National Reports on the Transfer of Movables in Europe: Volume 4 France, Belgium, Bulgaria, Poland, Portugal 9783866539228

Table of contents :
Preface
List of Contributors
Contents
National Report on the Transfer of Movables in France
National Report on the Transfer of Movables in Belgium
National Report on the Transfer of Movables in Bulgaria
National Report on the Transfer of Movables in Poland
National Report on the Transfer of Movables in Portugal
Systematic of the Portuguese Civil Code
Table of Literature
Table of Abbreviations

Citation preview

National Reports on the Transfer of Movables in Europe

National Reports on the Transfer of Movables in Europe Volume 4: France, Belgium, Bulgaria, Poland, Portugal

edited by

Wolfgang Faber / Brigitta Lurger Schriften zur Europäischen Rechtswissenschaft / European Legal Studies / Etudes juridiques européennes Band 13 / Volume 13 / Volume 13 European Legal Studies Institute, Osnabrück Molengraaff Institute for Private Law, Utrecht Amsterdam Institute for Private Law Institute of European and Comparative Law, Oxford Institut für Zivilrecht, Ausländisches und Internationales Privatrecht, Graz

Schriften zur Europäischen Rechtswissenschaft / European Legal Studies / Etudes juridiques européennes herausgegeben im European Legal Studies Institute, Osnabrück von Christian von Bar im Molengraaff Institute for Private Law, Utrecht von Ewoud Hondius im Amsterdam Institute for Private Law von Martijn W. Hesselink im Institute of European and Comparative Law, Oxford von Stefan Vogenauer im Institut für Zivilrecht, Ausländisches und Internationales Privatrecht, Graz von Brigitta Lurger Translation of the Polish report into English: Mariusz Bobiński, Katarzyna Diehl, and Kamil Zaradkiewicz. Linguistic revision and editorial support for all reports in this volume: Susan-Gale Wintermuth. The reports published in this volume and a linguistic revision of the whole book are financed by the Fonds zur Förderung der wissenschaftlichen Forschung (FWF), Vienna. Publication of the whole series of national reports is supported by: Swiss Institute of Comparative Law (Lausanne); Bundesministerium für Wissenschaft und Forschung (Vienna); Bundesministerium für Justiz (Vienna); Land Salzburg; Evers-Marcic-Stiftung an der Rechtswissenschaftlichen Fakultät der Universität Salzburg.

ISBN (print) 978-3-86653-118-5 ISBN (eBook) 978-3-86653-922-8 The Deutsche Nationalbibliothek lists this publication in the Deutsche Nationalbibliografie; detailed bibliographic data are available in the Internet at http://dnb.d-nb.de. © 2011 by sellier. european law publishers GmbH, Munich. All rights reserved. No part of this publication may be reproduced, translated, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior permission of the publisher. Production: Karina Hack, Munich. Typesetting: fidus Publikations-Service GmbH, Nördlingen. Printing and binding: AZ Druck und Datentechnik GmbH, Kempten. Printed on acid-free, non-ageing paper. Printed in Germany.

Preface This is the fourth volume of a series of national reports on basic issues concerning the acquisition and loss of ownership of movable assets. This fourth volume covers a number of (but not all) jurisdictions applying a ‘consensual transfer model’, many of them in the tradition of the French Code civil. The full series covers 28 European legal systems, distributed over six volumes and appears as a by-product of the research activities of the Graz & Salzburg working group on ‘Transfer of Movables’ within the ‘Study Group on a European Civil Code’,1 which was in charge of preparing Book VIII of the Draft Common Frame of Reference (DCFR).2 Starting with general property law issues, like the concepts of ownership and possession employed in the respective legal systems and the related means of protection, the reports primarily deal with the ‘derivative’ transfer of ownership, but extend to good faith acquisition from a non-owner, acquisitive prescription, processing and commingling, and to further related issues. Corresponding to the working group’s task within the Study Group, the reports are generally restricted to movable assets and basically leave aside fiduciary transfers, such as transfers for security purposes. After all, they do, however, not only cover mere property law issues, but also much of the related law of obligations, enforcement and insolvency – in a generally accessible language, i.e. English.3 Publishing the whole series of national reports would not be possible without generous support by a number of institutions. Financial support is granted by the Swiss Institute of Comparative Law (Lausanne), the Austrian Ministry of Science and Research (Bundesministerium für Wissenschaft und Forschung), the Austrian Ministry of Justice (Bundesministerium für Justiz), the Land Salzburg and the Evers-Marcic-Stiftung an der Rechtswis1

2

3

For further information on this project, see Lurger, Introduction to the Project ‘Transfer of Movables’: Organisational Framework, Basic Issues and Goals, in: Faber / Lurger (eds.), Rules for the Transfer of Movables – A Candidate for European Harmonisation or National Reforms? (2008), 1. Published in von Bar / Clive (eds.), Principles, Definitions and Model Rules of European Private Law – Draft Common Frame of Reference (DCFR) Full Edition (2009), Volume V. Book VIII is entitled ‘Acquisition and loss of ownership of goods’. The concept of these reports is further described in the preface to the first volume of that series: Faber / Lurger (eds.), National Reports on the Transfer of Movables in Europe – Volume I: Austria, Estonia, Italy, Slovenia (2008).

vi

Preface

senschaftlichen Fakultät der Universität Salzburg. The reports as such as well as a linguistic revision of the whole book are financed by the Austrian Funds for Scientific Research (Fonds zur Förderung der wissenschaftlichen Forschung, FWF). The editors wish to express their gratitude to all these institutions. We also wish to thank Mrs Monika Lammer for formatting the manuscripts. The national report for Poland, originally written mainly in Polish, was translated into English by Mariusz Bobiński, Katarzyna Diehl, and Kamil Zaradkiewicz. Particular thanks go to Susan-Gale Wintermuth who bestowed great care on linguistically improving all reports and harmonising the terminology used. March 2010 Salzburg and Graz

Wolfgang Faber Brigitta Lurger

List of Contributors José Caramelo-Gomes Professor of European Law, Universidade Lusíada, Porto Eleanor Cashin Ritaine Director of the Swiss Institute of Comparative Law, Lausanne Caroline Cauffman Assistant professor at the universities of Antwerp and Maastricht, attorney José Carlos de Medeiros Nóbrega Legal researcher at the European Legal Studies Institute, University of Osnabrück Jerzy Pisuliński Professor of Civil Law, Jagiellonian University in Cracow, Member of the Polish Codification Commission for Civil Law Vincent Sagaert Professor at the University of Leuven, Department of Private Law, Professor of Property Law at the University of Antwerp, Attorney at the Brussels Bar Dimitar Stoimenov Lawyer at Peterka & Partners Law Firm, Sofia Kamil Zaradkiewicz Adjunct professor at the Department of Civil Law, University of Warsaw; Director of the Department of Jurisprudence and Studies in the Office of the Constitutional Tribunal of Poland

Contents Preface List of Contributors

v vii

National Report on the Transfer of Movables in France Eleanor Cashin Ritaine

1

National Report on the Transfer of Movables in Belgium Caroline Cauffman / Vincent Sagaert

189

National Report on the Transfer of Movables in Bulgaria Dimitar Stoimenov

353

National Report on the Transfer of Movables in Poland Jerzy Pisuliński / Kamil Zaradkiewicz

467

National Report on the Transfer of Movables in Portugal José Caramelo-Gomes/ José Carlos de Medeiros Nóbrega

581

National Report on the Transfer of Movables in France Eleanor Cashin Ritaine

Table of Contents Preliminary remarks

9

Part I: Basic information on property law 1. Notion of ownership and different property rights in French law 1.1. General basics 1.1.1. Characteristics of rights in rem in contrast to obligations (a) The French “law of goods” (b) Movables and immovables (c) Rights in rem and obligations (d) Other rights (e) Consequences of these distinctions 1.1.2. The French numerus clausus of property rights 1.1.3. Other general principles of property law 1.1.4. Where are the rules on property law (on movables) to be found? 1.2. Notion of ownership 1.2.1. Definitions and characteristics (a) Definitions (b) Characteristics of ownership rights (i) The absolute effect (ii) The exclusive characteristic (iii) The perpetual characteristic 1.2.2. Interests linked to the right of ownership 1.3. Other property rights in movables 1.4. The protection of property rights 1.4.1. Actions (a) Actions with respect to ownership rights (b) Other means of protection 1.4.2. Remedies 1.5. Transferability of movable assets

11 11 11 14 17 19 20 23 26 28 29 29 29 31 32 33 34 36 39 39 39 41 44 46 46

4

France

2. Possession 2.1. Notion of possession 2.1.1. Definitions 2.1.2. Limits to possession 2.1.3. Components of possession 2.1.4. Presumptions with respect to possession 2.1.5. Types of possession 2.2. Functions of possession 2.3. Acquisition of possession 2.4. Protection of possession 2.5. Self-help

52 52 53 54 56 57 60 63 65 67

3. Nature of the various rights to hold or to acquire a movable 3.1. The right to hold a movable 3.2. The right to acquire a movable

67 70

4. Rules relevant to the transfer of movables 4.1. Field of application 4.2. Definitions

70 71

Part II: Derivative acquisition 5. System of transfer 5.1. Basic characteristics and overview 5.1.1. The “unititular” or “uniform” concept of the transfer of ownership 5.1.2. Are the same rules applicable to all kinds of obligations? 5.1.3. Short overview of the basic transfer requirements (a) Legal requirements for the transfer (b) Legal nature of the transfer (c) Limits of the solo consensu principle 5.2. General issues 5.2.1. Specific goods – generic goods 5.2.2. The role of party autonomy and its relationship to third party interests (a) The limits of party autonomy (b) Protection of third parties 5.2.3. Problems, inconsistencies, critique

75 75 78 79 80 82 86 90 90 92 94 94 96

Table of Contents

5.3.

5.4. 5.5. 5.6. 5.7. 5.8. 5.9.

Valid obligation (causal or abstract system) 5.3.1. The kinds of obligations underlying the transfer of ownership 5.3.2. Validity of the obligation – different forms of defects regarding the obligation and their effects on the transfer of ownership Traditio Registration Consensual system Real agreement Payment Right to dispose

5 97 97

98 99 100 100 103 103 104

6. Rules for double and multiple selling 7. Which are the rules for selling in a chain? 7.1. General rules, valid contracts 7.2. Rules when contracts fail

105 106

8. Transfer or acquisition by means of indirect representation 9. Consequences in the case of insolvency of one of the parties involved 9.1. General issues 9.2. Insolvency of the transferor 9.3. Insolvency of the transferee

108 109 110

10. Passing of risk and passing of ownership

Part III: Original acquisition 11. Types of original acquisition 11.1. Accession of movables 11.2. Commixture and confusion 11.3. Specification and processing 11.4. Further general aspects

114 115 117 117

12. Rules of good faith acquisition (acquisition a non domino) 12.1. Field of application 12.2. Good faith acquisition only for value?

119 121

France

6

12.3. Possession or physical control by the transferor “B” 12.4. Physical control or possession by the acquirer “C” 12.5. Specific requirements with respect to the circumstances of the “transfer” 12.6. Specific requirements regarding the way the original owner “A” lost the movable 12.7. Good faith requirements 12.8. Treatment of lost or stolen goods 12.9. Right of the original owner A to buy back the asset from the good faith acquirer C? 12.10. Rules on good faith acquisition free of encumbrances 13. Rules for “acquisitive” prescription of movable property 13.1. Functions of acquisitive prescription 13.2. Requirements for acquisitive prescription 13.2.1. Assets that can be acquired 13.2.2. Role of possession 13.2.3. Role of good faith 13.2.4. Prescription periods 13.2.5. Extent of the acquisition 13.3. Prescription of ownership

121 122 123 124 124 125 128 128

129 131 131 132 134 134 137 137

14. Other forms of original acquisition

Part IV: Additional questions 15. Rules for the reservation of title 15.1. Notion and conditions 15.2. Effects

141 146

16. Abandonment: further ways of losing ownership 17. Transfer rules for “co-ownership” 17.1. Forms of co-ownership 17.1.1. Simple undivided ownership 17.1.2. Special forms of co-ownership 17.2. Rules on transfer 17.3. Separation and termination of co-ownership

150 151 153 154 154

Table of Contents

18. Further rules applying to unspecified goods 18.1. Transfer of shares in an identified bulk 18.2. Floating charge 19. Consequences of restitution of the movable to the owner 19.1. Entitlement to benefits resulting from the movable 19.2. Loss and deterioration of the movable 19.3. Reimbursement for improvements and expenses incurred during the possession of the movable 19.4. Possessor’s right to retain the movable 19.5. Who bears the expenses of the restitution of the movable to the owner?

7

156 156

161 163 165 165 171

Table of Literature

172

Table of Abbreviations

186

Preliminary remarks The present study of the transfer of movable property in French law follows as closely as possible the suggested format for this series. Considerable effort was made to follow the questionnaire, and in particular to take into account German or Austrian legal thinking, despite the fact that the French legal system does not easily fit into this predefined model. A number of topics in the suggested format simply do not occur in French law. This can be explained by the fact that the French Civil Code greatly simplified the rules on transfer of property and did not adhere to the abstract model applicable elsewhere on the continent. Furthermore, a lot of the questions posed by the suggested topics can be answered by using the general principles presented in the first part. Nevertheless, to enable a comparison between the different European legal systems, the study has kept to the original structure suggested, even though the final result may seem somewhat imbalanced. The question of transfer of movable property, as such, is not a topic that is covered extensively by French legal literature. Until recently, most authors generally considered that this was a minor legal item, as transfer of property occurs automatically in most cases. References given in this study refer, therefore, to the most common and accessible academic sources, even though their content on this specific theme is often very limited. A lot of attention has been given to providing references (in footnotes) that are as complete as possible, specifically, reference to recent articles and doctoral theses that may allow the reader to carry out further research into this topic. It is also essential to be aware of the fact that there have been very many legislative changes in the field of property law over the 2004 to 2009 period. As a result, many provisions of the Civil Code have been modified or have received a new numbering. For the sake of clarity and to enable the use of older sources, the old numbering is also given in the present study, either in the footnotes or in brackets. Most French legal concepts are included in brackets so as to avoid any distortion due to translation. Translations provided in this paper have been made by the author or extracted from the official government website (www. legifrance.gouv.fr), with, however, some changes whenever the accuracy of the translation could be challenged. This study concentrates exclusively on movable property. Immovable property and its legal regime are not covered by this report, except when concepts are applied by analogy to movable property.

10

France

A special note must be made regarding legal terminology: unless specified otherwise, the terms “ownership” and “property” are used as synonyms throughout the report as are the terms “things”, “assets”, “goods” and “objects”, even though the term “assets” shall be preferred in most occurrences. In addition, the term “possession” is used to define simple physical holding or stricto sensu, in the technical meaning of the legal institute. Finally, this text uses the generic “he / his” instead of “he / she” or “his / her” without any intent to discriminate. This study is up to date as of May 2009.1 1

In particular, the loi n° 2008-561 du 17 juin 2008 portant réforme de la prescription en matière civile (in force as of 19th of June 2008) has been taken into account. This law has greatly changed the numbering of the Civil Code.

Part I: Basic information on property law 1.

Notion of ownership and different property rights in French law

1.1.

General basics

1.1.1. Characteristics of rights in rem in contrast to obligations (a)

The French “law of goods”

Rules on property rights and ownership are part of the so-called law of goods (droit des biens),2 which deals with the various legal distinctions between different types of assets3 and with the ways assets can be used.4 French statutory law does not define “goods”.5 However, the new law on prescription of June 17, 20086, has replaced the formula “le domaine 2

3

4

5

Bergel J.-L., Bruschi M., Cimamoni S., Traité de Droit civil, Les Biens, sous la direction de J. Ghestin, LGDJ 2000. – Terré F., Simler Ph., Droit civil, Les Biens, Dalloz, 7e éd. 2006. – Chabas F., Leçons de droit civil, Biens, Droit de propriété et ses démembrements, Montchrestien, 8e éd. 1994. – Atias Ch., Droit civil, Les biens, Litec, 8e éd. 2005. – Zenati-Castaing F., Revet Th., Les biens, PUF Coll. Droit fondamental, 3e éd. 2008. – Cornu G., Droit civil – Les biens, Montchrestien, 13e éd. 2007. – See also, Loiseau G., Pour un droit des choses, D. 2006, chr. p. 3015. – Danos F., Propriété, possession et opposabilité, préf. L. Aynès, Economica 2007, 534 pages. – Aynès L., Property Law, in Bermann G., Picard E. (eds.), Introduction to French Law, Kluwer Law International 2008, pp. 147-169. As opposed to « things » (choses). See, Loiseau G., Pour un droit des choses, D. 2006, chr. p. 3015 proposing the creation of a law of things (droit des choses), which would include things that cannot be treated as legal goods because they cannot be “owned” such as: res communis, the human body … However, Strickler Y., Droit des biens, évitons la dispersion, D. 2007, p. 1149. Voirin P., Goubeaux G., Droit civil, Personnes, Famille, Incapacités, Biens, Obligations, Sûretés, Tome 1, LGDJ, 31e éd. 2007, p. 261, n° 584. – Revet Th., Le code civil et le régime des biens: questions pour un bicentenaire, Dr. et patr., mars 2004, p. 20. See Baudry-Lacantinerie et Chauveau, Traité théorique et pratique du droit civil. Des biens, 1e éd. 1896, p. 10, n° 10: « toutes les choses qui, pouvant procurer à l’homme une certaine utilité, sont susceptibles d’appropriation privée ». – David A., Les biens et

France

12

des choses” (i.e. “the field of assets”) by “les biens et les droits” (i.e. “assets and rights”), in article 2260 of the Civil Code (former C. civ., art. 2226). The new law therefore does not pertain to “things”, but to “assets” and “rights”, however most academic writings prior to 2007 use the former term of “things” (les choses). Legal scholars and court decisions have defined the scope of property law essentially in relation to assets.7 “Assets”,8 in the legal sense, are considered to be rights that have an economic value9 and can be 6

6

7

8

9

leur évolution, Archives phil. du droit, 1963, 165 (166). – Battifol H., Problèmes contemporains de la notion de biens, in, Les biens et les choses en droit, Archives phil. du droit, t. 24, 1979, p. 9. – Revet Th., Les nouveaux biens, in La propriété, Travaux de l’Association H. Capitant, SLC 2006, p. 271. – Berlioz P., La notion de bien, LGDJ, Bibliothèque de droit privé, tome 489, 2007, préface Aynès L., p. 19-21. – See, Zenati-Castaing F., Revet Th., Les biens, p. 21, n° 2: « Constitue […] un bien toute entité identifiable et isolable, pourvue d’utilités et objet d’un rapport d’exclusivité ». – Revet Th., Le code civil et le régime des biens: questions pour un bicentenaire, Dr. et patr., mars 2004, p. 20. – Libchaber R., La recodification du droit des biens, in Le Code civil 1804-2004, Livre du bicentenaire, Dalloz-Litec 2004, 297. – Comp. Dufour A., Notion et division des choses en droit germanique, Arch. phil. du droit 1979, p. 95-125 (107). Loi n° 2008-561 du 17 juin 2008 portant réforme de la prescription en matière civile (in force as of 19th of June 2008). Terré F., Variation de sociologie juridique sur les biens, in Les biens et les choses en droit, Arch. phil. du droit, 1979, p. 17. – Yet, Grzegorczyk, Le concept de bien juridique: l’impossible définition, in Les biens et les choses en droit, Arch. phil. du droit, 1979, p. 259. – Also, Berlioz P., La notion de bien, LGDJ, Bibliothèque de droit privé, tome 489, 2007, préface Aynès L., p. 22, n° 52. – See, Zenati-Castaing F., Revet Th., Les biens, PUF Coll. Droit fondamental, 3e éd. 2008, p. 21, n° 3: property rights are not goods because they are the mechanism that allow assets (les choses) to be goods (les biens). – Zenati-Castaing F., La propriété, mécanisme fondamental du droit, RTD civ. 2006, p. 445-465 (448). – Libchaber R., La recodification du droit des biens, in Le Code civil 1804-2004, Livre du bicentenaire, Dalloz-Litec 2004, 297, 324 seq. See also the new legal concept of “produit” as a product of human activity: ZenatiCastaing F., Revet Th., Les biens, p. 30 n° 8 and André Ch., La cohérence de la notion de produit, RRJ, 2003-2, p. 751. – Mainguy D., Réflexions sur la notion de produit en droit des affaires, RTD com. 1999, p. 47. – The 1998 law on the liability for products (Loi n° 98-389 du 19 mai 1998 sur la responsabilité du fait des produits défectueux) is also a good example of the change in terminology, whereas the Civil Code still uses the word chose, as a liability factor (C. civ., art. 1384, al. 1). See however, Chilstein D., Les biens à valeur vénale negative, RTD civ. 2006, p. 663. – Comp., Labbée X., La valeur des choses sacrées ou le prix des restes mortels, D. 2005, chr. 930. – Piedelièvre S., Le matériel et l’immatériel, Essai d’approche de

1. Notion of ownership and different property

13

“owned”,10 whether they relate to corporeals or incorporeals.11 This means, in particular, that incorporeals, such as the right in personam held by a creditor against his debtor, fall into this category.12 In other terms, in French law, both corporeal and incorporeal assets13 can be the object of ownership rights.14 On the other hand, so-called personality rights (droits de la personnalité) cannot be owned and are not considered assets in the legal sense.15 Some confusing statements can be found in French legal literature on the distinction between “goods” (i.e. “assets”) and “rights”. Some authors consider that goods / assets are things, not rights.16 However, like Frédéric Zenati-Castaing, one should consider that “rights” are a type of “assets” of a specific nature,17 whereas “assets” are only the legal “perception” of things.

10

11

12 13

14

15

16

17

la notion de bien, in Aspects du droit privé à la fin du XXe siècle, Mél. Michel de Juglart, Montchrestien 1986, p. 55: limiting the definition of goods to everything that has a monetary value. – Mousseron J.-M., Valeurs, biens, droits, in Mél. Breton A. et Derrida F., Dalloz 1991, p. 277 (279) who adds the faculty to circulate (commercialisation) the asset. See, Zenati-Castaing F., Revet Th., Les biens, p. 18, n° 2: «Les biens sont les choses dont l’utilité justifie l’appropriation». And p. 28, n° 8: «Les choses sont tout ce que l’on peut possèder, les biens sont ce que l’on possède». – Critizing, Berlioz P., La notion de bien, LGDJ, Bibliothèque de droit privé, tome 489, 2007, préface Aynès L., p. 151-203. Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 1, n° 1. – Catala P., L’immatériel et la propriété, in Le droit et l’immatériel, Archives phil. du droit, t. 43, 1999, p. 61. See infra in this section the discussion on the ownership of a claim. Piedelièvre S., Le matériel et l’immatériel, Essai d’approche de la notion de bien, in Aspects du droit privé à la fin du XXe siècle, Mél. Michel de Juglart, Montchrestien 1986, p. 55. – Mousseron J.-M., Valeurs, biens, droits, in Mél. Breton A. et Derrida F., Dalloz 1991, p. 277. In recent years, ownership rights have been recognized on a credit card number (Cass. crim., 14 nov. 2000: Bull. crim., n° 338; D. 2001, 1423, note B. de Lamy; RTD com. 2001, 526, obs. Bouloc) and on information (Cass. crim., 12 janv. 1989: Bull. crim., n° 14; Gaz. Pal. 1989, 2, somm. 283). – Also, Cons. const., déc. 2006-540 DC, 27 juillet 2006: RTD civ. 2006, 791, obs. Revet recognizing that intellectual property rights are ownership rights and protected as such. See however, Revet Th., La propriété de la personnalité, Gaz. Pal. 2007, n° 139, p. 49 and Zenati-Castaing F., Revet Th., Les biens, p. 30-31. Gardies J.-L., La chose et le droit sur la chose dans la doctrine du droit de Kant, Arch. phil. du droit 1979, p. 139-149 (143). – Villey M., Les biens et les choses, préface historique, Arch. phil. du droit 1979, p. 1-7 (2). Zenati-Castaing F., Revet Th., Les biens, p. 33 n° 8, see also p. 50, n° 13: « si tous les biens sont des choses, toutes les choses ne sont pas des biens, du fait qu’il existe des choses qui n’ont pas de propriétaire »; and p. 132, n° 84: « Il faut se faire à l’idée que

France

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(b)

Movables and immovables

Article 516 of the French Civil Code18 declares that all assets are either movable or immovable and must therefore belong to either of these two categories in French law.19 French law defines clearly and in a positive way the class of immovables (C. civ., art. 517 to art. 526). By comparison, movables are, in general, only defined negatively as a residual class. If an asset is not immovable, it is necessarily movable.20 As a rule, an asset will be considered immovable if it does not move and cannot be moved.21 Yet certain movable assets have a status similar to immovable assets because of their great value, even though they can be moved. This applies, for example, to airplanes22 and ships.23 Additionally, the law sometimes determines the nature of an asset by way of statute. This

18

19

20 21

22

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tous les biens ne sont pas des droits et qu’avoir un bien, ce n’est pas nécessairement avoir un droit ». – Yet Libchaber R., La recodification du droit des biens, in Le Code civil 1804-2004, Livre du bicentenaire, Dalloz-Litec 2004, p. 297 (313): « les droits ne sont pas des biens; ils ne font l’objet d’aucune appropriation, mais d’une simple titularité. » C. civ., art. 516: All goods are movable or immovable. – Terré F., Meubles et immeubles, in Le discours et le code. Portalis, deux siècles après le Code Napoléon, Litec, Jurisclasseur 2004, p. 279. – Périnet-Marquet H., L’immeuble et le Code civil, in Le Code civil, un passé, un présent, un avenir, Dalloz 2004, p. 395. Monier R., La date d’apparition du dominum et de la distinction des res en corporales et incorporales, Studi S. Solazzi, Naples 1948, 357. – Périnet-Marquet H., L’évolution de la distinction entre meubles et immeubles depuis le Code civil, in Etudes Béguin, Litec 2005, p. 642. – Critisizing this distinction: Zenati-Castaing F., Revet Th., Les biens, p. 42, n° 10: « la division générale des biens en immeubles et immeubles […] ne saurait demeurer la summa divisio dans un univers des richesses dominé par les choses immatérielles et créées », also at p. 155, n° 98. See infra 4.2: Definitions of movables. Voirin P., Goubeaux G., Droit civil, p. 261, n° 586. – Zenati-Castaing F., Revet Th., Les biens, p. 145, n° 88. C. de l’aviation civile, article L 121-11: “Les aéronefs constituent des biens meubles pour l’application des règles posées par le code civil. Toutefois, la cession de propriété doit être constatée par écrit et ne produit d’effet à l’égard des tiers que par l’inscription au registre d’immatriculation. Toute mutation de propriété par décès et tout jugement translatif, constitutif ou déclaratif de propriété doivent être inscrits sur le registre à la requête du nouveau propriétaire.” Yet it is possible to mortgage an airplane: C. de l’aviation civile, art. L 122-1 seq. – Let it be stressed, that as a general rule, movables cannot be mortgaged. Jambu-Merlin R., Le navire, hybride de meuble ou d’immeuble?, in Etudes Flour, Défrenois 1979, p. 305. – See also C. des douanes, article 241 where it is possible to mortgage a ship.

1. Notion of ownership and different property

15

is the case when a movable is attached to an immovable in such a way that it forms a single combination.24 Three criteria are applied to define an immovable. The first criterion is purely physical and defines immovables by nature (immeubles par nature): it results from an attachment (incorporation)25 to the surface of the Earth, to a portion of ground or from a physical link to the ground (stones of a house or a tree planted in the ground).26 The second criterion results from a fiction: a corporeal asset is deemed to be immovable if it is accessory to an immovable asset (immeuble par destination).27 The third criterion applies to incorporeal rights: rights are considered to be immovable if they apply to an immovable, corporeal asset.28 Assets are considered to be movable if they can be moved. Notwithstanding this physical criterion, certain goods are deemed to be movable either because they do not fall into the category of immovable assets, or because their nature has been determined by statute (C. civ., art. 527-536). Specifically, animals are movables.29 The same status applies to claims (C. civ., art. 529),30 to security rights relating to movables (usufruct rights, pledges, mortgage rights),31 to actions

24 25

26

27

28 29

30

31

See hereafter the concept of « immeuble par destination ». Req., 15 déc. 1857: DP 1859, I, 366. – Civ., 19 avr. 1864: D. 1864, 1, 178. – Cass. com., 1er juin 1974: D. 1974, inf. rap. 209. C. civ., art. 518 to art. 523. – Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 13, n° 14. C. civ., art. 524 and art. 525. – Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 14, n° 15. C. civ., art. 526. – Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 22, n° 21. Sohm-Bourgeois, A.-M., La personnification de l’animal: une tentation à repousser, D. 1990, 33. – Burgat F., Res nullius, l’animal est objet d’appropriation, Arch. phil. du droit, tome 38, 1994, 279, (286). – Antoine S., Le droit de l’animal, évolution et perspectives: D. 1996, chr. 126. – Libchaber R., Perspectives sur la situation juridique de l’animal, RTD civ. 2001, 239. – Antoine S., L’animal et le droit des biens, D. 2003, 2651. – Farjat G., Entre les personnes et les choses, les centres d’intérêt, RTD civ. 2002, p. 221. Emerich Y., La propriété des créances: approche comparative, préf. Zenati-Castaing, LGDJ, Bibl. dr. privé, t. 469, 2007. – Krief-Sémitko C., De l’action paulienne ou de la propriété des créances, droit de propriété sur une valeur (essai d’une théorie de la valeur en droit civil français) (suite), RRJ 2004-2, 789. – Also, (Krief-) Verbaere C., Essai d’une théorie générale de la notion de valeur, application au droit de rétention, RRJ 1999-3, p. 685. Rabeau A., L’usufruit des droits sociaux, Litec, Bibl. dr. de l’entreprise, 2006, p. 22, n° 17. – Libchaber R., L’usufruit des créances existe-t-il?, RTD civ. 1997, p. 615.

16

France

relating to movables (action en revendication d’un bien meuble),32 to business property (fonds de commerce), to intellectual property rights lato sensu (clienteles and copyright), and to securities, stocks and shares (valeurs mobilières). In French law, it is not possible for parties to a contract to determine the movable or immovable nature of an asset.33 This is of practical importance because the principles applicable to movable and immovable property sometimes differ, notably in respect to rules on transfer of ownership. Nevertheless, the nature of property can vary over time. In particular, during their lifetimes, movables can be attached to an immovable and thus take on an immovable nature through incorporation (immeuble par nature)34 or intention (immeuble par destination).35 On the other hand, an immovable can become movable if it is to be separated from its immovable support (meuble par anticipation).36 Both movable and immovable assets can be corporeal or incorporeal.37 In the latter case, the “assets” are actually simple rights (C. civ., art. 529).38 In general, rights relating to an object take on the nature of the object. 32 33

34

35 36

37

See infra 1.4.1. (a): Actions in respect to ownership rights. For example, the fact that a seller of a veranda (movable good) benefits from a reservation of title until complete payment does not prevent this veranda to become immovable when it is added to a house (immeuble par destination). Civ. 3e, 26 juin 1991: Bull. civ. III, n° 197, p. 115; JCP 1992, II, 21825, note Barbiéri; RTD civ. 1992, 144, note Zenati; D 1993, 93, note Freij-Dalloz: « La nature, immobilière ou mobilière, d’un bien est définie par la loi et la convention des parties ne peut avoir d’incidence à cet égard ». – See critics by Zenati-Castaing F., Revet Th., Les biens, p. 159, n° 99. – Mestrot M., Le rôle de la volonté dans la distinction des biens meubles et immeubles, RRJ 1995-1, 809. – See also the opposite position of the Commercial chamber: Cass. com., 2 mars 1999, Bull. civ. IV, n° 50; Dr. affaires 1999, 597, obs. A. L.; RTD civ. 1999, 442, obs. Crocq; JCP 1999, II, 10180, note Cutajar. And, Cass. 3e civ. 29 mars 2006: D. 2006, 1166, obs. Lienhard; RTD civ. 2006, 351, obs. Revet. See for example, Immeuble et le droit, Mélanges à la mémoire du Pr Roger SaintAlary, Presses universitaires des sciences sociales, Toulouse 2006. Voirin P., Goubeaux G., Droit civil, p. 262, n° 588 seq. Cass. ass. plén., 15 avril 1988: Bull. civ. R., p. 198: frescos that are immovable by nature become movable if they are removed from the wall they were painted on. – Larroumet Ch., La publicité des contrats de fortage et la mobilisation par anticipation, Mel. Colomer, Litec 1993, p. 209. – Also, CJCE, 7 déc. 2004, aff. C-1 / 03: RDI, 2005, p. 31, note Trébulle; D. 2005, p. 2352, note Reboul-Maupin in a case of pollution to a field. CEDH, 23 fevr. 1995, Gasus Dosier und Fördertechnik, A 306-B, § 53: “The Court recalls that the notion “possessions” (in French: biens) in Article 1 of Protocol No. 1 (P1-1) has an autonomous meaning which is certainly not limited to ownership of physical goods: certain other rights and interests constituting assets can also be

1. Notion of ownership and different property

17

Therefore, rights relating to an immovable are immovable (C. civ., art. 516 and 526),39 and rights to a movable are considered to be movable (C. civ., art. 527). As a result, except for rights pertaining to immovables (i.e. rights to the ownership of an immovable), all rights are movables. 38

(c)

Rights in rem and obligations

Classic French law describes two legal techniques for the use of assets. It explains to whom assets or an interest therein belongs and the scope of this right. On the one hand, an object, or some of its benefits, can be reserved for the direct use of one or more persons. On the other hand, a person can entitle another person to use the object. This distinction generates a dual classification between rights in rem (droits réels) and rights in personam (obligations – droits personnels). Both rights are subjective rights as they confer a legal power upon an individual person. The sole function of rights in rem is to distribute the uses of objects among persons.40 Obligations, on the other hand, have many functions: they can be used to distribute the uses of objects among persons, but can also entitle someone to demand a service or a payment from another person. All French property law is founded on this distinction.41 Yet this distinction does not encompass all rights.42

38

39 40 41

42

regarded as “property rights”, and thus as “possessions”, for the purposes of this provision (P1-1).” – Zenati-Castaing F., Revet Th., Les biens, p. 91, n° 45. The Commission on the Reform of the Code civil had suggested distinguishing between corporeal and incorporeal rights and not between movable and immovable assets. Article 1 of the project stated that « all assets are corporeal or incorporeal » The distinction between movable and immovable assets thus would have become secondary (Travaux de la Commission de réforme du Code civil, 1946-1947: Sirey, 1948, p. 781 et s.). – Gutmann D., Du matériel et de l’immateriel dans le droit des biens, in Le droit et l’immatériel Arch. phil. du droit, t. 43, 1999, p. 65. – Martin D., Du corporel, D. 2004, Chron. 2285. – Savouret E.-M., Droit des biens incorporels. Incorporels: vers une adaptation de notre droit?, D. Affaires 1997, 750. Such as usufruct rights. Atias Ch., Droit civil, Les biens, Litec, 8e éd. 2005, p. 1, n° 2. This distinction has been largely criticized by Planiol M. (Traité élémentaire de droit civil, 1e éd. 1897, 4e éd. 1906, n° 2159 seq.) who developed the notion of a universal passiv obligation (l’obligation passive universelle). Some personal rights don’t have a passiv subject: right to a name, right to honour, right to freedom, right to live … The same situation arises for intellectual property rights.

18

France

Rights in rem (droit réel or jus in re) are rights that are linked directly to an asset (res).43 They represent the power that a person has in regard to this asset. This person is the only party to this legal relationship.44 The main example of a right in rem is the right of ownership. The right of ownership45 is the fullest right in rem, as it encompasses all other rights.46 Rights in rem have an active subject (the creditor) and an object (the asset).47 This right gives the owner of the right direct and immediate power over the object of the right. Rights in rem are recognized only in respect of existing assets.48 Possession as such is not a right in rem,49 but reflects a factual situation that has legal effects. Obligations (droit personnel or jus in personam or obligation) represent the right given to a person (the creditor) to demand a service or a payment from another person (the debtor).50 An obligation is a legal tie between or among persons. The main example of an obligation is the promise to deliver goods. The creditor has an indirect right to the debtor’s patrimony. This means that if the debtor does not fulfil his promise, the creditor can seize assets belonging to the debtor (droit de gage general des créanciers – C. civ., article 2285).51 There are specific procedures for enforcing these claims.52 43

44 45

46

47 48 49

50

51

Libchaber R., La recodification du droit des biens, in Le Code civil 1804-2004, Livre du bicentenaire, Dalloz-Litec 2004, 297, 350 seq. Atias Ch., Les biens, p. 2, n° 3. Zenati-Castaing F., La propriété, mécanisme fondamental du droit, RTD civ. 2006, p. 445-465. Atias Ch., Les biens, p. 53, n° 75. – See however the medieval confusion between dominium and jus, where ownership becomes an asset: Zenati-Castaing F., Revet Th., Les biens, p. 131, n° 83. – Gardies J.-L., La chose et le droit sur la chose dans la doctrine du droit de Kant, Arch. phil. du droit 1979, p. 139-149 (143). Atias Ch., Les biens, p. 46, n° 69. Atias Ch., Les biens, p. 51, n° 72-73. See Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 146, n° 134 and, p. 143, n° 129: « La possession n’est pas actuellement un véritable droit subjectif. (…) On peut néanmoins avancer que la possession, si elle est à l’origine un fait, tend à se cristalliser en un droit par la volonté du possesseur. On dira qu’il s’agit d’une situation volontaire, légitime ou illégitime, juridiquement protégée qui constitue, selon les cas, l’anticipation ou la preuve d’un droit ». Atias Ch., Les biens, p. 59, n° 85. – See however the analogy at Zenati-Castaing F., Revet Th., Les biens, p. 93, n° 46: « Le droit et l’obligation étant corrélatifs, on peut rechercher dans tout droit incorporel un rapport d’obligation lato sensu ». C. civ., art 2285 (former C. civ., article 2093): The assets of a debtor are the common pledge of his creditors; and the proceeds of them shall be distributed among them pro rata, unless there are lawful causes of priority between the creditors.

1. Notion of ownership and different property

19

Obligations have an active subject (the creditor), a passive subject (the debtor) and an object (the service promised). The creditor can assign the claim53 and thus impose a new creditor upon the debtor, whereas the debtor cannot substitute another debtor for himself. 52

(d)

Other rights

In addition to rights in movables and rights in immovables, a third category of rights54 has been developed over the last decades: the so-called intellectual rights (droits intellectuels).55 These rights arise neither in respect of an object nor against a person.56 They have an incorporeal scope relating to the intellectual work of their holders.57 They entitle the holder to conduct his creative activity and make a living out of it. These rights have as their object either an intellectual creation58 or a clientele.59 An example of such 52

53

54

55

56

57

58

Loi n° 91-650 du 9 juillet 1991 (Loi portant réforme des procédures civiles d’exécution) reforming civil enforcement proceedings. Claims are thus movables (C. civ., art. 529 C. civ.) that can be possessed, vindicated or transferred (C. civ., art. 1240 and 1690). Some authors also categorize rights such as company rights (droits sociaux) which are neither claims or real rights and monopoly rights: see Zenati-Castaing F., Revet Th., Les biens, p. 95, n° 49 and 50. – And also the new category of environmental rights: Strickler Y., Droit des biens, évitons la dispersion, D. 2007, p. 1149. Dabin J., Les droits intellectuels comme catégorie juridique, Rev. crit. 1939, p. 413. – Cass. crim. 22 sept. 2004: D. 2005. p. 411, note B. de Lamy et p. 961, obs. J. Raynard; AJ Pénal 2005, p. 22, obs. J. Leblois-Happe; RTD civ. 2005, chr. p. 164, obs. Revet. – Caron C., Du droit des biens en tant que droit commun de la propriété intellectuelle, JCP 2004, I, 162. – Bictin N., Les biens intellectuels: contribution à l’étude des choses, Com. comm. électr., n° 6, juin 2006, étude 14. Comp. Libchaber R., La recodification du droit des biens, in Le Code civil 18042004, Livre du bicentenaire, Dalloz-Litec 2004, 297 (312). To shortlist a few (see, Zenati-Castaing F., Revet Th., Les biens, p. 99, n° 53 also at p. 113, n° 65): works of art, a scientific discovery, a book of fiction, a trademark, a production process. See also the possibility to own information: Catala P., La propriété de l’information, in Mélanges P. Raynaud, Dalloz-Sirey, 1985, p. 97. – Galloux J.-Ch., Ébauche d’une définition juridique de l’information, D. 1994, chron. p. 229. – Mallet-Poujol N., Appropriation de l’information: l’éternelle chimère, D. 1997, chron. p. 330. – Passa J., La propriété de l’information, un malentendu?, Dr. et patrimoine 3 / 2001, p. 64. – Frison-Roche M.-A., Le droit d’accès à l’information ou le nouvel équilibre de la propriété, in Le droit privé français à la fin du XXe siècle, Etudes P. Catala, Litec 2001, p. 759.

France

20

rights is the right of a composer or of an author to his work product.60 These rights generate a form of property (propriété intellectuelle)61 as they entitle someone to use it in an exclusive way.62 Nevertheless, even if the immaterial right relates to a corporeal movable, the ownership of the corporeal movable should not be confused with the intellectual property right to the process of its creation.63 A short note should be made here in respect of what French law calls “real obligations” (obligations réelles or obligations propter rem).64 These obligations are a sort of hybrid created by legal scholars65 that explains how a specific obligation can be linked to an asset, obliging the owner of the asset. This concept has however, not found any clear acceptance in jurisprudence. 59

(e)

Consequences of these distinctions

The distinction between rights in rem and obligations has a number of consequences.

59

60

61

62 63

64 65

Atias Ch., Les biens, p. 367, n° 637 et suiv. – Terré F., Simler Ph., Les biens, p. 63, n° 55 et suiv. for further references. – Zenati-Castaing F., Revet Th., Les biens, p. 101, n° 55. Pfister L., La propriété littéraire est-elle une propriété? Controverses sur la nature du droit d’auteur au XIXe siècle, RIDA, 2005, 117. – Kamina P., Author’s Right as a Property: Old and New Theories, J. of the Copyright Society of the USA, Vol. 48, n° 3, 2001, p. 383. – For the ownership of a software program: Rouen, 26 juin 1997: Gaz. Pal. 1998, 1, somm. p. 91. Vivant M., L’irrésistible ascension des propriétés intellectuelles in Mélanges Christian Mouly, Litec, 1998, p. 441. – Vivant M., L’immatériel, nouvelle frontière pour un nouveau millénaire: JCP, éd. G 2000, I, 194. – Zenati F., L’immatériel et les choses, in Le droit et l’immatériel, Arch. phil. du droit, t. 43, 1999, p. 79. – Adde critizising, Gutmann D., Du matériel à l’immatériel dans le droit des biens; Les ressources du langage juridique, in Le droit et l’immatériel, Archives de philosophie du droit, t. 43, 1999, p. 65. Zenati-Castaing, Revet Th., Les biens, p. 99, n° 53. Code de la propriété intellectuelle, article L. 111-3: “la propriété incorporelle […] est indépendante de la propriété de l’objet matériel”. – Possession of the corporeal asset that entitles to ownership under article 2279 of the Civil Code does not have any effect on the ownership of the incorporeal intellectual rights. See Paris, 17 févr. 1988: D. 1989, somm. p. 50, obs. Cl. Colombet. – Kamina, L’indépendance des propriétés corporelles et intellectuelles, RRJ, 1998-3, p. 881. Scapel J., La notion d’obligation réelle, préf. P. Jourdain, PUAM 2002. Zenati-Castaing F., Revet Th., Les biens, p. 461, n° 298.

1. Notion of ownership and different property

21

The number of different types of obligations is in principle unlimited, whereas rights in rem are generally created by statute so that there is a limited number (numerus clausus) of different types of such rights in rem.66 Rights in rem can be enforced against everyone in the world and therefore have an absolute character (caractère absolu),67 whereas obligations can only be enforced against the debtor (effet relatif).68 This means in particular that the absolute right is effective against every other person, whereas a relative right only grants a restricted right towards a certain person. Nevertheless, third parties have to respect obligations contracted by others (opposabilité).69 This means specifically that obligations are also protected against unlawful interferences by anyone whomsosoever. Additionally, as everybody is bound to respect absolute rights, it would seem to be a prerequisite that everybody be in a position to know the content of those rights. Nevertheless, as even obligations are protected against unlawful interference, the fact that third parties effectively know the content of a right is not always relevant. In the case of obligations, the wilful (or grossly negligent) breach of a right gives rise to an action in tort.70 Obligations can be assets in the form of claims (créances), or liabilities in the form of debts (dettes), whereas rights in rem are always assets (actifs).71 Obligations only give the creditor a general right to the patrimony of the debtor (C. civ., art 2285 – former C. civ., art. 2093), who is entitled to manage all the assets in his patrimony until a creditor effects a seizure; whereas rights in rem encompass the right to follow the object in question into the hands of anyone who takes possession of it (droit de suite)72 and the right to be paid in preference to other creditors if the object were to be sold (droit de preférence).73 Yet this distinction between rights in rem and rights in personam is not always very clear. For a number of years there has been a controversy over 66 67

68 69

70 71

72 73

See infra 1.1.2 The French numerus clausus of property rights. Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 97, n° 93. – See also infra 1.2.1 (a): The absolute right of ownership. Voirin P., Goubeaux G., Droit civil, p. 434, n° 959. Comp., Levis M., L’opposabilité du droit réel, Economica 1989, p. 11 and p. 12. – Danos F., Propriété, possession et opposabilité, préf. L. Aynès, Economica 2007, p. 13, n° 10. – Wintgen R., Etude critique de la notion d’opposabilité, les effets du contrat à l’égard des tiers en droit français et en droit allemand, préf. J. Ghestin, LGDJ 2004, Bibl. dr. privé, t. 426. Voirin P., Goubeaux G., Droit civil, p. 434, n° 959. See however, Chilstein D., Les biens à valeur vénale négative, RTD civ. 2006, p. 663. Larroumet Ch., Les biens – Droits réels principaux, p. 24, n° 33. Larroumet Ch., Les biens – Droits réels principaux, p. 24, n° 33.

22

France

the question whether there can be a right of property in a claim (notion de propriété d’une créance),74 or in other terms, a right in rem to a claim.75 Can a creditor own his claim against a debtor? Even if the terminology hitherto used by the legislator76 and by judges77 is not always precise, many legal scholars78 consider that there can be no right of property in a claim. This is very widely disputed today.79 Additionally, certain rights have dual characteristics: belonging both to those of rights in rem and to those of obligations. This is the case of longterm leases (Contrat de bail de longue durée or emphytéose) and for certain rights in rem that are accessory to an obligation (droits réels accessoires d’une créance – gage, hypothèque …).80

74

75

76

77

78

79

Emerich Y., La propriété des créances: approche comparative, préf. Zenati-Castaing, LGDJ, Bibl. dr. privé, t. 469, 2007. – Krief-Sémitko C., De l’action paulienne ou de la propriété des créances, droit de propriété sur une valeur (essai d’une théorie de la valeur en droit civil français) (suite), RRJ 2004-2, 789. – Egalement (Krief-) Verbaere C., Essai d’une théorie générale de la notion de valeur, application au droit de rétention, RRJ 1999-3, p. 685. Ginossar S., Droit réel, propriété et créance, élaboration d’un système rationnel des droits patrimoniaux, LGDJ 1960. – Ginossar S., Pour une meilleure définition du droit réel et du droit personnel, RTD civ. 1962, p. 573. – Dabin J., Une nouvelle définition du droit réel, RTD civ. 1962, p. 20. – Zénati F., Pour une rénovation de la théorie de la propriété, RTD civ. 1993, p. 305. – Also, Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 106, n° 101 et suiv. See art. L. 511-7, al. 3 of the Commercial Code which refers to the « property of the claim » (propriété de la provision). CEDH, 26 juin 1986, Van Marle v / The Netherlands: serie A, n° 101. – CEDH, 9 déc. 1994, Raffineries Grécques: série A n° 301-B. – CEDH, 6 oct. 2005, Maurice c / France, n° 11810 / 03; Draon c / France, n° 1513 / 03: RTD civ. 2005, p. 798, obs. Revet. Ghestin et allii, Introduction générale, LGDJ, 4e éd. 1994, n° 232, p. 185 et suiv. – Dabin J., op. cit., RTD civ. 1962, p. 20. See Storck M., La propriété d’un portefeuille de valeurs mobilières, in Le droit privé français à la fin du XXe siècle, Etudes P. Catala, Litec 2001, p. 695. – Cashin-Ritaine E., Les cessions contractuelles de créances de sommes d’argent dans les relations civiles et commerciales franco-allemandes, pref. F. Ranieri, avant propos F. Jacquot, LGDJ 2001, Bibl. dr. privé, t. 348, p. 32, n° 43 seq. – Emerich Y., La propriété des créances: approche comparative, préf. Zenati-Castaing, LGDJ, Bibl. dr. privé, t. 469, 2007, p. 459, n° 877. – Krief-Sémitko C., De l’action paulienne ou de la propriété des créances, droit de propriété sur une valeur (essai d’une théorie de la valeur en droit civil français) (suite), RRJ 2004-2, 789. – Egalement (Krief-) Verbaere C., Essai d’une théorie générale de la notion de valeur, application au droit de rétention, RRJ 1999-3, p. 685.

1. Notion of ownership and different property

23

Finally, if an absolute right is violated, this can, in certain circumstances, generate a relative right against a certain person, such as a claim for damages based on tort law.81 80

1.1.2. The French numerus clausus of property rights French authors82 generally consider that rights in rem are listed exclusively by statute and that new property rights can only be created by way of statute.83 Nevertheless, a controversial court decision84 decided in 1834 that rights in rem could also be created on a contractual basis. This would mean that parties to a contract may agree on new types of rights in rem. This possibility has only been used on very few occasions.85 It is considered to be a factor of legal uncertainty because it creates a risk with respect to third parties.86 There is no formally exclusive catalogue (numerus clausus) in French law. Nevertheless, there are two types of rights in rem recognised by statute: principal rights in rem and accessory rights in rem. The Civil Code lays down the rights and duties following from each type of right in rem, as well 80

81 82

83

84

85 86

See also usufruct rights on securities: Rabeau A., L’usufruit des droits sociaux, Litec, Bibl. dr. de l’entreprise, 2006. Under C. civ., art. 1382. Carbonnier J., Droit civil, Les biens: PUF, 18e éd., 1998, n° 44. – Chabas F., Biens: Montchrestien, 8e éd. 1994, n° 1287 – Contra: In favour of contractual rights in rem: Atias Ch., Les biens, p. 47, n° 71. – Malaurie Ph., Aynès L., Les biens, Defrénois 2e éd. 2005, p. 91, n° 359. – Terré F., Simler Ph., Les biens, p. 60, n° 52. This creates specific problems when foreign property rights are to be recognized in France. See in particular, Cabrillac M., La reconnaissance des sûretés réelles sans dépossession constituées à l’étranger: Rev. crit. DIP 1979, p. 487. – Klein F. E., La reconnaissance en droit international privé helvétique des sûretés réelles sans dépossession constituées à l’étranger: Rev. crit. DIP 1979, p. 507. – Kreuzer K., La reconnaissance des sûretés mobilières conventionnelles étrangères: Rev. crit. DIP 1995, p. 465. – Dahan F., La floating charge, reconnaissance en France d’une sûreté anglaise: JDI 1996, p. 381. Cass. req., 13 févr. 1834 (arrêt Caquelard): D. 1834.I.218; S. 1834.1.205; GA de la jurisp. civ., F. Terré, Y. Lequette, n° 60: “ni ces articles (C. civ., art. 544, 546 et 552), ni aucune autre loi, n’excluent les diverses modifications et décompositions dont le droit ordinaire de propriété est susceptible”. – Atias Ch., Les biens, p. 47, n° 71. – Comp., Belgian Law: the Belgian Cour de cassation (Cass, 16 sept. 1966, Journ. Trib. 1967, 59 and Cass., 17 oct. 1996, R.W. 1996-97, 1395, note M.E. Storme) does not allow parties to create real rights that have not been recognised by law. Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 48 n° 53 et p. 287, n° 283. Zenati-Castaing, Revet Th., Les biens, p. 458, n° 296 seqq.

24

France

as the content. However, these rules are not mandatory. This does not mean that parties can encumber rights in rem freely. Yet if the owner of an asset restricts functional rights to the asset by, for example, limiting his own right to use the asset, he will most likely fall within a category provided for by the Civil Code. In comparison to other legal systems, such as the German and Austrian systems, legal practitioners have not created new categories of rights in rem or quasi rights in rem such as the various types of credit securities by transfer of ownership or equitable interests found in German law.87 Principal rights in rem derive from the right of property (ownership rights) and from the constituent elements of this right (C. civ., art. 543). Ownership rights encompass three characteristics: the right to use the asset (usus), the right to collect the fruit (fructus) and the right to dispose of the asset (abusus).88 Principle rights in rem use a combination of these attributes. They are rights that are autonomous and that apply directly to the use of an asset. In this respect, French law accepts the following principal rights in rem: – Usufruct rights (Usufruit), where the usufructary is entitled to the right to use the asset (usus) and the right to collect the fruit (fructus) (C. civ., art. 578 to art. 624); – Rights of use (droit d’usage)89: a limited type of usufruct where the bearer can use an asset and collect the fruit, but only to cover his own needs and those of his family (C. civ., art. 630-631); – Rights of dwelling (droit d’habitation): the right of the bearer to use a building and to live there with his family only (C. civ., art. 632-633). A person entitled to a right of use or of dwelling cannot alienate or encumber it; nor can he allow the asset to be used or the dwelling to be inhabited by another person. These rights are immovable rights.90 – Rights of easement (servitude): the right of the owner of a piece of land to use some attributes of the neighbouring land, for example water rights or a right of way (C. civ., art. 637 to art. 710). This right is immovable.91 – Long term leases (emphytéose): a lease given for a period of 18 to 99 years gives quasi-ownership rights to the tenant92 (see also bail à construction, bail à rehabilitation – CCH, art. L 251-1 to art. L 252-4).

87 88

89

90 91

See infra, 1.1.3: Other general principles of property law. See infra 1.2.1: Definitions and characteristics of ownership, and 1.2.2: Interests linked to the right of ownership. Gau-Cabée C., Droits d’usage et Code civil, l’invention d’un hybride juridique, préf. J. Poumarède, LGDJ 2006, Bibl. dr. privé, t. 450. Cass. 3e civ., 23 juin 1983: JCP 1983, II, 19928. Cass. 3e civ., 27 oct. 1993: Bull. civ. III, n° 132.

1. Notion of ownership and different property

25

– Surface rights (droit de superficie) entitle the bearer to the use of the surface of an estate, but not to the subsoil.93 92

Most of these principal rights in rem apply only to immovable property, except the right of usufruct94 (C. civ., art. 581) and the right of use, which can exist in respect of a movable. Accessory rights in rem entitle the creditor of an obligation to a specific right to an asset owned by the debtor. These rights only exist in relation to a claim. These accessory rights generally have a security function. Until recently, there were two main accessory rights in rem: the right of lien (droit de gage – C. civ., art. 2333 to art. 2350)95 and the right of mortgage (hypothèque, C. civ., art. 2393 to art. 2425).96 In these two cases, the creditor of an obligation acquires a direct interest in a movable or an immovable owned by the debtor. This right is accessory to the obligation of the debtor. This accessory right allows the creditor to claim the asset, regardless of in whose hands it may be (droit de suite).97 It also gives him the right to be paid in preference to other creditors if the asset were to be sold (droit de preference). The 2006 law reform of security rights98 now clearly recognizes four types of securities in movables. Article 2329 of the Civil Code lists privileges, pledges, pledges of incorporeal movables and the retention of ownership.99 However, these accessory rights essentially aim to give their holders an economic right to the value of the asset, rather than to give the holder of the right a direct right to the asset. 92

93 94

95

96

97

98

99

Cass. 3e civ., 15 mai 1991: Bull. civ. III, n° 140, p. 82: « le bail emphytéotique de biens immeubles confère au preneur un droit réel susceptible d’hypothèque ». – C. rur. art. L 451-1 to art. L 451-14. See for details, Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 290, n° 285. Example of a usufruct right to a sum of money: Cass. 1e civ., 19 févr. 1980: Bull. civ. I, n° 63. Pledges were formerly ruled under C. civ., art 2071 seq. The whole field was reformed by the Ord. n° 2006-346 du 23 mars 2006. See also the right of privilege (C. civ., art. 2330 seq.). Yet, Putman E., Sur l’origine de la règle: « meubles n’ont point de suite par hypothèque », RTD civ. 1994, chr. p. 543. – See also the antichrèse (C. civ., art. 2387 seq.), that enables the creditor to be paid with the income of an immovable asset or by preference on the price of the sale. With a limit concerning movables: C. civ., art. 2276 (former C. civ., art. 2279) (see infra 12: Rules of good faith acquisition). See the Ordonnance n° 2006-346 du 23 mars 2006, JO du 24 mars 2006 that has been codified in the Civil Code. See infra 15: Rules for the reservation of title.

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26

1.1.3. Other general principles of property law In French law, it is not customary to present general principles of property law in a dogmatic way, classifying them under a general heading as is the case in German or Austrian law,100 nevertheless, similar principles do exist in French law. All assets in French law are subject to at least one right in rem, as under French law every asset must have an identified owner, which in the last resort is the State.101 In practise, this principle only applies to immovables.102 Every person owns a patrimony (patrimoine), which encompasses all assets and liabilities103 of the person.104 This patrimony is linked to a person and does not exist independently of the person.105 Only objects subject to human control can be owned.106 For example, water in the sea and air can only be partially owned when they are controlled, e.g. put in a bottle.107 100 101

102

103 104

105

106

107

See for example, the notions of: Typenzwang, Typenfixierung, Spezialitätsprinzip. C. civ., art. 713: Goods without a master belong to the town (commune) where they are situated. However, ownership is transferred automatically to the State if the town renounces to exercise its rights. – See also C. civ., art. 539: The assets of persons who die without heirs or whose successions are abandoned belong to the State. There is a very specific situation that occurs when the owner of a field finds assets that have an archeological interest. In this case, the owner of the field is not deemed owner of the objects found: these belong to the State. See art. 18-1 of the law of 27 September 1941 on archeological discoveries (JO, 15 oct. 1941, p. 4438), recodified at Code du patrimoine, art. L 531-16. – Also, Saujot C., La loi n° 2001-44 du 17 janvier 2001 relative à l’archéologie preventive, JCP 2001, I, 351. Principle of universality: see, Zenati-Castaing F., Revet Th., Les biens, p. 22, n° 4. Zenati F., Mise en perspective et perspectives de la théorie du patrimoine, RTD civ 2003, 667. – Atias Ch., La distinction du patrimonial et de l’extra-patrimonial et l’analyse économique du droit: un utile face-à-face, RRJ, 1987-2, 477. Zenati-Castaing F., Revet Th., Les biens, p. 34, n° 8. – Hiez D., Etude critique sur la notion de patrimoine en droit privé actuel, préf. Ph. Jestaz, LGDJ, bibl. dr. privé, t. 399, 2003. – Fromion-Hebrard B., Essai sur le patrimoine en droit privé, préf. M. Grimaldi, LGDJ, bibl. dr. privé, t. 398, 2003. – Comp. Groulier C., Quelle effectivité juridique pour le concept de patrimoine commun?, AJDA 2005, p. 1034. Comp. Proutière-Maulion G., L’évolution juridique du poisson de mer – Contribution à la notion juridique de bien, D. 2000, p. 647. – De Rey-Bouchentouf M.-J., Les biens naturels, un nouveau droit objectif: le droit des biens spéciaux, D. 2004, p. 1615. See C. civ., art. 714: (1) There are assets which belong to nobody and whose usage is common to all. (2) Public order statutes regulate the manner of enjoying them. – Malaurie Ph., Aynès L., Les biens, Defrénois 2e éd. 2005, p. 51, n° 164. – Sériaux

1. Notion of ownership and different property

27

Rights in rem, in general, apply to an existing, identified and individual asset.108 This means on the one hand, that the transfer of property has to occur in respect of a particular asset. It is nevertheless possible to own a combination (aggregate) of assets that cannot be separated. This combination is referred to as a “universalité de droits”. For example, a business (fonds de commerce) is such a combination of assets.109 Yet, in the case of a transfer of a business entity, separate transfers have to be made in respect of the movable, immovable and incorporeal assets, particularly as to their evaluation.110 On the other hand, rights in rem can only apply to things that can be “owned”. Assets like res communis,111 res nullius, and res derelictae are thus excluded. Articles 711 and 712 of the Civil Code list four ways of acquiring ownership rights: by succession, by contract, by acquisitive prescription112 and by accession.113 Scholars add two other mechanisms to this list: by operation of law and by occupation.114 The transfer of property in French law is governed by the solo consensu principle, which means that property is transferred solely through the intent of the contracting parties without any other formality.115 The transfer of property requires a valid legal transaction such as a contract. This legal transaction must have a valid causa. Thus French law follows the causal principle. In all cases, a form of publication is required to give effect to the right in rem with respect to third parties. These formalities can be of three kinds: traditio (or its substitute),116 notice to a third party or publicity (registration or recordation).

108

109 110 111

112 113 114 115 116

A., La notion de choses communes; Nouvelles considérations juridiques sur le verbe avoir, Droit et environnement, 1995, p. 27 et s. n° 5 et s. – Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 189, n° 178 et suiv. Atias Ch., Les biens, p. 51, n° 72. – Libchaber R., Le portefeuille de valeurs mobilières: bien unique ou pluralité de biens, Défrenois 1997, p. 65. Terré F., Simler Ph., Les biens, p. 26, n° 20. C. com., art. L 141-1. Such as the sea, running water, air. However these resources are becoming more rare and many mechanisms are set up to control their appropriation: EU Council Directive 96 / 61 / EC of 24 September 1996 concerning integrated pollution prevention and control (and its amendments) – Kyoto Protocol of 11 dec. 1997 amending the UN Framework Convention on Climate Change. – Chardeaux M.-A., Les choses communes, LGDJ 2006, préf. G. Loiseau, bibl. dr. privé, t. 464. See infra 13: Rules for acquisitive prescription. See infra 11.1: Accession of movables. See Terré F., Simler Ph., Les biens, p. 313, n° 388. See infra 5.1.1: The “unititular” or “uniform” concept of the transfer of ownership. See infra 5.4 (Traditio) and 2.1 (Notion of possession).

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28

It is not possible under French law to create a security by transfer of ownership, as ownership rights cannot be limited in time and thus revert to a previous owner when the debt has been paid.117 French law does not recognise securities such as the Sicherungsübereignung or the Sicherungsabtretung in German law.118 If there is a conflict between two property rights, the issue is decided either by the principle of publicity, i.e. the first registered or recorded property right is preferred, or by the principle of priority, i.e. the oldest property right is stronger than the younger one (prior tempore, potior jure).119 In the case of movables, publication is in general ensured by direct possession. There are however, many cases where possession can be indirect.120

1.1.4. Where are the rules on property law (on movables) to be found? The rules on property law can be found within the Civil Code, in the second book relating to goods and alterations to ownership rights (Livre deuxième, Des biens et des différentes modifications de la propriété) and in the third book relating to the different ways to acquire ownership (Livre troisième, Des différentes manières dont on acquiert la propriété).121 Yet as movables were considered in the past to be lesser things (res mobilis, res vilis),122 only a few provisions of the Civil Code specifically apply to movables. In particular, articles 516 to 710 of the Civil Code describe goods in general and their uses. Articles 711 to 717 of the Civil Code explain the different ways to acquire ownership. Articles 1582 to 1701 describe the sale of goods (vente) and the assignment of receivables (cession de créance). 122

117

118

119 120 121

122

See nevertheless, the mecanism of the “repurchasing” sale (vente à reméré) that enables the seller to repurchase the good within a period of five years (C. civ., art. 1659-1673). – Huet J., Les principaux contrats spéciaux, Traité de droit civil sous la dir. de J. Ghestin, LGDJ 2e éd 2001, p. 406, n° 11454. Cashin-Ritaine E., Les cessions contractuelles de créances de sommes d’argent dans les relations civiles et commerciales franco-allemandes, préf. F. Ranieri, Bibl. dr. privé t. 348, LGDJ 2001, p. 361, n° 587 seqq. Roland H., Boyer L., Adages du droit français, Litec 4e éd. 1999, p. 674, n° 339. See infra 2.1: Notion of possession. Revet Th., Le code civil et le régime des biens: questions pour un bicentenaire, Dr. et patr., mars 2004, p. 20. – See also, the code on Financial Markets (Code des marchés financiers) that details the legal status of securities and other immaterial rights. Other codes specifically examine the rules for intellectual property rights (Code de la propriété intellectuelle) and criminal law (Code pénal). Roland H., Boyer L., Adages du droit français, Litec 4e éd. 1999, p. 796, n° 397.

1. Notion of ownership and different property

29

Security rights123 are described under articles 2333 to 2354 (gage), articles 2355 to 2366 (nantissement de meubles incorporels), 2367 to 2372 (la propriété retenue à titre de garantie) and articles 2330 to 2332-3 (privilèges sur les meubles). Rules on possession and on the statutes of limitations can be found in articles 2219 to 2279 (new version) of the Civil Code.124 Other rules on the transfer of goods can be found outside the Civil Code.125 In particular, the Commercial Code (Code de commerce) has various articles on the treatment of property rights in insolvency proceedings126 and on shares, negotiable instruments and other intangible goods.127 Similarly, specific rules apply to public property.128

1.2.

Notion of ownership

1.2.1. Definitions and characteristics (a)

Definitions

The right of property / ownership129 is the most important and comprehensive right in rem.130 According to article 544 of the Civil Code:131 “ownership is the right to enjoy the use and to dispose of an asset in the most 130

123

124

125 126

127

128

129

130

Ordonnance n° 2006-346 du 23 mars 2006 (JO du 24 mars 2006) that has been codified in the Civil Code. These articles have been modified by the loi n° 2008-561 du 17 juin 2008 portant réforme de la prescription en matière civile (in force as of 19th of June 2008). Seube J.-B., Le droit des biens hors le Code civil, PA 15 juin 2005 n° 118, p. 4. See in particular, C. com., art. L 624-9 (formerly, C. com., art. L 621-115) with respect to the rights of a seller benefiting from a retention of title. See in the Commercial Code, the articles L 210-1 seq. in the Livre deuxième: Des sociétés commerciales et des groupements d’intérêt économique, and in particular, art. L 224-1 seq. See the relevant articles in the Code général de la propriété des personnes publiques (Ord. du 22 avril 2006). Zénati-Castaing F., La propriété, mécanisme fondamental du droit, RTD civ. 2006, p. 445. – La propriété, Travaux de l’Association H. Capitant, SLC 2006. – Bufnoir C., Propriété et contrat, Paris 1924. – Vareilles-Sommières, La définition et la notion juridique de la propriété, RTD civ. 1905, 443. – Lévy J.-Ph., Histoire de la propriété, PUF, Que sais-je, 1972. The nature of ownership rights has been largely discussed in legal scholarship. Many opinions collide on what exactly is to be understood under this word. Historical analysis and modern interpretation thus provide many understandings of the concept of ownership, and it is not possible to present them all here. However, a very

l e é n –

absolute way, under the condition that it is not used in a way prohibited by law or by regulations”. The right of property encompasses both a subjective aspect: the exclusive right of a person to an asset; and an objective aspect: the attribute that an asset belongs to a person.132 Property rights are not assets / goods in the legal sense, but only a mechanism that enables objects to become “assets / goods”133 and, in this respect, ownership rights are considered to be subjective rights (droits subjectifs).134 The right of property is mentioned in the 1958 French Constitution,135 the preamble to the 1946 Constitution136 and the 1789 Declaration of Hu131

131

n o

e m e s

132

u

r e

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30

133

134

135

interesting analysis of these diverse opinions can be found at Zenati-Castaing F., Revet Th., Les biens, p. 267-270, n° 167. – See also Libchaber R., La recodification du droit des biens, in Le Code civil 1804-2004, Livre du bicentenaire, Dalloz-Litec 2004, 297 (304-311) C. civ., article 544, « la propriété est le droit de jouir et disposer des choses de la manière la plus absolue, pourvu qu’on en fasse pas un usage prohibé par les lois ou les règlements ». – See also, Pavageau S., Le droit de propriété dans les jurisprudences suprêmes françaises, européennes et internationales, préf. S. Braconnier, LGDJ 2006, Coll. Univ. Poitiers, n° 37, p. 31. – Cass. 1e civ., 4 janv. 1995: Bull. civ. I, n° 4; D. 1995, Somm. 328, obs. Grimaldi; JCP 1996, I, 3921, n° 1, obs. Périnet-Marquet; RTD civ. 1996, 932, obs. Zénati. Comp. Libchaber R., La recodification du droit des biens, in Le Code civil 18042004, Livre du bicentenaire, Dalloz-Litec 2004, 297 (310) who states that public ownership is in contradiction to private ownership, as public property is a collective concept. Zenati-Castaing F., Revet Th., Les biens, p. 260, n° 164: in particular, the right of property is not an incorporeal right. Zénati-Castaing thus distinguishes the power to want (pouvoir de vouloir) from the power to claim (pouvoir d’exiger): ownership belongs to the first type, rights to the second. See Zenati-Castaing F., Revet Th., Les biens, p. 265, n° 167. – However, see Duguit (Duguit L., Les transformations générales du droit privé depuis le Code Napoléon, Paris, 2e éd. 1920, p. 156-157) who does not consider ownership rights as rights but only as an objective legal situation. See Mestre A., Remarques sur la notion de propriété d’après Duguit, Arch. phil. du droit 1932, p. 163. – Comp. CEDH, 30 nov. 2004, Öneryildiz c / Turquie, req. 48939 / 99: RTD civ. 2005, 422, obs. Revet. If only done by reference to the 1789 Declaration. In particular, the right of property has a constitutional value: Cons. Const., n° 81-132, DC, 16 janv. 1982: Rec. p. 18; Grandes décisions, n° 31; D. 1983, 169. – Cass. 1e civ., 4 janv. 1995: Bull. civ. I, n° 4; D. 1995, somm. 328, obs. Grimaldi; JCP N, 1995, II, 1468, obs. Simler; RTD civ. 1996, 932, obs. Zenati. – Cass. 1e civ., 13 déc. 2005: JCP E 2006, 2743, note Lamoureux. – Cass. 1e civ., 28 nov. 2006: JCP 2007, I, 117, n° 7, obs. Périnet-Marquet. – Cons. Const., 29 juil. 1998: D. 1999, 269. – Legeais D., Le Conseil constitutionnel français, protecteur du droit de propriété, in Mél. Flattet, Ed. Payot Lausanne 1985,

1. Notion of ownership and different property

31

man Rights.137 Additionally, international law and in particular the European Convention on Human Rights138 also protect the right of property.139 Administrative law considers the right of ownership to be a fundamental freedom.140 Notwithstanding this general protection of the right of property, public law tends to infringe more and more on private property rights, aiming to promote the use of private property in the public interest. Yet these limitations generally only apply to immovable property, and shall not be developed here. 136

(b)

Characteristics of ownership rights

In the field of private law, the right of property has the following effects. Ownership rights have three characteristics: they are absolute, exclusive and perpetual. Additionally, property rights are characterized by the notion of droit de suite:141 the owner, or the person entitled to a partial (or

136 137

138

139

140 141

p. 61. – Chérot J.Y., La protection de la propriété dans la jurisprudence du Conseil constitutionnel, in Mél. Christian Mouly, Litec 1998, t. 1, p. 405. – Brunet P., Les garanties de la propriété par le juge constitutionnel, in La propriété, Travaux de l’Association H. Capitant, SLC 2006, p. 531. Again by reference to the 1789 Declaration. DDHC, article 17: « La propriété étant un droit inviolable et sacré, nul ne peut en être privé, si ce n‘est lorsque la nécessité publique, légalement constatée, l’exige évidemment, et sous la condition d’une juste et préalable indemnité ». – See also article 2 DDHC of 1789. – Mestre J.-L., La propriété, liberté fondamentale pour les Constituants de 1789, RFDA, n° 1, janv.-fév. 2004, p. 1-5. First Protocol to the ECHR (20th March 1952): Article 1: “Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law. The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties”. – CEDH, 13 juin 1979: Marckx, Série A n° 24, § 63. – It is also considered as a human right: Rémy Ph., La propriété considérée comme un droit de l’homme, in La protection des droits fondamentaux, Publications de la Faculté de droit et des sciences sociales de Poitiers, t. 22, PUF, 1993, p. 127. – Bîrsan C., Renucci J.-F., La Cour européenne des droits de l’homme précise le droit de propriété, D. 2005, 870. See also the protection by the European Court of Justice: CJCE, 44 / 79, 13 dec. 1979, Hauer: Rec. p. 3327; JDI 1981, note V. Constantinesco, p. 174. Zenati-Castaing F., Revet Th., Les biens, p. 261, n° 165. Larroumet Ch., Les biens – Droits réels principaux, p. 24, n° 33.

France

32

restricted) right, is allowed to follow and claim his property regardless of in whose hands it may be. (i)

The absolute effect

The absolute effect of property mentioned in article 544 of the Civil Code means that the owner has all the rights to an asset (usus, fructus and abusus).142 There are no limits inherent in the right of property. Legal restrictions upon the right of ownership can only be created by statute or by regulation.143 As a general principle, it is not possible to use the right of property in a way prohibited by law (C. civ., art. 544). This has been construed in a rather liberal manner by the courts. In this respect, court decisions have discovered a number of restrictions upon the use of an asset by its owner. In particular, the theory of misuse of one’s rights (abus de droit) has been applied to the right of property.144 This theory limits the right of ownership by taking into account the intention of the owner whilst using the asset. If the owner uses the asset in a way that is a misuse of an ownership right, courts will limit the right of the owner.145 There is also a jurisprudential theory enabling one to sue an owner or a user of an asset if his use of the asset brings abnormal disruption to the neighbourhood (troubles anormaux du voisinage).146 Generally this theory only applies to immovable property. Nevertheless, it should be possible to use this theory in relation to movables as well.147

142

143

144 145

146

See infra 1.2.2: Interests linked to the right of ownership. – Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 97, n° 93. – See however Zenati-Castaing F., Revet Th., Les biens, p. 333, n° 209, who consider these attributes as an effect of the exclusive character of ownership; yet they write p. 343: “Ainsi que le prévoit l’article 544 du Code civil c’est à la fois la jouissance – que nous interprétons comme exclusivité – et la disposition qui s’exercent de manière absolue et donc opposable”. – Critizing the limitation: Libchaber R., La recodification du droit des biens, in Le Code civil 1804-2004, Livre du bicentenaire, Dalloz-Litec 2004, 297 (306). See C. civ., art. 545: No one may be compelled to yield his ownership, unless for public purposes and for a fair and previous indemnity. Req., 3 août 1915, arrêt Clément Bayard: GAJC 11e éd. 2000, n° 62; DP 1917, 1, 79. For a general presentation, Ghestin J., Goubeaux G., Traité de droit civil, Introduction générale, LGDJ 4e éd. 1994, p. 775, n° 790 seqq. Cass. 2e civ., 23 oct. 2003: Bull. civ. II, n° 318; D. 2004, Somm. 2467, obs. MalletBricout; RTD civ. 2004, p. 315, obs. Revet. – Cass. 3e civ., 24 oct. 1990: Bull. civ. III, n° 205. – Lepage A., Le voisinage, Défrenois 1999, 257 – Libchaber R., Le droit de propriété, un modèle pour la réparation des troubles du voisinage, in Mél. Christian Mouly 1998, t. 1, p. 421.

1. Notion of ownership and different property

33

On the other hand, constitutional protection of the right of property has increased in recent years.148 This means, in particular, that only statutes can circumscribe the principles underlying the rights of property, the rights in rem and civil and commercial obligations (1958 Constitution, art. 34149). However, the law can impose a number of charges on the owner, such as obligations to pay tax or insurance. Additionally, the absolute effect of ownership rights means that the owner can claim the right against all parties without any restriction other than the duty to respect the rights of others. Ownership rights thus have erga omnes effects150 and cannot be limited to inter partes relationships. In particular, even a court decision that is limited to interpersonal relationships (relativité de la chose jugée) will have erga omnes effects if it declares property rights. Any event that modifies ownership is ipso facto effective against all third parties.151 Notwithstanding this absolute effect, the owner is obliged to respect the rights of others. In particular, if the owner has established a partial right (e.g. usufruct) or a personal right (e.g. lease) to the asset, he must respect this limitation. In the case of co-ownership, co-owners must respect the rights of the other co-owners. 147

(ii)

The exclusive characteristic

The exclusive characteristic means that only the holder of a right of property can take advantage of the asset and, thus, third parties cannot impinge upon his enjoyment.152 Exclusivity results from the appropriation by one 147

148

149

150

151

152

This would be the case if the disruption comes from a movable asset, for example, if a person uses a particularly noisy machine in a residential area. See Cass. 3e civ., 3 janv. 1969: D. 1969, 323; JCP 1969, II, 15920, note Morgeon: use of a vacuum cleaner. – Lyon, 23 déc. 1980: D. 1983, 605, note Aubert: use of a musical instrument. Cons. const., 16 janv. 1982: GAJC 11e éd, 2000, n° 1. – Cons. const., 29 juill. 1998: JCP 1998, I, n° 2, obs. Périnet-Marquet. Constitution, art. 34 (extracts): « La loi détermine les principes fondamentaux: (…) du régime de la propriété, des droits réels et des obligations civiles et commerciales (…) ». Danos F., Propriété, possession et opposabilité, préf. L. Aynès, Economica 2007, p. 193 seq. Comp. C. civ., art. 1165: Agreements produce effect only between the contracting parties; they do not harm a third party, and they benefit him only in the case provided for in Article 1121. Cass. civ., 22 avril 1823, Hellot: S. 1822-1824, I, p. 243; GAJC, 11e éd. Dalloz 2000, p. 334. – Nevertheless, the owner of an asset does not possess a exclusive right to the image of an asset: Ass. plén, 7 mai 2004: Bull. ass. plén. n° 10. – Contra, Cass. 1e civ., 10 mars 1999: Bull. civ. I, n° 87, he can only prevent the use of an image if this causes abnormal damage to him.

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single individual or by a group of persons (in the case of co-ownership153). Exclusivity comprises the right to exclude others from the use of the asset. This is accomplished, in general, by material acts that simultaneously show the possession of the asset by the owner. With respect to third parties, the rights of ownership of the asset are indivisible. This means that the owner appears as such with respect to everybody. This situation would not exist if two owners could claim ownership against two different categories of persons.154 Nevertheless, the owner or the law can give others part of the right (e.g. usufruct rights or easement rights). Sometimes community interests entail that property rights can be used by others than the owner. This is the case of land that lays fallow, which can be farmed against the will of the owner.155 Such a possibility for others to use an asset is not common in respect of movables. However, intellectual property law allows others to use a patent (i.e., be granted a compulsory licence) if the holder of the patent has not manufactured any (or sufficient) product(s) under his patent within a period of three years after the granting of the patent (C. prop. intell., art. L 613-11). The exclusive characteristic does not mean that an asset can have only one owner. French law recognises various forms of joint ownership (indivision, copropriété).156 This situation is to be distinguished from the case where different persons have different rights in rem in the same asset (for example, usufruct rights in relation to the owner without the usufruct). It is to be remarked, that even if ownership is conditional (precedent or subsequent conditions), this does not affect the exclusive character of the right of property. (iii)

The perpetual characteristic

The perpetual characteristic157 covers two situations: First, the right of property lasts as long as the asset; second, the right of property does not disappear if the asset is not used.158 153

154

155 156

157

Such co-ownership is not a normal situaiton, because none of the co-owners can fully exercise his ownership ight. Thus the right to divide a co-ownership is fundamental to the right of ownership and is, as such, protected by the French constitution. Co-ownership (indivision) can never be perpetual. Atias Ch., Les biens, p. 2, n° 3. – Comp. Libchaber R., La recodification du droit des biens, in Le Code civil 1804-2004, Livre du bicentenaire, Dalloz-Litec 2004, 297 (315). C. rural, art. L 125-1 seq. Loi du 31 déc 1995 et décret du 9 juin 1996 (copropriété) and C. civ., art. 815 seq. (indivision). See infra 17: Co-ownership. However, Pourquier C., Le mythe de la perpétuité de la propriété, Himeji International Forum of Law and Politics, n° 2, 1995, 143 seq. – Comp., C. civ., art. 2227

1. Notion of ownership and different property

35

It has been acknowledged for numerous years that the right of property is inherent to the asset and cannot be separated from it.159 Nevertheless, from a theoretical standpoint, it is necessary to distinguish the right to an asset from the asset itself.160 There is no such thing as temporary property in French law. It is not possible to give up the right of property for a limited period of time.161 When an owner disposes of (i.e., conveys) his property, the buyer is not the bearer of a new property right: the right of property of the seller is simply transferred to the buyer.162 This is also the case if the object disappears and reappears at a later period.163 The initial owner remains the holder of the right of property. The right to revindicate the object is not subject to a statute of limitations.164 158

158

159 160

161

162

163

164

(new version): Le droit de propriété est imprescriptible. Sous cette réserve, les actions réelles immobilières se prescrivent par trente ans à compter du jour où le titulaire d’un droit a connu ou aurait dû connaître les faits lui permettant de l’exercer. Req., 12 juil. 1905: GAJC 11e éd. 2000, n° 61; DP 1907, 1, 141, rapp. Potier; S. 1907, 1, 273, note Wahl. – Cass. 3e civ., 22 juin 1983: Gaz. Pal. 1983, 2, pan. 309, note Piedelièvre. – Cass. 3e civ., 5 juin 2002, Bull. civ. III, n° 129. – Cass. 3e civ., 9 juillet 2003: Bull. civ. III, n° 156; JCP 2004, 816, obs. Atias. – Lamarche Th., L’imprescriptibilité et le droit des biens, RTD civ. 2004, 403. – Hébraud, La notion et le rôle du temps en droit civil, in Mélanges Kayser, PU Aix Marseille, 1979, t. 2, p. 1 Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 106, n° 101. Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 107, n° 101. – See supra, 1.1.1 (a): Characteristics of rights in rem in contrast to obligations. Contra, Voirin P., Goubeaux G., Droit civil, p. 274, n° 611: admitting that property can be transferred under the constitution of a time limit (terme). Malaurie Ph., Aynès L., Les biens, Defrénois 2e éd. 2005, p. 159, n° 552. – Atias Ch., Les biens, p. 188, n° 285 seq. – Yet see infra 1.5: The transferability of movable assets. This was decided, in a case involving immovable property, by the Assemblée plenière of the Cour de cassation: Ass. plén., 23 juin 1972, l’affaire dite de l’étang Napoléon: Bull. civ., n° 3; JCP 1973, 17331 note Goubeaux et Jégouzo: D. 1972, 705, concl. Lindon. Cass. 1e civ., 2 juin 1993: Bull. civ. I, n° 197; D. 1993, Somm. 306, obs. A. Robert; D. 1994, 582, note Fauvarque-Cosson; Défrenois 1994, 414, obs. Souleau-Defrénois: “la propriété ne s’éteignant pas par le non-usage, l’action en revendication n’est pas susceptible de prescription extinctive”. – Cass. 3e civ., 5 juin 2002: Bull. civ. III, n° 129; D. 2003, 1461, note Pillet; JCP 2002, II, 10190, note du Rusquec. – See nevertheless, Cass. com., 8 mars 1994: Bull. civ. IV, n° 101, limiting the right of a seller to revindicate within three months after the opening of an insolvency proceeding (C. com., art. L 624-9 former art. L 621-115).

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Nevertheless, in the case of movables, the perpetual characteristic of property is not always maintained. If a movable object is abandoned by its owner (res derelicta), the object has no master until another person takes possession of it and becomes owner by the effect of the mechanism of the so called “occupation” (taking of possession), which is the creation of a new property right of the third party from the moment he enters into possession of the object.165 Similarly, acquisitive prescription rules in the field of movables, through the mechanism of article 2276 of the Civil Code (former C. civ., art. 2279), give the new possessor of the asset a new property right.166 In this respect, the taking of possession and acquisitive prescription rules are two original ways to acquire property. Original ownership of movables can thus be obtained through possession and through occupation.167 In the case of immovable assets, there is no exception to the perpetual characteristic of the right of property, except perhaps as regards surface ownership (droit de superficie),168 which can be transmitted for a limited period of time. It must also be noted that ownership rights do not disappear if they are not used, as is the case of usufruct rights (C. civ., art. 617) and easements (C. civ., art. 706). There is no such thing as a resolutory statute of limitations, even if in the same period of time a third person can gain ownership through acquisitive prescription.169 This third person would have to use the asset to be able to benefit from acquisitive prescription rules. As a consequence, the owner of an asset has a perpetual right to assert his property rights to an asset, as long as another person does not acquire the asset through acquisitive prescription rules.170

1.2.2. Interests linked to the right of ownership The right of ownership is the most important and comprehensive right in rem. As mentioned before, according to article 544 of the Civil Code,171 “ownership is the right to enjoy the use and to dispose of an asset in the 165 166 167 168 169 170 171

See infra 11: Types of original acquisition. See infra 12: Good faith acquisition. See infra 2.2: Functions of possession. Malaurie Ph., Aynès L., Les biens, Defrénois 2e éd. 2005, p. 279, n° 900-905. See infra, 13: Acquisitive prescription. Cass. 1e civ., 7 oct. 1964: Bull. civ. I, n° 430. C. civ., article 544: Ownership is the right to enjoy and dispose of assets in the most absolute manner, provided it is not used in a way prohibited by statutes or regulations.

