mr Dietzinger was not informed of his right of cancellation. After, under these circumstances, the guarantee had been concluded on 11 September 1992, the parents of Mr. Dietzinger were faced with serious financial difficulties. In May 1993 the bank, with immediate effect, called in all the loans granted. The sum total of these loans was more than DM 1.6 million. Mr. Dietzinger was then sued under the guarantee for payment of DM 50.000. He then claimed that he had not been informed of his right of cancellation, contrary to the Gesetz über den Widerruf von Haustürgeschäften und ähnlichen Geschäften (Law on the cancellation of ‘doorstep’ transactions and analogous transactions, BGBl. I, p 122) of 16 January 1986. This law transposed Directive 85/577 on doorstep-selling transactions into German law.27 In his view the consequence of this failure was that he could renounce the guarantee. One of the questions that had to be decided was, whether a guarantee concluded under the above circumstances could fall under the directive on doorstep transactions. The ECJ ruled as follows with regard to the ‘ancillary nature’ of the guarantee:

20.‘In view of the close link between a credit agreement and a guarantee securing its performance and the fact that the person guaranteeing repayment of a debt may either assume joint and several liability for payment of the debt or be the guarantor of its repayment, it cannot be excluded that the furnishing of a guarantee falls within the scope of the directive.

26European Court of Justice 17 March 1998, Case C-45/96 (Bayerische Hypothekenund Wechselbank AG and Edgar Dietzinger) and European Court of Justice 13 December 2001, Case C-481/99 (Georg Heininger and Helga Heininger and Bayerische Hypound Vereinsbank AG). Both cases can be found electronically at: <http://www.curia.eu.int>.

27Council Directive 85/577/EEC of 20 December 1985 to protect the consumer in respect of contracts negotiated away from business premises, OJ 1985 L 372, p 31.

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21.Moreover, the possible termination of a contract of guarantee concluded in the context of ‘doorstep selling’ within the meaning of Directive 85/577 is merely one particular situation where the question may arise as to the effect of the possible invalidity of an ancillary contract upon the principal contract. In those circumstances, the mere fact that the directive contains no provision governing the fate of the principal contract where the guarantor exercises the right of renunciation conferred by Article 5 cannot be taken to mean that the directive does not apply to guarantees.

22.However, it is apparent from the wording of Article 1 of Directive 85/577 and from the ancillary nature of guarantees that the directive covers only a guarantee ancillary to a contract whereby, in the context of ‘doorstep selling’, a consumer assumes obligations towards the trader with a view to obtaining goods or services from him. Furthermore, since the directive is designed to protect only consumers, a guarantee comes within the scope of the directive only where, in accordance with the first indent of Article 2, the guarantor has entered into a commitment for a purpose which can be regarded as unconnected with his trade or profession’.

The court concluded that the answer to the question referred by the national court must therefore be ‘that, on a proper construction of the first indent of Article 2 of Directive 85/577, a contract of guarantee concluded by a natural person who is not acting in the course of his trade or profession does not come within the scope of the directive where it guarantees repayment of a debt contracted by another person who, for his part, is acting within the course of his trade or profession’.

Although the decision is clearly not of a general nature with regard to guarantees, but only concerns the question whether a guarantee can fall under the provisions of the doorstep-selling directive under the specific circumstances of the case, it can still be said that in the view of the court the ‘ancillary nature’ of a guarantee is seen as a general characteristic.

It might, therefore, be concluded that in European private law the ancillary nature of surety agreements is seen, in the words of Habersack, as a ‘Strukturprinzip’. The Heininger case, however, shows that this conclusion should not be extended too far. Before I discuss the Heininger case further let me again first give the facts of the case. To enable them to buy a flat, Mr. And Mrs. Heininger took out a loan of DM 150.000 from the bank. The loan agreement was dated 28 April 1993 and 7 May 1993. It was secured by a Grundschuld (real property mortgage). In January 1998 Mr. and Mrs. Heininger revoked their declaration of intent to enter into the loan agreement, referring to paragraph 1 of the already mentioned German law on the cancellation of ‘doorstep’ transactions and analogous transactions. In their view this was a case of doorstep-selling, as an estate agent for the bank had visited them several times uninvited at their home and induced them to purchase the flat and enter into the loan agreement. They knew the estate agent, who acted on a self-