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most absolute way, under the condition that it is not used in a way prohibited by law and by regulations”. The right of property gives its holder full mastery of the asset.172 He has the right (or more accurately said, the choice173) to use the asset (usus), to collect the fruit (fructus) and to dispose of it (abusus).174 Each of these rights can be examined from a positive or a negative perspective. The right to use the asset means that the owner can use it (for example, drive his car or farm his land) or not use it (for example, leave the car in the garage or leave the land to lie fallow175). He can also let it be used by others, either by contract (e.g. lease) or by pure permission.176 The right to collect the fruit entitles the owner to have the asset produce natural fruit or legal fruit (i.e. income), and to become the owner of these fruit. This covers all economic benefits of the property. The owner also has the choice not to earn an income from the asset. The right to dispose of the asset (le droit de disposer) has two aspects.177 From a material standpoint, the owner can change the substance of the asset or even destroy it. From a legal standpoint, the bearer of this right can conclude legal transactions relating to its ownership.178 In other words, he can abandon or sell the asset,179 dissociate various elements of the right of 172

173 174

175 176 177

178

179

See Carbonnier J., Droit civil, III, Les biens, PUF, 19e éd. 2000, n° 68: an owner can do everything that is not prohibited; the holder of a real right can only do what is allowed. – Comp., C. civ., art. 544: the right to do everything that is not prohibited. Ownership rights are akin to a form of freedom: they can only be limited by exceptional rules and can both be abused as their use reflects a choice. See ZenatiCastaing F., Revet Th., Les biens, p. 314, n° 192. See Zenati-Castaing F., Revet Th., Les biens, p. 314, n° 192. Some authors have seen a contradiction between the full mastery of an asset and the listing of these three fundamental rights (usus, fructus, abusus), which are only an effect of the right of ownership: See Aubry et Rau, Droit civil français, t. II, 7e éd.1961 par P. Esmein, § 190, p. 232. – Zenati-Castaing F., Revet Th., Les biens, p. 313, n° 192. Exception at C. rural, art. L 125-1. Cass. 1e civ., 10 mars 1999: GAJC, 11e éd. 2000, Dalloz, n° 63. The aspects treated here are aspects specific to property law. However the right to dispose as such is an attribute of lagal personality, which is also linked to rules on legal capacity. See, Zenati-Castaing F., Revet Th., Les biens, p. 337, n° 211. Yet this right can be limited: CE, 25 mars 1966, Epx. Richet: Rec. p. 233; GADU, n° 31: «le droit de propriété ne comporte pas le droit de procéder librement à un lotissement». It must be noted that the right to dispose legally of an asset does not necessarily mean that property on the asset may be transferred. Some things cannot be sold. The owner may have rights he cannot transfer to others (guns, family property). See infra 5.2.1: Specific goods.

38

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property,180 or partly renounce some of his prerogatives over the asset (for example, grant security rights in the asset).181 He can also create real rights to the asset by giving a third party a direct right to the asset. This direct right in rem of the third party can be claimed against all transferees of the asset, as long as this direct right exists.182 Such a direct right can be a security right or an element of that right. It must nevertheless be mentioned that French law does not allow the owner to create a security right or interest by transfer of ownership, like in German or Austrian law.183 Additionally, although the right to dispose of goods is only conceivable for goods that can be put into circulation, only very few limits can be imposed upon this circulation, such as constitutional184 and human rights rules,185 that however, even when creating (strict) limitations, protect the right to dispose in a very strong way, as an essential feature of ownership. As ownership rights have an in rem effect, they are valid against third parties without any restriction. In this respect, ownership rights have an absolute effect.186 As to claims against third persons, the owner of an asset has the right to follow the asset wherever it is (droit de suite).187 This means in particular that the owner of an asset is entitled to claim the asset if it is held by a third person. If the third party holder is subject to an insolvency proceeding, the owner of the asset has a number of privileged rights. Article L624-9 of the Commercial Code188 provides that movables can be revindicated within a period of three months from the publication of the initiation of the proceeding.189 In particular, if the asset is subject to a reservation of title, the

180 181

182 183

184

185 186

187 188 189

Cons. cons., n° 81-133, DC, 30 déc. 1981: Rec. p. 41. Crocq P., Dix ans après: l’évolution récente des propriétés-garanties, in Ruptures, mouvement et continuité du droit, Mélanges M. Gobert, Economica 2004, p. 347. Comp. Obligatory rights which only apply to the patrimony of the debtor. Legeais D., Les nouvelles fonctions de la propriété, in La propriété, Travaux de l’Association H. Capitant, SLC 2006, p. 419. Cons. const., 27 nov. 1959: D. 1960, 5, note Hamon. – Cons. const., 20 juil. 1983: Rec., p. 49. – Cons. const., 4 juil. 1989: D. 1990, 209, note Luchaire. – Cons. const., 29 juil. 1998: JO, 31 juil., p. 11710. – Cass., 1e civ., 4 janv. 1995: Bull. civ. I, n° 3. CEDH, 13 juin 1979, Marckxx: A. 31, GA, n° 16, § 63. Levis M., L’opposabilité du droit réel, Economica 1989, p. 11 and p. 12. – See supra at 1.2.1 (a): Definitions and characteristics. Larroumet Ch., Les biens – Droits réels principaux, p. 24, n° 33. Former C. com., article L 621-115. C. com., art. L 624-9 al. 1: « La revendication des meubles ne peut être exercée que dans le délai de trois mois suivant la publication du jugement ouvrant la procédure. »

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owner can revindicate his asset without having to lodge a claim in the insolvency proceedings.190 Similar rules exist in the case of execution proceedings against the third party holder.191 Nevertheless, persons other than the owner may have interests in the property. This can be the case of creditors who have security rights, such as a pledge.192

1.3.

Other property rights in movables

Under the heading “principal rights in rem”, there are two types as regards movables. The fist includes usufruct rights and rights to use the asset. Usufruct rights to movable assets occur frequently. A typical example of such a right is the usufruct right to company shares. The second, accessory rights in rem, includes the pledge (gage), which is the right to sell the asset if the debt guaranteed by the asset pledged is not paid. There is also a right of retention,193 which allows the holder to withhold physical possession of the asset as long as the debt is not paid. French law does not acknowledge any other property rights in movables, like those included in German law.194

1.4.

The protection of property rights

1.4.1. Actions The law accords various rights of action. In all cases hereafter, the remedies are independent of each other and may be cumulated. Nevertheless, the interaction among remedies in property law, unjust enrichment law and tort law can be problematic. In general, property law prevails. Tort law only covers situations that are not encompassed by property law. Unjust enrichment rights appear as subsidiary rights when no other action exists. Disputes relating to ownership rights belong to the jurisdiction of the Tribunal de grande instance (C. org. jud., art. R 311-1). As an exception, for revindication of commercial assets in the context of an insolvency proceeding, commercial courts have jurisdiction (C. com., art. 624-9 seq.). 190 191 192 193 194

Cass. com., 11 mars 1997: Bull. civ. IV, n° 70. Loi n° 91-650 du 9 juillet 1991 reforming civil enforcement proceedings. See infra 1.3: Other property rights in movables. See infra 19.4: The possessor’s right to retain the movable. See supra 1.1.2: The French numerus clausus of property rights.

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If the action of revindication is successful, the possessor must surrender the asset with all accessories, such as fruit and products, including those accrued after the dispossession of the owner. If restitution of the asset cannot take place because the asset has been lost, the possessor must indemnify the owner. There are however different case constellations. If the loss is the fault of the possessor, he must pay the value of the asset to the owner (C. civ., art. 1379).195 If the possessor was in bad faith, he must pay the value of the asset even if the loss was accidental (cas fortuit). If the asset has been sold by a possessor acting in good faith, the owner only has a right to the price received.196 If the asset has been sold by a possessor acting in bad faith, the owner is entitled to be compensated for the loss incurred, even if this loss is higher than the price obtained, or even if there was no price.197 As to the fruit generated by the asset, they follow special rules. Until the claim of revindication is raised, they belong to a possessor acting in good faith, as compensation for having kept the asset. As soon as the claim of revindication is registered in court, they belong to the owner. A possessor acting in bad faith is not entitled to keep the fruit accrued at any time. If the fruit can not be surrendered, their value in money at the time of reimbursement is given as compensation. Fruit are always calculated with a deduction for the costs incurred for the benefit of the asset (impenses).198 The possessor can always deduct the costs incurred in respect of the asset (théorie des impenses), and no distinction is made whether he is acting in good or bad faith (C. civ., art. 1381).199 These costs include all expenditures made in the interest of the asset, but also those that increased the value of the asset.200 They do not include costs of maintenance or administration, as these are the counterpart of the use of the asset and are 199

195

196

197

198 199

200

C. civ., art. 1379: Where the asset unduly received is an immovable or a tangible movable, the person who has received it binds himself to make restitution in kind, if it exists, or of its value, if it has perished or deteriorated through his fault; he is even guarantor of its loss by fortuitous event, if he received it in bad faith. C. civ., art. 1380: Where the person who received in good faith has sold the asset, he must make restitution only of the proceeds of the sale. In such a case, there is an application of article 1382 of the Civil Code, where there is a fault of the possessor acting in bad faith. See, fructus non sunt nisi deductis impensis and fructus intelliguntur deductis impensis. C. civ., art 1381: The person to whom an asset is restored must account, even to a possessor acting in bad faith, for all the necessary and useful expenses which have been incurred for the preservation of the asset. – Larroumet Ch., Les biens – Droits réels principaux, p. 372, n° 665. – Cass. 3e civ., 12 mars 1985: Bull. civ. III, n° 50. – Cass. 1e civ., 17 janv. 1990: D. 1990, inf. rap. p. 37. Cass. 3e civ., 15 janv. 2003: JCP 2003, IV, 1394.

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41

compensated by the fruit allotted to the possessor. The costs that can be deducted must have been useful for the asset and have either preserved the asset or improved it. Any costs that are considered to have been spent to satisfy personal tastes of the possessor, or to add luxurious features (impenses voluptaires), are not reimbursed.201 The sum to be reimbursed is the lower of two amounts: the cost incurred or the value added to the asset, which is calculated at the time of restitution.202 However, the value added to the asset is not taken into consideration if the costs were incurred only to maintain the asset (impense nécessaire).203

(a)

Actions with respect to ownership rights

French law distinguishes two types of actions with respect to property: the right to “pure” restitution and the right of revindication. Pure restitution is applicable if the right of the owner is not contested; revindication204 steps in for contested ownership rights. If the ownership right of the owner is not contested, any involuntary dispossession is a clear case of unlawful disturbance (trouble manifestement illicite), which justifies the immediate return of the asset to the owner. Courts thus simply order restitution of the asset to the owner.205 This action of pure restitution is applied every time the rightful owner is prevented from possessing his asset. A situation not to be included in the present analysis is that in which the holder of the asset is entitled to possession of the asset on the basis of a contract (e.g. loan, lease or deposit). The rightful owner only has to establish the content of the contract that entitles him to demand restitution of the asset from the holder. The restitutionary claim here is the exercise of a personal contractual right against the holder, whereas revindication and pure restitution are actions in rem. Whenever the ownership right of the owner is disputed, he must prove his right. Therefore, this is not a simple action for pure restitution, but a specific action of revindication. 201 202

203 204

205

Larroumet Ch., Les biens – Droits réels principaux, p. 373, n° 665. Larroumet Ch., Les biens – Droits réels principaux, p. 373, n° 665. – Cass. 3e civ., 18 mai 1982: D. 1983, inf. rap. 14, obs. Robert. Larroumet Ch., Les biens – Droits réels principaux, p. 372, n° 665. Laroche M., Revendication et propriété – Du droit des procédures collectives au droit des biens, préf. P. Théry, Thèses Défrenois 2007, tome 24. – Martin D. R., La revendication des sommes d’argent, D. 2002, p. 3279. See for example, C. com. art. L. 624-10 which prescribes this action for registered goods in cases of insolvency. However this text is deemed to have general application.

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The right to restitution is an action for recovery of property (action en revendication – action pétitoire206), which only the lawful owner, or a beneficiary of a principle right in rem,207 can use. No specific provision of the Civil Code regulates this right.208 Revindication both establishes the property rights of the plaintiff and enables him to recover his property. This action is not subject to the statute of limitations,209 unless the right to the asset is itself subject to a time limit.210 The claim for recovery does not give its beneficiary a right to self-help or a right to resort to force. If the possessor or holder is unwilling to deliver the property to the owner, an action must be brought in court. This action can be taken against any holder of the asset, whether lawful possessor or otherwise, except in the case of corporeal movables,211 which cannot be revindicated, except if they have been stolen or lost,212 as the possessor acting in good faith immediately becomes owner (C. civ., art. 2276 – former C. civ., art 2279).213 This rule creates a presumption of ownership that can be rebutted. Nevertheless, the protection of article 2276 of the Civil Code only applies to cases of acquisition a non domino. Additionally, the holder of the asset must act in good faith, i.e. believe that he contracted with the

206

207 208

209

210 211

212 213

Zenati-Castaing F., Revet Th., Les biens, p. 318, n° 197, distinguishing different types of actions to protect ownership: action confessoire (directed against the rightful owner where a third party wants his / her right to be recognized); action négatoire (the rightful owner acts against a third party to deny the real rights the third party pretends having). The emphyteutic holder, the superficiary and the usufructuary. Yet its existence derives from the principal caracteristics of property rights: See supra 1.2.1: Definitions and characteristics of ownership rights: exclusive, perpetual and absolute rights. Cass. 1e civ., 2 juin 1993: Bull. civ. I, n° 197. – Cass. 3e civ., 5 juin 2002: Bull. civ. III, n° 129. – See however in insolvency proceedings the time limit of three months to revindicate: C. com., art. L 624-9. – The right to revindicate is paralysed if another person acquires rights on the asset due to acquisitive prescription. See infra 13: Rules for acquisitive prescription. Such is the case for patents and other intellectual property rights. However, Zenati-Castaing F., Revet Th., Les biens, p. 319, n° 198: describing the revindication of incorporeal rights such as patents and trademarks, and of businesses (fonds de commerce). Claims can also be revindicated, if their ownership is disputed. See in particular the case of a lost treasure, infra 2.2: Functions of possession. See infra 12: Rules of good faith acquisition: The transferee thus becomes immediately owner through an original acquisition mechanism.

1. Notion of ownership and different property

43

rightful owner. Good faith is required at the time of acquisition214 and it is presumed (C. civ., art 2274).215 This action of revindication is available in case of the bankruptcy of the possessor where the owner can claim the property of an asset to avoid seizure by the creditors of the possessor (C. com., art. L 624-9). This is also an application of the droit de suite principle. Revindication fails if the owner brings a revindicatory action against a possessor and cannot prove that the possessor is not the owner. Proof of ownership can be adduced by any means.216 Revindication also fails when the defendant is entitled to possession of the asset on the basis of a legal relationship with the rightful owner. This is, for example, the case where the defendant has a lease of the asset, granted by the rightful owner. Revindication fails also if the asset revindicated is commingled with another asset so as to make them indistinguishable (fongible).217 If the revindication succeeds against a possessor in good faith, this possessor has a number of rights in respect to the owner. In particular, natural and civil fruit that have become due belong to the possessor acting in good faith (C. civ., art. 549).218 The owner must also compensate any costs expended on the asset.219 As long as a possessor, acting in good faith, has not received the reimbursement of such costs, he has the right to retain the asset.220

214

215

216 217

218

219 220

It is clear that the possessor will discover at some stage that the person who transferred the asset to him was not the rightful owner. From that moment, the possessor will be acting in bad faith. This has no effect on the passing of ownership (mala fides superveniens non nocet), but will be important if the possessor has to surrender the asset. In this hypothesis, the possessor will also have to surrender the fruit of the asset from the time of discovery of the rightful situation. See infra 19: Consequences of restitution of the movable to the owner. C. civ., art. 2274 (former C. civ., art. 2268): Good faith is always presumed, and it is up to the person who alleges bad faith to prove it. Cass. 1e civ., 11 janv. 2000: Bull. civ. I, n° 5. However, Cass. com., 11 juil. 2006: RTD civ. 2006, 794, obs. Revet, allowing a wine producer to revindicate grapes even though they had already entered the process of winemaking and had been mingled with the grapes of other wine producers. C. civ., art. 549: A mere possessor makes fruit his own only where he possesses in good faith. If not, he is bound to restore the products with the asset to the owner who claims it; where the said products are not found in kind, their value must be appraised at the date of repayment. Cass. 3e civ., 15 janv. 2003: Bull. civ. III, n° 7. See infra 19.4: The possessor’s right to retain the movable.

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Nevertheless, a possessor who is not acting in good faith is obliged to restore to the owner the natural and civil fruit that have become exigible, but can deduct the costs he has incurred on the asset221 or the costs necessarily incurred in order to make the asset produce fruit.222 Additionally, there are a number of actions to protect the peaceful possession of an asset (actions possessoires).223 Physical possession is protected in the sense that no one, not even the owner himself, can take the asset against the possessor’s will. These actions are dealt with in civil procedure,224 but do not, in general, apply to movable assets.225

(b)

Other means of protection

There is a general principle in French tort law that states any damage done to a third party must be repaired, whether this damage was caused by wrongful behaviour or not (C. civ., art. 1382 and art. 1383).226 In this respect, any damage caused to property must be repaired by those liable. Damages to ownership rights are thus protected by these general rules of tort. As a rule, any disturbance of ownership rights is wrongful behaviour.227 It would also be possible to ask for compensation if the asset has been used by another person and thus the owner suffered from not being able to use the asset himself (loss of use, loss of profit – damnum emergens, lucrum cessans). In this case however, the extent of compensation depends on whether the unlawful possessor had a just reason to believe he was entitled to the use of the asset or whether he knew that he had no right.228 Therefore the rules on evaluating the damages applicable in property law prevail over the tort law rules. 221 222 223

224

225

226

227 228

Cass. 3e civ., 12 mars 1985: Bull civ. III, n° 50. Cass. 3e civ., 5 juill. 1978: Bull. civ. III, n° 281. See infra 2.4: Protection of possession. – These actions only apply to immovables: Civ. 1e, 6 févr. 1996: Bull. civ. I, n° 57; RTD civ. 1996, chr. p.943, obs. Zenati. C. proc. civ., art. 1264-1267. – Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 426 seq., n° 424-436. See infra 1.4.2: Remedies. Even though, as a general principle, the owner of any asset, whether movable or immovable, has no right to retrieve the asset from a possessor against the latter’s will. C. civ., art. 1382: Any act whatever of man, which causes damage to another, obliges the one by whose fault it occurred, to compensate it. – C. civ., art. 1383: Everyone is liable for the damage he causes not only by his intentional act, but also by his negligent conduct or by his imprudence. Zenati-Castaing F., Revet Th., Les biens, p. 331, n° 207. See supra 1.4.1: Actions with respect to ownership rights – “théorie des impenses”.

1. Notion of ownership and different property

45

There are also rules that protect property that suffers from abnormal disturbance in the neighbourhood (troubles anormaux du voisinage), such as abnormal noise or smoke produced by neighbours or smells from a neighbour’s garden.229 The right to protection applies to all possessors of the asset, whether full owners or simple holders.230 In the same way, French law provides for compensation if a person’s property suffers an undue loss, whereby somebody else benefits from this loss. This is an action ex unjust enrichment (C. civ., art 1376: enrichissement sans cause231 – action de in rem verso).232 There are four pre-conditions to this action: an enrichment of the defendant; an impoverishment of the plaintiff; a causal relationship between this enrichment and impoverishment; an enrichment not justified by a legal mechanism (absence of a causa). Nevertheless, this action is available only if there is no other legal way to obtain compensation (subsidiary principle). Additionally, the plaintiff will be awarded compensation within the limits of the defendant’s current enrichment. This means, in particular, that if the defendant has lost all the benefits, which he previously obtained from the asset, the plaintiff will be entitled to nothing. This action is useful in cases of accession, when an asset becomes a component part of another asset belonging to somebody else (see discussion on accession, infra 11.1).233 In the case of business property, French law protects the owner of a business against unfair trading (concurrence déloyale).234 In criminal law, there are numerous texts that protect the owner from unlawful dispossession of assets: the concepts of theft (vol)235 and embezzlement (abus de confiance)236 are applied to corporeal movables. Texts on counterfeiting (contrefaçon)237 protect most incorporeal ownership rights, 229 230

231

232

233 234 235 236

237

See supra 1.2.1 (a): Definitions and characteristics of ownership rights. Cass. 2e civ., 17 mars 2005: Bull. civ. II, n° 73; D. 2005, pan. 2357, obs. ReboulMaupin. C. civ., art. 1376: He who receives by error or knowingly what is not owed to him is bound to make restitution to the person from whom he has unduly received it. Terré F., Simler Ph., Lequette Y., Les obligations, p. 1018, n° 1062 seq. – See also articles 1376 seq. of the Civil Code. And also: Cass req., 15 juin 1892: DP 1892. 1596; S. 1893.1.281; Grands arrêts, 11e éd. 2000, n° 227. See infra 11. 1: Accession of movables. Blaise J.-B., Droit des affaires, p. 347, n° 653 seq. C. pén., art 311-1: Le vol est la soustraction frauduleuse de la chose d’autrui. C. pén., art. 314-1: (1) L’abus de confiance est le fait par une personne de détourner, au préjudice d’autrui, des fonds, des valeurs ou un bien quelconque qui lui ont été remis et qu’elle a acceptés à charge de les rendre, de les représenter ou d’en faire un usage déterminé. See Code de la propriété intellectuelle.

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such as patents, trademarks and so forth. Notwithstanding criminal liability, the law thus permits the rightful owner to revindicate his asset.

1.4.2. Remedies In addition to a damage award for various actions (see above 1.4.1), French law provides for two kinds of injunctions that can be obtained from a judge in ex-parte proceedings (injonction de faire238 and injonction de payer239). The injunction de faire is a court decision that forces the defendant to do something, whereas the injunction de payer obliges the defendant to pay a debt. Both types of court decisions are combined with a threat of financial penalties in case of non-performance. There are also a number of actions that enable an owner or a possessor to stop any damage from taking place (actions conservatoires). Although, in the case of immovable property, the possessor can stop any building by a neighbour that could damage his possession (dénonciation de nouvel oeuvre), there is no specific action in respect of movables. Courts can oblige a person to cease interference under the threat of a fine (astreinte). All these actions are dealt with in civil procedure and can be found in the Code of civil procedure (Code de procedure civile).

1.5.

Transferability of movable assets

The right to transfer an asset is one of the main characteristics of the right of ownership.240 The transfer of ownership is not the transmission of a simple “right” to the asset, but of full “ownership” of the asset.241 Any limitations of the transferability of an asset are contrary to the public policy principle of the free circulation of goods. In particular, modern French law prohibits the so-called institution of “la mainmorte”,242 where

238 239 240 241

C. proc. civ., art. 1425-1 seq. C. proc. civ., art. 1405 seq. Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 86 seq., n° 83-91. Zenati-Castaing F., Revet Th., Les biens, p. 264, n° 167. This distinction is essential to understand the difference between the transfer of a right to use the asset and the transfer of the asset in full ownership.The transfer of ownerhip is the transfer of an objective attribute of the asset (the “belonging to” attribute) and not of the subjective right of a person to use the asset (droit subjectif). – See also the distinction in the 1958 French Constitution (Article 34) between the right of ownership (propriété) and real rights (droits réels).

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47

goods belonging to certain organisations, such as churches, monasteries or hospitals, were deemed before the French Revolution to be non-transferable. Nevertheless, under French law, some goods cannot be transferred by contract.243 This limitation applies to public property (biens du domaine public),244 certain non-transferable rights (droits d’usage et d’habitation, C. civ., articles 631 and 634),245 and also to certain specific goods (C. civ., art. 1128).246 Article 1128 of the Civil Code declares that only certain assets can be the object of a contract.247 In application of this article, the courts 242

242

243

244

245

246

247

Conseil constitutionnel: Déc. 99-419 DC du 9 nov. 1999, JO 16 nov. 1999, p. 16962, § 86. See in particular, art. 1128 and 1598 of the Civil Code. – Marty R., De l’indisponibilité conventionnelle des biens, Petites affiches 21 et 22 nov. 2000, n° 232, p. 4 et n° 233, p. 8. Terré F., Simler Ph., Lequette Y., Droit civil, les obligations, Dalloz 9e éd. 2005, p. 285, n° 277. – Formerly this was justified by: C. domaine, art. L. 52: « Les biens du domaine public sont inaliénables et imprescriptibles ». See also, Civ. 1re, 2 mars 1994, D. 1994, somm. p. 165, obs. A. Robert. This article has now disappeared from the Code des domaines since 2006 but can be found under Article L 3111-1 and Article L 3111-2 C. gén. de la prop. des pers. Pub. (CGPPP). – See also the general restriction in C. civ., art. 537: (1) Private individuals have the free disposal of property which belongs to them, subject to the modifications established by legislation. (2) Property which does not belong to private individuals is administered and may be transferred only in the forms and according to the rules which are peculiar to it. – David C., Pour une approche renouvelée du droit français de la domanialité publique, Petites Affiches 2007, n° 165, p. 3. This was typically the case in the famous « Affaire de l’étang Napoléon », where private ownership disappeared when the sea (domaine public maritime) flooded the pond and thus transformed the pond into public domain: Civ. 3e, 29 févr. 1968: D. 1968, 454; RTD civ. 1968, 741, obs Bredin – Ass. plén., 23 juin 1972: D. 1972, 704; RTD civ., 1973, 147, obs. Bredin. C. civ., art. 631: A user may neither transfer nor lease his right to another person.; and C. civ. art. 634: A right of dwelling may not be transferred nor leased. C. civ., art. 1128: Only assets which may be the subject matter of legal transactions between private individuals may be the object of agreements. Loiseau G., Typologie des choses hors du commerce, RTD civ. 2000, 47. – Galloux J.-C., Réflexions sur la catégorie des choses hors du commerce: l’exemple des éléments et des produits du corps humain en droit français, 30 Les Cahiers du Droit, 1989. 1011. – Couturier I., Remarques sur quelques choses hors du commerce, Petites affiches, 1993, n° 107, p. 7 et n° 110, p. 7. – Moine I., Les choses hors du commerce: une approche de la personne humaine juridique, préf. E. Loquin, LGDJ, 1997, Bibl. dr. privé, t. 271. – Bénabent A., Droit civil, les obligations, Montchrestien, 10e éd. 2005, p. 104, n° 146. – Paul F., Les choses qui sont dans le commerce au sens de l’article 1128 du Code civil, préface J. Ghestin, LGDJ 2002, Bibl. dr. privé, t. 377.

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thus limit the transfer of any piece of the human body,248 of any part of a tomb249 and of family heirlooms.250 This is also the case for game and fish (during the periods when hunting and fishing are prohibited), tobacco, gunpowder, arms, works of art251 and gold, whenever specific rules apply to limit the transferability of these assets.252 In certain cases, a person may limit the transferability of an asset. In general, this is done either unilaterally, by will, or contractually in the form of a donation. Such clauses are valid under two legal conditions (C. civ., art. 900-1253).254 First, the limitation must be temporary. Second, the limitation must be justified by a “serious and legitimate” interest.255 Such a limit 254

248

249

250

251 252 253

254

255

See C. civ., art. 16-5 and Code de la santé publique, art. L 1211-1. – Edelman B., L’homme aux cellules d’or, D. 1989, chr. 225. – Hermitte M.-A., Le corps hors du commerce, hors du marché, Arch. phil. dr. 1988, t. 33, p. 323. – Gobert M., Réflexions sur les sources du droit et les « principes » d’indisponibilité du corps humain et de l’état des personnes: RTD civ. 1992, 489. Civ., 11 avril 1938: DH 1938, 321. – Cass. 1e civ., 25 mars 1958: Bull. civ. I, n° 178. – Except the contract where a person concedes the right to be burried in a tomb: Cass. 1e civ., 22 fév. 1972: D. 1972, 513, note R. Lindon. Such family heirlooms can be jewelery, paintings, weapons, documents or letters. Cass. 2e civ., 29 mars 1995: Bull. civ. II, n° 115: D. 1995, Somm. 330, obs. Grimaldi; JCP 1995, II, 22477 note Hovasse-Banget; RTD civ. 1996, 420, obs. Zénati. – Cass. 1e civ., 29 nov. 1994: Bull. civ. I, n° 354. – Paris, 7 déc. 1987, D. 1988.182, note R. Lindon; JCP 1988.II.21148, note J.-F. Barbiéri; RTD civ. 1989.119, obs. J. Patarin. – Paris, 2 juill. 1993, JCP 1994.II.22191, note S. Hovasse-Banget. – Barbiéri J.-F., Les souvenirs de famille, mythe ou réalité, JCP 1984, I, 3156. – Raynaud-Chanon M., Les souvenirs de famille, une étape vers la reconnaissance de la personnalité morale de la famille, D. 1987, chr. 264. – Demogue R., Les souvenirs de famille et leur condition juridique, RTD civ. 1928, 27. Lhuilier, Les œuvres d’art, res sacrae?, RRJ 1998-2, p. 513. Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 128, n° 119. C. civ., art. 900-1: (1) Clauses of inalienability concerning a property donated or bequeathed are valid only where they are temporary and justified by a serious and legitimate interest. Even in that case, a donee or legatee may be judicially authorized to dispose of the property if the interest which justified the clause has disappeared or if it happens that a more important interest so requires. (2) [repealed] (3) The provisions of this Article do not prejudice gratuitous transfers granted to juridical persons or even to natural persons responsible for forming juridical persons. Morin M., Les clauses d’inalienabilité dans les donations et les testaments, Défr. 1971, art. 29982, p. 1185. – Corvest H., L’inaliénabilité conventionnelle, Défr. 1979, art. 32126, p. 1377. The proof of such an interest lies with the person who prevails of the limitation to transfer the asset (Cass. 1e civ., 15 juin 1994, Bull. civ. I, n° 211; JCP 1995, I, 3876

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upon the transferability of an asset renders any subsequent transfer void.256 Nevertheless, the donee or the heir may be authorized by a court to waive this limitation, if the underlying interest has disappeared or if a greater interest prevails.257 The subsequent violation of such a clause by the donee would render the donation revocable.258 If the clause was stipulated in the interest of a third party, this party can ask the relevant court to declare the transfer void. However, if the asset is sold to a third party acting in good faith, this third party becomes the owner of the asset in application of article 2276 of the Civil Code (former C. civ., article 2279). The transferability of an asset may also be limited by a court. This is the case in insolvency proceedings where certain rules limit the transferability of the assets of a company during the insolvency proceeding.259 In French law, the general principle assessorium principale sequitur260 leads to the automatic transfer of accessories to the asset transferred.261 Accessories are assets that have a specific, close connection to another 261

256 257

258 259

260

261

n° 8, obs. Le Guidec; D. 1995, 342, note Leborgne, RTD civ. 1995, 667 obs. Patarin: RTD civ. 1995, 919 obs. Zenati). The legitimate interest is viewed very broadly: it can aim to keep the asset in the family (Cass. 1e civ., 20 nov. 1985: Bull. civ. I, n° 313; Défrenois 1986, 472, obs Champenois; RTD civ. 1986, 620, obs. Patarin) or simply protect the beneficiary from himself (Req. 11 juillet 1877: DP 1878, 1, 62). Cass. 3e civ., 31 mai 2006, n° 05-10270. – Req., 9 mars 1868: S. 1868, 1, 204. Cass., 1e civ., 10 juillet 1990: Bull. I n° 192 p. 136; Defrénois, 1991, n° 5, p. 272, note F. Lucet. JCP, Ed. notariale et immobilière, 1991, p. 197, note P. Salvage; Le Quotidien juridique, 1990, n° 139, p. 3, note M. Bourgeois. – Cass. 1e civ., 29 mai 2001: Bull. civ. I, n° 150; JCP 2001, I, 360, obs. Cabrillac; JCP 2002, I, 178, n° 10, obs. Le Guidec; RTD civ. 2001, 644, obs Patarin. Req. 13 juil. 1938: Gaz. Pal. 1938. 2. 714. Guyon Y., L’inalienabilité en droit commercial, in Etudes à la mémoire d’Alain Sayag, Droit et vie des affaires, Litec 1998, p. 267. Roland H., Boyer L., Adages du droit français, Litec 4e éd. 1999, p. 1, n° 3. – And C. civ., art. 696: (1) Where a person establishes an easement, he is deemed to grant all that is necessary to use it.; C. civ., art. 1018: The asset bequeathed shall be delivered with its necessary accessories, and in the state in which it stands on the day of the death of the donor.; C. civ., art. 1615: The obligation to deliver the asset includes its accessories and all that was designed for its perpetual use.; C. civ., art 1692: The sale or assignment of a claim includes the accessories of the claim, such as suretyship, prior charges and mortgages. Cashin-Ritaine E., Les cessions contractuelles de créances de sommes d’argent dans les relations civiles et commerciales franco-allemandes, préf. Ranieri, Bibl. dr. privé t. 348, LGDJ 2001, p. 339, n° 554 et suiv.

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asset.262 Yet only accessories that are not linked to personal attributes of the transferor, and that are not non-transferable by decision of the parties, can be transferred.

2.

Possession

In French law, the term « possession » refers to a factual situation: the effective power of a person over an asset.263 This term thus applies to the actual behaviour of the holder of an asset.264 Generally, the possessor is also the owner of the asset.265 Legally, possession exists through the combination of the so-called corpus and animus.266 Additionally four cumulative qualities are required to give legal effect (effet utile) to the possession of a holder (C. civ., art. 2261, former art. 2229).267 Possession must be peaceful,268 public,269 permanent270 and without ambiguity.271 Subsidiarily, good faith and a title deed also play a role in ascertaining possession rights. 262

263

264 265

266 267

268

269 270

For an analysis of the notion: Cabrillac M., Les accessoires de la créance, Etudes dédiées à Alex Weill, 1983, p. 107. M. Cabrillac considers an accessory as a right defined by law or by the will of the parties that is beneficial for the use of the asset and exclusively useful for this asset. Malaurie Ph., Aynès L., Les biens, p. 137, n° 482. – Zenati-Castaing F., Revet Th., Les biens, p. 647, n° 441 and p. 655, n° 448. Malaurie Ph., Aynès L., Les biens, p. 137, n° 482 and p. 140, n° 488. Malaurie Ph., Aynès L., Les biens, p. 138, n° 483. – Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 144, n° 131. See infra 2.1: Notion of possession. C. civ., art. 2261 civ. – former art. 2229: In order to be allowed to prescribe, one must have a continuous and uninterrupted, peaceful, public and unequivocal possession, and in the capacity of an owner. – Zenati-Castaing F., Revet Th., Les biens, p. 659, n° 452. Possession must be obtained peacefully. Only the rightful owner can contest this fact: Zenati-Castaing F., Revet Th., Les biens, p. 660, n° 452. Civ. 1e, 4 mai 1977, Bull. civ. I, n° 205. Req. 15 avr. 1890: S. 1891, 1, 342. – Civ., 21 juin 1978: D. 1978, IR, 246. – According to the Cour de cassation, there is discontinuity if “possession has not been exercised in all occasions and at all times in which it should have been, taking into account the nature of the asset, without any abnormal intervals of a certain length which would be lacunae” (Civ., 11 janv. 1950: Bull. civ. I, n° 12; D. 1950, 125, note Leonan). – Possession must be stable and permanent. This is presumed if possession has started (C. civ. art 2264 – former C. civ. art. 2234): Zenati-Castaing F., Revet Th., Les biens, p. 660, n° 452.

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51

A title deed, i.e. a (written) legal act, is useful to transfer property to a possessor or to create a right in rem for a quasi-possessor.272 This title deed is not necessary to recognise possession of an asset,273 yet possession rights are reinforced if the holder has a title deed.274 The deed therefore creates an appearance of factual and legal ownership, and thus the holder has a stronger right to the asset.275 In some cases, it is necessary to have a title deed.276 This is the case when the right in rem can only have a contractual origin (i.e. a pledge).277 Furthermore, quasi-possession exists on the basis that the contract, i.e. the deed, can be produced.278 This is also a requirement when the factual situation is not sufficiently clear to establish lawful possession. Good faith at the time of the entry into possession (C. civ., art. 2275 – former C. civ., art. 2269) is also taken into account to measure the effects 271

278

271

272

273

274 275

276

277 278

The possessor must behave as if he were entitled to hold the asset as a rightful owner (Com., 18 oct. 1994: D. 1994, inf. rap., 249. – Cass. 1e civ., 14 mai 1996: D. 1996, inf. rap., 147). For example, if two people live together it is difficult to determine which of the users of an asset is its rightful owner and thus possesses the asset (Civ. 31 janv. 1900: DP 1900. 1. 281, note Poncet. – Com., 12 juil. 1948: S. 1949. 1. 19). On the other hand, this situation can lead to a co-possession of the asset. See Voirin P., Goubeaux G., Droit civil, p. 288, n° 645. Even though, the possession of a right is in fact the possession of a right in rem on an asset. See Terré F., Simler Ph., Les biens, p. 146, n° 153 and p. 155, n° 164. This state of affairs must be distinguished from the fact that possession itself creates entitlement (présomption de titre), especially when the contested asset is a movable (see C. civ., art. 2276 (former C. civ., art. 2279): infra 12: Rules of good faith acquisition). A contrario, Terré F., Simler Ph., Les biens, p. 419, n° 537. Terré F., Simler Ph., Les biens, p. 421, n° 540-543. – It also is useful for proving ownership, see Cass. 3e civ, 5 mai 1982: Bull. Civ. III, n° 116. Depending on civil or commercial law, the proof of such a title must be written (civil law) or can be any type of proof (commercial law: Cass. com., 25 fév. 1981: Bull. civ. IV, n° 207). C. civ., art. 2074 (former) – See the new text at C. civ. art. 2336 and 2337. See the general rules on proof: C. civ., art. 1341 C. civ.: (1) A notarized deed or an deed under private signature must be executed in all matters exceeding a sum or value fixed by decree [€ 800], even for voluntary deposits, and no proof by witness is allowed against or beyond the contents of these deeds, or as to what is alleged to have been said before, at the time of, or after the deeds, although it is a question of a lesser sum or value. (2) All of which without prejudice to what is prescribed in the statutes relating to commerce.

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of possession.279 A person is acting in good faith, if he is convinced that he has become the holder of the right through a valid title deed (C. civ., art. 550),280 even if ultimately the deed proves to be void. Good faith is presumed (C. civ., art. 2268281).282 If the holder knows that he is not the rightful owner of the asset, he is acting in bad faith. If the holder is acting in bad faith, the effects of possession are limited.283 In certain cases, the simple physical holding of an asset (détention) can give the holder a number of rights284. This is the case, in particular, when the holder benefits from rights of retention (droit de rétention)285 as a form of a security right.

2.1.

Notion of possession

2.1.1. Definitions Possession in French law can be defined in two ways. First, the term possession refers to an act accomplished by the holder of an asset regardless of whether this act relates to a right or not.286 Secondly, the term “possession” relates to the acts generally performed by the owner of an asset.287 In other terms, possession can be defined as the situation where a person performs acts that appear to be the voluntary exercise of a right, whether or not this person is entitled to use this right.287 Article 2255 (former C. civ., art. 2228) of the Civil Code288 describes possession as “the holding or use of an asset or right that we have or enjoy

279

280 281

282 283

284

285 286 287

Malaurie Ph., Aynès L., Les biens, p. 168, n° 568-569. – The new text (C. civ., art. 2275) is however specifically in the section on acquisitive prescription of immovables, which was not the case of former C. civ., art. 2269. Cass. 1e civ., 5 déc. 1960: Bull. civ. I, n° 527. C. civ., art. 2274 (former C. civ., art. 2268): Good faith is always presumed, and it is to the person who alleges bad faith to prove it. Cass. civ., 11 janv. 1887: S. 1887, 1, 225. In particular the possessor in bad faith does not become owner of the fruit of the asset (see infra, 19.1: Entitlement to benefits). See C. civ., art. 2278 (former C. civ., art. 2282) al. 2 on the protection of the simple holder in the same way as a possessor. Cabrillac M., Mouly Ch, Droit des sûretés, p. 473, n° 560 seq. Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 133, n° 121. See in particular the fact that one of the elements of possession is the animus domini. See also: Terré F., Simler Ph., Les biens, p. 150, n° 158. – Atias Ch., Les biens, p. 199, n° 307.

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53

ourselves or through another person who holds or enjoys this asset or right in our name”. 288 Possession can refer to the use of the right of ownership, in which case it is commonly referred to as the possession of an asset, or to the exercise of a right. French rules on possession therefore recognise a “possession of rights”, which is called quasi-possession.289 Yet, the possession of rights does not involve the same set of rules as those applicable to possession of a tangible asset. For example, bona fide rules and rules on acquisitive prescription do not apply to the possession of rights.290

2.1.2. Limits to possession There are, however, some limits to possession. Only assets that can become private property can be possessed.291 Thus are excluded from possession: common things such as air and water of the sea, assets that can not be transferred (choses hors du commerce292), and public property (biens du domaine public).293 In a similar manner, only assets that have been individualised can be possessed, except when an asset is made up of a legal combination of assets (universalité de droit) that links individual assets together to form a new asset, a legal fiction.294 Thus almost all rights in rem can be possessed,295 such as ownership rights, usufructuary rights, antichresis, pledge, and hereditary leases. Claims 294

288

289

290 291 292 293 294

295

C. civ. art. 2255 (former C. civ. art. 2228): Possession is the detention or enjoyment of an asset or of a right which we hold or exercise by ourselves, or by another who holds and exercises it in our name. Voirin P., Goubeaux G., Droit civil, p. 289, n° 647. – Terré F., Simler Ph., Les biens, p. 146, n° 153. – Pélissier A., Possession et meubles incorporels, préf. Cabrillac, Nouvelle biblothèque de thèses, vol. 8, Dalloz 2001. – Parance B., La possession des biens incorporels, préf. Aynès, LGDJ, Bibl. Institut André Tunc, 2008, p. 69, n° 77. – Zenati-Castaing F., Revet Th., Les biens, p. 654, n° 448. Terré F., Simler Ph., Les biens, p. 343, n° 461. Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 143, n° 130. See infra, 5.2.1: Specific goods – generic goods. Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 143, n° 130. Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 143, n° 130 citing Cass. civ., 26 janv. 1914: DP 1914.1.112; S. 1920.1.27. – Comp. infra 5.2.1: Specific goods – generic goods. Zenati-Castaing F., Revet Th., Les biens, p. 647, n° 441 states « all goods can, a priori, be possessed whether they are corporeal or uncorporeal ».

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can also be possessed (C. civ. art. 1240296).297 As an exception, mortgage rights cannot be possessed because the legislation does not protect the possession of such rights.298 This is also the case of hidden or partial easements (servitudes discontinues et non apparentes).299

2.1.3. Components of possession As mentioned above,300 possession exists through the combination of the so-called corpus and animus. A person is considered to possess an asset when he holds both factual power (pouvoir de fait) over the asset (corpus) and the intention to act as if he were holder of the right (animus).301 The corpus element is the factual, material side of possession: it is the act of possessing. The holder of an asset performs the same material acts that the lawful owner of an asset would also perform.302 Sometimes the corpus element is limited to having the opportunity of performing such acts.303 Yet, in general, the corpus can only be acquired by the accomplishment of material acts.304 Possession always starts with a material act that enables a person to deal with the asset in his exclusive interest. This act of possession can be unilateral, and it is then called an “occupation du bien”.305 Possession can also be transferred from one person to another, for instance by the act of giving the keys of a car to the new possessor.306

296

297

298

299 300 301 302

303

304

305 306

C. civ., art. 1240: Payment made in good faith to one who was in possession of the claim is valid, even if the possessor is afterwards dispossessed. Contra, Voirin P., Goubeaux G., Droit civil, p. 289, n° 647: « la quasi possession ne s’applique jamais aux droits de créance ». Voirin P., Goubeaux G., Droit civil, p. 289, n° 647: this is also the case because the owner of the asset still detains it. C. civ., art. 690 et 691 a contrario. See supra 2. Possession. Terré F., Simler Ph., Les biens, p. 148, n° 155. Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 145 n° 133. – Terré F., Simler Ph., Les biens, p. 148, n° 155. – Atias Ch., Les biens, p. 198, n° 306. – Yet more nuancé: Malaurie Ph., Aynès L., Les biens, p. 143, n° 493. In the case of immovable property, it is possible to have a possession animo solo, where there is no physical holding of an asset see infra same section. Possession can not be acquired simply by accomplishing legal acts: Cass. civ., 14 nov. 1910: DP 1912, 1, p. 483. – Cass. civ., 13 déc. 1948: D. 1949, jurispr. p. 72; RTD civ. 1949, p. 28, obs. H. Solus. – Cass. 3e civ., 11 juin 1992: Bull. civ. III, n° 199, p. 122. Atias Ch., Les biens, p. 197, n° 302. – See infra 11: Types of original acquisition. Amiens, 24 oct. 1922: Gaz. Pal. 1922, 2, p. 677.

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Sometimes the corpus element does not have to be accomplished by the bearer, but can be performed by a third party acting in his name: it is then a possession corpore alieno.307 This is the case when a tenant acts for the lessor, or an employee acts for his employer. If two people live together, it is difficult to determine which of the users of an asset is its rightful owner and thus possesses the asset (ambiguity). As a result, this situation can lead to a co-possession of the asset.308 It must be remarked that, if a person can possess a usufruct right as a quasi-possessor, this person is deemed to hold a simple right of detention with respect to the full property rights.309 In other terms, this person cannot acquire ownership (acquisitive prescription) with respect to the full property rights by the simple passing of time. The animus element refers to the psychological, immaterial side of possession: it is the intent to possess.310 The holder must perform the material acts with the intention of behaving as the lawful holder of the right.311 Such behaviour is referred to as animus domini. Generally, the rightful owner and a thief will act in such a way. However, neither tenants, nor simple holders have this intention to possess. The animus domini is generally presumed from the use of the corpus. It is because a person behaves as if he were the holder of a right that the intention to possess is presumed to exist. Nevertheless, such an intention can also result from a legal transaction. For example, this results from a « traditio brevi manu »312 or from a « constitut possessoire ».313 The « traditio brevi manu » situation reflects the circumstances where the material holder of an asset becomes possessor after having bought it from its owner.314 The animus domini changes, whereas the corpus remains identical, i.e. the material holder, who held the asset corpore alieno and for the owner, now holds it for himself. 314

307 308 309 310 311

312 313 314

Likillimba G.-A., La possession corpore alieno, RTD civ. 2005, p. 1. Voirin P., Goubeaux G., Droit civil, p. 290, n° 651. Voirin P., Goubeaux G., Droit civil, p. 289, n° 647. Malaurie Ph., Aynès L., Les biens, p. 142, n° 492. Cass. req., 15 avr. 1890: DP 1890, 1, p. 188. – Cass. 1e civ., 20 déc. 1955: JCP G 1956, II, 9455, note A. Weill; Bull. civ. I, n° 453. – Cass. 1e civ., 18 juin 1959: JCP G 1959, IV, p. 98. – Cass. 2e civ., 5 avr. 1960: Bull. civ. II, n° 252. – Cass. 1e civ., 21 juin 1978: Gaz. Pal. 1978, 2, somm. p. 337. – Cass. 1e civ., 20 févr. 1996: JCP G 1996, IV, 872; Bull. civ. I, n° 96. By ‘inverting’ the deed: Malaurie Ph., Aynès L., Les biens, p. 144, n° 494. Malaurie Ph., Aynès L., Les biens, p. 144, n° 496. Terré F., Simler Ph., Les biens, p. 151, n° 159.

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In the case of a « constitut possessoire », the current possessor ceases to possess the asset for himself, but starts to possess for someone else.315 This happens every time an owner sells the asset, yet keeps the right to use the asset, such as a usufruct right.316 Again, the corpus remains identical, whereas the animus is modified by the legal transaction.

2.1.4. Presumptions with respect to possession The law lays down a number of presumptions to make the proof of such intention easier. Article 2256 of the Civil Code (former C. civ., article 2230) notes:317 “one is always presumed to possess for oneself, as an owner, unless there is proof that one has commenced possession for someone else”. In the same way, if a person has the corpus, he is also presumed to have the animus. This means, in particular, that if a person holds an asset (détention matérielle) and wants to exercise a right in rem, it is presumed that his claim is lawful. Those who contest this right must prove the contrary (C. civ. art. 1315318).319 This presumption also means that the animus existing at the time the holder entered into possession, is presumed to subsist after this time.320 Yet every taking of possession does not require a specific intention: the general intention to possess is enough, i.e. by organising the capacity to receive new possessions.321

315 316

317

318

319

320 321

Malaurie Ph., Aynès L., Les biens, p. 144, n° 496. Malaurie Ph., Aynès L., Les biens, p. 143, n° 493. – See also Terré F., Simler Ph., Les biens, p. 155, n° 164. C. civ., art. 2256 (former C. civ., art. 2230): One is always presumed to possess for oneself, and in the capacity of an owner, where it is not proved that one has begun by possessing for another. – Cass. 1e civ., 23 oct. 1956: Bull. civ. I, n° 369. – Cass. 1e civ., 7 févr. 1962: Bull. civ. I, n° 91. – Cass. 3e civ., 28 févr. 1978: D. 1978, inf. rap., p. 425. C. civ., art. 1315: (1) A person who claims the performance of an obligation must prove it. (2) Reciprocally, a person who claims to be released must substantiate the payment or the fact which has produced the extinguishment of his obligation. Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 152, n° 141. – Terré F., Simler Ph., Les biens, p. 157, n° 167. Malaurie Ph., Aynès L., Les biens, p. 143, n° 493. For example, by installing a letterbox to receive post, one automatically becomes possessor of the letters even if one ignores that these letters are in the box. – Terré F., Simler Ph., Les biens, p. 151, n° 159.

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2.1.5. Types of possession In French law, as physical control (corpus) leads to presumed intention (animus), such physical control is sufficient to maintain possession. Possession disappears when the possessor surrenders both his physical control (corpus) of the asset and his intention (animus) to consider the asset as his own.322 Sometimes, possession can survive the loss of physical control (corpus) of the asset. Yet this is possible only with respect to immovable assets (possession solo animo). In general, possession on movable assets is lost as soon as physical control has been given up. It is to be noted that article 2264 (former C. civ. art. 2234) of the Civil Code323 lays down a presumption that the current possessor, who proves having had possession at an earlier point in time, is deemed to have possessed during the intermediate period of time. In the case of immovable property, it is possible to have possession animo solo, where there is no physical holding of an asset.324 This is not possible with respect to movable assets. Nevertheless, possession solo animo is only possible if there is no obstacle to the possessor’s recovery of the corpus. This is not the case when a third person possesses the asset.325 In fact, this situation more often results from the non-use of an asset, rather than the loss of the corpus. On the other hand, the animus can be lost, even if the holder still has the corpus. In this case, possession is lost, because the holder recognises the possession of a third party. This happens, for example, when an asset is sold, but not yet delivered. The seller recognises that the asset does not belong to him and agrees to hold the asset corpore alieno for the buyer (constitut possessoire). On the contrary, it is much more difficult to go from precarious possession (holding) to simple possession. There is a “presumption of precariousness” that derives from article 2257 (former article 2231) of the Civil Code.326 This applies typically to a tenant, who has the corpus, but not the animus. The tenant cannot change this situation of his own initiative. It is necessary to prove the change of situation by changing (‘inverting’) the ti322 323

324

325

326

Terré F., Simler Ph., Les biens, p. 152, n° 161. C. civ., art. 2264 – former C. civ., art. 2234: A present possessor who proves that he has formerly possessed, is presumed to have possessed during the intervening time, unless there is proof to the contrary. Terré F., Simler Ph., Les biens, p. 153, n° 161. – Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 149, n° 138. Cass. civ., 29 mars 1929: DH 1929, 250; S. 1929.1.207. – Cass. 3e civ., 15 mars 1977: Bull. civ. III, n° 121, p. 94. C. civ., art. 2257 (former C. civ., art. 2231): Where one has begun by possessing for another, one is always presumed to possess in the same capacity, unless there is proof to the contrary.

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tle deed (C. civ., art. 2268327), i.e. by transferring ownership through a legal transaction. This situation also applies to a custodian (C. civ., art. 2236328). There is therefore a distinction between mere “detention” (physical control) and “possession”. Only the possessor has the intention to keep the asset as his own (subjective element). A person (detentor) who just holds the object does not have such an intention. Therefore, mere detention can never result in acquisitive prescription.329 In particular, an employee (using, for instance, a company car) does not possess.330 Neither does a lessee (e.g. a person renting a car from a hire car firm) or someone entitled to use a movable gratuitously. The same can be said of a custodian or other person obliged to keep and / or take care of an asset as an obligation accessory to another legal relationship (such as a motor mechanic who takes over a car to repair it) and of a family member or other household member who is allowed to use an asset. In all these cases, the animus element is absent. The presumption of precariousness also applies to the heirs of a tenant,331 but not to those who have acquired an asset acting in good faith332 with a legal title (acquisition a non domino).333 The possessor must have the intention to possess; the intentions of another person cannot render anyone a possessor, except in the cases of minors, protected persons and agency.334 French law recognises only one type of possession through an intermediary. This is the case of possession corpore alieno (C. civ., C. civ., art. 2255 – 327

328

329 330

331

332 333 334

C. civ., art. 2268 (former C. civ. art. 2238): Nevertheless, the persons mentioned in articles 2266 and 2267 [former articles 2236 and 2237] may prescribe where the basis of their possession is reversed, either owing to a cause arising from a third party, or by an adverse claim they have raised against the right of the owner. C. civ., art. 2266 (former C. civ. art. 2236): (1) Those who possess for others never acquire ownership by prescription, whatever the time elapsed may be. (2) Thus a tenant, a depositary, a usufructuary, and all those who precariously hold the good or the right of an owner, may not prescribe it. See infra 13: Acquisitive prescription. Simply because he knows that the car belongs to his employer and he does not have the intention to keep the asset as his own. See Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 151, n° 140. Cass. 3e civ., 16 nov. 1976: Gaz. Pal. 1977, 1, somm. 23; D.S. 1977, inf. rap. 85. – Cass. 3e civ., 2 mai 1979: JCP G 79, IV, 221; Bull. civ. III, n° 97; D.S. 1979, inf. rap. 408; Gaz. Pal. 1979, 2, somm. 418. – Cass. 1re civ., 9 déc. 1986: Bull. civ. I, n° 291. Cass. civ. 8 nov. 1880: D.P. 81, 1, 28; S. 81, 1, 52. See infra 12: Rules of good faith acquisition. Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 147, n° 136 a contrario.

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former C. civ., art. 2228).335 It is to be remarked that French law is not as fine-tuned as German law. Legal scholarship does not distinguish different criteria of possession such as the intensity of the relationship to the asset,336 the intentions of the persons involved337 or the social dependence of the person physically holding the asset to the possessor.338 Possession corpore alieno is possible, because possession as such is not a legal transaction, but a mere material act in respect to assets.339 This material act can be accomplished by a third party, yet this intermediary does not necessarily represent the possessor. This is, for example, the case of a usufructuary,340 of a lessee341 or of a seller342 who has not yet delivered the goods. This intermediary simply holds the asset without the intention to act as an owner. He therefore recognises that someone else is the owner of the asset and that by holding the asset, he performs the act of corpus of this owner. The holder, on the other hand does not act for this owner, but simply uses his own rights to the asset.343 As a result, it is also possible to conclude a contract of agency where the agent takes possession of an asset for the principal. In this case, the agent acts for the owner. Nevertheless, only the person “for whom” the object is kept is considered to be “in possession”.344

335

336

337

338 339 340

341

342 343 344

Cass. 1e civ., 16 janv. 1980: JCP G 1980, IV, p. 124; Bull. civ. I, n° 31. – Cass. 1e civ., 3 nov. 1981: JCP G 1982, IV, p. 33; Bull. civ. I, n° 324. Actual physical control (in German law: “unmittelbarer Besitz”) – or control only through another person physically holding the asset (“mittelbarer Besitz”). The intermediary is called “Besitzmittler” in German law, he is “unmittelbarer Besitzer” himself. Possessing the asset “as one’s own” (German law: “Eigenbesitz”; e.g. the owner, the thief) – or possessing the asset with the intention of someone having some right to use or otherwise hold the asset (“Fremdbesitz”; e.g. the lessee, custodian). The intermediary is called “Besitzdiener”. Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 142, n° 129. Cass. 3e civ., 21 mars 1984: Bull. civ. III, n° 78; D. 1984, inf. rap. p. 425, obs. Robert. The usufructuary possesses for the full owner. Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 146, n° 134, p. 151, n° 139. – Cass. 3e civ., 8 déc. 1976: Bull. civ. III, n° 449. Cass. 3e civ., 16 nov. 1976: Gaz. Pal. 1977, 1, somm. 23; D.S. 1977, inf. rap. 85. Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 150, n° 138. See constitut possessoire, supra in this section.

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2.2.

Functions of possession

Rules on possession have many functions in French law.345 On the one hand, these rules serve the public interest by maintaining public peace (see the theory of Savigny346). The owner cannot evict the possessor. He must first prove his ownership. Until then the possessor cannot be disturbed. This means that conflicts concerning ownership do not change the actual situation until the courts render their decision. The rules on possession also have a social function by promoting social and economic interests (see Ihering’s theory347). In this case, the rules on possession tend to protect the possessor, the actual user of the asset, as against the owner who has neglected his asset.348 On the other hand, rules on possession limit the uncertainty of the right of property. It is impossible to prove the origin of ownership (probatio diabolica), because this would entail going back to times immemorial.349 Thus, French law protects the owner because he is also the possessor. As a result, the possessor is presumed to be the owner350 and possession has a probative function.351 This presumption (presomption simple) can however be rebutted in most cases.352 The rules on possession also protect third parties because they can rely on the appearance given by factual possession without having to check whether this appearance corresponds to a legal reality. Rules on possession therefore create a legal appearance.353 This aspect is very important when 345

346

347 348 349 350

351

352

Zenati-Castaing F., Revet Th., Les biens, p. 648, n° 443, distinguishing essentially two roles: a peace keeping function (natural possession or simple detention) and a function as ancillary to ownership rights (civil possession). See also p. 657, n° 450. Savigny K. F., Le droit de la possession, Vienne, 7e éd. 1865, p. 7 s. – ZenatiCastaing F., Revet Th., Les biens, p. 648, n° 441. Ihéring R., Fondement de la protection possessoire, Iéna, 2e éd. 1869, p. 54. Trigeaud J. M., La possession des biens immobiliers, Economica 1981, n° 443 s. Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 439, n° 439. Dross W., Le singulier destin de l’article 2279 du code civil, RTD civ. 2006, chr. p. 27. Zenati-Castaing F., Revet Th., Les biens, p. 662, n° 456: however, this proof only is effective in the relationship of the possessor and third parties. In the relationship with the transferor of an asset or a right, possession needs to be confirmed by a title: “l’effet acquisitif de la possession des meubles n’a lieu qu’au profit de l’ayant cause d’un auteur non propriétaire. Dans les autres cas, la revendication demeure possible, mais le défendeur n’aura pas à produire un titre pour justifier de son origine de propriété, sa seule possession suffisant à cet effet”. If rebuttal is not possible, the possessor is deemed having acquired the asset for good: Zenati-Castaing F., Revet Th., Les biens, p. 321, n° 200.

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a legal transaction can change the rights to an asset without any formality or publication of the transfer. Nevertheless, the function of possession rules is less important when a transfer of rights must be published.354 Rules on possession tend to enable the transfer of ownership in the case of movables if the possessor is acting in good faith. Therefore, the legal effects of possession depend on whether this possession is bona fide or not,355 although good faith is presumed (C. civ., art. 2274 – former art. 2268). If the ownership of an asset is contested (procès pétitoire), the possessor is presumed to be the owner. He therefore is always the defendant in a lawsuit concerning ownership.356 If the plaintiff cannot prove either his ownership or that the defendant’s possession has been vitiated, the defendant remains in possession without having to prove his own right of property.357 Until the law of June 17, 2008,358 if possession lasted thirty years, the possessor, even acting in bad faith, gained ownership (usucapion).359 For certain movable assets, the possessor gained immediate ownership at the time he entered into possession, if he was acting in good faith.360 This system has been modified by the aforementioned law. Article 2258 of the Civil Code now states: 353

“Acquisitive prescription is a way of becoming the owner of a good or a right by way of possession, where the person claiming acquisition is not required to provide a deed nor subject to any defence of bad faith”. 353

354 355 356 357

358

359

360

Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 158, n° 148. – Zenati-Castaing F., Revet Th., Les biens, p. 647, n° 442 states that the main function of possession is to publish the relationship between a person and a legal good. Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 161, n° 150. See infra 12: Rules of good faith acquisition. Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 158, n° 148. By way of comparison, in the case of immovable assets, possession is protected by specific court actions (complainte, dénonciation de nouvel oeuvre and réintégrande): Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 435, n° 433 seq. The loi n° 2008-561 du 17 juin 2008 portant réforme de la prescription en matière civile (in force as of 19th of June 2008). – Amrani-Mekki, Liberté, simplicité, efficacité, la nouvelle devise de la prescription?, JCP 2008. I. 160. – Mignot, Aperçu critique de l’avant-projet de loi sur la prescription, RRJ 2007. 1639. See infra 13: Acquisitive prescription. – See former C. civ., art. 2262: All claims, in rem as well as in personam, are prescribed by thirty years, without the person who alleges that prescription being obliged to adduce a title, or a plea resulting from bad faith being allowed to be set up against him. Zenati-Castaing F., Revet Th., Les biens, p. 661, n° 454. – See infra 12: Rules of good faith acquisition.

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Possession therefore has a function of creating a legal position as it is a requirement for the acquisition of ownership by acquisitive prescription. The new law, now clearly distinguishes between movable and immovable property. The right to reclaim movables lapses after five years (C. civ., art. 2224 new version361). The right to reclaim immovables lapses after thirty years (C. civ., art. 2227 new version362). In the case of certain movable assets, the possessor still gains immediate ownership at the time he enters into possession, if he was acting in good faith at that time (C. civ., art. 2276 – former C. civ., art. 2279). If the possessor acts in good faith, he also becomes the owner of the income produced by the asset (C. civ., art. 549363).364 This means that, even if the rightful owner claims the asset, the possessor in good faith does not have to return the income. French law distinguishes two types of original acquisition of ownership through possession: the so-called “occupation” and the so-called “invention”. In the case of occupation, assets that have no owner (choses non appropriées, res derelictae or res nullius) can be possessed and as a result, the new holder automatically becomes the owner.365 The new owner therefore has an original right of property. This type of acquisition of property can only apply to corporeal assets.366 The concept of “invention” applies to the case where a person finds, by chance,367 a hidden movable asset,368 to which nobody can prove property 361

362

363

364

365

366 367 368

C. civ., art 2224: Personal or movable claims lapse five years after the day the holder of a right knew or should have known the facts that would have allowed him to act. C. civ., art. 2227: Ownership rights cannot lapse. Within this limit, immovable claims lapse thirty years after the day the holder of a right knew or should have known the facts that would have allowed him to act. C. civ., art. 549: A mere possessor makes fruit his own only where he possesses in good faith. If not, he is bound to restore the products with the asset to the owner who claims it; where the said products are not found in kind, their value must be appraised at the date of repayment. See infra 19.1: Entitlement to benefits resulting from the movable. – Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 161, n° 151. See infra 11: Types of original acquisition. – Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 247, n° 236, with further references. Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 161, n° 150. Cass. crim., 20 nov. 1990: Bull. crim. n° 395. T. civ. St Sever, 15 juill. 1898: Gaz Pal. 1898, 2, p. 320. – CA Bologne, 21 juin 1901: S. 1903, 4, p. 23. – TGI Millau, 26 mai 1988: Juris-Data n° 050954. – Malaurie Ph., Aynès L., Les biens, p. 182, n° 593. – Terré F., Simler Ph., Les biens, p. 333, n° 419.

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rights (C. civ., art. 716369).370 Property rights vary in line with where the so called “treasure” (trésor) has been found. If the treasure was found on private premises, it is shared with the owner of those premises, if that person is unable to prove any property rights to the asset.371 Possession also has a liability function in French law. Under article 1384 al. 1 of the Civil Code, if an asset, movable or not, is controlled by a person, this person is liable for any loss / damage that this asset might cause.372 A similar rule lies at the root of the liability of the possessor of an animal, i.e. the person controlling the behaviour of the animal (C. civ., art. 1385).

2.3.

Acquisition of possession

Since possession is acquired by the combination of corpus and animus (see discussion 2.0, above), according to French law, it is necessary to fulfil both requirements in ways that represent the prerogatives of the right that is used, i.e. use the asset in the way it should be used. It is not necessary that the possessor take hold of the asset. It is sufficient that he has the present possibility to do so. French law recognises different forms of acquisition of possession. Possession can, of course, be acquired by transfer, by which the former possessor transfers possession to the current possessor. This is not a consensual agreement, but implies a “real” act (“traditio”), physically materialising the transfer. In this respect, the new possessor obtains actual physical power over the asset (corpus). To benefit from the legal effects of possession, it is sufficient to prove that one has the corpus. However, the possessor must also have the intention to possess; the intention of another person cannot render someone a possessor, except in the cases of minors, protected persons and agency.373

369

370 371

372

373

C. civ., art. 716: (1) Ownership of a treasure belongs to the person who discovers it on his own tenement; where a treasure is discovered on another’s tenement, one half of it belongs to the person who discovered it, and the other half to the owner of the tenement. (2) A treasure is any hidden or buried asset of which nobody can prove ownership and which is discovered by mere chance. Cass. 1e civ., 19 nov. 2002: Bull. civ. I, n° 279. A treasure is necessarily a forgotten movable asset: T. corr. Paris, 10 janv. 1949: JCP G 1949, II, 5023, note M. Le Roy. Cass. Ch. réunis, 2 déc. 1941, arrêt Franck: GAJC 11e éd. n° 194. – Cass. 2e civ., 11 fév. 1999: RCA 1999, n° 96. – Cass. 2e civ., 12 déc. 2002: Bull. civ. II, n° 288: liability of a lessee. See supra 2.1: Notion of possession.

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Physical control over the asset leads to the presumed intention to possess, the animus.374 Nevertheless, it is not necessary that every act of possession be preceded by a specific intention to possess. If the possessor has organised a mechanism for receipt of new possessions, like having a letterbox with his name on it, the general intention to possess everything that goes into the letterbox is enough.375 Possession can also be transferred by symbolic delivery.376 This would be the case where the new possessor obtains the possibility to use the asset, e.g. by receiving the keys of a car or the license documents of a boat (traditio per instrumentum). When possession is held through a third party, it is possible to transfer possession by giving orders to this third party, who then holds for the new possessor.377 This is the traditio brevi manu. Only the intention (animus) changes without any modification of the corpus. Possession can also be transferred by constitutum possessorium. This is a form of possession corpore alieno,378 where the corpus is held through another person. French law recognises the possibility of concluding a “constitut possessoire”, a contract in which the alienator recognises that he possesses the asset for the account of the buyer. In this situation, it is necessary that the holder of the asset recognises the rights of the possessor. Possession is lost if a person loses the corpus and the animus. This happens when this person sells the asset or abandons it. If the possessor loses the corpus of a movable asset, i.e. the faculty to use the asset (by loss or theft), he loses the possession of this asset. Yet for immovable assets, it is possible to remain possessor solo animo for a short period of time (one year). This exception does not apply to movable assets. The animus can be lost if a person recognises the right of another person to the asset. He then becomes a simple holder of the asset (détenteur précaire379). Possession can also be acquired by so-called occupation.380

374 375 376 377 378 379 380

See supra 2.1: Notion of possession. See supra 2.1: Notion of possession. See supra 2.1: Notion of possession. See supra 2.1: Notion of possession. See supra 2.1: Notion of possession. The tenant, the depositary, the usufructuary, the emphyteutic owner. See supra 2.2: Functions of possession.

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65

Protection of possession

There are specific rules in French law on the protection of possession, yet they only apply to immovable property.381 In the case of movables, because of the fact that article 2276 (former C. civ., art. 2279) of the Civil Code presumes that the possessor of a movable corporeal asset is also the owner of this asset, the possessor automatically benefits from the protection of ownership rights. The legal rules on the protection of possession apply to a possessor, a co-possessor,382 a tenant in common (indivisaire),383 a usufructuary,384 and to a simple holder of the asset (C. civ., art. 2278, former C. civ., art. 2282).385 Possession is only protected if it is peaceful.386 It is not protected in a legal conflict with the rightful owner. Article 2276 of the Civil Code (former C. Civ., art. 2279) entitles the possessor to claim ownership of the asset in accordance with the maxim: “en fait de meubles, possession vaut titre”. The plaintiff must then prove that the possessor does not have lawful possession (lack of good faith or tainted possession)387 However, this rule only applies to movable corporeal assets,388 381

382 383

384 385

386

387 388

Cass. 1e civ., 6 févr. 1996: Bull. civ. I, n° 57; RTD civ. 1996, p. 943, obs. Z. Zénati; Procédures 1996, comm. n° 217, obs. R. Perrot. – Zenati-Castaing F., Revet Th., Les biens, p. 699, n° 490. Cass. 1e civ., 3 juill. 1962: D.S. 1962, 568. Cass. 3e civ., 29 mai 1968: Bull. civ. III, n° 244. – Cass. 3e civ., 20 nov. 1973: Bull. civ. III, n° 585. – Cass. 1e civ., 15 avril 1980: RTD civ. 1981, 173, obs. Giverdon; Defrénois 1981, art. 32520, p. 112, observ. Breton. – Cass. 3e civ., 9 mars 1982: Bull. civ. III, n° 63; Gaz. Pal. 1982, 2, pan. jur. 217, note A. Piedelièvre; Rev. dr. imm. 1983, 36, obs. Bergel. TI Tours, 21 fév. 1984: JCP G 1985, IV, 213. C. civ., art. 2278, – former C. civ., art. 2282: (1) Possession is protected, regardless of the substance of the right, against disturbance which affects or threatens it. (2) Protection of possession is also granted to a person who holds an asset against all other than the one from whom he holds his rights. Some court cases speak of peaceful possession: Cass. 3e civ., 18 mai 1982: JCP G 1982, IV, 263; D.S. 1982, inf. rap. 403; Gaz. Pal. 1982, 2, pan. jur. 313, obs. A. Piedelièvre. – Other cases also require a public possession. See, for example: Cass. 1e civ., 21 oct. 1980: Gaz. Pal. 1981, 1, somm. 65; D.S. 1981, inf. rap. 229, obs. A. Robert. – Others again protect a useful possession (possession utile): Cass. 3e civ., 12 oct. 1983: Bull. civ. III, n° 184; JCP G 1983, IV, 345; D.S. 1984, inf. rap. 429, obs. A. Robert. – Cass. 3e civ., 24 janv. 1978: Gaz. Pal. 1978, 1, somm. 161. See infra 12: Rules of good faith acquisition. Cass. req., 25 nov. 1929: D.H. 1930, 3. – Cass. com., 19 janv. 1960: Bull. civ. III, n° 30; JCP 1960, éd. G, IV, 34. – For example, in the case of animals, Cass. 1e civ.,

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and then again not to all corporeal assets,389 such as corporeal assets that are registered.390 This can be explained because the transfer of such assets implies compliance with certain written and published procedures. Nevertheless, as an exception to this exclusion, although cars are registered, their possession is protected by article 2276 of the Civil Code (former C. civ., art. 2279).391 If an asset is incorporeal, the rule of article 2276 of the Civil Code does not apply. There is no protection of quasi-possession, i.e. the possession of rights such as claims,392 usufruct rights, and rights to securities,393 stocks and bonds. This exception also includes intellectual property rights.394 Nevertheless, as an exception to the general rule, protection of possession of movable assets is possible in respect of lost and stolen assets.395 In a similar way, courts protect the possession of three types of movables (immeubles par destination,396 meubles accessoires d’un immeuble397 and meu-

389

390

391

392 393 394

395

396

397

14 déc. 1971: JCP 1972, II, 17102, note Goubeaux, possession of a horse. – Cass. 1e civ., 21 janv. 1964: Bull. civ. I, n° 38, possession of a cow. – A painting: Cass. 1re civ., 24 nov. 1970: Bull. civ. I, n° 312; D.S. 1971, somm. 54. – Orléans, 17 mars 1965: JCP 1965, II, 14186, note Boursigot. – A piece of jewellery: Paris, 19 janv. 1933: S. 1933, 2, 134. – Paris, 17 mars 1954: D. 1954, somm. 60. – Furniture: Paris, 15 fév. 1961: D. 1961, somm. 43. – A contrario, all immovable goods are excluded: Cass. 3e civ., 4 juill. 1968: Gaz. Pal. 1968, 2, 298; JCP G 1968, IV, 147; RTD civ. 1969, p. 144, obs. Bredin. – Cass. com. 19 janv. 1960: Bull. civ. III, n° 30; JCP 1960, éd. G, IV, 34. For instance goods that are public property, such as museum pieces: T. corr. Montluçon, 29 sept. 1965: D.S. 1965, 774, note Delpech; RTD civ. 1966, p. 109, observ. Bredin. – Cass. req., 17 juin 1896: D.P. 1897, 1, 257. – Cass. 1re civ., 2 avril 1963: Bull. civ. I, n° 203. – Paris, 18 août 1851: D.P. 52, 2, 96. – Dijon, 3 mars 1886: D.P. 87, 2, 253. – Nîmes, 4 déc. 1944: D. 1946, 28, note Waline. – Or library collections: Paris, 3 janv. 1846: D.P. 46, 2, 212 autographs from Molière. For example, boats: Cass. com. 20 nov. 1951: Bull. civ. II, n° 340. – Le Brun, En fait de yacht possession vaut titre, Dr. mar. fr. 1949, p. 355. Registration of cars is considered to be a simple administrative measure. – Jauffret C., La vente d’automobile d’occasion: l’automobile en droit privé, p. 67, n° 7. – Also Bénabent A., commenting, Cass. 1re civ., 5 oct. 1972: JCP 1973, II, 17485. Cass. civ., 2 déc. 1856: D.P. 1856, 1, 443. Cass. civ., 4 juill. 1876: D.P. 1877, 1, 33. Cass. civ., 26 fév. 1919: D.P. 1923, 1, 215. – T. civ. Seine, 15 nov. 1927: D.P. 1928, 2, 89, note Nast. – Paris, 17 avril 1956: D. 1956, 530, note Ripert. Cuilleron M., Revendication des meubles perdus ou volés et protection possessoire, RTD civ. 1986, p. 504. Cass. civ., 14 nov. 1849: DP 1850, 1, p. 10. – See also supra 1.1.1 (b): Characteristics of rights in rem in contrast to obligations. Cass. 1e civ., 25 nov. 1959: Bull. civ. I, n° 497.

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67

bles par anticipation398).399 Rules on the possession of immovables therefore exceptionally apply. As there are no specific rules on the protection of the possession of movable assets, French law does not have any specific procedure, except the rules of article 2276 al. 2 (new) of the Civil Code that apply to the loss of possession through theft or loss. Yet, under the general rules on civil liability (C. civ., art. 1382400), the possessor is nevertheless entitled to damages for the deterioration and for the loss he suffered as a result of not being able to use the asset. French law protects possession, in general, by means of three procedures. These procedures, named “actions possessoires”, are judged by the Tribunal de Grande Instance (C.org. jud., art. L 312-7), but they only apply to immovables. Possession of movables is protected by ownership actions. There are no specific, set procedures.

2.5.

Self-help

French law does not recognise any form of self help. Any action must be brought in court.

3.

Nature of the various rights to hold or to acquire a movable

3.1.

The right to hold a movable

In French law, rights to possess401 or to acquire a movable are directly linked to the right of ownership. If a person has a right to possess a movable, this right can result from three situations. First, whenever the person is the owner of the asset, he is, of course, entitled to possess it. The right to possess the movable is thus a right in rem. Secondly, sometimes a person possesses an asset for the owner because there is a contract between the owner and this person. In this case, the right is an obligatory right. This applies to leases, loans and depository contracts. Thirdly and finally, when a person possesses the movable 398 399 400

401

T. civ. Sancerre, 17 mai 1951: D. 1951, 646. Cass. req., 21 juill. 1892: D.P. 1892, 1, 455. C. civ., art. 1382: Any act whatever of a person, which causes damage to another, obliges the one by whose fault it occurred, to compensate it. The term « possess » is used here in a non technical manner and means inter alia the holding of a movable.

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as security for a debt, then this person has an accessory right in rem. This accessory right in rem is protected in the case of bankruptcy of the debtor.402 The possessor has an obligatory right whenever there is a contract between the owner and the possessor. Leases fall within this category. In particular, article 1709 of the Civil Code403 provides that a lease is a contract by which one of the parties promises to allow the other party to use an asset for a fixed duration and for a certain price. This contract creates only obligatory rights between the lessor and the lessee. Articles 1719 and 1720 of the Civil Code404 provide that the lessor405 is obliged to deliver the leased assets in a good condition of maintenance and to enable the lessee to use the asset peacefully. The lessee406 is obliged to pay the rent (C. civ., art. 1728407) and to use the asset carefully (“user de la chose en bon père de famille”). As an exception, French law grants specific protection to long term leases, which is similar to the protection given by rights in rem.408 Additionally, in the so-called bail à contruction (C. constr. et habit., art. L 251-1 seq.), 402 403

404

405

406

407

408

Example: C. com., article L 643-2. C. civ., article 1709: The hiring of assets is a contract by which one of the parties binds himself to have the other enjoy an asset during a certain time, and at a certain price which the latter binds himself to pay him. – Collart Dutilleul F., Delebecque Ph., Contrats civils et commerciaux, p. 352, n°409 seq. on leases of movable assets. C. civ., art. 1719: A lessor is bound, by the nature of the contract, and without need of any particular stipulation: 1° To deliver the asset leased to the lessee “and, where the main dwelling of the latter is concerned, a decent lodging” 2° To maintain that asset in order so that it can serve the use for which it has been let; 3° To secure to the lessee a peaceful enjoyment for the duration of the lease; 4° To secure also the permanence and quality of plantings. – C. civ., art. 1720: (1) A lessor is bound to deliver the asset in good repair of whatever character. (2) He must, during the term of the lease, make all the repairs which may become necessary, other than those incumbent upon lessees. Huet J., Les principaux contrats spéciaux, p.738 seq., n° 21160 seq. – Collart Dutilleul F., Delebecque Ph., Contrats civils et commerciaux, p. 410, n° 491 seq. Huet J., Les principaux contrats spéciaux, Traité de droit civil sous la dir. de J. Ghestin, LGDJ 2e éd 2001, p. 764 seq., n° 21176 seq. – Collart Dutilleul F., Delebecque Ph., Contrats civils et commerciaux, p.392, n° 472 seq. C. civ., art 1728: A lessee is bound to two main obligations: 1° To make use of the asset leased as a prudent administrator and according to the purposes intended by the lease, or according to those presumed under the circumstances, failing an agreement; 2° To pay the rent at the agreed times. For example, leases that last longer than 12 years must be registered at the « Conservation des hypothèques ». – See Huet J., Les principaux contrats spéciaux, Traité de

3. Nature of the various rights to hold or to acquire a movable

69

the lessee has an “immovable” right in rem to the asset for the duration of the lease.409 However, both these leases only apply to immovables.410 In a similar way, for short term leases, the lessee, as a simple possessor with obligatory rights, has been given the same kind of protection against infringements by third parties, as has the possessor or the owner of an asset.411 However, this is not a protection in rem, but only a possessory shield against material infringements by third parties. Two specific contracts should be mentioned here, because of their hybrid status of so-called “real contracts” (contrat réel). The first kind of such a real contract is the “depository contract”,412 where the contract only comes into existence by the physical transmission of the goods. This contract is considered to be a “real contract” by virtue of the means of its formation. Yet, this contract generates only obligatory rights. It can be defined as a contract under which the depository is asked by a depositor to mind an asset and to return it to the depositor when requested.413 The depository only holds the movable for the depositor, who is deemed to remain in possession (C. civ., art. 2266 new – former C. civ., art. 2236).414 Another such contract is the contract of loan (prêt).415 This contract is also a real contract by formation, but it generates only obligations between the contracting parties. Accessory rights in rem also entitle a person to possess a movable. This is the case of pledges (gage), which are contracts where the debtor transfers an asset to a creditor as security for his debt. Pledges can secure a civil debt

409

410

411

412

413 414

415

droit civil sous la dir. de J. Ghestin, LGDJ 2e éd 2001, p. 685, n° 21112. – See also emphyteotic leases (C. rur., art. 451-1 seq.). Such an “immovable” right entitles the holder to use legal techniques specifically created for immovables, such as jurisdiction rules, prescription rules, etc. See for other types of leases of immovables with in rem rights: Collart Dutilleul F., Delebecque Ph., Contrats civils et commerciaux, p. 341, n° 389 seq. C. civ., art. 2278 (former C. civ., art. 2282): (1) Possession is protected, regardless of the substance of the right, against disturbance which affects or threatens it. (2) Protection of possession is also granted to a person who holds an asset against all others than the person from whom he holds his rights. C. civ., art. 1915 seq. – Collart Dutilleul F., Delebecque Ph., Contrats civils et commerciaux, p. 730, n° 792 seq. Huet J., Les principaux contrats spéciaux, p. 1555 seq., n° 33101 seq. C. civ., art 2266 – former art. 2236: (1) Those who possess for another never acquire ownership by prescription, whatever the time elapsed may be. (2) Thus a tenant, a depositary, a usufructuary, and all those who precariously hold the asset of an owner, may not prescribe it. C. civ., art. 1874 to 1908. – Huet J., Les principaux contrats spéciaux, p. 913 seq., n° 22100 seq.

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(C. civ., art. 2333 seq.) or a commercial debt (C. com., art. L 521-1 seq.). In both cases, although the contract creating the pledge creates only obligatory rights between parties, yet with respect to third parties, the holder of the asset possesses a property right (i.e. real right), the right of pledge, which confers priority rights on the asset if the debtor fails to pay the debt.416

3.2.

The right to acquire a movable

The right to acquire a movable asset is an obligatory right under French law.417 This right also includes any form of pre-contractual agreements418 such as pre-emption rights,419 options to buy or to sell, the right to repurchase (C. civ., art. 1659-1673),420 etcetera. In particular, a unilateral promise to sell (promesse unilatérale de vente) is a simple contract that sets the conditions of a contractual offer for a fixed period of time.421 The beneficiary of the promise only has a claim to sign a contract, i.e. an option to buy the asset. The promise itself does not have any in rem effects.422

4.

Rules relevant to the transfer of movables

4.1.

Field of application

The rules relevant to the transfer of movables depend on the type of movable in question.

416

417 418 419

420

421

422

C. civ., art. 2333. – C. com., art. L 521-3. – Since the reform of this field in 2006 it is no longer necessary to transfer the asset to the creditor. A simple registration of the pledge on a special ledger is enough. Bénabent A., Les contrats spéciaux civils et commerciaux, p. 70, n° 94. Ghestin J., Desché B., La vente, p. 151, n° 140 seq. Collart Dutilleul F., Delebecque Ph., Contrats civils et commerciaux, p. 71, n° 67. Collart Dutilleul F., Delebecque Ph., Contrats civils et commerciaux, p. 180, n° 196. Ghestin J., Desché B., La vente, p. 156, n° 145. – Collart Dutilleul F., Delebecque Ph., Contrats civils et commerciaux, p. 63, n° 59. – Bénabent A., Les contrats spéciaux civils et commerciaux, p. 68, n° 89. Bloch P., L’obligation de transférer la propriété dans la vente, RTD civ. 1988, p. 673, p. 681, n° 18.

4. Rules relevant to the transfer of movables

71

If the movable is corporeal, the general rule is that of the transfer solo consensu.423 The new owner is only presumed to be the rightful owner however, if he is also in possession of the asset (C. civ., art. 2276424).425 If the movable is incorporeal, French law states a number of formalities that must be respected to ensure that the transfer is made public.426 Even in this situation however, the transfer of ownership between the contracting parties is immediate at the time of contracting. Only third party effects require that such formalities be accomplished. This applies to assignment of claims (C. civ., art. 1690427 – C. mon. fin., art. L. 313-23 seq.),428 to the transfer of intellectual property rights,429 to shares,430 to negotiable instruments and to other intangible goods. This rule includes ships,431 airplanes432 and cars.433

4.2.