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employed basis. It was claimed by the couple that the agent did not inform them of their right of cancellation. They sought an order that the sums paid by them by way of capital and interest would be reimbursed and that the costs they incurred in connection with the execution of the loan agreement would be refunded. The total sum claimed was about DM 118.500. Mr. and Mrs. Heininger further sought a declaration that no rights accrued to the bank under the loan agreement. One of the questions put before the court was, whether the loan agreement fell under the doorstep-selling directive and what the consequences of cancellation would be with respect to the purchase contract regarding the flat. In particular the problem arose what the ambit was of Article 3(2)(a) of the doorstep-selling directive, stating that this directive shall not apply to contracts for the construction, sale and rental of immovable property or contracts concerning other rights relating to immovable property. The ECJ decided that the loan agreement did fall under the scope of the directive. It said:

29.‘The question which arises in the main proceedings is whether a securedcredit agreement of the type entered into by the parties in this case is covered by Article 3(2)(a) of the doorstep-selling directive, which excludes from the scope of that directive contracts for the construction, sale and rental of immovable property or contracts concerning other rights relating to immovable property.

30.Whilst Mr and Mrs Heininger, the French, Italian and Austrian Governments and the Commission contend that the provision referred to in the preceding paragraph does not apply to secured-credit agreements, the bank and the German and Spanish Governments contend that a secured-credit agreement is, in substance, a contract concerning rights relating to immovable property since it creates a right in rem in the immovable property which constitutes the security for the loan.

31.[…]

32.[…] [W]hilst a secured-credit agreement of the type in question in the main proceedings is linked to a right relating to immovable property, in that the loan must be secured by a charge on immovable property, that feature is not sufficient for the agreement to be regarded as concerning a right relating to immovable property for the purposes of Article 3(2)(a) of the doorstep-selling directive.

33.Both for consumers, whom the doorstep-selling directive is designed to protect, and for lenders, the subject-matter of a credit agreement such as that in point in the present case is a grant of funds which is linked to a corresponding obligation of repayment together with interest.

34.The fact that the credit agreement is secured by a charge on immovable property does not render any less necessary the protection which is accorded to the consumer who has entered into such an agreement away from the trader’s business premises’.

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The ECJ approaches the loan agreement as legally disconnected from the contract of purchase. This is in my view certainly correct. The loan itself is not a contract for the construction, sale and rental of immovable property. It does not create any security interest in the immovable property (it is merely ‘a grant of funds’ that is ‘linked to a corresponding obligation of repayment together with interest’) and hence not a contract concerning other rights relating to immovable property. This does not mean that the cancellation of the loan agreement might not have consequences for the validity of the purchase contract and the validity and effectiveness of any security interest created with regard to the immovable property. The latter question concerns the accessority principle. In short the principle implies: no loan, no security. The court addresses this problem in paragraph 35 of the decision. It ruled:

35.‘It may be added that although a credit agreement such as that in point in the present case accordingly falls within the scope of the doorstep-selling directive, the effects of a cancellation of that agreement in accordance with the directive on the contract for the purchase of the immovable property and on the provision of security in the form of a charge on it fall to be governed by national law’.

In other words: the applicability of the accessority principle and the consequences of its applicability are not a matter of European private law, but a matter of national law. No doubt, this approach is heavily influenced by the awareness that these are questions which may be answered differently from country to country, given that the rules on validity of immovable property transfers and the creation of security interests are interrelated with the rules on immovable property registers as well as rules on third party protection.

Finally, the Siepert case. Mr Siepert gave a guarantee to the Berliner Kindl Brauerei to the value of DEM 90.000, for the repayment of loans granted by the brewery to a third party for opening a restaurant. Neither Mr. Siepert, nor the principal debtor was acting in the course of his trade or profession. Mr Siepert had not been informed of his right of cancellation under Paragraph 7 of the German Consumer Credit Law 1990. However, at a meeting in June 1994, he had told a representative of the brewery that he was going to withdraw his consent to act as guarantor. The principal debtor could not perform his obligations and the brewery called in the loans. The brewery then obtained on 25 July 1997 an order directing the principal debtor to pay the sum of about DEM 29.000 together with interest. Mr Siepert was ordered to pay the same amount, by judgment in default given on 8 December 1997, as he had guaranteed payment of the obligations by the principal debtor. The Court of Justice then was asked whether the consumer credit directive also covered guarantees and for that reason also protected Mr. Siepert and not only principal debtors. The court ruled as follows:

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25.‘Given the objectives of Directive 87/102 […], which almost entirely concern the information to be given to the principal debtor regarding the implications of his commitment, and bearing in mind the fact that it is almost devoid of provisions that might afford an effective safeguard to the guarantor – whose primary concern is to have knowledge concerning the solvency of the principal debtor in order to assess the likelihood of being called upon to repay the credit granted – that directive must be regarded as not being designed to apply to contracts of guarantee.