Definitions

Assets are considered to be movable if they can be moved, even if at the present time they are fixed to the ground.434 Nevertheless, certain assets are considered to be movable either because they do not fall into the category 423 424 425 426 427

428

429 430

431

432 433

434

Huet J., Les principaux contrats spéciaux, p. 178, n°11202. Former C. civ., art 2279. See 5.1.1: The Unititular or Uniform Concept of the Transfer of Ownership. Huet J., Les principaux contrats spéciaux, p. 175, n° 11197. C. civ., art. 1690: (1) An assignee is vested with regard to third parties only by notice of the assignment served upon the debtor. (2) Nevertheless, the assignee may likewise be vested by acceptance of the assignment given by the debtor in an authentic act. Cashin-Ritaine E., Les cessions contractuelles de créances de sommes d’argent dans les relations civiles et commerciales franco-allemandes, préf. F. Ranieri, Bibl. dr. privé t. 348, LGDJ 2001, p. 181, n° 293 et suiv. – Ghestin J., Billiau M., Loiseau G., Le régime des créances et des dettes, LGDJ 2005, p. 344 seq. See for example, C. prop. intell., art. L 131-3 seq. (droit d’auteur). Various rules apply depending on the type of shares, such as registration or notification duties. Example: C. dom. pub. fluvial et de la navigation intérieure, article 78 seq. – See the recent case of the Calypso: Cass. com., 11 déc. 2007: D. 2008, 888. – D’Avout L., Quelques observations sur la valeur des publictés réelles en droit français (ou, pourquoi, en matière de meubles, l’inscription ne vaut pas titre), D. 2008, p. 888. C. av. civ., art. L 121-6. Terré F., Simler Ph., Les biens, p. 325, n° 408. – Cass. 1e civ., 30 oct. 2008: D. 2008, 2935; JCP G 2009, I, 127, n° 7, H. Périnet-Marquet. Theatre installed temporarily, CE, 14 déc. 1984: Gaz. Pal. 1985, 2, somm. p. 351.

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of immovables,435 or because their nature has been determined by statute (C. civ., art. 527-536).436 It is not possible for parties to a contract to themselves determine the movable or immovable nature of an asset.437 The legal definition of movables is very broad. Claims (C. civ., art. 529), security rights relating to movable assets (usufruct rights, pledges, mortgage rights), actions relating to movable assets (action en revendication d’un bien meuble), business property (fonds de commerce), intellectual property rights (clienteles and copyright), and securities, stocks and shares (valeurs mobilières) are all considered to be movable “assets”. Animals are specifically considered to be movable (art. 528 C. civ.).438 This is also the case of money, electricity (C. civ., art. 1386-3),439 gas440 and of micro-organisms such as bacteria.441 435

436

437

438

439

440

441

Bergel J.-L., Théorie générale du droit, Dalloz, Méthodes du droit, 3e éd. 1998, n° 197, p. 209. – Libchaber R., La recodification du droit des biens, in Le Code civil 1804-2004, Livre du bicentenaire, Dalloz-Litec 2004, 297 (331). Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 30 seq., n° 31 seq., with further references. For example, the fact that a seller of a veranda (movable good) benefits from a reservation of title until complete payment does not prevent this veranda from becoming an immovable when it is added to a house (immeuble par destination). Civ. 3e, 29 juin 1991: Bull. civ. III, n° 197, p. 115; JCP G 1992, II, 21825, note J.F. Barbiéri; RTD civ. 1992, p. 144, obs. F. Zénati; D. 1993, jurispr. p. 93, note I. Freij-Dalloz: « La nature, immobilière ou mobilière, d’un bien est définie par la loi et la convention des parties ne peut avoir d’incidence à cet égard ». – Mestrot M., Le rôle de la volonté dans la distinction des biens meubles et immeubles: RRJ 1995 / 3, p. 809. – There are nevertheless limits to the power of parties, as their choice has no effect with respect to third parties. Only the real situation is of significance for third parties. Antoine S., La loi n° 99-5 du 6 janvier 1999 et la protection animale: D. 1999, chron. p. 168. – Revet Th., Commentaire de la Loi n° 99-5 du 6 janvier 1999 relative aux animaux dangereux et errants et à la protection des animaux (JO 7 janv. 1999, p. 327), RTD civ. 1999, p. 479. – Libchaber R., Perspectives sur la situation juridique de l’animal: RTD civ. 2001, p. 239. – Nevertheless there is an exception for farm animals (art. 522 C. civ.). – Libchaber R., La recodification du droit des biens, in Le Code civil 1804-2004, Livre du bicentenaire, Dalloz-Litec 2004, 297 (343). CA Paris, 26 févr. 1936: Gaz. Pal. 1936, 1, p. 852. – CA Paris, 28 déc. 1940: S. 1941, 2, p. 23 – Pillon E., Le problème juridique de l’électricité: RTD civ. 1904, p. 5 (19). – Cass. crim., 8 janv. 1958: JCP G 1958, II, 10546, note H. Delpech: “la soustraction frauduleuse d’énergie au préjudice d’autrui est assimilée au vol”. Catala P., La matière et l’énergie, in Mélanges en hommage à François Terré: PUF, Dalloz, Juris-Classeur, 1999, p. 557 (563). Lucas-Baloup I., Le microbe: une res nullius cause étrangère?: Rev. Gén. de droit médical 1999 / 2, p. 91 (93).

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73

During their lifetime, movable assets can be attached to an immovable asset and thus take on an immovable nature through incorporation (immeuble par nature) or intention (immeuble par destination).442 On the other hand, an immovable asset can become movable443 if it is to be separated from its immovable support444 (meuble par anticipation).445 Movables can be tangible or intangible, in other words corporeal or incorporeal.446 Tangible movables have a physical appearance, whereas intangible movables are simple rights. Claims as such are intangible assets unless the claim is included in a negotiable instrument that appears in a material form. Under French company law, most negotiable instruments appear in a “dematerialised” (i.e. non-physical) form447 and therefore follow the rules relating to intangible rights.

442 443

444

445 446 447

C. civ., art. 524 and 525. This applies in cases where an asset is fixed to an immovable support but is deemed to be detached at short notice. Parties to a contract can thus apply the legal rules on movables, and especially the specific tax rules. See, Cass. com., 4 févr. 1963: Bull. civ., III, n° 81. Cass. ass. plén., 15 avril 1988: Bull. civ. R., p. 198; D. 1988, jurispr. p. 325, concl. J. Cabannes et note J. Maury; JCP G 1988, II, 21066, rapport Grégoire et note J. F. Barbiéri; RTD civ. 1989, p. 345, obs. F. Zénati; Rev. crit. DIP 1989, p. 100, note G.-A. L. Droz: frescos, that are immovables by nature, become movable if they are removed from the wall they were painted on. See C. civ., art. 520 and 521. See supra 1.1.1 (b): Characteristics of rights in rem in contrast to obligations. But bearer bonds are corporeal and thus are subject to the rules governing corporeal movables: Cass. com., 25 fév. 1975: Bull. civ. IV, n° 61.

Part II: Derivative acquisition Like many other European legal systems, French law distinguishes between original and derivative acquisition of ownership.448 Acquisition stricto sensu describes the process of becoming owner, i.e. the creation of an ownership right.449 Derivative acquisition relates to a right that the new holder acquires from his predecessor,450 whereas original acquisition refers to a situation where ownership is acquired independently of any predecessor.451 Derivative acquisition applies to assets that already belong to someone and uses legal mechanisms such as contracts, wills, accession by incorporation,452 acquisitive prescription,453 possession454 and expropriation; whereas original acquisition is relevant to assets not belonging to anyone (choses sans maître) and uses mechanisms such as occupation, accession by production, accession of movables and creation of assets. Derivative acquisition presupposes the extinction of the former ownership right, as no two property rights may apply to the same asset;455 original acquisition is the creation of a right ab initio. All cases of acquisition require the consent of the acquirer, who can not become an owner against his will.456 This consent can be explicit, following a declaration by the acquirer, or tacit as shown by non-equivocal behaviour. 448

449

450

451 452 453 454 455

Many other classifications are possible: one could distinguish voluntary and involuntary modes of acquisition, universal (à titre universel) and specific (à titre particulier) modes of acquisition, acquisition inter vivos or post death, acquisition for value or gratuitous acquisition. Legal theory however generally distinguishes original and derivative acquisition modes which then can fall under the other classifications that have been mentioned. Acquisition of ownership is not protected by the ECHR, unlike ownership itself: Bisan C., Renucci J.-F., La Cour européenne des droits de l’homme précise le droit de propriété, D. 2005, 870. Malaurie Ph., Aynès L., Les biens, p. 159, n° 551 seq. – Terré F., Simler Ph., Les biens, p. 314, n° 389. Malaurie Ph., Aynès L., Les biens, p. 159, n° 551 et p. 160 n° 554 seq. See infra 11.1: Accession of movables. See infra 13: Acquisitive prescription. See supra 2: Possession. Except the specific case of co-ownership (indivision, C. civ. art. 883 seq.), which however is only a temporary situation that disappears retroactively when the coownership ceases.

5. System of transfer

5.456

System of transfer

5.1.

Basic characteristics and overview

75

5.1.1. The “unititular” or “uniform” concept of the transfer of ownership In general, French law has a uniform concept of transfer of ownership, meaning that the various aspects linked to the right of ownership pass to the transferee at one moment in time.457 There is no transfer in stages. In particular, with respect to sales contracts,458 article 1583 of the Civil Code459 provides that the contract automatically transfers the ownership of the goods, as an effect of the intent (agreement) of the parties.460 Article 1583, thus declares the sale to be “perfect” between the parties. “Perfection” in the conception of article 1583 of the Civil Code means that the duty to give, i.e. transfer ownership arises and must be performed at this unique instant in time, whether or not a transfer (as a physical act) has occurred.461 This “intellectual” transfer of ownership is called a transfer solo consensu.462 This situation is specific to French law and contrasts with, for example, the situation in German law. French law links the requirement of a traditio to an intellectual act, creating a civil transfer,463 whereas German law links, in general, the traditio to a material act, physically or symbolically transferring the asset. As an exception, even in German law, there is a civil transfer, notably in the case

456 457

458

459

460

461 462

463

Zenati-Castaing F., Revet Th., Les biens, p. 275, n° 172. Collart Dutilleul F., Delebecque Ph., Contrats civils et commerciaux, p. 175, n° 187. – Terré F., Simler Ph., Les biens, p. 318, n° 397 seq. See for a general overview, Ghestin J., Desché B., Traité des Contrats, La vente, LGDJ 1990. – Collart Dutilleul F., Delebecque Ph., Contrats civils et commerciaux, p. 39, n° 35. C. civ., art. 1583: [the sale] is complete between the parties, and ownership is acquired as of right by the buyer with respect to the seller, as soon as the asset and the price have been agreed upon, although the asset has not yet been delivered or the price paid. Cass. com., 17 févr. 1987: Bull. civ. IV, n° 46. – See also, Bloch P., L’obligation de transférer la propriété dans la vente, RTD civ. 1988, p. 673. Zenati-Castaing F., Revet Th., Les biens, p. 283, n° 178. See also, Danos F., Propriété, possession et opposabilité, préf. L. Aynès, Economica 2007, p. 363 seq. Zenati-Castaing F., Revet Th., Les biens, p. 284, n° 178, referring also to article 938 of the Civil Code that excludes expressly “any other form of traditio”.

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of the assignment of claims;464 whereas, in French law, specifically for the assignment of claims, a material act is necessary, at least with respect to third parties.465 This automatic transfer of ownership completely masks a substantial obligation of the transferor: the “duty to give” (C. civ., art. 1101, obligation de donner).466 The duty to give (donner, from the Latin verb dare) means specifically “to transfer ownership” and not to donate (from the Latin verb donare). The performance of this duty to transfer ownership entails that the transferor specifically renounces his right of ownership of the asset. The French Civil Code lays down a fundamental principle in article 1138:467 the duty to give is performed at the time of conclusion of the contract and by the sole acceptance of this contract by the transferor.468 Thus, there is no 464

465

466

467

468

Cashin-Ritaine E., Les cessions contractuelles de créances de sommes d’argent dans les relations civiles et commerciales franco-allemandes, préf. F. Ranieri, LGDJ 2001, Bibl. dr. privé t. 348, p. 69, n° 105. Cashin-Ritaine E., Les cessions contractuelles de créances de sommes d’argent dans les relations civiles et commerciales franco-allemandes, préf. F. Ranieri, LGDJ 2001, Bibl. dr. privé t. 348, p. 190, n° 314 seq. Critizising this situation, Zenati-Castaing F., Revet Th., Les biens, p. 299-301, n° 187. – Tallon D., Le surprenant reveil de l’obligation de donner, D. 1992, chr. 68. – Fabre-Magnan M., Le mythe de l’obligation de donner, RTD civ., 1996, 85. – Courdier-Cuisinier A.-S., Nouvel éclairage sur l’énigme de l’obligation de donner, RTD civ., 2005, 521. – Comp. Pignarre G., A la redécouverte de l’obligation de praestare – Pour une relecture de quelques articles du code civil, RTD civ. 2001, p. 41. – Also, Pignarre G., L’obligation de donner à usage dans l’avant-projet Catala – Analyse critique, D. 2007, p. 384. C. civ., art. 1138: (1) The obligation of delivering an asset is performed by the sole consent of the contracting parties. (2) It makes the creditor the owner and places the asset at his risks from the time when it should have been delivered, although the handing over has not been made, unless the debtor has been given notice to deliver; in which case, the asset remains at the risk of the latter. Comp. the “dessaisine-saisine” clause in old French law, which in notarized documents, explicitly stated the double unilateral declaration of the transferor and transferee. – Also Zenati F., Transfert de propriété par l’effet des obligations, RTD civ. 1994, p. 132. – Chazal J.-P., Vicente S., Le transfert de propriété par l’effet des obligations dans le Code civil, RTD civ. 2000, p. 477 seq. – Blanluet G., Le moment du transfert de la propriété, in 1804-2004, Le Code civil, un passé, un présent, un avenir, Dalloz 2004, 409. – Ancel P., Force obligatoire et contenu obligationnel du contrat, RTD civ. 1999, 771. – Bloch P., L’obligation de transférer la propriété dans la vente, RTD civ. 1988, p. 673 (677). – Huet J., Des différentes sortes d’obligations et plus particulièrement, de l’obligation de donner, la mal nommée, la mal aimée, in Mélanges Ghestin, LGDJ 2001, p. 425.

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specific declaration of the intent of the transferor to renounce his right of ownership. In the same way, there is no specific declaration of intent of the transferee to acquire ownership. However, both declarations are implied, as the will of both parties is required to transfer property in the good.469 The duty to give includes the duties to deliver and to keep the asset until delivery (C. civ., art. 1136),470 and to transfer ownership and possession (C. civ., art. 1604).471 Nevertheless, in some cases, where a legal formality has to be respected, French law distinguishes between the effects of the transfer with respect to the contracting parties and the effects of the transfer in relation to third parties.472 This occurs for the transfer of claims (assignment of receivables – C. civ., art. 1690)473 and in cases where the transfer must be registered to be effective against third parties.474 Additionally, with respect to third parties, the transfer of property in a movable is only fully opposable as a right in rem, when the new owner takes possession of the asset.475 The concept of opposabilité is complex.476 Article 1365 of the Civil Code provides that the transfer of ownership is fully opposable against third parties, solo consensus, because opposability is an inherent feature of ownership. Yet, because the transfer has taken place solo consensu, third parties may not be informed of the transfer of ownership. In general, if the asset transferred is a corporeal movable, the third party can consider the person who is in possession of it to be its owner (C. civ., art. 1141).477 Possession here serves the purpose of information.

469

470

471

472

473

474

475

476

Zenati-Castaing F., Revet Th., Les biens, p. 283, n° 178 stresses that this transfer is not a transfer by an effect of the law, as each party must agree to this transfer. C. civ., art 1136: An obligation to transfer carries that of delivering the asset and of keeping it until delivery, on pain of damages to the creditor. C. civ., art. 1604: Delivery is the transfer of the asset sold into the power and possession of the buyer. Collart Dutilleul F., Delebecque Ph., Contrats civils et commerciaux, p. 176, n° 189-190. – Terré F., Simler Ph., Les biens, p. 322, n° 405 seq. Cashin-Ritaine E., Les cessions contractuelles de créances de sommes d’argent dans les relations civiles et commerciales franco-allemandes, Bibl. dr. privé t. 348, LGDJ 2001, p. 403, n° 666 et suiv. See for example the transfer of shares that must be registered within the books of the company (C. civ., art. 1865). Bufnoir C., Propriété et contrat, Paris 1924, p. 59 seq. – There are however exceptions in the case of possession corpore alieno or constitutum possessore. – See supra 2.1: Notion of possession. See Danos F., Propriété, possession et opposabilité, préf. L. Aynès, Economica 2007, 534 pages.

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For some specific movables however, the transfer of ownership must adhere to certain publicity requirements. This is the case of ships,478 boats479 and airplanes,480 the transfer of which must be registered in a ledger maintained by the French customs (administration des douanes). Similar rules apply to patents, for which registration is required at the Institut national de la propriété industrielle.481 To be complete, in legal theory, a lot of discussions have been held as to whether the right of ownership is transferred as such, or whether there is a double mechanism of deconstitution (i.e. extinction) and constitution of a right: i.e. the right of ownership of the transferor is extinguished followed by the birth of the right of the transferee.482 Such an analysis is similar to the Roman conception of the transfer of ownership. Zenati-Castaing and Revet483 consider that this approach is logi cal if one perceives the right of ownership as a link between the assets and a person (subjective approach)484 and thus, the transmission only applies to the assets and implies the extinction and simultaneous constitution of a right for each of the two parties. 477

5.1.2. Are the same rules applicable to all kinds of obligations? French law does not make any distinction among the different kinds of obligations / duties to transfer ownership.485 As soon as the object of the obligation is clearly defined (certain), the transfer takes place solo consensus, whether the obligation to transfer ownership derives from a contract,486 a unilateral promise, a claim for unjustified enrichment, a claim for damages, or an obligation arising from negotiorum gestio. For the transfer to be effec477

478 479 480 481 482

483 484 485 486

C. civ., art. 1141: Where an asset which one is obliged to transfer or deliver to two persons successively is purely movable, the one of the two who has been put in actual possession is preferred and remains owner of it, although his title is subsequent as to date, provided however that the possession is in good faith. Décret du 27 oct. 1967, Article 93. C. dom. pub. fluv., art. 101. C. av. civ., art. L 121-11. C. prop. intell., art. L. 613-9, al. 1. Zenati-Castaing F., Revet Th., Les biens, p. 297, n° 187. – Vareilles-Sommières, La définition et la notion juridique de la propriété, RTD civ. 1905, p. 443 (458). Zenati-Castaing F., Revet Th., Les biens, p. 297, n° 187. See supra 1.2.1: Definiton of ownership rights. Malaurie Ph., Aynès L., Les biens, p. 160, n° 553. Whatever the type of contract. See a dation en paiement: Cass. 1e civ., 27 janv. 1993: Bull. civ. I, n° 39; Defrénois 1993, 730, obs Aubert; RTD civ. 1994, 132, obs. Zenati.

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tive, both the transferor and the transferee must agree to the transfer of ownership. This agreement is, however, implied in most cases. If the transfer results from a decision or order of a court or another public authority, the transfer takes place as soon as this decision is definite. In the law of successions,487 the transfer from the de cujus to his heirs takes place immediately at the time of death. If an heir does not want to accept the succession, the renunciation then has retroactive effects.488 In all cases of transfer, the transferor loses his right of ownership, which extinguishes, whereas the transferor acquires a right of ownership that is created ipse jure.489 As the right of the new owner (ayant-cause) is dependent on the right of the former owner (auteur), it is a derivative acquisition. The exact nature of this mechanism is disputed. For some modern authors490, there is no transfer of rights of ownership, but only the transfer of the asset (i.e. goods in the legal sense) as receptacle of the right of ownership. In other words, the transfer mechanism represents the death of the former right of ownership and the birth of a new right to the assets transferred, the two rights being identical. Other authors consider, in a more classical way, without however being fully in contradiction to the former statement, that the transfer of ownership derives directly from the law491 and the right of ownership is transferred independently of the asset as such.492

5.1.3. Short overview of the basic transfer requirements The transfer of ownership may take many forms in French law. In most cases, this transfer will be a consequence of the consent of parties to a contract. The transferor will thus renounce his ownership right to the benefit of the transferee, who then will become the owner. Article 711 of the Civil Code provides for the acquisition of ownership as an effect of obligations.493 This acquisition requires two unilateral declarations: the renunciation of the transferor in favour of the transferee and the decision of the transferee to acquire ownership of the asset.494 487 488 489 490 491 492

493

Malaurie Ph., Aynès L., Les biens, p. 160, n° 553. C. civ., art. 776. Zenati-Castaing F., Revet Th., Les biens, p. 279, n° 176. Zenati-Castaing F., Revet Th., Les biens, p. 279, n° 176. See supra 5.1.3.(a): The legal requirements for the transfer. Collart Dutilleul F., Delebecque Ph., Contrats civils et commerciaux, n° 187, p. 175. C. civ., art. 711: Ownership of property is acquired and transmitted by succession, by gift inter vivos or will, and by the effect of obligations.

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However, if there is no contract, the transfer can be the result of a unilateral act such as a will, or result from the operation of law, as in a succession ab intestat. Additionally, courts can decide on the transfer of ownership by adjudication. In this last case, the judge makes the decision in the stead of the transferor.495 If the transfer of ownership is the result of a will, here again there are two unilateral acts: the deceased person (de cujus) decided before his death to bequeath an asset (legs, succession à titre particulier) or his entire estate (succession à titre universel) to a heir; the heir must agree to become the owner of the asset or of the entire estate. If the de cujus did not draft a will, it is an ab intestat succession. In this case, the law presumes that the deceased person intended (presumption of a unilateral declaration) to leave his assets to his heirs in the legal order of succession, as provided for in the Civil Code. Here again, the heir must agree to become the owner of the asset. 494

(a)

Legal requirements for the transfer

The transfer of ownership in French law is subject to the principle of party autonomy,496 meaning that the parties to a contract are free to transfer property by contract if they comply with the legal conditions laid down in the law (C. civ., art. 711 and 1134).497 The transfer of ownership in French law requires a valid contract that respects the conditions provided for in articles 1108 to article 1133 of the Civil Code (on the formation of the contract) and in articles 1134 to 1167 of the Civil Code (on the performance of the contract). In particular, article 1108 of the Civil Code states,498 “Four requisites are essential for the validity of an agreement: the consent of the party who binds himself; his capacity to contract; a definite object which forms the subject-matter of the undertaking; a lawful cause in the obligation.” 494 495

496 497

498

Zenati-Castaing F., Revet Th., Les biens, p. 280, n° 177. Specifically, only a judge can make such a decision in cases involving legally protected persons (incapables en tutelle), when business assets (fonds de commerce) or immovables are to be sold. The judge also intervenes in cases where assets have to be divided (licitation). Terré F., Simler Ph., Les biens, p. 316, n° 393. C. civ., art 1134: (1) Agreements lawfully entered into are the law of those who have made them. (2) They may be revoked only by mutual consent, or for causes authorized by law. (3) They must be performed in good faith. Translation taken from www.legifrance.gouv.fr.

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These four conditions are part of general contract law and will only be explained briefly here.499 First, the Civil Code500 provides that the consent (consentement) of a party should be free of defects such as: a mistake as to the substance of the assets that constitutes the object of the contract; a mistake as to the person of the other party, if the contract is concluded intuitu personae; a fraud committed by one of the parties to induce the other party to conclude the contract; and moral or physical violence towards the other party to force him to contract. Secondly, each party must also be capable of contracting (capacité). Article 1123 of the Civil Code501 states that anybody can conclude a contract, unless he is declared incompetent by law. Limits apply generally to minors and to mentally impaired persons.502 Specific rules apply to donations, where limitations exist both for the donor and the donee.503 Thirdly, the contract must also have an object (objet) that conforms to legal requirements. The exact meaning of the “object” of the contract is not clear in the Civil Code. Authors504 generally distinguish between the object of the contract,505 i.e. the type of agreement the parties want to make (sale of goods, barter, lease) and the object of the obligation,506 which is the

499

500

501

502

503

504

505

Detailed explanations can be found in: Terré F., Simler Ph., Lequette Y., Droit civil, les obligations, Dalloz 9e édition 2005, p. 93, n° 79 seq. – Flour J., Aubert J.-L., Savaux E., Droit civil, les obligations, 1. L’acte juridique, Sirey 12e éd. 2006, p. 87, n° 121 seq. – Chabas F., Leçons de droit civil, T. II, 1er vol., Obligations, Théorie générale, Montchrestien, 9e éd. 1998, p. 103, n° 114 seq. – Voirin P., Goubeaux G., Droit civil, p. 353, n° 790 seq. – Bénabent A., Droit civil, les obligations, Montchrestien, 10e éd. 2005, p. 21, n° 28 seq. Bénabent A., Les obligations, p. 41, n° 54 seq. – Terré F., Simler Ph., Lequette Y., Les obligations, p. 212, n° 204 seq. – Flour J., Aubert J.-L., Savaux E., Les obligations, p. 143, n° 190 seq. C. civ., art. 1123: Any person may enter into a contract, unless he has been declared incapable of it by law. Voirin P., Goubeaux G., Droit civil, p. 378, n° 838 seq. – Terré F., Simler Ph., Lequette Y., Les obligations, p. 108, n° 94 seq. – Flour J., Aubert J.-L., Savaux E., Les obligations, p. 178, n° 225 seq. Jubault Ch., Droit civil, Les successions, Les liberalités, Montchrestien 2005, p. 395, n° 660 seq. Bénabent A., Les obligations, p. 102, n° 141 seq. – Terré F., Simler Ph., Lequette Y., Les obligations, p. 274, n° 265 seq. – Criticizing this distinction, Flour J., Aubert J.-L., Savaux E., Les obligations, p. 185, n° 234 seq. Bénabent A., Les obligations, p. 114, n° 156 seq. – Terré F., Simler Ph., Lequette Y., Les obligations, p. 309, n° 301 seq.

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promise to do, to give or to refrain from doing something. This object of the obligation must exist, be determined or determinable and be transferable.507 Finally, the contract must have a valid causa (cause), which is the main motive of the legal transaction. Here again, terminology is not clear, as authors508 distinguish between the cause of the contract509 (cause subjective, i.e. the motive behind the conclusion of the contract), and the cause of the obligation510 (cause objective, i.e. the counterpart of the other party’s promise). The validity of the contract requires an existing and legal cause conforming to public order requirements and mandatory law. The French system follows the causal principle. This means in particular, that if the contract that underlies the transfer is void, the transfer of property is also void ad initio.511 The transfer thus needs a valid obligation as its causa.512 Nevertheless, if the acquirer is in possession of the asset, third parties can trust this appearance of ownership, and thus acquire ownership from the possessor.513 506

(b)

Legal nature of the transfer

The transfer of ownership in French law is consensual.514 This principle results from article 1138,515 article 711,516 article 938 (donation)517 and arti506

507 508

509

510

511

512

513 514

Bénabent A., Les obligations, p. 102, n° 142 seq. – Terré F., Simler Ph., Lequette Y., Les obligations, p. 276, n° 266 seq. See infra, 5.2.1: Specific goods – generic goods. Bénabent A., Les obligations, p. 133, n° 178 seq. – Flour J., Aubert J.-L., Savaux E., Les obligations, p. 185, n° 234 seq. – Yet see a different terminology at, Voirin P., Goubeaux G., Droit civil, p. 383, n° 850 seq. Bénabent A., Les obligations, p. 140, n° 187 seq. – Flour J., Aubert J.-L., Savaux E., Les obligations, p. 210, n° 264 seq. Bénabent A., Les obligations, p. 133, n° 179 seq. – Flour J., Aubert J.-L., Savaux E., Les obligations, p. 203, n° 255 seq. This is an application of the general theory on « la cause du contrat » ruled by art. 1131 C. civ. Bénabent A., Les obligations, p. 134, n° 181. – Voirin P., Goubeaux G., Droit civil, p. 384, n° 852 seq. See acquisition a non domino infra at 12: Rules of good faith acquisition. Chazal J.-P., Vicente S., Le transfert de propriété par l’effet des obligations dans le Code civil: RTD civ. 2000, p. 477. – Bloch P., L’obligation de transférer la propriété dans la vente, RTD civ. 1988, p. 673. – Witz Cl., Analyse critique des règles régissant le transfert de propriété en droit français à la lumière du droit allemand, in Festschrift für Günter Jahr, Tübingen, p. 533. – Ducouloux-Favard C., Le transfert de propriété, objet du contrat de vente en droit français, allemand et italien, Petites Affiches, 27

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cle 1583 of the Civil Code (contract for the sale of goods).518 This means specifically that the transfer of ownership derives directly from the law, the law implying the agreement of the parties to the transfer of ownership.519 It also means that the right of ownership is transferred independently from the asset as such.520 Nevertheless, the transferor must own the asset or the right he is transferring.521 French law applies the general principle nemo plus juris transferre potest quam ipse habet.522 In other terms, one can only transfer what one has.523 In particular, if the right of the transferor (auteur) to the asset disappears, because the contract establishing this right is avoided, the right of ownership of the transferee (ayant cause) also disappears (resoluto jure dantis, resolvitur jus accipientis principle524). If the asset is charged with real rights, such as securities, the transferor will be subject to the droit de suite of the beneficiary of the real rights. If the 515

515

516

517

518

519

520

521 522

523

524

516

517

avril 1990, p. 21. – Terré F., Simler Ph., Les biens, p. 316, n° 394. – Collart Dutilleul F., Delebecque Ph., Contrats civils et commerciaux, p. 175, n° 187. C. civ., art. 1138: (1) An obligation of delivering an asset is complete by the sole consent of the contracting parties. (2) It makes the creditor the owner and places the asset at his risks from the time when it should have been delivered, although the handing over has not been made, unless the debtor has been given notice to deliver; in which case, the asset remains at the risk of the latter. C. civ., art. 711: Ownership of property is acquired and transmitted by succession, by gift inter vivos or will, and by the effect of obligations. C. civ., art. 938: A gift duly accepted is complete by the sole consent of the parties; and ownership of the articles donated is transferred to the donee without need of any other delivery. C. civ., art. 1583: [the sale] is complete between the parties, and ownership is acquired as of right by the buyer with respect to the seller, as soon as the asset and the price have been agreed upon, although the asset has not yet been delivered or the price paid. See supra 5.1.3.(a): The legal requirements for the transfer and supra 5.1.1: The “unititular” or “uniform” concept of the transfer of ownership. Collart Dutilleul F., Delebecque Ph., Contrats civils et commerciaux, n° 187, p. 175. Ghestin J., Desché B., La vente, p. 415, n° 371. Roland H., Boyer L., Adages du droit français, Litec 4e éd. 1999, p. 506, n° 259. – Terré F., Simler Ph., Lequette Y., Les obligations, p. 501, n° 499. See also C. civ., art 2477 al. 2: A seller conveys to a purchaser only the ownership and the rights he himself had on the asset sold: he conveys them subject to the same prior charges and mortgages with which the asset sold was burdened. – Didier P., Les biens négociables, in Mélanges Guyon, Dalloz 2003, p. 327. Larroumet Ch., Les biens – Droits réels principaux, p. 189, n° 317.

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asset benefits from certain rights, such as guarantee rights, the transferee can also use them. The impact of this rule is limited to the internal relations of the parties, insofar as movables are concerned. In respect of third parties, the rule provided by article 2276 (former C. civ., art. 2279) of the Civil Code lays down that a third party acting in good faith acquires ownership of an asset that he has received a non domino.525 Additionally, rules on representation526 may alleviate the fundamental principle of nemo plus juris. Representation is a replacement mechanism where one person replaces another in the accomplishment of a legally significant act. Representation is not provided by the Civil Code as an independent legal institution,527 but various specific applications can be found in the Civil Code, depending on the reason for the representation.528 Representation can be defined as a situation in which a person, the agent or intermediary, acts in the name and on behalf of another person, the principal, with the effect that the legal consequences of the agent’s acts are attributed directly and exclusively to the principal.529 Representation is direct or perfect (representation parfaite) if the agent has the power to act not only on behalf, but also in the name, of the principal. Representation is indirect (representation imparfaite) if the agent acts on behalf of the principal, but in his own name. The agent thus declares that he acts for a third party, but does not reveal the name of the third party. Such a situation can be found in commercial law under the so-called contrat de commission (C. com., art. L 132-1 seq.). This contract achieves its effects in two stages: first the agent contracts with the other party. Then the principal becomes a party to the contract. The legal effects of direct representation impact upon the patrimony of the principal.530 The agent is only an intermediary, who brings the consent of the principal to the attention of the other party.531 Thus, the transfer of 525 526

527 528

529

530

See infra 12: Rules of good faith acquisition. Flour J., Aubert J.-L., Savaux E., Les obligations, p. 348, n° 426 seq. – Storck M., Essai sur le mécanisme de la representation dans les actes juridiques, préface Huét-Weiller, Bibl. dr. privé, LGDJ 1982. – Didier Ph., De la representation en droit privé, préface Y. Lequette, Bibl. dr. privé, LGDJ 2000. See however the agency contract at C. civ., art. 1984 seq. See C. civ., art. 1984 seq. for the contract of agency (mandat), legal representation measures for minors and mentally impaired persons, representation by court decision (C. civ., art. 219: for example, representation of a spouse by the other spouse). Flour J., Aubert J.-L., Savaux E., Les obligations, p. 349, n° 428 seq. – Terré F., Simler Ph., Lequette Y., Les obligations, p. 177, n° 173. – Huet J., Les principaux contrats spéciaux, p. 1055, n° 31000 seq. Terré F., Simler Ph., Lequette Y., Les obligations, p. 179, n° 175.

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ownership, operated by an agent on instructions of the principal, has no effects whatsoever within the agent’s patrimony. 531 On the other hand, in the case of indirect representation, the situation is more complex. As the agent acts in his own name, logically, he is party to the contract; yet ownership rights pass directly to the principal.532 If the agent acts without a power of representation, neither the agent nor the principal are bound by the act of the intermediary (i.e. the agent).533 The only way to circumvent this situation is to obtain ratification by the principal. Ratification534 is a unilateral act by which the principal agrees to adopt the act accomplished by the intermediary. Between the agent and the principal, this ratification has an ex tunc effet. In respect of third parties, it only applies ex nunc if third parties have acquired rights between the moment the act was accomplished and the moment of ratification. In some cases, the so-called “theorie de l’apparence”535 will protect third parties if they legitimately believe that the apparent representative has the power to act for the principal.536 Courts will thus judge that the power of representation produces effects towards third parties. The transfer of property rights takes place automatically at the time of the contract, even if the asset has not been delivered to the acquirer.537 The transferor thus no longer holds the asset as an owner, but recognises automatically that he possesses the asset for the account of the buyer (constitut possessoire).538 531

532

533 534

535

536

537 538

As a particular feature, the consent of both the agent and the principal has to be valid: Cass. 1e civ., 19 mai 1999: Bull. civ. I, n° 160. Terré F., Simler Ph., Lequette Y., Les obligations, p. 178, n° 173, p. 182, n° 181. – Collart Dutilleul F., Delebecque Ph., Contrats civils et commerciaux, n° 666, p. 556. Izorche M.-L., A propos du « mandat sans representation », D. 1999, chr. 369. C. civ., art. 1998: (1) A principal is bound to perform the undertakings contracted by the agent, in accordance with the authority granted to him. (2) He is bound for what may have been done outside its scope, only where he has expressly or tacitly ratified it. – Huet J., Les principaux contrats spéciaux, p. 1149, n° 31214. Ghestin et allii, Introduction générale, LGDG, 4e éd. 1994, n° 838, p. 828 seq. – Zenati-Castaing F., Revet Th., Les biens, p. 301, n° 187. – Danis-Fatôme A., Apparence et contrat, préf. G. Viney, LGDJ, bibl. dr. privé, t. 414, 2004. – Sourioux J.-L., La croyance légitime, JCP 1982, I, 3058. – Leroux E., Recherche sur l’évolution de la théorie de la propriété apparente dans la jurisprudence depuis 1945, RTD civ. 1974, p. 509. Calais-Auloy B.-V., Essai sur la notion d’apparence en droit commercial, 1959, préface M. Cabrillac. – Huet J., Les principaux contrats spéciaux, p. 1151, n° 31217 seq. Ghestin J., Desché B., La vente, p. 589, n° 524. Terré F., Simler Ph., Les biens, p. 151, n° 159. – See supra 2.1: Notion of possession.

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The contract does not create an obligation to transfer property,539 as ownership is transferred immediately. “Traditio” (i.e. transfer of possession) as such is not required. Neither is payment necessary in a synallagmatic contract, unless the parties have provided otherwise.540 French law does not require a so-called “real agreement”, i.e. a declaration or agreement separate from the underlying obligation which is necessary to accomplish the transfer of ownership. If the asset has been transferred with a retention of title clause, the seller may empower the acquirer to sell the asset again, even though he is not the owner. In this case, the claim for payment against the second acquirer is transferred to the first seller.541

(c)

Limits of the solo consensu principle

These rules are not mandatory and parties to a contract may make other arrangements.542 The parties to a contract may thus decide that the transfer of ownership be postponed to the time of delivery543 or to the time of payment (reservation of title).544 The transfer of ownership is not retroactive to the time of the conclusion of the contract, unless the parties decide otherwise (C. civ., art. 1601-2).545 A clear distinction must be made between cases where the transfer is only delayed and cases where the transfer is conditional upon the perfor545

539

540 541

542

543

544

545

Ghestin J., Réflexions d’un civiliste sur la clause de réserve de propriété: D. 1981, chron. p. 1, spec. n° 13. – Saint-Alary-Houin C., Réflexions sur le transfert différé de la propriété immobilière, in Mélanges Raynaud, 1985, p. 733, n° 25. – Cass. 1e civ., 27 janv. 1993: Bull. civ. I, n° 39; JCP G 1994, II, 22195, note Pétel-Teyssié; RTD civ. 1994, p. 132, obs. Zénati. – Cass. 1e civ., 10 oct. 1995: Bull. civ. I, n° 361; JCP G 1995, IV, 2527; D. 1995, inf. rap. p. 246. Reservation of title, see Ghestin J., Desché B., La vente, p. 647, n° 581. C. civ., art. 2372: The right of ownership burdens the debtor’s claim with respect to a subpurchaser or to the indemnity under an insurance policy which is subrogated to the property. Ghestin J., Desché B., La vente, p. 621, n° 554. – Collart Dutilleul F., Delebecque Ph., Contrats civils et commerciaux, n° 185, p. 174. This is often agreed in distance contracts, so as to be sure that the asset exists at that moment; see future goods infra, this section. C. com., art. L 624-16 to L 624-18 and C. civ., articles 2367-2372. – Reservation of title, see Ghestin J., Desché B., Traité des Contrats, La vente, LGDJ 1990, p. 647, n° 581. – See infra 15: Rules for the reservation of title. C. civ., art. 1601-2: A sale for future delivery is the contract by which the seller undertakes to deliver the building on its completion, and the buyer undertakes to

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mance of an obligation, such as the payment of a price. In the first set of cases, neither party can ultimately prevent the transfer of ownership, because both have consented in advance to the transferring of the property at a given moment in time.546 In the second case, the transfer is dependent on the occurence of a condition, which is an uncertain event in time that suspends the existence of the duty to give.547 If this event happens, it has a retroactive effect by transferring the ownership at the time of the conclusion of the contract. This hypothesis is applied in the case of a reservation of title clause that links the transfer of ownership to the payment of the price. Parties to a contract may also transfer only partial ownership rights, such as usufruct rights or an asset that is burdened with a usufruct right.548 Sometimes, the solo consensu principle is set aside. This is the case of donations, where article 931 of the Civil Code lays down that a donation between living people (donations entre vifs) must be drafted by a notary, or else be declared void.549 Yet, there is one exception accepted by courts: the gift from hand to hand (don manuel).550 This gift only requires the physical transfer of the asset from the donor to the donee. The intention of the donor is expressed through this material act. In respect to non corporeal assets, the transfer from hand to hand can be done via a bank draft.551 Certain assets can however only be transferred by virtue of a written contract: such

546

547 548

549

550

551

take delivery of it and to pay the price of it at the date of delivery. The transfer of ownership is achieved by operation of law by the acknowledgement of the completion of the building through an authentic instrument; it is effective retroactively on the day of the sale. In such a case, the transferee would be creditor of the transfer of ownership. It is a form of jus ad rem, which does not give any power over the good, but is a personal right that can be transferred. See Zenati-Castaing F., Revet Th., Les biens, p. 303, n° 188. – Also Cass. com., 10 janv. 2006: RTD civ. 2006, 343, obs. Revet. – Cass. 3e civ., 6 oct. 2004: Bull. civ. III, n° 163; D. 2004, 3098, note G. Kessler; RTD civ. 2005, 121, n° 2, obs. Mestre et Fages. Zenati-Castaing F., Revet Th., Les biens, p. 286, n° 180. Dagot M., La vente d’un bien grevé d’usufruit, JCP N 1987, I, 307. – Bénabent A., Les contrats spéciaux civils et commerciaux, p. 22, n° 24. C. civ., art. 931: All acts containing an inter vivos gift shall be executed before notaires, in the ordinary form of contracts; and there shall remain the original of them, on pain of annulment. Cass. 1e civ., 11 juil. 1960: D. 1960, 702, note Voirin. – Peterka N., Les dons manuels, préf. P. Catala, Bibl. dr. privé t. 355, LGDJ 2001. Cass. com., 19 mai 1998: Bull. civ. IV, n° 161; D. 1998, 551, note Martin; D. 1999, somm. 308, obs. Nicod; RTD com. 1998, 967, obs. Deboissy; RTD civ. 1999, 677, obs. Patarin; JCP 1999, I, 118, n° 8, obs. Viandier et Caussain. – Comp. the transfer

88

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is the case of patents (brevets d’invention – CPI, art. L 613-8, al. 5); of trademarks (CPI, art. L 714-1, al. 4); and of aircraft (C. av. civ., art. L 121-11). Furthermore, the solo consensu principle is only fully effective between the parties to a contract.552 With respect to third parties, rules on registration and rules governing possession of movables553 limit the effects of the solo consensu principle.554 Additionally, the solo consensu principle only applies when an immediate transfer of ownership is possible, in particular only for identified assets, which is not the case of future assets that can only be acquired when they come into existence, or of assets that have to be individualised first (generic goods). It is also important to note that, if for some reason the derivative acquisition of ownership fails, the acquirer may become the owner under the rules of original acquisition.555 For example, if there is a conflict between two buyers, article 1141 of the Civil Code,556 which is a specific application of article 2276 (former C. civ., art. 2279) of the Civil Code,557 provides that if a movable good has been transferred to two different buyers, preference is given to the person who first possessed the asset in good faith, even if his legal title came later. Therefore, even if the ownership on the asset is transferred solo consensu, where there is a conflict between two buyers, it will be resolved through the rules on possession.558 In a similar way, notwithstanding the solo consensu principle, rules on prescriptive acquisition enable the acquirer to become the owner after a certain period of time.559 In some cases, where the transfer of ownership is delayed, the transferee benefits from an immediate right of use (entrée immediate en jouissance). Any risks befalling the asset are normally linked to the right of ownership560 (res

552

553 554

555 556

557 558 559 560

of ownership of securities (C. mon. et fin., art. L 431-2, al. 1) and the transfer of emission quotas (C. env., art. L. 229-15, I, al. 2). Collart Dutilleul F., Delebecque Ph., Contrats civils et commerciaux, n° 189, p. 176. – Bénabent A., Les contrats spéciaux civils et commerciaux, p. 99, n° 143. Bénabent A., Les contrats spéciaux civils et commerciaux, p. 101, n° 147. Collart Dutilleul F., Delebecque Ph., Contrats civils et commerciaux, n° 189, p. 176. – See supra 5.1.1: The “unititular” or “uniform” concept of the transfer of ownership. See infra 11: Types of original acquisition. C. civ., art. 1141: Where an asset which one is bound to transfer or deliver to two persons successively is purely movable, the one of the two who has been put in actual possession is preferred and remains owner of it, although his title is subsequent as to date, provided however that the possession is in good faith. See infra 12: Rules of good faith acquisition. See supra 2: Possession. See infra 13: Acquisitive prescription. Cass. civ., 13 nov. 1997, n° 95-20411 (inédit).

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perit domino principle561), which in this case has not yet been transferred. Therefore, article 1137 of the Civil Code impresses a “conservation duty” on the holder (détenteur précaire) of the asset.562 Additionally, the contract may provide for the transfer of risks at the time of the delivery, notwithstanding any transfer of ownership. If the asset is destroyed after the transfer of ownership, but before the material delivery of the asset and before payment of the price agreed, the transferor has a duty of conservation (C. civ., art 1136),563 but the loss of the asset is at the risk of the transferee (C. civ., art. 1138).564 The transferee must then pay the price without obtaining the counterpart. If however, the transferor did not tend to the asset as a reasonable person (bon père de famille) would have, the transferee is entitled to compensation for the loss incurred. The transferee must establish a fault (faute, obligations de moyens) on the part of the transferor, the mere fact of the asset’s destruction not being enough to establish the transferor’s liability. If the asset is destroyed before transfer of ownership and before delivery, the risks of the loss are the transferor’s (res perit debitori principle).565 This is an application of the theory of impossibility of performance of a synallagmatic contract, which states that the two parties are freed from their obligations if the contract cannot be performed under any circumstances. Article 1138, al. 2 of the Civil Code considers that the transferor must bear the risks of loss if the delivery of the asset is late and if the transferee has notified the transferor of the delay in delivery. However, the transferor is exempted from liability if he can prove that the asset would have equally been destroyed at the transferee’s place of business if it had been delivered (see also, C. civ., art. 1302, al. 2 and art. 1604).566

561 562

563

564

565

Roland H., Boyer L., Adages du droit français, Litec 4e éd. 1999, p. 401, n° 808. C. civ., art 1137: (1) An obligation to watch over the preservation of an asset, whether the agreement has as its object the profit of one party, or it has as its object their common profit, compels the one who is responsible to give it all the care of a prudent administrator. (2) That obligation is more or less extensive as regards certain contracts, whose effects, in this respect, are explained under the Titles which relate to them. C. civ., art. 1136: An obligation to transfer carries that of delivering the asset and of keeping it until delivery, on pain of damages to the creditor. C. civ., art. 1138: (1) An obligation of delivering an asset is complete by the sole consent of the contracting parties. (2) It makes the creditor the owner and places the asset at his risks from the time when it should have been delivered, although the handing over has not been made, unless the debtor has been given notice to deliver; in which case, the asset remains at the risk of the latter. Roland H., Boyer L., Adages du droit français, Litec 4e éd. 1999, p. 400, n° 807.

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5.2.566 General issues 5.2.1. Specific goods – generic goods Under French law, some goods cannot be transferred by contract.567 Limitations apply to public property (biens du domaine public),568 certain nontransferable rights (droits d’usage et d’habitation, articles 631 and 634 C. civ.),569 but also to certain specific goods (C. civ., art. 1128570) such as game and fish (during the periods when hunting and fishing are prohibited), tobacco, gunpowder, arms, works of art and gold, as well as the human body and tombs. Rules governing the transfer of ownership apply, in general, to an identified and individual asset. It is nevertheless possible to transfer a combination of assets that cannot be separated. This combination is referred to as a “universalité de droits”. For example, a business (fonds de commerce) is such a combination of assets. In the case of generic goods,571 it is necessary to identify the asset so that the transfer of property can take place.572 Article 1585 of the Civil 566

567 568

569

570

571

C. civ., art. 1302: (1) Where an asset certain and determined which was the object of an obligation perishes, may no longer be the subject matter of legal transactions between private individuals, or is lost in such a way that its existence is absolutely unknown, the obligation is extinguished if the asset has perished or has been lost without the fault of the debtor, and before he was under notice of default. (2) Even where the debtor is under notice of default, if he has not assumed fortuitous events, the obligation is extinguished in the case where the asset would also have perished in the hands of the creditor if it had been delivered to him. (3) The debtor is obliged to prove the fortuitous event which he alleges.; and C. civ., art. 1604: Delivery is the transfer of the asset sold into the power and possession of the buyer. Didier P., Les biens négociables, in Mélanges Guyon, Dalloz 2003, p. 327. Terré F., Simler Ph., Lequette Y., Les obligations, p. 285, n° 277. – Formerly this was justified by: C. domaine, art. L. 52: « Les biens du domaine public sont inaliénables et imprescriptibles ». See also Civ. 1re, 2 mars 1994, D. 1994, Somm. p. 165, obs. A. Robert. This article has now disappeared from the Code des domaines since 2006 but can be found under Articles L 3111-1 and Article L 3111-2 C. gén. de la prop. des pers. pub. C. civ., art. 631: a user may neither transfer nor lease his right to another person. – C. civ., art. 634: A right of dwelling may not be transferred or leased. C. civ., art. 1128: Only assets which may be the subject matter of legal transactions between private individuals may be the object of agreements. The so-called «vente en bloc» is not included here, as it applies to the whole of a set of identified goods situated in a certain place, where the price has been fixed per unit (C. civ., art. 1586). This type of goods does not fall within the category of generic goods.

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Code573 regulates this situation. This article provides that, as long as the asset has not been weighed, counted or measured, it remains at the risk of the seller.574 The transfer of property can only take place when the asset has been individualised.575 French law uses identification in two manners: at the time the contract is concluded, identification (i.e. the determination of the asset) is a condition of validity of the contract (for example, for the sale of a kilo of butter or flour).576 Precise identification of the asset is additionally a method of performance of the contract. Identification thus serves two purposes. First, identification enables the transfer of property and the performance of the contract:577 as soon as the promised quantities have been measured, ownership is transferred. Secondly, identification is used under contracts where the asset is sold by reference, to verify whether the selected item is conform to the contract.578 Identification can however, only be performed when the asset exists.579 In general, identification is a unilateral act performed by the transferor. There is no additional requirement (e.g. notification to the other party or consent by the other party).580 If the goods that have been identified are not in accordance with the agreement, the other party can, of course, sue for faulty performance.581 572

572

573

574 575

576

577 578

579

580

581

573

Goré F., Le transfert de propriété dans les ventes de choses de genre, D. 1954, chr. p. 175. C. civ., art 1585: Where goods are not sold in bulk but by weight, number or measure, a sale is not complete, in that the assets sold are at the risk of the seller until they have been weighed, counted or measured; but the buyer may claim either the delivery or damages, if there is occasion, in case of non-performance of the undertaking. Zenati-Castaing F., Revet Th., Les biens, p. 166, n° 102. Cass. civ., 30 juin 1925, D.P. 1927, 1, 29. – Zenati-Castaing F., Revet Th., Les biens, p. 166, n° 102 and p. 285, n° 179. Collart Dutilleul F., Delebecque Ph., Contrats civils et commerciaux, p. 137, n° 134. – Bénabent A., Les obligations, p. 103, n° 144. – Terré F., Simler Ph., Lequette Y., Les obligations, p. 278, n° 270. Cass. com., 25 nov. 1986: Bull. civ. IV, n° 222. Collart Dutilleul F., Delebecque Ph., Contrats civils et commerciaux, p. 218, n° 232. – Huet J., Les principaux contrats spéciaux, p. 224, n° 11253. Future goods must exist before they can be individualised: Cass. civ., 29 mars 1886: DP 1886, 329. But identification must be proved. It will be deemed proven if done in the presence of the transferee (Req., 18 mai 1927: S. 1928. 1. 93), of a third party (Req., 22 janv. 1868: S. 1868. 1. 115) or of a transporter (Rouen, 28 janv. 1878, DP, 1879. 2. 102). Collart Dutilleul F., Delebecque Ph., Contrats civils et commerciaux, p. 218, n° 232 seq.

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5.2.2. The role of party autonomy and its relationship to third party interests As a rule, party autonomy is central to French law on transfer of property. Parties can decide when and how the transfer takes place.582 They thus enjoy great freedom in the way they draft their contract. Nevertheless, this freedom has two boundaries. On the one hand, if the parties decide nothing, the transfer of ownership occurs automatically, ipse jure, as soon as the parties agree on the transfer of ownership. On the other hand, the parties cannot restrict the effects of the transfer of ownership, notably by allowing the transferor to keep durable ownership rights to the asset. Notwithstanding these two restrictions, there are four types of clauses that can affect the transfer of ownership. The first clause (terme suspensif – C. civ., art. 1185583) links the transfer of ownership to a future event that will take place at a moment that is not yet known. As soon as the event takes place, the transfer occurs. The second clause (condition suspensive – C. civ., art. 1168584) links the transfer of ownership to a future event that might take place at a moment that is not yet known. If this event does not occur, the transfer of property does not take place. The seller thus remains owner pendente conditione, as the transfer of property only takes place if the condition is fulfilled. If the condition is fulfilled, the transfer is retroactive to the day of the signing of the contract (C. civ., article 1179585), unless the parties have provided

582

583

584

585

The transfer of property can thus be delayed. Specifically in consumer contracts, if the consumer is entitled to retract his consent, the transfer should only take place at the end of the period of retraction. C. civ., art. 1185: A term differs from a condition, in that it does not suspend the undertaking, of which it only delays the fulfilment. – Bénabent A., Les obligations, p. 229, n° 302. – Terré F., Simler Ph., Lequette Y., Les obligations, p. 1148, n° 1202. – Collart Dutilleul F., Delebecque Ph., Contrats civils et commerciaux, p. 186, n° 192. C. civ., art. 1168: An obligation is conditional where it is made to depend upon a future and uncertain event, either by suspending it until the event happens, or by cancelling it, according to whether the event happens or not. – Bénabent A., Les obligations, p. 243, n° 320. – Terré F., Simler Ph., Lequette Y., Les obligations, p. 1170, n° 1230. – Collart Dutilleul F., Delebecque Ph., Contrats civils et commerciaux, p. 186, n° 193. C. civ., art. 1179: A condition which is fulfilled has a retroactive effect to the day when the undertaking was contracted. Where the creditor dies before the condition is fulfilled, his rights pass to his heir. – Bénabent A., Les obligations, p. 244, n° 322. – Terré F., Simler Ph., Lequette Y., Les obligations, p. 1172, n° 1231.

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otherwise. A sale that is subject to a reservation of title586 is an example of such a clause. The third clause is a condition subsequent (condition résolutoire),587 where the transfer of property is immediate at the time of the contract, yet if a certain event occurs, the transfer is rendered retroactively void.588 If the event does not occur, the sale is definite. The last clause constitutes a sale with a repurchasing faculty (vente à réméré – C. civ., art. 1659 to 1673).589 In this case, the seller has the right to buy back the item he sold within a period of five years under the implied condition that he provides compensation for all the costs of the sale and the value added to the asset. This type of condition is often used for shares and other bonds.590 There are nevertheless certain restrictions to party autonomy, due for instance to the nature of the asset. For example, if the contract concerns future assets,591 the transfer can only take place when the asset comes into existence. In the case of generic goods, the transfer only takes place when they have been individualised.592 Additionally, as a means of protection of third parties, certain rules counteract the consensual principle. This is the case of article 2276 (former C. civ., art. 2279) of the Civil Code that protects the possessor in good faith, and also third parties who relied on this appearance. In a similar manner, registration rules for immovable property protect the party who first had his title registered.593 Rules on the assignment of receivables also give precedence to the transferee who first accomplished the formalities prescribed by article 1690 of the Civil Code. 586

587

588

589

590 591

592 593

Ghestin J., Réflexions d’un civiliste sur la clause de reserve de propriété, D. 1981, p. 1. – Ghozi A., Nature et transmissibilité de la clause de réserve de propriété, D. 1986, chr. p. 317. – Guyenot et Fresy, Similitudes et divergences de la conception de la réserve de propriété en droits français et anglais, Gaz. Pal. 1984, Doct. 116. – Collart Dutilleul F., Delebecque Ph., Contrats civils et commerciaux, p. 187, n° 194. Bénabent A., Les obligations, p. 246, n° 324-326. – Terré F., Simler Ph., Lequette Y., Les obligations, p. 1174, n° 1234. Bénabent A., Les obligations, p. 246, n° 326. – Terré F., Simler Ph., Lequette Y., Les obligations, p. 1174, n° 1235-1236. Collart Dutilleul F., Delebecque Ph., Contrats civils et commerciaux, p. 188, n° 196. Heinrich, La vente à réméré d’obligations, JCP éd. E, 1984, II, 14282. See supra 5.2.1: Specific goods – generic goods. – Zenati-Castaing F., Revet Th., Les biens, p. 168, n° 104. See supra 5.2.1: Specific goods – generic goods. Cass. 2e civ., 8 janv. 1992: Bull. civ. II, n° 12.

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(a)

The limits of party autonomy

In French law, parties are free to choose some of the consequences of the transfer of title. They can, for example, postpone the time of transfer of title, for instance by inserting a time period or a condition. On the other hand, it is not possible in French law to limit the effects of the transfer of ownership, nor create new forms of transfer. The new owner must have full property rights to the asset. In particular, it is not possible to limit ownership rights in time,594 or to transfer the right of property for guarantee purposes.595 It is also essential that the transferor is entitled to transfer the asset. French law applies two fundamental principles: nemo plus juris ad alium transferre potest quam ipse habet (the asset is transferred in its legal state)596 and nemo dat quod non habet (the person who does not own cannot transfer).597 In some cases, the aforementioned “theorie de l’apparence”598 will nevertheless protect third parties. Furthermore, due to reasons of third party protection, the transfer of ownership can only take place in the future. Nevertheless, parties to a contract are free to decide otherwise in their internal relationship and thus, for example, they can decide to carry out the required acts before they (can) take effect, e.g. an “anticipated” constitutum possessorium.

(b)

Protection of third parties

Even if the transfer of property is immediate, there are rules that protect third party interests and in particular the fact that third parties might be un594

595

596

597 598

Terré F., Simler Ph., Les biens, p. 144, n° 150. – Except by using a resolutive clause, see Collart Dutilleul F., Delebecque Ph., Contrats civils et commerciaux, p. 186, n° 192. Cabrillac M., Mouly Ch., Droit des sûretés, 7e éd. Litec 2004, n° 529, p. 451. – See on the other hand, the retention of title for guarantee purposes, infra 15: Rules for the reservation of title. See C. civ., art. 2477, al. 2. – Roland H., Boyer L., Adages du droit français, Litec 4e éd. 1999, p. 506, n° 259. Roland H., Boyer L., Adages du droit français, Litec 4e éd. 1999, p. 497, n° 252. See supra at 5.1.3.(b): Legal nature of the transfer. – Ghestin et allii, Introduction générale, LGDG, 4e éd. 1994, n° 838, p. 828 et suiv. – Zenati-Castaing F., Revet Th., Les biens, p. 301, n° 187. – Danis-Fatôme A., Apparence et contrat, préf. G. Viney, LGDJ, bibl. dr. privé, t. 414, 2004. – Sourioux J.-L., La croyance légitime, JCP 1982, I, 3058. – Leroux E., Recherche sur l’évolution de la théorie de la propriété apparente dans la jurisprudence depuis 1945, RTD civ. 1974, 509.

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able to know of the modification of the property right. As a rule, the general principle of opposability (opposabilité) provides that the transfer of ownership is opposable against third parties solo consensu (C. civ., art. 1165). Third parties thus have a duty to inform themselves of the existence of an ownership right. Yet, as it is often very difficult for third parties to ascertain ownership rights, a number of rules are set down in the Civil Code to protect third parties. Article 1141 of the Civil Code lays down a general rule that, if a movable corporeal asset has been transferred twice, preference is given to the person who has been given possession of the asset, if this person is acting in good faith.599 This text is an application of article 2276 al. 1 (former C. civ., art. 2279, al. 1) of the Civil Code. It only applies to corporeal movable assets that are not subject to any publication or registration requirement when transferred. It is also necessary that the second acquirer have acted in good faith, in other terms that he acted in ignorance of the fact that ownership of the asset had already been transferred. Additionally, the second acquirer must possess the asset. This is not the case if he benefits from a constitut possessoire and holds the asset corpore alieno.600 The situation would be different on the other hand, if he possesses following a traditio brevi manu.601 Ratio legis of this rule is to ensure publication to third parties and thus to protect these third parties. This publicity results from possession.602 If however, the possessor is acting in bad faith, the rule prior tempore, potior jure is preferred.603 Nevertheless, in the case of some movables, it is difficult to ensure publication of the transfer. Therefore, the law provides for publication with respect to certain movables. If the movable is registered, such as a ship, a boat or an airplane, the transfer of ownership can only be opposed against third parties if it has been published in a register held by the Customs service (for ships),604 by the Commercial Court (for boats),605 or by the administrative depart599

600 601 602

603 604

605

C. civ., art. 1141: Where an asset which one is bound to transfer or deliver to two persons successively is purely movable, the one of the two who has been put in actual possession is preferred and remains owner of it, although his title is subsequent as to date, provided however that the possession is in good faith. See supra 2: Possession. See supra 2: Possession. Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 158, n° 148. – ZenatiCastaing F., Revet Th., Les biens, p. 288, n° 181. Zenati-Castaing F., Revet Th., Les biens, p. 288, n° 181. Terré F., Simler Ph., Les biens, p. 324, n° 408. – Decrét n° 67-967, 27 oct 1967, art. 93. Terré F., Simler Ph., Les biens, p. 324, n° 408. – C. dom. publ. fluv., art. 101.

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ment responsible for civil aviation (for airplanes).606 In the same spirit, the transfer of rights to trademarks or patents must be registered with the National Institute for Industrial Property607 or on the National Register on Trademarks.608 On the other hand, the registration of cars has no effect on ownership rights with respect to third parties.609 In respect of claims, their assignment (transfer) must be notified to the debtor in order to render the transfer opposable against third parties (C. civ., art. 1690).

5.2.3. Problems, inconsistencies, critique French commentators610 criticize the formalities required by civil law for the assignment of receivables (C. civ., art. 1690). Notification to the debtor is an essential element of the assignment mechanism: even if the transfer between the parties takes place when the contract is concluded, it does not have any effect with respect to third parties until the notification is performed. Such a procedure is cumbersome and leads to greater costs, whereas the aim of protecting third parties is not really reached. Furthermore, it is interesting to underline the fact that the transfer of corporeal goods is possible and opposable against third parties without any formality and even without any publicity in the case of a transfer constitutum possessorium.611 It is paradoxical that the security of the law is not considered to be endangered in this case. Additionally, the transfer solo consensu generates many problems that have yet to be solved. First and foremost is the ignorance of most lawyers as to the exact mechanism of transfer of ownership. It is commonly understood that the transfer of ownership is automatic and that in fact the transferor has no obligation to transfer.612 As a result, this transfer appears to be an effect of the operation of law and not of party autonomy.

606 607 608 609

610

611

Terré F., Simler Ph., Les biens, p. 324, n° 408. – C. av. civ., art. L 121-11. Institut national de la propriété industrielle – C. prop. intell., art. L 613-9. C. prop. intell., art. L 714-7. Cass. 1e civ., 19 mars 1958: D. 1958, 353. – Yet see Cass. 1e civ., 30 oct. 2008: D. 2008, 2935: the acquisition of a car without its registration papers (carte grise) only gives equivocal possession. For a general presentation, Cashin-Ritaine E., Les cessions contractuelles de créances de sommes d’argent dans les relations civiles et commerciales franco-allemandes, Bibl. dr. privé t. 348, LGDJ 2001, p. 190, n° 314 seq. – Terré F., Simler Ph., Lequette Y., Les obligations, p. 1219, n° 1279. Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 150, n° 139.

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This appearance is, of course, false and can easily be rebutted by the recognition of the retention of title clause that enables the transferor to retain ownership until full payment of the price.613 Additionally, the transfer of risk to the new owner, who is not yet in possession, as delivery has not yet taken place, creates numerous problems, which could be solved by joining the transfer of risk to the material “traditio” (delivery) of the asset.614 612

5.3.

Valid obligation (causal or abstract system)

5.3.1. The kinds of obligations underlying the transfer of ownership The Civil Code lists a number of ways to acquire ownership in French law (C. civ., art. 711 and 712615).616 In general, the transfer will result from a contract: sale of goods, barter, donation, or exchange. Each type of contract is governed by specific rules detailed in the Civil Code as to the conditions necessary for its validity. Nevertheless, in these contracts, the transfer of title is always consensual. Even in the case of a gift from hand to hand (don manuel), the intention to transfer the property is expressed by the material “traditio” of the asset. There is no separate act creating an obligation to transfer the asset. Sometimes the transfer will take place by operation of law. This happens without the express consent of the transferor. For example, the property of a deceased person will be transferred immediately to his legal heirs if he does not leave a will (C. civ., art. 724617). This can be explained by the principle of “the continuation of the deceased person” in the person of his heirs,618 or by the fact that the law makes presumptions as to the wills of ab

612

613 614

615 616 617

618

Comp. the discussion of the “obligation de donner”: at supra 5.1.1: The “unititular” or “uniform” concept of the transfer of ownership. See infra 15: Rules for the reservation of title. Comp. in maritime affairs the loi n° 69-8 du 3 janv. 1969 relative à l’armement et aux ventes maritimes, art. 31 seq. C. civ., art. 711 and 712. Terré F., Simler Ph., Les biens, p. 313, n° 388. C. civ., art 724: Heirs designated by legislation are vested by operation of law in possession of the property, rights and actions of the deceased; Universal legatees and donees are vested in possession in the conditions provided for in Title II of this Book. Failing them, succession is acquired by the State who needs a court order to take possession. Hereditas personam defuncti sustinet, see Roland H., Boyer L., Adages du droit français, Litec 4e éd. 1999, p. 305, n° 155.

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intestat deceased persons.619 Similar effects are produced if the property is transferred as a result of the application of the statute of limitations, that transfers ownership to the bona fide possessor of the asset after a certain lapse of time.620 This is also the case of State nationalisations.621 Transfer can occur by a court order. This results, for example, from the sale of a company in an insolvency proceeding (cession judiciaire d’une entreprise en difficulté622). Unilateral promises with a transfer effect are also recognised in French law.623 This is the case, when the transfer results from a will (C. civ., art. 895624).625

5.3.2. Validity of the obligation – different forms of defects regarding the obligation and their effects on the transfer of ownership If the transfer of property results from a contract, this contract can only be declared void by a court decision. Until that decision is made, the transfer of property is legally valid.626 The contract will be declared void if one of the conditions of validity is missing, such as the lack of legal capacity of one of the parties, or the existence of a mistake, a fraud or a threat at the time the contract was concluded.627 It is to be remarked that it is generally not possible to avoid the contract with retroactive effect on account of a mistake regarding the solvency of the other party.628 If the contract is void, the subsequent transfer of property is also void and the transferee loses his ownership, if he does not benefit from another 619 620 621 622 623 624

625 626 627 628

See supra 5.1.3: Short overview on the basic transfer requirements. See infra 13: Acquisitive prescription. Terré F., Simler Ph., Les biens, p. 397, n° 508. C. com., art. L 642-1 seq. Malaurie Ph., Aynès L., Les biens, p. 159, n° 552-553. C. civ., art. 895: A will is a transaction by which a testator disposes, for the time when he is no longer alive, of the whole or part of his property, and which he may revoke. Malaurie Ph., Aynès L., Les biens, p. 159, n° 552-553. Terré F., Simler Ph., Lequette Y., Les obligations, p. 396, n° 390. See supra 5.1.3.(a): Legal requirements for the transfer. “Irrtum über die Zahlungsfähigkeit” – Yet see Cass. 1e civ., 19 mars 1985: JCP 1986, II, 20659, note Bouteiller: the guarantor was mistaken as to the solvency of the main debtor.

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title.629 This voidness has a retroactive effect. As a consequence, the transferee has to give the asset back to the former owner. Restitution rules are a direct application of the rules on voidable contracts (C. civ., art. 1304) and are thus subject to the general statute of limitations period of five years (C. civ., art. 2224 new version).630 As a result, each party to the contract must return the property received to its former owner.631 Nevertheless, with respect to third parties, this retroactive principle of restitutions has limited effects. Third parties are thus protected by the general rules on possession: the possessor in good faith is deemed to have acquired the ownership of the asset notwithstanding the lack of rights of his predecessor.632 Similar effects with respect to the transfer of property result from the termination of a contract, especially termination for non-payment and non-conformity. The same is to be said about contracts subject to a condition subsequent.633

5.4.

Traditio

French law does not, as a rule, require “traditio” (delivery, transfer of possession) for the transfer of ownership of movables.634 Nevertheless, if the acquirer has possession of the asset, he is presumed to be the owner.635 Therefore, the rules on acquisition and transfer of possession are central to French property law.636 There is, however, one case where “traditio” is necessary for the transfer of property: the gift from hand to hand (don manuel). This act is, in fact, a substitute for the normal formality required for a donation, i.e. a notarised document that guarantees the intention of the donor (C. civ., art. 931). However, this material act does not execute an obligation to transfer, because as long as the “traditio” of the asset has not taken place, there is no contract.637

629 630 631 632

633 634 635 636 637

Ass. plén., 6 janv. 1994: Bull. civ. ass. plén. n° 1. Cass. 1e civ., 24 sept. 2002: Bull. civ. I, n° 318, p. 168; D. 2002, 369, note Aubert. See infra 19: Consequences of the restitution of the movable to the owner. See art. 1141 C. civ. and infra 12: Rules of good faith acquisition. – Terré F., Simler Ph., Les biens, p. 326, n° 409. See infra 19: Consequences of the restitution of the movable to the owner. Terré F., Simler Ph., Les biens, p. 318, n° 397 seq. – C. av. civ., art. L 121-1. See infra 12: Rules of good faith acquisition. See supra, 2.3: Acquisition of possession. Larroumet Ch., Les biens – Droits réels principaux, p. 218, n° 381.

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5.5.

Registration

In some cases there is a transfer of ownership in movables by registration. This is the case, for example, of boats638 and airplanes.639 It is also the case for shares.640 In rare circumstances the act of registration is considered to be a “constitutive” act, actually transferring ownership.641 In general, nevertheless, it has only a “declaratory” nature (i.e. reflecting a transfer of ownership that has already taken place).642

5.6.

Consensual system

In French law, ownership rights generally pass with the conclusion of the contract. This system departs from the Roman tradition and tends to promote party autonomy.643 Nevertheless, parties can decide to link the transfer of ownership, not to the conclusion of a contract, but to the effective performance of the contract (e.g. the reservation of title). The solo consensu principle only applies when a transfer of ownership is possible, in particular only in respect of identified assets. This is not the case for future assets or for assets that have to be individualised first, such as generic goods. There is a principle that rights in rem can only refer to a particular, individual asset. The transfer of “ownership” is linked to an “identification” of the asset. 638

639 640

641 642 643

For ships: Terré F., Simler Ph., Les biens, p. 324, n° 408.; Decrét n° 67-967, 27 oct 1967, art. 93. – For boats: Terré F., Simler Ph., Les biens, p. 324, n° 408. – C. Dom. Publ. Fluv., art. 101. Terré F., Simler Ph., Les biens, p. 324, n° 408. – C. av. civ., art. L 121-10. Terré F., Simler Ph., Les biens, p. 353, n° 447. – C. mon. et fin., art. L 431-1 and L 431-2 – Blanluet G., Le transfert de propriété des actions, Dr. et patr. oct. 2004, p. 81. I.e. for aircraft. I.e. for cars. From a historical standpoint, the Civil Code merely adopted the system that was applicable in practice before the Revolution (Ancien Droit). The old French law had maintained the Roman law requirement of a “traditio” of the asset, yet in practice this traditio had become abstract. Jurists thus replaced the material traditio by a clause in the contract (clause de dessaisine-saisine). The acquirer became owner at the time of the contract, even if the asset was still held by the seller. The Civil Code merely confirmed this system. – Terré F., Simler Ph., Les biens, p. 318, n° 398 seq. – Collart Dutilleul F., Delebecque Ph., Contrats civils et commerciaux, p. 182, n°186.

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Furthermore, if the sale refers to future assets, the transfer of ownership is subject to the same rules that apply to generic goods: the transfer is only possible once the asset exists.644 There has been some discussion as to the moment at which this transfer takes place: either at the time the asset comes into existence or at the time the asset is delivered to the buyer. Court decisions seem to prefer the first solution: the transfer takes place once the asset has been created and can be delivered, even if delivery has not effectively taken place.645 If the goods are not yet owned by the transferor, article 1599 of the Civil Code provides that this sale is void.646 In this case, the right to avoid the contract belongs only to the buyer.647 Nevertheless, if the seller acquires ownership of the asset before the buyer has exercised this right, the contract is retroactively validated and the transfer of ownership takes place at the moment the seller becomes the owner.648 If the contract provides for alternative obligations (C. civ., art. 1189),649 the transfer of ownership is linked to the choice of the person who can decide which obligation shall be performed.650 In general, the choice is left to the debtor (C. civ., art. 1190).651 The transfer of ownership only takes place at the time of the choice. If one of the assets, being the object of one of the alternative obligations, has perished, the transfer of ownership of the other asset then takes place automatically (C. civ., art. 1193).652 If the choice of which obligation shall be performed is left to the creditor, the transfer is also automatic, as soon as the creditor has expressed his preference. Yet if the asset disap644

645 646

647 648 649

650

651

652

Goré F., Le moment de transfert de propriété dans les ventes à livrer, RTD com. 1947, p. 4. Cass. req., 28 nov. 1900: D. 1901, 1, 65. C. civ., art. 1599: The sale of an asset belonging to another is void: it may give rise to damages where the buyer did not know that the asset belonged to another. Cass. 3e civ., 8 déc. 1999: Bull. civ. III, n° 241. Cass. 1e civ., 12 juil. 1962: D. 1963, 246. – And infra 5.9: The right to dispose. C. civ., art. 1189: The debtor of an alternative obligation is discharged by the delivery of one of the two assets which were included in the obligation. Terré F., Simler Ph., Lequette Y., Les obligations, p. 1179, n° 1239. – Bénabent A., Les obligations, p. 103, n° 144. C. civ. art. 1190: The choice belongs to the debtor, where it was not expressly granted to the creditor. C. civ. art. 1193: (1) An alternative obligation becomes outright, where one of the assets promised perishes and may no longer be delivered, even through the fault of the debtor. The price of that asset may not be offered in its place. (2) Where both have perished, and the debtor is at fault as to one of them, he shall pay the price of the one which has perished last.

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pears due to the fault of the debtor, no automatic transfer of ownership takes place in respect of the remaining asset, as the creditor still has the right to claim either compensation for the perished asset or the alternative remaining asset. If the contract is subject to a condition precedent (condition suspensive), meaning that the contract only comes into force if and when this future condition is met, the transfer of property will only take place at the time the condition comes into existence.653 As mentioned before,654 the consensual principle is neither mandatory nor applicable erga omnes without restrictions. The solo consensu principle is only fully effective between the parties to a contract.655 With respect to third parties, rules on registration and rules governing possession of movables656 limit the effects of the solo consensu principle.657 Yet, the passing of ownership upon the conclusion of the contract is – in practice – regularly the case. This immediate transfer of ownership has many consequences. The transfer of ownership upon the conclusion of the contract gives the buyer the right to dispose of the movable (e.g. to resell it) even though the price has not yet been paid. On the other hand, the seller is protected against non-payment of the price. He has a right to retain the asset if the contract specifies that payment is immediate658 and he has a legal lien on the asset to guarantee the payment of the price.659 Normally, as the seller no longer has any ownership rights to the asset, he has lost the right to use it (usus) and to reap the fruit (fructus), unless the agreement between the parties provides otherwise. As the acquirer is now the owner, he is entitled to recover the asset if it is stolen from the transferor’s premises between conclusion of the contract and delivery and also to claim for unjustified enrichment when the object is unlawfully used by a third party during the period, if any, between conclusion of the contract and delivery.

653 654 655

656 657

658

659

See supra 5.2.2: Role of party autonomy especially in relation to third party interests. See supra 5.1.3.(b): Legal nature of the transfer. Collart Dutilleul F., Delebecque Ph., Contrats civils et commerciaux, n° 189, p. 184. – Bénabent A., Les contrats spéciaux civils et commerciaux, p. 99, n° 143. Bénabent A., Les contrats spéciaux civils et commerciaux, p. 101, n° 147. Collart Dutilleul F., Delebecque Ph., Contrats civils et commerciaux, n° 189, p. 184. Collart Dutilleul F., Delebecque Ph., Contrats civils et commerciaux, p. 312, n° 339. C. civ., art. 2332-3, al. 1er, 4°. – Cabrillac M., Mouly Ch., Droit des sûretés, p. 540 n° 647 seq.

5. System of transfer

5.7.

103

Real agreement

French law does not require a “real” agreement as such, nor any form of juridical transaction that could be compared with it. As explained previously, the transfer of ownership passes solo consensu, as a form of “civil traditio”.660 However, this civil traditio does entail a double unilateral declaration of intent, whereby the transferor renounces his right of ownership and the transferee agrees to become the owner.661 This double unilateral declaration is masked by the fact that acceptance of the terms of the contract suffices to transfer ownership.662 There is however one exception that requires a real agreement: the mechanism of the “don manuel”, which enables the transfer of a gift from hand to hand. Yet, even in this case, the transfer of ownership passes solo consensu, the “traditio” of the asset appearing simultaneously as both the condition precedent to and the performance of the transfer. Such a contract, created by the material transfer, is a real contract (contrat réel).663

5.8.

Payment

Under French law, unless there is an agreement to the contrary, there is no requirement that the transfer of (full) “ownership” requires payment.664 A sales contract in French law brings about two obligations: one for the seller to deliver the asset concerned and another for the buyer to pay the price agreed upon (C. civ., art. 1582).665 Unless the parties to the contract have expressly agreed on a reservation of title666 until full payment of the price, the transfer of ownership is immediate.

660 661 662 663 664

665

666

See supra, 5.1.1 The “unititular” or “uniform” concept of the transfer of ownership. See supra, 5.1.1: The “unititular” or “uniform” concept of the transfer of ownership. See supra, 5.1.1: The “unititular” or “uniform” concept of the transfer of ownership. Larroumet Ch., Les biens – Droits réels principaux, p. 218, n° 381. See transfer solo consensu supra, 5.1.1: The “unititular” or “uniform” concept of the transfer of ownership. – C. civ., art. 1583: [the sale] is complete between the parties, and ownership is acquired as of right by the buyer with respect to the seller, as soon as the asset and the price have been agreed upon, although the asset has not yet been delivered or the price paid. C. civ., art. 1582: (1) A sale is an agreement by which one person binds himself to deliver an asset, and another to pay for it. See infra 15: Rules on the reservation of title.

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Both parties are nevertheless entitled to suspend the performance of their obligation if the other party does not perform the contract (exceptio non adimpleti contractus).667

5.9.

Right to dispose

The transferor must own the asset or the right he is transferring,668 or be entrusted with the right to dispose of the asset by the owner of the asset. French law applies the general principle nemo plus juris transferre potest quam ipse habet.669 In other terms, one can only transfer what one has.670 Article 1599 of the Civil Code provides that the sale of goods belonging to somebody else is void. The right to have the contract declared void, however, belongs only to the buyer.671 If the seller acquires ownership of the asset before the buyer has exercised this right, the contract is retroactively validated and the transfer of property takes place at the moment the seller becomes the owner.672 The impact of this rule is limited to the internal relations of the parties. With respect to third parties, the rule provided by article 2276 (former C. civ., art. 2279) of the Civil Code lays down that a third party, acting in good faith, acquires ownership of an asset he has received a non domino.673

6.

Rules for double and multiple selling

In the case of double selling, French law is very clear. Article 1599 of the Civil Code provides that the sale of an asset belonging to another person is void.674 If A sells the same asset to B and afterwards also to C, then in application of article 1599 of the Civil Code, the contract between A and C is void and, therefore, C cannot become the owner. Nevertheless, in the case of movables, this rule is set aside by the rules on good faith acquisition (C. civ., art. 2276 al. 1 – former C. civ., art. 2279 667 668 669 670

671 672 673 674

Terré F., Simler Ph., Lequette Y., Les obligations, p. 623, n° 630 seq. Ghestin J., Desché B., La vente, p. 415, n° 371. Roland H., Boyer L., Adages du droit français, Litec 4e éd. 1999, p. 506, n° 359. See also C. civ., art 2477, al. 2. – Didier P., Les biens négociables, in Mélanges Guyon, Dalloz 2003, p. 327. Cass. 3e civ., 8 déc. 1999: Bull. civ. III, n° 241. Cass. 1e civ., 12 juil. 1962: D. 1963, 246. See infra 12: Rules of good faith acquisition. C. civ., art. 1599: The sale of an asset belonging to another is void: it may give rise to damages where the buyer did not know that the asset belonged to another.

7. Which are the rules for selling in a chain?

105

al. 1). This means in particular that the current possessor is deemed to be the owner. Ownership by B or C depends on whether the one or the other is in possession of the asset and acting in good faith. If C is in possession, he cannot acquire ownership if he is acting in bad faith, i.e., if he knows that the asset has already been sold once.675 If C is acting in bad faith, he is also liable towards B for having prevented the performance of the contract between A and B.676 If A is still in possession, B acquires ownership. If the seller A has handed the asset over to B, A will be in default in relation to the second buyer C, since this contract cannot be fulfilled. A will thus be contractually liable to pay damages to C.677

7.

Which are the rules for selling in a chain?

Selling in a chain encompasses the following situation: A sells to B and B to C, A delivers the asset directly to C. In such a situation, B and C successively become owners. There is no direct transfer from A to C. This rule results from the mechanism of transfer solo consensu: the transfer of ownership is automatic at the time of conclusion of the contract, even if the asset is not yet delivered.

7.1.

General rules, valid contracts

If an asset is sold in a chain, every acquirer derives his ownership rights directly from his immediate seller. French law applies the rule “nemo plus juris”,678 meaning that a person can only transfer as many rights as he receives from his own transferor. Therefore if A sells to B and B sells again to C then, even if A delivers the asset to C, C only derives his rights from B. This means in particular that B is only liable towards C in the limits of the contract between B and C. In some cases, C can invoke the liability of A, but only within the conditions set down in both contracts A / B and B / C.

675 676 677 678

See infra 12: Rules of good faith acquisition. Application of tort law under article 1382 of the Civil Code. Terré F., Simler Ph., Lequette Y., Les obligations, p. 558, n° 570 seq. Roland H., Boyer L., Adages du droit français, Litec 4e éd. 1999, p. 506, n° 359.

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7.2.

Rules when contracts fail

In general, if a contract of sale is void ab initio, ownership cannot pass to the buyer. Similiarly, ownership cannot pass to the buyer in case of avoidance of a voidable contract, since this has a retroactive effect in French law. Hence, the transferee is considered never to have been the owner, even if the asset has been handed over to him. If the asset has already been handed over to the transferee, it has to be returned to the transferor. The transferor can sue for the surrender of the asset both by an action based on ownership (revindication – action pétitoire), but also by an action ex unjust enrichment (action de in rem verso). Nevertheless, the rules on the limitation of actions can come into conflict with these principles. In particular, depending on whether the contract pertains to a movable or an immovable asset, the parties can act within a period of five years (movables)679 or thirty years (immovables).680 Until the 19th of June 2008, depending on the reason for which the contract was void, the parties could act within a period of five years (nullité relative) and thirty years (nullité absolue). In this respect, the avoidance on account of error, wilful misrepresentation and threats had to be brought by suit within five years of the discovery of the cause of voidness.681 If the reason (causa) or the object of the contract was illegal or contrary to accepted standards of behaviour, the contract could be contested during a period of thirty years from the day on which it was concluded.682 This system has now disappeared from French law, the prescription period now depending upon a distinction as to the type of asset involved. For movables, the period of limitations is currently five years. Some case constellations that illustrate the legal situation follow. If the contract between A and B is invalid, but the contract between B and C is valid, then C has acquired a non domino from B. In this case, B could not transfer the asset to C (nemo plus juris principle and nemo dat quod non habet principle). Rules on good faith acquisition thus apply to the ownership of C,683 and C is presumed to be owner (C. civ., art. 2276 al. 1 new version). 679

680

681 682 683

C. civ., art. 2224 (new version): Les actions personnelles ou mobilières se prescrivent par cinq ans à compter du jour où le titulaire d’un droit a connu ou aurait dû connaître les faits lui permettant de l’exercer. C. civ., art. 2227 (new version): Le droit de propriété est imprescriptible. Sous cette réserve, les actions réelles immobilières se prescrivent par trente ans à compter du jour où le titulaire d’un droit a connu ou aurait dû connaître les faits lui permettant de l’exercer. Terré F., Simler Ph., Lequette Y., Les obligations, p. 398, n° 393 seq. Terré F., Simler Ph., Lequette Y., Les obligations, p. 398, n° 393 seq. See infra 12: Rules of good faith acquisition.

8. Transfer or acquisition by means of indirect representation

107

If the contract between B and C is invalid, but the contract between A and B is valid, then B has the right to transfer ownership. It is not a case of acquisition a non domino. C does not acquire ownership rights as against B. Article 2276 al. 1 (former C. civ., art. 2279 al. 1) of the Civil Code does not apply. Nevertheless, rules on acquisitive prescription can be used. C then becomes the owner after a period of five years for movables (C. civ., art. 2224 new version). If both contracts are invalid, neither B nor C acquires ownership by contract. Nevertheless, rules on acquisitive prescription can be used. C could then become owner after a period of five years (C. civ., art. 2224 new version).

8.

Transfer or acquisition by means of indirect representation

Representation is indirect (représentation imparfaite) if the agent acts on behalf of the principal, but in his own name.684 The agent thus declares that he acts for a third party, but does not reveal the name of the third party. Such a situation can be found in commercial law under the so-called contrat de commission (C. com., art. L 132-1 seq.). This contract deploys its effects in two stages: first, the agent contracts with the other party; then the principal becomes a party to the contract. As the agent acts in his own name, logically, he is party to the contract, yet ownership rights pass directly to the principal.685 The agent only detains the asset for the principal.686 If the intermediary is insolvent, the principal can revindicate any goods that the intermediary was supposed to sell (C. com., art. L 624-13687). On the other hand, the principal may not exercise against the third party the rights acquired by the intermediary on the principal’s behalf – or the other way round.688 684 685

686

687

See also supra 5.1.3.(b). Terré F., Simler Ph., Lequette Y., Les obligations, p. 178, n° 173, p. 182, n° 181. – Collart Dutilleul F., Delebecque Ph., Contrats civils et commerciaux, n° 666, p. 556. Cass. com., 7 mars 2000: Bull. civ. IV, n° 46. – Auckenthaller F., Commettant, commissionnaire à la vente: détermination du véritable titulaire de la créance envers le tiers contractant, D. 1998, Chr. 53. Articles L 624-9 to L 624-18 of the Commercial Code were last modified by the ordonnance n° 2008-1345 du 18 déc. 2008. C. com., art. 624-13: Peuvent être revendiquées les marchandises expédiées au débiteur tant que la tradition n’en a point été effectuée dans ses magasins ou dans ceux du commissionnaire chargé de les vendre pour son compte. Néanmoins, la revendication n’est pas recevable si, avant leur arrivée, les marchandises ont été revendues sans fraude, sur factures ou titres de transport réguliers.

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9.688

Consequences in the case of insolvency of one of the parties involved

9.1.

General issues

The rules on the insolvency of one of the parties to a contract can be found in the law on insolvency689 that has been codified in the Code de commerce under the articles L 611-1 to article L. 670-8. Like in other European countries, the insolvency proceeding is governed by a number of general principles and, in particular, all creditors have to be treated equally. To comply with this principle, article L 622-7 of the Commercial Code lays down that the judgment that opens the insolvency proceeding automatically prohibits the satisfaction of any claims existing at that date. The opening of an insolvency proceeding does not lead to the automatic termination of the contracts concluded by the insolvent debtor.690 Similarly, it has no effect on the right of ownership as such: the owner of an asset has, in principle, the right to revindicate his property held by the debtor.691 Nevertheless, the commencement of the proceedings has different effects on the contract depending on whether the contractual obligations have been performed completely by both parties or just by one of them. If both parties have not performed their obligations in full, the insolvency administrator has the exclusive right to chose whether he wants to fulfil the obligation and thus claim the counterpart, or whether he wants to repudiate the contract (C. com., art. L 622-13, II).692 If no insolvency administrator is appointed, this choice is left to the insolvent debtor.

688

689

690 691

Cass. civ., 20 juillet 1871: DP, 1871.1.232: « … le commettant qui en s’effaçant pour ne laisser apparaître que le commissionnaire, a renoncé à toute action contre les tiers, de même que les tiers n’ont aucune action contre lui. » – Cass. com., 15 juil. 1963: Bull. civ. III, n° 378. Loi n° 85-98 du 25 janvier 1985 relative au redressement et à la liquidation judiciaire des entreprises modifiée par la loi n° 94-475 du 10 juin 1994. This law was entirely revised by the law n° 2005-845 du 26 juil. 2005. – Roussel Galle Ph., Réforme du droit des entreprises en difficulté par la loi de sauvegarde des entreprises du 26 juillet 2005, Litec 2005. Two new texts have recently modified this part of the Commercial Code: ordonnance n° 2008-1345 du 18 décembre 2008 and ordonnance n° 2009112 du 30 janv. 2009. C. com., art. L 622-13, al. 6. Nevertheless, Cass. com., 8 mars 1994: Bull. civ. IV, n° 101, limiting the right of a seller to revindicate within three months after the commencement of an insolvency proceeding (C. com., art. L 624-9).

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109

The other party can repudiate the contract, if a summons addressed to the administrator by registered letter is left unanswered after a month (C. com., art. L 622-13, II). As an exception to the general rule, in this case, the termination of the contract is not retroactive.693 There is some discussion as to what an “unfulfilled” contract (contrat en cours) is.694 It is generally accepted that a sales contract concluded before the proceedings and providing that the price is to be paid at a later date, is not an unfulfilled contract, because the transfer of ownership has taken place. Furthermore, a contract with a reservation of title clause, where the price has not been paid, is not an unfulfilled contract.695 If the administrator chooses to continue the contract, the obligation promised by the insolvent debtor must be performed.696 If the debtor is obliged to pay a sum of money, it must be paid in one instalment. The other party cannot refuse to perform the contract, even if other obligations due prior to the proceedings were not fulfilled. This party can only register in the list of debts its claim relating to those other obligations.697 If the transaction was completed shortly before the opening of the insolvency proceedings, then it may be, in certain circumstances, voidable.698 These contracts are voidable both under specific insolvency rules and under the actio pauliana (action paulienne). This is the case when there is a fraudulent preference in favour of one creditor or a gratuitous transfer.699 692

9.2.

Insolvency of the transferor

If the transferor is insolvent, it is necessary to determine whether the contract has been performed or not. If only one of the parties has discharged his obligation in full, the legal situation depends on whether the transfer of ownership has taken place or not. The transferee, who is in possession of the asset, is normally protected against the transferor’s general creditors from the moment of conclusion of the contract, unless the contract has been concluded in fraud of the rights 692

693 694

695 696 697 698 699

C. com, art. L 622-13: “L’administrateur a seul la faculté d’exiger l’exécution des contrats en cours en fournissant la prestation promise au cocontractant du débiteur …” In general civil law, the termination of a contract is retroactive. Roussel Galle Ph., Réforme du droit des entreprises en difficulté par la loi de sauvegarde des entreprises du 26 juillet 2005, Litec 2005, p. 163, n° 253. Cass. com., 5 mai 2004: D. 2004, AJ 1525, obs. Lienhard. C. com., art. L. 622-13 II. C. com., art. L. 622-13, I. C. com., art. L. 632-1 seq. See C. com., art. L 632-1 and art. L 632-4.

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of the creditors.700 Nevertheless, the acquirer must pay the price to the bankrupt’s estate. If the asset has not yet been delivered, or if the obligation of the transferor has not been performed (i.e. in the cases of a sale of future or generic goods), the insolvency administrator has the right to decide whether he wants to perform the contract or not.701 If the insolvent transferor does not yet own the asset(s) but has already contracted to buy them from a previous seller, under a reservation of title, the transferee is protected with regard to these goods as in an acquisition a non domino.702 In all these cases, the transferee is only protected as long as he has paid a fair price for the asset transferred. In this respect, articles L 632-1 to L 632-4 of the Commercial Code list a number of contracts that are considered to be void if they have been concluded during the period following the date on which the debtor became unable to fulfil his financial obligations (date de cessation des paiements). For example, the transferee is not protected if he is party to a gratuitous contract. The same goes for contracts which favour one party exclusively and securities taken within the same period. Article L 632-3 of the Commercial Code specifically considers a contract to be void if the transferee knew that the transferor was insolvent.

9.3.

Insolvency of the transferee

If the transferee is insolvent, insolvency rules only provide for synallagmatic commutative contracts that may have an effect on the rule of equality between creditors, such as contracts of sale and barter. In the case of a donation, where the transferee benefits from new assets, insolvency law does not intervene. If the seller has not yet delivered the asset, he can refuse to do so until full payment (privilège du vendeur).703 If the transferor, creditor of the bankrupt debtor, has not been paid for the asset transferred, French law distinguishes between the situations where, on the one hand, either a reservation of title has been agreed upon, or the creditor has a security right and, on the other hand, the situation where the creditor has neither.

700 701

702 703

Cass. com., 3 févr. 1998: Bull. civ. IV, n° 53. – See C. com., art. L 632-1 to L 632-4. C. com., art. L 622-13 II: “L’administrateur a seul la faculté d’exiger l’exécution des contrats en cours en fournissant la prestation promise au cocontractant du débiteur …”. See infra 12: Rules of good faith acquisition. Yet see C. com., art. L. 622-13 I.

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111

If a reservation of title has been agreed upon, the transferor has the right to revindicate the asset, as the debtor has never been owner of the asset. A number of conditions must nevertheless be respected.704 If the creditor has a secured right to an asset of the debtor, insolvency rules protect the secured creditor. If the creditor has no secured rights (créancier chirographaire), then he will only be paid from whatever assets are remaining at the end of the proceedings. If the insolvent debtor has already performed his obligation towards the creditor, then this party must also discharge his obligation to the bankrupt debtor’s estate.

10.

Passing of risk and passing of ownership

The general principle of French law705 is to transfer the risks to the current owner of the asset (res perit domino). In this respect, the buyer immediately becomes the owner and responsible for the risks of loss of the asset as soon as the contract is concluded, even if the asset has not been delivered (C. civ., art. 1138).706 This rule is however, not mandatory.707 In the case of a reservation of title, as the seller remains the owner until the price is paid, he is responsible for the risks.708 This may be changed by contract between the transferor and the transferee. Nevertheless, French law distinguishes between risks arising from the contract and risks pertaining to the asset. If the contract can not be fulfilled (risques du contract), the debtor of the obligation that cannot be performed bears the risks (res perit debitori).709 If, on the other hand, the asset that is the object of the contract is lost or destroyed (risques de la chose), the current owner bears the risks (res perit domino).710

704 705

706

707

708

709 710

See infra 15: Rules on reservation of title. These rules only apply to internal sales. The Vienna Convention on the International Sale of Goods provides otherwise. Cass. 1e civ., 19 nov. 1991: Bull. civ. I, n° 325: books lost during their transport to the buyer. See article L. 132-7 du Code de commerce: “La marchandise sortie du magasin du vendeur ou de l’expéditeur voyage, s’il n’y a convention contraire, aux risques et périls de celui à qui elle appartient”. Cass. com., 19 oct. 1982, arrêt Mecarex: Bull. civ. 1982, IV, n° 321; D. 1983, inf. rap. p. 12; RTD civ. 1984, p. 515, obs. Huet. Cass. 3e civ., 27 janv. 1976: Bull. civ. 1976, III, n° 34. Collart Dutilleul F., Delebecque Ph., Contrats civils et commerciaux, p. 193, n° 202. – Huet J., Les principaux contrats spéciaux, p. 188, n° 11215.

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There are a number of exceptions to the rule res perit domino. The most important is probably the following: if the seller has been summoned to deliver the asset (C. civ., art. 1138 in fine), the seller responsible for late delivery bears the risk of the loss of the asset (res perit debitori).711 He thus cannot claim the price of the asset if the risk is realised.712

711 712

Terré F., Simler Ph., Lequette Y., Les obligations, p. 662, n° 672. R. Libchaber, Demeure et mise en demeure en droit français, in Les sanctions de l’inexécution des obligations: Bruylant-LGDJ, 2001, p. 113.

Part III: Original acquisition 11.

Types of original acquisition

Original acquisition can be defined as the situation in which the current owner of an asset has no legal link to the previous owner. This situation can result either from the fact that there was no previous owner or from the fact that the previous owner lost his ownership rights through no intent of his own. In general, such original acquisition applies to goods that have no master (choses sans maître and res derelictae). There is no transmission of ownership: the acquirer becomes the owner as a consequence of a factual situation, not thanks to the renunciation of the right of another person. This situation also occurs when the asset is irrevocably attached to a dominant movable (accessio) or immovable (fixtures). Three types of assets fall within this category: accessory, “accession” and global. The first, accessory assets are those which are dependant upon another asset, without however, losing their distinctiveness713 (C. civ., art. 567714). This dependency results either from the fact that the accessory asset is a product of the first asset (genetic relationship715), or from the fact that the accessory asset is functionally related to the first asset. In both cases, the second is in the same legal situation as the first (accessorium sequitur principale716). The secondary asset follows the same regime as the main asset: ownership is the same and security rights are established in respect of both assets. As a result, fruit and products (accessories) produced by a main asset belong to the owner of the main asset.717 Legal qualifications as to the type of asset (movable or immovable) lead to the same conclusion in respect of the ac713 714

715 716 717

Zenati-Castaing F., Revet Th., Les biens, p. 177, n° 112. C. civ., art. 567: The part to which the other has been joined only for the use, ornamentation or completion of the first part is deemed to be the main part. Zenati-Castaing F., Revet Th., Les biens, p. 177, n° 112. Roland H., Boyer L., Adages du droit français, Litec 4e éd. 1999, p. 1, n° 3. Zenati-Castaing F., Revet Th., Les biens, p. 179, n° 113; p. 276, n° 173. See however, a similar rule in favour of the possessor: the possessor acting in good faith becomes the owner of the fruit, infra 19.1: Entitlement to benefits resulting from the movable.

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cessory asset as the main asset. This situation is particularly important for movables that are accessory to immovables, such as immeubles par destination718 and fruit. The second situation, accession, is a phenomenon where two assets are united to create a single asset, in which both components are indistinguishable as individual assets. Finally the situation of a global asset (universalité), relates to the fact that a series of assets may be fictitiously considered as a single asset, although each of the individual assets remains distinguishable. Two types of global assets are recognised by French law: the factual global (universalité de fait)719 and the legal global asset (universalité de droit).720 Original acquisition can have many causes: various types of possession of the asset (occupation and prescription); various types of accessory relationships of one asset to another asset (accession). Original acquisition also applies to the creation of a new asset,721 whereas the new asset belongs to its creator.722 Production as such is a specific mode of original acquisition.723 Original acquisition has one main advantage: the rights of the acquirer are totally new and bear no relationship to any former rights to the asset. The asset is “cleaned” (purge) of any other rights.

11.1.

Accession of movables

If a movable is incorporated into another movable, French law speaks of “accession” (C. civ., art. 546).724 The legal title of the new owner derives

718

719 720 721

722

723 724

See supra 1.1.1.(b): Characteristics of rights in rem in contrast to obligations and infra, 11.2: Commixture and confusion. Cornu G., Droit civil, les biens, Montchrestien 13e éd. 2007, p. 42. Cornu G., Droit civil, les biens, Montchrestien 13e éd. 2007, p. 11. Zenati-Castaing F., Revet Th., Les biens, p. 278, n° 173, applying the same reasoning to the replacement of one good by another through the mechanism of real subrogation (subrogation réelle). Or to the person who ordered the asset to be created, cf. the ownership rights of the employer to creations of his employees (CPI, art. L 611-7), the ownership rights of the person who provided the material (C. civ., art. 540), except if the work employed had a much higher value than the material used (C. civ., art. 570). See infra 11: Accession of movables. Becquet S., Le bien industriel, préf. Revet, Bibl. dr. privé t. 448, LGDJ, 2005. Larroumet Ch., Les biens – Droits réels principaux, p. 608, n° 968, who considers this concept useless for movables.

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from the physical changes brought to the movable. This legal phenomenon only applies to corporeal movables.725 Accession appears in two cases, either as an incorporation of one movable into another (accession par incorporation), or by the growth of a first movable through its own production (accession par production). Article 551 of the Civil Code726 provides that the owner of an asset automatically becomes the owner of everything that is incorporated or attached to the asset, unless the parties provide otherwise.727 Nevertheless, the current owner must compensate the costs that the previous owner incurred on the incorporated asset.728 The Civil Code lists a number of specific rules applicable to movables (C. civ., art. 565 to art. 577). The main difficulty encountered is to determine which of the owners of the two objects is to become the owner of the new asset. The Code specifies that the solution is to be governed by principles of natural equity (C. civ., art. 565729), yet lists a series of examples for resolving each particular case. In none of these cases, is good faith a condition of acquisition of ownership. However, these rules are rather theoretical. In most cases, the work done on an asset will be performed as a result of a contract and these property issues will be resolved in the contract. If there is no contract, the possessor in good faith becomes owner; and here again these specific rules on accession of movables do not apply.

11.2.

Commixture and confusion

Commixture can be defined as the confusion / commingling of two goods belonging to two different owners.730 This is not to be mistakenly understood as the situation in which a movable becomes part of an immovable asset and can be qualified as an immeuble par destination (C. civ., art. 524 and 525).

725 726

727 728 729

730

Paris, 13 janv. 1993: D. 1993, inf. rap., 90. C. civ., art. 551: Everything which unites and incorporates itself with an asset belongs to the owner, according to the rules hereafter laid down. Cass. 3e civ., 6 nov. 1970: D. 1971, 395. Cass. 3e civ., 12 mars 1985: Bull. civ. III, n° 50. C. civ., art. 565 al. 1: Where the right of accession applies to two movable assets belonging to two different masters, it depends entirely on the principles of natural equity. Comp. C. civ., art. 572 seq.

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In such a case, three conditions must be met: first, the owner of the immovable asset and of the movable asset must be the same;731 secondly, the owner must wish to immobilize the movable; thirdly, there must be an objective link between the movable and the immovable (either the movable is necessary for the use of the immovable, or the movable cannot be detached from the immovable without being destroyed). The owner of the immovable asset does not acquire ownership of both goods, as the whole process requires that the owner of the immovable asset already be the owner of the movable asset. On the contrary, rules on commixture only apply to assets with different owners. There is no differentiation as to whether the assets are of the same kind or not, but in all cases separation must be impossible. In general, the owner of the main asset becomes the owner of the whole new asset, if he pays compensation to the other owner for the value of the secondary asset (C. civ., art. 566732). Different criteria can be taken into account to determine the principal or secondary nature of an asset. The Civil Code cites: the solely decorative function of the secondary asset (C. civ., art. 567733); the respective value of each asset or its size (C. civ., art. 568734); the labour involved in creating the new asset (C. civ., art. 570 and art. 571735). In some cases nevertheless, the Civil Code institutes common ownership of the new asset (C. civ., art. 572 to art. 577736). 731 732

733

734

735

736

Cass. 1e civ., 5 mars 1991: JCP 1991, IV, 169. C. civ., art. 566: Where two assets belonging to different masters, which have been so joined as to form one whole, are nevertheless separable, so that one may subsist without the other, the whole belongs to the master of the asset which forms the main part, subject to the obligation of paying to the other the value, appraised at the date of payment, of the asset which has been joined. C. civ., art. 567: The part to which the other has been joined only for the use, ornamentation or completion of the first is deemed the main part. C. civ., art. 568: Where, however, the asset joined is of much more value than the main asset and where it was used without the knowledge of the owner, the latter may request that the asset joined be separated in order to be returned to him, even where there may result some deterioration of the asset to which it has been joined. C. civ., art. 570: Where a craftsman or any person whatever has used material which did not belong to him to make an asset of a new kind, whether the material can resume its original form or not, he who was the owner of it has the right to claim the asset made out of it by repaying the price of the labour appraised at the date of repayment. – C. civ., art. 571: Where however the labour was so important that it greatly exceeds the value of the material used, the service will then be deemed the main part and the workman has the right to keep the asset wrought, by repaying the owner the value of the material, appraised at the date of repayment. See infra 11.4: Further general aspects.

11. Types of original acquisition

11.3.

117

Specification and processing

Specification is the creation of new goods, where labour is involved in creating the new asset (C. civ., art. 570 and art. 571). The rules applicable in commixture cases also apply here.

11.4.

Further general aspects

Common ownership is regulated as follows. In all cases, the respective value of the commingled assets is taken into account to calculate the portion of co-ownership, which is allocated to each owner (pro rata calculation). Common ownership can always be terminated by auction for the common benefit of all owners (C. civ., art. 575). In all cases, if materials were used without the knowledge of their owner to make an asset of a different kind, the owner of the materials may claim ownership of that asset. He also has the option of requesting restitution of his material in the same kind, quantity, weight, measure and good quality, or its value appraised at the date of restitution (C. civ., art. 576). These rules differ from the rules on unjust enrichment, as they do not take into account the enrichment of the user of the materials, but only the fact that the owner of the materials has been deprived of an asset. Compensation is based on the value of the goods. The Code does not provide for the specific situation in which third parties with limited rights in rem are deprived of their asset. General rules on compensation will thus apply.737 As to those who have made use of materials belonging to others without their knowledge, they may also be ordered to pay damages, or can even be subject to criminal prosecution (C. civ., art. 577738). In such situations, the good faith of the party concerned is taken into account. Article 572 of the Civil Code states that, if a person has partly used material that belonged to him, and partly material that did not belong to him, to make an asset of a new kind, without either of the two materials being entirely destroyed, but in such a way that they cannot be separated without inconvenience, then the asset is common to the two owners: as to one, on account of the material that belonged to him; and as to the other, on account of both the material that belonged to him and the price of his labour, at the date of the auction sale provided for in article 575 of the Civil Code (C. civ., art. 572). 737 738

See infra, 19: Consequences of restitution to the owner. C. civ., art. 577: Those who have made use of materials belonging to others, and without their knowledge, may also be ordered to pay damages, if there is occasion, without prejudice to criminal prosecution, if need be.

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In cases where an asset has been formed by the commingling of several materials belonging to different owners, of which none can be considered to be the main material, then if the materials can be separated, the owner of the materials commingled without his knowledge may request that they be separated. If the materials can no longer be separated without inconvenience, the two owners acquire common ownership, in proportion to the quantity, the quality and the value of the materials belonging to each of them (C. civ., art. 573). If the material belonging to one of the owners was far superior to that of the other in quantity and price, then the owner of the more expensive material may request the asset resulting from the commingling. In such a case, the owner of the new asset must repay the other owner the value of his material, appraised at the date of repayment (C. civ., art. 574). These rules are however, not mandatory and the parties may agree otherwise. If the asset has been sold under retention of title, where the seller remains the owner, there is a specific legal constellation whenever the buyer transforms the asset. If the asset has been mixed with other similar assets (fongibilité), the seller can revindicate an asset of a similar kind and quality (C. civ., art. 2369739). In the case of incorporation, the seller can claim for restitution, if the asset can be separated from the rest without damage (C. civ., art. 2370740). Revindication extinguishes the right of the seller to the value of the asset revindicated. Yet if the asset has grown in value, the difference in value must be paid to the buyer (C. civ., art. 2371741). If the asset has been resold or lost by the buyer, the first seller has a claim to the price of the goods resold or to the insurance claim. The mechanism here is a subrogation réelle.742 Similar rules are applied to all third parties’ rights in rem to original assets. 739

C. civ., art. 2369: The reserved title on fungible goods may be exercised, up to the amount of the debt remaining due, in respect to property of same nature and quality detained by the debtor or on his behalf. 740 C. civ., art. 2370: The incorporation to another asset of an asset whose title is retained is not a bar to the rights of the creditor whenever those assets may be separated without suffering damage. 741 C. civ., art. 2371: (1) Failing payment in full on due date, a creditor may claim the restitution of the asset in order to get back the right to dispose thereof. (2) The value of the returned asset shall be deducted, as payment, on the outstanding secured debt. (3) Where the value of the returned asset exceeds the amount of the secured debt still due, the creditor owes the debtor a sum equal to the difference. 742 Crocq P., La réserve de propriété, JCP G 2006, supplément au n° 20 du 17 mai 2006, n° 6, § 8.

12. Rules of good faith acquisition (acquisition a non domino)

12.

119

Rules of good faith acquisition (acquisition a non domino)

A is the owner of a movable. The movable is “transferred” by non-owner B to the potential “good faith acquirer” C. An asset is acquired a non domino when the current holder (buyer, donee) has contracted with a transferor who did not own the asset at the time of the contract. No transfer of property could thus take place on the basis of the contract (nemo plus juris principle). Rules on bona fide purchase (i.e. acquisition a non domino) protect the transferee who did not know or could not have known that his acquisition was encumbered with the ownership rights of a third party. In this respect, possession by the transferor serves a publication of the right of ownership in respect to third parties (i.e. the transferee), who thus do not need to make any verification as to the rights of the transferor.

12.1.

Field of application

Article 2276 al. 1 of the Civil Code (former C. civ., art. 2279) resolves the conflict between the initial owner and the current holder. This article provides that « in the case of movables, possession is good title ».743 This article covers all of the following cases: seller B was never the owner; seller B’s right (to dispose) was avoided with retroactive effect; B’s contract with his supplier (seller S) was terminated with “ex nunc” effect; double sale.744 Article 2276 al. 1 of the Civil Code has two meanings: on the one hand, it means that possession of a movable gives a deed of ownership (instrumentum) and that possession is therefore material proof of ownership. On the other hand, this provision means that possession entitles one to ownership (negotium), or in other terms, that possession creates a right to ownership, i.e. the possessor C becomes the owner even if he has not contracted with the rightful owner. As a consequence, this second rule bars any revindication by the rightful owner (i.e. A). Furthermore, if an asset has been acquired “a non domino”, article 2276 al. 1 of the Civil Code leads to waiving the “nemo plus juris” rule by giving preference to the possessor acting in good faith, over the rightful owner. The rightful owner (i.e. A) therefore cannot revindicate his asset.745

743

744 745

C. civ., art. 2276 (former C. civ., art. 2279) al. 1: In matters of movables, possession is equivalent to title. See supra 6: Rules for double and multiple selling. Req., 21 nov. 1927: DP 1928, I, p. 172, rapp. Bricourt.

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This rule helps to solve the conflict between successive buyers of the same asset, or in relation to a seller who is a beneficiary of a reservation of title clause.746 Specific rules apply to stolen or lost goods.747 Article 2276 only applies to corporeal movables748 that can be the object of a contract.749 Immaterial goods do not normally fall within the scope of this article. In particular, money, claims, negotiable instruments and universas rerum750 are not within the scope of article 2276.751 Neither are movables that have to be registered, such as boats752 or planes. As an exception, article 2276 applies to cars.753 Article 2276 al. 1 C. civ. only applies to assets that are in private ownership, which is not the case of movables belonging to the State.754 As an additional exception, this article does not apply to works of art.755

746 747

748

749

750

751

752

753

754

755

Cass. com., 1er oct. 1985: Bull. civ. IV, n° 224. See infra 12.6: Sprecific requirements regarding the way the original owner lost the movable and 12.8: Treatment of lost and stolen goods. Cass. req., 25 nov. 1929: D.H. 1930, 3. – Cass. com., 19 janv. 1960: Bull. civ. III, n° 30; JCP 1960, éd. G, IV, 34 (excluding immeubles par destination). – Cass. 3e civ., 4 juil. 1968: Bull. civ. III, n° 321; Gaz. Pal. 1968, II, 298 (excluding meubles par anticipation). Any assets that cannot be transferred, such as public property or non transferable goods, do not fall within the field of application of this rule. See the case of legal combinations such as businesses (fonds de commerce): Cass. 1e civ., 2 mars 1960: Bull. civ. I, n° 141: « un fonds de commerce est une universalité mobilière de nature incorporelle; il en résulte que les dispositions de l’article 2279 ne sont pas applicables … » and also family heirlooms co-owned by all the heirs (souvenirs de famille): Cass. 1e civ., 29 nov. 1994: Bull. civ. I, n° 354. l’article 2279 « ne s’applique qu’aux meubles corporels individualisés, ce qui exclut les universalités mobilières, tels les souvenirs de famille, dont la propriété est indivise entre le possesseur et d’autres personnes ». – See supra 1.1.3: Other property rights in movables. Cass. civ., 4 janv. 1876, Lefèvre et autres, DP, 1877, I, 33: excluding bearer bonds and shares. Cass. com., 20 nov. 1951: Bull. civ. II, n° 340, cassant Aix 10 fév. 1947: D. 1948, 78, note Ripert; J.C.P. 48, II, 3751, note Hémard. Cass. 1e civ., 11 juil. 1960: Bull. civ. I, n° 382; D. 1960, p. 702, note Voirin. – Note Bénabent sous Cass. 1re civ., 5 oct. 1972: J.C.P. 73, II, 17485. – Yet see Cass. 1e civ., 30 oct. 2008: D. 2008, 2935: the acquisition of a car without its registration papers (carte grise) only gives equivocal possession. See for example, museum pieces: Cass. req. 17 juin 1896: D.P. 97, 1, 257, note Guenée. – Cass. 1e civ., 2 avril 1963: Bull. civ. I, n° 203. Droz G., La convention Unidroit sur le retour international des biens culturels volés ou illicitement exportés (Rome, 24 juin 1995), Rev. crit. DIP 1997, p. 239.

12. Rules of good faith acquisition (acquisition a non domino)

12.2.

121

Good faith acquisition only for value?

Good faith acquisition is possible whether the acquisition was for value or was gratuitous.756 The transferee is protected whether the price has been paid or not, unless the asset was transferred under reservation of title. The only asset of importance is the bona fide possession of the acquirer.757 A person is acting in good faith, if he is convinced that he has become the bearer of the right through a valid title deed (art. 550 C. civ.).758

12.3.

Possession or physical control by the transferor “B”

Article 2276 of the Civil Code does not require that the transferor of an asset also be the former possessor of the asset. The rules on the protection of good faith acquisition only apply to the possession of the transferee. If, by chance, the transferor is also the possessor of the asset and acting in good faith, article 2276 simply confirms the ownership of the transferor. As a consequence, the property right of the transferee would be acquired simply a domino. Furthermore, in this case, possession by the transferor creates a legal appearance upon which third parties, and in particular the transferee, can rely.759 There is nevertheless a distinction between mere “detention” (physical control) and “possession”. Only the possessor has the intention to keep the asset as his own. The possessor must have the intention to possess; the will of another person cannot render anyone a possessor, except in the case of minors, protected persons and agency.760 The “detentor”, who just holds the object, does not have such an intention. In this respect, the transferor simply holding the asset in his possession for somebody else (possession corpore alieno – C. civ., art. 2255 – former C. civ., art. 2228)761 is a detentor. Therefore if this detentor transfers the ownership of the asset, the transferee acquires this ownership a non domino. As a result, the rule provided by article 2276 of the Civil Code enables the 756

757

758 759 760 761

However, if a fraud was committed upon creditors, these creditors can use the action paulienne (C. civ., art. 1167), without having to prove the complicity of the third party beneficiary of the donation. If there is a reservation of title, there is no bona fide possession, as the holder knows that he is not the owner. Cass. 1e civ., 5 déc. 1960: Bull. civ. I, n° 527. Cf. the German term “Rechtsscheinwirkung des Besitzes”. See supra 2.1: Notion of possession. Cass. 1e civ., 16 janv. 1980: JCP G 1980, IV, p. 124; Bull. civ. I, n° 31. – Cass. 1e civ., 3 nov. 1981: JCP G 1982, IV, p. 33; Bull. civ. I, n° 324.

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transferee acting in good faith to become the rightful owner when he enters into possession of the asset.

12.4.

Physical control or possession by the acquirer “C”

As a general rule, possession of the asset by the acquirer / transferee C is the fundamental requirement for the protection of a transferee who acquires an asset a non domino. Article 2276 of the Civil Code lays down three conditions. First, the initial owner of the asset (A) must have surrendered his possession of his own accord.762 This means, in particular, that the initial owner of the asset, A, lent, rented or delivered the asset to a buyer B (in performance of a void contract or of a contract with a condition subsequent) and later wants to regain possession. Such a case appears where a sales contract contains a reservation of title clause, yet the buyer B sells the asset to C without having paid the price to A. The initial seller did not transfer ownership,763 however he transferred possession. Therefore, article 2276 of the Civil Code can apply to the transferee C. Secondly, the current holder of the asset (i.e. transferee C) must possess animo domino, as if he were the rightful owner.764 This means, in particular, that the transferee’s possession must be peaceful, public, continuous and without ambiguity.765 These conditions are required to exist at the time the current holder enters into possession.766 In other words, if the transferee discovers at a later time that his ownership is doubtful, this has no effect on the quality of the possession. Thirdly, the current holder C must be a holder acting in good faith.767 This means that the possessor must believe at the time he enters into pos762

763

764 765

766

If he lost possession against his will (theft or loss of the asset), he is protected by article 2276 al. 2 of the Civil Code. Ortscheidt P., Possession et clause de réserve de propriété en droit français et allemand: Rev. int. dr. comp. 1983, p. 767, n° 53 et s. – Cass. 1re civ., 16 janv. 1980: JCP G 80, IV, 124; Bull. civ. I, n° 31; Gaz. Pal. 1980, 1, somm. 245; D.S. 1980, inf. rap. 232; Rev. trim. dr. civ. 1980, p. 785, observ. Giverdon. – Cass. 1e civ., 13 fév. 1980: JCP G 80, IV, 167; Bull. civ. I, n° 57; D.S 1980, 491, note A. Robert; D.S. 1980, inf. rap. 438, observ. Bénabent; Gaz. Pal., 1980, 2, somm., p. 357. – Cass. 1e civ., 4 avril 1984: JCP G 84, IV, 184. Cass. 2e civ., 5 avril 1960: Bull. civ. II, n° 252. Cass, 1e civ., 27 nov. 2001: D. 2002, p. 119, note Chartier, RTD civ. 2002, p. 121, obs. Revet: “les règles de prevue de la propriété entre époux séparés de biens, édictées par l’article 1538, excluent l’application de l’article 2279”. Cass. 1re civ., 4 janv. 1972: Bull. civ. I, n° 4.

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session768 that he holds his right from the rightful owner.769 In particular, C must not know of the retention of title clause agreed upon between A and B. Good faith is presumed (C. civ., art 2274 – former C. civ., art. 2268). On the other hand, the transferee does not have to prove a valid title deed.770 If these three conditions are fulfilled, article 2276 of the Civil Code leads to the following consequences. The current holder C is considered to be the owner of the asset and the previous owner A cannot revindicate the asset. This acquisition of ownership is immediate and operates at the time the transferee C enters into possession. It does not require any declaration on the part of the current holder C. It is nevertheless necessary to add that revindication by the rightful owner A is only excluded if the current holder C effectively possesses the asset at the time of the revindication.771 This is not the case if the transferor B holds the asset through a constitutum possessorium for the transferee C. On the other hand, it is possible that the acts of possession be accomplished by a third party D772 (other than the transferor) acting in the name of the possessor (possession corpore alieno).773 This acquisition of ownership is an original form of acquisition. The current owner holds his rights by operation of the law and not from the previous owner. 767

12.5.

768

Specific requirements with respect to the circumstances of the “transfer”

It is of no importance whether the asset was sold through “ordinary course of business” in a “market overt” (i.e. a public market) or at a public auction, 767

768

769

770 771 772 773

Cass. req., 1er fév. 1893: D.P. 94, 1, 278. – Cass. com. 7 janv. 1953: Bull. civ. III, n° 10. – Cass. 1re civ., 27 nov. 1973: Bull. civ. I, n° 324; JCP G 74, IV, 15. Cass. 1e civ., 27 nov. 2001, bronze Camille Claudel: Bull. civ. I, n° 295; D. 2002, p. 671, note Gridel. Cass. 1re civ., 23 mars 1965: Bull. civ. I, n° 206: « En matière d’application de l’article 2279 du Code civil, la bonne foi … s’entend de la croyance pleine et entière où s’est trouvé le possesseur au moment de son acquisition des droits de son auteur, à la propriété des biens qu’il lui a transmis; le doute sur ce point est exclusif de la bonne foi ». – Cass. 1e civ., 14 mai 1996: Bull. civ. I, n° 199. Cass. civ., 7 fév. 1962: Bull. civ. I, n° 91. Cass. com., 13 fév. 1990: Bull. civ. IV, n° 45; D. 1990, somm. 388, obs Aynès. I.e. the asset is under the physical control of a third party. Cass. com., 11 mai 1993: Bull. civ. IV, n° 184. – Contra Cass. soc., 3 janv. 1964: Bull. civ. IV, n° 9.

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unless the asset was lost or stolen from the original owner.774 There are no specific rules with respect to consumers.

12.6.

Specific requirements regarding the way the original owner “A” lost the movable

It is necessary that the original owner A have entrusted the asset to the transferor B, who was supposed to hold the asset for the original owner, without having the right to dispose of it. The loss of possession775 by the original owner must thus be voluntary.776 If the owner of the asset has been dispossessed against his will, he does not forfeit the right to revindicate. As against a thief or finder of the asset, the rightful owner may revindicate the asset during a period of thirty years. As against a possessor, revindication may take place during a fixed period (délai préfix) of three years from the date of the loss or the theft (C. civ., art 2276, al. 2). However, the rightful owner must indemnify the possessor for the price paid, if the sale took place at a fair, in a market or in a shop selling similar items (C. civ., art. 2277, al. 1 – former C. civ., art. 2280, al. 1). French law does not distinguish on the basis of the type of defect befalling the original contract between A and B, as the defects only deploy their effects in the law of obligations and do not spill over into the law of property. Rules on restitution are the same whatever the causa of the restitution (see infra 19.).777

12.7.

Good faith requirements

The acquirer C must act in good faith with respect to the transferor’s right of ownership, yet it is sufficient that he believed bona fide that the transferor B is entitled to dispose of the asset.778 The good faith of the acquirer is presumed (C. civ., art 2274 – former C. civ., art. 2268). 774 775

776 777 778

See infra 12.8: Treatment of lost or stolen goods. It is however,only the loss of the corpus, not of the animus, because the transferor holds the asset corpore alieno, cf. supra 2.1: Notion of possession. Zenati-Castaing F., Revet Th., Les biens, p. 324, n° 200. See infra 19: Consequences of the restitution of the movable to the owner. See the case of a common error (error communis): Cass. 1e civ., 22 juill. 1986: Bull. civ. I, n° 214. – This condition is disputed: Zenati-Castaing F., Revet Th., Les biens, p. 663, n° 456 write that the good faith condition should not be a prerequiste to an a non domino acquisition. They consider that the possessor is ipso facto in good faith, as he believes that the asset was acquired a domino. Criminal courts consider that good

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A clear distinction must however be made between the good faith of the acquirer and the mistake made by the acquirer as to the ownership of the transferor.779 These two issues are linked in measuring the good faith of the acquirer and both an objective and subjective approach must be taken towards the behaviour of the acquirer. It is fair to state that the transferee has acquired the asset in the mistaken belief (and in good faith) that the transferor is the owner. The mistake of the acquirer must be common (error communis) in the same sense that any other person placed in the same circumstances would have made the same mistake.780 This is an objective approach. On the other hand, good faith is evaluated taking into account the intellectual capabilities and personality of the acquirer. This is a subjective approach. Good faith is presumed, but can be rebutted if either the subjective or the objective approach leads to other conclusions. As a result, the acquirer does not act in good faith if he has actual knowledge of the lack of rights of the transferor. Courts consider additionally that gross or even slight negligence excludes good faith.781 This is the case, for example, if the price paid by the acquirer is particularly low, or if the acquirer, a professional, did not check the identity of the seller.782 Good faith is required at the time the acquirer enters into possession783 (rules of the law of property), and not at the time the contract was concluded (contract law rule). Therefore the law of property rule prevails over any rules of the law of obligations, although in most cases the contract is prior to possession and thus generally bad faith will be established at the time of entry into possession.

12.8.

Treatment of lost or stolen goods

If the ownership of the current holder, who acquired a non domino, is recognized in preference to the initial owner in application of article 2276 al. 1

779 780 781

782 783

faith is automatic as soon as someone invoques the ownership presumption resulting from possession (Cass. crim., 28 oct. 1998: Bull. crim. n° 383; D. 1993, somm. 34, obs. Robert; RTD civ. 1994, 134, obs. Zenati). Civil courts do not require this condition anymore (Cass. 1e civ., 8 déc. 1987: Bull. civ. I, n° 338; D. 1987, somm. 29, obs. Robert). Zenati-Castaing F., Revet Th., Les biens, p. 293, n° 184. See the distinctions made by courts: erreur invincible, erreur légitime. Cass. 1e civ., 23 mars 1965: Bull. civ. I, n° 206. – CA Paris, 22 mars 1983, Gaz. Pal. 1983.1, somm. 207. – CA Lyon, 8 juin 1989, D. 1990., somm. 86, obs. Robert. – Djoudi J., « Revendication », Répertoire de droit civil, Dalloz, avril 2008, p. 19, § 121. Cass. 1e civ., 6 déc. 1989: Bull. civ. I, n° 385; D. 1990, somm. 89, obs. Robert. Cass. 1e civ., 27 nov. 2001: D. 2002, 671, note Gridel.

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of the Civil Code, article 2276 al. 2 nevertheless introduces an exception, if the asset has been stolen or lost. In these cases, the initial owner can revindicate, even from a possessor in good faith. There is also a specific legal regime for bearer bonds.784 As a general rule, the previous owner must have given up possession against his will,785 either because he lost the asset or because the asset was stolen. An asset has been stolen if it falls under the strict definition of theft provided by the Criminal Code, i.e. the fraudulent removal of somebody else’s property.786 The loss of an asset can be defined as the involuntary loss of possession by the rightful owner, i.e. a situation where this owner did not renounce his right to property. Nevertheless, article 2276 al. 2 cannot be extended to the breach of trust (abus de confiance) or to situations of fraud (escroquerie), as the relevant notions of loss and theft are those defined very strictly by criminal law.787 The proof of the loss or the theft must be made by the rightful owner.788 The rightful owner must also prove that the asset revindicated is identical to the asset that he lost or that was stolen.789 This can be difficult if the asset is generic goods. Nevertheless, it is not necessary for the rightful owner to prove his ownership. It suffices that he proves he possessed the asset at the time of the theft or the loss.790 If the asset is held by the finder or the thief, the rightful owner can act in court against the finder or the thief without limitations.791 Revindication as such, directed against the finder or the thief, is not subject to the statute of limitations.792 The only limit to revindication follows from acquisitive 784 785

786 787

788

789 790 791

792

Decret n° 83-359 du 2 mai 1983: D. 1983. 232. Cass. 1re civ., 1er juin 1977: JCP G 77, IV, 194; Bull. civ. I, n° 261; D.S. 1977, inf. rap. 455; Rev. trim. dr. civ. 1978, 161, observ. Giverdon. See, C. pen., art. 311-1: “la soustraction frauduleuse de la chose d’autrui.” Cass. civ. 16 juill. 1884: D.P. 85, 1, 232; S. 86, 1, 407. – Cass. req. 2 mars 1892: D.P. 93, 1, 198. – Cass. civ. 19 juin 1928: D.H. 1928, 448. Cass. 1e civ., 13 nov. 1962: Bull. civ. I, n° 478. – Cass. 1e civ., 21 janv. 1964: Bull. civ. I, n° 38. Grenoble 20 juill. 1949: D. 1952, 551, note Gervésie. Cass. civ., 21 mai 1951: D. 1951, 507. – Cass. 2e civ., 5 avril 1960: Bull. civ. II, n° 252. There is an apparent contradiction between article. 2224 of the Civil Code, which bars actions in respect to movables after five years, and article 544 of the Civil Code which gives a perpetual ownership right. Courts tend to give prevalence to article 544 of the Civil Code. Cass. 1e civ., 2 juin 1993: Bull. civ. I, n° 197; D. 1993, somm 306, obs. Robert: « l’action en revendication n’est pas susceptible de prescription extinctive. »

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prescription rights of third parties, who become rightful owners after a period of three years. It is also possible for the rightful owner to sue the finder or the thief for civil damages (civil liability) within a period of ten years from the date of the loss or the theft (C. civ., art 2226, former C. civ., art. 2270-1793).794 If the third party possesses the asset acting in good faith, the rightful owner of a lost or stolen asset can revindicate the asset during a period of three years from the day the asset was lost or stolen (C. civ., art. 2276 al. 2795). The rightful owner is thus protected if the asset was lost or stolen.796 The rightful owner must nevertheless prove his property rights in this case and also prove the loss or the theft of the asset. The three year period is an immutable period and cannot be suspended or extended.797 However, by way of exception, if the third party bought the asset in a shop or at a market, where similar assets are sold, the rightful owner must reimburse the price that was paid (C. civ., art. 2280 al. 1).798 In this case, the third party can retain the asset until full payment.799 Therefore, in general, the rightful owner will only revindicate the asset if the price paid by the possessor was low. If the price paid is particularly low, the good faith of the possessor can be doubted.800

793

794 795

796

797

798

799 800

C. civ., art 2226 al. 1: (1): Claims for tort liability are barred after ten years from the manifestation of the injury or of its aggravation. Cass. civ., 7 fév. 1910: DP 1910, I, p. 201, obs. Nast. C. civ., art. 2276 (former C. civ., art. 2279) al. 2: Nevertheless, the person who has lost or from whom an asset has been stolen, may claim it during three years, from the day of the loss or of the theft, against the one in whose hands he finds it, subject to the remedy of the latter against the one from whom he holds it. Dorhout-Mees T.-J., La revendication des meubles perdus ou volés contre le possesseur de bonne foi, in Mélanges Savatier, p. 265. Cass. crim., 30 oct. 1969: J.C.P. 70, II, 16333, note Goubeaux. – Cf. also Montpellier, 19 janv. 1949: JCP 1949, II, 4806, note Dijol. – Lyon, 15 mars 1954: D.S. 1954, 461, note Gervesie et Chavrier. – Bordeaux, 22 janv. 1974: D.S. 1974, 542, note Rodière; RTD. civ. 1974, 837, observ. Bredin. C. civ., art. 2277 (former C. civ., art. 2280) al. 1: « Si le possesseur actuel de la chose volée ou perdue l’a achetée dans une foire ou dans un marché, ou dans une vente publique, ou d’un marchand vendant des choses pareilles, le propriétaire originaire ne peut se la faire rendre qu’en remboursant au possesseur le prix qu’elle lui a coûté. » See infra 19.4: Possessor’s right to retain the movable. Cass. Crim., 3 déc. 1984, Bull. crim., n° 381; Gaz. Pal. 1985.2. somm. 224; D. 1985, inf. rap. 186. – Cass.1e civ., 27 nov. 1973, Bull. Civ. I, n° 324. – Djoudi J., « Revendication », Répertoire de droit civil, Dalloz, avril 2008, p. 20, § 121.

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If the possessor returns the asset to the rightful owner, he then can act against the person from whom he received the asset.801 Nevertheless, such an action is doomed to failure in most cases, as the thief and the dishonest transferor rarely give identification. If the lost or stolen asset is a bearer bond or share, a decree of the 2nd of May 1983802 enables the rightful owner to revindicate the bond or share if he has advertised the loss or the theft both at the Chambre syndicale des agents de change and at the issuing company.

12.9.

Right of the original owner A to buy back the asset from the good faith acquirer C?

There is a right of the original owner to buy back the asset from the good faith acquirer, but only in two limited cases: for lost and stolen goods. This right can be exercised against the first acquirer acting in good faith and also against all further acquirers.803 The original owner only has to compensate the price paid by the acquirer acting in good faith. As the original owner exercises his property rights, which are perpetual, he is deemed to have never lost his ownership.804 Revindication thus has a retroactive effect. The right of the original owner to buy back the asset is, however, limited to a period of three years from the day the asset was lost or stolen.

12.10. Rules on good faith acquisition free of encumbrances A person B buys a movable from the owner A, or a person A who possesses the authority to dispose of the movable, but the movable is encumbered with a property right of a third party C (e.g. pledge), of which buyer B is not aware. Can B, if he is acting in good faith with respect to the non-existence of that encumbrance, acquire the movable free of encumbrances? What are the exact requirements? 801

802

803

804

CA Paris, 7 février 1950, D. 1951, 456, note Lalou. – CA Paris, 3 janv. 1951, D. 1951, 456, note Lalou. – Djoudi J., « Revendication », Répertoire de droit civil, Dalloz, avril 2008, p. 22, § 138. Decret n° 83-359 du 2 mai 1983: D. 1983. 232. – Dross W., « Prescription et possession. – Prescription des choses mobilières », Jurisclasseur Civil Code Art. 2279 et 2280, 15 mars 2007, p. 22, § 63-64. TI Lille, 12 janv. 1982: Gaz. Pal. 1982.1, somm. 182. – Djoudi J., « Revendication », Répertoire de droit civil, avril 2008, p. 19, § 118. See supra 1.2.1.(c): Definitions and characteristics of the right of ownership.

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This is the case when a person buys a movable from the owner, or from someone who possesses the authority to dispose of the movable, but the movable is encumbered with a property right of a third party. The general rules of article 2276 al. 1 of the Civil Code protect the acquirer who did not know, nor ought to have known, that his acquisition was encumbered with the property rights of someone else. Therefore, B acquires the movable free of encumbrances.

13.

Rules for “acquisitive” prescription of movable property

According to former article 2219 of the Civil Code, “prescription is a manner of acquiring or of discharging oneself at the end of a certain period of time and subject to the conditions determined by law.”805 The new provisions of the Civil Code distinguish between acquisitive prescription (C. civ., art. 2258 new version) and extinctive prescription (C. civ., art. 2219 new version). Time thus serves the double purpose of allowing someone to become an owner and enabling someone to discharge himself of an obligation.806 In the first case, use, i.e. possession leads to ownership; in the second case, non-exercise of right leads to its extinction. The term “acquisitive prescription” circumscribes the acquisition of ownership by being in possession / physical control of a movable for a longer period of time (C. civ., art. 2258). French law clearly distinguishes between acquisitive prescription rules for movables and those for immovables. In the case of movables, the general rule is immediate acquisition of ownership as soon as a person acquires possession of an asset. However, in some exceptional cases, ownership may be acquired later, either because such is the intent of the parties to a contract, or because the asset was lost or stolen from the original owner, who can claim the asset within a period of three years after the loss or the theft.807 As a general rule, claims pertaining to movables lapse after five years (C. civ., art. 2224).

13.1.

Functions of acquisitive prescription

In general, acquisitive prescription rules exist in order to ensure legal certainty as well as to protect the certainty of legal transactions and public 805

806

807

Zenati F., Fournier S., Essai d’une théorie unitaire de la prescription civile, RTD civ. 1996, 339. Hébraud P., Observations sur la notion de temps dans le droit civil, in Mél. Kayser, 1979, t. II, 1. See supra 12: Rules of good faith acquisition.

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order. Legal certainty entails that factual appearances be given legal effects as third parties do not always have the means to check the legal foundations of a situation. Additionally, such rules aim to protect the person who effectively tends to the asset (use as compared to non-use).808 Prescriptive acquisition rules essentially fulfil two functions: Acquisitive prescription rules permit the termination (purge) of legal relationships that need to be wound up after a certain time, thus freeing debtors from any legal chains.809 A debtor does not need to keep, for an indeterminate time, proof that he has fulfilled an obligation. This obligation disappears ipso facto after a certain time. These rules seize upon a passive attitude, where a person (the creditor) fails to assert a right and thus loses it after some time. Acquisition by prescription (usucapion) also serves to consolidate the legal position of the user of an asset and therefore put an end to any dispute that may arise in respect of an asset after a certain time. In general, acquisitive prescription rules protect the rightful owner, who is exempted from having to prove his rights. On the one hand, these rules are based upon an active attitude where the acquisition results from a person possessing a right. On the other hand, it is because a person fails to exercise a right (passive attitude) that a user can become owner by active use of the asset. This concept has been criticized in the past as many discussions have been held to determine whether prescription rules affect only the substantial right (le droit) or the right to act (l’action).810 Such discussions are linked to the contradiction mentioned above811 between the perpetual right of ownership,812 which is not subject to the statute of limitations, and the general statute of limitations, by which the right to act is limited in time. Specifically, in cases of acquisition by prescription, the right to bring legal actions with respect to the asset is extinguished. Former article 2262 of the Civil Code proclaimed: “All claims, in rem as well as in personam, are prescribed by thirty years, without the person who alleges that prescription being obliged to adduce a title, or a plea resulting from bad faith being allowed to be set up against him.”

Since 2008, article 2224 (new version) of the Civil Code provides that actions relating to claims and movables must be brought to court within 808 809 810

811 812

See supra 2.2: Functions of possession: the discussion between Ihering and Savigny. Zenati-Castaing F., Revet Th., Les biens, p. 664, n° 458. Zenati-Castaing F., Revet Th., Les biens, p. 677, n° 471: « l’effet acquisitif est substantiel, l’effet extinctif, processuel ». See 12.8: Treatment of Lost or Stolen Goods. See 1.2.1 (c): Definitions and Characteristics.

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a five year period. It is, however, necessary to understand that the time limit of five years stated in article 2224 applies to the extinction of claims linked to movables, whereas property rights linked to movables are perpetual (C. civ., art. 544). Yet, in the case of movables, revindication is barred either within a time limit of three years for lost and stolen goods (C. civ., art. 2276 al. 2), if the current possessor is acting in good faith, or immediately (C. civ., art. 2276, al. 1), if the owner freely gave up possession of the asset. In either case, the former owner can still bring a claim to court, within a time period of five years, to re-establish his rights of ownership (C. civ., art. 2224).

13.2.

Requirements for acquisitive prescription

13.2.1. Assets that can be acquired All assets can, in principle, be acquired by acquisitive prescription. Acquisitive prescription can apply to both corporeal and to incorporeal assets, but also to real rights and obligations.813 This applies in particular to registered goods and stolen goods. However, some assets are excluded from the field of application, as they belong to a category of non-tradable goods. Article 2260 (former C. civ., art. 2226) of the Civil Code declares, “One may not prescribe the ownership of assets which may not be the subject matter of legal transactions between private individuals”.814

In this respect, rights that cannot be transferred by contract (inaliénable), cannot be transferred by prescription rules (impréscriptible) either. This exclusion applies in particular to res communis and to public property. On the other hand, goods that are subject to a contractual clause limiting their transferability (inaliénabilité conventionnelle) may be acquired by acquisitive prescription. The same goes for undivided goods (biens indivis), as it is sufficient that one of the co-owners possesses the goods for the required time period. Registration of ownership does not prevent acquisitive prescription, even though in such cases, possession is equivocal and presumably in bad faith, the “possessor” being aware that he is not the lawful owner. In the 813

814

However, the passive attitude of a person simply tolerating a behaviour is not enough. Article 2262 (former C. civ., art. 2232) states “Acts which are merely allowed or simply tolerated may not give rise to possession or prescription.” See supra 1.5: Transferability of movable assets.

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case of registered goods, the time needed to acquire ownership is thus longer: it is not immediate as stated in article 2276 al. 1 of the Civil Code, but is accomplished after a period of five years (C. civ., art. 2224).

13.2.2. Role of possession Possession is an essential feature of acquisitive prescription, second only to the passing of a specific period of time. Possession must not be vitiated and four cumulative qualities are required to give legal effect (effet utile) to the possession of a holder (C. civ., art. 2261, former art. 2229).815 Possession must be peaceful,816 public,817 permanent818 and without ambiguity.819 Subsidiarily, good faith and a title deed also play a role in ascertaining possession rights, but in the case of corporeal movable assets, there is no requirement of a valid obligation or a valid “title” to acquire ownership. Specifically, if the “title” is putative, in which case the acquirer just believes that the contract, under which he bought the asset, is valid, whereas in reality it is not, article 2276 of the Civil Code applies.820 815

816

817

818

819

C. civ., art. 2261 civ. – former art. 2229: In order to be allowed to prescribe, one must have a continuous and uninterrupted, peaceful, public and unequivocal possession, and in the capacity of an owner. – Zenati-Castaing F., Revet Th., Les biens, p. 659, n° 452. Possession must be obtained peacefully. Only the rightful owner can contest this fact: Zenati-Castaing F., Revet Th., Les biens, p. 660, n° 452. Civ. 1e, 4 mai 1977, Bull. civ. I, n° 205. Yet see, Cass. 1e civ., 7 juil. 1965: Bull. civ. n° 459. – Cass. 1e civ., 8 mars 2005: JCP 2005, I, 181, n° 4 obs Périnet-Marquet. Req. 15 avr. 1890: S. 1891, 1, 342. – Civ., 21 juin 1978: D. 1978, inf. rap. 246. – According to the Cour de cassation, there is discontinuity if “possession has not been exercised on all occasions and at all times in which it should have been, taking into account the nature of the asset, without any abnormal intervals of a certain length which would be lacunae” (Civ., 11 janv. 1950: Bull. civ. I, n° 12; D. 1950, 125, note Leonan). – Possession must be stable and permanent. This is presumed if possession has started (C. civ. art 2264 – former C. civ.art. 2234): Zenati-Castaing F., Revet Th., Les biens, p. 660, n° 452. The possessor must behave as if he were entitled to hold the asset as a rightful owner (Com., 18 oct. 1994: D. 1994, inf. rap. 249. – Cass. 1e civ., 14 mai 1996: D. 1996, inf. rap. 147. – Cass. 1e civ., 10 déc. 1958: Bull. civ., I, n° 555. – Cass. 1e civ. 11 juin 1991: Bull. civ. I, n° 199; RTD civ. 1992, 595, obs. Zenati). For example, if two people live together it is difficult to determine which of the users of an asset is its rightful owner and thus possesses the asset (Civ. 31 janv. 1900: DP 1900. 1. 281, note Poncet. – Com., 12 juil. 1948: S. 1949. 1. 19). On the other hand, this situation can lead to a co-possession of the asset. See Voirin P., Goubeaux G., Droit civil, p. 288, n° 645.

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On the other hand, when an obligation disappears by acquisitive prescription to the benefit of the debtor, no possession is required, the passing of time being sufficient. In fact, in this case, it is more the case of nonpossession (of the creditor) that is relevant.821 The possession of the acquirer must also encompass all elements of possession, such as the corpus and the animus. The corpus element is the factual, material side of possession: it is the act of possessing. The holder of an asset performs the same material acts that the lawful owner of an asset would perform.822 The animus element refers to the psychological, immaterial side of possession: it is the intent to possess.823 The holder must accomplish the material acts with the intention of behaving as the lawful holder of the right.824 Indirect possession is possible. This is the case of possession corpore alieno (C. civ., art. 2255 – former C. civ., art. 2228),825 which is a mere material act in respect of goods.826 This material act can be accomplished by a third party, even if this intermediary does not represent the possessor. Such is the case of a usufructuary,827 of a lessee828 or of a seller829 who has not yet delivered the goods. This intermediary simply holds the asset without the intention to act as an owner. He therefore recognises that someone else is the owner of the asset and that by holding the asset he exercises the corpus of this owner. The simple holder, on the other hand, does not act for this owner, but simply uses his own rights to the asset.830 820

820 821 822

823 824

825

826 827

828

829 830

See supra 12.7: Good faith requirements. Zenati-Castaing F., Revet Th., Les biens, p. 665, n° 459. Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 145 n° 133. – Terré F., Simler Ph., Les biens, p. 148, n° 155. – Atias Ch., Les biens, p. 198, n° 306. – Yet more nuancé: Malaurie Ph., Aynès L., Les biens, p. 143, n° 493. Malaurie Ph., Aynès L., Les biens, p. 142, n° 492. Cass. req., 15 avr. 1890: DP 1890, 1, p. 188. – Cass. 1e civ., 20 déc. 1955: JCP G 1956, II, 9455, note A. Weill; Bull. civ. I, n° 453. – Cass. 1e civ., 18 juin 1959: JCP G 1959, IV, p. 98. – Cass. 2e civ., 5 avr. 1960: Bull. civ. II, n° 252. – Cass. 1e civ., 21 juin 1978: Gaz. Pal. 1978, 2, somm. p. 337. – Cass. 1e civ., 20 févr. 1996: JCP G 1996, IV, 872; Bull. civ. I, n° 96. Cass. 1e civ., 16 janv. 1980: JCP G 1980, IV, p. 124; Bull. civ. I, n° 31. – Cass. 1e civ., 3 nov. 1981: JCP G 1982, IV, p. 33; Bull. civ. I, n° 324. Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 142, n° 129. Cass. 3e civ., 21 mars 1984: Bull. civ. III, n° 78; D. 1984, inf. rap. p. 425, obs. Robert. The usufructuary possesses for the full owner. Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 146, n° 134, p. 151, n° 139. – Cass. 3e civ., 8 déc. 1976: Bull. civ. III, n° 449. Cass. 3e civ., 16 nov. 1976: Gaz. Pal. 1977, 1, somm. 23; D.S. 1977, inf. rap. 85. Bergel J.-L., Bruschi M., Cimamoni S., Les biens, p. 150, n° 138.

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134

13.2.3. Role of good faith For immediate acquisition of ownership, possession in “good faith” is required (C. civ., art. 2276 al. 1). Good faith in this context means: that the transferee has acquired the asset in the mistaken belief (and thus in good faith) that the transferor is the owner. The mistake of the acquirer must be “common” (error communis) in the same sense that any other person placed in the same circumstances would have made the same mistake.831 This is an objective approach. On the other hand, good faith is evaluated taking into account the intellectual capabilities and personality of the acquirer. This is a subjective approach. Good faith is presumed, but can be rebutted if either the subjective or the objective approach leads to other conclusions. As a result, the acquirer does not act in good faith if he has actual knowledge of the lack of rights of the transferor. Courts consider additionally that gross or even slight negligence excludes good faith.832 This is the case, for example, if the price paid by the acquirer is particularly low, or if the acquirer, who is a professional, did not check the identity of the seller.833 Good faith is required at the time the acquirer enters into possession834 (rules of the law of property), and not at the time the contract was concluded (contract law rule). If the acquirer is acting in bad faith, ownership can be acquired after five years (C. civ., art. 2224). In this case, one does not take into account the quality of the possession, notably whether possession is public or whether the acquirer keeps the asset secretly. Only the passing of time consolidates the acquirer’s right as a bar to any actions (C. civ., art. 2224). On the contrary, if the acquirer is acting in good faith, acquisition of ownership is immediate (C. civ., art. 2276, al. 1).

13.2.4. Prescription periods To calculate the time needed to acquire a right, one should take into account the entire time period, subtracting the first day and counting the last day. Article 2228 of the Civil Code (former C. civ., art. 2260) states that “Prescription is counted by days and not by hours”. Article 2229 of 831 832

833 834

See the distinctions made by courts: erreur invincible, erreur légitime. Cass. 1e civ., 23 mars 1965: Bull. civ. I, n° 206. – CA Paris, 22 mars 1983, Gaz. Pal. 1983.1, somm. 207. – CA Lyon, 8 juin 1989, D. 1990., somm. 86, obs. Robert. – Djoudi J., « Revendication », Répertoire de droit civil, Dalloz, avril 2008, p. 19, § 121. Cass. 1e civ., 6 déc. 1989: Bull. civ. I, n° 385; D. 1990, somm. 89, obs. Robert. Cass. 1e civ., 27 nov. 2001: D. 2002, 671, note Gridel.

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the Civil Code (former C. civ., art. 2261) adds that prescription “accrues when the last day of the period is over.” The period of prescription accrued to a predecessor can be taken into account (jonction des possessions – C. civ., art. 2265, former C. civ., art. 2235), whether the transmission of the asset from the predecessor was single (à titre particulier) or part of a global transmission (à titre universel), such as an inheritance. However, if the transmission is global, possession by the new holder is considered to be identical to that of the predecessor, as successors are deemed to continue the person of the predecessor. Therefore, if the predecessor’s possession was faulty, the successor will continue this faulty possession. On the other hand, the possession by a single successor is deemed to be autonomous: possession by the successor as such will be considered separately from the predecessor’s possession. These rules apply regardless of whether the predecessor and / or the new possessor were acting in good or bad faith. Yet specifically, in the case of movables, if the new possessor is acting in good faith, ownership is immediate (C. civ., art. 2276 al. 1); whereas if he is acting in bad faith, such ownership is only confirmed after a period of five years (C. civ., art. 2224). As an exception, if the asset was lost or stolen, the lawful owner may reclaim (revindicatio) the asset, during a time frame of three years (C. civ., art. 2276, al. 2), from a new possessor acting in good faith. French law provides certain rules concerning an interruption (renewal) or extension of the prescription period. The prescription period can be interrupted whenever possession of the asset ceases. In such a case, possession loses its continuity and thus the condition for prescribing disappears. To acquire ownership, the possessor must then possess for a whole new prescription period (C. civ., art. 2231, new version), with a limit of 20 years (C. civ., art. 2232, new version). Two types of interruption can occur. The first case is a natural interruption (interruption naturelle), where the possessor loses his possession either voluntary or involuntary. If he is dispossessed against his will, he is entitled to take action to recover possession, which in the case of movables takes the form of a revindication.835 If this action succeeds, the interruption is deemed never to have taken place. This interruption of the prescription period has erga omnes effects. The second case is the civil interruption of possession (interruption civile), where the possessor is taken to court836 by the presumptive owner. In this case, if the claim is accepted by the court, possession ceases. However, 835 836

Actions possessoires, see supra 2.4: Protection of possession. Many rules on civil interruptions of possession can be found in civil procedure.

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if the claim is rejected or if the claimant withdraws the claim, there is no interruption.837 In cases where the claim is vitiated by a procedural error, possession is nevertheless interrupted (C. civ., art. 2241).838 If the possessor recognises the right of the claimant, possession is also interrupted (C. civ., art. 2240, former article 2248). This interruption effect only applies to the parties in court and to persons that have joint and severable liability with the debtor, as well as to persons providing security for his debt.839 There are certain rules concerning a suspension of the prescription period (C. civ., art. 2230, new version). French law distinguishes various suspension periods depending on social circumstances. In particular, article 2235 (former C. civ., art. 2252 and art. 2278 lato sensu) states, “Prescription does not run against non-emancipated minors and adults in guardianship, except for [not relevant for movables]”.

Similar rules apply to conditional or delayed (droits à terme) rights: “The statute of limitations does not run: with regard to a claim that depends upon a condition, until that condition occurs; with regard to a claim on a warranty, until dispossession has taken place; with regard to a claim with a fixed term, until that day has occurred.” (C. civ., art. 2233, former C. civ., art. 2257). Specific rules also apply to the revocation of a donation in the event of the birth of a child840 or between spouses.841 As a general rule, courts apply the contra non valentem agere non currit praescripto principle: for those who cannot act, prescription does non run against them. Causes should be major events, such as wars or force majeure or even legal and contractual impediments (C. civ. art. 2234).

837

838

839 840

841

A claim lodged in court without the requisite jurisdiction will nevertheless validly interrupt precription. This is a different solution from the one laid down by former C. civ., art. 2247, which did not accept the interruption of prescription. C. civ., art. 2245, former C. civ. 2246. C. civ., art. 966 C. civ. new version (L n° 2006-728 du 23 juin 2006): The right to revoke a gift lapses five years after the birth or the adoption of the last child. This right only belongs to the donor. C. civ., art. 2236 (former C. civ., art. 2253): “It does not run or is suspended between spouses and between partners of a registered partnership.” Comp. former C. civ., art. 2254: “Although there is no separation resulting from an ante-nuptial agreement or a judgment, prescription runs against a married woman, with regard to the property of which the husband has the administration, subject to her remedy against the husband”.

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137

13.2.5. Extent of the acquisition As soon as the period of time needed to prescribe ownership has elapsed, the possessor becomes the owner of the asset without any obligation to compensate the former owner,842 whether in terms of unjustified enrichment or non-contractual liability for damage (torts). The only exception to this rule can be found in article 2276 of the Civil Code, which applies to the cases of lost and stolen goods. In such cases, the acquirer may have to return the asset to the initial owner, but then it is the original owner who must compensate the acquirer.843 If third parties have limited rights in rem (e.g. pledge) in the movable, such rights are lost. The acquirer, when all requirements of acquisitive prescription are met, acquires full ownership of the movable (i.e. free of these encumbrances). If the acquirer is aware that these limitations exist, but erroneously thinks he is owner, he then is acting in good faith and will acquire immediate full ownership (i.e. unlimited by the encumbrances he was aware of). The situation would be different if he were acting in bad faith, full ownership being granted only after five years (C. civ., art. 2224).

13.3.

Prescription of ownership

In general, there are no acquisitive prescription rules for movables, as acquisition of ownership is immediate as soon as a person enters into possession of the asset (C. civ., art. 2276 al. 1 new version). Nevertheless some assets do not fall within the scope of this article844 and therefore can benefit from acquisitive prescription rules. This is the case of lost and stolen goods (three years) and of registered goods (five years). There is no period of limitation (préscription) for the right of ownership (see the German “Verjährung des Eigentums”). Under French law, ownership rights are perpetual and do not disappear after a certain period.845 As mentioned above,846 the right of property lasts as long as the asset. Additionally, the right of property does not disappear if the asset is not used.847

842 843 844 845 846 847

Form of original acquisition see supra 11: Types of original acquisition. See supra 12.8: Treatment of lost and stolen goods. See supra 12.1: Field of application. T. Lamarche, L’imprescriptibilité et droit des biens, RTD civ. 2004, 403. See supra 1.2.1.(c): Definitions and characteristics. Req., 12 juil. 1905: GAJC 11e éd. 2000, n° 61.

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There is no such thing as temporary property in French law. It is not possible to give up the right of property for a limited period of time.848 Nevertheless, in the case of movables, the perpetual characteristic of property is not always maintained. If a movable asset is abandoned by its owner (res derelicta), the asset has no master until another person takes possession of it and becomes the owner by the effect of the mechanism of the so-called “occupation” (taking of possession), which is the creation of a new property right for the third party from the moment he enters into possession of the asset. Similarly, acquisitive prescription rules in the field of movables, through the mechanism of article 2276 of the Civil Code (former C. civ., art. 2279), give the new possessor of the asset a new right of property.849 In this respect, the taking of possession (occupation) and acquisitive prescription rules are two original ways to acquire property. Original ownership of movables can thus be obtained through possession and through occupation.850 Yet in prescription cases, a rather unusual phenomenon occurs. Prescription is a legal mode of acquiring ownership. Property rights are established by way of law and no transmission takes place (acquisitive effect). As a result, the old ownership right of the last owner survives, even if this owner does not have any right of action against the new owner to revindicate the asset. It must, however, be stressed that only revindication rights are extinguished. Contractual rights of the possessor or of his creditors are not governed by the same regime.851 To limit the effects of such a survival of property rights, prescription is deemed to have retroactive effects. Prescription thus delivers a right of ownership to those who have no other legal title. The right given by prescription is said to have existed at the time of entry into possession of the asset. Any acts done by the new owner / possessor during the period needed to acquire ownership are valid. Additionally, the old owner loses any right of action against the new owner (extinctive effect).852 In civil procedure, the court does not have to apply the statute of limitations ex officio (C. civ., art. 2247, former C. civ., art. 2223):853 only the parties are entitled to invoke this circumstance. Such an argument can be invoked at all stages in the proceedings (fin de 848

849 850 851 852

853

Contra, Voirin P., Goubeaux G., Droit civil, p. 274, n° 611: admitting that property can be transferred subject to the constitution of a time limit (terme). See supra 12: Good faith acquisition. See supra 2.2: Functions of possession. Zenati-Castaing F., Revet Th., Les biens, p. 673, n° 467. However, if the extinctive effect applies to an obligation, the creditor has no action against the debtor. Yet if the debtor pays the creditor, the de in rem verso rules do not apply. Except in some very limited cases defined by law.

14. Other forms of original acquisition

139

non-recevoir), by a debtor, but also by the debtor’s creditors or any interested persons (C. civ., art. 2253, former C. civ., art. 2225) through an action oblique (C. civ., art. 1166). The statute of limitations cannot be waived in advance, before the elapse of the time period (C. civ., art. 2250, former C. civ., art. 2222). Only an acquired prescription can be renounced by the beneficiary of the prescription.854 Such a renunciation can be tacit, but must be unequivocal (C. civ., art. 2251, former C. civ., art. 2221).

14.

Other forms of original acquisition

The main type of original acquisition is the so-called “occupation” of a movable not owned by anyone. Ownership through occupation is an application of the effects of possession of the asset and it leads to original ownership in the following cases. In general, if a person possesses an asset that has no identified owner (choses sans maître and res derelictae), he immediately becomes its owner through occupation, if he so wishes. If, however, the asset is not considered to have no identified owner, but was simply lost (trésor), the finder only becomes its owner under certain circumstances (C. civ., article 716).855 As an exception, article 2276 of the Civil Code allows possessors of identified movables, who are acting in good faith, to become owners immediately. This rule applies specifically to cases where it would be possible to find the owner of the asset. It does not apply to cases where the current possessor found the asset, as he would not be acting in good faith. A person is acting in good faith, if he is convinced that he has become the bearer of the right through a valid title deed (C. civ., art. 550).856 Good faith is presumed (C. civ., art. 2274, former art. 2268857).858 If the bearer knows that he is not the rightful owner of the asset, he is acting in bad faith. If the bearer is acting in bad faith, the effects of possession are limited. Furthermore, acquisitive prescription rules enable possessors (in bad faith) to become owners after a certain period of time.859 854 855 856 857

858 859

See however the action paulienne open to creditors. See supra 2.2: Functions of possession. Cass. 1e civ., 5 déc. 1960: Bull. civ. I, n° 527. C. civ., art. 2274 (former C. civ., art. 2268): Good faith is always presumed and it is up to the person who alleges bad faith to prove it. Cass. civ., 11 janv. 1887: S. 1887, 1, 225. See supra, same section. It is to be noted that the rule of C. civ., art. 2276 (former C. civ., art. 2279) on immediate acquisition of the ownership of movables only applies to possessors in good faith.

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Another original acquisition mechanism derives from the right of the possessor to keep the fruit produced by an asset and thus acquire ownership of this fruit.860 As a general principle recognised by legal scholarship,861 but not formulated specifically, the possessor is entitled to the fruit of an asset.862 Many applications of this general principle can be found in statutory law. For example, if a possessor has to surrender an immovable, he can keep the fruit accrued until a claim (demande) for restitution is filed (C. civ., art. 1682, al. 2). In inheritance cases, in order to ensure equality between heirs, heirs must surrender assets given to them by the deceased person, but they can keep the fruit accrued before the death (C. civ., art. 856). Similar rules apply to donees, where the gift would violate the reserve principle protecting heirs (C. civ., art. 928) or in cases where the gift is revoked (C. civ., art. 958 and art. 962).

860

861

862

For a general presentation, see infra 19.1: Entitlement to benefits resulting from the movable. However, the foundation of such a rule is disputed. See Zenati-Castaing F., Revet Th., Les biens, p. 720, n° 509. Zenati-Castaing F., Revet Th., Les biens, p. 716, n° 504.

Part IV: Additional questions 15.

Rules for the reservation of title

15.1.

Notion and conditions

French law863 has acknowledged the concept of retention of title since the 1980’s;864 however, the third party effects of such a clause were originally limited to insolvency proceedings. The comprehensive 2006 reform of securities law865 fully recognised the reservation of title as a general contractual 863

864

865

In comparative and international law: Waelbroeck M., Le transfert de propriété dans la vente d’objets mobiliers corporels en droit comparé, Bruylant 1961, 246 pages. – Stumpf H., Eigentumsvorbehalt und Sicherungsübertragung im Ausland – Recht der Mobiliarsicherheiten im Ausland, Verlag Recht und Wirtschaft 4. Aufl. 1980, 499 pages. – Fisch P., Eigentumserwerb, Eigentumsvorbehalt und Sicherungsübereignung an Fahrnis im internationales Sachenrecht der Schweiz, der Bundesrepublik Deutschland und Frankreichs, Huber Druck 1985, 196 pages. – Kaiser E., Verlängerter Eigentumsvorbehalt und Globalzession im IPR: Rechtsvergleichende Darstellung von Zession und Zessionsstatut im deutschen, österreichischen, schweizerischen, französischen, englischen und US-amerikanischen Recht, Centaurus-Verlagsgesellschaft Pfaffenweiler, 1986, 255 pages. – CCI (Eds.), Réserve de propriété: Guide sur les législations de 19 pays, 1989, 65 pages. – Schulz M., Der Eigentumsvorbehalt in europäischen Rechtsordnungen, Peter Lang Verlag 1998, 239 pages. – Al Dabbagh H., La clause de réserve de propriété dans les ventes mobilières à crédit (étude de droit comparé français et irakien), PUAM 2004, 154 pages. Many books have been written on this topic. The leading author is Pérochon F., La reserve de propriété dans la vente de meubles corporels, Actualités de droit de l’entreprise 21, Avant propos. J.-M. Mousseron, Litec 1988, 332 pages. – See also Garcin et Thieffry (Eds.), La clause de reserve de propriété, Actualités de droit de l’entreprise 12, 1981, 308 pages. – Robine E., La clause de réserve de propriété depuis la loi du 12 mai 1980-bilan de dix années de jurisprudence, Litec 1990, 171 pages. – Menne M., Die Sicherung des Warenlieferanten durch den Eigentumsvorbehalt im französichen Recht, Verlag Recht und Wirtschaft 1998, 152 pages. Loi n ° 80-335 du 12 mai 1980 relative aux effets des clauses de réserve de propriété dans les contrats de vente: JO 13 mai 1980, p. 1202. – Loi n° 85-98 du 25 janv. 1985 relative au redressement et à la liquidation judiciaires des entreprises: JO 26 janv. 1985, p. 1097. – Loi n° 94-475 du 10 juin 1994 relative à la prévention et au

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mechanism,866 applicable outside insolvency proceedings,867 that secures erga omnes the seller’s ownership rights to the goods against the buyer until full payment of the agreed price.868 Retention of title can be defined as a contractual clause that delays the transfer of ownership until the moment at which the price of the other counter-obligation is entirely performed.869 These clauses can be used in contracts where a transfer of ownership takes place, such as contracts of sale (contrat de vente), but also leasing contracts (location vente),870 or construction contracts with supply of materials (contrat d’entreprise).871 A contract only has this effect, however, if it contains an express clause concerning its effect on the transfer of ownership. Reservation of title has been recently codified in the French Civil Code (C. civ., articles 2367 to 2372).872 It is also dealt with in the Commercial Code in relation to insolvency proceedings (C. com., articles L 624-16 to

866

867

868

869

870 871

traitement des difficultés des entreprises, JO 11 juin 1994, p. 8440. – Loi du 1er juillet 1996 – codified at article L 621-122 of the Commercial Code. – Ordonnance n° 2006-346 du 23 mars 2006 relative aux sûretés at C. civ., art. 2367 to 2372 – Until 1994, retention of title was considered as an exceptional contractual mechanism. Before 2006, such clauses could be agreed upon in any type of contract: Cass. com., 19 nov. 2003, n° 01-01.137: Juris-Data n° 2003-021073; Bull. civ. 2003, IV, n° 174; Act. proc. coll. 2004, comm. 20, obs. C. Alleaume; JCP G 2004, I, 113, n° 1, obs. Ch. Caron; D. 2003, p. 3049, obs. A. Lienhard; D. 2004, p. 801, note A. et F.-X. Lucas; LPA 19 févr. 2004, p. 9, note H. Lécuyer; RTD com. 2004, p. 599, obs. A. MartinSerf. – Cass. com., 29 mai 2001, n° 98-21.126: Juris-Data n° 2001-010018; RTD civ. 2001, p. 930, obs. P. Crocq; Contrats, conc. consom. 2001, comm. 133, obs. L. Leveneur. – Cass. com., 5 nov. 2003, n° 00-21.357: Juris-Data n° 2003-020806; JCP G 2003, IV, 3057; JCP E 2003, 1762; Bull. civ. 2003, IV, n° 162; D. 2003, p. 2965; RTD com. 2004, p. 600, obs. A. Martin-Serf. Al Dabbagh H., La clause de réserve de propriété dans les ventes mobilières à crédit (étude de droit comparé français et irakien), PUAM 2004, p. 20, n° 14. Crocq P., La réserve de propriété, JCP G 2006, supplément au n° 20 du 17 mai 2006, n° 6, § 1. – Pérochon F., La reserve de propriété dans la vente de meubles corporels, Actualités de droit de l’entreprise 21, Avant propos. J.-M. Mousseron, Litec 1988, p. 13, n° 13. C. civ., art. 2367: the retention of title clause is a clause that “suspends the transferring effect of a contrat until full payment of the obligation that is the counterpart”. Cass. civ. 3e, 26 juin 1991: Bull. civ. n° 197 p. 115; JCP 1992, II, 21825. Cass. com., 29 mai 2001, n° 98-21.126: Juris-Data n° 2001-010018; RTD civ. 2001, p. 930, obs. P. Crocq; Contrats, conc. consom. 2001, comm. 133, obs. L. Leveneur. – Cass. com., 5 nov. 2003, n° 00-21.357: Juris-Data n° 2003-020806; JCP G 2003, IV, 3057; JCP E 2003, 1762; Bull. civ. 2003, IV, n° 162; D. 2003, p. 2965; RTD com. 2004, p. 600, obs. A. Martin-Serf.

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L 624-18). Its admissibility ensues from the general rules of contract and property law.873 Although article 1583 of the Civil Code provides that the contract automatically transfers ownership of the goods,874 this can be altered by the parties to a contract as a consequence of the general principle of freedom of contract.875 The legal characterisation of the clause has, however, caused a lot of controversy.876 Modern commentators consider that the transfer of ownership is a consequence of the law and not the performance of a duty.877 Ownership passes as an automatic effect of the contract. Yet in this hypothesis, the clause creates a duty upon the seller to transfer ownership, this duty being conditional on payment of the price. Such a clause suspends the transfer of ownership878 using the form of a condition 872

872

873

874

875

876

877

878

Ordonnance n° 2006-346 du 23 mars 2006 relative aux sûretés: art. 2367 to 2372 C. civ. – Crocq P., La réserve de propriété, JCP G 2006, supplément au n° 20 du 17 mai 2006, n° 6. Schulz M., Der Eigentumsvorbehalt in europäischen Rechtsordnungen, Peter Lang Verlag 1998, p. 135. Pérochon F., La reserve de propriété dans la vente de meubles corporels, Actualités de droit de l’entreprise 21, Avant propos. J.-M. Mousseron, Litec 1988, p. 5, n° 6 et suiv. – Al Dabbagh H., La clause de réserve de propriété dans les ventes mobilières à crédit (étude de droit comparé français et irakien), PUAM 2004, p. 32, n° 24. Pérochon F., La reserve de propriété dans la vente de meubles corporels, Actualités de droit de l’entreprise 21, Avant propos. J.-M. Mousseron, Litec 1988, p. 11, n° 11. – Often such clauses are complemented by subsequent conditions and penal clauses. – See Storck M., Revendication des marchandises et sort d’un contrat de vente conclu avec une clause de réserve de propriété, D. 1988, Chr. 131. – Witz Cl., Analyse critique des règles régissant le transfert de propriété en droit français à la lumière du droit allemand, in Festschrift für Günter Jahr, Tübingen, p. 533.(544). Trigeaud J.-M., Réserve de propriété et transfert de propriété, JCP éd. CI, 1982, II, 13744. – Ghozi A., Nature juridique et transmissibilité de la clause de réserve de propriété, D. 1986, Chr. p. 317. – Bloch P., L’obligation de transferer la propriété dans la vente, RTD civ. 1988, p. 673. – Fabre-Magnan M., Le mythe de l’obligation de donner, RTD civ. 1996, p. 85. – Schulz M., Der Eigentumsvorbehalt in europäischen Rechtsordnungen, Peter Lang Verlag 1998, p. 140. – Al Dabbagh H., La clause de réserve de propriété dans les ventes mobilières à crédit, PUF Aix-Marseille 2004, p. 44, n° 45 et suiv. – Collart Dutilleul F., Delebecque Ph., Contrats civils et commerciaux, Précis Dalloz 8e éd. 2007, p. 179, n°194. Chazal P., Vicente S., Le transfert de propriété par l’effet des obligations dans le Code civil, RTD civ. 2000, p. 477. – See supra 5.1.1: The “unititular” or “uniform” concept of the transfer of ownership. Crocq P., La réserve de propriété, JCP G 2006, supplément au n° 20 du 17 mai 2006, n° 6, § 6. – Pérochon F., La reserve de propriété dans la vente de meubles corporels,

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precedent (condition suspensive)879 and not the form of a contractual delay (term contractuel).880 The law of 12 May 1980881 allowed the seller to retain ownership of the asset until complete payment of the price agreed upon. This was a complete form of ownership, the transferor also being liable for the risks of the asset, unless the contract provided otherwise.882 This situation has not changed. However, this clause now also has third party effects, because it is recognised as a security. To make the reservation of title effective in relation to third parties, the parties to a contract have to establish a written record of the clause. This requirement is stated both in commercial and in civil law. Following article 2368 of the Civil Code, this clause must be drafted in writing.883 Article L 624-16, al. 2 of the Commercial Code adds that the clause must be stipulated at the time of delivery at the latest. Because of the consensual character of the reservation clause, the buyer’s acceptance has to be pronounced no later than at this moment. But this basic principle is often modified by tacit agreements, in which the seller presents the clause on the delivery note or bill at the moment of delivery of the merchandise. The same written document including the reservation clause can cover several commercial operations, as long as this is agreed between the parties. The objective of this requirement is the protection of third party creditors by reducing risks of fraud. But it does not need to be executed as a private deed (acte sous seing privé). The mention of this clause on any document would be sufficient (certificate of order or delivery, bill, etc.). The nature of this requirement is not clearly established in the law and it is not clear whether it is a pre-condition of validity or only an evidential requirement. However, in commercial law, it seems to be a pre-condition

879

880

881 882

883

Actualités de droit de l’entreprise 21, Avant propos. J.-M. Mousseron, Litec 1988, p. 33 et suiv. Cass. com., 20 nov. 1979, Mercarex: RTD com. 1980, 43. – Pérochon F., La reserve de propriété dans la vente de meubles corporels, Actualités de droit de l’entreprise 21, Avant propos. J.-M. Mousseron, Litec 1988, p. 64, n° 67. Ghestin J., Réflexions d’un civiliste sur la clause de réserve de propriété, D. 1981, chr. p. 1. Loi n° 80-335 du 12 mai 1980, modified in 1985, 1996 and 2006. Cass. com., 20 nov. 1979: Bull. civ. 1979, IV, n° 300; JCP G 1981, II, 19615, 1re esp., note J. Ghestin; D. 1980, inf. rap. p. 571, obs. Audit. – Von Breitenstein D., La clause de réserve de propriété et le risque d’une perte fortuite de la chose vendue: RTD com. 1980, p. 43. Collart Dutilleul F., Delebecque Ph., Contrats civils et commerciaux, p. 179, n° 194.