26.Furthermore, the scope of the Directive cannot be widened to cover contracts of guarantee solely on the ground that such agreements are ancillary to the principal agreement whose performance they underwrite, since there is no support for such an interpretation in the wording of the Directive […] or in its scheme and aims’.

The statement in paragraph 26 hardly gives any indication as to whether the court considers the accessority principle as a principle of European private law. The court merely declares that, with regard to the ambit of the consumer credit directive, the ‘ancillary nature’ of a guarantee is not sufficient to widen the scope of the directive. This does not clarify the position of the court concerning the principle as such. It is presumed, but not further analysed.

3.3The New Draft Consumer Credit Directive

Under the present consumer credit directive sureties, as was decided in the Siepert case, are not protected.28 This will change under the new draft directive. Furthermore, where the protection given under the present directive is a measure of minimum harmonisation (cf. Article 15 of that directive), the new draft directive is aimed at maximum harmonisation. See Article 30 (total harmonisation and imperative nature of the directive’s provisions). In other words: a substantial part of surety law will, from the entry into force of this new directive, no longer be governed by national law, but by European private law. Analysis of the surety provisions in the new draft directive is therefore of utmost importance. What are the most important provisions on surety agreements in the directive?

Article 3 (scope) explicitly states that the directive ratione materiae will apply to both credit agreements and surety agreements. Article 1 (definitions), under (e) gives the following definition of a surety: ‘an ancillary agreement concluded by a guarantor and guaranteeing or promising to guarantee the fulfilment of any form of credit granted to natural or legal persons’. Article 1 gives a definition of the ambit of the directive ratione personae. Under (f) a guarantor is defined as ‘a consumer

28The Siepert case is discussed above. See for an overview of the present consumer credit directive and the evaluation and review process: <http://europa.eu.int/scadplus/leg/en/lvb/l32021.htm> and <http://europa.eu.int/comm/consumers/cons_int/fina_serv/cons_directive/index_en.htm>.

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concluding a surety agreement in connection with a credit agreement concluded by a third party as a consumer’. The definition of consumer can be found in Article 1, under (a): ‘a natural person who, in transactions covered by this directive, is acting for purposes which can be regarded as outside his trade or profession’. What a credit agreement is can be found in Article 1, under (c): ‘an agreement whereby a creditor grants or promises to grant to a consumer credit in the form of a deferred payment, loan or other similar financial accommodation’. Agreements for the provision on a continuing basis of services (private or public), where the consumer has the right to pay for them for the duration of their provision by means of instalments, are not deemed to be credit agreements for the purposes of the draft directive. In addition, also Article 3 (scope) contains under (f) various exemptions, such as mortgage loans and surety agreements guaranteeing business loans. From an accessority viewpoint the latter exemption is certainly interesting: It implies that the protection the draft directive aims to give to sureties depends upon the nature of the transaction between the principal creditor and principal debtor. If this is a consumer transaction the draft directive applies, however, if it is a business transaction the draft directive does not apply, even when in the latter case it is a consumer who gives the guarantee.

The protection of the surety under the draft directive is achieved primarily through marshalling both the contracting process as well as the contents of the contract itself and only on a secondary level through application of the accessority principle. This approach finds a clear expression in Article 10 (contractual information), paragraph 1, where it is stated that credit agreements and surety agreements shall be drawn up on paper or on another durable medium. It is added that all the contracting parties shall receive a copy of the credit agreement and that the guarantor shall receive a copy of the surety agreement. Paragraph 3 of Article 10 adds that the surety agreement shall state the maximum amount guaranteed, as well as the charges for defaulting to be applied in accordance with the procedure referred to in paragraph 2 (e). This latter paragraph deals with agreements where capital amortisation of a credit agreement with fixed duration and rate is involved. In such cases a statement of account in the form of an amortisation table, the payments owing, and the periods and conditions relating to the payment of these amounts must be given in a clear and concise manner. Article 11 of the draft directive gives the consumer a right of withdrawal. Such a right does not apply to credit agreements concluded through services of an official, provided that the official confirms that the consumer is guaranteed the rights under Article 5, paragraph 2 (necessary and essential information to be given to the consumer before conclusion of the credit agreement) and Article 10, paragraph 2 (contractual information). The right of withdrawal also does not apply to credit agreements within the scope of the directive, which are secured either by a mortgage on immovable property or by a surety commonly used in a Member State for this purpose or credit agreements cancelled under certain other European directives.