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of validity as, for the purposes of insolvency proceedings, the clause must be written in order to have erga omnes effects. In civil matters, it is also likely to be a pre-condition of validity, as the French legislature only rarely imposes formal requirements for evidential purposes.884 It follows from articles 1134 and 1583 of the Civil Code, that such a clause must be agreed upon by the contracting parties and that a unilateral retention of title is not possible.885 However, the acceptance of the clause does not have to be explicit: it can be tacitly contracted by unconditionally signing a document mentioning the reservation of title clause.886 Consequently, the French legal system retains a consensual, bilateral concept of the reservation of title.887 Such a clause only recently received full recognition in the context of insolvency. In particular, between 1980 and 1994, only movable goods, such as merchandise (marchandises), fell under this clause. In 1994, the more general concept of “assets” was introduced. It is however, not clear whether intangible assets (fonds de commerce, software and securities) also fall within the scope of the clause.888 Additionally, French law, until recently, contained specific rules on the reservation of title only for movable goods. Immovable property was not included by the legislature until 2006.889 884

885

886

887

888

889

In general, for evidential reasons, contracts must be written if they exceed a certain amount, i.e. € 1500 (C. civ., art. 1341). However this rule does not apply to commercial contracts concluded between merchands (C. com, art. L 110-3). Schulz M., Der Eigentumsvorbehalt in europäischen Rechtsordnungen, Peter Lang Verlag 1998, p. 151. Cabrillac M., Mouly Ch., Droit des sûretés, n° 731, p. 610. – see Cass. com., 12 déc. 1984: Bull. civ. 1985, IV, n° 347. – Cass. com., 3 janv. 1995: Bull. civ., n° 3 p. 2; D. 1995, inf. rap. 44. – Cass. com., 11 juil. 1995: JCP 1995, IV, 2246, 2e arrêt. After 1996, the seller could unilaterally stipulate this clause and the buyer could not refuse it (see C. com., art. L 624-16). This faculty has been deleted from the law in 2006. Regnaut-Moutier C., Redressement et liquidation judiciaires: à propos de l’application des articles 115 et suivants de la loi du 25 janvier 1985 aux meubles incorporels, D. 1996, 211 (214). See C. civ., art. 2373 al. 2: Ownership of an immovable can also be retained as a security. – However: Ortscheidt P., Possession et clause de reserve de propriété en droits français et allemand, RIDC 1983, 767 (768). – Cass. com., 9 janv. 1996: D. 1996, 184, note Derrida. – Also Zenati-Castaing F., Revet Th., Les biens, p. 158, n° 98 describing the fact, that in a building contract, the owner of the land agrees to waive the accession process with respect to the building materials. See also: Cutajar C., Nature juridique, validité et opposabilité de la clause de renonciation à l’accession dans les marchés privés de travaux, Petites Aff., 4. août 1997, n° 93, p. 19.

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15.2.

Effects

Rules governing the reservation of title in French law are of two kinds, as they deploy their effects both in general contract law and in insolvency law.890 Primarily, they are of a contractual nature, where the seller and the buyer agree that the ownership of the asset sold will not pass to the buyer until full payment of the price. The parties cannot completely suppress the transfer of ownership, as this is fundamental to the sale of goods.891 However the parties can postpone the passing of ownership, as both jurisprudence and commentators consider that article 1583 of the Civil Code is optional. This clause is used in most commercial contracts, thus leading some authors to propose the systematic linkage of the transfer of ownership to the payment of the price.892 There is nevertheless a controversy about the relationship between the reservation of title and possession rules.893 As a rule, this clause essentially has inter partes effects, as the assets are possessed by the buyer non-owner thus creating a situation where third parties will apply the presumption of article 2276 of the Civil Code.894 Following article 2276 of the Civil Code,895 possession by the buyer creates an appearance of solvency (solvabilité apparente) that protects third parties,896 even though ownership has not been transferred. The French legislation also provides that the seller is protected in case of bankruptcy of the buyer. In this case, the validity and the effectiveness of the clause depend upon adherence to certain formal requirements (C. com., art. 624-16 al. 2). These provisions give third party effects (erga omnes) to the clause, guaranteeing application in bankruptcy proceedings.

890

891

892

893

894 895 896

This has been confirmed by: Cass. com., 2 mars 1999: Bull. civ. IV, n° 50; Dr. affaires 1999, p. 597, obs. A. L.; RTD com. 1999, 751 et 2000, 455, obs. Martin-Serf. – Cass. 3e civ., 29 mars 2006: D. 2006, 1166, obs. Lienhard; RTD civ. 2006, 351, obs. Revet. Al Dabbagh H., La clause de réserve de propriété dans les ventes mobilières à crédit, PUF Aix-Marseille 2004, p. 20, n° 14. Ghestin J., Réflexions d’un civiliste sur la clause de réserve de propriété, D. 1981, chr. p. 1. Jamin Ch., Propos démodés sur les effets d’une generalisation éventuelle de la réserve de propriété dans les ventes des.biens mobiliers corporels, Cah. dr. de l’entrep., 1955, p. 29. Ortscheidt P., Possession et clause de reserve de propriété en droits français et allemand, RIDC 1983, 767. See supra 12: Rules of good faith acquisition. Cass. civ. 28 mars 1934, D. 1934, I, 151. Pérochon F., La reserve de propriété dans la vente de meubles corporels, Actualités de droit de l’entreprise 21, Avant propos. J.-M. Mousseron, Litec 1988, p. 16, n° 15.

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French Law grants the seller both the retention of ownership and a security right. As a consequence, the seller can recover the asset or demand preferential payment from the price of resale. As an ownership right, the retention of property clause is first and foremost a clause that restricts the transfer of ownership. The property right stays with the seller. As a result, the seller bears the risk of damage and loss (res domino perit principle).897 However, the parties can customize their relationship: thus they can agree on a clause providing the transfer of risks to the buyer at the moment of the delivery of the good sold. Nevertheless, as a security right, with a stipulation of reservation of title, the destiny of the property is bound to the destiny of the debt. The clause has an accessory character.898 At the moment of full payment of the debt, property is transferred automatically. This limits the prerogatives of the seller. As a consequence of the accessory character, sellers can no longer exercise a claim for restitution after the extinction of the debt.899 Neither can the seller transfer the guarantee independently in order to secure another debt. The clause can only serve as a guarantee of payment of the price of the asset transferred and not of another claim.900 However, despite the accessory character of the security, the guarantee is transferred onto the price obtained from any resale (C. civ., art. 2372) or onto the proceeds of insurance.901 If only a part of the debt is paid by the transferee, the reservation of property clause continues to benefit the transferor. If the property is transferred to several persons, the reservation of property and the claims to restitution are not severable (indivisible)902 and the rights can only be claimed by all joint owners acting together. As a consequence, it seems that the French legal system retains ownership in the strict sense. 897

898 899

900

901 902

Von Breitenstein D., La clause de réserve de propriété et le risque d’une perte fortuite de la chose vendue, RTD com. 1980, 43. Cass. com., 23 janv. 2001: D. 2001, a.j. 702, obs. Lienhard; JCP G 2001, p. 391. Yet see, Cass. com., 9 janv. 1996, n° 93-12.667: Juris-Data n° 1996-000364; JCP G 1996, I, 3935, n° 19, obs. M. Cabrillac; JCP E 1996, I, 554; RTD civ. 1996, p. 436, obs. P. Crocq; D. 1996, p. 184, F. Derrida; RTD com. 1997, p. 331, obs. A. MartinSerf; Dr. et patrimoine mai 1996, p. 85, obs. M.-H. Monsèrié; JCP G 1996, I, 3942, n° 4, obs. Ph. Simler et Ph. Delebecque. – Cass. com., 11 mars 1997, n° 94-20.069; Juris-Data n° 1997-001069; Bull. civ. 1997, IV, n° 70; JCP G 1997, IV, 971; D. affaires 1997, p. 510; RD bancaire et bourse 1997, p. 132, obs. M.-J. Campana et J.-M. Calendini. Crocq P., La réserve de propriété, JCP G 2006, supplément au n° 20 du 17 mai 2006, n° 6, § 6. C. civ., art. 2372 and C. com., art. L 624-18. Cabrillac M., Mouly Ch., Droit des sûretés, 7e éd. Litec 2004, n° 734, p. 614. – Cass. com., 15 mars. 1988: Gaz. Pal. 1988, I, 244.

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If the buyer does not pay the price as agreed, the seller can realise the security in many ways, depending on where the asset is. In particular, if the asset is still in the possession of the buyer, the seller can simply revindicate it. The seller must first ask the buyer in a non-contentious way to surrender the asset (demande aimable en revendication); only then can he revindicate the goods.903 If the asset has been incorporated into other assets or has been resold, the situation is somewhat different. If the asset has been mixed with other similar assets (fongibilité), the seller can revindicate an asset of a similar kind and quality (C. civ., art. 2369904). In the case of incorporation, the seller can exercise his claim to restitution, if the asset can be separated from the other object without damage (C. civ., art. 2370905). Revindication extinguishes the right of the seller to the value of the revindicated asset. If the asset has grown in value, the difference in value must be paid to the buyer (C. civ., art. 2371906). If the asset has been resold or lost by the buyer, the first seller has a claim to the price obtained for the resold asset or to the proceeds of the insurance. The mechanism here is a subrogation réelle907 and is a form of extended reservation of title.

16.

Abandonment: further ways of losing ownership

The French legal system acknowledges abandonment (l’abandon) as a unilateral legal act (acte juridique unilatéral),908 by which an owner can relinquish ownership. The owner loses his property right by a simple voluntary 903

904

905

906

907

908

Cass. com., 11 juil. 2006: D. 2006, 2100, obs. Liénhard; Act. Proc. Coll. 2006, n° 177, obs. Vallansan; RTD civ. 2006, 800, obs. Crocq. C. civ., art. 2369: The reserved title to fungible goods may be exercised, up to the amount of the debt remaining due, with respect to property of same nature and quality detained by the debtor or on his behalf. C. civ., art. 2370: The incorporation into another item of an asset whose title is retained, is not a bar to the rights of the creditor whenever the asset may be separated without suffering damage. C. civ., art. 2371: (1) Failing payment in full on due date, a creditor may claim the restitution of the asset in order to get back the right to dispose thereof. (2) The value of the returned asset shall be deducted, as payment, on the outstanding secured debt. (3) Where the value of the returned asset exceeds the amount of the secured debt still due, the creditor owes the debtor a sum equal to the difference. Crocq P., La réserve de propriété, JCP G 2006, supplément au n° 20 du 17 mai 2006, n° 6, § 8. Terré F., Simler Ph., Les biens, p. 332, n° 417.

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renunciation.909 This right to abandon the asset is a consequence of the right to dispose of the asset.910 It is an extreme act, as the owner renounces his ownership without any creation of another ownership right to the asset: res derelictae are goods that have no owner. An essential requirement of abandonment is the intention to abandon (l’intention de renoncer).911 With respect to the proof of this intention, the French system distinguishes between movables and immovables.912 For movables it will be sufficient to prove that the initial owner had thrown away the object concerned. The corporeal movable object turns into a “res derelicta”, which can be acquired by a third person taking possession of it.913 As to incorporeal assets, such as intellectual property rights, they disappear if they are abandoned, as their very existence is linked to a person.914 For immovables, there is no exception to the perpetual characteristic of the right of property, except perhaps as regards surface ownership (droit de superficie),915 which can be transmitted for a limited period of time. Ownership rights do not disappear if they are not used. There is no such thing as a resolutory statute of limitations, even if in the same period of time a third person can gain ownership through a mechanism of acquisitive prescription.916 Registration of immovable property rights hinders simple abandonment of an immovable. Several legal provisions aim to protect the environment, whenever a movable is abandoned. For example, in the matter of disposal of motor vehicles, public authorities can oblige the initial owner to take the vehicle back in order to sell it or to dispose of it (C. de la route, art. L. 325-1 seq.). Similar provisions can be found in respect of waste disposal (Code 909 910 911 912

913 914 915 916

Terré F., Simler Ph., Les biens, p. 388, n° 496. See supra 1.2.2: Interests linked to the right of ownership. Cass. civ., 10 nov. 1988: JCP. 1988, IV, n° 23. Terré F., Simler Ph., Les biens, p. 388, n° 496, p. ex.: l’abandon de la mitoyenneté: C. Civ., art. 656 and 667. – For immovables the simple abandonment of possession doesn’t suffice to prove the abandonment of the property right. For immovables an official statement about the abandonment is required. The Civil Code prescribes methods of abandonment of imovables in certain specific cases, but not in general. Art. 713 of the Civil Code provides that: “the property which has no master belongs to the commune on whose territory it is situated. However, ownership is transferred by operation of law to the Public Domain where the commune waives the exercise of its rights”. Terré F., Simler Ph., Les biens,, p. 388, n° 496. Zenati-Castaing F., Revet Th., Les biens, p. 336, n° 210. Malaurie Ph., Aynès L., Les biens, Defrénois 2e éd. 2005, p. 279, n° 900-905. See supra, 13: Acquisitive prescription.

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de l’environnement, art. L. 541-1 sqq.), radioactive waste disposal (Code de l’environnement, art. L. 542-1 sqq.), and abandonment of ships at sea and ocean dumping (Loi relative aux navires et engins flottants abandonnés en mer). These special provisions do not eliminate the right to abandon an asset, so that third persons can appropriate the object by taking possession of it. But they provide a liability ex post upon the initial owner.

17.

Transfer rules for “co-ownership”

17.1.

Forms of co-ownership

The French law system acknowledges different forms of joint ownership. However, the fathers of the Civil Code adopted a concept of property that was rather individual, so that common ownership was considered as unintentional and temporary. For that reason, only few provisions about co-ownership were established, in which the main principle of an always possible partition dominated.917 Over the years, this concept of mainly individual property changed as realisation grew that common resources or goods could offer many advantages to the economy and society. So partly the courts, partly legislation tried to adapt the existent provisions to the new social and economic needs. Until 2006,918 no general and all-embracing reform was adopted, but modifications were made by different special acts, modifying or completing the original provisions in the Civil or Commercial Codes or establishing a new legal co-ownership by a specific act. In absence of a classification of co-ownership in the legal provisions, the French commentators tried to classify, but without finding a common system. Different types of co-ownership are recognised in French law. The recent 2006 legislation distinguishes simple undivided ownership (indivision ordinaire), co-ownership on immovables (copropriété des immeubles bâtis),919 but also legal and contractual undivided ownership. Sometimes authors propose sub-classifications to the simple undivided ownership taking into account the objectives of the co-ownership.920

917 918 919

920

Malaurie Ph., Aynès L., Les biens, Defrénois 2e éd. 2005, p. 199, n° 653. Loi n° 2006-728 du 23 juin 2006. Malaurie Ph., Aynès L., Les biens, Defrénois 2e éd. 2005, p. 200, n° 655. – Ghestin J., Traité de droit civil / Les biens; éd. L.G.D.J 2000, n° 467 seq. See Cornu G. G., Droit civil – Les biens, Montchrestien 13e éd. 2007, p. 136, n° 57: The author proposes to distinguish between simple undivided ownership (indivision ordinaire), perpetual co-ownership (copropriété perpétuelle) and co-ownership on immovables (copropriété des immeubles bâtis).

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17.1.1. Simple undivided ownership The most important form of co-ownership is the simple undivided ownership (indivision ordinaire). In this form, identical rights in a same object arise for the different owners, who exercise all the property rights related to their collective object.921 Every joint owner exercises his property right to the entire object and not only to part of it. But he has to respect the respective property rights of the other joint owners. There is no material dissociation of the object.922 The individual right to the collective object is calculated in abstract portions or quotas.923 Undivided ownership occurs very frequently. It can be established by law, e.g. successoral undivided ownership, or by contract. Undivided ownership can tend to partition (traditional objective of this kind of coownership, especially after succession or divorce) or it can be contracted for a certain term. In articles 815 seq., the Civil Code contains various provisions on undivided ownership. Following the structure of the Civil Code, they belong to the provisions of the successions. Nevertheless, they apply to all kinds of undivided ownership.924 As a basic principle, article 815 of the Civil Code provides that every joint owner has the right to demand a partition of the co-ownership at every moment: “No one may be compelled to remain in undivided ownership and a partition may always be induced, unless it was delayed by judgment or agreement.”

The right to demand partition can be delayed or limited by contract or judicial decision. Specifically, the delay by judgment aims to protect the value of the object. The Civil Code has additionally several specific provisions for co-ownerships that are established by agreement (C. civ., art. 1873-1 to 1873-18), because this kind of undivided ownership is intended to persist during a determinate period.

921

922

923 924

Cornu G., Droit civil, Introduction / Les personnes / Les biens, Montchréstien 12e éd. 2005, n° 1221. Cornu G., Droit civil, Introduction / Les personnes / Les biens, Montchréstien 12e éd. 2005, n° 1225. Terré F., Simler Ph., Les biens, Dalloz 7e éd. 2006, p. 456, n° 570. Cornu G., Droit civil, Introduction / Les personnes / Les biens, Montchréstien 12e éd. 2005, n° 1243.

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France

Concerning the organisation of the simple undivided ownership, the Civil Code provides several basic rules, but a lot of them can be waived and replaced by a contractual agreement.925 As a general rule, undivided ownership only concerns the initial and defined object or a collection of objects without extension to other assets owned by the several joint owners. Exceptions are made for objects of the undivided whole that are replaced by new objects. In this case, the new object enters the whole of the undivided property and becomes part of the co-ownership by subrogation (“subrogation réelle”).926 Fruit and revenues of the undivided property also become part of the undivided property mass. Art. 815-10 of the Civil Code thus provides that: “Fruit and revenues of undivided property accrue to the undivided ownership, in default of interim partition or of any other agreement establishing divided enjoyment.”

Creditors of each of the joint owners would welcome the opportunity to seize the undivided property. This is, of course, problematic with respect to the other joint owners. Three kinds of creditors can, however, levy execution on the undivided property and be paid by deduction from the assets before partition: creditors who might have levied execution before there was undivided ownership (C. civ., art. 815-17), creditors who can claim remuneration for having taken care of the conservation and management of the undivided property927 and creditors who have claims against all the joint owners.928 Personal creditors of an undivided owner cannot attach or seize the undivided object (C. civ., art. 815-17). They only can instigate partition in the name of their debtor or intervene in a partition instigated by him (C. civ., art. 815-17). Concerning the administration of undivided ownership, the relationship between the undivided co-owners is dominated by the principle of unanimity. Article 815-3 of the Civil Code provides that: “Acts of administration and disposition relating to undivided property require the consent of all the undivided co-owners. They may give to one or several of them general authority for administration. A special authority is required for any act which does not belong to a normal management of the undivided property, as well as for the conclusion and renewal of leases. 925

926 927 928

Cornu G., Droit civil, Introduction / Les personnes / Les biens, Montchréstien 12e éd. 2005, n° 1241. Malaurie Ph., Aynès L., Les biens, Defrénois 2e éd. 2005, p. 203, n° 672. Cass. 1re civ., 20 fev. 2001: Bull. civ. I, n° 41. Cass. 1re civ., 6 nov. 2001: Bull. civ. I, n° 271.

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Where one undivided owner takes up the management of the undivided property, with the knowledge of the others and nevertheless without opposition on their part, he is deemed to have received an implied authority, covering acts of administration, but not acts of disposition or conclusion or renewal of contracts.”

This principle has a very large scope and covers all kinds of acts of administration or dispositions such as, sale, donation, and creation of reality charges, leasing or rent. Exceptions to the principle of unanimity are made in some kinds of situations: Article 815-4 Civil Code thus provides: “Where one of the undivided owners is unable to express his intention, another may be judicially entitled to represent him, in a general manner or for some particular transactions, the terms and extent of that representation being fixed by the judge. Failing statutory power, contractual authority or judicial entitlement, the acts done by an undivided owner on behalf of another are effective with regard to the latter under the rules of management of another’s business.”

Article 815-of the Civil Code adds: “(1) An undivided owner may be judicially authorized to do alone an act for which the consent of an undivided co-owner would be required, where the refusal of the latter imperils the common interest. (…) (3) An act made within the terms fixed by the judicial authorization is effective against the undivided owner whose consent was wanting.”

As a result, according to article 815-6 of the Civil Code, “The president of the tribunal de grande instance may prescribe or authorize all urgent measures which the common interest requires.”

17.1.2. Special forms of co-ownership In the field of movables, there are very few kinds of special forms of coownership. In this respect, co-ownership of intellectual property rights following a collaboration on a joint creation (C. prop. intell., art. L. 113-3) would fall within this characterisation.

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17.2.

Rules on transfer

As a consequence of the principle of unanimity, a joint owner cannot transfer the whole undivided property on its own. Such an act of transfer without the consent of the rest of the co-owners is forbidden and would not be opposable (inopposable) to the other undivided owners as long as the partition has not yet taken place. But the act can become entirely or partly retroactively valid, if the objects, intended to be transferred by the void act, fall into the share of the contracting co-owner after partition.929 With respect to their own part of undivided property, the different coowners have the right to dispose of it. This follows from art. 815-14 of the Civil Code, that provides that undivided owners who intend “to transfer, for value, to a person outside the undivided ownership, all or part of his rights in the undivided property or in one or several articles of that property” have to respect certain formalities, if the property part shall be acquired by third persons. In this case, articles 815-14 to 815-16 of the Civil Code organise a right of pre-emption for the other co-owners. The possibility of exercising the right of pre-emption is mainly a protection for the rest of the co-owners to avoid that a completely unknown person enters the co-ownership.930 In consequence, the respect of the provisions about the pre-emption rights is protected by article 815-16 of the Civil Code, which provides that, “Every transfer or auction made in defiance of Articles 815-14 and 815-15 is void.” However, an action for annulment is time-barred after five years and it may be brought only by those on whom notices were to be served (or by their heirs), i.e. the joint owners. The right of pre-emption is valid for all kinds of simple undivided coownerships, even though it belongs to the provisions on successions.931 The right of pre-emption applies not only to the all undivided owners but also to the beneficiaries of undivided property in usufruct, as far as this would be consistent with the general rules on usufruct (C. civ., art. 815-18).

17.3.

Separation and termination of co-ownership

According to article 815 al. 1 of the Civil Code, “[n]o one may be compelled to remain in undivided ownership and a partition may always be induced, unless it was delayed by judgment or agreement.”

929 930 931

Terré F., Simler Ph., Les biens, Dalloz 7e éd. 2006, p. 470, n° 586. Malaurie Ph., Aynès L., Les biens, Defrénois 2e éd. 2005, p. 218, n° 699. Cass. 1re civ., 23 avr. 1985: Bull.civ. I, n° 124.

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The possibility to induce the partition is an absolute right of every coowner, which is enforceable against everyone.932 The right is strictly discretionary933 and does not fall under the statute of limitations.934 Because of the absolute character of the right to induce partition the exclusion of this capacity whilst establishing an undivided ownership is void. French jurisprudence decided that in the matter of successions a testator cannot effectively impose an unlimited co-ownership on the co-heirs.935 Even more strictly, the jurisprudence refused to acknowledge the testamentary clause that intended to exclude a partition during five years.936 The partition can be induced by simple declaration. It is a declaratory act937 that effects the direct transfer of property from the initial owner to the different co-owner, i.e. the transfer of property works in a retroactive manner. This principle (principe de l’effet déclaratoire du partage) is laid down in art. 883 of the Civil Code: “Each co-heir shall be deemed to have succeeded alone and immediately to all the effects comprised in his share, or falling to him through auction, and never to have had ownership of the other effects of the succession. It shall be the same as to the property that came to him through any other act leading to the cessation of undivided ownership. One shall not distinguish depending on whether the act causes undivided ownership to cease in whole or in part, with regard only to some items of property or to some heirs.”

Although article 883 of the Civil Code belongs to the provisions on successions, it applies to all kinds of simple undivided ownerships.938 The retroactivity of the property acquisition has an important effect on the contracts passed during the time in which the co-ownership took place. If an undivided owner has performed some transactions on the undivided property without the consent of his co-owners and the property part, that is subject of these transactions falls into the share of this undivided owner after the

932 933

934

935 936

937 938

Ghestin J., Traité de droit civil-Les biens, LGDJ. 2000, n° 483. Cass. civ., 26 déc. 1966: DP 1967.1.27. – CA Nancy, 16 nov. 1961, JCP 1964, II, 13477. Exceptions are made for acquisitive prescription: Ghestin J., Traité de droit civil-Les biens, éd. L.G.D.J. 2000, n° 483. – Cass. civ. 3e, 27 nov. 1985: Bull. civ. III, n° 158. – Cass. civ. 3e, 15 juin 1988: Rev. dr. imm. 1988, 489. Cass. civ., 29 juin 1933: DH 1933, 477. Cass. 1re civ., 5 janv. 1977: Bull. civ. I, n° 15. – CA Paris, 12 janv. 1987: D. 1987, IR, 37. Ghestin J., Traité de droit civil-Les biens, LGDJ 2000, n° 485. Terré F., Simler Ph., Les biens, Dalloz 7e éd. 2006, p. 470, n° 586.

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partition, these transactions are retroactively validated.939 Nevertheless, they are validated only partially, if a part only of the transaction’s object falls into the share of the performing owner. On the other hand, if the objects of these transactions do not fall into the share of the performing undivided owner, these acts are retroactively void.940 The strict principle of retroactivity provided by article 883 of the Civil Code is, however, attenuated in the matter of transactions that are lawfully performed either under the agency of the undivided owners, or under a judicial authorization. These lawfully performed acts “maintain their effects whatever the allotment of the property which was the subject thereof may be at the time of the partition” (C. civ., art. 883). Partition can be induced by each co-owner, but also by their creditors under application of the general principle of article 1167 of the Civil Code (action oblique). In such a case, the other co-owners can prevent partition by buying the share of the indebted co-owner and thus paying the creditors of this co-owner.

18.

Further rules applying to unspecified goods

18.1.

Transfer of shares in an identified bulk

Shares can be transferred in an identified bulk, but at all times the full list of the shares must be available. General rules identified above relating to the identification of the asset transferred apply to this case.941

18.2.

Floating charge

Floating charges as such do not exist in French law.

939

940

941

Terré F., Simler Ph., Les biens, Dalloz 7e éd. 2006, p. 470, n° 586; in case of sale: Cass. 1re civ., 9 mai 1979: JCP G 1979, II, 19257. – Cass. 1re civ., 16 juin 1987: Bull. civ. I, n° 197. – in case of mortgage: Cass. civ. 3e,: 21 oct. 1980, Bull. civ. III, n° 160. Cass. 1re civ., 2 juin 1987, Bull. civ. I, n° 181. – Cass. 1re civ., 16 mai 2000, Bull. civ. I, n° 148. See supra 5.2.1: Specific goods – generic goods.

19. Consequences of restitution of the movable to the owner

19.

157

Consequences of restitution of the movable to the owner

This section deals with consequential questions that may arise when a movable has to be restored to the owner.942 In the following, the parties are called “the possessor” (i.e. the person who has to surrender the object) and “the owner” (i.e. the person who can claim restitution of the object). In case of void or avoided contracts, nullity applies retroactively. Consequently, the original situation has to be reconstituted.943 If the property has already been transferred, as it is frequently the case (transfer solo consensu), the transfer occurred without a legal cause944 and therefore the asset has to be returned to the initial owner.945 As soon as the nullity is declared, the party who received the asset has a duty of restitution (obligation de restitution). The legal nature of this duty of restitution is controversial. As the contract is retroactively avoided, it is considered having never existed. Consequently, some courts analyse the duty of restitution as a kind of the quasi-contractual de in rem verso claim or “répetition de l’indu”.946 However a dominant majority of courts consider the duty of restitution as a contractual claim,947 based on the avoided contract. The duty of restitution of objects that are transferred for temporary use depends on whether the contract is gratuitous or non-gratuitous. As a general rule, the duty of restitution is provided by statute. In cases of non-gratuitous leasing contracts (contrat de bail), article 1730 of the Civil Code provides that the possessor, “must return the asset such as he received it (…) except for what has perished or has been deteriorated through decay or force majeure”.

This principle has to be applied “where an inventory of fixtures has been made” between the parties. If no inventory has been made, the possessor is,

942

943

944 945

946

947

See questions on protection of ownership supra under 1.4: The protection of property rights. Terré F., Simler Ph., Lequette Y., Les obligations, Dalloz 9e éd. 2005, p. 424, n° 423. Bénabent A., Les obligations, Montchréstien, 10e éd. 2005, n° 222. See for example, Cass. civ., 6 déc. 1967: Bull. civ., I, n° 358, p. 269. – Cass. com., 16 déc. 1975: Bull. civ., IV, n° 308, p. 256. Cass. 1re civ., 14 avril 1991, Cont., Conc., Consom. 1991, n° 137. – Cass. com., 4 janv. 2000, Cont., Conc., Consom. 2000, n° 79. Cass. 1re civ., 24 sept. 2002: D. 2003, 369, note Aubert.

158

France “presumed to have received the premises in a good state of repairs incumbent upon lessees, and must return them in the same state, except for proof to the contrary” (C. civ., art. 1731).

The duty to return the object in its original state includes the duty to execute routine maintenance repairs (C. civ., art. 1754), not to modify the substance of the object948 and to compensate for deteriorations and losses that are caused by the possessor, his household or his subtenant (C. civ., art. 1735), unless such deteriorations or losses are caused by decay or force majeure (C. civ., art. 1730). Concerning the gratuitous contract of loan, the French law recognizes two forms: loan for use or accommodation (prêt à usage or commodat) and loan for consumption (prêt de consommation), at article 1874 of the Civil Code.949 In case of a loan for use or accommodation, the possessor has only a right to use the loaned object, so that he has to return it in original state (C. civ., art. 1874). The lender remains the owner of the asset loaned (C. civ., art. 1877). For this kind of loan, article 1875 of the Civil Code provides for a duty of restitution: “A loan for use or “commodate” is a contract by which one of the parties delivers to the other an asset to be used, on condition that the borrower returns it after making use of it”.

The object has to be returned in its original state and, if necessary, with the fruit of the asset that have accrued in the meantime.950 The loaned object has to be returned at the moment in which the contract expires.951 The owner does not have to declare the possessor in default.952 In cases of open-ended loans, the general contract rules are applicable, i.e. the contract can be terminated.953 In doing so, there must be compliance with article 1888 of the Civil Code. This article provides that,

948

949

950 951 952 953

Special legislation for residential tenancy (bail d’habitation) in art. 7-f loi du 6 juillet 1989. C. civ., art. 1874: “There are two kinds of loans: That of assets which can be used without being destroyed, And that of assets which are consumed by the use which is made of them. The first kind is called loan for use or commodate; The second is called loan for consumption, or simply loan”. Antonmattei P-H., Raynard J., Contrats spéciaux, Litec, 3e éd. 2002, n° 326. Cass. com., 7 déc. 1993: Bull. civ. IV, n° 461. Cass. com., 7 déc. 1993: Bull. civ. IV, n° 461. Antonmattei P-H., Raynard J., Contrats spéciaux, Litec, 3e éd. 2002, n° 326.

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“[t]he lender may take back the asset loaned only after the term agreed upon or, failing an agreement, after it has served the use for which it was borrowed”.

Because of this provision, there have been problems in all situations where the possessor had a continued need of the loaned object (e.g. residential tenancy). For that reason the Cour de cassation decided that the provisions of articles 1888 and 1889 of the Civil Code had to be interpreted as a permission to the judge to determine the contractual term of open-ended loans.954 The location where the restitution is to take place is not settled by the Civil Code. By analogy with article 1903 of the Civil Code (loan of consumption), part of legal scholarship proposes to return the asset to the place of the deliverance of the loaned asset, unless there were other contractual agreements.955 In the case of a loan for consumption, the possessor can consume the loaned object, so that he has to return an equivalent in the same kind and quality (C. civ., art. 1892). Article 1893 of the Civil Code provides that, “through such a loan, the borrower becomes the owner of the asset loaned; and the loss falls upon him, in whatever manner it occurs”.

French civil law offers owners who have lost objects, or from whom they have been stolen, a claim of restitution (action en revendication). Although article 2276 of the Civil Code recognizes as a general rule, that in matters of movables, possession is equivalent to a title, it also provides that, “Nevertheless, the person who has lost or from whom an asset has been stolen, may claim it during three years, from the day of the loss or of the theft, against the one in whose hands he finds it, subject to the remedy of the latter against the one from whom he holds it”.

In order to succeed with his claim, the owner has to prove that the deprivation of his asset was caused by loss or theft. Otherwise the claim would not be admissible.956 All kinds of evidence are permitted. The owner has to respect the period for filing the action, i.e. three years, from the day of the loss or of the theft. The failure to file the complaint timely renders the ac954 955

956

Cass. 1re civ., 12 nov. 1998: Contrats, conc., consom 1999, comm.22, note Leveneur. Bénabent A., Les contrats spéciaux civils et commerciaux, Montchréstien: 5e éd. 2001, n° 429 – Huet J., Traité de droit civil – Les principaux contrats, LGDJ, 2e éd. 2001, p. 957, n° 22147. Cornu G., Droit civil Introduction-Les personnes-Les biens, Montchréstien, 12e éd. 2004, n° 1643.

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France

tion inadmissible.957 The jurisprudence and doctrine agree that this period is not a period of prescription but a fixed period (délai prefix).958 As a result, this period can not be interrupted or suspended by the legal provisions about the interruption or suspending of the statute of limitations. This short period does not apply in case of bad faith.959 If the possessor (thief, finder, and purchaser) is not bona fide, the common prescription of five years runs.960 Furthermore, the owner has to prove his right of property. All kinds of evidence are permitted, but the owner has to prove his ownership right of the specific object. The claim of fungible goods is only exceptionally possible. So an owner can claim the restitution of an amount of money, if the thief (e.g.) still possesses it. But the action is excluded, if this amount was commingled with other money.961 In general the action of restitution succeeds if these conditions are fulfilled. Nevertheless restitution can be bound to an additional condition. Article 2277 of the Civil Code (former C. civ., art. 2280) provides that, “where the present possessor of an asset lost or stolen has bought it at a fair or market, or at a public sale, or from a merchant selling similar assets, the original owner may have it returned to him only by reimbursing the possessor for the price which it has cost him. A lessor who claims, under Article 2332, the movables displaced without his consent and that have been bought in the same conditions, must likewise reimburse the buyer for the price which they have cost him.”

This provision aims to protect certain kinds of commercial transactions. As a consequence, the owner has to buy his asset back. But courts construe this additional condition very restrictively. The quality of being a “merchant” is only recognized for professionals who accomplish this kind of transaction regularly. The only occasional performance of transactions does not fulfil the legal requirement.962 If for other reasons the owner retrieves the posses-

957

958

959

960

961 962

Cornu G., Droit civil Introduction-Les personnes-Les biens, Montchréstien: 12e éd. 2004, n° 1644. Cass. crim., 30 oct. 1969: Gaz. Pal. 1969. II.380. – CA Bordeaux, 22 janv. 1974: D. 1974.542, note Rodière. – Cass. crim., 4 mars 1986: Gaz.Pal. 1986. II. somm. 433. Cornu G., Droit civil Introduction-Les personnes-Les biens, Montchréstien, 12e éd. 2004, n° 1644. I.e., former period of thirty years: CA Paris: 22 mars 1983: Gaz. Pal. 1983. I. somm. 207 – Cass. 1e civ., 7 fév. 1989: Bull. civ. I, n° 57. Trib. civ. de Besançon, 25 avril 1955: Gaz. Pal. 1955. II. p. 9. CA Pau, 28 janv. 1948: JCP 1949. 4758.

19. Consequences of restitution of the movable to the owner

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sion of his lost or stolen object, the duty of reimbursement is excluded.963 The exclusion of reimbursement also applies if the asset is returned to his owner by the police.964 If the conditions of article 2277 of the Civil Code are fulfilled, the owner has to buy his property back. But he has a claim of reimbursement against the person who sold his property to the possessor provided that he can prove his fault. He has to file an action for tortious liability, not for unjustified enrichment.965 If the conditions of reimbursement of the possessor are not fulfilled (i.e. non application of article 2277), the possessor has to return the object immediately. He can however intend an action against his seller in order to get back his purchase price and if necessary indemnity.

19.1.

Entitlement to benefits resulting from the movable

French law distinguishes between different categories of benefits (fruits), such as: natural fruit (those that result directly from the movable) and civil fruit (profit and interest that the movable produces as a consequence of a legal relationship). As a general principle recognized by legal scholarship,966 but not formulated specifically, the possessor is entitled to the fruit of an asset.967 Many applications of this general principle can be found in statutory law. For example, if a possessor has to return an immovable, he can keep the fruit accrued until a claim (demande) of restitution is filed (C. civ., 1682, al. 2). In inheritance cases, in order to ensure the equality of heirs, heirs must surrender assets given to them by the deceased person, but they can keep the fruit accrued before the death (C. civ., 856). Similar rules apply to donees,968 where the gift would violate the reserve principle protecting heirs (C. civ., art. 928) or in cases where the gift is revoked (C. civ., art. 958 and art. 962). Similar rules also apply to beneficiaries of a usufruct, lease or antichrèse.

963

964 965 966

967 968

Cornu G., Droit civil, Introduction, Les personnes, Les biens, Montchréstien, 12e éd. 2004, n° 1648. Cass. civ., 22 févr. 1956: D. 1956, 286. – CA Paris 7 févr. 1950: D. 1951, 456. Cass. 1e civ., 11 févr. 1931: D. 1931. 1. 1229, note Savatier. However, the justification of such a rule is disputed. See Zenati-Castaing F., Revet Th., Les biens, p. 720, n° 509. Zenati-Castaing F., Revet Th., Les biens, p. 716, n° 504. See also for légataires, C. civ., art. 1005 and 1014, al. 2.

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France

Courts distinguish between cases where the fruit can be kept, such as cases where the contract is avoided for nullity969 or rescission970, and cases where the fruit cannot be kept, as in a résolution of the contract.971 This is criticized by part of legal scholarship972 as often the possessor was acting in good faith in these cases. The entitlement to the fruit produced by an asset is linked to the physical apprehension of the asset (corpus). However, in some cases, the possessor may have to surrender the fruit acquired. As a general rule, no restitution is necessary if the fruit have been used by the possessor to maintain the asset. Yet, in some cases, the fruit cannot be used by the possessor, such as in the deposit contract or in the contract guaranteed by a specific security (antichrèse), where the fruit must serve to pay back the debt guaranteed by the antichrèse. If the possessor is acting in good faith, he can keep the fruit. Good faith is presumed and must be established by the claimant. Good faith is construed widely.973 Good faith is considered both at the time of entry into possession, where the possessor acquires the asset without knowing that the title deed is void (C. civ., art. 550), but also throughout the whole possession period (continuous bona fide). The possessor must clearly always believe that he is entitled to the use of the asset. As soon as this belief ends, the possessor is not bona fide anymore and cannot continue acquiring the fruit. Therefore the possessor will have to surrender the fruit accrued after the date of the filing of the claim, i.e. after proceedings for restitution have been initiated.974 Whether the possessor is acting in good or bad faith, he must surrender the fruit that he did not realize. If the fruit have been consumed, he must pay an equivalent sum of money, estimated at the value of the fruit at the time of their reimbursement. If the possessor is acting in bad faith, he must surrender all the fruit obtained and even those that he neglected to realize. Additionally, whenever the possessor acting in bad faith did not acquire the fruit that the movable could have potentially generated, he must compensate the owner for their loss. 969 970 971 972 973

974

Cass. civ., 21 déc. 1903: DP 1908. 1. 377. Cass. 1e civ., 19 avr. 1977: Bull. civ. I., n° 176. Req., 23 déc. 1936: Gaz. Pal. 1937. 1. 378. See Zenati-Castaing F., Revet Th., Les biens, p. 721, n° 510. Therefore both mistakes on facts (Cass. 3e civ., 23 mars 1968: Bull. civ. III, n° 138) or on the state of the law are admitted, unless the mistake follows a misinterpretation of an ordre public rule: Cass. civ., 11 janv. 1887: S. 1887. 1. 225. Cass. civ., 23 déc. 1840: S. 1841. 1. 136. – Cass. civ. 21 déc. 1926: DH 1927. 84. – Cass. 1e civ., 1er fév. 1955:Bull. I, n° 48. – Cass. 3e civ., 28 juin 1983: Bull. III, n° 148.

19. Consequences of restitution of the movable to the owner

163

Notwithstanding the good or bad faith of the possessor, courts tend to take into account the value of the asset at the time of entry into possession to estimate the value of the fruit accrued. This complex calculation allows the courts to extract the added value of the possessor’s work on the asset, and thus exclude any fruit specifically due to the possessor’s work.975 The owner is only obliged to reimburse the possessor for the fructification expenses incurred (e.g. seeds, raw materials, etc.) if the possessor is acting in good faith.

19.2.

Loss and deterioration of the movable

If the movable is lost or has deteriorated, the possessor is liable vis-à-vis the owner for the loss or deterioration of the movable. As a matter of principle, the asset has to be returned in its original state.976 Restitution also includes the fruit of the asset,977 unless the possessor possessed them bona fide (C. civ., art. 549978). If the restitution is not possible, for in the meantime the object has been damaged or destroyed, sold, consumed, commingled or joined with other assets, the possessor has to provide a monetary compensation.979 The calculation of this compensation obeys following rules. In order to determine the value of the asset, one has to determine the value that it had the day of the transfer.980 The asset’s value at the moment of alienation can differ from the purchase price.981 As an exception, if the restitution duty applies to an amount of money, the possessor must return the whole amount of money without regard to any current depreciation.982 For that reason, the general principle determin975

976 977 978

979

980

981 982

Cass. 1e civ., 20 juin 1967: D. 1968, 32; JCP 1967, II, 15262; RTD civ., 1968, 397, obs. Bredin. – Cass. 3e civ., 25 mars 1980: JCP 1980, IV, 225. – However, contra, Cass. 1e civ., 19 janv. 1977: D. 1977, inf. rap., 212. Cass. 1e civ., 23 fév. 1970: D. 1970, 604, note Etesse. Cass. 3e civ., 22 juill. 1992: Bull. civ., III, n° 263. C. civ., art. 549: “A mere possessor makes fruit his own only where he possesses in good faith. If not, he is bound to restore the products with the asset to the owner who claims it; where the said products are not found in kind, their value must be appraised at the date of repayment.” Cass. com., 29 fév. 1972: D.1972.623. – Cass. 1e civ., 26 avr. 1988: D.1988, inf. rap. 134. Cass. com., 18 nov. 1974: D. 1975 p.625, note Malaurie. – Cass. com., 21 juill. 1975: D. 1976 p. 582, note Agostini et Diener. – Cass. com., 14 juin 2005, D. 2005, 1775. Cass. 1e civ., 16 mars 1999: Bull. civ., I, n° 95. Cass. 1e civ., 7 avril 1998, Bull.civ., I, n° 142.

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ing the due amount of money by considering the value on the day of the alienation is very criticized by the doctrine.983 A long lasting dispute in French courts discussed whether the owner had a right to compensation by the possessor for the use of the object.984 In 2004, a decision by the mixed Chamber of the Cour de cassation finally decided985 that a compensation of the owner for the use by the possessor was excluded. French law recognizes exceptions to the principle of restitutions for minors or adults in guardianship. Article 1312 of the Civil Code limits their duty of restitution to what they still possess, “unless it is proved that what has been paid has turned to their advantage”. This limitation of the duty of restitution is not applicable to minors who had concealed something fraudulently to the other party to the contract (i.e. the owner).986 Another exception to the duty of restitution is recognized by application of the general nemo auditur principle.987 If the contract is avoided because its object or cause is immoral (l’immoralité de l’objet ou de cause), the claim of restitution is excluded.988 The intention of this exclusion of restitution is to protect the public order. This customary principle applies, when the two conditions are fulfilled. First, there has to be a severe immorality (immoralité caractérisée), e.g. corruption, hired killers, gambling. Second, both parties to the contract have to have acted immorally. However, the immoral attitude of each party can be different, so that one of them can seem more or less immoral. For that reason the court very often has to decide, case by case, if the nemo auditur principle applies or not.989 However this principle is rarely applied. In recent cases it occurs mostly in contracts about surrogacy motherhood.990 983 984

985

986

987

988 989

990

Bénabent A., Les obligations, Montchréstien: 10e éd. 2005, n° 230. Pro: Cass. com., 16 déc. 1975: Bull. civ., n° 308, p. 256. – Cass. com., 15 mars 1988: Bull. civ., n° 105, p. 73. – Cass. 3e civ., 12 mars 2003: Bull. civ., n° 63. – Contra: Cass. com., 11 mai 1976: Bull. civ., n° 162, p. 137; Cass. 1e civ., 2 juin 1987: Bull. civ., n° 183, p. 137. – Cass. 1e civ., 11 mars 2003: Bull. civ., I, n° 74. – Only in case of good faith of the owner: Cass. 3e civ., 12 janv. 1988: Bull. civ., n° 7, p. 4. Ch. mixte, 9 juill. 2004: Bull. civ., C.M., n° 2; D. 2004.2175, notes Tuaillan et Serinet; JCP 2004. II. 10190. Cass. 1re civ., 12. nov. 1998: JCP 1999. II. 10053, note Garé: concealing the age fraudulently does not fulfull this condition (C. civ., art. 1307). nemo auditur propriam turpitudinem allegans. See Roland H., Boyer L., Adages du droit français, Litec 4e éd. 1999, p. 483, n° 246. Bénabent A., Les obligations, Montchréstien, 10e éd. 2005, n° 233. Cass. crim., 7 juin 1945: D. 1946 p. 149. – Cass. crim., 3 juill. 1947: JCP 1948. II. 4474, note Carbonnier. Cass. 1e civ., 25 fév. 2004: Bull. civ., n° 42; JCP 2004.I.149, n° 9, obs. Labarthe.

19. Consequences of restitution of the movable to the owner

19.3.

165

Reimbursement for improvements and expenses incurred during the possession of the movable

The whole regime of reimbursement for improvements and expenses incurred during the possession of the movable has been developed in French law for restitution issues in immovable cases. However, it is possible to transpose the solutions to movables, as in fact, the theory of reimbursement for improvements and expenses incurred is a mixture of modern law revival of quasi-contractual relationships such as the gestion d’affaires, the enrichissement sans cause and the Roman theory of impenses (C. civ., art. 1381). French law makes a clear distinction between different categories of expenses, such as “necessary”, “useful” and “sumptuary” expenses. These categories have been defined both in legislation and in court. The amount to be reimbursed depends on the type of expense. If the expense was necessary (impenses necessaires) to ensure the conservation of the asset, the owner must reimburse the cost of the expense. An eventual higher value of the asset due to the expense incurred is not to be taken into account. No distinction is made between the possessor acting in good or in bad faith, as the theory of impenses only aims at rebalancing the patrimonial situation.991 If the expense was only useful (impenses utiles) to the asset, thus increasing its value, the owner must reimburse the possessor either the cost of the improvement or of the added value to the asset. If the expense was sumptuary, without adding value to the asset, no refunding is necessary

19.4.

Possessor’s right to retain the movable

French law recognizes the right of retention (droit de retention).992 This right is defined as the right given to a creditor to withhold the asset he should return to the debtor, as long as the latter does not pay his debt.993 This 991 992

993

Cass. 3e civ., 12 mars 1985: Bull. civ. III, n° 50. Bibliography: Jiogue G., Le droit de retention conventionnel – Etude de droit français et de droit OHADA, RRJ 2007-4, p. 1765-1797. – Bardet-Blanvillain A., Le droit de rétention: un domaine en deux dimensions, PA, 25 mar 2005, n° 60, p. 9. – Aynès A., La consécration légale des droits de rétention, D. 2006, Dossier n° 19, 1301, 1302. – Aynès A., Le droit de rétention, unité ou pluralité, thèse Paris II, préf. Larroumet, Economica coll. Recherches juridiques, 2005. – Durand J.-F., Le droit de rétention, thèse Paris II, 1979. Cornu G., Vocabulaire juridique, Association Capitant, PUF 2002, [droit de rétention] « droit reconnu à un créancier de retenir entre ses mains l’objet qu’il doit restituer à son débiteur, tant que celui-ci ne l’a pas lui-même payé ».

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France

right is conceived as a security right that guarantees three types of debts: the reimbursement of expenses / improvements made on a given asset; the payment of a claim for the compensation of damage caused by the asset;994 or, simply to guarantee performance of the other party. Initially, the 1804 Civil Code did not recognize a general right of retention, but only gave this right to specific persons in special circumstances. Three different types of rights of retention were specified:995 first the right of retention as a type of security in rem; second the right of retention as an independent contractual guarantee; and last the right of retention as a guarantee for civil liability. The Civil Code thus lists a number of beneficiaries of this right: the seller (C. civ. art. 1612)996 the depository (C. civ., art. 1948),997 the lessee (C. civ., art. 1749) and the heir to cover his expenses (C. civ., art. 862). However, both courts and legal scholarship998 consider that these examples are only applications of a general principle that entitles every creditor to retain a movable belonging to the debtor as a guarantee of payment. As such, courts have recognized a right of retention for the agent (mandataire)999 the broker (commissionaire)1000 acting in good faith,1001 the contractor (entrepreneur)1002 or even to the defendant to an action in revindication (even if he is in bad faith1003). This general principle translates as the idea that it conforms to the ideal of justice to deny the return of an asset to someone who does not pay his debts.1004 Additionally, when a contract turns out to be void or is avoided after both parties have performed, a 994

Cassin R., De l’exception tirée de l’inexécution dans les rapports synallagmatiques (exception non adimpleti contractus) et ses relations avec le droit de retention, la compensation et la résolution, Th. Paris, 1914. 1995 Jiogue G., Le droit de retention conventionnel – Etude de droit français et de droit OHADA, RRJ 2007-4, p. 1765-1797 (1766). 1996 C. civ., art. 1612: “The seller is not obliged to deliver the asset where the buyer does not pay the price of it unless the seller has granted him time for the payment”. 1997 Art. 1948: “A depositary may retain the deposit until full payment of what is owed him by reason of the deposit.” 1998 Simler Ph., Delebecque Ph., Droit civil, Les sûretés, la publicité foncière, 4e éd. Dalloz, 2004, n° 572. – Cabrillac Ch., Mouly Ch., Droit des sûretés, 7e ed. Litec, 2004, n° 544. – Marty M., Raynaud P., Jestaz Ph., Droit civil, les sûretés, la publicité foncière, 2e éd. 1987, n° 28. 1999 Cass. civ., 17 janv. 1866: DP 1866, 1, 76. – Cass. civ., 15 juil. 1903: S. 1905.1.213. 1000 Cass. com., 11 mai 1976: Bull. IV, n° 161. – Cass. 1e civ., 19 juin 1978: Bull. Civ. I, n° 171. 1001 Cass. com., 3 oct. 1989: JCP 1990, II, 21454, note Béhar-Touchais; RTD civ 1990, 306, note Zenati. 1002 Req., 13 mai 1861: DP, 1861. 1. 328. – Req., 25 fév. 1878: DP. 1878. 1. 302. 1003 Cass; 3e civ., 23 avr. 1974: JCP 1975, II, 18170, note Tuillier; RTD civ. 1976, 164, obs. Giverdon.

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167

general principle of unjustified enrichment law applies, according to which each party can withhold the performance of its obligation of reversal until the other party renders performance. 1004 In general, one can consider that the right of retention will apply to cases such as where the possessor of the asset must return it either because the transfer of the asset was based on a void or an avoided contract or because the right to use or possess the movable has ended, or never even existed. In these cases, the possessor may retain the asset until any expenses made on the asset are reimbursed by the claimant. This general principle was developed by the 2006 legislation on securities.1005 The new article 2286 of the Civil Code1006 allows the retention of an asset if there is a direct link between the asset and the claim that is guaranteed (lien de connexité1007).1008 This direct link can be contractual as desired by the parties (connexité conventionnelle – C. civ. art. 2286, 1°),1009 can be an indirect effect of the contract (connexité juridique – C. civ. art. 2286, 2°)1010 or can simply represent the cost of detaining an asset for the owner 1004

Zenati-Castaing F., Revet Th., Les biens, p. 727, n° 516. Ordonnance n° 2006-346 du 23 mars 2006. – Aynès A., La consécration légale des droits de retention, D. 2006, 1301. – Simler Ph., Dispositions générales du livre IV nouveau du Code civil, JCP 17 mai 2006, I, 2. 1006 See former court cases: Req., 26 avr. 1900: S. 1901, I, 193, note Ferron: « pour que le droit de retention existe en faveur d’un créancier qui détient la chose appartenant au débiteur, il suffit que la detention se rattache à une convention ou un quasi-contrat qui ait donné naissance à la créance ». – Cass. civ., 17 janv. 1866: DP 1866, I, 76. 1007 Gabet-Sabatier C., Le rôle de la connexité dans l’évolution du droit des obligations, RTD civ., 1980, p. 39. 1008 Aynès A., Le droit de rétention. Unité ou pluralité, préf. Larroumet, Economica 2005. – See however, the theory of a right of retention « ex dispari causa », where no link is required between the claim and the asset, the creditor being entitled to withhold the asset every time the need arises to ensure his own satisfaction: Bonnecase J., Supplément au Traité théorique et pratique de droit civil, Baudry-Lacantinière, t. V, 1930, p.644. – Colin et Capitant, Cours élémentaire de droit civil français, 10e éd. Par Julliot de la Morandière, t. II, n° 1473. This theory has however been rejected by the courts: Cass. 1e civ., 16 juil. 1969: JCP 1969, IV, 238. – Cass. com., 11 juil. 1983: D. 1984, IR, p. 82, obs Vasseur. – Cass. com., 13 déc. 1983: Bull. civ. IV, n° 147. – By comparison, German law (§ 369, Abs. 1 HGB) recognizes a right of retention ex dispari causa as soon as the parties are in a business relationship and the creditor, a businessman retains an asset belonging to the debtor. 1009 See Devésa Ph., La retention de documents: contribution à la notion générale de retention, PA 1995, n° 73, p. 11. 1010 Aubry C., Rau C., Cours de droit civil français, tome III, 7e éd. par Esmein, 1968, § 256 bis, p. 189. – Cass. soc., 9 janv. 1958: D. 1958, 270. 1005

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(connexité matérielle – C. civ. art. 2286, 3°).1011 The two latter cases are retention rights that derive automatically from the law.1012 In some cases there is both a legal and a material link (connexité matérielle et juridique).1013 The form of retention based on a contractual link (connexité conventionnelle1014) was disputed in legal literature, but the 2006 legislation explicitly recognizes this form.1015 It appears when the parties to a contract decide to entitle one of the parties to retain an asset belonging to the other party even though there is no legal or material link between the claim guaranteed and the asset. In general, the right of retention is only applicable to a monetary claim that is certain (certitude),1016 liquid (liquidité) and payable (exigible).1017 However, these three conditions are not fully applicable to the retention based on a contractual link (connexité conventionnelle).1018 The right of retention is lost if the person holding the asset surrenders it voluntarily.1019 However, the “detention” of the asset can be indirect.1020

1011

Mande-Djapou J., La notion étroite de droit de rétention, JCP 1976, I, 2760. – Cass. 1e civ., 15 juin 1962: Bull. civ. I, n° 303. 1012 Jiogue G., Le droit de retention conventionnel – Etude de droit français et de droit OHADA, RRJ 2007-4, p. 1765-1797 (1772). – Pérochon F., Le droit de rétention, accessoire de la créance, Mélanges Cabrillac, Litec 1999, p. 378. 1013 This is the case for the right of retention of the garage proprietor, of architects and chartered accountants in repect to documents produced for the client. 1014 This form was disputed until 2006, as according to some authors only the law can create a form of retention right that would give a hidden preferential right (sûreté occulte) to third paties. See in this respect, Legeais D., Sûretés et garanties du credit, LGDJ 4e éd. 2004, p. 476, n° 684. – Simler Ph., Delbecque Ph., Droit civil, Les sûretés, la publicité foncière, 4e éd. Dalloz, 2004, p. 434, n° 484. – However: Dupichot Ph., Le pouvoir des volontés individuelles en droit des sûretés, thèse Paris II, préf. Grimaldi, éd. Panthéon-Assas 2005, n° 943. – Cabrillac M., Mouly Ch., Droit des sûretés, 7e éd. Litec, 2004, p. 468, n° 551. Now art. 2286, 1° explicitly recognizes this form of right of retention. 1015 For an analysis of this form: Aynès A., Le droit de retention conventionnel, Dr. et Patr. n° 142, nov. 2005, p. 40. 1016 Cass. 1e civ., 3 mai 1966: D. 1966, 649, note Mazeaud. – Cass. com., 7 avr. 1998, JCP G 1999, I, 116, n° 11, obs. Delebecque. 1017 However, courts do not always require that the claim is liquid or payable: Cass. 3e civ., 23 avril 1974: JCP 1975, II, 18170, note Thuillier; RTD civ. 1976, 164, obs. Giverdon. – Cass. 3e civ., 12 mars 1985: Bull. civ. III, n° 50. – The 2006 legislation only insists on the fact that the claim should be payable (exigible). 1018 Jiogue G., Le droit de retention conventionnel – Etude de droit français et de droit OHADA, RRJ 2007-4, p. 1765-1797 (1772).

19. Consequences of restitution of the movable to the owner

169

The right of retention cannot be divided: the creditor has a right on the whole asset until full payment of the debt due.1021 The right of retention is not considered to be a right in rem1022 nor an obligatory right.1023 It is not a right in rem; therefore, there is no droit de suite nor preferential rights (droit de preference).1024 It is not an obligatory right, as the debtor has no right to force the creditor to release the asset, except when the claim has been paid. The right of retention is a pure factual situation1025 where the creditor holds the asset through a form of natural possession (possession naturelle).1026 The right of retention has been considered alternatively as a security right1027 or as a right that simply guarantees the satisfaction of the credi1019

1019

1020

Retention requires the physical holding of the asset: Req., 25 fév. 1878: DP, 1978.1 302: le droit de retention ne peut exister sans la detention de la chose. 1020 Req., 19 juil. 1904: DP, 1906, 1, 1, note Glasson. – A clear distinction is thus made on the one side between a right of retention based on a material or legal link (connexité matérielle ou juridique) and the right of retention as a attribute of a pledge (gage avec dépossession) and on the other side the fictuous retention right (droit de rétention fictif). This fictuous or symbolic retention serves the purpose of bocking the debtors rights on an asset (i.e. preventing the sale of a car, because the debtor does not detain the relevant documents), rather than allowing a physical apprehension of the asset. 1021 Cass. civ., 9 déc. 1840: S. 1841. 1. 23. – Req., 13 mai 1861: DP 1861. 1. 328. 1022 Zenati-Castaing F., Revet Th., Les biens, p. 729, n° 517. However, Mestre J., Putman E., Billiau M., Droit commun des sûretés réelles, Traité de droit civil, sous la dir. Ghestin J., LGDJ 1996, n° 60 et 84. – See also, Cass. 1e civ. 7 janv. 1992: Bull. civ.,I, n° 4; JCP 1992, I, 3585, n° 16, obs. Delebecque; JCP 1992, II, 21971, note Ramarolanto-Ratiaray; RTD civ., 1992, 586, obs. P.-Y. Gautier: « le droit de rétention d’une chose, conséquence de sa détention, est un droit réel, opposable à tous, et même aux tiers non tenus de la dette ». – Cass. com., 3 mai 2006: RTD civ. 2006, 584, obs. Revet. 1023 However, Catala-Franjou N., De la nature juridique du droit de rétention, RTD civ. 1967, 9. – Also, Cabrillac M., Mouly Ch., Cabrillac S., Petel Ph., Droit des sociétés, 8e éd. 2007, n° 591. 1024 Cass. com., 19 fév. 1958: Bull. n° 82. 1025 “Sûreté de fait”: Toulouse, 11 fév. 1977: JCP 1978, II, 18898, note Verschaeve. 1026 Let it be stressed that the possession here is does not follow the conditions of the civil possession developped supra 2.1: Notion of possession. It is clear that the creditor retaining the asset is not in good faith as to his possession, nor does he have a legal title to possess. – See also the distinction between fictive and non fictive retention, linked to fictive or symbolic possession: Cass. com., 11 juin 1969: D 1969, 244, note Bihr. – Cass. com., 20 janv. 1971: Bull. n° 19. 1027 Zenati-Castaing F., Revet Th., Les biens, p. 724, n° 513. – Additionally, the right of retention is classed in the part of the Civil Code applicable to securities. – Yet, Cass. com., 20 mai 1997: D. 1998, somm. p. 102, obs. Piedelièvre, et p. 115, obs

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tor.1028 This gives the creditor a means of pressure against the debtor, but also creates rights in respect to third parties. Thus, the right of retention can have third parties effects especially in relation to other creditors of the debtor1029 and as such has erga omnes effects.1030 For example, the possession of the creditor exceptionally blocks the revindication of a new owner, if the property has been transferred in the meantime, due to the non-payment of the debtor’s debt. Therefore, as long as physical control is maintained, the right of retention provides priority over subsequent dispositions. Exceptionally, if an asset is used as a pledge for two different creditors, the first pledge being without possession of the creditor (gage sans dépossession), the second entitling the creditor to possession (gage avec dépossession), article 2340 of the Civil Code gives the first creditor a preferential right against the second creditor even if this second creditor has a right of retention in respect to the debtor or third parties.1031 However, in respect to other creditors, the possessor only has a general pledge on the asset.1032 This means in particular, that if the asset is to be sold to pay for the claim, this possessor will have to divide the proceeds with Libchaber; JCP 1998, I, 103, n° 23, obs. Delebecque: « le droit de rétention n’est pas une sûreté, et n’est pas assimilable au gage ». 1028 See the distinction in French law between security rights and rights of guarantee: Malaurie Ph., Aynès L., Droit civil, les sûretés, la publicité foncière, 8e éd. 1997, Cujas, n° 2: « La sûreté est […] une garantie en ce sens qu’elle rend plus probable la satisfaction du créancier. Mais toute garantie n’est pas une sûreté. ». – Also, Ginestet C., La qualification des sûretés, Défrenois 1999, art. 36927 et 36940. 1029 Cass. civ., 6 avril 1875: DP 1875. 1.354. – Req., 23 mai 1881: S. 1881. 1. 312. – Cass. civ. 12 mai 1903: S. 1905. 1. 327. 1030 Jiogue G., Le droit de rétention conventionnel – Etude de droit français et de droit OHADA, RRJ 2007-4, p. 1765-1797 (1765). – Also, Cass. 1e civ, 7 janv. 1992: Bull. civ.,I, n° 4; RTD civ. 1992, 586, note P.-Y. Gautier; JCP G 1992, I, 3583, n° 16, obs. Delebecque; JCP 1992, II, 21971, note Ramarolanto-Ratiaray. 1031 Derrida F., La dématérialisation du droit de rétention, in Mél. Voirin, LGDJ 1967, p. 178. – Also in general, Pourquier C., La rétention du gagiste ou la supériorité du fait sur le droit, RTD com., 2000, p. 569. 1032 The fact that art. 2286 C. civ. is set in the chapter pertaining to securities has caused some confusion. However, three reasons are given to exclude the qualification of a security (Jiogue G., Le droit de rétention conventionnel – Etude de droit français et de droit OHADA, RRJ 2007-4, p. 1765-1797 (1779)): there is no right of preference for the creditor / possessor; the general pledge of every creditor is not considered a security; the right of retention is not listed in the catalogue of real securities of art. 2329 C. civ. – Catala-Franjou N., De la nature juridique du droit de retention, RTD civ. 1967, p. 9. – Piédelièvre S., L’efficacité du droit de retention face aux autre sûretés réelles, Droit et procedures n° 5, sept. 2001, La revue des idées, n° 290.

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other creditors, but may subordinate the release of the asset to the payment of the claim it guarantees.1033 The right to retain does not include a right to sell the retained property, or have it sold. However, as an exception, in commercial relations, between two parties that are both businessmen acting as such, the right of retention entitles the creditor to sell the retained asset after the avoidance of a sales contract. There are no conditions pertaining to the good or bad faith of the possessor,1034 however, the taking of possession must be conform to law, and thus the right to retain is excluded with regard to property, which has been taken away without permission or fraudulently.1035 The only limits that apply are the limits relating to the payment of the debt: the possessor can only hold the asset until payment. Additionally, the possessor may not use the asset nor perceive the fruit or products of the asset.1036 The creditor / possessor only has the right to detain the asset and as such also must fulfil the obligations of a depository. As soon as the creditor voluntarily departs of the asset, the right of retention disappears.1037 If the asset is released by the possessor to the owner, the latter must cover the expenses borne by the possessor during the detention of the asset (théorie des impenses).

19.5.

Who bears the expenses of the restitution of the movable to the owner?

French Law does not specifically deal with this question. However, as a general rule the costs of restitution will be allocated depending on the reason of restitution, and more specifically on the good or bad faith of the possessor. If the asset was lost or stolen, the lawful owner can reclaim the asset from a possessor acting in good faith, yet he must also bear the expenses of the restitution the same way as he must compensate the possessor. If the possessor is acting in bad faith, in all likelihood, the costs of restitution will be borne by such a possessor. 1033

Cass. civ., 31 mars 1851: DP 1851. 1. 65. Cass. 3e civ., 3 oct. 1990: Bull. civ. III, n° 180; RTD civ. 1993, 165, obs. Zenati that considers good faith in a large way: good faith is required in the taking of possession of the asset and not in the knowledge that the possessor is not owner. – ZenatiCastaing F., Revet Th., Les biens, p. 730, n° 518. 1035 Cass. civ., 14 mars 1883: DP, 1883, 1, 338. – Cass. civ., 28 fév. 1957: D. 1957, 266. 1036 Zenati-Castaing F., Revet Th., Les biens, p. 730, n° 518. 1037 Req., 25 fév. 1878: DP 1878. 1. 302. – Cass. com., 23 mai 1967: JCP 1967, IV, 102. 1034

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Table of Abbreviations AJ Pénal AJDA Arch. phil. du droit

Actualités juridiques de droit pénal Actualités juridiques de droit des affaires Archives de philosophie du droit

Bull. civ. Bull. crim.

Bulletin civil de la Cour de cassation Bulletin criminel de la Cour de cassation

CA C. av. civ. C. civ. C. com. C. env. C. proc. civ. C. prop. intell. C. rur. Cass req. Cass. ass. plén. Cass. civ. Cass. com. Cass. crim. CEDH chr. CJCE

Cour d’appel Code de l’aviation civile Code civil Code de commerce Code de l’environnement Code de procedure civile Code de propriété intellectuelle Code rural Chambre des requêtes de la Cour de cassation Assemblée plénière de la Cour de cassation Chambre civile de la Cour de cassation Chambre commerciale de la Cour de cassation Chambre criminelle de la Cour de cassation Cour européenne des droits de l’homme Chronique Cour de justice des Communautés européennes

D. D. Affaires D.S. DDHC Défr. DH DP Dr. et patr.

Revue Dalloz Dalloz Affaires Dalloz Sirey Déclaration des droits de l’homme et du citoye de 1789 Défrenois Dalloz Hebdomadaire Dalloz Périodique Droit et patrimoine

GA de la jurisp. civ. GAJC

Grands arrêts de la jurisprudence civile Grands arrêts de la jurisprudence civile (ou constitutionnelle) Gazette du Palais

Gaz. Pal.

Table of Abbreviations

187

inf. rap.

Informations rapides

JCP JCP, éd. N JCP, éd. E JCP, éd. G JDI JO Journ. Trib.

Semaine juridique Semaine juridique, édition notariale Semaine juridique, édition entreprise Semaine juridique, edition générale Journal de droit international (Le Clunet) Journal officiel Journal des tribunaux (Belgique)

LGDJ

Librairie générale de droit et de jurisprudence

Mél.

Mélanges

Ord.

ordonnance

PA pan. jur. Préf. PUAM PUF

Les Petites Affiches Panorama de jurisprudence préface Présses universitaires d’Aix-Marseille Presses universitaires de France

RDI Rev. crit. Rev. dr. imm. RIDA RIDC RRJ RTD civ. RTD com.

Revue de droit international Revue critique de droit international privé Revue de droit immobilier Revue internationale du droit d’auteur Revue internationale de droit comparé Revue de la recherche juridique Revue trimestrielle de droit civil Revue trimestrielle de droit commercial

S. SLC somm.

Sirey Société de législation comparée sommaire

TGI TI

Tribunal de grande instance Tribunal d’instance

National Report on the Transfer of Movables in Belgium Caroline Cauffman Vincent Sagaert

Table of Contents Part I: Basic information on property rights 1. Introduction. The distinction between real rights and personal rights

199

2. Ownership and restricted real rights 2.1. Notion of ownership 2.1.1. Definition and content 2.1.2. Powers of the owner 2.1.3. Transferability of movable property 2.2. Other property rights in movables 2.3. Remedies for property rights

203 203 204 204 206 206

3. Possession 3.1. Notion of possession 3.1.1. Requirements 3.1.2. Distinction between possession and detention 3.2. Functions of possession 3.3. Acquisition of possession 3.4. Protection of possession 3.5. Self-help

207 207 209 209 210 211 211

4. Property and obligatory rights to hold, use or acquire 4.1. Rights to use movables 4.1.1. Obligatory rights: loan, lease and lease-purchase (a) Generalities (b) “Obligatory” protection of the user’s possession (i) The relationship between the contracting parties (ii) The relationship with third parties 4.1.2. Property rights: usufruct and the right of use 4.2. The right to hold movables 4.2.1. Obligatory rights: the contract of deposit 4.2.2. Property rights: pledge (a) Civil pledge (b) Commercial pledge

211 211 211 213 213 214 214 215 215 215 216 217

Belgium

192

4.3.

4.4.

The right to acquire movables 4.3.1. Right of pre-emption 4.3.2. Option to buy 4.3.3. Right of repurchase (a) Generalities (b) Conditions (c) Situation pendente conditione (d) Execution of the right of repurchase (e) Situation of the parties after repurchase Contracts under a suspensive time limit

5. General scope and content of the rules on transfer of movables

217 217 217 218 218 219 220 220 221 221 222

Part II: Transfer of ownership directly from the owner to the transferee: “derivative” acquisition 6. The system of transfer of movables in Belgian law 6.1. Basic characteristics and overview 6.2. General issues 6.3. Means to acquire ownership 6.3.1. Contracts 6.3.2. Unilateral promises (a) Principle: binding force of unilateral promises (b) Exception: the unilateral promise of a gift 6.3.3. Other sources of obligations (a) Torts (b) Unjust enrichment (c) Court orders (d) Succession law (e) Wills

225 226 226 227 228 228 229 230 230 231 232 232 232

7. Validity of the contractual / promissory obligation 7.1. Validity requirements and defects 7.1.1. General rules (a) Consent (b) Capacity (c) Object (d) Cause

233 233 233 236 237 238

5. General Table of Contents scope and content of the rules on transfer of movables

222

7.1.2. Special rules for gifts, including wills (a) Sanity of mind (b) Defects of consent (c) Capacity 7.2. Remedies 7.2.1. Absolute / ​relative voidness (a) Necessity of judicial intervention (b) Causes of absolute / ​relative voidness (c) Consequences of absolute / ​relative voidness 7.2.2. Damages 8. Requirements for ownership 8.1. Principle 8.2. Exceptions 8.2.1. Article 2279 C.C. 8.2.2. Representation 9. Consensual system 9.1. General principle: transfer by mere consent 9.2. Exceptions: according to the nature of the property 9.2.1. Generic property 9.2.2. Future property 9.2.3. Sale of property not (yet) owned by the transferor 9.2.4. Agreements subject to a suspensive condition 9.2.5. Transfer in execution of an alternative obligation / ​claim 9.3. Statutory exceptions to consensual transfer 9.4. Effect of the transfer between the parties and in relation to third parties 9.5. Requirement of delivery / ​traditio 9.5.1. Introduction 9.5.2. The traditio in gifts from hand to hand 9.5.3. Delivery in contracts of sale (a) Generalities (b) Concept of delivery (c) Modes of delivery (i) Factual handing over (traditio) (ii) Handing over the keys and other forms of symbolic traditio (aa) Keys (bb) Documents of title (cc) Other forms of delivery

193 238 238 239 240 241 241 241 241 243 243

244 244 244 244

248 252 252 255 255 257 257 257 258 260 260 260 262 262 264 264 265 265 265 266 267

Belgium

194

9.6.

9.7.

(iii) Mere consent (aa) Impossibility of delivery at the moment of sale (bb) Seller’s control over the property in another capacity (cc) The seller’s continued possession of the property by agreement (iv) Delivery of intangible rights (aa) Generalities (bb) Special rules (v) Particularities (d) Delivery and the opposability of the transfer against third parties 9.5.4. Real agreements Registration 9.6.1. Sea ships 9.6.2. Aircrafts 9.6.3. Cars Requirement of payment for the transfer of property 9.7.1. Principle: transfer of property does not require payment 9.7.2. Exception: possibility of contractual deviation 9.7.3. Property related consequences of non-payment (a) Contract of sale (i) Right to withhold performance (ii) Quasi-revindication (iii) Right to terminate the contract (b) Other contracts

268 268 269 269 270 270 270 271 272 272 273 273 274 275 275 275 276 276 276 276 277 277 277

10. Double / multiple selling

278

11. Rules for “selling in a chain”

279

12. Transfer or acquisition by indirect representation 12.1. Contractual rights and obligations 12.2. Transfer of property rights

279 281

13. Insolvency of the transferor or transferee 13.1. General considerations 13.2. Protection of the transferee against insolvency of the transferor

281 282

5. General Table of Contents scope and content of the rules on transfer of movables

222

13.3. Protection of the transferor against insolvency of the transferee 13.3.1. Legal lien 13.3.2. Quasi-revindication 13.3.3. Rescission of the agreement 13.3.4. Right of retention 13.3.5. Stoppage in transitu

195

283 283 285 286 287 288

14. The transfer of the risk in contract law

289

15. Transfer and co-ownership 15.1. Ordinary (“accidental”) co-ownership 15.2. Compulsory co-ownership 15.3. Voluntary co-ownership

289 291 291

16. Transfer and unidentified property 16.1. Transfer of unidentified property 16.2. Floating charge

292 292

Part III: Original acquisition 17. Specificatio – accessio 17.1. Specificatio 17.2. Accession (“accessio”) 18. Good faith acquisition 18.1. Scope 18.1.1. Material scope of the property 18.1.2. Scope of the position of the real owner 18.1.3. Scope of the position of the transferee (a) Meaning of “transferee” – rights the transferee intended to acquire (b) Good faith (c) Possession (i) Real possession (ii) Possession pro suo (iii) Possession free of defects (d) Title 18.1.4. Scope of the position of the transferor

294 295 298 298 298 299 299 299 300 301 301 302 302 303 304

Belgium

196

18.2. The protection offered to the acquirer 18.2.1. Voluntary dispossession of the real owner 18.2.2. Involuntary dispossession of the real owner (a) Meaning of involuntary dispossession (b) Basic rule (c) Banknotes (d) Reimbursement of the purchase price (e) Bearer shares (f) Other specific rules 18.2.3. Exception: lessor’s right of revindication

304 304 304 304 305 306 306 307 307 308

19. Acquisitive prescription 19.1. Functions of acquisitive prescription 19.2. Requirements of acquisitive prescription 19.3. Prescription of ownership

308 310 312

20. Other forms of original acquisition 20.1. Occupation 20.2. Treasure finding 20.3. Finding of lost property 20.4. Separation

312 313 314 314

Part IV: Additional questions 21. Loss of ownership 21.1. Transfer of ownership 21.2. Fulfilment of a resolutive condition 21.3. Abandonment 21.4. Caducité? 21.5. Loss of ownership in other ways

316 316 317 317 318

22. The law of restitution of movables 22.1. Fruits 22.1.1. Definition of fruits 22.1.2. Good faith possession 22.1.3. Bad faith possession (a) Principle: full restitution (b) Exception: moderations 22.1.4. Application to the obligation of restitution

319 320 320 321 322 322 323 324

5. General Table of Contents scope and content of the rules on transfer of movables

222

22.2. Loss and deterioration 22.2.1. Restitution following revindication 22.2.2. Restitution at the end of a contract of lease 22.2.3. Restitution at the end of a contract of loan 22.2.4. Restitution at the end of a contract of deposit 22.2.5. Restitution at the end of a contract of pledge 22.2.6. Restitution following an action based on an undue payment 22.3. Reimbursement for improvements and expenses incurred during the possession of the movable 22.3.1. Restitution after revindication 22.3.2. Restitution at the end of the rental contract 22.3.3. Restitution at the end of a contract of loan 22.3.4. Restitution at the end of a contract of deposit 22.3.5. Restitution at the end of a contract of pledge 22.3.6. Restitution following an action based on undue payment 22.4. Possessor’s right to retain the movable 22.4.1. Introduction 22.4.2. Definition 22.4.3. Conditions 22.4.4. Real or personal nature 22.5. Expenses and place of restitution 22.5.1. Restitution pursuant to avoidance of the contract 22.5.2. Restitution when the right to use is invalidated 22.5.3. Restitution when the right to use has ended 22.5.4. Restitution in case of theft and similar cases

197 324 324 325 325 326 326 327 327 327 328 329 329 329 329 330 330 330 330 334 335 335 335 336 336

23. Retention of title 23.1. General overview 23.2. Legal categorization of title retention 23.3. Conditions for the proprietary effects of title retention 23.4. Effects of re-sale by the purchaser

336 337 339 340

Table of Literature

343

Table of Abbreviations

350

Part I: Basic information on property rights 1.

Introduction. The distinction between real rights and personal rights

General views on the distinction between real rights and personal rights have been subject to major developments in French and Belgian law. As a result, Legal scholars and case law have not been able to reach any agreement on the distinctive criteria. The following analysis will show how the objective conceptions of real rights in the 19th century have been replaced by an increasing measure of subjectivity within the concept of real rights.1 In the 19th century, it was generally acknowledged that the criterion for distinguishing between real rights and personal rights was to be found in their internal structure. A personal right establishes a legal relationship between two (natural or legal) persons: the one is the creditor entitled to claim compliance with the obligation; the other is the debtor bound to fulfil the obligation to which he has agreed. In contrast, a real right does not establish a relationship between two subjects, but between a subject and an object burdened with the real right. So, a real right generates a direct relationship between the holder of the real right and the asset subject to the right, independently from the intervention of another person (for instance, the owner).2 According to this view, it should not be possible to create a real right that obliges the debtor to take positive action.3 1

2

3

For an extensive analysis of this development: V. SAGAERT, “Les interferences entre le droit des biens et le droit des obligations. Une analyse de l’évolution depuis le Code civil” in P. WERY (ed.), Le droit des obligations contractuelles et le bicentenaire du Code civil, Bruges, Die Keure, 2004, 354-395. H. DE PAGE, Traité élémentaire de droit civil belge, I, Introduction. Théorie générale des droits et des lois. Les personnes – la famille, Brussels, Bruylant, 1962, n° 127. Comp. already POTHIER, who has highly influenced the codification: “le jus in re est le droit que nous avons dans une chose, par lequel elle nous appartient, au moins à certains égards. Le jus ad rem est le droit que nous avons, non dans la chose, mais seulement par rapport à la chose, contre la personne qui a contracté” (R.J. POTHIER, Traité de la propriété, in Oeuvres de R.J. Pothier, Brussels, Tarlier, 1831, n° 1). Comp. J. HANSENNE, “La limitation du nombre de droits réels et le champ d’application du concept de service foncier”, R.C.J.B. 1968, 176-177.

200

Belgium

This view is based on an economic distinction between two categories of economic values: property and services rendered by another person. The first category reflects real rights, the second category personal rights.4 If the holder of a limited real right in another’s asset also has a claim against the owner of that asset, that claim against the owner should not be considered a real right even though it would be closely related to the exercise of the limited real right. This “objective” approach, as described above, was subject to critical observations by PLANIOL at the beginning of the 20th century. According to his view, a legal relationship must always involve two (legal or natural) persons. A legal relationship can never be established between a legal subject and a legal object since the subject-object relationship can only be a factual one. Therefore, both real rights and personal rights are created between persons, so that no difference between those categories exists in the internal structure.5 Rather, the difference exists in the external structure: a personal right is vested between one person (the creditor) and one other person (the debtor), whereas a real right is vested between one person (the holder of the real right) and people in general. All other persons – except for the holder of the right – have to refrain from action that would impede the exercise of the real right. In other words, a real right is reflected in the universal passive obligation not to obstruct the prerogatives attributed to the holder of the real right.6 These distinctive features also entail, as was the case under the classic conception, that no positive obligation can correspond to a real right.7 In conclusion, a real right is, according to this “subjective” approach, enforceable erga omnes, whereas a personal right would only be enforceable against one person (the debtor). This subjective theory is called “personnalisme”, because it emphasises the persons involved in all legal relationships, whatever their nature may be. However, this “personnalisme” has also been the subject of criticism. It has been observed that the universal obligation not to impede the rights of others is not a distinctive feature of real rights and personal rights.8 Indeed, the existence of personal rights is, similar to real rights, opposable against 4 5 6

7 8

H. DE PAGE, I, n° 129. M. PLANIOL, Traité élémentaire de droit civil, Paris, Pichon, I, 1928, n° 2159. L. MICHAS, Le droit réel, considéré comme une obligation passivement universelle, Paris, Thesis, 1900; M. RIGAUD, Le droit réel: histoire et théories: son origine institutionnelle, Toulouse, Thesis, 1912. M. PLANIOL, I, n° 2163. R. DEKKERS, “Du neuf sur les droit réels”, J.T. 1960, p. 697, n° 4. In France: D. FERRU, La notion de servitude, Paris, L.G.D.J., 1973, 100.

1. Introduction. The distinction

201

third parties, as interference with those personal rights can give rise to a tort claim. For instance, if a third person is co-operating intentionally in the breach of contract by one of the contracting parties, then he can be held liable for tortious interference with a contract (in civil law terminology: complicity in another’s breach of contract).9 This example demonstrates that even personal rights should be respected by everyone, so that there exists a universal passive obligation not to interfere with these rights In conclusion, everybody has a (passive) obligation not to infringe the rights belonging to other persons, regardless of the nature of these rights. The “absolute” effect of real rights may be greater than those of personal rights – due to the right to follow the object and the possibility of tracing it, both of which are attributed to the holder of a real right – but the distinction between both types of rights is only a matter of intensity and not substantive. GINOSSAR introduced an innovative discourse on the distinction between real rights and personal rights in his Ph.D. thesis in 1960.10 He extended the scope of the concept of “property” to include incorporeal property: rights, both personal and real, belonging to a person. Even personal rights may be the object of property, as the creditor can be seen as the owner of his claim. In his view, property is a uniquely identifiable right, which cannot be assimilated into personal rights, but also not into real rights. In GINOSSAR’s view, the only remaining real rights are restricted real rights. And these rights are confined to obligations imposed on the owner of the property rights. In other words, real rights are claims against the owner of the property burdened with this right. In that sense, there is no fundamental difference between the nature of real rights and the nature of personal rights. The only difference exists with regard to the sources of these rights: personal rights arise out of one of the sources mentioned in Article 1370 C.C. (e.g. contracts, torts, quasi-contracts), where the source of a real right is property: one becomes the debtor of a real right by becoming the owner of the objects involved. In other words, the debtor of a real right is not personally bound by the obligation created by the real right, but he is bound qualitate qua. In this view, a right is recognised as a real right if it corresponds to a real obligation;11 this is an obligation which is related to the property to which it applies and which is automatically and immediately 9

10

11

Cass. 22 April 1983, Arr. Cass. 1982-83, 1022, Pas. 1983, I, 944 and R.W. 1983-84, 427, note E. DIRIX. S. GINOSSAR, Droit réel, propriété et créance, Paris, L.G.D.J., 1960, 212 p. His ideas were adopted in Belgian literature by R. DEKKERS, “Du neuf sur les droit réels”, J.T. 1960, 697-698. S. GINOSSAR, o.c., 112.

202

Belgium

transferred by the transfer of this asset.12 The analysis by GINOSSAR was further developed in France by ZENATI in 1981 in his thesis on the nature of proprietary rights.13 However, the thesis by GINOSSAR has not been unanimously agreed upon. The most fundamental criticism is that this author excludes the right of property from the scope of real rights, whereas this has been traditionally regarded as the strongest and most eminent real right.14 In conclusion, it has emerged that even after 200 years of doctrinal debate on the concept of real rights, no agreement has been reached on the precise content of this concept. The discussion on the content of real rights can have practical implications as far as the extent of real rights is concerned. For example, the extent of the right of easement is determined by the extent of the concept of real rights in general. More generally, this theoretical framework is important for the extent of the concept of real obligations. We will analyse this in the following, beginning with the structure of an easement. Belgian property law is to be found in the second book of the Belgian Civil Code. This Code is historically based on the French Civil Code, as Belgium was a French province in 1804. Except for the amendments which have been made since 1804,15 Belgian property law is identical to French property law. It is generally considered that Belgian property law is determined by the numerus clausus principle. It is, according to the general opinion, not possible to create property rights which have not been recognized by the legislator. This principle is not to be found in the Civil Code or in another statutory provision. Article 543 C.C. provides that “one may have a right of ownership, or a mere right of enjoyment, or only land services to be claimed on property”. However, this provision does not enumerate the property rights in an exhaustive manner: first of all, superficies and emphyteusis are not mentioned, as these rights have only been re-introduced in the Acts of 10 12

13

14

15

For further developments on this concept V. SAGAERT, “Real rights and real obligations in Belgian and French law” in J. MILO and S. BARTELS (eds.), The content of real rights, Ars notarius, Deventer, Kluwer Rechtswetenschappen, 2004, 47-70. F. ZENATI, Essai sur la nature juridique de la propriété. Contribution à la théorie du droit subjectif, Lyon, 1981. A summary of his findings was published in F. ZENATI, “Pour une rénovation de la théorie de la propriété”, Rev. trim. dr. civ. 1903, 305-321. L. RIGAUD, “A propos d’une renaissance du jus ad rem et d’un essai d’une classification nouvelle des droits patrimoniaux”, Rev. int. dr. comp. 1963, 557 et seq. See also J. DABIN, “Une nouvelle définition du droit réel”, Rev. trim. dr. civ. 1962, 31 et seq. The only major amendment which has been implemented, was the modernization of the rules with regard to co-ownership.

2. Ownership and restricted real rights

203

January 1824. Moreover, real security rights and co-ownership have been omitted in the enumeration. Although this principle is sometimes criticised by academics,16 it has been determined by the Cour de Cassation that parties cannot create real rights which have not been recognised by law.17 The foregoing does not mean however that party autonomy is excluded in the field of property law. Parties are free to determine the content of property rights, as long as they respect the essential characteristics of these rights.

2.

Ownership and restricted real rights

2.1.

Notion of ownership

2.1.1. Definition and content Article 544 of the Belgian Civil Code gives a classical definition of ownership, which has remained unamended since 1804: ownership is the right to enjoy and dispose of property in the most absolute manner, provided one does not exercise these rights in a way prohibited by statutes or regulations. This definition makes the distinction between the right of ownership and limited property rights: the right of ownership grants to the owner all powers in the property, except for those which have been transferred to third parties or which have been prohibited by law. It is false to assume that this definition intended to render the powers of the owner absolute: Belgian legal scholars have demonstrated that the absoluteness of ownership has been emphasized at the end of the 19th century, but did not inspire the legislator in 1804.18 Since the 20th century, the powers of the owner have been gradually more restricted. The owner must take into account several restrictions from 16

17

18

J. HANSENNE, “La limitation du nombre des droits réels et le champ d’application du concept de service foncier”, Revue critique de jurisprudence belge 1968, p. 181, n° 13; A. KLUYSKENS, Zakenrecht, V, in Beginselen van Burgerlijk Recht, Antwerp, Standaard, 1953, n° 44; F. LAURENT, Principes de droit civil, VI, Brussels, Bruylant, 1878, n° 84. In France: M. PLANIOL and G. RIPERT, Traité pratique de droit civil, III, Paris, L.G.D.J., 1952, n° 48. Cass. 16 September 1966, J.T. 1967, 59. Also: Cass. 17 October 1996, R.W. 1996-97, 1395, comment M.E. STORME; H. DE PAGE, I, n° 130; W. VAN GERVEN, Algemeen Deel, in Beginselen Belgisch Privaatrecht, Brussels, Story-Scientia, 1987, n° 34. R. DERINE, De grenzen van het eigendomsrecht in de negentiende eeuw, Antwerp, De Sikkel, 1955, 306. For a short summary: F. VAN NESTE, R. DERINE and H. VANDENBERGHE, Zakenrecht, IA, in Beginselen van Belgisch Privaatrecht, Antwerp, Kluwer, 1974, n° 148 et seq.

Belgium

204

both private law and public law. A major private law restriction is the prohibition of abuse of rights, e.g. the owner cannot exercise his ownership in a manner which is manifestly contrary to the manner in which a reasonable owner would exercise his ownership in similar circumstances.19 Belgian case law has gradually developed several specific criteria for determining abuse of property rights, e.g.: (i) the mere intention to cause damage to a third person,20 (ii) a manner which causes damage to third persons if the owner would benefit to the same degree from another exercise that does not cause any damage to third persons or to the general interest,21 (iii) in such way that the damage he causes is disproportionate in relation to the benefit he gains,22 The other important restrictions on ownership exclusively deal with immovables (neighbourhood law, public servitudes), and will therefore not be dealt with in this report.

2.1.2. Powers of the owner The powers of the owner are generally distinguished according to the old Roman law trilogy: he has the power to use the property (‘usus’), to take the fruits (‘fructus’) and to dispose of the property (‘abusus’). Traditionally, the power to dispose of one’s property is considered the essential power of the owner. For instance, DE PAGE stressed that the right to dispose was “l’attribut essentiel” (the essential characteristic) of ownership. Nowadays however, one accepts that there are forms (and always more) of indisposable ownership. We will analyze these forms more in detail infra, Part I, 2.1.3.

2.1.3. Transferability of movable property In principle, the owner can freely dispose of his property. If he does, the act of disposition automatically transfers the accessories of this property. 19

20 21 22

For a general overview: S. STIJNS and H. VUYE, “Tendances et réflexions en matière d’abus de droit en droit des biens” in J. KOKELENBERG, F. VAN NESTE, H. VUYE and P. WÉRY (eds.), Eigendom – Proprieté, Bruges, Die Keure, 1996, 97-159. For instance: Court of Appeal Ghent 27 January 1854, Pas. 1854, II, 233. Cass. 16 November 1961, Pas. 1962, I, 332 and R.W. 1962-63, 1157. Cass. 10 September 1971, Arr. Cass. 1972, 31, conclusion Att.-Gen. GANSHOF VAN DER MEERSCH, Pas. 1972, I, 8 note W.G., R.C.J.B. 1976, 300, note P. VAN OMMESLAGHE.

2. Ownership and restricted real rights

205

Article 1615 C.C. provides, with regard to sales agreements, that the obligation to deliver the goods includes its accessories and all that was destined for its perpetual use. There is property that is not transferable because it may not be the object of a legal act, it is not in commerce.23 This is for instance the case of public property destined for public use. Most specific statutes prohibiting its transferability are based on considerations of health and public security, such as the Drugs Act.24 Other examples are found in the financial branch. The question whether parties can contractually exclude the transferability of property has been the object of debate for a long time. Initially, such clauses were deemed to be invalid because they were considered contrary to public order.25 The power to dispose was considered the essential power of the owner. One of the main Belgian legal scholars of the 20th century writes that the power to dispose is “l’attribut essentiel du droit de propriété”.26 An undisposable ownership was considered a contradictio in terminis. This position was mainly explainable on a historical basis: during the feudal regime, many people gave gifts to religious institutions hoping for a favourable destination after their death. However, the beneficiaries could not dispose of these assets and they became immobilized in economic trade. This was the so-called “dead hand”.27 However, since the 1950’s, most case law and legal scholars acknowledge that these clauses can be valid if (i) they are restricted in time and (ii) they serve a legal interest. The violation of such a clause has no proprietary effect: suppose that A has made a gift of a painting to B with the stipulation that the latter cannot dispose of the property for ten years, but B sells the painting to C after two years. If C is in good faith (which is presumed), he cannot be attacked by A, who will only have a contractual claim for damages against B. A will, in that case, not be able to recover his painting. If C is in bad faith – e.g. he knew or ought to know that he has acquired the painting in violation of a contractual prohibition – he will be liable for the contractual breach by B. This liability is, in the absence of a contract between A and C, based upon tort law (Article 1382 C.C.). The main remedy in that case is restitution in integrum, meaning the repossession of the painting by A. 23 24 25 26

27

Article 1598 C.C. Act of 24 February 1921. Still quite recently: Court of Appeal Ghent 22 May 1987, Pas. 1987, II, 175. H. DE PAGE and R. DEKKERS, Traité élémentaire de droit civil. Principes – Doctrine – Jurisprudence, V, Les principaux contrats usuels (Deuxième partie). Les biens (Première partie), Brussels, Bruylant, 1975, n° 897. For a more profound analysis: V. SAGAERT, “Nieuwe perspectieven op het eigendomsrecht na twee eeuwen Burgerlijk Wetboek” in B. TILLEMAN and P. LECOCQ (eds.), Zakenrecht, Bruges, Die Keure, p. 48, n° 7.

Belgium

206

2.2.

Other property rights in movables

The main other property right in movables is usufruct, which is defined by Article 578 C.C. as the right to enjoy property, of which another has ownership, in the same manner as the owner himself, but on condition that its substance be preserved. So, the usufructuary has the right of “usus” and of “fructus”, but he does not have the right to dispose of the property. A derivative of that right is the right of use, which is dealt with in Articles 625 et seq. of the Belgian Civil Code. A person who has the use of the fruits of a tenement may only demand what is necessary for his needs and those of his family. He may demand them even for the needs of children arrived since the granting of the use.28 The other property rights (superficies, emphyteusis, servitudes, right of habitation) can only have immovables as their object. They will not be dealt with in this report. Possession is generally not considered a property right nor an obligatory right, but rather a legal fact, e.g. a fact to which the law attributes legal effects.29

2.3.

Remedies for property rights

Property rights are protected by the proprietary action that is connected to the property right. Every holder of a property right has the possibility to bring a legal action if his property right is violated. The legal ground for that action is to be found in the statutory provisions that recognize the property right. The main property action related to ownership is the action of recovery of property (‘revindication’). This remedy most frequently exists along side another remedy, e.g. a contractual action or a tort claim. If for instance, the owner has given his car in deposit to a friend, he has the choice to recover his car by a contractual claim or to do so by the property claim (‘revindication’). The latter has the advantage that the claimant will not suffer the consequences of an insolvency proceeding against the custodian. Moreover, the property action can be exercised during 30 years30 while the contractual claim is subject to a prescription period of ten years.31 An owner can also introduce an “actio negatoria” or an “actio confessoria”. The former seeks to have a judge recognize that a third person has no rights

28 29

30 31

Article 630 C.C. J. HANSENNE, Les biens: précis, I, Liège, Université de Liège. Faculté de droit, 1996, n° 143. Article 2262 C.C. Article 2262 bis C.C.

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in the asset, the latter one seeks to have a judge recognize that a right in an asset does exist.

3.

Possession

3.1.

Notion of possession

3.1.1. Requirements Article 2228 C.C. gives a definition of possession: Possession is the detention or enjoyment of property or of a right that we hold or exercise by ourselves, or by another who holds and exercises it in our name. Possession requires two essential elements, e.g. a corporeal element (“corpus”) and a subjective element (“animus”). – Corpus means that the possessor has the physical control of the asset. This control must however not have been effected in a direct way, indirect control is sufficient. For instance, if somebody has stolen a car and leaves that car to a garage owner for reparation works, the thief remains in possession. The garage holder is the detentor of the car while he effects the reparation works. The thief remains possessor. This is called “indirect possession” or “possessio animo suo, corpore alieno”. The intermediary is, in that case, considered the detentor, he is not possessor as he does not meet the second, subjective element of possession. The same reasoning applies if somebody is already in possession of e.g. a coat and places this coat in the wardrobe of a restaurant: the possessor remains in possession, the depositary is mere detentor. That is also the case if a possessor leaves the coat in his car, which is parked 100 metres away or forgets it in the restaurant (but will come back to collect it the next day). – The subjective element means that the possessor has also the intention to exercise this physical control in his own interest, and not in the interest of the owner or a third party (“animus rem sibi habendi”). Belgian law adheres, as French law, to the Savignan doctrine according to which the animus domini is the main characteristic of possession. – This subjective element, contrary to the corporeal element, cannot be exercised indirectly: it must be assessed on behalf of the possessor himself. This subjective element is however, considered in an objective way: nobody can exercise physical control in his own interest if he has, from the beginning of his physical control, the obligation to make restitution of his asset. If the contract giving him the physical control includes an obligation to make restitution of the asset, he cannot be considered

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a possessor. For instance, a lessee, an employee (using, for instance, a company car), a depositary cannot be considered a possessor but only a mere detentor. Their physical control can never result in acquisitive prescription: as they are obliged to make restitution according to their title, they cannot have the “animus rem sibi habendi”. – This subjective element does not however require that the possessor be in good faith. The possessor can be in bad faith, but nevertheless have the intention to exercise physical control in his own interest, as is the case for example of a thief. This possession in bad faith even has legal effects as it can lead, after 30 years, to acquisitive prescription. There are no gradual differences in the intensity of possession between the initial possession and the continuation of possession. For instance, the occupation of a res nullius requires the same intensity of physical control as the possession of another’s property. The mere intention to occupy the property is not sufficient.32 Originally, possession was only used with regard to corporeal property. Nowadays however, it is recognized that possession can also apply to mere rights. Possession is also possible with regard to limited property rights. Somebody who exercises factually the powers of the holder of a limited property right and who does so in his own interest has the possession of that property right. This possession of mere rights is indirectly recognized by the Civil Code in the provisions that set forth acquisitive prescription as means of acquisition of limited property rights.33 However, possession of personal rights is not possible in the real sense of the word: rather, possession exists in another sense, which is provided by Article 1240 C.C.: “The payment, in good faith, to the possessor of a receivable, is valid, even if the possessor is deprived of the possession”.

32

33

J. HANSENNE, Les biens, I, n° 176. The “occupatio” as means of original acquisition of a res nullius is not generally recognized by the Civil Code. On the contrary, article 713 C.C. provides that property that has no owner belongs to the State. However, this provision only applies to immovables (H. DE PAGE and R. DEKKERS, Traité élémentaire de droit civil belge. Principes, doctrine, jurisprudence, VI, Les biens (Deuxième partie), Les sûretés (Première partie), Brussels, Bruylant, 1953 p. 15, n° 10). The recognition of the occupatio as means of acquisition is found in article 715 C.C., which provides that the right of fishing and hunting is determined in specific statutes. With regard to servitudes, article 690 C.C. restricts acquisitive prescription to continuous and visible servitudes. Usufruct can be acquired by acquisitive prescription.

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209

3.1.2. Distinction between possession and detention Possession is to be distinguished from “detention”. Detention only requires a physical element, but the detentor does not meet the subjective element; he does not have the animus rem sibi habendi. The Civil Code provides for a presumption in favour of possession: one is always presumed to possess in his own interest, and in the capacity of an owner, where it is not proved that one has begun by possessing for another.34 It is, from a procedural point of view, up to the other party to prove that the controller of the asset, in this case the detentor, does not have the “animus rem sibi habendi”. The distinction between possession and detention is decisive from a property viewpoint: detention can never result in acquisitive prescription. The detentor cannot become the owner of the property over which he has had physical control, not even after 100 years. This does not mean however that Belgian property law does not recognize any legal effect of detention. A detentor can make use of a remedy that protects his physical control, e.g. a so-called reintegranda.35 This is however only possible with regard to immovables. The detention of movables is not protected by specific actions.

3.2.

Functions of possession

Possession has, according to Belgian law, three functions: 1. Acquisitive function of possession: possession can result in the acquisition of ownership or of a limited property right. This function applies in cases of acquisition non a domino. This acquisition can be instantaneous if the possessor is in good faith and the original owner has been voluntary dispossessed. If the original owner has been involuntary dispossessed and the possessor is in good faith, possession results in the acquisition of property rights after three years following the dispossession (Article 2279 C.C.). This rule is applied in Article 1138 C.C., which provides the acquisition rules in case of conflicting transfers: if A transfers the same property subsequently to B and C, the first one of the acquirers who takes possession of the property in good faith will prevail. If this is C, C will prevail even if his title is of a later date than that of B. Even in case of bad faith, acquisitive prescription will result in the acquisition of the property, but in that case the term for acquisitive prescription will be determined at 30 years.

34 35

Article 2230 C.C. Article 1370 Judicial Code.

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2. Possession is a means of proof: the person who has possession of a movable is presumed to be its owner. That is the other aspect (besides acquisition) of “possession gives title” (Article 2279 C.C.). It is up to the other party to prove the contrary. Possession has thus the function of a legal presumption. 3. Remedies of possession: the possessors of immovables are protected by specific remedies, e.g. a complainte and a reïntegranda. Possession of movables is not protected by specific actions. For that reason, we will not go into further detail on those remedies.

3.3.

Acquisition of possession

The contractual transfer of an existing possession generally requires the transfer of both aspects of possession, e.g. of both the “corpus” and the “animus”.36 So, the transfer of possession is not a consensual agreement (as agreements generally are in Belgian law), but a real agreement, this means that traditio is normally required in order to constitute the transfer of ownership. Moreover, a real transfer of “animus rem sibi habendi” is not possible. The acquirer will only have the possibility to continue the possession of his predecessor if he himself meets the requirement of “animus rem sibi habendi”.37 However, the transfer of the corpus can be effected in a more symbolic way, e.g. by handing over the key of the building or the title (tradition per instrumentum).38 Belgian law recognizes three forms of consensual transfer of possession in which the mere consensus effects the transfer of possession: – Traditio brevi manu: the detentor gets possession of the property he holds in detention. For instance, a thief of a car gives his car in deposit to a friend, and subsequently sells the car to that same friend. Or: a leased house is sold to the lessee. In the former example, the friend, who already had the physical control of the car, will become possessor by the mere sales agreement without any physical change in the situation being necessary. – Constitutum possessorium: this is the inverse of the traditio brevi manu: someone is possessor, but he transfers the possession to a third party, reserving however the detention of the asset. A frequent example, in the framework of estate planning, is the following: A is possessor of a movable object and gifts this object to a third party, reserving however

36 37 38

J. HANSENNE, Les biens, I, n° 177. Cass. 2 June 1989, Arr. Cass. 1988-89, 1166. J. HANSENNE, Les biens, I, n° 177.

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211

the usufruct of this asset. A was possessor, but becomes mere detentor of the asset, possession has passed to the beneficiary. – The last exception is the so-called traditio longa manu: a possessor of an asset (A) gives detention of this asset to B, who is obliged to make restitution. During this detention, however, A passes possession of the asset to C. C become possessor by the mere sales agreement, without any change in the physical control of the asset.

3.4.

Protection of possession

There are specific protection measures with regard to possession of immovables. The possessors of immovables are protected by specific remedies, e.g. a complainte and a reïntegranda. Possession of movables is not protected by specific actions. For that reason, we will not go into further detail on those remedies.

3.5.

Self-help

Any form of self-help is normally excluded in Belgian law. One can only obtain legal protection by judiciary means. The only cases in which the law of obligations allows a possessor to use methods of self-help is in case of the exceptio non adimpleti contractus and the right of retention. These can allow the possessor of an asset to keep that asset until the person who is entitled to it has complied with the obligation that has a legal or physical link to the property. However, these methods of self-help can rarely be used by a possessor and will most often be used by a detentor: the asset is the object of an obligation to make restitution, which precisely involves detentio.

4.

Property and obligatory rights to hold, use or acquire

4.1.

Rights to use movables

4.1.1. Obligatory rights: loan, lease and lease-purchase (a)

Generalities

The lease and loan (bruikleen) of movables (as well as the lease of land) are contracts conferring rights to use property. According to Belgian law, the lease (also termed “rent”) of a movable or an immovable necessarily implies that a price (usually but not necessarily in money) is paid in return for the

212

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use of the property. A contract conferring a right to use property for free is named a “loan” (bruikleen).39 A lease-purchase contract is a credit contract by which the creditor (leasing-disposer)40 transfers the use of property to the leasing-taker in exchange for the payment of a periodical sum by the lessee, with the option for the leasing-taker to acquire the ownership of the property at the end of the lease-purchase contract.41 The rights conferred by the contracts of loan, lease and lease-purchase are always considered personal rights irrespective of the duration of the contract. The contracts of lease and lease-purchase come into existence solely by the consent of the parties. However, a contract of lease that has not been performed in any way (by e.g. transmission of the key or payment of the rent for the first term), cannot be proven by witnesses or presumptions, unless the writing has been lost by force majeure, one is bringing an action against a merchant, or only the conditions of the contract are disputed but not its existence.42 The contract of loan only comes into existence by the delivery of the object of the loan. It is therefore qualified as a “real” contract. Nevertheless, a contract containing an accepted promise to conclude a contract of loan (concluded before the transmission of the object of the loan) is also binding; although, it cannot be qualified as a loan per se because, for a loan, delivery is indispensable. The use of the distinction between the contract containing an accepted promise of a loan or a loan and the real contract of loan is doubted by certain legal scholars.43

39

40

41 42 43

The term “loan” here is not to be confused with the same term that includes a financial obligation. There is no financial obligation in this case; quite the contrary, here ‘loan’ means to provide someone something for free, such as ‘to loan a book to a friend’. Belgian law also has a contract of “verbruikleen” which differs from the contract of “bruikleen” in that the contract of “verbruikleen” concerns consumables, of which ownership is transferred to the loaner, which is not the case for “bruikleen”. At the end of the contract of “verbruikleen”, the usor does not have to return the goods he has received in “bruikleen”, but an equal amount of goods of the same type (See B. TILLEMAN and A. VERBEKE, Bijzondere overeenkomsten in kort bestek, Antwerp, Intersentia, 2005, n° 783 et seq., p. 214 et seq.). In Belgium the term “lessor” is often used to indicate the leasing-disposer, the term “lessee” to indicate the leasing-taker. However, in this paper, the terms “lessor” and “lessee” are reserved for the indication of the parties to a contract of rent (lease). B. TILLEMAN and A. VERBEKE, o.c., n° 799, p. 219. B. TILLEMAN and A. VERBEKE, o.c., n° 515 et seq., p. 141-142. B. TILLEMAN and A. VERBEKE, o.c., n° 756, p. 207.

4. Property and obligatory rights to hold, use or acquire

(b)

“Obligatory” protection of the user’s possession

(i)

The relationship between the contracting parties

213

– Delivery On the basis of Articles 1719 and 1720 C.C. the lessor is obliged to deliver the rented property in good condition. Correlatively, the lessee has a claim against the lessor for delivery in good condition. The lender has no duty to deliver the property pursuant to the coming into existence of the agreement as the contract of loan only comes into existence through the delivery of the property. – Peaceful use: guarantee for acts of the lessor The lessee’s peaceful use of the rented property is protected by contractual rights (Article 1719, 3° C.C.); this implies that the lessor must, during the time of the rent, abstain from every material or legal act disturbing the lessee’s use of the rented property. The lender has the obligation to surrender the possession of the property to the borrower during the stipulated time or, if no time has been stipulated, until it has served for the purpose for which it has been lent (Article 1888 C.C.). Because of the gratuitous character of the loan, the law accepts that the lender’s interests may in certain cases prevail over those of the borrower. If the lender needs his property urgently and unforeseen, the judge can, depending on the circumstances, oblige the borrower to return the property (Article 1889 C.C.) before the “normal” duration of the contract has come to an end. – Peaceful use: guarantee for legal claims of third parties The lessor has to guarantee the lessee against legal claims from third parties. If the lessee is disturbed by a legal claim concerning ownership of the property, he is entitled to a proportionate reduction of the rent, if he has informed the lessor of the disturbance.44 If third parties, who have committed factual acts, claim to have any right to the property, the lessee has to call the lessor in guarantee, and if he wishes so, the lessor can exonerated, if he names the lessor.45 In contrast to the lessor, the lender is not obliged to guarantee the borrower for legal disturbances by third parties. The borrower that is disturbed 44 45

Article 1726 C.C. Article 1727 C.C.

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by third parties will have to act himself to defend his possession. However, it is accepted that he can act in this respect in the name of the lender and file the claims which are at the service of the lender: he can as such revindicate the loaned property from a third party.46 (ii)

The relationship with third parties

The lessee / borrower also has the possibility to claim compensation for damages he has suffered if his peaceful use of the property, the object of the contract of lease / loan, has been factually disturbed by third parties (extracontractual liability based on the Articles 1382 et seq. C.C.). This claim is a claim in personam. Moreover, the lessee and borrower enjoy a provisional protection of their possession on the basis of Article 2279 C.C. (cf. infra, Part III, 18). This is a protection of a real nature.

4.1.2. Property rights: usufruct and the right of use Usufruct is a real47 and temporary right to use another’s property and to enjoy it as an owner, but under the obligation to maintain the property.48 It will ultimately end by the death of the usufructor.49 Usufruct conferred on legal persons lasts at most for 30 years.50 Usufruct can be conferred by law, by the will of persons (will or contract)51 and by prescription.52 Usufruct of movables is protected by the following actions: (a) the action in recognition of usufruct – with this action the usufructor will demand others to recognize his usufruct; it is, in fact, the revindication of the usufruct. (b) the action in repartition of the fruits. the action based on Article 1382 et seq. C.C. in defence against factual disturbances by third persons.53

46 47

48

49 50 51 52

B. TILLEMAN and A. VERBEKE, o.c., p. 213, n° 780. Usufruct of a movable is a movable real right; usufruct of an immovable is an immovable real right (Article 526 C.C.). Article 578 C.C; R. DEKKERS and E. DIRIX, Handboek burgerlijkrecht, II, Zakenrecht, zekerheden, verjaring, Antwerp, Intersentia, 2005, n° 451, p. 181. Comp. J. HANSENNE, Les biens, II, n° 997, p. 1019. Article 617 C.C. Article 619 C.C.; R. DEKKERS and E. DIRIX, o.c., n° 594, p. 235-236. Article 579 C.C. R. DEKKERS and E. DIRIX, o.c., n° 463, p. 186.

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215

The “right of use” is also a real right on the basis of which the holder can use another’s property and collect the fruits for his own needs and those of his relatives.54 It differs from usufruct in that the usufructor has the right to rent the object of his usufruct and to enjoy the rent; the user only has the right to personally use the object of his right. The actions protecting the right of use are mutatis mutandis, the same as those protecting usufruct. 53

4.2.

The right to hold movables

4.2.1. Obligatory rights: the contract of deposit The contract of deposit is a real contract that only comes into existence by the transmission of the property.55 The rights created by this contract are obligatory rights. The depositary has the obligation to preserve the property, he has no right to use the property, unless the depositor has explicitly or implicitly given him that right. In the case that the depositary has been given a right to use the property, it is difficult to distinguish deposit from rent and loan.56 The object of the contract, the preservation of the property, implies that the depositary has not only the right to hold the property that forms the object of the contract, he has the obligation to guard it. He has however only a provisional protection of his possession on the basis of Article 2279 C.C. (cf. infra, Part III, 18).

4.2.2. Property rights: pledge Pledge is a real contract by which a debtor transfers property to his creditor to secure the payment of his debt (Article 2071 C.C.). A distinction is made between civil pledge (which secures a civil debt) and commercial pledge (which secures a commercial debt). As pledge is a contract, it gives rise to obligatory rights. However, pledge also gives rise to property rights.57 The pledgee possesses a property right of possession (protected by Article 2279 applied mutatis mutandis).58 It confers 53 54 55 56 57 58

Comp. R. DEKKERS and E. DIRIX, o.c., n° 539, p. 214-215 Comp. Article 630 C.C. Article 1919 C.C. B. TILLEMAN and A. VERBEKE, o.c., n° 971, p. 279. R. DEKKERS and E. DIRIX, o.c., n° 897, p. 369. R. DEKKERS and E. DIRIX, o.c., n° 931, p. 384.

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on the pledge-holding creditor a privilege (Article 2073 C.C. – Article 20, 3° Mortgage Act); at least if the main debt is a civil debt that surmounts 375 Euros and the pledge is formalized in an authenticated or registered document (Article 2074 C.C. – Article 2084 C.C., Article 11 Law on Commercial pledge).

(a)

Civil pledge

The pledge-holding creditor has the obligation to preserve and to return the property. In his relation to the debtor, the pledge-holding creditor is a mere detentor. In his relation to third parties, he is the possessor of a property right, the right of pledge. The pledge-holding creditor who has legally acquired his pledge and who is in good faith, is protected by Article 2279 C.C. for the time of the pledge.59 He may not use the property (Article 2079 C.C.) and as a rule certainly not sell or pledge it, not even if the debtor fails to pay his debt, unless he first receives permission of the court. Clauses that allow the pledge holding-creditor to sell the good without judicial permission are void. However, according to certain scholars, parties can, once the debt has become actionable, agree to transfer the pledged property to the pledge-holding creditor.60 Special rules exist if the pledge consists of financial instruments. If an action was pledged, the pledge-holding creditor may as a rule not receive payment of the capital. He may however receive the interests if he brings them into account on the main debt. If shares are pledged and they enjoy a right of subscription to new shares, the pledge-holding creditor may not exercise this right nor transfer it. Parties may however deviate from these rules.61 They can even stipulate that the pledged property passes to the pledge-holding creditor in case the debtor fails to pay his debt on time, at least if the rules are determined following which the transfer occurs, especially those concerning the determination of the value of the financial instruments.62 According to a certain opinion, such an agreement can only be validly made in the contract of pledge. It would not be valid if it were concluded after the debt has become actionable.63 59 60

61 62

R. DEKKERS and E. DIRIX, o.c., n° 916, p. 378-379. R. DEKKERS and E. DIRIX, o.c., n° 929, p. 383; R. DE CORTE and E. DIRIX, Zekerheidsrechten, in Beginselen van Belgisch Privaatrecht, Antwerp, Story-Scientia, 1999, n° 456, p. 303. R. DEKKERS and E. DIRIX, o.c., n° 938, p. 386. Article 8 § 2 Law 15 December 2004 concerning financial securities, Belgian Official Gazette 1 February 2005.

4. Property and obligatory rights to hold, use or acquire

(b)63

217

Commercial pledge

Several types of commercial pledge exist: the common commercial pledge, pledge on a business, warrant, pledge on an invoice, the original deposit and the pledge of the commissionair or his creditor. The pledge-holding creditor of a common commercial pledge may not only receive the interest, but also the capital, on condition he brings it into account on the main debt (Article 3 Com. C.). Further differences between civil and commercial pledge concern the creation of the pledge, the persons able to hold the pledge, and the judge from whom permission to sell or acquire the pledged property is to be demanded.

4.3.

The right to acquire movables

4.3.1. Right of pre-emption A contract that confers on the beneficiary a right of preemption, in the sense that the owner of the property assumes an obligation to sell the property to the beneficiary if he ever decides to sell it and the beneficiary is prepared to pay the price demanded by the owner or offered by a third party, is a purely obligatory contract. It has no influence on the status of the property as far as real rights to it are concerned.

4.3.2. Option to buy A right of pre-emption differs from an option to buy. If A conveys to B an option to buy, he 1) assumes an obligation not to sell the property on which the option rests to a third party and 2) conveys to B the right to acquire such property by his own unilateral act. B only needs to exercise the option to conclude the contract of sale and to realise the transfer of the property. A new declaration of intention by the owner is not necessary, which does not however exclude the possibility of the parties to formalizing the negotium of their sale into a written document, the instrumentum of the sale signed by both parties. The classical opinion in Belgian law analyses the option as a purely obligatory right. Opinions diverge as to the content of the obligation. Ac-

63

H. SEELDRAYERS and V. SAGAERT, “De Wet financiële zekerheden”, R.W. 200405, n° 41, p. 1532-1533.

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cording to a first opinion, it concerns an obligation to do;64 according to a second opinion, it concerns an obligation to abstain in the sense that the promisor may not do anything that is incompatible with the promise; and according to a third opinion, it concerns an obligation to do (to maintain the offer) and to abstain from hindering the sale (at the moment of the execution of the option).65 In our opinion, the option is to be analysed as a power, a right of will (wilsrecht) combined with an obligation not to sell the property on which the option is given to a third party during the time for which the option is given. The right of will differs from an obligation in the respect that it gives its beneficiary the power to realise a legal effect without further intervention of the debtor, while the obligation is a right to demand the debtor give, do or abstain from doing, something.

4.3.3. Right of repurchase (a)

Generalities

A clause of repurchase in a contract of sale confers on the seller the right to repurchase the property, within a certain time, against payment of the price and the accessories (Article 1659 C.C.). If the beneficiary uses his right of repurchase, the original contract of sale is resolved. In contrast with what the phrase “right of repurchase” suggests, there is thus no second contract for re-sale. A contract of sale containing a clause of repurchase is in fact a sale under resolutive condition.66 The clause of repurchase confers on the seller not only an obligatory right against the buyer; it also confers on him a property right against third acquirers.67 The clause of repurchase is to be distinguished from a contract that confers on the seller a right of preemption in two respects. 64

65

66

67

A. KLUYSKENS, De Contracten, in Beginselen van Burgerlijk Recht, Antwerp, Standaard, 1952, n° 13, p. 18-19; Court of Appeal Liège 24 April 1986, Pas. 1986, II, 115. H. DE PAGE and A. MEINERTZHAGEN-LIMPENS, Traité élémentaire de droit civil belge, IV / 1, Brussels, Bruylant, 1997, n° 283, p. 376. H. DE PAGE and A. MEINERTZHAGEN-LIMPENS, IV, n° 378, p. 449; B. TILLEMAN and A. VERBEKE, o.c., n° 338, p. 87. On the consequences of the fulfilment of a resolutive condition, see also Part IV, 21.2. B. TILLEMAN and A. VERBEKE, Bijzondere overeenkomsten in kort bestek, n° 339, p. 87.

4. Property and obligatory rights to hold, use or acquire

219

1) The right of pre-emption only confers on the beneficiary a right to buy if the original buyer decides to sell. The beneficiary of a right of pre-emption cannot force the other party to sell if he does not want to. A clause of repurchase offers the original seller, within the limit defined in the clause, the power to resolve the sale if he (the original seller) wishes to do so. The original seller can thus impose the resolution on the original buyer, even against his will. 2) The right of preemption is also a purely obligatory right, while the nature of the right of repurchase is disputed. According to a first opinion, the beneficiary of a right of repurchase is an owner under a suspensive condition; his right has thus the nature of a property right.68 According to a second opinion, the beneficiary of a right of repurchase only has an obligatory right.69 In our opinion, the beneficiary of the right of repurchase has neither a pure right in rem, nor a purely obligatory right, but a power (a right of will) to modify the status of the property as to its ownership by a unilateral declaration, and to end the ownership of the buyer and retake it himself ex tunc, i.e. as if the contract of sale containing the clause of repurchase would never have been concluded.

(b)

Conditions

The right of repurchase has to be stipulated in the contract itself. If the parties to the original contract later agree to confer the original seller a power to re-acquire the property against repayment of the price, this agreement is to be analysed as a contract conferring the original seller an option to buy.70 The right of repurchase can only be exercised during the time stipulated in the clause of repurchase. This time may not be longer than five years (Article 1660 C.C.). If a longer term is stipulated in the contract, it will be reduced to five years. This is the case because the legislator wants to limit the time during which the original buyer and his possible successors are insecure in their ownership. The five-year period cannot be prolonged by interruption or suspension of the period of prescription. Also the courts cannot prolong the five-year period, not even by giving the original seller a period of grace.71 The execution of the right of repurchase should imply the obligation that the original seller returns to the original buyer the price and the ac68 69 70

71

B. TILLEMAN and A. VERBEKE, o.c., n° 339, p. 87. H. DE PAGE and A. MEINERTZHAGEN-LIMPENS, IV, n° 393, p. 466-467. H. DE PAGE and A. MEINERTZHAGEN-LIMPENS, IV, n° 385, p. 457-458; B. TILLEMAN and A. VERBEKE, o.c., n° 340, p. 87. H. DE PAGE and A. MEINERTZHAGEN-LIMPENS, IV, n° 378, p. 452.

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cessories.72 Exceptionally, it is to be stipulated that the original seller has to pay an additional sum and certain judicial decisions have considered this practice valid. This can be explained by the theory of autonomy of will. It is possible and legally acceptable that a buyer only wants to contract a sale containing a right of repurchase if he will receive an additional sum in case the seller exercises his right of repurchase. However, when the clause concerning the payment of an additional sum does not rest on objective grounds, or when it hides a usurious loan, the contract no longer constitutes a valid contract of sale containing a right of repurchase.73

(c)

Situation pendente conditione

While the seller enjoys the right of repurchase, the buyer is the owner of the property. He has to carry its charges and he can transfer his rights in the property; he can mortgage it and burden it with property rights.74

(d)

Execution of the right of repurchase

The original seller who enjoys a right of repurchase can, within the limits set out by the contract and the time limit set out by the law, exercise his right of repurchase by expressing his intention to do so.75 If the original buyer still possesses the property at the moment when the right of repurchase is exercised, the original seller evidently has to address his declaration of repurchase to this person (the original buyer); it is of course also from him that he has to demand the traditio (or re-ditio) of the property. If the original buyer has already transferred the property to a third person, the original seller can in conformity with Article 1664 C.C. exercise his right of repurchase against this third person, even if the right of repurchase has not been mentioned in the third person’s contract of sale.76 However, concerning movables, this rule will often be rendered a nullity by the protection Article 2279 C.C. offers to the third-party acquirer a non domino in good faith. The seller’s declaration of intention does not have to meet formal requirements to be valid. The seller should, however, be able to prove that he 72 73 74 75

76

Article 1673 C.C. H. DE PAGE and A. MEINERTZHAGEN-LIMPENS, IV, n° 378, p. 452. Article 1665 C.C.; B. TILLEMAN and A. VERBEKE, o.c., n° 343, p. 88. H. DE PAGE and A. MEINERTZHAGEN-LIMPENS, IV, n° 386, p. 459-460; B. TILLEMAN and A. VERBEKE, o.c., n° 344, p. 88. B. TILLEMAN and A. VERBEKE, o.c., n° 346, p. 88-89.

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has exercised his right of repurchase as well as the date on which he did so. He can achieve this result by having his declaration of intention serviced on the seller by bailiff.77

(e)

Situation of the parties after repurchase

As a result of the exercise of the right of repurchase, the seller retakes the property ex tunc, as if the contract of sale containing the right of repurchase were never concluded. From the moment the declaration of repurchase takes effect, the risk passes ex nunc from the original buyer to the original seller. Concerning the risk there is, thus, no retroactivity.78 The original buyer becomes the creditor of the original seller for the reimbursement of the price and the accessories.79 The original seller has to respect the contracts of rent the original buyer has concluded without fraud (Article 1673 C.C.).

4.4.

Contracts under a suspensive time limit

A major distinction is to be made between the case in which only the delivery is subject to a suspensive condition and the case in which the transfer of ownership of the property is subject to a suspensive condition. If only the delivery is subject to a suspensive condition, property passes according to the normal rules for the concerned contract.80 If the transfer of the ownership of the property is subject to a suspensive condition, ownership only passes at the moment the condition is fulfilled; this constitutes an exception to the normal rules on conditional contracts according to which the conditional rights (obligations) exist from the moment of the conclusion of the contract, but will only be due at the moment of the fulfilment of the condition.

77

H. DE PAGE and A. MEINERTZHAGEN-LIMPENS, IV, n° 387, p. 461; B. TILLEMAN and A. VERBEKE, o.c., n° 344, p. 88.

78

79 80

Article 1182 C.C.; H. DE PAGE and A. MEINERTZHAGEN-LIMPENS, IV, n° 394, p. 468. H. DE PAGE and A. MEINERTZHAGEN-LIMPENS, IV, n° 395, p. 469. W. VAN GERVEN and S. COVEMAEKER, Verbintenissenrecht, Leuven, Acco, 2001, 318.

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5.

General scope and content of the rules on transfer of movables

As far as the transfer between the parties is concerned, the rules are the same for all transfers, whatever may be the nature of their object. Movables and immovables, tangibles and intangibles are all principally subject to the rule of transfer by mere agreement between the parties (transfer solo consensu). As far as the opposability to third parties is concerned, there are, according to Belgian law, different rules for immovables, movables and receivables. – Immovables are subject to a system of registration, which is provided by Article 1 Mortgage Act of 16 December 1851.81 – Movables are subject to a consensual system between the parties, but possession has a major role in relation to third parties. This system will be elaborated in more detail in Part II, 9. – The opposability of the transfer of receivables is subject to Article 1690 et seq. C.C. These provisions have been amended by the Act of 6 June 1994. Before this Act, a basic distinction was made between the effectiveness of the agreement between the parties and the effectiveness of the agreement in relation to third parties. Between the parties, consensus was the basic idea, but the effectiveness against third parties required a notification to the debtor of the receivable or acceptance in a notarial deed by the debtor. Since this amendment, effectiveness against third parties is also ensured by the mere agreement of transfer. However, some third parties, which are expressly enumerated in Article 1690 § 2-4, are especially protected, e.g. the debtor, third parties with competing rights (other assignees, pledge-holding creditors) and creditors of the assignor. The assignment is only effective in relation to those specific third parties after notification of the assignment to the debtor. The system which will be dealt with, covers the transfer of movables, with the exclusion of the assignment of receivables. It is often alleged that the possessory protection of Article 2279 C.C. only applies to corporeal movables (cf. infra, Part III, 18). Hence, receivables, intellectual or industrial property rights, etc. would not fall under Article 2279 C.C.82 Immovables are also excluded. For instance: the manuscript of a book is subject to Article 2279 Civil Code, but not the monopoly to commercialize the manuscript.83 However, restricted property rights are dealt with in the same way and are likewise protected. For instance, the pledgee is protected in his posses81 82 83

Belgian Official Gazette 22 December 1851. J. HANSENNE, Les biens, I, n° 229. Court of Appeal Brussels 11 February 1964, Pas. 1965, II, 74.

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sion if he could believe in good faith that the pledgor was the owner of the property of the pledge. Thus, the pledgee will be in that case – possessor of the right of pledge: he has acquired non a domino, but nevertheless is entitled to appeal to Article 2279 C.C. The right of pledge as such is included in the scope of article 2279 C.C. This is true for all limited property rights. The argument that personal rights should also be included in Article 2279 C.C., as it is argued by French legal scholars,84 has not been made in Belgian legal literature so far. – detentor of the pledged property: the nature of the pledge agreement includes an obligation to make restitution of the pledged property after full payment of the guaranteed obligation. The question whether company shares fall under this provision, depends upon the nature of the shares. If the shares are registered in the register of the issuing company, the transfer of the shares and the vesting of property rights are subject to the same regime as that of receivables. Notification to the debtor is effected by declaration to the issuing company, which registers the declaration in its register.85 The system of transfer of “bearer shares” is subject to the same regime as corporeal movable property, and to the possessory protection of movable corporeal property.86 The entitlement to the shares coincides with the physical control of the shares. The rights are incorporated in the instrument. Only the detentor / possessor can exercise the rights incorporated in the shares. Also the protection of possession applies to these assets. The same applies to all negotiable instruments (bonds, obligations, warrants, etc.). However, it must be taken into account that, pursuant to company legislation, bearer shares will be eliminated from legal trade by 2015. Animals are considered, according to Belgian law, corporeal movable assets which can be the object of patrimonial transactions. However, the legislator has put some restrictions on the transferability of animals.87 For instance, it is prohibited to transfer animals by way of a gift to a minor person without the consent of the person exercising parental authority over him.88 However, animals are – even in principle movable – often immobilized by destination. 84 85 86

87

88

A. PELISSIER, Possession et meubles incorporels, Paris, Dalloz, 2001, 373 p. Article 504 Company Act. J. HANSENNE, Les biens, I, n° 229; Court of Appeal of Brussels 13 July 1953, Rev. prat. soc. 1954, 246; Com. Namur 14 July 1977, R.R.D. 1978, 615. See for more details: P. LECOCQ, V. SAGAERT and B. VANBRABANT, “La notion de biens”, in Rapports Belges au Congrès de l’Académie Internationale de Droit comparé à Utrecht, Brussels, Bruylant, 2006. Article 12 of the Act of 14 August 1986, Belgian Official Gazette 3 December 1986.

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Money is an obligatory instrument of payment. Money can never be the object of vindication out of the hands of a possessor in good faith, not even if it can be identified.89 This provision was introduced into Belgian law in 1953, in order to protect the possessor of money who has not had the possibility of refusing the money as a payment method. Even if this provision had not been introduced, the vindication of money would be extremely exceptional in legal practice given the fluidity of money, which immediately commingles and becomes unidentifiable. With regard to energy, a distinction must be made. The Belgian Cour de cassation ruled that it is possible to subtract electricity in order to occupy it privately. Hence, theft of electricity is possible.90 It tends to qualify as corporeal movable property.91 With regard to the transfer of electricity, it is most often dealt with as generic goods, which are only transferred at the moment of specification. Legal practice has elaborated the sales of an account, indicating the amount of electricity that is transferred.92 This view is founded in some international instruments. For instance, the Vienna Convention expressly excludes electricity from its scope, but this exception may be based on a misconception about the nature of electricity.93 Moreover, electricity is goods in the sense of Article 28 of the Rome Treaty.94 The new regime in the Belgian Civil Code on consumer sales expressly excludes the sale of electricity, gas and water if they are not contained in a fixed volume or quantity.95 Even if the main distinction remains the one between movables and immovables,96 there is a specific category of registered movables. These are movable objects whose transfer and vesting of property rights is subject to registration. They are for transfer purposes subject to the regime on immovables. The regime of Article 2279 C.C. is inapplicable to those assets. We can refer to Part II, 9.6 for a more detailed analysis of this category. 89

90 91

92

93

94 95 96

Article 2279, § 3 C.C. This provision applies to notes, but it is not sure that coins are subject to this provision. Cass. 23 September 1981, Rev. dr. pén. 1982, 261. A. CARETTE, Herstel van en vergoeding voor aantasting aan niet-toegeëigende milieubestanddelen, Antwerp, Intersentia, 1997, n° 7; P. LECOCQ, V. SAGAERT and B. VANBRABANT, l.c., n° 12. See on this point: R.P.D.B., Compl., IV, Bruylant, Bruxelles, 1972, v° Energie électrique et gaz, esp. n° 450. See Ph. KAHN, “Introduction générale: qu’est-ce que la vente?” R.D.A.I. 2001, n° 3 / 4, p. 241 et seq., spec. pp. 243 and 244, Rapport introductif du 50ème séminaire CDVA on the theme “Droit et pratique de la vente internationale”. See European Court of Justice, 13 March 2001, (Preussen Electra, C-379 / 98). Article 1649bis C.C., § 2, 3°. Contrary to Dutch law, where the distinction is made between registered and nonregistered assets.

Part II: Transfer of ownership directly from the owner to the transferee: “derivative” acquisition 6.

The system of transfer of movables in Belgian law

6.1.

Basic characteristics and overview97

Belgian law has, from a theoretical point of view, a uniform concept of the transfer of ownership. Ownership passes from the transferor to the transferee at one moment in time. This emerges from Article 1138 C.C.: the obligation to give (“dare”) is perfected from the moment that the parties have reached a consensus. In other words: ownership passes by the mere agreement between the parties. The obligation to give something (“dare”) normally is fulfilled from the moment that it comes into existence. Belgian law has a consensual transfer of ownership. For a more detailed analysis of this rule: infra, Part II, 9. However, article 1138 C.C. and its applications only look to the internal relationship between the transferor and the transferee. For the opposability against third parties, the taking of possession by the transferee is necessary in order “to perfect” the transfer. We refer to Part II, 9.4 for a more detailed analysis. The rule of the consensual transfer of ownership (and its mitigations) applies to all kinds of obligations. It also applies to the transfer of ownership by a unilateral promise.98 The automatic transfer is also valid in cases of succession: ownership passes by the mere death of the person from the decuius to his heirs. The latter can opt for the rejection or the acceptance of the succession, and the exercise of this option has retroactive effects. The beneficiary of a legacy also becomes automatically the owner of the object of the legacy, but if it concerns a specific legacy, he has an action in order to take possession of the legacy.

97

98

For an in depth analysis: V. SAGAERT, “Consensus versus delivery systems. Consensus about tradition?”, in W. FABER en B. LURGER (eds.), Rules for the transfer of movables. A candidate for European harmonization or national reforms?, München, Sellier, 2008, 9-46. For a more detailed analysis: cf. infra, Part II, 6.3.2.

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The transfer in Belgian law is based on a causal system. It is necessary that a valid obligation is underlying the transfer of ownership in order to effect this transfer. For details on the requirement for a valid obligation underlying a transfer of ownership, we can refer to Part II, 7. There are not, according to the majority opinion, two separate agreements independent from one another: an obligatory agreement and a real agreement. Rather, there is one single agreement, which must meet all validity requirements in order to effect the transfer of the property right. The concept of a real agreement is used in another sense, for which we can refer to Part II, 9.5.4. The consensual nature of the transfer system also includes that payment is not a requirement for the passing of property rights. (For the consensual nature of the transfer system, we can refer to section 4.) Except if parties have agreed otherwise, ownership is immediately transferred, for instance, in a sales agreement, from the moment that parties have agreed upon the object of the sale and the sales price. The moment of payment is irrelevant, unless parties have provided otherwise (see Part II, 9.7).

6.2.

General issues

We can refer to Part II, 9.2.1 a for a detailed analysis on the transfer of ownership with regard to generic goods. The role of party autonomy will also come into play in the subsequent chapters.

6.3.

Means to acquire ownership

Article 711 C.C. stipulates that ownership of property is acquired and transferred by succession, donation inter vivos or by will, and by the force of obligations. Article 712 C.C. adds that ownership is also acquired by accessio or incorporation and by prescription. A rare type of acquisition of ownership that is also recognised by the Civil Code is treasure finding (Article 716 C.C.). The right to objects thrown into the sea, objects washed ashore by the sea and plants and spices growing alongside the shores are dealt with by special laws. The same is true for lost objects (Article 717 C.C.) and for right to hunt and to fish (Article 715 C.C.). Some objects do not belong to anyone and are for general use, for example, the fish in the sea and the water in the rivers. The enjoyment thereof is regulated by police laws. Objects that have no owner belong to the State (Article 713 C.C.). Article 711 C.C. mentions the most common derivative means to ac-

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quire ownership, the means by which one person can transfer his ownership to another person. This is dealt with in Part II of this report. Articles 712 and 716 C.C. mention the most common original means to acquire property and the means by which a person can acquire ownership although it has not been transferred to him by another person. Finding objects can also be an original means to acquire ownership. Original means of acquiring ownership are dealt with in Part III of this report. The other means to acquire ownership that are dealt with in Articles 712, 715 and 717 C.C. will not be further elaborated.

6.3.1. Contracts The most common way to transfer ownership is the contract of sale: a contract by which one party, the seller, obliges himself to transfer to another property against payment of a price in money. If the price is not paid in money but consists of other property, we are dealing with a contract of barter. Property may also pass on the basis of a contract of enterprise. A contract of enterprise is a contract by which one party, the entrepreneur (contractor), undertakes to perform independently certain work or service for another person, the principal. If the entrepreneur constructs exclusively with his own materials on the grounds of the principal, the constructed property passes to the principal by way of accession. Some authors defer the passing of ownership until the moment of the acceptance of the works by the principal.99 Further, the contract of annuity has to be mentioned. This is a contract by which one party (the debtor) obliges himself to pay periodically a certain sum (annuity) to another person (the contract owner) during the life of a certain person (the annuitant), who is usually the contract owner but who can also be a third person. In exchange, the contract owner may oblige himself to transfer property to the debtor, but this is not necessary: an annuity can also be accorded by the debtor animo donandi as a gift for which the debtor receives nothing in return. It is essential to the contract of annuity that the ultimate amount of the obligation is uncertain, as it depends on the lifetime of the annuitant. Property may also pass on the basis of donations, which are considered to be contracts. The requirements for the validity of donations resemble those of other contracts, but they are more stringent.100 Donations result in an immediate and irrevocable transfer of property (Article 894 C.C.). According to Article 931 Civil Code, they are subject to formal requirements: “all acts containing an inter vivos gift shall be executed before notaries, in the ordinary 99 100

B. TILLEMAN and A. VERBEKE, o.c., n° 256, p. 911. Cf. infra, Part II, 7.1.2.

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form of contracts; and there shall remain the original of them, on pain of voidness” (free translation). However, it will emerge from the following that a custom has developed that allows the gift of movables from hand to hand, in which case the mere traditio is sufficient (cf. infra, Part II, 9.5.2). A contract of settlement (“une transaction / dading”) is a contract by which the parties terminate or prevent a conflict with mutual concessions. Only in exceptional circumstances does it transfer property, i.e. a party transfers property that is not the object of any discussion. Normally a contract of settlement has retroactive effects: it will only declare that the situation between the parties has always been as it is laid down in the contract. Ownership can also pass on the basis of marital contracts or contracts concluded in the course of a divorce by mutual consent. Finally it is to be mentioned that property may pass on the basis of contracts of game and bet. The Civil Code takes an ambiguous position as to the legal effect it confers on these contracts. It makes a distinction between, on the one hand, games that are apt to be exercised with weapons, races, horse races, races with carts, fives and other games in which dexterity and training of the body are concerned and, on the other hand, other types of games. For the first type of games, an action in payment is admitted, although the judge may defer it if he considers the demanded sum extravagant.101 For the second type of games, no action is admitted, but what is paid voluntarily cannot be re-claimed, unless the winner practised fraud, ruse or swindle.102 Case law and legal scholars even consider contracts concerning the second type of games and bets void.103 It seems to follow therefore that they cannot transfer ownership. The question then arises whether the losing party, who has paid the winner on the basis of one of these contracts and who cannot demand the price be re-paid on the basis of the law of obligations, can revindicate his property or whether this action would also be barred by the exception of game (Article 1967 C.C.).

6.3.2. Unilateral promises (a)

Principle: binding force of unilateral promises

The Belgian Civil Code does not mention the unilateral promise as a source of obligation. But, the Belgian Cour de Cassation has recognized the binding force of the unilateral promise and this view has been approved by an almost unanimous legal scholarship.104 101 102 103

Article 1966 C.C. Artt. 1965 and 1967 C.C. B. TILLEMAN and A. VERBEKE, o.c., n° 427, p. 112.

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229

Exception: the unilateral promise of a gift

A unilateral promise cannot, however, realize a donation inter vivos because Article 894 C.C. mentions explicitly the acceptance of the beneficiary as a constitutive element of such a legal act: “A donation inter vivos is an act by which the donator disposes immediately and irrevocably of property in favour of a third person who accepts it” (free translation). Article 932 C.C. adds that “[t]he donation inter vivos does not bind the donator and has no effect whatsoever until the day on which it has been accepted in explicit terms” (free translation). The acceptance can take place during the lifetime of the donator by a later authenticated act of which a record is kept; but then, it will only have effect as to the donator from the day on which the act of acceptance is served upon him” (free translation). Moreover, where the Civil Code has installed an “open” system of obligations, it has installed a closed system of gratuitous dispositions. Indeed, Article 893 C.C. stipulates that “one cannot dispose gratuitously of his property in any other way than by donation inter vivos or by will, with respect to the forms stipulated hereafter” (free translation). The possibility of realizing a donation by a unilateral promise seems therefore to be limited more strictly than the possibility of creating (other) obligations by unilateral promises, and a widespread opinion considers promises to make a gift (from hand to hand) void.105 But, certain elements allow us to question this position. At first, we have seen that the Belgian legal system accepts the validity of the gift from hand to hand, although it is not explicitly mentioned by the Civil Code. The gift from hand to hand implies an acceptance during the lifetime of the donator, but it replaces the formal acceptance by a traditio. As we have seen, the traditio is considered a means of confronting the donator with the seriousness of his act, and therefore able to replace the formal requirements. However, the necessity of a traditio has been criticised. Orders to transfer money from one account to another do not imply a real traditio. Nevertheless, our legal system is prepared to accept that such orders can realize a valid gift, although it may not be named gift from hand to hand, but rather

104

105

Cass. 9 May 1980, Arr. Cass. 1979-80, 1139 and Pas. 1980, I, 1127. For a general overview: C. CAUFFMAN, De verbintenis uit eenzijdige wilsuiting, Antwerp, Intersentia, 2005, XL + 952 p. Court of Appeal Liège 13 October 1997, J.L.M.B. 1998, 257, comment S. NUDELHOLE; H. DE PAGE and R. DEKKERS, Traité élémentaire de droit civil belge. Principes – Doctrine – Jurisprudence, VIII / 1, Les libéralités (généralités). Les donations, Brussels, Bruylant, 1957, n° 518, p. 619-620; W. PINTENS, B. VAN DER MEERSCH and K. VANWINCKELEN, Inleiding tot het familiaal vermogensrecht, Leuven, Universitaire pers, 2002, n° 1037, p. 489.

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named indirect gift. Also, informal contracts of gifts promised by phone in favour of good causes (solicitation) have become common. Moreover, it is not always easy to distinguish valid unilateral promises from unilateral promises of gifts, which leads to legal insecurity. The criterion for distinguishing both types of promises is, in fact, to be found in the cause of the unilateral promise, the motive that moved the promisor to make the promise. If this motive is an intention to give (“animus donandi”), the promise is an invalid promise of a gift. If it is any other legal reason, it is a valid promise. This distinction can be illustrated by the following two cases. The court of first instance of Nivelles declared void a women’s written promise that declared “en reconnaissance de toutes vos gentilesses je vous offre deux tableaux”.106 It did so although the offer was recognized by the Cour de Cassation as a unilateral promise and the reference to “toutes vos gentilesses” even indicated that the promise was not purely gratuitous, but rather a reward for earlier performances.107 In contrast, the Court of Appeal of Ghent found a valid unilateral promise in a written declaration of a father made during the course of a divorce procedure by which he promised to pay a sum of 100.000 francs to each of his children when they reached the age of majority.108 On a separate note, it has to be mentioned that fictitious recognitions of debt can “disguise” a donation.109 In our opinion, it would be preferable to accept the validity of a unilateral promise to make a gift: this seems to respond to a social need and to diminish legal insecurity. The protection of the promisor could be guaranteed by the validity requirements of unilateral promises.

6.3.3. Other sources of obligations (a)

Torts

Whoever causes damage to another person by an illegal or careless act is obliged to compensate the harmed party for the loss he has suffered (Article 1382 C.C.). Compensation for the loss should primarily be in natura:110 the damage should be materially repaired, which can imply that the tort-feasor 106 107

108 109

Civ. Nivelles 4 March 1993, Rev. not. b. 1994, 32. According to English law, this promise would be unenforceable because the consideration was “past” and “past consideration is no good consideration”. Court of Appeal Ghent 23 November 1993, T.G.R. 1994, 109. M. PUELINCKX-COENE, N. GEELHAND and F. BUYSSENS, “Giften 1993-1998”, T.P.R. 1999, (779), n° 86, p. 831.

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has to use his own materials to effectuate a repair of the property of the victim of the tort or that he has to restitute the property he has stolen from its owner. In the case the tort-feasor has to restitute the object he has stolen from its owner, the owner has never lost ownership of it. If the tort-feasor has to use his own materials, the property seems to pass by accessio with their incorporation into the “main object” of the tort, or at the moment they are handed over to the victim. In case of non-performance of a contract, the creditor can request an injunction to make the debtor perform. In case the debtor is liable for compensation because of non-performance in contractual cases, compensation in natura is also the primary remedy. The argumentation above concerning compensation in natura in tort cases applies equally to contractual cases.

(b)110

Unjust enrichment

The Civil Code does not mention unjustified enrichment as a source of obligation. However it is recognised by the Cour de Cassation as a source of obligation111 and even as a general principle of law.112 Unjust enrichment is a source of obligations if the following conditions are fulfilled: 1. an impoverishment of the claimant; 2. an enrichment of the defendant; 3. a connection between the impoverishment and the enrichment; 4. the absence of a cause for the impoverishment and the enrichment; and 5. the absence of other causes of action (subsidiarity).113

110

111

112

113

Cass. 26 June 1980, R.C.J.B. 1983, 173, note F. DELPEREE; Cass. 20 January 1993, Pas. 1993, I, 67, note; Cass. 21 April 1994, Arr. Cass. 1994, 392, note. Cass. 18 December 1974, R.C.J.B. 1980, 61, note M. Coipel, Arr. Cass. 1975, 460, J.T.T. 1975, 53, concl. Att.-Gen. H. LENAERTS, Pas. 1975, I, 425, R.W. 1974-75, 1827, note W. LEEN and T.S.R. 1975, 79; Cass. 9 May 1980, Arr. Cass. 1979-80, I, 1132, Pas. 1980, I, 1120, J.T. 1981, 206 and T. Aann. 1981, 146, note M. Senelle; Cass. 9 May 1980, Arr. Cass. 1979-80, I, 1139 and Pas. 1980, I, 1127; Cass. (n° C. 99.0051.N / 1) 27 May 2002, http: // www.cass.be; Cass. 19 January 2004 (n° S.03.0073.N.), http: // www.cass.be. Cass. 17 November 1983, Arr. Cass. 1983-84, 315, Pas. 1984, I, 295, R.W. 1983-84, 982, Rev. not. b. 1984, 601 and Rec. gén. enr. not. 1985, 310. R. KRUITHOF, H. BOCKEN, F. DE LY and B. DE TEMMERMAN, “Overzicht van rechtspraak (1981-1992) Verbintenissen”, T.P.R. 1994, (171), n° 320, p. 619.

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(c)

Court orders

Judicial decisions can also give rise to a transfer of property: this is e.g. the case for judgements conferring on a creditor a pledge, or adjudicating seized property to the highest bidder.

(d)

Succession law

Transfer of ownership by intestate, ab intestato succession law, takes place at the moment of the death of the decujus.114 The heirs receive immediately and by the sole effect of the law possession of the property of the estate.115

(e)

Wills

Article 895 C.C. provides that a will is an instrument by which the testator states how the whole or part of his property will be disposed at the time when he is no longer alive, but which he can always revoke. A legacy can be general, under general title or under special title. A general legacy grants a residuary claim on all the property the deceased will leave at the time of his death (Article 1003 C.C.). A legacy under general title grants the legatee a proportionate fraction of all the movable and / or immovable property of the deceased (Article 1010 C.C.). Every other legacy is a special legacy (Article 1010 paragraph 2 C.C.). When at the moment of the death of the testator, no heirs exist on whom the law confers reserved rights to his property, the general legatee, will enter automatically into possession of the property without having to ask for delivery.116 If the general legatee was installed by a holographic or international will, he has to demand delivery from the president of the Court of First Instance of the district where the succession has been opened.117 The legatee under general title has to demand delivery from the “reservative” heirs (i.e. heirs who cannot be totally disinherited, forced heirs) and, in their absence, from the general legatee and, in his absence, from the intestate heirs (Article 1011 C.C.). 114

115

116 117

Article 711 and article 718 C.C.; M. PUELINCKX-COENE, Erfrecht, Antwerp, Kluwer, 1996, n° 30, p. 52. Article 724 C.C. An exception is made for the State who inherits in the absence of other heirs and who has to demand possession. Article 1006 C.C. Article 1008 C.C.

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A special legatee receives the ownership of the property from the moment of the death of the deceased (Article 1004 C.C.), but he has to demand delivery from the “reservative” heirs and, in their absence, from the general legatee and, in his absence, from the intestate heirs (Article 1011 C.C.).

7.

Validity of the contractual / promissory obligation

7.1.

Validity requirements and defects

7.1.1. General rules Article 1108 C.C. requires for the validity of a contract: – the consent of the party who obliges itself; – its capacity to conclude contracts; – a definite object as the subject of the contract; and – a definite cause of obligation. These conditions apply mutatis mutandis to unilateral promises.118 For “real” contracts, the actual transfer of the property is additionally required. We refer for an analysis of these real contracts to Part II, 9.5.4.

(a)

Consent

The requirement of consent implies that the promisor or the parties to the contract express their intention to be bound to certain obligations. If there is a discrepancy between the actual intention of the party / parties and their expressed intentions, the party / parties will nevertheless be bound if the

118

Court of Appeal Ghent 22 December 1998, T.B.B.R. 2002, 575, comment S. DEBUSSCHERE ; C. CAUFFMAN, “De verbindende eenzijdige wilsuiting” in Bijzondere overeenkomsten, Commentaar met overzicht van rechtspraak en rechtsleer, Mechelen, Kluwer, 2005, n° 80; C. CAUFFMAN, De verbindende eenzijdige belofte, Antwerp, Intersentia, 2005, n° 751, p. 483, fn. 2395; E. DIRIX and A. VAN OEVELEN, “Kroniek van het verbintenissenrecht (1981-1984)”, R.W. 1985-86, n° 3, c. 4; W. VAN GERVEN, Algemeen deel, p. 294, n° 294; W. VAN GERVEN and S. COVEMAEKER, Verbintenissenrecht, Leuven, Acco, 2001, 167; P. WÉRY, “Les vices de consentement et l’acte juridique unilatéral”, (comment under Com. Mons 8 July 2003), T.B.B.R. 2004, p. 214, n° 1.

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promisee or counterparty could reasonably believe that the promisor, the other party, expressed his intention to be bound (legitimate expectation).119 The consent should be free of defects: error, fraud, force, (qualified) inequality between the rights and obligations of the parties. Mistake only constitutes a defect of consent when it concerns the substance of the object of the contract, or if and only if the contract or promise is made intuitu personae, when it concerns the person of the promisee or counter party.120 The substance of the object of the contract is every element that has influenced a person determinately to conclude the contract or make the promise, in such a way that the contract or promise would not have come into existence without this element.121 To constitute a defect-of-consent mistake for contracts and unilateral promises, it is necessary that the counter party was aware of or should have been aware of the determinant nature a party accorded to the element concerning which he was in error.122 Furthermore, the mistake is only taken into account if a reasonable person placed in the same circumstances would have made the same mistake.123 Deceit is a defect of consent if one of the parties made use of manoeuvres without which the other party would not have concluded the contract.124 Manoeuvres can consist of fraudulent positive acts, but also of fraudulent silence.125 Silence of a party is fraudulent if he was under an obligation to inform, but consciously or intentionally did not comply with this obligation.126 Informational obligations can result from the law, from usages, from the type of contract or from special circumstances concern-

119

120 121

122

123

124 125

126

C. CAUFFMAN, “De verbindende eenzijdige wilsuiting” in Bijzondere overeenkomsten, Commentaar met overzicht van rechtspraak en rechtsleer, n° 83 with references. Article 1110 C.C. Cass. 27 October 1995, Arr. Cass. 1995, 920, Pas. 1995, R.W. 1996-97, 298 and J.T. 1996, 61; Cass. 3 March 1967, Arr. Cass. 1967, 829 and Pas. 1967, 811. C. CAUFFMAN, “De verbindende eenzijdige wilsuiting” in Bijzondere overeenkomsten, Commentaar met overzicht van rechtspraak en rechtsleer, n° 88. Cass. 28 June 1966, 664, Pas. 1966, 714 and J.L.M.B. 1997, 12; Cass. 20 April 1978, Arr. Cass. 1978, 960 and Pas. 1978, 950; Cass. 10 April 1975, Arr. Cass. 1975, 785 and R.C.J.B. 1978, 198, note M. COIPEL; Cass. 6 January 1944, Arr. Cass. 1944, 66 and Pas. 1944, 133, note R.H. Article 1116 C.C. Cass. 8 June 1978, Pas. 1978, 1156, R.W. 1978-79, 1777 and R.C.J.B. 525, comment J.P. MASSON; Cass. 21 April 1988, T.B.H. 1991, 203, comment C. JASSOGNE; Cass. 16 September 1999, Arr. Cass. 1999, 1116, Pas. 1999, 1160, R.W. 2001-02, 414, T.B.B.R. 2000, 688 and A.J.T. 2000-01, 787, comment W. DE BONDT. S. STIJNS, Leerboek verbintenissenrecht, Bruges, Die Keure, 2005, n° 110, p. 84.

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ing the parties, for instance the professional knowledge of a party or the legitimate expectations provoked by the other party.127 The Civil Code only mentions deceit committed by the other party as a grounds for voidness. The question arises how this condition is to be applied to unilateral promises. Concerning unilateral promises, the majority of legal scholars accept that deceit is a cause of voidness without regard to the person from whom it emanates.128 Whoever wants to invoke deceit as a defect of consent, has to prove that the manoeuvres have been used to provoke the mistake of the other party to obtain his consent and to benefit from it.129 According to the text of Article 1116 C.C., deceit will only be the cause of voidness if it has been determinant in the sense that the other party would not have given his consent without the deceit. This type of deceit is called main deceit. Manoeuvres that only cause the deceived party to contract under harsher conditions lead only to incidental deceit, which can only be remedied as a pre-contractual fault leading to an obligation to pay damages. However, damages need primarily to be paid in natura and compensation in natura will in this case consist in the voidness of the contract.130 The distinction between main and incidental fraud thus loses much of its relevance and is criticised in legal scholarship.131 Violence or force consists in the use of physical or moral violence, at least in the threat of it towards the person, the honour or the estate of the other party, his spouse or his blood relatives in downward or upward line.132 To constitute a defect of consent, violence has to provoke an immediate

127 128

129 130 131

132

S. STIJNS, o.c., n° 110, p. 84. H. DE PAGE, I, 1962, n° 52, p. 69-70; C. GOUX, “L’erreur, le dol et la lésion qualifiée: analyse et comparaisons”, T.B.B.R. 2000, p. 22, n° 15; R. KRUITHOF, H. BOCKEN, F. DE LY and B. DE TEMMERMAN, “Overzicht van rechtspraak (19811992) Verbintenissen”, T.P.R. 1994, n° 127, p. 353; F. LAURENT, Principes de droit civil, XV, Brussels, Bruylant, 1878, n° 529, p. 607; A. VAN OEVELEN, “Afstand van recht en rechtsverwerking in het individuele arbeidsovereenkomstenrecht” in M. RIGAUX (ed.), Actuele problemen van het arbeidsrecht 4, Antwerp, Maklu, p. 38, n° 34. For a more detailed analysis, see C. CAUFFMAN, “De verbindende eenzijdige wilsuiting” in Bijzondere overeenkomsten, Commentaar met overzicht van rechtspraak en rechtsleer n° 89 with references. S. STIJNS, o.c., n° 112, p. 85. S. STIJNS, o.c., n° 113, p. 86. See for instance R. KRUITHOF, H. BOCKEN, F. DE LY and B. DE TEMMERMAN, “Overzicht van rechtspraak (1981-1992) Verbintenissen”, T.P.R. 1994, n° 126, p. 351. Article 1112-1113 C.C.

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fear for a considerable harm,133 it has to be determinant for the conclusion of the contract and it should be illegal and illegitimate.134 Inequality between the rights and obligations of the parties only constitutes a defect of consent in the cases foreseen by the law. For the transfer of movables are relevant: – A person receives less than three-fourths of what he should receive in a repartition (Article 887 and 1079 C.C.); – Concerning legal acts by minors, one takes into account the inequality between the performances promised by the minor and his estate or as an inequality between the performances promised and received by the minor (Article 1305 et seq. C.C.). The limited protection the Belgian Civil Code provides against inequality between the obligations of the parties in mutual contracts was considered insufficient by the Belgian Courts and scholars, who developed the theory of the qualified inequality between the obligations of the parties. This theory applies when the following cumulative conditions are fulfilled: – there is a serious inequality between the obligations of the parties; – one of the parties abused the circumstances of physical, moral, intellectual or economical inferiority of the other party or his own superiority; and – without the abuse of circumstances one of the parties would not have entered into the contract or would only have entered into it under less harsh conditions.135

(b)

Capacity

According to Article 1123 C.C. anyone can conclude contracts unless he is declared incapable thereto by the law. A distinction should be made between the incapacity to possess rights and the incapacity to exercise rights. Every natural person is in principle capable of possessing rights and exercising these personally and independently. Legal persons have in principle the same rights as natural persons except for the statutory limitations provided for certain legal persons and for the rights and duties incompatible with the nature of a legal person (for instance the right to recognize a child). To exercise their rights, legal persons have to be represented by natural persons, in particular by their organs installed by law and by their articles of association. 133 134 135

Article 1112 C.C.; S. STIJNS, o.c., n° 117, p. 87. S. STIJNS, o.c., n° 116 et seq., p. 87 et seq. S. STIJNS, o.c., n° 124 et seq., p. 91 et seq.

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The incapacity imposed by law can be general or partial. Generally incapable are minors (younger than 18) and certain mentally impaired persons. Other types of mentally impaired persons and legally incapable convicts are only partially incapable. A person who is not declared incapable by law cannot oblige himself by contract or unilateral promise to incapacity. However, one can deny oneself, for a limited time, the right to perform a certain legal act or to entrust a part of his estate exclusively to another person.136 The most important category of incapable persons is minors. Their incapacity is general, which implies that it concerns in principle all kinds of legal acts and legal actions. However, the law and legal custom accept certain exceptions, like the capacity of the minor to open a saving account in his own name. The incapacity of the minor is in principle complete, which indicates that the minor cannot act personally but has to be represented. However, it is accepted that there are exceptions whereby the minor can perform certain acts personally, albeit not completely independently. He is then protected by several techniques such as assistance, consent of the persons exercising authority over him (e.g. for the conclusion of a labour contract), and by the possible opposition of those persons.137

(c)

Object

The object is the concrete legal effect the party / parties want(s) to create, i.e. the whole of obligations parties want to create, modify, transfer or extinguish. The object of the legal act should in fact be distinguished from the object of the obligation, which is the promise to do, give or abstain from something. The obligation to give has an object in the third sense of the term ‘object’. However, these distinctions are not always clearly made. Even Article 1126 C.C. does not use clear terminology, as it mentions the object of the contract where, in fact, it means the object of the obligation.138 The object that should (be able to) exist and be definite or definable according to Articles 1108 and 1120 C.C. is the object of the obligation, the promised act.139

136 137 138 139

S. STIJNS, o.c., n° 128, p. 94. S. STIJNS, o.c., n° 129, p. 95. S. STIJNS, o.c., n° 131, p. 96. Cass. 8 April 1999, Arr. Cass. 1999-2000, 475, Pas. 1999, 487, R.W. 2001-02, 596 and T.B.H. 1999, 855, note I. CLAEYS; Cass. 14 September 2000, Arr. Cass. 2000, 1365, with concl. Att.-Gen. HENKES, Pas. 2000, 1339, 855.

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Only property that is in commerce can be the object of a promised act (Article 1128 C.C.). Not in commerce is, for instance, property of the public domain, for public use (e.g. museum pieces), personality right.140 The Civil Code also provides the possibility for the parties to leave the determination of the object to a third person; the decision of the third party is called a binding third-party decision (bindende derdenbeslissing).141 The majority of legal scholars also accepts the possibility of giving a party the power to determine the object of the obligation (excesses can be remedied by the theory of abuse of rights).142

(d)

Cause

The cause is the determinant motive for a certain legal act; it can include the object of the obligation of the other party or the animus donandi.143 The validity of the obligation requires an existing and legitimate cause.144 A legal act will not have an existing cause if it is based on a presumption or a legal relation that later appears not to be in conformity with reality, or to be inexistent or annulled. The legal act was then based on a wrong determinant cause.145 The cause will be illegitimate if the determinant motives of one of the parties infringe rules of public order or of mandatory law.146

7.1.2. Special rules for gifts, including wills (a)

Sanity of mind

The first requirement for the validity of a donation or of a will is, as is true for other contracts, consent. With respect to donations and wills, which are unilateral acts, the Civil Code specifies that the donator has to be “sane 140 141

142 143

144 145 146

S. STIJNS, o.c., n° 133, p. 96-97. S. STIJNS, o.c., n° 134, p. 97. For the contract of sale, see article 1592 C.C. concerning the possibility to have a third person determine the price. S. STIJNS, o.c., n° 135, p. 98-99. Cass. 16 November 1989, Arr. Cass. 1989-90, 371, note, Bull. 1990, 331, comment, Ann. dr. Liège 1990, 334, note P. DELNOY, J.L.M.B. 1990, 1190, J.T. 1991, 211, Pas. 1990, I, 331, note, R.C.J.B. 1993, 73, note S. NUDELHOLE, R.W. 1989-90, 1259, Rec. gén. enr. not. 1991, 248, Rev. not. b. 1990, 240, comment and T.B.B.R. 1990, 294, note L. RAUCENT. Article 1108 C.C.; Article 1131 and 1133 C.C. Comp. S. STIJNS, o.c., n° 145, p. 104-105. S. STIJNS, o.c., n° 149, p. 108.

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of mind”, which not only refers to his mental condition, but also to his physical condition. If the donator is considered to be insane of mind, his donation is void, even if his consent is not completely absent or if one of the defects of consent mentioned in Article 1109 C.C. is present.147 This theory of strengthened consent for gifts has been criticised in the literature. According to its critics, one cannot speak of a strengthened consent: at most one could accept stronger judicial control over the presence of consent.148 Insanity of mind can be proven by all means of law, including testimonies and presumptions. Proof of insanity of mind can follow from the content or the formal aspects of the legal act. However, as such, this will usually not be considered sufficient. It will have to be completed, for instance, with testimonies and medical reports.149

(b)

Defects of consent

The defect of consent that is most commonly invoked in cases concerning gifts is deceit, which here is distinguished from the “common deceit” treated above in the section concerning contracts and unilateral promises.150 In the matter of gifts, deceit is a cause of voidness even if it does not emanate from the counter party. Deceit also covers “captatie en suggestie”, i.e. the creation of an artificial climate by third parties in order to make a party dispose of property in their favour.151 According to the main position in present Belgian law, one only deals with “captatie en suggestie” if the dispositor was influenced by trickery, fraudulent acts or lies. Exaggerated flattery or calculated helpfulness does not suffice to achieve the voiding of the gift.152

147

148

149

150

151

152

M. PUELINCKX-COENE, N. GEELHAND and F. BUYSSENS, “Giften 1993-1998”, T.P.R. 1999, n° 4, p. 787; H. DE PAGE, VIII / 1, n° 82, p. 127 et seq. F. SWENNEN, “Het misverstand van de “theorie van de versterkte toestemming” bij giften”, A.J.T. 1998-99, 569 et seq. M. PUELINCKX-COENE, N. GEELHAND and F. BUYSSENS, o.c., T.P.R. 1999, n° 6 et seq., p. 788 et seq. See M. PUELINCKX-COENE, N. GEELHAND and F. BUYSSENS, o.c., T.P.R. 1999, n° 25, p. 796. M. PUELINCKX-COENE, N. GEELHAND and F. BUYSSENS, o.c., T.P.R. 1999, n° 25, p. 796. M. PUELINCKX-COENE, N. GEELHAND and F. BUYSSENS, o.c., T.P.R. 1999, n° 26 et seq., p. 796 et seq.

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(c)

Capacity

According to Article 902 C.C., every person is in principle capable of disposing and receiving by donation or by will, unless the law declares him incapable thereof. Concerning donations, the legal capacity and capacity to act must exist at the moment of the offer and at the moment of the acceptance of the donation. Concerning wills, the legal capacity and capacity to act must only exist at the moment the will is made. At the moment of death he must only have the capacity to leave a will, he need no longer be able to make a will.153 The beneficiary of a donation must have legal capacity to receive at the moment of the offer, and at the moment of acceptance and communication thereof.154 Concerning legacies, legal capacity to receive must exist at the moment of the death of the testator. For, it is at that moment that the rights of the beneficiary come into existence. However, if a special legal incapacity to receive rests on the beneficiary, the beneficiary has to be capable of receiving at both the moment the will is made and at the moment of the death of the testator.155 Minors are not capable of receiving donations made to them. If one of the parents is still alive, he or she can accept the donation (Article 376 C.C). This rule is also applied to legacies. If the minor no longer has parents, the donation or legacy under special title needs in principle to be accepted by the guardian with authorisation of the Justice of the Peace (Article 410, § 1, 6° and Article 935 C.C.). A minor that has been “deguardianed” (i.e. relieved from parental powers, but given a curator whose assistance is required for certain legal acts) can accept a donation with assistance of his curator. However, all the blood relatives of the minor can also accept the donation for the minor (Article 935 C.C.). Article 907 C.C. forbids a minor, even if he has reached the age of 16 years, to dispose in favour of his guardian. Even if he has reached majority no disposition in favour of his previous guardian is possible as long as the closing account concerning the guardianship is not made and settled. Medical doctors are incapable of receiving if they have treated the person during the illness from which he has died and when the gift in their favour is made during that illness. 153

154

155

M. PUELINCKX-COENE, N. GEELHAND and F. BUYSSENS, o.c., T.P.R. 1999, n° 31, p. 800. M. PUELINCKX-COENE, N. GEELHAND and F. BUYSSENS, o.c., T.P.R. 1999, n° 32, p. 800. M. PUELINCKX-COENE, N. GEELHAND and F. BUYSSENS, o.c., T.P.R. 1999, n° 32, p. 800.

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The relative incapacities to receive cannot be set aside by making a gift to the parents, descendents or spouse of the relatively incapable person. These persons are presumed juris et de jure to be only an intermediary for the relatively incapable person (Article 911 C.C.). Article 911 C.C. is to be interpreted strictly; for example, it should not be applied to the cohabitating partner of the relatively incapable person.156 Gifts of more than 100.00 Euros to legal persons with a disinterested aim need to be authorized by the Minister of Justice or his representative, unless they take the form of gifts from hand to hand.157

7.2.

Remedies

7.2.1. Absolute / relative voidness (a)

Necessity of judicial intervention

Belgian law does not know any act that can be considered not to exist except by intervention of a judge; nor does it know any voidness that can be realized by declaration of one of the parties to the legal act. The intervention of a judge is necessary to declare an act void. This is the case when the voidability results from the infringement of a rule that serves only private interests (in which case a relative voidness / voidability is concerned) as well as when it results from the infringement of a rule that serves general interests (in which case an absolute voidness / voidability is concerned).158 If a legal act is afflicted with a defect that can be remedied by relative voidness, it can only be declared void upon demand of the protected party. If it is afflicted with a defect that can be remedied by absolute voidness, it can be declared void upon demand of any person that has an interest in its voidness; the court before which a conflict with regard to the afflicted legal act is brought, can also invoke absolute voidness.159 Both kinds of voidness remedy defects existing at the moment the legal act comes into existence.

(b)

Causes of absolute / relative voidness

The following defects lead to relative voidness: 156

157 158 159

M. PUELINCKX-COENE, N. GEELHAND and F. BUYSSENS, o.c., T.P.R. 1999, n° 51, p. 812; H. DE PAGE, VIII / 1, n° 230, B, p. 308. Article 16 Law 27 June 1921 as modified. S. STIJNS, o.c., n° 176, p. 127. S. STIJNS, o.c., n° 50, p. 39-40 and n° 178, p. 128.

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– absence of consent, cause, object; – defects of consent – mistake, deceit, force, (qualified) inequality of the rights and duties of the parties; – incapacity of the promisor or of one of the contracting parties; – an object that infringes rules of mandatory law that do not concern public policy or good morals, but which serve only private interests; or – a cause that infringes rules of mandatory law, that does not concern public order or good morals, but that serves only private interests.160 The following defects lead to absolute voidness: – an object that infringes rules concerning public order or good morals; or – a cause that infringes rules concerning public order or good morals.161 Concerning the remedy for incapacity of minor promisors or contracting parties, some clarifications have to be made. A distinction ought to be made between the situation in which the minor has and has not reached the age of majority. If the minor has not yet reached this age, the judge before whom an action in voidness is brought in the name of the minor (or by the minor himself after majority) must declare the legal act null and void. If the minor has reached the age of majority, a further distinction is to be made. The judge before whom an action in voidness is brought will have to investigate whether the problematic act is one that the minor’s representative could have made without special formalities (e.g. sale of a movable) or whether it concerns an act that his representative could not have made without special formalities or could not have made at all. If it concerns an act that the representative could have made without special formalities, it will only be declared null and void in case of proven inequality between the rights and obligations of the parties. If it concerns an act that the minor’s representative could not have made without special formalities or could not have made at all, it will be declared null and void without regard for any inequality between the rights and obligations of the parties.162 The sanction of qualified inequality between the rights and obligations of the parties is disputed. At present, the main opinion considers the qualified inequality an application of the culpa in contrahendo, which leads to extra-contractual liability.163

160 161 162 163

S. STIJNS, o.c., n° 50, p. 39. S. STIJNS, o.c., n° 50, p. 39. S. STIJNS, o.c., n° 129, p. 95. Antwerp 21 January 1986, R.W. 1986-87, 1488, comment D. DELI; E. DIRIX and A. VAN OEVELEN, “Kroniek van het verbintenissenrecht (1985-1992)”, R.W. 1992-

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243

Consequences of absolute / relative voidness

Absolute voidness as well as relative voidness leads in principle to the annulment of the legal act ex nunc; the legal act is considered never to have existed.164 A possible transfer of property is also considered to have never been realized. However, the rules of third-party acquirers a non domino of movables are protected by Article 2279 C.C. As the declaration of voidness normally leads to the annulment of the act ex tunc, the arguments of voidness lead to a black or white, all or nothing, solution. This effect of voidness has been strongly criticised. At present, the majority of case law and literature accepts that the judge can adapt the annulment to the circumstances of the case.165 The adaptation of annulment can consist in declaring only certain clauses of a contract null (partial annulment), a reduction of the rights and obligations of the parties,166 conversion,167 or limitation of duties of restitution.168 Also there is the possibility of complementing or replacing annulment by an action in damages, dealt with in the next paragraph.