Concerning the performance of a surety agreement Article 23 is the crucial provision. It provides in paragraph 1 that a guarantor may conclude a surety agree-

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ment guaranteeing repayment under an open-end credit agreement for a period of three years only. An extension is only allowed with the specific agreement of the guarantor at the end of that period. Paragraph 2 states that the creditor may take action against the guarantor only if the consumer, having defaulted on repayment of the credit, has failed to comply with a default notice within three months. As soon as a default notice has been sent to the consumer the guarantor must be informed. As to the amount granted, paragraph 3 says that it may only equal the outstanding balance of the total amount of credit and any arrears in accordance with the credit agreement, with the exclusion of any other indemnities or penalties provided for by the credit agreement. Article 23 thus is a clear expression of the accessority principle, as it contains various provisions which connect the main agreement between principal creditor and principal debtor to the surety agreement, e.g. with regard to the amount granted.29

The draft directive also covers assignment of rights to a third party under a credit agreement or surety agreement. According to Article 17 (assignment of rights) if such an assignment takes place ‘the consumer and, where applicable, the guarantor, shall be entitled to plead against the assignee of the creditor’s rights under that agreement any defence which was available to him against the original creditor, including setoff where the latter is permitted in the Member State concerned. The consumer must be informed that the contract has been assigned to a third party’. The ban on the use of bills of exchange and other securities, as is laid down in Article 18, also applies to surety agreements.

4Adequate Protection of Sureties under the New Draft Directive?

The background of the draft directive is the desire to create an efficient functioning of the European capital markets. Integration of markets will mean that major players on this market (especially large financial institutions, such as banks), will be able to expand their market outside national borders. Given this economic purpose, a danger exists that the focus tends to be on the credit providing side of the market, not on the credit taking side. Integration of capital markets certainly will have great economic advantages. A bigger market potentially means that more credit providers can offer credit, which will affect competition and might lead to lower interest rates and competing credit conditions. There might also be a downside for consumers. They may now be confronted with credit providers who are established outside their member state and who might not only be major players on their local, i.e. national market, but also on an integrated European market. If credit consumer law is not harmonised adequately, consumers may be confronted with the applicability of

29Article 24, concerning default notice and enforceability, paragraph 1, under a adds that in a situation of non-performance ‘creditors, their representatives and any other assignee of the creditor’s rights under a credit agreement or surety agreement may not take disproportionate measures to recover amounts due to them in the event of non-performance of such agreements’.

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unknown foreign law and even larger counterparties than on their local markets. The result could very well be that the consumer’s bargaining strength might even become smaller in an integrated market than in a local market. Also these aspects should be taken into account when looking at the required level of protection of principal debtors and sureties.30 It is, therefore, to be applauded that through a European directive consumer protection is being enhanced. Still, some critical remarks can be made, especially with regard to the protection of sureties.

It seems that the protection of sureties under the draft directive is based upon the idea that informed consent is sufficient protection. Information itself, however, will not change an unequal bargaining position that so often exists, on the one hand, between large financial institutions and, on the other hand, small and medium sized businesses and certainly consumers. Even a well-informed consumer still might be faced with social and economic pressure to enter into a surety agreement. If mandatory law does not protect him, a serious risk exists that by using standard conditions the rights of the surety are reduced to a minimum. Especially in view of the fact that the new directive is aimed at maximum harmonisation and the member states will not be allowed to extend this protection, it is of the utmost importance that a fair balance of interests between principal creditors, principal debtors and sureties is reached at a European level. Part of this fair balance should, it is submitted, be strict application of the accessority principle with regard to surety agreements.

5Concluding Remarks: Towards a Multi-Level Remedial Approach?

If maximum harmonisation of consumer credit law should be reached, a well balanced and worked out set of European rules must be available, because the rules must be such that they can be fitted into each of the national legal systems. As is mentioned in the preparatory documents, various member states have adopted more

30See Questions and answers on the Commission’s revised proposal for a new EU consumer credit law, MEMO/04/252, Brussels, 4 November 2004:

‘The purpose of the proposal is to create a single market for consumer credit. It will make it easier for financial institutions to offer credit across borders or for consumers to take out a loan with a bank in another country, while at the same time ensuring a high level of consumer protection. The current EU law on consumer credit was passed in 1987 and has become rather outdated. It has not kept pace with innovation in the financial services sector and it has not sufficiently fostered greater cross border lending in the EU.

The Commission’s objective in revising the 1987 consumer credit law is to establish a set of modern rules that guarantee consumers a good level of protection no matter where in the EU they take out credit. This will give consumers confidence to sign up for credit products across borders and so help make an EU internal market for financial services more of a reality’.

The memo can be found at: <http://europa.eu.int/comm/dgs/health_consumer/library/ press/memo337_en.pdf>.

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