7.2.2. Damages Damages can be awarded as a complementary remedy to annulment. This possibility exists if a pre-contractual fault has been committed and the resulting harm is not entirely compensated by the annulment of the contract.169 Damages can also be awarded as the only remedy for a pre-contractual fault that does not lead to voidness, but has caused harm.170 If a defect in the constitution of a judicial act can be remedied by relative voidness, the protected person can chose not to assert the voidness, but claim damages, at least if the defect is caused by a fault of the other party and caused harm to him. Damages can thus replace annulment.171

164 165

166 167

168 169 170 171

93, n° 23, p. 1219; S. STIJNS, D. VAN GERVEN and P. WERY, “Chronique de jurisprudence. Les obligations: les sources (1985-1995)”, J.T. 1996, n° 65, p. 713. S. STIJNS, o.c., n° 174, p. 127. S. STIJNS, o.c., n° 179, p. 129; W. VAN GERVEN and S. COVEMAEKER, Verbintenissenrecht, Leuven, Acco, 2001, 91. S. STIJNS, o.c., n° 184 et seq., p. 133 et seq. S. STIJNS, o.c., n° 186, p. 134. Although the Cour de Cassation does not easily accept this type of adaptation of nullity, Cass. 23 March 2006, http: // www.cass.be. S. STIJNS, o.c., n° 188 et seq., p. 135 et seq. S. STIJNS, o.c., n° 181, p. 131. S. STIJNS, o.c., n° 181, p. 131. S. STIJNS, o.c., n° 181, p. 131.

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8.

Requirements for ownership

8.1.

Principle

The rule Nemo plus iuris transferre potest quam ipse habet is recognized as basic in Belgian law. It implies a.o. that a person who only has a conditional property right, can only transfer a conditional property right. However, the impact of the nemo plus-rule is limited in various ways in matters of movables, especially by Article 2279 C.C. and by the rules of (direct and indirect) representation.

8.2.

Exceptions

8.2.1. Article 2279 C.C. Article 2279 C.C. enables a third party in good faith to acquire property received a non domino, from a person who is not its owner. These rules are dealt with in detail in Part III, 18.

8.2.2. Representation According to the traditional definition, representation refers to the situation in which a person, the agent or other intermediary, acts (in the name and) on behalf of another person, the principal, with the effect that the legal consequences arise directly and exclusively for the principal.172 However, a few authors define representation as a legal technique that enables a person, the principal, to confer on another person, the intermediary, the power to accomplish legal acts on his behalf.173 Representation is called direct if the intermediary has the power to act not only on behalf of, but also in the name of the principal; it is called indirect if the intermediary has the power to act in his own name, but on behalf of the principal. By means of direct representation, as well as by means of indirect representation, the principal can confer on the intermediary the power to dispose of his property.

172

173

L. CORNELIS, Algemene theorie van de verbintenis, Antwerp, Intersentia, 2000, n° 29, p. 40; P. WERY, Le mandat, in Répertoire notarial, Brussels, Larcier, 2000, n° 10, p. 66. For instance K. BROECKX, “Vertegenwoordiging in rechte en naamlening in het geding”, R.W. 1994-1995, 248 et seq.

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In the case of direct representation, all the legal consequences (obligatory and property rights) of the legal act accomplished by the intermediary arise in the relationship between the third party and the principal. The principal and the third party are the parties to the legal act accomplished by the intermediary. The intermediary remains outside the contractual relationship arising out of the agreement, and does not become owner of the property, which would be acquired by the legal act he accomplished. The intermediary only serves to accomplish the act; he is not involved in its legal consequences, except when he commits wrongful acts, causing loss to the third party, for instance when he has mislead the third party concerning his powers of authority.174 In this case he will be liable on the basis of tort law.175 In the case of indirect representation, the obligatory consequences of the act accomplished by the intermediary arise in the relationship between the intermediary and the third person. The legal act accomplished by the intermediary does not give rise to obligations in the relationship between the principal and the third party. However, the property rights transferred by (or to) the intermediary pass directly from the estate of the principal to that of the third party (and vice versa), at least as long as the property transferred is not mixed with the property of the intermediary.176 This rule is derived from Article 103 Bankruptcy Act, which confers on the principal a right of revindication in case of the insolvency of the intermediary (commissionaire). We refer for a further analysis of the rules on indirect representation to infra, Part II, 12. If the intermediary acts without power of representation, or when he exceeds his powers of representation, the starting point is that neither the principal nor the intermediary is bound by the act of the intermediary.177 174

175 176

177

He can of course incur contractual liability, when he has additionally committed himself towards the third person, or when he has committed himself to the principal for example to guarantee the solvency of the third person, but these commitments are no consequence of the power of representation (Article 1997 C.C.; I. SAMOY, “Vertegenwoordiging” in Bijzondere overeenkomsten. Commentaar met overzicht van rechtspraak en rechtsleer, Mechelen, Kluwer, 2004, n° 29. I. SAMOY, “Vertegenwoordiging” in Bijzondere overeenkomsten, n° 32. E. DIRIX, “De rechtsverhouding tussen principaal, commissionair en derde” in E. DIRIX, W. PINTENS, P. SENAEVE and S. STIJNS (eds.), Liber Amicorum Jacques Herbots, Antwerp, Kluwer, 2002, (97), n° 4, p. 100 and n° 10, p. 106; I. SAMOY, “Vertegenwoordiging”, in Bijzondere overeenkomsten, n° 32. P.-A. FORIERS, “Le droit commun des intermédiairs commerciaux: courtiers, commissionnaires, agents” in B. GLANSDORFF (ed.), Les intermédiaires commerciaux, Brussels, Editions du Jeune Barreau de Bruxelles, 1990, n° 68, p. 77-78; I. SAMOY, “Vertegenwoordiging”, in Bijzondere overeenkomsten, n° 33; P. WERY, Le mandat, n° 203, p. 241 and n° 213, p. 251.

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The principal is not bound, because he is not represented and did not consent to the act. The intermediary, who acted in the name and on behalf of a third party, is not bound because he did not express the intention to be personally bound. However, if the intermediary has misled the third party about the extent of his powers or if he has not given the third party sufficient information about the extent of his powers, he will be considered to have committed a wrongful act, which can give rise to extra contractual liability against the third party (Article 1997 C.C.).178 To the rule that neither the principal nor the intermediary is bound by the act of the intermediary exceeding his powers, three exceptions exist. First, the principal has the possibility to ratify the act of the intermediary who exceeded his powers. Ratification by the principal can be expressed or silent (Article 1998 paragraph 2 C.C.). Ratification is a unilateral act by which the principal confers post factum power of representation on the intermediary.179 No formal requirements apply.180 In the relationship between the principal and the intermediary, the ratification has effect ex tunc: the act accomplished by the intermediary is considered to have been accomplished from the beginning on behalf of the principal.181 However, the ratification cannot deny the rights third parties have acquired between the moment the legal act was accomplished and the moment of the ratification.182 Second, under certain conditions Belgian law allows, by means of the theory of apparent representation, the interests of the intermediary’s counter party to prevail over those of the principal and the principal to be bound, even if he did not confer on the intermediary the power to accomplish the act. The requirements for the application of the theory of apparent representation are: 1. the creation of an apparent situation, namely the fact that the intermediary has been conferred the necessary power of representation, which does not conform to reality; 2. a justified confidence of the third party in the presence and extent of the powers of the intermediary; 3. the imputability of the appearance to the apparent principal; and 4. an act of omission of the third party in reliance on the appearance.183 178 179

180

181 182 183

H. DE PAGE and R. DEKKERS, V, 1975, n° 444, p. 440-441. I. SAMOY, “Vertegenwoordiging” in Bijzondere overeenkomsten, n° 34; P. WERY, Le mandat, n° 205, p. 243. I. SAMOY, “Vertegenwoordiging” in Bijzondere overeenkomsten, n° 32; P. WERY, Le mandat, n° 205, p. 244. H. DE PAGE and R. DEKKERS, V, 1975, n° 446, p. 443. Cass. 21 September 1987, Pas. 1988, 77. A. VAN OEVELEN, “De juridische grondslag en de toepassingsvoorwaarden van de verbondenheid van de lastgever bij een schijnmandaat”, R.CJ.B. 1991, 68-73.

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Third, negotiorum gestio is the voluntary accomplishment of a useful act in the interest of a third person. If the negotiorum gestor has accomplished an act on behalf of the third person, he is treated as his agent (Article 1372-1375 C.C.). The principal may be bound to the agent on the basis of unjustified enrichment if the appropriate conditions are fulfilled.184 Agency is currently used in real estate transactions, commercial distribution and other commercial contracts. In this context, a special situation is one in which one person may grant another person a right to dispose of his property, but retains ownership until he has received payment. This is a particularly frequent practice if the sold goods are perishable. This construction serves the interests of both parties to the original sale. The first buyer will often not be able to pay his seller before he has himself sold the goods to a third party and has received the purchase price; nonetheless, in the absence of special permission, the fact that his seller has retained a property interest forbids him to sell the goods. The first seller will find himself in a weak position if his buyer nevertheless sells the goods to a third person. Indeed, often the third party will act in good faith and will be able to invoke the protection of Article 2279 C.C. if he is sued in revindication by the first seller. The first seller has the possibility to file a contractual action against the first buyer. He will even have the possibility to start a criminal prosecution of the first buyer and file a delictual claim against him. But, as the first buyer will often be insolvent, the seller will often not receive compensation for his loss. To avoid these problems, the seller can stipulate a cession in his favour of all the obligatory rights against any third person, for instance the next buyer of the goods, that the first buyer has or will obtain. If this cession is agreed on at the time of the conclusion of the sales contract, or even later – but in any case before the sale of the goods by the buyer – the first seller will be considered to have consented to the resale by his buyer. Such an implicit consent will not be presumed if the cession is agreed on after the resale, and the first buyer has the right to prove that his seller had already consented to the resale. Mind that cession is only opposable against the third party if the cession has been communicated to him by either the first seller or by the first buyer (Article 1690 C.C.). It is strongly advised that the first seller attends to this communication.185

184 185

H. DE PAGE, V, 1975, n° 447, p. 443. Ph. COLLE and B. VAN DEN BRANDE, “Het eigendomsvoorbehoud verbintenisrechtelijk bekeken en tegenwerpelijkheid van het beding in verschillende samenloopsituaties” in B. TILLEMAN and P.-A. FORIERS (eds.), De koop, in Recht en onderneming, Bruges, Die Keure, 2002, n° 11, p. 171-172.

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9.

Consensual system

9.1.

General principle: transfer by mere consent

There is, according to Belgian law, a principle that ownership shall pass when the obligation to transfer ownership arises: this principle emerges from the combination of Articles 712 and 1138 C.C. Article 711 C.C. lists the various ways of acquisition of property rights: “Ownership of property is acquired and transmitted by succession, by gift inter vivos or will, and by the effect of obligations” (free translation). Article 1138 C.C. specifies that an obligation to deliver property is complete by the sole consent of the contracting parties. The conclusion of a lawful agreement is not only the source of contractual rights and obligations, but also has proprietary effects. It makes the creditor the owner and transfers to him the risk from the time when the thing should have been delivered, even though the handing over has not been made, unless the debtor has been given notice to deliver; in which case, the thing remains at the risk of the latter. So, Belgian law has a consensual system of transfer of property rights: property rights are transferred by the mere agreement between the parties.186 Even if the transferor keeps the physical control over the property, he is a mere detentor of the asset, and holds it for the account of the seller.187 Even if Article 1138 C.C. at first sight limits this principle to contractual obligation, it is generally accepted that it is equally applicable to other kinds of obligations. The more general principle is expressed in Article 711 C.C., which is not limited to contractual obligations. The general rule of Article 1138 C.C. is iterated in Article 1583 C.C. for sales agreements and in Article 938 C.C. for gifts: – Article 1583 C.C. provides that “it188 is complete between the parties, and ownership is acquired as of right by the buyer with respect to the seller, as soon as the property and the price have been agreed upon, although the property has not yet been delivered or the price paid” (free translation).189 By consequence, transfer of ownership belongs to the essential features of a sales agreement.190 186

187 188 189

H. DE PAGE and A. MEINERTZHAGEN-LIMPENS, IV, n° 20; J. HANSENNE, Les biens, I, n° 210; A. KLUYSKENS, Beginselen, V, n° 101; M. WAELBROECK, Le transfert de la propriété dans la vente d’objets mobiliers corporels en droit comparé, Brussels, Bruylant, 1961, p. 19, n° 6. M. WAELBROECK, o.c., p. 20, n° 6. Meaning: a sale. The original French text provides: “Elle est parfaite entre les parties, et la propriété est acquise de droit à l’acheteur à l’égard du vendeur, dès qu’on est convenu de la chose et du prix, quoique la chose n’ait pas encore été livrée ni le prix payé”.

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– Article 938 C.C. provides that “a gift, if duly accepted, will be effected by the mere consensus of the parties. Ownership of property donated will pass to the donee without another traditio being needed” (free translation).191 190

In this way, Belgian (and French) law take a total departure from the basic principles of Roman law in which the agreement in itself was insufficient to operate as a transfer of ownership.192 There are no formal requirements. The signing of a written document is not necessary for the passing of ownership, but merely to prove the transfer of ownership if the transfer involves property of which the value exceeds € 375.193 The delivery is not necessary either.194 This also results in the transfer of the risk of the asset by the mere agreement between the parties: if the asset perishes due to vis maior after the agreement but before the delivery of the asset, the creditor of the obligation will normally bear the risk (“res perit domino”). The consensual transfer entails, from the moment of the agreement, that all fruits belong to the transferee. His ownership includes the right to the fruits (“ius fruendi”). This rule is expressly stated by Article 1614 C.C. with regard to sales agreements: “The property must be delivered in the condition in which it is at the time of the sale. From that day, all the fruits belong to the purchaser” (free translation). The solution is of course different if transfer of ownership has been delayed. This gives a counter-balance to the (sometimes inequitable) rule with regard to the passing of the risk: the transferee, on the one hand, immediately bears the risk of his property, but on the other hand, is entitled to reap the fruits. The mere consensus of intentions is sufficient to accomplish the transfer of ownership. This also entails the transfer of risk from that moment on. If the sold property perishes due to vis maior, even if delivery had not been effected yet, the buyer will be obliged to fulfil the obligation to pay the price, as he has become the owner of the property (“res perit domino”).195 190 191

192

193 194 195

H. DE PAGE and A. MEINERTZHAGEN-LIMPENS, IV n° 21. The original French text provides: “La donation dûment acceptée sera parfaite par le seul consentement des parties ; et la propriété des objets donnés sera transférée au donataire, sans qu’il soit besoin d’autre tradition”. See for an analysis: V. SAGAERT, o.c., in W. FABER and B. LURGER (eds.), Rules for the transfer of movables. A candidate for European harmonization or national reforms?, München, Sellier, 2008, 9 et seq. Article 1341 C.C. J. HANSENNE, Les biens, I, n° 210. H. DE PAGE and A. MEINERTZHAGEN-LIMPENS, IV, n° 25A; M. WAELBROECK, o.c., p. 51, n° 41. Some 19th century legal scholars have refused to con-

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This general starting point does not apply if parties have contractually delayed the transfer or if the transfer is delayed due to the nature of the property (cf. Part II, 9.2). There is however another exception to this rule: if the buyer has given notice to the seller with regard to his obligation of delivery, and the property perishes afterwards, the seller will normally not be entitled to the sales price, except if he can prove that the property would also have perished if he had delivered the property according to his contractual obligations.196 In other words: notice re-transfers the risk to the seller. This is expressed by Article 1138 C.C. Parties are however free to disconnect the transfer of risk from the transfer of ownership. Contrary to the French Commercial Code, Belgian statutes do not expressly recognize this possibility, but legal scholars and case law have adopted the same position.197 Parties can thus stipulate that the risk passes at another moment than ownership. It is however a debated question whether they can stipulate that the risk passes at a moment at which ownership cannot pass, for instance: can parties agree that risk passes before the individualisation of the generic goods that are sold? Some scholars have denied such possibility,198 but the majority opinion tends to accept it.199 How can the consensual transfer system in Belgian property law be explained from a theoretical point of view? Historically, Belgium was part of France and was subject to the developments in French law preceding the introduction of the Belgian Civil Code.200 Before the Napoleonic Code, French law201 required a traditio for the transfer of movable and immovable property in both “les pays de droit coutumier” (north of France) and “les pays de droits écrit” (south of France). The latter regions had the traditio requirement since the requirement dated back to Roman law. In the former regions, customary law was prevailing but, nevertheless, the traditio requirement was upheld over there. In these regions, the transfer of ownership required a proceeding called “investiture réelle”.202

196 197 198

199

200

201

nect the transfer of ownership to the transfer of risk, (cf. F. LAURENT, Principes, XVI, n° 208-209), but this opinion has not been supported afterwards. H. DE PAGE and A. MEINERTZHAGEN-LIMPENS, IV, n° 25A, c. M. WAELBROECK, o.c., p. 53, n° 43. G. VAN HECKE, “Verhaalsrecht van schuldeisers op roerende goederen die hun schuldenaar in detentie heeft” in Jaarboek 1958-59 van de Vereniging voor de vergelijkende studie van het recht van België en Nederland, p. 53, n° 43. J. HEENEN, “Le transfert des risques et le transfert de la propriété dans les ventes de choses de genre”, R.D.I.D.C. 1954, 116; M. WAELBROECK, o.c., p. 53, n° 43. See e.g. V. SAGAERT, o.c., in W. FABER and B. LURGER (eds.), Rules for the transfer of movables. A candidate for European harmonization or national reforms?, p. 10, n° 5. Both “les pays de droit coutumiers” (north of France) and “les pays de droits écrits” (south of France).

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This traditio requirement was gradually being eroded as in many instances a true transfer of direct possession was no longer needed. Often a simple declaration that possession had been transferred replaced the actual transfer. This was called “une clause de dessaisine-saisine”, e.g. a clause in which parties contractually agreed that possession had been passed. In this way, a “tradition feinte” (fictitious transfer) was developed. The practical result of the fictitious traditio was that ownership (especially of land) passed when the contract of sale was concluded. The same practices were transposed to the transfer of immovables. With the introduction of the Civil Code, a clause creating a fictitious transfer was presumed by the legislator. The consensual transfer was dogmatically justified by PORTALIS, during the preparatory work for the Civil Code, in stating that a contract for transfer of ownership contains a certain fictitious traditio, which performs the transfer of rights.203 This widespread use of the consensual transfer demonstrates that the so-called break with the past with regard to the system of transfer was rather a continuity. With the introduction of the Civil Code, it was presumed that parties implicitly included a clause that ownership passed immediately.204 However, POTHIER – an author whose writings largely influenced the drafters of the Civil Code – still pleaded for a traditio system.205 Some authors find evidence in these developments to allege that French, and thus Belgian, law, recognizes a traditio requirement. Additional evidence is sought in Article 938 C.C., which reads as follows: “A gift, if duly accepted, will be effected by the mere consensus of the parties. Ownership of the goods donated will pass to the beneficiary without another traditio being needed”206 (free translation, emphasis added). The word “another” implies that there is already a traditio in the consensual gift, which is deemed to be executed tacitly.207 The most common explanation however is that PORTALIS did not intend to say that a transfer of possession is still needed, but only that transfer 202

202 203

204

205 206

207

L. VAN VLIET, Transfer of movables, Nijmegen, Ars Aequi Libri, 2000, 76. LOCRE, Législation civile, commerciale et criminelle, ou commentaire et complément des code Français, Brussels, Wahlen, 1836, 71. A. KLUYSKENS, Beginselen, V, n° 102; see also C. LEBON, “Non nudis pactis dominia rerum transferuntur? Kritische bemerkingen omtrent de consensualiteit van de overdracht van eigendom en de vestiging van beperkt zakelijke rechten”, T.P.R. 2004, 425-426. R.J. POTHIER, Traité du domaine de propriété, in Oeuvres de Pothier, IX, 186 et seq. Article 938: “La donation dûment acceptée sera parfaite par le seul consentement des parties; et la propriété des objets donnés sera transférée au donataire, sans qu’il soit besoin d’autre tradition”. C. BUFNOIR, Propriété et contrat, Paris, 1924, 45 et seq.

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of direct possession was not needed under the system of the Civil Code.208 This does not exclude however systematic arguments for acknowledging that there still exists a real agreement in French / Belgian law. They refer therefore to the transfer of generic goods (Part II, 9.2.1) and the retention of title (cf. infra, Part IV, 23).

9.2.

Exceptions: according to the nature of the property

9.2.1. Generic property With regard to generic property,209 the principle of consensualism cannot be completely upheld. It is a common principle of property law that property rights can only have as their object identified or identifiable assets. Property rights can never concern an abstract value. This is the so-called principle of specificity.210 This principle was formulated by the Supreme Court in 1947: a vindication claim can only be accepted if and to the extent it concerns specific property, and it cannot be exercised based on the amount due.211 As a consequence, if A sells generic goods to B, ownership will only pass after the individualisation of the goods that are transferred.212 That also results in the transfer of risk at the moment of individualisation. A normally will never be discharged of his obligation to deliver amount X of generic goods, not even if the goods that he had in mind have perished due to vis maior.213 This is the Roman law rule “genera non pereunt”. 208 209

210

211

212

213

In the same sense: L. VAN VLIET, o.c., 80. We comprehend assets which according to their nature can only be determined to their measure, number of weight, and not according to their individual characterisitics (V. SAGAERT, Zakelijke subrogatie, Antwerp, Intersentia, 2003, n° 418). G. BELTJENS, Article 567 Faill. W., p. 957, n° 29; H. JONES, “Dépôt irrégulier et abus de confiance”, Rev. not. b. 1974, p. 622, n° 14. Cass. 9 May 1947, Arr. Cass. 1947, 148, Pas. 1947, I, 193, T.B.H. 1948, 208 and Revue de la banque 1948, 282. H. DE PAGE and A. MEINERTZHAGEN-LIMPENS, IV, n° 23, 1°; J. HANSENNE, Les biens, I, n° 15; A. KLUYSKENS, Zakenrecht, in Beginselen van Burgerlijk Recht, Antwerp, Standaard, 1942, V, n° 103; Rép. not., v° Théorie générale de la vente, VII, n° 105 and 196 ; V. SAGAERT, o.c., in W. FABER en B. LURGER (eds.), Rules for the transfer of movables. A candidate for European harmonization or national reforms?, p. 19-23, n° 23-25. By contrast, this is the case for specific property: article 1302 C.C. provides that “where property certain and determined which was the object of an obligation perishes, may no longer be the subject matter of legal transactions between private

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This rule is expressly repeated in Article 1585 C.C.: “Where goods are not sold in bulk but by weight, number or measure, a sale is not complete, in that the goods sold are at the risk of the seller until they have been weighed, counted or measured; but the buyer may claim either delivery or damages, if there is occasion, in case of non-performance of the undertaking” (free translation). What does individualisation exactly mean? It seems to emerge from Article 1585 C.C. that the weighting, numbering or measuring of the sold goods is not sufficient to transfer ownership. This is the generally defended viewpoint. However, an (older) judgement of the Belgian Cour de cassation ruled in another way.214 This judgement has been severely criticized by certain legal scholars.215 Traditionally, one assumes that the individualisation must be performed in the presence of both parties or their representatives.216 However, more recently, legal scholars accept the validity of a unilateral individualisation.217 It would, according to this opinion, be sufficient that the individualisation is the expression of the irrevocable intention of the transferor to affect specified goods to the agreement. From the moment that the transferor cannot revoke the individualisation in order to appoint other goods as the object of the contract, the individualisation must be deemed to be accomplished. The fact that the transferee did not participate in that process is irrelevant.218 It emerges from the judgement of the Cour de cassation, supra, that case law adheres to this position.219 Authoritative authors defend the viewpoint that identification not only presupposes the identity of the property but also the intention of the parties to transfer the identified property. CLOQUET expresses that reasoning as follows: “L’individualisation suppose non seulement l’identité du bien, mais en

214 215

216

217 218 219

individuals, or is lost in such a way that its existence is absolutely unknown, the obligation is extinguished if the property has perished or has been lost without the fault of the debtor, and before he was under notice of default. Even where the debtor is under notice of default, if he has not assumed fortuitous events, the obligation is extinguished in the case where the thing would also have perished in the hands of the creditor if it had been delivered to him” (free translation). Cass. 3 January 1952, Pas. 1952, I, 225. J. LIMPENS, La vente, n° 1083; see M. WAELBROECK, o.c., p. 24, n° 10 and the references he cites. See the references in G. VAN HECKE, “Le transfert de propriété des choses de genre”, J.T. 1947, 49. J. LIMPENS, La vente, n° 1093-1103; M. WAELBROECK, o.c., p. 24, n° 10. M. WAELBROECK, o.c., p. 24, n° 10. Cass. 3 January 1952, Pas. 1952, I, 225.

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outre la volonté de le confier au futur failli comme corps certain à restituer”.220 This would mean that, with regard to generic goods, a separate real agreement is necessary in order to effect a transfer of property rights in those goods. However, it seems to us that this view is founded in confusion between the obligatory and the proprietary relation. It is not clear whether the individualisation creates a distinct agreement. Some authors contend that goods can be apportioned unilaterally by the seller. Others defend the view that individualisation requires an agreement between the seller and the buyer. For instance, DE PAGE defends the position that the transfer of ownership, if it has been delayed, does not deprive the sales agreement of its consensual nature. The transfer is, according to his view, automatically accomplished at a later moment due to the sales agreement.221 With regard to commercial sales agreements, the concept of traditio is prevailing gradually more. Many “commercial law” scholars argue that ownership is not transferred by the individualisation, but by the delivery of the sold goods. In other words: the individualisation of the sold goods would not be sufficient in a commercial sale to pass ownership, delivery would be necessary. It has indeed become legal practice in some domains of trade to determine contractually the moment of transfer as that of the moment of delivery.222 This conception has been largely influenced by French legal scholars.223 Most of the commercial-law-inspired Belgian scholars have adopted this view,224 but case law remains restricted in accepting such exception. It is an important fact that Belgian law is influenced by French law as far as the applicability of the possessory protection with regard to generic goods is concerned. The protection of the possessor in good faith of generic goods is, according to French case law, not applicable to unidentified generic goods: the French Cour de cassation ruled that “la présomption [de l’Article 2279 C.C.] ne saurait s’appliquer à des espèces non individualisés”.225 The French Supreme Court re-affirmed this judgement in 1989, in ruling that 220

221 222

223

224 225

This was first defended by J. HEENEN, Les ventes maritimes, n° 24bis. See also: A. CLOQUET, Faillite et banqueroute, Brussels, Larcier, 1985, p. 489, n° 1648; H. DE PAGE and A. MEINERTZHAGEN-LIMPENS, IV, n° 23, 1; L. FREDERICQ, Principes de droit commercial, Ghent, Feytur, 1946-1954, VIII, p. 678-679, n° 477. H. DE PAGE and A. MEINERTZHAGEN-LIMPENS, IV, n° 21B. See the determining arguments of J. VAN RYN and J. HEENEN, III, n° 674; see also H. DE PAGE and A. MEINERTZHAGEN-LIMPENS, IV, n° 21B. See F. GORE, “Le moment de transfert de propriété dans les ventes à livrer”, Rev. trim. dr. civ. 1947, p. 168, n° 18. L. FREDERICQ, Droit commercial, III, n° 1422. Cass. fr. 25 November 1929, Dalloz. Hebd. 1930, I, 3, note.

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“une action en revendication peut s’exercer sur toutes les catégories de choses, notamment sur les choses fongibles”.226 The regime of Article 2279 C.C. does not apply to generic goods which are unidentified, which means that the actual owner who has been dispossessed can claim restitution. The fact that those goods are not identified, does not exclude the vindication. Belgian law has been influenced by this French case law, and some authors adopt this French legal doctrine.227

9.2.2. Future property An agreement with regard to transfer of future property is in principle valid. This emerges from Article 1130 C.C.: “Future goods may be the object of an obligation. One may not however renounce a succession which is not open, or make any stipulation with respect to such succession, even with the consent of him whose succession is concerned. With regard to future goods, the principle of the transfer solo consensu cannot have any effect neither” (free translation). If goods are sold which do not exist at the moment of the sales agreement, transfer of ownership will only be effected at the moment of the coming into existence of these goods.228 Only from that moment on will the transferee bear the risk of the goods perishing.229 The most common case is the one where a person undertakes to accomplish certain works, and he himself provides the materials he will use. The transfer of property is, in that case, immediate at the moment that the work to which the contractor has committed himself has been accomplished. However, the risk of the goods perishing will only be transferred after their delivery. This follows from Article 1788 C.C.

9.2.3. Sale of property not (yet) owned by the transferor Article 1599 C.C. provides that “the sale of property belonging to another is void: it may give rise to damages where the buyer did not know that the 226

227 228

229

Zie Cass. fr. 7 February 1989, Bull. civ., I, n° 57 and Rev. trim. dr. civ. 1990, p. 109, n° 3, comment F. ZENATI. For a comment on this decision, see A. LAUDE, “La fongibilité”, Rev. trim. dr. com. 1995, p. 336 et seq., n° 50 et seq.; M. MALAURIE, Les restitutions, Paris, Cujas, 1992, 93. V. SAGAERT, Zakelijke subrogatie, n° 461. Civ. Antwerp 20 March 1969, Pas. 1969, 340 (sale of a ship in construction); H. DE PAGE and A. MEINERTZHAGEN-LIMPENS, IV, n° 23, 3°. M. WAELBROECK, o.c., p. 51, n° 41.

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property belonged to another” (free translation).230 This rule is not difficult to understand, as it emerges from the foregoing consideration that the transfer of ownership is a constitutive element of a sales agreement.231 As transfer of ownership is not possible if one sells another’s property, such an agreement cannot be considered a sales agreement. So, it is the combination of the agreement with the proprietary effects of the agreement that underlies this rule. The rule applies to both voluntary sales agreements and to “forced” sales agreements (for instance, sale after seizure). It applies to both immovable and immovable property.232 The voidness of the sale of goods not (yet) owned by the seller has, however, relative effects. This means that the voidness can only be argued by the buyer, and not by the seller or by a third person.233 The seller did not comply with his obligation to transfer property, so logically he is not entitled to claim the voidness of the agreement on this grounds. If the buyer does not argue the voidness of the agreement, the agreement will not be considered a sales agreement, but rather as an “unnamed agreement” or “agreement sui generis”. The buyer can sue based on the voidness of the sales agreement, even if he is in bad faith.234 According to the second sentence of Article 1599 C.C., the buyer is only deprived of the right to claim damages, but he can still claim the sales agreement is void. The sales agreement can however be ratified by the buyer, which means that he waives his right to claim voidness, or by the actual owner of the sold goods.235 The buyer in good faith is entitled to damages, even if the seller was also in good faith.236 The underlying foundations of this claim are not clear, but it is mostly defended by the argument that this is the “culpa in contrahendo”.

230

231

232 233 234

235

236

The original French text providing as follows: La vente de la chose d’autrui est nulle: elle peut donner lieu à des dommages-intérêts lorsque l’acheteur a ignoré que la chose fût à autrui. H. DE PAGE and A. MEINERTZHAGEN-LIMPENS, IV, n° 21A.; F. LAURENT, Principes, XXIV, n° 101. H. DE PAGE and A. MEINERTZHAGEN-LIMPENS, IV, n° 32, 6°. Cass. 30 January 1941, Pas. 1941, 1941, I, 24. H. DE PAGE and A. MEINERTZHAGEN-LIMPENS, IV, n° 31; F. LAURENT, Principes, XXIV, n° 123. Court of Appeal Ghent 3 December 1930, Pas. 1932, II, 56; Court of Appeal Brussels 12 June 1928, Belg. Jud. 1930, 84; H. DE PAGE and A. MEINERTZHAGENLIMPENS, IV, n° 31. Court of Appeal Brussels 22 October 1993, T.B.B.R. 1995, 46, note I. DEMUYNCK.

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9.2.4. Agreements subject to a suspensive condition If an agreement transferring ownership is concluded under a suspensive condition, it is generally acknowledged that the agreement exists but is deprived of legal effect until the condition has been fulfilled.237 Not the agreement itself, but the execution of the obligations subject to the suspensive condition is suspended.238 Most authors defend the view that ownership passes immediately, even if the condition has not been fulfilled. For instance, in the case of an enforced sale of an asset in a seizure proceeding, the asset can be adjudicated provisionally to one person, under the suspensive condition that no one else makes a better offer within a couple of weeks time. Most legal scholars argue that ownership in this example passes immediately.239 However, it would be inequitable if the transferee had to bear the risk of the goods at a moment the suspensive condition has not yet been fulfilled. Therefore, Article 1182 § 1 C.C. expressly provides that “where an obligation was contracted under a condition precedent, the goods that are the subject matter of the agreement remain at the risk of the debtor who has bound himself to deliver them only in the case of the occurrence of the condition” (free translation).

9.2.5. Transfer in execution of an alternative obligation / claim If a sales agreement contains an alternative obligation with regard to its object, the transfer of ownership is also delayed. In that case, ownership will only pass to the buyer after the competent party has made his choice.240

9.3.

Statutory exceptions to consensual transfer

There are, according to the majority opinion, no legal exceptions to the rule that ownership passes at the moment of the conclusion of the agreement. This is with the exception that parties can contractually delay the transfer 237 238 239

240

H. DE PAGE and A. MEINERTZHAGEN-LIMPENS, IV, p. 46, fn. 7. Cass. 5 June 1981, Pas. 1981, I, 1149. H. DE PAGE and A. MEINERTZHAGEN-LIMPENS, IV, p. 46, fn. 7; E. DIRIX, “Eigendomsoverdracht bij gedwongen openbare verkoop van onroerend goed”, R.W. 1985-86, 1084; C. ENGELS, Het uitvoerend beslag op onroerend goed, Antwerp, Kluwer, 1981, 256 et seq. Cass. 22 February 1972, Pas. 1972, I, p. 578, fn. 2; H. DE PAGE and A. MEINERTZHAGEN-LIMPENS, IV, n° 23, 3°.

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of ownership by way of retention of title. However, such agreement is not assumed if it has not been agreed upon expressly between the parties. The only case in which transfer is, according to some scholars, delayed until delivery without any express stipulation is the case of commercial sales agreements. There is however no explicit legal basis for this exception (if one accepts it: cf. supra, Part II, 9.2.1).

9.4.

Effect of the transfer between the parties and in relation to third parties

As stated above, ownership is transferred between the parties from the moment of the conclusion of the agreement. However, this does not mean that the transfer is also opposable against third parties by the mere consensus between the parties. Article 1138 C.C., which gives the legal basis for the consensual transfer, does indeed not concern the opposability of the transfer of ownership against third parties. In order to protect third parties (for instance the actual owner), the Belgian legislator has required some formal requirements for the opposability of the transfer against third parties. As long as these requirements have not been fulfilled, the ownership of the transferee has a “relative nature”, meaning that it only exists in relation to the transferor and not in relation to other parties acting in good faith. The relative effect of the transfer of ownership in the absence of transfer of possession has been gradually more emphasized more in legal scholarship.241 It emerges from legal scholarship that the opposability requirements have a larger scope, because of the critical observations against the general starting point. Legal scholars observe indeed why a legal system that adheres to legal security as an important value, accepts the transfer on the basis of mere consensus of intentions, without providing any means of informing third parties. Third parties can be disadvantaged by a transfer of which they could not have any knowledge. They can rely in good faith on the appearances that do not correspond with the legal reality.242 With regard to corporeal movables, this additional formality required by law is the taking of the possession in good faith by the transferee. Article 1141 C.C. expresses this third-party protection by providing that “if the property that a person has obliged to give to two different persons is a corporeal movable, the one who has first been given possession will prevail 241

242

Comp. V. SAGAERT, o.c., in W. FABER en B. LURGER (eds.), Rules for the transfer of movables. A candidate for European harmonization or national reforms?, p. 18-19, n°. 19-22. M. WAELBROECK, o.c., p. 27, n° 11.

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and will be considered the owner, even if his title is more recent, provided the requirement that his possession is in good faith” (free translation). In other words: if A sells property to B and afterwards A sells the same property to C and C takes possession, C will be considered the owner on the condition that he acted in good faith, i.e. he did not know and should not have known of any previous transfer of the same property. This provision is considered the expression of the general principle that, as long as the traditio has not been effected, ownership by the transferee is not opposable against third parties in good faith with a competing right.243 We cannot state however that the transfer is never opposable against third parties, as only some third parties can argue that the transfer is not opposable against them until the transfer of possession. Third parties without a competing right and third parties who are not acting in good faith are not entitled to claim the non-opposability of the transfer until the transfer of possession. According to a more modern view, the transfer of possession not only solves the priority conflict between the creditors of the transferor and the transferee if the transferor becomes insolvent or is the object of seizure measures. The issues arising from the insolvency of the transferor or the transferee are dealt with in more detail in Part II, 13. If the property is stolen, the same principles should apply: a thief is not a third-party possessor in good faith with a competing right, so the right to sue him should belong to the transferee, even if the latter has not yet taken possession of the property. That would also be the case if a third party were subject to a claim for unjustified enrichment. We can refer to Part IV, 22.1, for an analysis of the question who may reap the fruits. The immediate passing of ownership is however corrected by certain protective measures in favour of the seller. There are additional rules to reduce the effect of an immediate transfer in order to protect the interests of the transferor or third parties. We refer in that respect to the legal lien of the seller in order to guarantee the payment of the sales price, to the stoppage in transitu and to the quasi-revindication (Part II, 13.3). Moreover parties are free to derogate contractually from the immediate transfer of ownership. We refer to title retention, which is analyzed more in depth in Part IV, 23.

243

E. DIRIX, “Actuele trends in de zakelijke zekerheidsrechten” in Zakenrecht: absoluut niet een rustig bezit, Antwerp, Kluwer, 1995, n° 7. In the same sense: J. VANBELLE, “De revindicatie van onroerende en roerende goederen”, Jura Falconis 1994-95, 31-62.

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9.5.

Requirement of delivery / traditio

9.5.1. Introduction The only undisputed case in which the traditio is necessary for the transfer of property is the gift from hand to hand (handgift). Delivery is nevertheless an obligation of the seller and is, or at least in certain cases can be, necessary for the transfer of property by a contract of sale. The rules on delivery in the matter of a sale apply to barter as well.244

9.5.2. The traditio in gifts from hand to hand The traditio implies an immediate and irrevocable loss by the disposer of possession and control over the object of the gift and an immediate acquisition of the exclusive possession and control over it by the beneficiary.245 If the disposer retains in some way the right to remain in, or regain, possession of the object of the gift, there is no traditio and no gift from hand to hand.246 This is for example the case if money is deposited in a bank account on which the disposer has a power of attorney, so that he has the possibility to take money from the account.247 An exception to this rule is made for deposits on the account of minors on which parents have power of attorney by law.248 The function of the traditio is two-fold. At first it serves to make the disposer aware of the seriousness of his act. It replaces the formal requirements that have to be fulfilled for the validity of other types of gifts. Whoever hands over property is more strongly confronted with the consequences of his act than one who promises to make a gift in the future. Secondly, it serves to make clear to society who is the present owner of the property.249

244

245

246

247

248

Article 1707 C.C.; H. DE PAGE and A. MEINERTZHAGEN-LIMPENS, IV, n° 616, p. 676-677. Comp. M. PUELINCKX-COENE, N. GEELHAND and F. BUYSSENS, “Giften 1993-1998”, T.P.R. 1999, n° 144, p. 875; F. Delporte, De handgift, in Advocatenpraktijk, Antwerp, Kluwer, 1997, n° 45, p. 17; V. SAGAERT, o.c., in W. FABER en B. LURGER (eds.), Rules for the transfer of movables. A candidate for European harmonization or national reforms?, München, Sellier, 2008, p. 23, n° 26. M. PUELINCKX-COENE, N. GEELHAND and F. BUYSSENS, o.c., T.P.R. 1999, n° 147, p. 877. M. PUELINCKX-COENE, N. GEELHAND and F. BUYSSENS, o.c., T.P.R. 1999, n° 146, p. 876; F. DELPORTE, De handgift, n° 48, p. 18. F. DELPORTE, De handgift, n° 48, p. 18.

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The question whether a transfer of money from one account to another constitutes a valid traditio has been the object of vivid debate. However, at present this question is generally answered negatively because a transfer from one account to another only implies a replacement of an obligation, not of movables.250 But, this does not imply that a transfer from one account to another cannot realise a gift. It can, but this gift is not a gift from hand to hand, but rather an indirect gift.251 Sometimes it is said that the two accounts may not be held by the same bank,252 or that the order may not mention the animus donandi of the disposer.253 However, the fact of depositing money on an account of the beneficiary is a valid traditio.254 The Court of First Instance of Brussels saw a valid traditio longa manu in the replacement of bonds to bearer from an account of the disposer to one of the beneficiary. The court pointed out that the bonds to bearer were clearly identifiable so that there was no analogy with the transfer of money from one account to another. The fact that the bonds were given in deposit by the bank was considered to be irrelevant. The deposit does not deprive the bonds of their character as negotiable instruments.255 The same court considered the written instruction from a disposer to use money on her account to buy state obligations and transfer these to a beneficiary as a valid gift from hand to hand.256 There is no traditio if the beneficiary has taken possession of the goods himself, for example by taking money from an account of the disposer on the basis of a mandate.257 If the beneficiary claims to have handed over the money to the disposer after which the disposer has given it back by gift from hand to hand, he has the burden of proof. This is also the case if he claims that the disposer told him he could retain the property he held as an agent or depositee of the gift (Article 2231 C.C.).258 249

249

250

251

252 253

254

255 256 257

M. PUELINCKX-COENE, N. GEELHAND and F. BUYSSENS, o.c., T.P.R. 1999, n° 144, p. 875. M. PUELINCKX-COENE, N. GEELHAND and F. BUYSSENS, o.c., T.P.R. 1999, n° 147, p. 877. M. PUELINCKX-COENE, N. GEELHAND and F. BUYSSENS, o.c., T.P.R. 1999, n° 144, p. 877. H. CASMAN, “Schenkingen en successierechten”, Not. Fisc. M. 1994, n° 7, 8-9, fn. 68. P. DELNOY, “La qualification de la donation par virement”, R.C.J.B. 1984, n° 12, p. 234. Contra: H. CASMAN, “Schenkingen en successierechten”, Not. Fisc. M. 1994, afl. 7, 9. M. PUELINCKX-COENE, N. GEELHAND AND F. BUYSSENS, o.c., T.P.R. 1999, n° 148, p. 878. Contra: Court of Appeal Mons 17 December 1996, Rev. not. b. 1997, 183. Civ. Brussels 5 March 1996, R.W. 1996-97, 785. Civ. Brussels 3 February 1995, J.T. 1995, 343. Civ. Liège 11 December 1995, Rev. trim. dr. fam. 1997, 213.

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Incorporeal property can only be transferred by a gift from hand to hand if it is incorporated into a document of title. The right is then assimilated with the title259 so that it is fit for material transfer, traditio.260 The Court of Appeal of Ghent judged correctly that, as non-printed shares do not exist as negotiable instruments, they cannot be donated by gift from hand to hand.261 The question arises whether the transfer of non-printed shares to bearer can be realized by the gift from hand to hand of a scrip to bearer. A scrip is a piece of paper that incorporates the right to receive a certain number of shares after they have been printed. As the law does not oppose the transfer of future shares, scrips to bearer can be given from hand to hand before the creation of the shares. The answer is that this is indeed possible, although the scrip does not give a right to enforce the payment in full or the conversion of shares to bearer.262 The validity of the scrip results from the rule that Belgian law recognizes the right of contracting parties to create by contract “new”, “innominated” types of negotiable instruments. The basis of this possibility is the principle of freedom of contract.263 This opens possibilities to transfer all kinds of incorporeal property by gift from hand to hand. 258

9.5.3. Delivery in contracts of sale (a)

Generalities

As a consequence of a contract of sale, transfer of property and risk normally take place at the moment of the conclusion of the contract (Article 258

259

260

261

262 263

M. PUELINCKX-COENE , N. GEELHAND and F. BUYSSENS, o.c., T.P.R. 1999, n° 14, p. 878. The possession of the title (document) is necessary to be able to demand the execution of the incorporated right. H. LAGA and V. LIETAER, “Eigendomsbetwistingen bij aandelen” in B. TILLEMAN and B. DU LAING (eds.), Onderneming en effecten, Bruges, Die Keure, 2001, n° 7, p. 468-469; M. PUELINCKX-COENE, “Giften (1985-1992)”, T.P.R. 1994, p. 1709, n° 180. Court of Appeal Ghent 4 October 1995, T.R.V. 1996, 122, comment J. BYTTEBIER; H. LAGA and V. LIETAER, “Eigendomsbetwistingen bij aandelen” in B. TILLEMAN and B. DU LAING (eds.), Onderneming en effecten, Bruges, Die Keure, 2001, n° 7, p. 468-469. P. DE BRUYNE, “Schenking van delen en aandelen”, V & F 1997, 100. H. LAGA and V. LIETAER, “Eigendomsbetwistingen bij aandelen” in B. TILLEMAN and B. DU LAING (eds.), Onderneming en effecten, Bruges, Die Keure, 2001, n° 8, p. 469.

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1138 C.C. and Article 1583 C.C.). Transfer of property and risk are normally independent of the delivery. But, if the sale concerns genera, transfer of property and risk only take place at the moment of the individualisation or, according to a certain opinion, at the moment of the specificatio, i.e. the individualisation and the irrevocable intention of the seller to attribute these goods to the execution of the contract with the buyer.264 However, especially in the literature, the opinion gains ground that in a commercial sale transfer of property and risk take place at the moment of delivery.265 This rule is based on usage and the common intention of the parties.266 Case law remains more reserved.267 The rule in any case is one of supplementary law, which implies that parties can agree that transfer of property takes place at another moment. During the time between the conclusion of the contract of sale and the transfer of property, the buyer has an obligatory right against the seller: he can demand delivery or, in case of non-performance, damages.268 It is also to be noted that delivery is, even if it is not necessary for the transfer of property, an obligation for the seller (Article 1603 C.C). Moreover, it follows from Article 1158 C.C. that the immediate transfer of property and risk at the moment of the conclusion of the contract only concerns the relationship inter partes.269 For the opposability against certain third parties, delivery is necessary. It serves to make the transfer of property public, which is necessary to make the transfer opposable against 264

265

266 267

268 269

A. MEINERTZHAGEN-LIMPENS, IV, n° 23, p. 47. Article 1585 C.C. stipulates that when goods are sold by weight, number or measure, the sale is not completed in the sense that the risk remains with the seller until they are weighed, counted or measured. This article is however interpreted in the sense that the mere fact of weighing, counting or measuring does not suffice for the transfer of risk and property, but that individualisation, even specification is necessary (A. MEINERTZHAGENLIMPENS, IV, n° 303, p. 392). It is not necessary that the individualisation takes place contradictory, in presence of the buyer or his representative (A. CHRISTIAENS, “Article 1605-1607”, n° 8). H. DE PAGE and A. MEINERTZHAGEN-LIMPENS, IV, n° 23, 1°, p. 48 and n° 27 A, p. 56; J. VAN RYN and J. HEENEN, Principes de droit commercial, III, Brussels, Bruylant, 1981, n° 674, p. 521-523. Contra, at least in the absence of an agreement between the parties en generally accepted usages, A. CHRISTIAENS, “Article 16051607” in o.c., n° 13. H. DE PAGE and A. MEINERTZHAGEN-LIMPENS, IV, n° 27 A, p. 56. See Cass. 24 April 1987, Pas. 1987, I, 994, n° 498, R.W. 1987-88, 806, note F. WACHSSTOCK that accepts that ownership had already been transferred before delivery. Cf. Article 1585 C.C. Cf. A. CHRISTIAENS, “Article 1605-1607” in o.c., n° 8.

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third parties.270 But, it is not the delivery itself that makes the transfer opposable against third parties. The opposability of property rights against third parties is based on possession in good faith, which in fact comes into existence after the delivery.271

(b)

Concept of delivery

In matters of sale, delivery is defined as the transfer of the goods sold to the control and possession of the buyer (article 1604 C.C.). It is not required that the seller brings the goods to the buyer; he only needs to leave them at the buyer’s disposal, so that the buyer can take possession of them. The buyer has the duty to accept the delivery and collect the goods from the seller (article 1608 and 1657 C.C.). However, the parties can agree that the seller has to bring the goods to the buyer.272 Delivery is usually considered a mere factual act. However, this qualification follows from the fact that delivery is in principle not necessary for the transfer of property.273 But, as we have seen, at least according to a certain opinion, delivery in the matter of a commercial sale does transfer property. In this case, delivery seemingly must be considered a legal act, an act committed with the intention of realising the transfer of property.

(c)

Modes of delivery

Article 1606 C.C. specifies that delivery of movables takes place either by effective handing over of the goods or by handing over of the keys of the buildings in which they are situated, and even by the mere consent of the parties if the transmission (handing over) cannot take place at the moment of the sale or if the buyer already has the goods in his control. Delivery of intangible rights takes place either by handing over the title or by the use thereof by the buyer with the consent of the seller (Article 1607 C.C.). The enumeration in Articles 1605-1607 C.C. is not exhaustive.274 The seller satisfies his obligation of delivery if he puts or even leaves the goods

270

271 272 273 274

R. DEKKERS and E. DIRIX, Handboek burgerlijkrecht, II, Zakenrecht, zekerheden, verjaring, Antwerp, Intersentia, 2005, n° 401, p. 160. R. DEKKERS and E. DIRIX, o.c., n° 412, p. 164. A. CHRISTIAENS, “1604 C.C.” in o.c., n° 4. H. DE PAGE and A. MEINERTZAGHEN-LIMPENS, IV, n° 117, p. 187. Court of Appeal Brussels 6 July 1935, Pas. 1936, II, 36; H. DE PAGE and A. MEINERTZHAGEN-LIMPENS, IV, n° 120, p. 197; A. CHRISTIAENS, “Article 1505-1607

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at the complete disposal of the buyer.275 However, the seller has to give the buyer the opportunity and the means to take possession of the goods.276 Parties can also agree on the modes of delivery.277 (i)

Factual handing over (traditio)

Factual handing over implies a co-operation between the seller who hands over the goods and the buyer who takes possession.278 This type of delivery is common for on the spot sales of goods of moderate size and weight,279 often with a retailer where the property bought is handed over to the buyer and taken by him. Traditio is also possible of large amounts of goods that are situated in the seller’s storage, but this will only be the case if the buyer takes the goods with him or, at least, sets them apart and marks them so that there can be no dispute about his possession of the goods.280 A traditio can also be realised by handing over the goods to a third-party carrier who is charged with collecting the goods.281 Traditio is also the normal way to deliver effects to bearer (shares to bearer, obligations to bearer, …). (ii)

Handing over the keys and other forms of symbolic traditio

(aa)

Keys

According to an older opinion, the handing over of keys should not be seen as a fictitious or symbolic traditio, but as a real factual traditio.282 The present opinion is that the handing over of keys constitutes a symbolic traditio, as

275

276 277

278 279

280

281 282

C.C.” in Commentaar Bijzondere overeenkomsten, Mechelen, Kluwer, 2002, n° 5 and n° 30. A. CHRISTIAENS, “Article 1605-1607” in o.c., n° 5; J. VAN RYN and J. HEENEN, III, n° 668 et seq., p. 514 et seq. A. CHRISTIAENS, “Article 1605-1607”, in o.c., n° 5. A. MEINERTZHAGEN-LIMPENS, IV, n° 120, p. 198; Brussels 6 July 1935, Pas. 1936, II, 63. A. CHRISTIAENS, “Article 1605-1607”, in o.c., n° 6. F. LAURENT, XXIV, n° 163, p. 165; A. CHRISTIAENS, “Article 1605-1607” in o.c., n° 6. A. CHRISTIAENS, “Article 1605-1607” in o.c., n° 6. See also J. VAN RYN and J. HEENEN, III, n° 670, p. 518. A. CHRISTIAENS, “Article 1605-1607” in o.c., n° 6. F. LAURENT, XXIV, n° 163, p. 165-166.

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the seller does not deliver the goods themselves but only delivers the means that enable the buyer to take possession.283 The symbolic traditio has the same effect as the real factual traditio and offers the buyer the protection of Article 1141 C.C. against a subsequent buyer on condition that the buyer actually takes possession of the goods. To avoid disputes, the buyer should externalise his taking into possession of the goods, for instance by marking them. (bb)

Documents of title

The seller can also realise a symbolic traditio by sending to the buyer the titles or the objects that symbolise the goods.284 It involves a bill of lading (cognossement) in the case of transport by sea, a consignment (vrachtbrief) in the case of transport by road and other documents that attribute to the holder an exclusive right to the goods.285 If the goods are still en route, delivery takes place by endorsement of the title that represents the goods.286 There is neither national legislation nor case-law on electronic versions of these documents of title. The application of the CMI Rules on electronic bills of lading is considered difficult or even impossible. A first problem is that the CMI Rules will be made applicable by referring to them, while Belgian law requires that general conditions are communicated in extenso. This problem can be solved by concluding a contract that contains the clauses in extenso and by which the parties agree that these rules can then be made applicable to future dealings by referring to them. But, there are other problems.287 The CMI Rules do not contain provisions on secure transmittal of the data in the electronic bill of lading to third parties, such as insurance companies; if the holder and the transporter do not agree on the content of the electronic data, neither of them can prove which data are the correct ones. The CMI Rules contain a certain incentive to a solution by stipulating that an Electronic Monitoring System (EMS) can be used. They do not, however, concretise the application of this EMS. Further, the CMI Rules do not pay enough attention to problems of security. The delivery of the goods is subject to a secret key, but the CMI

283 284 285 286 287

A. CHRISITAENS, “Article 1605-1607” in o.c., n° 15. A. CHRISTIAENS, “Article 1605-1607” in o.c., n° 16. J. VAN RYN and J. HEENEN, III, n° 669, 2°, p. 517. A. CHRISTIAENS, “Article 1605-1607” in o.c., n° 16. F. STEVENS, Vervoer onder cognossement in Bibliotheek Handelsrecht Larcier, Transportrecht, Brussels, De Boeck & Larcier, 2001, n° 173, p. 99.

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Rules do not define a safe way to communicate this secret key to the shipper and subsequent holders of the electronic bill of lading.288 The BOLERO system, which offers the possibility of using electronic bills of lading, gives the impression of a more solid solution. The BOLERO Users enter into a Service Agreement in which they oblige themselves to the Bolero Administrators and the BOLERO Users to follow the BOLERO Rules (Rule Book and Operational Rules). The theory of autonomy of will on which the Belgian contractual system is (largely) based allows the BOLERO Users to conclude such a contract and considers them bound to it. A BOLERO bill of lading is created and transferred as follows. A seller concludes a transport contract with a shipper. The contract can be concluded trough the BOLERO system or by traditional means. The transporter creates, for the shipment, a BOLERO bill of lading in the BOLERO database, the Title Registry. He registers himself as “Originator”, the seller as “Shipper” and “Holder” and the buyer as “To Order party”. As soon as the seller has received payment, he instructs the Title Registry to replace his own name with that of the buyer as “Holder” of the bill of lading. The buyer can subsequently endorse the bill of lading to a new “To Order party” or to “bearer”. He can make the new “To Order party” immediately “Holder”, enabling him to transfer the bill of lading, but he may also wait for payment to make him “Holder” of the bill of lading. When a “Consignee” is indicated, the bill of lading may no longer be transferred except by “Amending” the bill of lading. For this, the transporter’s consent is needed.289 (cc)

Other forms of delivery

The buyer can also realise the traditio by handing over written permission to log.290 Affixing a sign on the goods is generally considered an indication that the buyer has taken possession of the goods.291 A minority opinion points out that the stamp or other sign the buyer may use to mark the goods only proves the sale of individualised goods, and implies that the risk has transferred to the buyer. Whether it indicates delivery would depend on the circumstances of the case and on local usage.292

288 289 290 291 292

F. STEVENS, o.c., n° 175 et seq., p. 99 et seq. F. STEVENS, o.c., n° 183, p. 104-105. A. CHRISTIAENS, “Article 1605-1607” in o.c., n° 16. F. LAURENT, XXIV, n° 167, p. 167. A. KLUYSKENS, De contracten, n° 90, p. 111-112.

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In response, the defence is that the sign of the buyer on trees to be felled for his account is considered a symbolic delivery.293 However, the Court of Appeal of Brussels and the Commercial Court of Tournai judged that delivery is not completed if the marked trees are situated on enclosed property and the seller is the only person who could obtain access from the neighbours.294 In sales of animals in the cattle-market, the mark of the buyer is considered a sign of delivery even if the animal still forms part of the herd of the seller.295 (iii)

Mere consent

The Civil Code mentions two cases in which delivery can take place by the mere consent of the parties (solo consensu): 1) when traditio is not possible at the moment of the sale; 2) when the buyer already has control over the goods in another capacity. A third situation that gives rise to delivery solo consensu is when there is an agreement between the parties to the sale that the seller in the future will exercise possession over the goods as a detentor for the buyer (constitutum possessorio).296 (aa)

Impossibility of delivery at the moment of sale

If the object of the sale is a future harvest, delivery will not be possible at the moment of the sale. Delivery will take place at the moment of the harvest. The buyer is responsible for choosing the best time to harvest and take away the fruits.297 Another example that is given, is the situation in which the goods are not present at the place of the sale, and the conclusion of the contract of sale implies the authority to pick up the goods.298 This type of delivery solo consensu does not have all the consequences of the before-mentioned types of delivery. Delivery solo consensu differs from the previously mentioned types of consensus in that it does not “materialise” the transfer of either the property or possession of it. In the eyes of third parties, the goods remain in control of the seller. For this reason, delivery 293

294 295 296

297

298

Court of Appeal Brussels 6 July 1935, Pas. 1935, II, 63; F. LAURENT, XXIV, n° 167, p. 167. Court of Appeal Brussels 6 July 1935, Pas. 1935, II, 63. A. CHRISTIAENS, “Article 1605-1607” in o.c., n° 16. A. CHRISTIAENS, “Article 1605-1606” in o.c., n° 17 with reference to Civ. 8 February 1973, R.W. 1973-74, 1171. A. CHRISTIAENS, “Article 1605-1606” in o.c., n° 17 referring to Com. St.-Niklaas 28 October 1969, R.W. 1972-73, 1047. A. CHRISTIAENS, “Article 1605-1606” in o.c., n° 17; F. LAURENT, XXIV, n° 164, p. 166; A. KLUYSKENS, De contracten, n° 89, 3°, a in fine, p. 111.

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solo consensu is not considered a delivery in the sense of Article 1141 C.C., i.e. a delivery that makes the property right of the buyer opposable against third parties, meaning that a subsequent buyer will not be able to acquire the property on the basis of a second contract of sale concluded by his seller.299 The question arises whether, in the case of sale of a future harvest, any better “delivery” is really possible. It seems that the buyer of the future harvest could place a sign on the field indicating that he has bought the future harvest; a refusal of this by the seller should then be considered a violation of the rule that good faith is required in the execution of a contract (article 1134 § 3 C.C.). (bb)

Seller’s control over the property in another capacity

If the seller already has control over the goods in another capacity, delivery can only take place by inversion of the possession. The possession the buyer acquires is protected by Article 1141 C.C. A person who starts to possess for another, pro alieno is considered to continue to possess pro alieno, unless he proves the contrary (Article 2231 C.C.). The title that evidences the inversion of the title is thus very important.300 (cc)

The seller’s continued possession of the property by agreement

The agreement between seller and buyer, according to which the seller will remain in possession of the goods after the sale, is called a constitutum possessorio. The seller continues to possess the goods, but he will no longer possess them as an owner animo domino and for himself, pro suo, but rather he will possess them for the buyer. The delivery takes place solo consensu, by an inversion of the title of the seller. One pretends that the goods were handed over by the seller to the buyer, who then gave them back to the seller in the capacity of lessee, depositee, … Possession transferred constitutum possessorio is not real possession in the sense of Article 1141 C.C. as third persons are not on notice that an effective transfer of possession took place.301 The sold goods stay in control of the seller who can resell them and can effectively hand them over to a second buyer. However, a second buyer will only be protected by Article 1141 C.C. if he is in good faith.302 299

300 301 302

A. CHRISTIAENS, “Article 1605-1607” in o.c., n° 19; A. KLUYSKENS, De contracten, n° 89, 3°, a, p. 111; F. LAURENT, XXIV, n° 164, p. 166. A. CHRISTIAENS, “Article 1605-1607” in o.c., n° 20-21. A. CHRISTIAENS, “Article 1605-1607” in o.c., n° 23. A. CHRISTIAENS, “Article 1605-1607”, in o.c., n° 23.

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(iv)

Delivery of intangible rights

(aa)

Generalities

It is not possible to have possession of intangible rights in the normal sense of the word. The Civil Code mentions possession of claims, but this has a totally different meaning than the meaning of possession in general property law.303 Delivery of intangible rights takes place either by handing over the title or by the use the buyer makes thereof with consent of the seller (Article 1607 C.C.). However, other modes of delivery are possible. The use the buyer makes of a right is not a real act of transfer but rather an indication of the fact that delivery has taken place. Delivery in fact takes place solo consensu. This is, for example, the case when the person who has the right to use an industrial, literary or artistic creation sells his right of use.304 Given the intangible nature of the property concerned, the buyer cannot materially take possession of the property; it follows that Articles 1141 and 2279 C.C. cannot apply.305 Transfer of intangible property has immediate effect, both between the parties and against third parties. The third possessor who acquired the intangible property in good faith a non domino is not protected against claims of the previous buyer or any other verus dominus.306 (bb)

Special rules

Assignment of claims is treated in the Chapter entitled “Sale” in the Civil Code. Assignment of claims differs from sale in that the transfer of an obligation does not always take place for a price, but can also take place gratuitously. Whoever sells the active side of an obligation or other intangible right, needs only to guarantee its existence; one does not need to guarantee the solvency of the debtor (Article 1693-1694 C.C.). The assignment is 303

304 305

306

Article 1240 C.C. provides that “payment made in good faith to one who was in possession of the claim is valid, even if the possessor is afterwards dispossessed” (free translation). Possession means in this provision that one emerges toward the debtor of the claim as if one was the owner of the claim. For instance: the assignor of a claim remains the possessor of it as long as the assignment has not been notified to him. A. CHRISTIAENS, “Article 1605-1607”, in o.c., n° 30. Cass. 10 July 1890, Pas. 1890, I, 259; Cass. 11 October 1985, J.T. 1986, 290, R.W. 1986-87, 453, note; A. CHRISTIAENS, “Article 1605-1607”, in o.c., n° 31; J. VAN RYN and J. HEENEN, Principes de droit commercial, I, Brussels, Bruylant, 1976, n° 436, p. 398. Cf. A. CHRISTIAENS, “Article 1605-1607” in o.c., n° 31.

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only opposable against the debtor if notice is given to him or if the assignment is recognized by him (Article 1690 C.C.). Transfer of registered securities is completed by the mere consent of the parties concerning the securities and the price (Article 1583 C.C.). As long as the transfer is not registered, transfer between non-commercial parties has to be proven in conformity with the Articles 1341, 1437 and 1348 C.C. To complete his obligation of delivery, the seller has to co-operate in the modification of the register. Property of registered shares is proven by registration (cf. Article 465 Company Code). A business can be defined as a factual generality of property with a common destiny, i.e. the acquisition and preservation of clientele that make the business profitable. Although the business contains, apart from intangible property such as clientele, business name, contract for rent etc., tangible property such as furniture, it is considered intangible property. And because it can be replaced, the business is considered a movable. Transfer of property and risk take place by mere consent concerning the property and the price (1583 C.C.). To make the sale opposable against third parties, for each element of the business the suitable requirements have to be fulfilled. For the immovable elements, the requirements of Article 1 Mortgage Law have to be fulfilled, for obligations the rules of Article 1690 C.C. etc. For most cases of transfer of a business, special requirements have to be taken into account to make the transfer of the business opposable against the tax administration.307 After the death of the decujus, every heir can transfer his rights to succession gratuitously or for value. What is transmitted is not the property, but the rights of the heir to the succession (Article 1696-1698 C.C.). Special rules exist for transfer of copyright (Article 3 Law of 30 June 1994 on copyright and neighbouring rights), transfer of a trademark (Article 11 Uniform Benelux Law 19 March 1962 on marks), transfer of a right to a design or a model (Article 13 and 22 Uniform Benelux Law of 25 October 1965 in designs and models), and transfer of a patent (Article 44 Law of 28 March 1984 on Patents). (v)

Particularities

The buyer to whom the property is not delivered in the way defined by the parties, or recognised by law, but who nevertheless has control over the property, does not have possession in the sense of Article 2279 C.C.308 307 308

Article 442 bis Code of Income Taxes. Cf. Court of Appeal Antwerp 12 February 2001, R.W. 2001-02, 603, which demands incorrectly a delivery in one of the forms mentioned in article 1606 C.C. forgetting that this article does not contain an exhaustive enumeration.

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(d)

Delivery and the opposability of the transfer against third parties

Opinions diverge about whether delivery alone or delivery and possession in good faith are required for the transfer by sale to be opposable against all third parties in good faith, rather than only against a later acquirer of rights to the goods. The opinion that delivery and possession in good faith are required to make the transfer opposable only to the later acquirer, implies that the transfer has a third party effect on the creditors of the seller from the moment of the sale. The seizing creditors of the seller may, on the basis of Article 2279 C.C., presume that all the goods they find in possession of their debtor belong to him. However, they have to respect the contracts their debtor concluded before the seizure.309 The same is true for the bankruptcy trustee.310 In reverse, the creditors of the buyer can realise their claims against goods of the buyer at the conclusion of the contract or by the specification, even if the goods have not yet been delivered.311 The requirement of delivery is only required in the relationship between a first and a later acquirer of a property right to the goods, the first buyer’s ownership is only opposable if he had effectively received the possession of the goods. This is true also in the relationship between consecutive buyers and between a buyer and a pledgee of the goods.312 The second opinion requires delivery and good faith possession to make the transfer opposable against any third person having competing rights to the goods.313

9.5.4. Real agreements Belgian law has a consensual system of transfer of ownership, as elaborated in Part II, Chapter 9. Hence, ownership passes immediately and the law does not require a separate agreement for ownership to pass. Belgian law is generally not familiar with a “real agreement” in the sense of an agreement separate from the underlying obligation (e.g. contract), which is necessary to effect the transfer of ownership. The term “real agreement” is 309 310 311

312 313

A. CHRISTIAENS, “Article 1605-1607” in o.c., n° 10. A. CHRISTIAENS, “Article 1605-1607” in o.c., n° 10. A. CHRISTIAENS, “Article 1605-1607” in o.c., n° 10; Cass. 24 April 1987, R.W. 806, note F. WACHSTOCK. A. CHRISTIAENS, “Article 1605-1607” in o.c., n° 11. H. DE PAGE and A. MEINERTZHAGEN-LIMPENS, IV, n° 26, p. 55.

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used for agreements which only come into existence after the traditio of the object of the agreement, but which do not necessarily have proprietary effects. For instance, a loan agreement only comes into existence at the moment the object of the loan is put into the hands of the debtor, not by the mere agreement between the parties. If the loan agreement does not involve consumable goods, it does not transfer any property right. Another example is a contract of deposit, which only comes into existence at the moment the depositary is given the physical control over the object of the contract of deposit. The “agreement” between the parties does not give rise to a contract of deposit, but only to a promise to give an object in depositu. This agreement is binding upon parties as an agreement sui generis, but does not have any proprietary effect: the depositary does not become owner or possessor, but merely holder (‘detentor’) of the asset which is given in deposit. However, we have already indicated that the consensual nature of the system does not prevent some authors from making a distinction between the obligatory agreement and the real agreement. The consensual transfer system in Belgian property law could indeed be translated in terms of a “traditio-system” in which the real agreement is implicitly included so that ownership normally passes immediately. We refer for the historical foundations of this distinction to supra, Part II, Chapter 9.1. It largely demonstrates that the distinction between consensual systems of transfer and systems requiring delivery is not as sharp as it is often indicated.314

9.6.

Registration

There is registered movable property. This is expressly stated with regard to sea ships and other boats.315 Cars have to be registered, but this registration is of a totally different nature than with regard to sea ships and boats. Aircrafts are also subject to a different regime.

9.6.1. Sea ships Article 2 of the Sea Act of 11 June 1874 provides that sea ships are movable property. However, they are not subject to the rule according to which possession gives title. Article 8 of the same Act provides that all titles and judgements which evidence an agreement to vest, transfer or declare void 314 315

C. LEBON, l.c., p. 438, n° 28. Article 2 of the Sea Act of 11 June 1874.

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a property right (with the exception of a lien) on a sea ship that already exists, or is in construction, have to be registered in the registry for sea ships. They cannot be opposed against third parties if this registration has not been effected. The functioning of the registry for sea ships is analogous to the functioning of the mortgage registry (for immovables): transfer of property rights can be effected without registration, but the transfer has only a relative nature – e.g. has no third-party effect – if registration is not effected. We can thus conclude that the registration is constitutive in order to give an absolute nature to the rights of the transferee in relation to third parties with competing rights. Contrary to the mortgage registry, private deeds can be registered in the registry of sea ships; a sea ship can even be registered by telegram. In contrast, in the mortgage registry, only authentic deeds (notarial deeds, deeds of public offices, etc.) can be registered. Sea ships can be burdened with a mortgage, not with a pledge (which is normally the case for movables).316 It must furthermore be taken into account that the sale of ships is subject to specific rules, emerging from commercial practice and costumes.

9.6.2. Aircrafts Although aircrafts are subject to registration, they are considered to be movable property. The registration of aircrafts is provided by the Royal Decree of 15 March 1954,317 in execution of the Act of 27 June 1937.318 This registration only determines the (Belgian) nationality of the aircraft, but not its proprietary status. Contrary to most neighbouring countries,319 Belgian security law contains no specific provisions on the vesting of real security rights in aircrafts. 316 317 318 319

Article 25 of the Sea Act of 11 June 1874. Belgian Official Gazette 26 March 1954. Belgian Official Gazette 26 July 1937. For instance French law provides the possibility to mortgage an aircraft: “Les aéronefs, tels qu’ils sont définis à l’article L. 110-1, ne peuvent être hypothéqués que par la convention des parties. L’hypothèque grève, dès lors qu’ils appartiennent au propriétaire de l’aéronef, la cellule, les moteurs, hélices, appareils de bord et toutes pièces destinées de façon continue au service de l’aéronef, qu’elles fassent corps avec lui ou en soient temporairement séparées” (L122-1 Code de l’aviation civile). For an analysis: J.-P. LE GALL and S. REEB, “Highlighting various Tax and Security Law Aspects of Aircraft Financing – France”, Air & Space Law 1992, 87-89. For Dutch and German law, it can be referred to the contributions of P. HONNEBIER and E.-M. KIENINGER.

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In 1990 the government introduced a very elaborate act into parliament, introducing the possibility to create a mortgage on an aircraft.320 But this act has never been adopted due to political circumstances. Therefore the common forms of real security rights are to be applied to the asset-based financing in the aviation industry.321

9.6.3. Cars In Belgian law (contrary to French law), cars have to be registered according to the Royal Decree of 20 July 2001.322 This legislation however does not deal with the proprietary status of the car. Article 8 (natural persons) and Article 9 (legal persons) determine that the public registry must mention the name of the person who makes the request for registration. However, according to Article 10 of the Royal Decree, the request can be made either by the owner or by the user of the car. The registry does not mention who is the owner of the car. It has mainly administrative and insurance purposes. Cars can thus not be considered registered property, as is the case for sea ships, and remain subject to Article 2279 C.C. A professional buyer cannot gain from this protection, as he is not to be considered in good faith, if he did not ask for the invoice for the purchase.323 However, and again contrary to French law, Belgian law does not provide for specific provisions with regard to the registered pledge on cars. The pledge of cars can only be effected through a dispossession.

9.7.

Requirement of payment for the transfer of property

9.7.1. Principle: transfer of property does not require payment In principle, property rights pass at the moment the contract of sale is concluded (specific goods) or at the moment the goods have been identified (generic goods). The payment of the price is not a condition for the transfer 320

321

322 323

Not only the mortgage on an aircraft, but also a non-possessory lien and the seizure of an aircraft were governed in the enactment (Parl. Doc., Ch. Repr. 1990-91, n° 1297 / 1). For an overview: W. GORIS and G. JAKHIAN, “Security rights in aircraft under Belgian law”, Air & Space Law 1992, 61-67; V. SAGAERT, “De Unidroit-Conventie betreffende internationale zakelijke rechten op roerend uitrustingsmaterieel” in Artikelsgewijze Commentaar Voorrechten en Hypotheken, Antwerp, Kluwer, 2002, n° 2-4. Belgian Official Gazette 8 August 2001. I. SAMOY, “Financieren op eigen risico?”, T.B.B.R. 2000, 238-247.

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of property. We refer to Part II, Chapter 9.7, for an in depth analysis of the consensual system of transfer in Belgian law.

9.7.2. Exception: possibility of contractual deviation The law provides the possibility for the parties to agree that the transfer of property is postponed until the price has been paid.324 On the effects hereof as to third parties, see infra, Part IV, Chapter 23.

9.7.3. Property related consequences of non-payment (a)

Contract of sale

(i)

Right to withhold performance

Unless the parties to a sale stipulate otherwise, payment and delivery should take place at the same time.325 Article 1612 C.C. provides that the seller does not have to deliver if the buyer does not pay the price and has not acquired a term for payment. However, in commercial transactions (between two professionals), the Act of 7 August 2002 provides for a legal term of payment of 30 days from the moment the invoice is sent or – if the invoice is sent before the accomplishment of the work or the delivery of the goods – from the moment of delivery.326 If the buyer sues the seller in order to force him to deliver, the seller can invoke the exceptio non adimpleti contractus, a means of defence consisting in the argument that the buyer has not performed his obligations under the contract of sale. The seller cannot invoke this defence if he has given the buyer a term for payment. However, the buyer loses the benefit of the term in case of bankruptcy or insolvency (Article 1188 C.C.). This implies that the seller may refuse delivery regardless of the term for payment, unless the buyer offers a security that the price will effectively be paid at the end of the term (Article 1613 C.C.). As the delivery mostly coincides with identification, which is the moment in which property rights of generic goods pass, transfer of property can be postponed in case of non-payment.

324 325 326

B. TILLEMAN and A. VERBEKE, o.c., n° 13, p. 6-7. B. TILLEMAN and A. VERBEKE, o.c., n° 324, p. 83. Article 4 of the Act of 2 August 2002 with regard to the combat of late payment in commercial transactions, Belgian Official Gazette 7 August 2002. This Act implements the European Late Payment Directive (n° 2000 / 35 of 29 June 2000).

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277

Quasi-revindication

Article 20, 5°, paragraph 6 Mortgage Act confers an improper right of revindication on the non-paid seller of a movable that has been sold without a payment term. As long as the seller has not received payment, the seller can, within eight days from delivery, revindicate the movable from the buyer on the condition that it is still in the same state and has remained in possession of the buyer. The improper revindication is a kind of post-delivery exceptio non adimpleti contractus. As long as the seller has not been paid, he can refuse delivery; if he has already delivered, he can, within the frame of Article 20 Mortgage Act, revindicate the movable. The revindication is called improper because the seller is, as a consequence of the principle of consensualism, no longer the owner of the good. We refer for this quasi-revindication to Part II, Chapter 13.3.2. (iii)

Right to terminate the contract

According to Article 1654 C.C., the seller who has not received payment can sue the buyer to terminate the contract. The contract is deemed never to have existed and the property is deemed never to have passed. However, this does not prevent a third party in good faith from acquiring property rights in the property, even though he has acquired it from a non-owner, on the basis of Article 2279 C.C.327

(b)

Other contracts

Also, in other contracts such as contracts of settlement and barter, nonpayment can give rise to the remedy of the exceptio non adimpleti contractus and the right to terminate the contract (article 1184 C.C.). It is not clear whether the seller’s privilege can be extended to barter. A negative answer to this question seems to result from the combination of the rules that the privilege constitutes an exception to the general principle of the equality between the creditors (Article 7-8 Mortgage Act) and the rule that exceptions have to be interpreted strictly. However, the opinion has been defended that exceptional rules can nevertheless be extended to other cases than those explicitly foreseen in the exceptional rule, if the reasons that led to the adoption of the exceptional rule are also present in the other case.328 327 328

Cf. infra, Part III, Chapter 18. Comp. X. DIEUX, “Observations sur l’article 1794 du Code civil et sur son champ d’application”, (note sous Cass. 4 septembre 1980), R.C.J.B. 1981, 528 et seq.

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10.

Double / multiple selling

What are the consequences of double selling, i.e. if person A sells a movable object to B and subsequently sells the same object to C? In principle, the conclusion of a contract of sale causes the transfer of the ownership of the property sold from the seller to the buyer. It follows that, at the moment the second contract is concluded, A is no longer the owner of the sold property. However, the mere conclusion of the contract suffices only to create the transfer of ownership inter partes; to make this transfer opposable against third parties in good faith, the property has to be actually delivered to the buyer.329 The reason hereof is that third parties can assume that the movable property belongs to the person that has the possession of it. If the object of the sale has been delivered to B before the contract with C is concluded, B’s ownership is opposable against C, and C cannot acquire the ownership of the property sold to him. However, this does not imply that the contract of sale between A and C is absolutely void. It is only voidable at request of C. This is so even though Article 1599 C.C. stipulates: “The sale of another’s property is void: it can constitute a cause for damages, when the buyer did not know that the property belonged to another” (free translation). Consequently, C has a choice. He can file an action to declare the contract void and to be compensated for the damage he suffered because of the sale of the property of which A was no longer the owner. Alternatively, he can file an action for compensation because A did not and could not deliver the property of the sale to C. If the property was not yet delivered to B and A gives possession of the property to C, then B’s ownership was not yet opposable against third parties in good faith, and C will, if he is in good faith, acquire the ownership of it. This is an application of Article 1141 C.C., which provides that “if the asset which a person has obliged to give to two different persons, is a corporeal movable asset, the one who has first been given possession will prevail and will be considered owner, even if his title is more recent, upon the requirement that his possession is in good faith” (free translation). The contract between A and B was validly concluded and remains valid. B only has the possibility to claim compensation from A for non-execution of his obligations. The buyer is considered to be in good faith if he neither knows nor should know that the seller does not own the property sold. If C was not acting bona fide when concluding the contract of sale, i.e. if he knew or should have known that A was no longer the owner, he will not acquire the property of the good sold, whether or not it was still in possession of the seller at the moment of the sale. 329

Article 1141 C.C.

11. Rules for “selling in a chain”

11.

279

Rules for “selling in a chain”

Selling in chain means that person A sells goods to B, the latter sells those goods to C and A immediately delivers the goods to C. According to the consensual system used in Belgian law, B has become owner of the goods at the moment of his purchase, and C has become owner at the moment that he has purchased the good from B. However, the principle of consensualism – as we have seen – does not come into play in relation to third parties. Delivery is necessary to make the sales agreement opposable against third parties. What happens if B is subject to an insolvency proceeding? This insolvency necessarily interferes after the second sales agreement, as B no longer has a right to dispose of the goods from the moment of his insolvency. If B does not comply with his obligation to pay the purchase price, A will be entitled to exercise his legal lien (Article 20, 5° Mortgage Act) on the sub-sale price owed by C to (the trustee of) B, as long as the latter is identifiable. A will however not be entitled to exercise his right of retention vis-à-vis C.

12.

Transfer or acquisition by indirect representation330

Indirect representation means that a person (the agent or other intermediary) acts in his own name, but on the account of another person (the principal), in contracting with a third party. The legal effects of indirect representation must, according to the prevailing view, be separated: the obligatory effect arises in a totally different way than the proprietary effect. The coinciding of the obligatory and proprietary effects, inherent in a consensual system, does not apply in case of indirect representation.

12.1.

Contractual rights and obligations

The basic rule is that, in case of indirect representation, the contractual rights and obligations exist between the intermediary and the third party. As the intermediary does not reveal the identity of the principal to the third party, it would be unacceptable not to allow the third party to execute his contractual rights against the estate of the intermediary. The third party can indeed not assess the (in)solvency of the represented person. Likewise, the intermediary is not permitted to argue that he acted within the frame330

For an elaborate analysis of indirect representation: see I. SAMOY, Middellijke vertegenwoordiging. Vertegenwoordiging herbekeken vanuit het optreden in eigen naam voor andermans rekening, Antwerp, Intersentia, 2005, 762 p.

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work of representation in order to escape liability.331 There is no contractual relationship between the principal and the third party. As a consequence, the third party will not be able to immediately sue the principal.332 Conversely, the third party will not be able to claim against the principal if the latter does not comply with his contractual obligations.333 The inability of the principal and the third party to bring claims against each other has been criticized by legal scholars. The situation does not meet practical needs.334 For instance, it would not harm the interests of the third party if he could be directly sued by the principal and forced to comply with his contractual obligations The third party should be indifferent to the question whether he is sued by the intermediary or by the principal. Therefore some authors have argued in favour of a direct action by the principal against the third party. They argue that such action is justified on the grounds that reality must always prevail over appearance, and the reality is that the principal has become owner of the contractual rights.335 Therefore, legal scholars have emphasized indirect ways to bring claims between the principal and the third party, using elements of the general law of obligations. One of those elements is the “action oblique / zijdelingse vordering”, included in Article 1166 C.C. This Article provides that creditors may exercise their debtor’s rights and actions, except for those exclusively dependent on the person. Moreover, the intermediary can assign the rights he has against the principal to the third party and, conversely, the intermediary can assign his rights against the third party to his principal.336 According to some scholars, even a claim of unjust enrichment would enable the third party to claim against the principal.337 However, the latter view is doubtful. The third party can-

331 332 333 334

335

336

337

Cass. 17 April 1848, Pas. 1848, I, 387; H. DE PAGE and. R. DEKKERS, V, 436. F. LAURENT, Principes, XXVIII, 52. H. DE PAGE and R. DEKKERS, V, 436. I. SAMOY, “‘What’s in a name?’ Het ‘in naam van-vereiste’ bij de vertegenwoordiging vier jaar na Schoordijk”, T.P.R. 2004, p. 570, n° 6. G. BELTJENS, Code civil annoté, article 1998 C.C., 130; I. SAMOY, ‘What’s in a name?’ Het ‘in naam van-vereiste’ bij de vertegenwoordiging vier jaar na Schoordijk”, T.P.R. 2004, p. 573, n° 7. It is even argued that the principal can oblige the intermediary to assign his rights against the third party. Article 1993 C.C. provides indeed “that very agent is bound to account for his management, and to return to the principal all that he received by virtue of his power of attorney, even where what he received was not owed to the principal” (free translation). B. TILLEMAN, Lastgeving, in Algemene Praktische Rechtsverzameling, Ghent, StoryScientia, 1993, 276; H. DE PAGE and. R. DEKKERS, V, 437.

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not argue that the intermediary has been enriched without legal grounds, as the enrichment has its foundation (“causa”) in a contract.338

12.2.

Transfer of property rights

From a proprietary point of view, there is no difference between direct representation and indirect representation. The property rights, which are transferred pursuant to the agreement, immediately pass between the principal and the third party. The intermediary does not become owner, not even for a second. One of the main effects of the direct transfer is that the insolvency of the intermediary does not harm the position of the principal. If, for instance, the intermediary has bought goods in his own name, but for the account of the principal, the latter will be able to vindicate the goods from the insolvency estate of the intermediary, even if the intermediary were still in the possession of the goods at the moment of his insolvency. This starting point is confirmed in Article 103 of the Bankruptcy Act,339 which provides that commercial goods deposited with the bankruptcy debtor, or given in “consignation” to the bankruptcy debtor, in order to be sold for the account of the principal, can be vindicated, as long as they are fully or partly in natura in his possession. This immediate transfer is of course subject to the same requirements as the general conditions of transfer. If the agent has bought fungible assets, which have not yet been specified for the contract at the moment that the agent becomes subject to an insolvency proceeding, the ownership will not have passed to the principal. By consequence, the latter will be subject to the risk of the insolvency of his agent.

13.

Insolvency of the transferor or transferee

13.1.

General considerations

There is a general provision in Article 46 of the Bankruptcy Act conferring on the insolvency administrator the right to terminate the agreements of the bankruptcy debtor. This Article provides that the insolvency administrator, after the acceptance of his task, must immediately decide whether he will continue the agreements that have been entered into by the bankruptcy debtor before the bankruptcy and that are not terminated ipso facto by the bankruptcy. The other contracting party can request that 338 339

F. LAURENT, Principes, XXVIII, 64-65; I. SAMOY, l.c., p. 459, n° 5. Act of 8 August 1997, Belgian Official Gazette 28 October 1997.

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the insolvency administrator make his decision within fifteen days. If the insolvency administrator does not make a decision within the period of fifteen days after the request, the agreement is terminated and the damages pursuant to the termination are included in the bankruptcy estate. This right to terminate agreements is to be qualified from a legal point of view by a confirmation from the insolvency administrator that the debtor had not complied with his contractual obligations. This gives rise to a claim for damages, which can be introduced by the other contracting party in the bankruptcy proceeding. The decision of the bankruptcy trustee does not in itself rescind the agreement, but gives rise to all the conditions necessary to enable the rescission of the contract. The agreements that are entered into intuitu personae on the part of the bankruptcy debtor are automatically terminated by the bankruptcy judgement. This is, for instance, the case for a credit agreement.

13.2.

Protection of the transferee against insolvency of the transferor

If the transferor opens insolvency proceedings, and the transfer of ownership has not been contractually delayed, the position of the transferee is unclear. The insolvency administrator will not be entitled to appeal to Article 46 of the Bankruptcy Act in order to rescind the agreement and re-transfer the property to another person (at a higher sales price).340 The position of the purchaser of property that has not yet been delivered at the moment of insolvency is, however, debated. According to the traditional opinion, the transferee is in the position of a holder of a proprietary right and will escape the insolvency. As the property is excluded from the insolvency estate at the moment of the consent by the parties to the contract, the purchaser does not bear any risk. He will be able to claim property rights to the goods and will not be subject to the rule of equality of creditors. This is the normal application of the transfer solo consensu.341 The same would apply to fungible goods that have been identified before the opening of the insolvency proceeding.342 If these goods had not been identified before, they would be included in the insolvency estate. This would mean that the transfer is opposable against the insolvency by the mere agreement between the parties, even if the transferee has not yet taken possession. 340 341 342

E. DIRIX, “Faillissement en lopende overeenkomsten”, R.W. 2003-04, p. 208, n° 20. Court of Appeal Ghent 1 September 1986, T.G.R. 1986, 63. E. DIRIX, o.c., R.W. 2003-04, p. 208, n° 20; J. VAN RYN and J. HEENEN, Principes de droit commercial, IV, Brussels, Bruylant, 1988 p. 321, n° 2781.

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Other legal scholars however tend to grant possessory protection to the competing creditors of the seller (and thus the insolvency estate). According to them, the goods are part of the insolvency estate based on an analogous application of Article 1141 and 2279 C.C.: as the creditors had the legitimate expectation that the property in possession of their debtor would belong to the insolvency estate, the purchaser would not be protected even if he had already paid the purchase price.343 If the purchaser had paid (part of) the purchase price in advance, he likewise has no priority in claiming restitution of the paid sum.344 Most legal scholars defending this opinion, however, accept that there is an exception if the sale is part of the normal course of business activity of the seller; in such a case, the purchaser would be entitled to vindicate the goods.345

13.3.

Protection of the transferor against insolvency of the transferee

Belgian law provides for several measures of protection in favour of the transferor against the insolvency of the transferee. This very favourable protection is grounded in the fact that the legislator has aimed to give an incentive to credit-sales.346 This chapter only deals with the situation in which the sales agreement has not been made subject to title retention. The rules below apply if property rights have passed immediately to the purchaser. The rules with regard to title retention are dealt with in Part IV, chapter 23.

13.3.1. Legal lien If the underlying contract is a sales agreement, the seller will be protected by a legal lien, which is provided by Article 20, 5 Mortgage Act. The seller of movable property has a legal lien (“privilège / voorrecht”) for the payment of the sales price if the debtor opens an insolvency proceeding, if the sold property can be found in natura in the possession of the buyer at the moment that an insolvency proceeding is opened against him. The development of the lien is interesting from the perspective of transfer of ownership. In Roman law, such lien was not necessary as ownership only passed at the moment of the traditio. Hence, the seller was fully pro343 344 345 346

Court of Appeal Brussels 7 June 1979, Bull. Bel. 1981, 1612. Cass. 9 March 2000, Arr.Cass. 2000, n° 164. A.P.R., v° Beslag, 2001, n° 635; E. DIRIX, o.c., R.W. 2003-04, p. 208, n° 20. H. DE PAGE and A. MEINERTZHAGEN-LIMPENS, IV, n° 25B and n° 246C.

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tected by his ownership if he did not agree upon payment terms after delivery. However, the seller who granted a payment period was not protected against any contractual breach by the purchaser. Therefore, a legal fiction was created that property, in a sale with a payment period, only passed at the moment of the traditio (so-called “clause de précarité”). Both systems thus have been made uniform by the creation of a legal lien.347 The scope of the lien is very broad. The existence of the lien is subject to the following requirements348: – The goods must have remained in the possession of the purchaser. It is debated whether the legal lien can be exercised if the purchaser has re-sold the goods to a third person, but is still in possession of the goods. Some authors defend the view that “possession” means estate, and that the exercise of the legal lien becomes impossible after the sale, independent of the question whether delivery is still possible. A legal lien would confer, according to this view, a (limited) right to follow the goods.349 Others argue that only delivery can exclude exercise of the lien.350 – The goods must have remained in the same material situation, e.g. they may not have been processed. We refer for the criteria and the proprietary consequences of processing (‘specificatio’) of goods to Part III, 17.1 of this report. – The sold goods have not been immobilized because of their destination or incorporation. If the sold goods have been incorporated into movable property or if the sold goods have been made accessory to immovable property, in such way that they became immovable by destination, the legal lien normally ceases to exist. However, the seller can ensure also in that case the continuation of his lien by depositing the invoice at the Commercial Court within eight days, in which case the lien persists for five years after the delivery. The lien not only covers payment of the sales price, but also the incidental costs of the sale, e.g. the costs of the sales agreement, transport, taxes and interest.351 347 348 349

350 351

H. DE PAGE and A. MEINERTZHAGEN-LIMPENS, IV, n° 246C. E. DIRIX and R. DE CORTE, o.c., p. 188, n° 276. H. DE PAGE and R. DEKKERS, Traité élémentaire de droit civil belge. Principes-doctrine-jurisprudence, VII, Les privilèges, les hypothèques, la transcription, la prescription, Brussels, Bruylant, 1957, n° 215; E. DIRIX and R. DE CORTE, o.c., p. 188, n° 276; F. LAURENT, Principes, XXIX, n° 479; V. SAGAERT, Zakelijke subrogatie, n° 646. A.P.R., v° Voorrechten, n° 352; A. KLUYSKENS, Beginselen, VI, n° 124. H. DE PAGE and R. DEKKERS, VII, n° 213; E. DIRIX and R. DE CORTE, o.c., p. 189, n° 277.

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13.3.2. Quasi-revindication The seller can, during a short period after the sales agreement, not only claim a lien for the payment of the sales price, but is also entitled to claim restitution of the sold goods. Article 20, 5°, § 8 of the Mortgage Act provides that if the sale has been entered into without fixing a payment period, the seller can claim restitution of the sold goods. The requirements are that the goods are in the possession of the purchaser; the claim in restitution is brought within eight days after delivery; and the goods are in the same condition as at the moment of the sales agreement. This remedy is called “quasi-revindication”. This name must however not cause any confusion: the seller does not exercise his ownership in exercising quasi-revindication, as the ownership has already passed to the purchaser. The exercise of quasi-revindication is subject to several requirements: 1° The remedy is only open to sellers of movable corporeal property. 2° The remedy is only open to sellers who have sold the goods without granting the purchaser a payment period. If a payment period has been granted, the possibility to exercise this remedy expires, even if the purchaser did not pay within the agreed period. 3° The sold goods must have remained in possession of the seller. As a consequence, the quasi-revindication cannot result in restitution of the property by a third party, nor does it grant a right to follow property. This requirement was introduced in the Civil Code to protect the third-party acquirer (Article 2279 C.C.). However, quasi-revindication can also be exercised with regard to a sales price that is substituted for the original goods.352 The latter possibility is an application of real subrogation. 4° The sold goods must have remained in the same material state as they were at the moment of the sales agreement. This condition is analogous to the condition existing for the exercise of the legal lien; namely, the goods must not have been processed in such a way that they have lost their original identity. We refer to Part III, 17.1, with regard to this requirement. 5° The chose in action must be introduced within a brief period of eight days after delivery of the goods. Originally intended to protect the third-party acquirers of the goods, nowadays this rule especially protects the unsecured creditors of the debtor. The legislator aimed to avoid creditors being mislead by the goods in possession of their debtor, which could in fact be vindicated by a third person. After expiry of this delay, the seller has only one legal remedy left, e.g. his legal lien.

352

A.P.R., v° Afbetalingsovereenkomsten, p. 176, n° 489; V. SAGAERT, Zakelijke subrogatie, Antwerp, Intersentia, 2003, n° 631.

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This quasi-revindication is a debated and peculiar witness of the historical development of the transfer system. As noted above, the seller who granted a payment period to the purchaser was not protected in Roman law. The protection of the seller was realized by the introduction of the legal lien. As a consequence, the possibility of vindication, which existed in Roman law, lost most of its usefulness, but nevertheless it remained intact: while the legal lien only granted a priority right in the sales price, the vindication enabled the seller to claim restitution of the asset itself, even if it had been transferred to third parties. In other words, the quasirevindication gave a right to follow the asset.353 Since the introduction of the Civil Code, the quasi-revindication has become an illogical legal instrument, as the seller is no longer to be considered the owner from the moment of the sales agreement.354 It no longer has any legal grounds in the current legal system.355 In 1946, a leading “procureur-général” declared that the maintenance of this legal institute was an illustration of bad legislative technique.356 However, it has persisted, even if it has lost its main characteristic (“right to follow”). Most legal scholars agree that this is not really a “vindication”, but rather a vindicatio possessionis.357 It is often considered a technique rendering possession to the seller and thus preceding the exercise of the legal lien. Quasi-revindication has lost a lot of its practical usefulness nowadays. It is no longer used very frequently in legal practice.358

13.3.3. Rescission of the agreement If the purchaser does not comply with his obligation to pay the purchase price, the seller can rescind the agreement. The right to rescind a mutual agreement if one of the parties does not comply with his obligations, is a general principle of Belgian contract law. It is expressly recognized by Article 1184 C.C., which provides that “a resolutive condition is always implied in synallagmatic contracts, for the case where one of the two parties does not carry out his undertaking” (free translation). In that case, the contract is not avoided as of right. The party towards whom the undertaking has 353 354 355 356 357

358

F. LAURENT, Principes, XXIX, n° 494-495. H. DE PAGE and A. MEINERTZHAGEN-LIMPENS, IV, n° 255. H. DE PAGE and A. MEINERTZHAGEN-LIMPENS, IV, n° 25B, n° 255. Proc. Gen. CORNIL, concl. under Cass. 23 May 1946, Pas. 1946, I, 204. H. DE PAGE and A. MEINERTZHAGEN-LIMPENS, IV, n° 256; F. LAURENT, Principes, XXIX, n° 494 and futher. E. DIRIX and R. DE CORTE, o.c., p. 187, n° 273; J. VAN RYN and J. HEENEN, Principes de droit commercial, n° 718.

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not been fulfilled has the choice either to compel the other to perform the agreement if it is possible, or to request its avoidance with damages. This provision is completed by Article 1655 C.C., providing as follows: “The avoidance of a sale of immovables shall be ordered at once where the seller is in danger of losing the thing and the price. Where that danger does not exist, the judge may grant the purchaser a period of time, the length of which depends upon the circumstances. Where that period expires without the buyer having paid, the avoidance of the sale shall be ordered” (free translation). Even if this provision expressly provides that it only applies to immovables, all legal scholars assume that it also applies to the sale of movables.359 It deprives the judge of the possibility to grant a payment period (“délai de grâce”) to the purchaser. The action to rescind the agreement is however subject to strict requirements in cases of insolvency proceedings of the purchaser. During the period the seller has the right to claim restitution of the goods (‘quasirevindication’), he also has the right to terminate the sales agreement. The chose in action must also be introduced within eight days after the delivery of the sold goods. The restitution pursuant to the termination is subject to the same conditions as the quasi-revindication.

13.3.4. Right of retention Moreover, the transferor normally has a right to withhold (‘retain’) the transferred goods until the price has been paid. This is called the right of retention (“droit de rétention/retentierecht”), which is – generally speaking – an application of the more general Roman law principle “exceptio non adimpleti contractu”. This right is the expression of a generally recognized principle but, with regard to sales, is expressly provided for by Article 1612 Civil Code: “The seller is not obliged to deliver the thing if the buyer does not pay the price of it unless the seller has granted him time for payment”. Article 1613 C.C. adds a complementary protection in case of insolvency of the buyer: “If the seller has granted a payment period to the buyer, he is not obliged to deliver if the buyer has become, after the sale, the subject of a judicial arrangement or is subject to an insolvency proceeding, such that the seller is in imminent danger of losing the price, unless the buyer gives him security for the payment within the payment period” (free translation). The right of retention is effective against the bankruptcy trustee if the transferee becomes insolvent. It is not necessary, in order to suspend his obligations, that the seller applies to a judge. 359

H. DE PAGE and A. MEINERTZHAGEN-LIMPENS, IV, n° 25B; J. VAN RYN and J. HEENEN, III, n° 264; J. LIMPENS, o.c., n° 549.

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However, the right to retain the goods is subject to various conditions:360 – The seller did not agree upon a period for the payment of the price, or the agreed period has expired. The forbearance period granted by the judge does not impede the right of retention.361 The judge can indeed grant to each contracting party who is unfortunate and in good faith a forbearance period within which to comply with his obligations, even if this has not been agreed on by the parties (Article 1244, § 2 Civil Code).362 – The seller is objectively and subjectively in good faith. The seller must not be himself the cause of the non-compliance. – The purchaser has not complied with his contractual obligations pursuant to his default. As a consequence, the seller will not be entitled to exercise this right if the buyer has not paid the price due to vis maior. The right of retention does not grant a priority right to the seller. For instance, the right of retention does not prevent other creditors of the purchaser to seize the retained goods. If the seller voluntary surrenders possession to the insolvency administrator, he will lose any protection (except for the legal lien). The only consequence of the right of retention is that the seller exercises factual power over the goods in order to be factually protected by the insolvency administrator. In fact, the insolvency administrator will pay the seller who exercises his right of retention if the purchased goods have a value exceeding the claim of the seller.363

13.3.5. Stoppage in transitu Article 104 of the Bankruptcy Act expressly provides the necessary conditions for the exercise of the right of stoppage in transitu. According to this provision, the seller can claim restitution of the goods of which he has been dispossessed as long as they have not been in the possession of the purchaser. This possibility only applies if the purchaser is subject to an insolvency proceeding; it cannot be extended to other cases where the purchaser is only in default of his obligations.

360 361

362

363

For a general overview: see E. DIRIX and R. DE CORTE, o.c., p. 348, n° 519. H. DE PAGE and A. MEINERTZHAGEN-LIMPENS, IV, n° 250; J. LIMPENS, o.c., n° 231. This provision is of public order and can thus not been excluded by parties in their agreement. E. DIRIX and R. DE CORTE, o.c., p. 347, n° 518.

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14.364 The transfer of the risk in contract law We refer to supra, Part II, 9.

15.

Transfer and co-ownership

The Belgian rules of co-ownership have been radically amended by an Act of 30 June 1994.365 This amendment aimed to adapt these rules to developments regarding apartment buildings. Meanwhile, the rules with regard to other forms of co-ownership were also adapted. Through these amendments, Belgian law of co-ownership has become substantially different from French statutory rules. Belgian law recognizes three forms of co-ownership: – ordinary (“accidental”) co-ownership; – compulsory co-ownership; and – voluntary co-ownership.

15.1.

Ordinary (“accidental”) co-ownership

Ordinary (“accidental”) co-ownership comes into existence due to circumstances, which are not based on the intention of the co-owners. The most frequent example is the co-ownership coming into existence among the heirs or general legatees of a deceased person. Another example is the situation in which two persons have commingled their property, for instance by co-habitation for a long period, and cannot prove their individual exclusive ownership of the property. In that situation, the property is deemed to be in co-ownership. These forms of co-ownership have not been anticipated by the parties, so that the co-owners have not been able to contractually organize their co-existence. The statutory rules are found in Article 577-2, §§ 1-8 C.C. With regard to transfer, the Civil Code makes a distinction between the transfer of the right in co-ownership and of the co-owned property: – Each co-owner is entitled to transfer his rights in the co-owned property to a third party, except if it has been otherwise agreed between the co-

364

365

For instance, it does not apply to “concordat judiciaire”: Cass. 18 November 1971, R.C.J.B. 1973, 5, note J. HEENEN Belgian Official Gazette, 26 July 1994). For a general overview of the rules with regard to co-ownership: H. VANDENBERGHE and S. SNAET, Mede-eigendom, in Beginselen van Belgisch Privaatrecht, Ghent, Story-Scientia.

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owners (Article 577-2, § 4 C.C.).366 He can also freely burden his rights with property rights. – It is not possible to transfer the property in co-ownership except with “co-operation” of all the co-owners (Article 577-2, § 6 C.C.). This means that transfer of the property is only possible with the unanimous consent of all co-owners. However, if one co-owner sells the property without consent of the other co-owners, the protection of the possessor in good faith will have to be taken into account (cf. infra, Part III, 18). As the co-ownership could not be anticipated, it is often unorganized and is harmful from an economic perspective. That is the reason why the legislator has given to each co-owner the right to end the co-ownership by division. This right is provided in Article 815 C.C.: “No one may be compelled to remain in undivided ownership and a division may always be effected, unless it was delayed by judgement or agreement” (free translation).367 However, one can agree to delay the division for a certain period, but such period may not exceed five years. This period can be renewed. There are also statutory exceptions to the possibility to effect the division.368 Division can in the first place be effected by the co-owners themselves. Article 1561 Judiciary Code grants the same right to the creditors of the co-owners. The latter provision deals with the right of the creditor to seize the rights of the debtor in the co-ownership. Pursuant to this provision, the seizure cannot be executed before the division or public sale of the property, which can be effected by the personal creditors.369 According to the majority opinion, the creditor who effects the division of the co-ownership does

366

367

368

369

Contractual clauses prohibiting or restricting the right to dipose of these rights, must fulfill certain conditions (cf. infra in this section). Although this rule is part of the Chapter on the Law of Succession, it is generally assumed to apply on all ordinary forms of co-ownership. We refer to article 3 of the Act of 15 May 1900 on small heritages, which provides that if one or more minor heirs can claim the heritage, the indivision which is burdened with a usufruct of the widow, can be maintained by the judge during one or more periods until the minor heir has reached the age of 18 years old. E. DIRIX and R. DE CORTE, o.c., p. 422, n° 615; R.P.D.B., compl. VIII, v° Saisie immobilière, n° 23. The prohibition to execute until the division does not apply if all co-owners are engaged to perform the entire obligation (E. DIRIX and R. DE CORTE, o.c., p. 422, n° 615; A. SCHICKS, “De l’hypothèque sur part indivise. Commentaire pratique de l’article 2 de la loi du 15 août 1854”, Rev. not. b. 1912, p. 35, n° 2. For an application in French law: Cass. fr. 19 December 2000, Bull. civ., IV, n° 202 and J.C.P. 2001, éd. E, I, n° 315, p. 813, note P. SIMLER and P. DELEBECQUE).

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not exercise the rights of his debtor,370 but his own rights.371 Agreements for a period of maximum five years, which have been stipulated between coowners, must be taken into consideration by the creditors who must avoid executing seizure measures until the expiration of this term.

15.2.

Compulsory co-ownership

Compulsory co-ownership comes into existence if the object of the coownership, given its nature, cannot be divided among the parties. A typical example is a family tomb. Most often, the property in co-ownership is accessory to property that exclusively belongs to the co-owners. It is an application of the “accessorium sequitur principale” principle. For instance, the common areas in an apartment building are in coownership among the co-owners because the use of the common areas is necessary in order to gain access to the flats, which are in exclusive ownership. So, Belgian law adheres to the theory of dualism and not to the monistic structure, which is used in some European countries (e.g. Austria, the Netherlands). Another example is the common wall situated on the borderline between two immovable goods. The general rules with regard to co-ownership are included in Article 577-2, § 8-§ 9 C.C. However, extensive particular rules are provided for apartment co-ownership, which are set out by Article 577-3 to Article 57714 C.C. The specific type of compulsory co-ownership is the ‘common wall’ dividing two or more parcels of land. This type is also governed by specific provisions, which are included in Article 653 et seq. C.C. As these forms are an application of “accessorium sequitur principale”, the co-ownership cannot be divided (Article 577-2, § 9 C.C.). Neither is it possible to transfer the rights in co-ownership without transferring the principal property. The transfer of the principal property entails an automatic transfer of the rights in the co-ownership.

15.3.

Voluntary co-ownership

Voluntary co-ownership is the indivisibility that has come into existence pursuant to an agreement among the co-owners. Typical cases are the coownership of ships and the co-ownership of intellectual property rights. 370

371

E.g. the “action oblique”, which is provided in article 1166 C.C.: “However, creditors may exercise their debtor’s rights and actions, except those which are exclusively dependent on the person” (free translation). V. SAGAERT, Zakelijke subrogatie, n° 686.

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Other examples are to be found in the financial business, for instance an investment fund. Voluntary co-ownership is not regulated in a general manner. Each form of voluntary co-ownership is governed by a specific set of statutory provisions.372 The question whether a co-owner may transfer his rights in the co-ownership depends upon the issue whether or not the agreement creating the co-ownership was intuitu personae. There is a highly complicated debate going on about the question whether a co-owner can effect the division of this co-ownership. Traditionally, most legal scholars adhere to the opinion that Article 815 C.C., which provides for the possibility of division, only applies to ordinary forms of co-ownership. There is no need to be entitled to division, as parties have been able to anticipate and organize the indivisibility of the property. More recently, the position of the creditors is taken into consideration. If the co-owners cannot effect the division, creditors cannot do so either. This would mean that it would be sufficient to bring property into voluntary co-ownership in order to escape the execution rights of the creditors. Therefore, it is argued that voluntary forms of co-ownership, which are not entered into intuitu personae, are not subject to division. Other voluntary forms of co-ownership would be amenable to division.

16.

Transfer and unidentified property

16.1.

Transfer of unidentified property

It has already been noted that property rights are characterized by the principle of specificity, e.g. they can only have identified or identifiable goods as their object. We refer for an extensive analysis to supra Part II, 9.2.1.

16.2.

Floating charge

Belgian law has a legal institution that is rather similar to a floating charge: the “gage flottant / wisselpand”. This legal institution, which is not provided by statute, has been recognized in case law. It enables a creditor and debtor to create a pledge on an object of rotation. The substitutions within the object of the pledge do not impede the existence of the initial pledge.

372

For collective investment funds: the Act of 20 July 2004 with regard to certain forms of administration of collectieve investment funds, Belgian Official Gazette 9 March 2005. for co-ownership of ships: article 55-57 Sea Act.

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This issue arises mainly with regard to substitutions that have been effected during the “suspect” period preceding the bankruptcy. Normally, securities that have been vested during the suspect period (maximum. six months) in order to guarantee antecedent debts, have no effect on the other creditors. The floating charge removes this risk, as the initial pledge with its initial date continues to exist. The Belgian Supreme Court of 12 November 1914 ruled in a judgement as follows: “Lorsqu’au cours de la période suspecte, un failli a substitué un gage à un autre gage, cette opération n’est nulle que si les choses restituées au failli, au moment même de la substitution, n’étaient pas d’une valeur égale à celle qui leur ont été substituées”.373 This rule can, in many perspectives, be considered an exception to the principle of specificity, which requires that property rights have as their object specified or identifiable goods (cf. supra Part II, 9.2.1). The conditions set forth for this floating charge are the following: – The substitution must be effected instantaneously. If there is an overlap – or by contrast a gap – between the presence of the original goods and the presence of the substitute goods, the security right to the substitute goods will be considered a new security right. – The original goods and the substitute goods must have an equal value.374 If the value of the substitutive goods exceeds the value of the original goods, the difference remains outside the scope of the pledge. This rule aims to protect the other creditors, who should not be disadvantaged by the possibility to substitute goods. – Fungibility: it is a debated question whether the floating charge only involves a pledge on fungible goods, or whether it can also involve non-fungible goods. It emerges from the case law of the Supreme Court that fungibility is not a precondition for the floating charge. This contravenes French case law, where the fungible nature of the goods is a condition for the application of this theory: “les marchandises […] sont destinées à être remplacées par d’autres de même nature et en égale quantité”.375

373 374

375

Cass. 12 November 1914, Pasicrisie 1915, I, 124. Cass. 7 October 1976, Pasicrisie 1977, I, 154, concl. Proc. Gen. E.M. KRINGS and R.C.J.B. 1979, 5, note J.-L. FAGNART. Cass. fr. 10 March 1915, D. 1916, I, 214, S. 1916, I, 5, note C. LYON CAEN, Rev. trim. dr. civ. 1915, 528 and Rev. trim. dr. civ. 1916, 103, note R. DEMOGUE.

Part III: Original acquisition Acquisition of property is original if the owner does not obtain his right from another person. It is sometimes thought that only a factual situation can lead to an original acquisition of property.376 However, several original means of acquisition of property, such as occupation, seem to imply the intention to become the owner of the property of which one takes possession.377 Original acquisition of property is opposed to derivative acquisition of property, where the owner obtains his right from another person; it is transmitted to him by a certain legal act.

17.

Specificatio – accessio

17.1.

Specificatio

Acquisition of property by means of specificatio (creation of property) takes place when: 1. The object of an obligation that is only determined by its sort (genus) is transformed into a definite object of that obligation (species), e.g. a buyer buys five pounds of potatoes. He acquires the ownership of the potatoes bought at the moment the seller individualises the quantity bought.378 2. Certain property is transformed into other property (species nova), e.g. a stone is transformed into a statue, paint is transformed into a valuable painting. The new property belongs in principle to the owner of the original property on the condition that he pays for the work that has been effected by the manufacturer.379 However, if the work was so important that the value of the work exceeds to a large extent the value of the materials, the manufacturer becomes the owner of the product of his manufacturing on the condition that he pays the value of the materials to their original owner.380 If the manufacturer acted in bad 376

377 378 379 380

F. VAN NESTE, Zakenrecht, I, Goederen, bezit en eigendom, in Beginselen van Belgisch Privaatrecht, Brussels, Story-Scientia, 1990, n° 158, p. 302. Comp. F. VAN NESTE, o.c., n° 160, p. 306. Cf. supra Part II, 9.2.1. Article 570 C.C. Article 571 C.C.

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faith, i.e. he knew that he was using another’s materials, he has to compensate the original owner of the materials for the loss he caused him.381 However, these rules have a suppletive nature, in the sense that parties can contractually exclude the application of these rules. Moreover, their application is rather exceptional: if the manufacturer is a possessor in good faith, he will have become the owner due to the application of Article 2279 C.C., so that no property conflict arises.

17.2.

Accession (“accessio”)

By means of accessio, the owner of property owns everything that it produces or that incorporates itself into it (quod accedit) naturally or artificially.382 Accessio creates in the first place a presumption of ownership: buildings, crops or other improvements on or below the land are presumed to be manufactured by the owner of the land with his materials. If it is demonstrated that the incorporated property belonged to another person at the moment of the incorporation, accessio also functions as a way of acquisition of property in favour of the ground owner.383 The owner of the incorporated property can, however, claim compensation for his loss of property. Accessio implies an incorporation, e.g. a material tie between a main and an accessory movable or immovable. Mere manufacturing, improvement or repair of property does not lead to accessio; only to an obligation under the application of the theory of costs.384 Accessio demands that the accessory property remains, even after the incorporation into the main property, sufficiently identifiable so that it can be removed. If this is not the case one will not speak of accessio, but of mere manufacturing, improvement or repair. In the case of accessio, the ownership of the accessory property follows that of the main property. If movable and immovable property are involved, the immovable property will be considered as the main property. Article 381 382

383

384

F. VAN NESTE, o.c., n° 217, p. 384-385. Article 546 C.C. specifies that the attachment should be accessory. This means that the attached object should unite itself with and incorporate itself in the “main” property (article 551 C.C.). Article 533 C.C; F. VAN NESTE, o.c., n° 196, p. 357-358 and n° 201 et seq., p. 363 et seq. Article 533 C.C. also installs the presumption that the buildings, crops and improvements on or below land belong to the owner of the land. This presumption can be reversed by proving that one has acquired title to this property by prescription or by another title. Cass. 21 April 1866, Pasicrisie 1866, I, 130; F. VAN NESTE, o.c., n° 203, p. 365. Cass. 23 December 1943, Pasicrisie 1944, I, 123; F. VAN NESTE, n° 197, p. 358.

296

Belgium

577-2 §§ 9 and 10 C.C. exceptionally consider the land as one of the accessories to the ownership of an apartment; however, this does not imply that a reversed case of accessio is provided by law.385 Rather, it forms the legal grounds for appartment co-ownership in Belgian law. This manner of original acquisition has a definitive nature: ownership acquired by accessio will not end if the material tie would no longer exist.386 Articles 554 and 555 C.C. deal with artificial accessio (accessio by human intervention) of movable into immovable property. Article 554 C.C. stipulates that if the owner of the land has realised buildings, crops or works with materials belonging to another person, he has to pay the value of the materials; he can also be ordered to pay damages. The owner of the materials does not, however, have the right to claim restitution,387 not even at the moment the building is demolished.388 The value of the materials is to be determined at the moment they are acquired by the owner of the land, i.e. the moment of incorporation. Article 555 C.C. deals with the reverse situation, e.g. the situation in which someone has built or realised crops or works on another’s land. The owner of the land can accept that the third party has possession of the property he has constructed. By means of prescription, the third party can even acquire the underlying property. However, the owner of the land has the right to revindicate his property and – if the third party acted in bad faith – demand that everything that has been constructed by the third party be demolished and removed, even if these works do no harm to the owner’s property and even if they constitute additional value to it.389 The third party in bad faith will have to pay the expense of removal and he is obliged to pay damages to the extent he caused damage to the owner of the land. The owner can also choose to keep the buildings, crops or works. The choice is irrevocable.390 If the proprietor has chosen to keep the works, the third party has the right to be indemnified for the materials and the work. The third party can sue him for payment of the compensation due; he may not however remove the works.391

385 386 387 388 389

390

391

F. VAN NESTE, o.c., n° 197, p. 359. F. VAN NESTE, o.c., n° 198, p. 359-360. Article 554 C.C. F. VAN NESTE, o.c., n° 204, p. 366; R.P.D.B., v° Propriété, n° 145. F. VAN NESTE, o.c., n° 207, p. 368. However, the owner is – as any other holder of a property right – subject to the theory of abuse of rights. H. DE PAGE and R. DEKKERS, VI, n° 66, B, p. 56; F. VAN NESTE, o.c., n° 210, p. 371. F. VAN NESTE, o.c., n° 210, p. 372.

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If the third party acted in good faith, the proprietor of the land may not demand removal of the works. He is obliged to pay either the value of the materials and the work, or the additional value the property has gained.392 The third party is considered to have acted in bad faith if he knew or ought to have known that the land did not belong to him.393 The third party is acting in good faith when he possesses the land, as an owner, on the grounds of a title of transfer of property that he does not know (and does not have to know)is defective.394 The rule of Article 555 C.C. applies unless a special law rules the conflict of ownership between the owner of the land and the third party.395 Articles 556 to 563 C.C. deal with natural accessio, in particular with modifications to land because of the presence of water. The provisions do not have great practical relevance nowadays and are anyway not relevant in a study concerning the transfer of movables. Article 564 C.C. stipulates that pigeons, rabbits and fish that move to another pigeon-house, park or pond belong to the owner of that property, as far as the animals have not been lured by fraud or ruse. Articles 565-577 C.C. deal with various situations concerning the unification of two or more movables or the manufacturing of a movable out of material that does not belong to the manufacturer. The legislator proposes various solutions and does not apply a consistent system of accessio, accessoria sequitur principale. These articles have lost much of their interest. In most cases the one who uses materials belonging to another will already have acquired possession thereof based on Article 2279 C.C. Only in exceptional cases, where possession does not suffice as title to property, does one need the mentioned rules. In the case the manufacturer had taken possession of the incorporated property in bad faith, accessio would take place, but bad faith would imply an obligation to compensate the loss suffered by the owner.396 Replacement materials that have been used to repair a car are not transferred to the owner of the car by means of accessio, incorporation in the car. The transfer of property would only take place at the moment the repaired car is delivered to his owner.397 392 393 394

395 396 397

Article 555 third paragraph C.C. F. VAN NESTE, o.c., n° 290, p. 370. Article 555 third paragraph C.C. juncto article 550 C.C. See F. VAN NESTE, o.c., n° 211, p. 373. F. VAN NESTE, o.c., n° 213 et seq., p. 377 et seq. F. VAN NESTE, o.c., n° 217, p. 384-385. F. VAN NESTE, o.c., n° 217, p. 385 with reference to Brussels 18 April 1969, Pasicrisie 1969, II, 167 annulled by Cass 20 April 1970, Arr.Cass. 1970, I, 719 because the motivation concerning the acquisition of property by accessio is not clear.

Belgium

298

18.

Good faith acquisition

Good faith acquisition, i.e. the acquisition in good faith of a movable from a non-owner, is governed by Article 2279 C.C. This provision is part of the title “Prescription”, chapter “Time for prescription” of the Civil Code. Indeed, Article 2279 C.C. is considered to provide for an immediate prescription for movables, a prescription for which the time is reduced to zero (or three years).398

18.1.

Scope

18.1.1. Material scope of the property Article 2279 C.C. only applies to corporeal movables. Also concerned are: the real rights concerning movables, such as ususfructus or pledge, and negotiable instruments to bearer or order, in so far as they are endorsed in blank,399 banknotes,400 manuscripts, objects of art, industrial models.401 Article 2279 C.C. does not apply to immovable property, incorporeal movable property, movables that are considered accessories to an immovable, movables that have become immovable by destination or incorporation, movables by anticipation, universalities, movables that belong to the public domain (e.g. collections of museums402), and movables of which the transfer implies any kind of public notice or record (e.g. boats403, airplanes404)405. 398

399

400

401

402 403

404

405

H. DE PAGE and R. DEKKERS, V, 1975, n° 1032, p. 912. Contra: J. HANSENNE, I, n° 236, p. 245 who refutes the idea that a type of prescription is concerned. The Law of 24 July 1921 contains special rules concerning the involuntary loss of securities to bearer. Article 2279 second paragraph does not apply to notes of the National Bank of Belgium nor to the notes emitted on the basis of the law of 12 June 1930, when the possessor is in good faith. However, the possession of this property does not create a presumption concerning the transfer of the intellectual rights concerning this property. Cass. 2 October 1924, Pasicrisie 1924, I, 530. Article 2 Book II, Title I, Chapter I Commercial Code and article 272 Book II, Title X Commercial Code; for pleasure boats, see article 1 § 3 Law 21 December 1990, Belgian Official Gazette 29 December 1990 and article 2 et seq. Royal Decision 4 June 1999, Belgian Official Gazette 14 August 1999. Article 6 Law 27 June 1937, Belgian Official Gazette 26-27 July 1937 and article 2-3 K.B. 15 March 1954, Belgian Official Gazette 26 March 1954. See and compare R. DEKKERS and E. DIRIX, o.c., n° 219-220, p. 92-93; F. VAN NESTE, o.c., n° 266, p. 455; J. HANSENNE, I, n° 229 et seq., p. 238 et seq.

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299

The object of good faith acquisition is the property and not its value, except when the property is consumable goods.406

18.1.2. Scope of the position of the real owner The protection of a third acquirer differs according to whether the owner has been dispossessed voluntarily or involuntarily. In the first case, the owner has voluntarily transferred the possession to a second party on the basis of a contract – that either did not transfer ownership (e.g. a lease) or that did transfer ownership, but which ownership was reclaimed ex tunc (e.g. by avoidance or termination). In such a case, the second party is deemed to have good faith acquisition immediately. However, for a period of three years, the right to revindicate belongs to any person who had possession of the property and who was then involuntarily dispossessed, such as lessees, depositees, but who held the property for another and are responsible to the owner.407 In the case of involuntary dispossession, the real owner has been dispossessed by loss or theft.408 This makes it possible only for a bona fide purchaser to become the owner after three years.

18.1.3. Scope of the position of the transferee (a)

Meaning of “transferee” – rights the transferee intended to acquire

The “transferee”, protected by Article 2279 C.C, is not only the acquirer of the property in the sense of being one who intended to acquire the ownership over the property, but also the pledgee who has obtained in good faith a pledge, albeit of a non-owner. More generally, this protection is awarded to everyone who has been granted property rights over corporeal movable property by someone who did not have the power to transfer these property rights.409 The protection of Article 2279 C.C. is subject to the conditions mentioned below.

406 407 408 409

H. DE PAGE and R. DEKKERS, V, 1975, n° 1073, p. 946. H. DE PAGE and R. DEKKERS, V, n° 1073, p. 946. F. VAN NESTE, o.c., n° 267, p. 456-457. H. DEKKERS and R. DE PAGE, V, 1975, n° 1062, p. 937-939.

Belgium

300

(b)

Good faith

The law does not mention the condition of good faith of the acquirer for the application of Article 2279 C.C. Nevertheless, this condition is generally accepted by legal scholars and case law.410 For obvious reasons, a possessor in bad faith cannot claim protection. This condition is founded on Article 1141 C.C. and on the ratio legis of the Civil Code.411 The third acquirer is acting in good faith if he did not know, and ought not to have known, that he was dealing with a person who had no right to transfer the property. Circumstances that make the acquirer doubt, or that should make him doubt, whether he is acquiring the property from a person who has the right to transfer it, affect good faith,412 e.g. when one buys a valuable object for below its market value. Good faith requires that the third acquirer should have taken notice of all unusual circumstances that cast suspicion over the rights of the previous pretended owner. The courts are strict, but it is not required that the third acquirer investigate extremely carefully whether the person with whom he is dealing is the real owner or not. Higher standards apply to professionals than to consumers. It suffices that good faith exists at the moment one takes possession of the property.413 If the acquirer later learns that he has not dealt with the actual owner, this has no influence on the rights he acquired in good faith.414 Good faith is presumed.415 The party who invokes bad faith bears the burden of proof.416 It suffices to prove that the third acquirer doubted or 410

411 412

413

414

415

416

R. DEKKERS and E. DIRIX, o.c., n° 218, p. 92 and n° 230, p. 98; F. VAN NESTE, o.c., n° 271, p. 462 and the references cited. F. VAN NESTE, o.c., n° 271, p. 463. Cass. 3 June 1915, Pasicrisie 1915-16, I, 300; Cass. 12 November 1925, Pasicrisie 1926, I, 57; Cass. 17 October 1984, Arr.Cass. 1984-85, 280 and Pasicrisie 1985, I, 244; H. DE PAGE and R. DEKKERS, V, 1975, n° 1058, p. 934-935. Article 2269 C.C. mentions in fact the moment of acquisition. The moment of acquisition is usually also the moment one takes possession of the property; as far as there is a distinction between both, the moment of acquisition is determinant according to the dominant opinion: Liège 30 June 1988, Rev. Liège 1989, 1150; H. DE PAGE, V, 1975, n° 1059, p. 935; F. VAN NESTE, o.c., n° 271, 464-465. Contra: J. HANSENNE, I, n° 236, p. 245. Kh. Bruges 24 June 1997, Tijdschrift voor Westvlaamse Rechtspraak 1998, 73; J. HANSENNE, I, n° 236, p. 245; F. VAN NESTE, o.c., n° 272, p. 464; M. PUELINCKXCOENE, N. GEELHAND and F. BUYSSENS, o.c., T.P.R. 1999, n° 210, p. 1177. Article 2268 C.C.; Kh. Brussel 24 June 1996, J.T. 1995, 72; Brussels 23 June 1997, Actualités du droit: revue de la Faculté de droit de Liège 1999, 113, note M. SOMMACAL. M. PUELINCKX-COENE, N. GEELHAND and F. BUYSSENS, o.c., T.P.R. 1999, n° 210, p. 1176-1177.

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should have doubted the rights of the person from whom he acquired the property.417

(c)

Possession

To realize the transfer of property on the basis of Article 2279 C.C., the possession of the third party has to be real, pro suo and free of defects. (i)

Real possession

The third party needs to have “material” possession of the property, meaning that he must acquire factual control over the property. Third parties, and more specifically the actual owner, must be able to realize that there has been a real transfer of possession. Whether or not the possession is real, is a question of fact. If the possession has been transferred constitutio possessorio, the possession is considered not to be real. However, the symbolic nature of a transfer does not exclude it from granting ‘real possession’: e.g. the transfer of keys or the application of a sign on the property to be delivered confers a real nature to the possession.418 However, the transmission of letters of carriage or receipts is not accepted as a means of rendering the possession real. The question whether a bank order transfers the legal possession has been disputed.419 At present, the majority opinion answers this question negatively. If the possessor loses possession by means of violence or force, the real nature of the possession of the third-party acquirer is not considered to be lost.420 However, if he returns the property voluntarily to the original owner (because he has discovered that he purchased non a domino), he can no longer invoke Article 2279 C.C. to receive payment, because he has surrendered possession of the property.421

417 418 419

420 421

F. VAN NESTE, o.c., n° 272, p. 465. F. VAN NESTE, o.c., n° 269, p. 459. Answer this question positively: Mons 20 November 1979, R.C.J.B. 1984, 192, with critical note P. DELNOY; Mons 26 November 1980, Pasicrisie 1981, II, 19, Rev. Not. B. 1983, 288, note J. SACE. Answer this question negatively: Mons 5 May 1987, Rev. Liège 1987, 1026. Brussels 22 January 1963, Pasicrisie 1964, II, 188. Kh. Brussel 24 June 1996, J.T. 1995, 72; F. VAN NESTE, o.c., n° 267, p. 459.

Belgium

302

(ii)

Possession pro suo

To benefit from the protection of Article 2279 C.C., the possessor has to exercise the possession for himself, pro suo and not for another.422 Possessio pro suo can be possession as an owner, animo domini, but also as the holder of another real (security) right, e.g. as a ususfructuary or pledgee.423 The Civil Code provides a presumption that the possessor of property is the owner.424 The appearance of possession can create this presumption. However, the presumption is only juris tantum.425 The claimant may overcome the presumption by proving that the defendant possesses for another, that he is not a lawful possessor, but only a holder.426 However, whoever voluntarily surrenders control over the property loses the protection of Article 2279 C.C; even if the surrender takes place bona fide after having heard of the problems concerning the ownership of it and even if the property is handed-over to a bailiff.427 (iii)

Possession free of defects

It is often repeated that the possession of the acquirer a non domino has to be continuous,428 undisturbed (not created by violence),429 public (i.e. not hidden),430 and not ambiguous431 in order to serve as title against the real owner. However, authoritative legal scholars deny the necessity of the continuity of the possession of the acquirer a non domino.432 If the possession is 422

423 424 425 426 427 428 429

430

431 432

Com. Brussels 16 May 1963, Pasicrisie 1963, III, 124; F. VAN NESTE, o.c., n° 270, p. 460. F. VAN NESTE, o.c., n° 270, 460. R. DEKKERS and E. DIRIX, o.c., n° 227, p. 96. Article 2230; F. VAN NESTE, o.c., n° 270, p. 460. Article 2230 C.C.; R. DEKKERS and E. DIRIX, o.c., n° 226, p. 95. Antwerp 7 October 1997, Limburgs Rechtsleven 1997, 220. H. DE PAGE and R. DEKKERS, V, n° 1052, p. 928. Article 2229 and 2233 C.C.; H. DE PAGE and R. DEKKERS, V, n° 1051, p. 928. Who acquired the movable violently cannot invoke the protection of article 2279 C.C. against the real owner, but he can appeal to article 2279 C.C. in relation to third parties, see R. DEKKERS and E. DIRIX, o.c., n° 223, p. 93. Article 2229 C.C.; H. DE PAGE and R. DEKKERS, V, n° 1053, p. 929; R. DEKKERS and E. DIRIX, o.c., n° 223, p. 93. Article 2229 C.C.; R. DEKKERS and E. DIRIX, o.c., n° 223, p. 93. R. DEKKERS and E. DIRIX, o.c., n° 223, p. 93. Also J. HANSENNE, I, n° 237, p. 246 who specifies however that discontinuity might be taken into account not qualitate qua as a defect, but as an indication of fraud.

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303

intentionally hidden, the possessor will probably be in bad faith.433 It has also been pointed out that if the possession is created by violence, Article 2280 C.C. (acquisition of stolen or lost goods at a market or from a seller who usually sells goods of the same kind) will often apply.434 Only ambiguity is unanimously accepted as a defect excluding acquisition of property based on possession by an acquirer a non domino.435 The burden of proof of the defects rests on the party who invokes them.436

(d)

Title

A title, a iusta causa, is every legal act for which the law confers the effect of the acquisition of property (e.g. sale, exchange, gift).437 In the past, opinions diverged concerning the question whether the possessor has to prove his title. According to a first opinion, the possessor has to prove his title, which means a iusta causa, a legitimate cause such as a bilateral or unilateral legal act, or a rule of law that provides a means of acquisition of property (e.g. intestate succession). The requirement of a valid title would be implied in Article 2279 C.C., given its place in the Civil Code in matters of prescription.438 According to a second opinion, the possessor need not prove his title. The title is presumed to exist based on Article 2268 C.C.439 An exception to this rule would only exist for the pledgee, who would have to prove his title because a pledge can only exist based on a valid title.440 This dispute ended in 1974 with a judgement of the Cour the Cassation that adhered to the second opinion, stating that the possessor in good faith of movables need not prove any other element to justify his ownership of the property.441

433 434 435

436

437 438

439 440 441

J. HANSENNE, I, n° 237, p. 246. F. VAN NESTE, o.c., n° 270, p. 462. H. DE PAGE and R. DEKKERS, V, n° 1054, p. 929-930; F. VAN NESTE, o.c., n° 270, p. 462. M. PUELINCKX-COENE, N. GEELHAND and F. BUYSSENS, o.c., T.P.R. 1999, n° 209, p. 1176 and the cited references. H. DE PAGE and R. DEKKERS, V, n° 1055a, p. 931. R. DEKKERS, “Inzake roerend goed geldt bezit als title, doch niet als wettige titel”, R.W. 1972-73, 1937 et seq.; R. DEKKERS in H. DE PAGE and R. DEKKERS, V, n° 1055, p. 932 whose opinion differs from that of H. DE PAGE in the first edition. J. HERBOTS, “Bezit en bewijs”, R.W. 1973-74, 1033-1038. F. VAN NESTE, o.c., n° 272, p. 465. Cass. 20 December 1974, Arr.Cass. 1975, 478 and Pasicrisie 1975, I, 441.

Belgium

304

18.1.4. Scope of the position of the transferor For property of which the real owner has been dispossessed, the protection of the third acquirer differs according to (1) whether the dispossession has been voluntary or involuntary, and (2) whether he has acquired the movable from a person who usually sells goods of this type.442

18.2.

The protection offered to the acquirer

18.2.1. Voluntary dispossession of the real owner The third party who acquired possession in good faith from a non-owner a movable – of which the owner had been voluntarily dispossessed – cannot be subject to revindication by the owner. The real owner, who had an action in revindication against the transferor, loses this in the case of transfer of the property to a third party in good faith; he retains however a personal action against the transferor.443 Quid if the bona fide acquirer transfers the movable to a third person who knows that his transferor has acquired a non domino? It might be surprising, but this third person will immediately receive the movable property, through the title of sales, for his transferor had obtained the property based on Article 2279 C.C. He had the right to transfer the movable regardless what the transferee knew or did not know concerning the history of the movable.444 The third person did not acquire non a domino, so that he does not need to argue Article 2279 C.C.

18.2.2. Involuntary dispossession of the real owner (a)

Meaning of involuntary dispossession

Dispossession of movables is involuntary if the movables are lost or stolen. Movables are lost if they have disappeared unintentionally, or if their possession has ended by force majeure (e.g. flood), by accident or even by carelessness.445 442 443 444

445

Cf. infra, Part III, 18.2. F. VAN NESTE, o.c., n° 267, p. 456-457. H. DE PAGE and R. DEKKERS, V, n° 1061, p. 936-937; R. DEKKERS and E. DIRIX, o.c., n° 233, p. 99. Cass. 9 February 1982, Pasicrisie 1982, I, 728; H. DE PAGE and R. DEKKERS, V, n° 1072a, p. 945; F. VAN NESTE, o.c., n° 276, p. 472.

18. Good faith acquisition

305

Stolen property is property that was fraudulently taken away, even if it were for short use, by someone to whom the property did not belong (Article 461 Crim. C.). Certain forms of theft, committed by inmates and relatives for whom no criminal prosecution is possible (Article 462 Crim. C.) can nevertheless be taken into account by the application of Article 2279 second paragraph C.C.446 Revindication is possible, even if the thief is not known.447 The application of Article 2279 C.C. cannot be extended to grounds of dispossession other than loss and theft.448 As the crimes of abuse of confidence and swindle can only be committed in cases in which the owner of property has voluntarily handed it over to a third person, they cannot be assimilated into theft.449

(b)

Basic rule

In the case the real owner has been involuntarily dispossessed, he does not lose his ownership. However, the time during which the revindication can be exercised is limited. In the case the movable is transferred to an acquirer in bad faith, the revindication is possible for 30 years; this period can be suspended or interrupted. Against the bona fide acquirer, the time during which the revindication can be exercised is limited to three years from the moment of the dispossession.450 This three-year period cannot be suspended, interrupted or extended for any reason.451 If the acquirer bona fide sells the movable to a third party who knows of the loss or theft, this third party will not be protected against revindication by the true owner during the three years following the loss or theft.452 446

447

448 449 450 451 452

Civ. Ghent 13 February 1907, Pandectes Périodiques 1908, n° 789; Court of Appeal Brussels 19 November 1925, Tijdschrift voor Vrederechters 1927, 65 (abstract), Jurisprudence commercial de Belgique (hereafter: J.C.B.) 1926, 78, note, confirmation of Com. Brussels 17 November 1923, J.C.B. 1924, 36; R. DEKKERS and E. DIRIX, o.c., n° 237, p. 100; F. VAN NESTE, o.c., n° 276, p. 473. R. DEKKERS and E. DIRIX, o.c., n° 237, p. 100; F. VAN NESTE, o.c., n° 276, p. 473. Also Justice of the Peace Brussels 27 June 1902, Pandectes Périodiques 1902, n° 1230. F. VAN NESTE, o.c., n° 276, p. 473. H. DE PAGE and R. DEKKERS, V, n° 1072a, p. 945; J. HANSENNE , I, n° 247, p. 256. Article 2279 § 2 C.C. R. DEKKERS and E. DIRIX, o.c., n° 240, p. 102. R. DEKKERS and E. DIRIX, o.c., n° 241, p. 102.

Belgium

306

(c)

Banknotes

For lost or stolen banknotes, revindication out of the hands of a possessor in good faith is excluded.453 Article 2279 C.C. provides that banknotes issued by the National Bank of Belgium, or issued pursuant to the act of 12 June 1930, cannot be vindicated if the possessor is in good faith. It is mostly assumed that this provision also applies to banknotes issued by the European Central Bank. This provision is an exception to the rule that the owner of involuntarily dispossessed property can vindicate the property during three years (cf. supra this Part III, 18.2.2). This provision was inserted by the Act of 22 June 1953454 pursuant to a judgement of the Belgian Supreme Court in which the vindication of an identifiable unit of banknotes was approved. The legislator excluded banknotes from vindication because of the necessity to have legal certainty with regard to banknotes. As banknotes are a compulsory instrument of payment (the creditor may not refuse payment), the recipient (creditor) must have legal certainty that he will not be dispossessed. Several authors defend the view that this provision is the expression of the general rule that banknotes can never be vindicated out of the hands of a third party. They argue that this rule is founded in the principle of confusio nummorum.455 However, other legal scholars have taken a more restricted view, which is imposed by the terms of the statutory provision itself (good faith, stolen banknotes).456

(d)

Reimbursement of the purchase price

If the present possessor of the stolen or lost property has bought it at market, at an auction sale, or from a seller who usually sells this kind of property, the real owner cannot require that the possessor return the property unless he pays him the price at which the possessor bought it, as well as costs of the contract.457 Interest is not due as the possessor had the enjoyment of the movable. In order to qualify as “a seller who usually sells this kind of good”, the seller’s business needs to consist primarily of the sale of this kind of property. 453 454 455

456 457

Article 2279, § 3 C.C. Belgian Offical Gazette 13-14 July 1953. A. HEYVAERT, “Bezit geeft verscheidene titels”, T.P.R. 1983, p. 185, n° 25; C. RENARD, note on Cass. 30 October 1947, R.C.J.B. 1950, 26; M.E. STORME, “De kwaliteitsrekening, zakenrechtelijk bekeken” in E. DIRIX and R.D. VRIESENDORP (eds.), Inzake kwaliteit, Deventer, Kluwer, 1997, 56. V. SAGAERT, Zakelijke subrogatie, n° 366. Article 2280 C.C.; R. DEKKERS and E. DIRIX, o.c., n° 242, p. 102.

18. Good faith acquisition

307

A person who bought a car from a garage keeper who sells from time to time a second-hand car has no right to repayment of the price:458 Specifically, one who buys from a second-hand dealer will not enjoy this special protection.459 The true owner can demand repayment of the price and the contract costs paid to the possessor from the thief, the finder or from any person who has committed a fault that contributed to the fact the stolen or lost good came into the possession of the possessor in good faith.460

(e)

Bearer shares

The law of 24 July 1921 offers the victim of involuntary loss of bearer shares greater protection than that provided by Articles 2279 and 2280 C.C. The greater protection consists in an extensive interpretation of “loss of possession”. The dispossessed owner of the bearer shares must follow a procedure of opposition ending in revindication.461 Articles 2279 and 2280 C.C. continue to apply to transactions that took place before the publication of the opposition.462 It should be noted that securities to bearer will gradually disappear from Belgian law pursuant to the Act of 14 December 2005.463

(f)

Other specific rules

For certain cases of lost objects, there are specific rules: Article 33 Com. C.; Article 14 Field code; Article 16-17 Edict of 13 August 1669 containing the general regulations for waters and forests; Decree of 13 August 1810 concerning objects entrusted to certain transport enterprises that have not been claimed within six months from their arrival at their destination and Law 28 February 1860 that declares the decree of 13 August 1810 applicable to objects left in railway stations or that have not been claimed within 458

459 460 461 462 463

Court of Appeal Brussels 1 June 1927, Pand. Pér. 1927, 217; H. DE PAGE and R. DEKKERS, V, n° 181, p. 952-953. Contra: Court of Appeal Mons 18 December 1940, Pasicrisie 1941, III, 79. H. DE PAGE and R. DEKKERS, V, n° 181, p. 952-953. See R. DEKKERS and E. DIRIX, o.c., n° 243, p. 103. R. DEKKERS and E. DIRIX, o.c., n° 246, p. 104. H. DE PAGE and R. DEKKERS, V, 1975, n° 1080, p. 953. This act however provides for long periods of transition. From 1 January 2008, companies will not be entitled anymore to emit bearer shares. Until 1 January 2013, the owners of bearer shares will be entitled to request the conversion of their financial instrument into a nominative share.

Belgium

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a certain time, Belgian Official Gazette 1 March 1860; Article 16 Law 26 December 1956 on Post services, Belgian Official Gazette 30-31 December 1956; Article 13, § 1 R.D. 2 April 1975 containing police regulations concerning the working of taxi services, Belgian Official Gazette 18 April 1975, err. 24 April 1975; Law 30 December 1975 concerning objects found on private land or on public roads in execution of judicial decisions in eviction, Belgian Official Gazette 17 January 1976; Law 21 February 1983 concerning the sale of certain left objects.

18.2.3. Exception: lessor’s right of revindication The right of revindication of the lessor exercising his legal lien on the goods that furnish the rented property and that have been moved (Article 20, 1° paragraph 3 Mortgage Act) without his consent, prevails over the protection offered by Article 2279 C.C.464

19.

Acquisitive prescription

Acquisitive prescription means that a person who has possession of property for a certain period of time becomes the owner of that property. This acquisitive prescription indirectly deprives an owner of his rights, as the acquisition of ownership by one person necessarily deprives the current owner of his ownership. It is in Belgian law the complement of extinctive prescription, which means that a person who does not exercise his rights during a certain period of time, will lose them or at least the remedies attributed to those right.

19.1.

Functions of acquisitive prescription

Generally, legal scholarship recognizes two functions of acquisitive prescription: First, it functions as proof of ownership. In order to prove ownership, one has to demonstrate that the predecessor was the legal owner, that in turn his predecessor was the legal owner, and so on until the origin of the asset at stake is revealed. Indeed, one cannot acquire ownership from a person who is not himself the owner (“nemo plus iuris potest transferre quam ipse haberet”). Moreover, Belgian / French law has no positive system of registration: the registration of immovable property rights in the mortgage registry 464

H. DE PAGE and R. DEKKERS, V, 1975, n° 1062a, p. 939.

19. Acquisitive prescription

309

does not give title to the registered person. The rights can be disputed, even after registration. Acquisitive prescription facilitates this burden of proof: it is sufficient that the person in question (and, depending on the case, his predecessor(s)) has / have been the possessor(s) of the land for at least 30 years in order to make the ownership indisputable.465 Secondly, acquisitive prescription is a method of acquiring ownership. If a predecessor was not the owner, the acquirer has not become the owner either. Acquisitive prescription will make him the owner after a certain period of time if the actual owner has not acted during that period. Several legal scholars and law makers have noticed that the result reached by prescription is most often not in line with justice and equity, and is illogical and disproportionate. During the preparatory works for the French / Belgian Civil Code, BIGOT-PREAMENEU (who was the main defender of customary law) warned against the inequitable results of the rules on acquisitive prescription.466 One of Belgian’s leading scholars adhered to those critical observations in writing that “a hundred years of injustice cannot make a single day of law”.467 If acquisitive / extinctive prescription has such unjust results, why has it been introduced as a general institution in the national legal systems? Modern scholars duly argue that the rule is not inequitable, but rather closes the gap between the factual and the legal situation.468 According to some, the institution of prescription could even be founded on natural law. BIGOT-PREAMENEU, the drafter of the Civil Code who criticized 465

466

467 468

R. DERINE, F. VAN NESTE and H. VANDENBERGHE, Zakenrecht, IB, p. 986, n° 665; M. PLANIOL and G. RIPERT, Traité pratique de droit civil français, Paris, L.G.D.J., 1952, III, p. 637, n° 688. See for an application: Cass. fr. 14 June 1961, J.C.P. 1962, II, n° 12.472, note BULTE and Rev. trim. dr. civ. 1962, note SOLUS. LOCRE, VIII, 344: “A la seule idée de la prescription, il semble que l’équité doive s’alarmer; il semble qu’elle doive repousser celui qui, par le seul fait de la possession, et sans le consentement du propriétaire, prétend se mettre à sa place, ou qu’elle doive condamner celui qui, appelé à remplir son engagement d’une date plus ou moins reculée, prescription et ne point paraître dans le premier cas un spoliateur, et dans le second un débiteur de mauvaise foi qui s’enrichit de la perte du créancier”. H. DE PAGE, VII, Brussels, Bruylant, 1974, n° 1132 (free translation). P. JOURDAIN, Les biens, in G. MARTY and P. RAYNAUD, Droit civil, Paris, Dalloz, 1995, p. 246, n° 184: “Certes, on pourrait songer à mettre fin à cette discordance en expulsant le possesseur, mais encore faudrait-il que le véritable propriétaire le demande. Et s’il le fait après une longue négligence, il vaut mieux préférer celui qui s’est conduit en fait comme un véritable propriétaire pendant longtemps et dont l’activitité a été socialement utile, à celui qui s’est désintéressé de sa chose et dont on peut penser qu’il a implicitement renoncé à son droit”. Likewise: M. PLANIOL and G. RIPERT, Traité pratique, III, p. 637, n° 688.

Belgium

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the inequity of these rules, meanwhile advanced the position that no rule corresponds to a more pressing social need than the rules on prescription.469 Several arguments have been advanced in support of acquisitive prescription. The first argument that has been raised is that prescription would be grounded in a presumption of a waiver of rights.470 However, this argument is criticized because the presumption is irrefutable. Proof of the contrary is not possible. A more general approach finds justification for prescription in the general interest of society at large. A human being is a quarrelsome being, and it is appropriate to terminate such quarrels by means of the law. It is better to be confronted with inequity than with legal uncertainty.471 This collective interest in legal certainty prevails over individual arguments of equity in specific cases. Society needs rules that prevent claims brought on a legal basis no one remembers. This is not only in the interest of the possessor himself, but also of third persons acting with the possessor (e.g. the third acquirer, the creditor of the possessor). Finally, all commercial transactions, and thus the entire society, benefit from this legal certainty. That is the main reason the rules on prescription are of a public policy nature.472

19.2.

Requirements of acquisitive prescription

All property rights can be the object of acquisitive prescription. It can apply both to movables and immovables, and to registered and unregistered property. It applies to all property rights with regard to property that can be the object of trade. However, acquisitive prescription, contrary to extinctive prescription, does not apply to personal rights.473 469

470 471

472

473

LOCRE, VIII, 344. The same opinion is defended by M. PLANIOL and G. RIPERT, Traité pratique, III, n° 688. H. DE PAGE, VIII, n° 1132A. “Mieux vaut une injustice qu’un désordre”. See also H. DE PAGE, VII, n° 1032; R. DERINE, F. VAN NESTE and H. VANDENBERGHE, Zakenrecht, IB, in Beginselen van Belgisch Privaatrecht, Antwerp, Standaard, 1974, p. 985, n° 665. H. DE PAGE, VIII, n° 1334A; R. DERINE, F. VAN NESTE and H. VANDENBERGHE, Zakenrecht, in Beginselen van Belgisch Privaatrecht, Antwerp, Standaard, 1974, p. 985, n° 665; Rép. prat. dr. b., v° Prescription en matière civile, n° 20. This does not mean that receivables cannot be the object of possession. This emerges from article 1240 C.C.: “payment made in good faith to one who was in possession of the claim is valid, even if the possessor is afterwards dispossessed”(free translation). Possessor of the claim is the one who can present vis-à-vis the debtor as the “owner” of the claim.

19. Acquisitive prescription

311

Acquisitive prescription always requires that possession satisfy certain characteristics: the possession must be continuous and uninterrupted, peaceful, public and unambiguous, and the possessor must act in the capacity of an owner (article 2229 C.C.). A possession that does not meet one or more of these requirements can never result in acquisitive prescription. – Uninterrupted means that the possessor undertakes acts of possession in a regular way, as a normal and diligent owner would have done in the same situation. – Peaceful has a double meaning. Firstly, it means that the possessor did not use violence to take possession of the property. If the possessor took possession in a violent way, this excludes the acquisitive prescription. Secondly, it means that violence used by third parties during the possession, against which the possessor did not react as a normal diligent possessor would have done, also excludes peaceful possession. – Unambiguous means that there is no doubt concerning the origin of the possession, or concerning its exclusive nature. This problem is, in legal practice, often encountered when a parent or a secretary of a deceased person possesses certain property of the latter after his death and claims that he received it by gift from hand to hand.474 – Public means that the possessor does not hide his possession. This requirement must be applied with regard to the nature of the property. The nature of some property does not lend itself to a public possession. Good faith is not required for acquisitive prescription (at least not for the longer prescription periods). Good faith is presumed. Most authors recognize that, in such case, the possibility of acquisitive prescription is contrary to equity. However, these considerations of equity may not prevail. As was expressed during the preparatory works for the Civil Code: “La morale est pour la vertu, la loi est pour la paix”. When there is bad faith by the possessor, prescription is again partly founded on the collective interest of legal certainty and partly imposed as a penalty for the inattentive behaviour of the registered owner.475 This economic need should, according to these authors, prevail over the considerations of individual equity, which impose the contrary solution. Not only the interests of the possessor, but also those of his creditors and other third parties are at stake.

474 475

H. DE PAGE and R. DEKKERS, V, n° 1054, p. 930; J. HANSENNE, I, n° 237, p. 247. M. PLANIOL and G. RIPERT, Traité pratique, III, p. 637, n° 688. Contra: Rép. prat. dr. b., v° Prescription en matière civile, n° 10.

Belgium

312

19.3.

Prescription of ownership

According to the majority opinion in French and Belgian law, extinctive prescription does not operate for the right of ownership: no one can lose ownership because he did not “use” his right. Ownership is a so-called perpetual right.476 The perpetual nature of ownership can be criticized,477 but is generally accepted by Belgian and French legal scholars.478 This does not mean that ownership is not subject to prescription: ownership cannot be lost by non-use during 30 years, but this does not prevent the loss of ownership because of acquisitive prescription by a third party. If a third party has possession (which meets the requirements of Article 2228 C.C.) for a sufficiently long period, he will become the owner by acquisitive prescription and indirectly the original owner will be divested of his ownership. As we have seen above, the term for acquisitive prescription is zero years (voluntary dispossession) or three years (involuntary dispossession) in case of good faith of the possessor, and 30 years in case of bad faith.

20.

Other forms of original acquisition

20.1.

Occupation

One acquires property by occupation by taking possession of property that does not belong to anyone. Taking possession means exercising a factual power over the property in order to become the proprietor of it.479 Occupation is possible of: 476

477

478

Cass. fr. 12 July 1905, Dalloz 1907, I, 141; G. BAUDRY-LACANTINERIE, Traité théorique et pratique de droit civil, Paris, Sirey, 1878, XXIV, p. 339, n° 592; I. CLAEYS, “De nieuwe verjaringswet: een inleidende verkenning”, R.W. 1998-99, p. 387, n° 26; Rép. Prat. Dr. B., v° Prescription en matière civile, n° 5; M.E. STORME, “Perspektieven voor de bevrijdende verjaring in het vermogensrecht met ontwerpbepalingen voor een hervorming”, T.P.R. 1994, p. 1985, n° 5; A. VAN OEVELEN, “Algemeen overzicht van de bevrijdende verjaring en de vervaltermijnen in het Belgisch privaatrecht”, T.P.R. 1987, n° 23. V. SAGAERT, “Het onderscheid tussen persoonlijke en zakelijke vorderingen. Het verjaringsregime van zakelijke vorderingen nader geanalyseerd”, in I. CLAEYS, Verjaring in het privaatrecht. Weet de avond wat de morgen brengt?, Mechelen, Kluwer, 2005, 1-30. This can be explained by historical circumstances at the beginning of the 19th century, where the legislator and legal scholars wanted to distinguish ownership from other property rights. It is however very doubtful whether the considerations which underlay this legal opinion at the beginning of the 19th century are still valid.

20. Other forms of original acquisition

313

(a) property that has never had an owner (res nullius) e.g. wild animals, and (b) property that has been abandoned by its owner (res derelictae). 479 It is important to note the difference between abandoned property and lost property. Property is abandoned when its owner has parted with it voluntary. It is lost when the owner has lost possession of it involuntarily. Lost goods can be revindicated within three years (Article 2279 C.C.).480 The Act of 21 February 1983 has provided a special regime for movables left with merchants or artisans, and for those remaining with notaries or bailiffs as a consequence of sales or after adjudication of property. One year after the owner has been given notice, these can be sold at a forced sale under the conditions and the forms provided by the Act of 1983.481 No occupation is possible of universalities and incorporeal property, e.g. copyright.482

20.2.

Treasure finding

A treasure is every hidden or buried object of movable property of which nobody can prove his ownership and that is retrieved accidently.483 A lost object found in the ground is not a treasure: the rules on finding apply. On the other hand, banknotes hidden between the pages of a book constitute a treasure.484 The ownership of a treasure belongs to who finds it on his own property. If it is found on someone else’s property, a distinction is to be made: if the treasure is found after systematic or secret searching, the treasure belongs to the owner of the property on which it is found; if the treasure is found by accident, its ownership is divided between the finder and the owner of the property on which it is found.485 Finding does not necessarily imply “taking possession of”. In the case of a conflict between the finder and the person who took possession of the treasure, the finder prevails.486 479

480 481 482

483 484 485 486

R. DEKKERS and E. DIRIX, o.c., n° 362, p. 145. Comp. J. HANSENNE, I, n° 212, p. 225. R. DEKKERS and E. DIRIX, o.c., n° 363, p. 146. Belgian Official Gazette 2 April 1983 – Err. Belgian Official Gazette 12 October 1983. R. DEKKERS and E. DIRIX, o.c., n° 364, p. 146-147. Comp. F. VAN NESTE, o.c., n° 160, p. 306. Article 716, § 2 C.C. Comp. J. HANSENNE, I, n° 216, p. 228. J. HANSENNE, I, n° 216, p. 228. Article 716, first paragraph C.C. F. VAN NESTE, o.c., n° 161, p. 307.

Belgium

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If, exceptionally, the owner of the “treasure”487 would turn up and be able to prove his ownership, he can revindicate his property from the finder or “owner” of the property within 30 years.488 A third acquirer in good faith will however be protected by Article 2279 C.C.489

20.3.

Finding of lost property

Lost property is not hidden like treasures. Special legislation deals with the rights to lost property.490 They deal with property deposited at the registry, with senders, in the post, etc.491 The Act of 30 December 1975492 imposes on the person who finds movable property on private premises or on public roads, the duty to hand it in immediately at the municipality.493 The property is then held at the owner’s disposition for six months. Afterwards, the ownership is transferred to the municipality. From that time on, revindication is no longer possible.494 Beyond the scope of this special legislation, lost and found property belongs to the finder. However, the owner has the right to revindicate it within 30 years starting from the day the finder takes possession of the lost property. As to further bona fide receivers of the property, the right to revindicate it expires after three years, starting from the moment the property is lost.495

20.4.

Separation

Separation is usually not mentioned as a specific, original way of acquiring property. However, it is accepted that the owner of land or trees is in principle also the owner of the fruits thereof. It follows that he also becomes the owner of the fruits at the moment they are separated from the trees or the land.

487

488 489 490 491 492 493 494 495

Which is then, according to the definition of article 716 C.C., not really a treasure in the sense of this article. Article 2262 C.C. J. HANSENNE, I, n° 218, p. 231. Article 717 C.C. R. DEKKERS and E. DIRIX, o.c., n° 375, p. 150. Belgian Official Gazette, 17 January 1976. Article 1. Article 4. Article 2279, § 2 C.C.

20. Other forms of original acquisition

315

For every principle, there is an exception. The owner of the land will not be the owner of the fruits if he has conferred the fructus to another person by means of a contract of rent, or the property right of ususfructus. In this case, the fruits belong to the person who has the fructus. The owner of the land also will not be the owner of the fruits in the case the fruits have been separated by a possessor in good faith before a revindication.496 The right to the fruits is considered by the civil code as a kind of accessio (which is in fact only correct if there is a conflict of property rights between the owner of the land and that of the fruits).497

496 497

Article 549-550 C.C. R. DEKKERS and E. DIRIX, o.c., n° 379, p. 152.

Part IV: Additional questions 21.

Loss of ownership

21.1.

Transfer of ownership

Cf. supra, Part II.

21.2.

Fulfilment of a resolutive condition

If a contract is concluded under a resolutive condition, property passes according to the rules applicable to the concerned contract (e.g. in a contract for sale, at the time of the conclusion of the contract; but in the case of the sale of generic goods, at the time of the identification). The fulfilment of a resolutive condition has a retroactive effect to the day of the conclusion of the contract (Article 1179 C.C.). Whoever has become the owner of property under a resolutive condition and who has disposed of it before the condition was fulfilled, undergoes the annulment of his act of disposition. The owner only had a conditional right in the property and could only transfer a conditional right in the property. The impact of this rule, however, is limited by Article 2279 C.C.498 When an obligation is contracted under the condition that an event will take place within a certain period of time, the condition is considered fulfilled when the time has passed and the event has not taken place. If no time is predetermined, the condition can always be fulfilled, it is only considered unfulfilled when it has become certain that the event will not take place (Article 1176 C.C.). When an obligation is entered into under the condition that an event will not take place within a certain time, the condition is fulfilled when the time has passed and the event has not taken place. It is also considered fulfilled when, before that time has passed, it has become certain that the event will not take place and, if no time has been predetermined, when it is certain that the event will not take place (Article 1177 C.C.). The condition is considered fulfilled if the debtor, who has bound himself to that condition, has prevented its fulfilment (Article 1178 C.C.). 498

W. VAN GERVEN and S. COVEMAEKER, o.c., 316.

21. Loss of ownership

21.3.

317

Abandonment

A property right in movables can be extinguished by abandonment of the movable. Abandonment will usually serve to free the proprietor from the costs to which the property obliges him.499 The act of abandonment is a unilateral act. It does not indicate who will become entitled to the abandoned property. With regard to immovables, Article 713 C.C. provides that they will belong to the State. With regard to movables, the general rules on prescription will apply.

21.4.

Caducité?

The conditions of object and cause are traditionally considered conditions for the valid creation of a legal act. Certain case law and literature hold the opinion that they should continue to be present during the existence of the legal act. If they disappear, the legal act itself can expire (become “caduque”). Since a decision of the Cour de Cassation of 28 November 1980, it is accepted that a contract expires when specific performance is no longer possible because the object has disappeared. The case concerned rent; the rented property was materially destroyed. The Cour de cassation stated that the contract was dissolved automatically by force of law because the contract was no longer fit for specific performance.500 On 12 December 1991, the Cour de cassation agreed that an option contract had expired when the object of the contract, a building, was destroyed by a fire before the option had been exercised.501 In this case, the beneficiary of the owner had not yet acquired ownership. In cases where a contracting party already has acquired ownership, and even in cases where a party only has acquired a right to use or hold the property, or has possession of it, the contract seems to end by the material destruction of the property itself and not by the caducité of the contract. The only case in which caducité might lead to the loss of ownership is in a barter contract where the right to property has already passed between the parties but delivery has not yet taken place. If the object of party A’s obligation perishes, the contract would expire depriving A of his ownership 499 500

501

R. DEKKERS and E. DIRIX, o.c., n° 125, p. 55. Cass. 28 November 1980, Arr.Cass. 1980-81, 352, Pasicrisie 1981, I, 369 and R.C.J.B. 1987, note P.-A. FORIERS. Cass. 12 December 1991, Arr.Cass. 1991-92, 336, Pasicrisie 1992, 284, concl. Att.Gen. JANSSENS DE BISTHOVEN, R.W. 1992-93, 217, note A. CARETTE and Rev. not. b. 1992, 107.

Belgium

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of the property for which he had bartered. But then, it is uncertain whether in such a case the caducité of the contract would be accepted, because the delivery of the property bartered for the perished property is still possible. It seems the solution to this problem has to be found in the theory of risk. If the risk of the perished property has already passed to B, B still has to deliver the property for which title has already passed to A. If the risk is still with A, he will lose his right to claim delivery of the property for which he has already acquired title. In a decision of 16 November 1989, the Cour de Cassation held that a donation expires if afterwards the determinant motive of the donator disappears due to a cause independent of the donator’s will. In a decision of 21 January 2000, the Cour the Cassation refined its position. Concerning testamentary wills, it stated that the donation only expires if the cause disappeared before the death of the testator. At that moment the legatee has not yet acquired title so that the caducité will not lead to a loss of title, it will only prevent the legatee from acquiring the property. A decision of 12 December 2008 seems to have rejected the application of the doctrine of the caducité because of the disappearance of the cause to gifts inter vivos.502 The doctrine of the caducité, because of the disappearance of the cause, seems equally inapplicable to those legal acts for which there is a counterperformance – for which there is legal consideration.503

21.5.

Loss of ownership in other ways

One loses his property rights in a movable if it is no longer identifiable in one estate, i.e. when it has been destroyed by a fire, or also when it is no longer identifiable because it has been commingled with another property.504 Historically, movables have been lost by decrees of nationalisation by which the government declared that certain goods formerly belonging to private institutions, mostly ecclesiastical institutions, now belong to the nation.505 Presently, the tendency is however rather to privatise public institutions than to nationalise private property. Nationalisation, which leads to uncompensated property loss, is to be distinguished from expropriation for public interest, which is a kind of forced sale. The owner cannot refuse to sell, but he will receive compensation. Expropriation is still in use, but it normally concerns immovables. 502 503 504 505

Cass. 12 December 2008, Rev. not. b. 2009, 755. S. STIJNS, o.c., n° 148, p. 107. Comp. R. DEKKERS and E. DIRIX, o.c., n° 125, p. 55. H. DE PAGE and R. DEKKERS, V, 1975, n° 752, 1°, p. 671.

22. The law of restitution of movables

319

Articles 42 and 43 of the Penal code provide the confiscation of goods that have been used to commit a crime, that constituted the object of a crime or that were produced by it (‘fruits of the crime’).

22.

The law of restitution of movables

Among the grounds for restitution, a distinction must be made between the grounds that operate with retroactive effect and the grounds that do not have retroactive effect. The annulment of a contract has retroactive effect. That is also the case for dissolution due to non-compliance of the contractual obligations by one of the parties and, finally, the revocation of a gift because of non-compliance with the conditions on which the gift was made subject. These grounds of restitution result in the “restitutio status quo ante”, e.g. parties must make restitution in such way that they are put in the same situation as if no agreement had been entered into. The Belgian Supreme Court rules that “la resolution d’un contrat synallagmatique a pour effet que les parties doivent être replaces dans le meme état que si elles n’avaient pas contracté”.506 There is no agreement among legal scholars as to the legal grounds for this restitution. Some legal scholars defend the view that these restitutions must be effected according to the rules of undue payment (Article 1376 et seq. C.C.). As the contract must be considered to have never existed, the performance of contractual obligations is considered as undue.507 According to others, the obligation to make restitution would be grounded in the prohibition of unjust enrichment.508 This prohibition is not expressly stated by the legislation, but has been recognized as a general principle of law since the beginning of the 19th century. Still other scholars argue that 506 507

508

Cass. 24 March 1972, Pasicrisie 1972, I, 693. Court of Appeal Mons 15 September 1992, Rev. not. b. 1995, 22; M.E. STORME, “Het ingaan en de terugwerkende kracht van de ontbinding van wederkerige overeenkomsten”, T.B.B.R. 1991, 104; F. TROPLONG, Le droit civil expliqué suivant l’ordre du Code. De la vente, Brussels, Tarlier, 1844, article 1601, n° 252. P.-H. DELVAUX, “Les effets en droit belge de la résolution des contrats pour inexécution. Rapport belge”, in M. FONTAINE and G. VINEY (eds.), Les sanctions de l’inexécution des obligations contractuelles. Etudes de droit comparé, Brussels, Bruylant, 2001, p. 674, n° 8; M. FONTAINE, “La rétroactivité de la résolution des contrats pour inexécution fautive”, R.C.J.B. 1990, p. 401, n° 53; S. STIJNS, Gerechtelijke en buitengerechtelijke ontbinding, Maklu, Antwerp, 1994, n° 213; P. VAN OMMESLAGHE, “Examen de jurisprudence. Les obligations (1968-1973)”, R.C.J.B. 1975, p. 622, n° 73 et seq.

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the obligation has an autonomous nature, which cannot be reduced to one of the preceding legal institutions.509 Other grounds for restitution have no retroactive effect. This is notably the case for the termination of a contract that has been entered into for an indefinite period. These grounds will not be analyzed further, as they only operate for contracts that do not have any translative effects.

22.1.

Fruits

We will first analyse the concept of fruits and the position of a good faith possessor and a bad faith possessor with regard to the fruits. Afterwards, we will investigate whether these principles apply to the restitutionary obligation.

22.1.1. Definition of fruits Belgian law distinguishes between fruits and products. Fruits are the periodical gains of the property that do not reduce its value as such.510 A distinction is usually made between natural fruits and civil fruits. The Civil Code also mentions fruits of industry of land. Natural fruits are, besides the produce of the soil itself, the gains of animals and their offspring.511 Civil fruits are e.g. interests and sums of rent.512 Fictitious dividends do not constitute fruits but form part of the authorized share capital.513 Fruits of industry of land are those realized by cultivation.514 Products are non-periodical gains of the property that diminish the size and value of the property itself, e.g. minerals, timber trees.515 However, certain products are equalized with fruits.516 This is the case for the products of mines exploited at the moment the possession commenced. Generally 509

510 511

512 513 514 515 516

H. DE PAGE, Traité élémentaire de droit civil belge, II, Les incapables. Les obligations (Première partie), Brussels, Bruylant, 1964, n° 817. Tribunal of commerce Antwerp 8 January 1951, J.T. 1952, 305; C. RENARD, E. VIEUJEAN and Y. HANNEQUART, Théorie générale des obligations, in Les Novelles, Droit civil, Brussels, Larcier, 1957, p. 617, n° 2101; R.P.D.B., v° Quasi-contrat, n° 283. F. VAN NESTE, o.c., n° 250, p. 429-430; J. HANSENNE, I, n° 265, p. 270. Article 583 C.C. See however article 547 C.C., where the natural fruits are mentioned besides the offspring of animals. Article 584 C.C. J. HANSENNE, I, n° 280, p. 279. Article 583 C.C. J. HANSENNE, I, n° 280, p. 279. J. HANSENNE, I, n° 265, p. 270; F. VAN NESTE, o.c., n° 250, p. 430.

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speaking, only the ones who are entitled to dispose of the movables, can be entitled to the products. By contrast, a mere right to enjoy a movable (ius fruendi) is sufficient to be entitled to the fruits. Fruits of movables follow as a general rule Article 2279 C.C. The Civil Code also contains special rules concerning fruits of movables as well as immovables in the Article 549 et seq. These rules will usually give the possessor less protection and he will therefore prefer to claim the protection of Article 2279 C.C. However, there are cases in which Article 549 et seq. offers a better protection to the possessor than Article 2279 C.C. This will for example be the case if the verus dominus revindicates a stolen or lost movable within the period of three years mentioned in Article 2279 C.C.517 In what follows, only Articles 549 et seq. are dealt with. The rules of Article 549 C.C. et seq. on restitution of fruits vary according to the possessor’s good or bad faith.

22.1.2. Good faith possession Article 549 C.C. stipulates that a person who only has the possession of property is entitled to its fruits if he possesses in good faith. This Article only refers to the fruits dating from the period during which the possessor gained possession in good faith of the property; it is not to be applied to fruits dating from before that time.518 He is not allowed to keep the fruits dating from after the introduction of the action unless they follow from added value he has given the property.519 The rule that the possessor in good faith may keep the fruits is based on equity. The possessor in good faith is victim of an excusable mistake. Fruits are meant to be dispensed. Trusting the existence of his rights, the possessor will have incurred expenses. If the real owner could, after several months or years, claim his property and its fruits, this could ruin the possessor in good faith.520 The rule of Article 549 C.C. applies to real possessors. The object of the possession does not matter: it also applies to possessors of a real right in the property as far as that real right includes the right to the fruits (e.g. ususfructus).521 517 518

519 520

521

J. HANSENNE, I, n° 282, p. 281. Cass. 17 June 1852, Pasicrisie 1853, I, 435, concl. 1st Att.-Gen. DELEBECQUE; F. VAN NESTE, o.c., n° 252, p. 431. F. VAN NESTE, o.c., n° 252, p. 431. F. LAURENT, VI, n° 203, p. 270-273; H. DE PAGE and R. DEKKERS, VI, n° 159, p. 135; J. HANSENNE, I, n° 277, p. 277. J. HANSENNE, I, n° 278, p. 278.

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The rule does not apply to mere detentors. But this does not imply that mere detentors can never keep the fruits, just that they will not derive their rights from Article 549 C.C. Nonetheless, their right to, e.g. rent may give them rights to the fruits.522 The possessor in good faith is only entitled to the fruits, not to the products.523 Article 549 C.C. does not specify at which moment the possessor acquires the right to the fruits. Articles 585 and 586 C.C. stipulate that the rights of the ususfructor to the fruits come into existence at the moment they are separated from the main property. The literature extends this rule to the acquisition of a right to the fruits, according to Article 549 C.C.524 Article 550 C.C. stipulates that the possessor is (only) in good faith if he possesses as an owner on the basis of a title of transfer of property of which he does not know the defects. His good faith ends as soon as he knows of the defects. The word ‘title’ does not refer to an instrumentum, but to a certain legal act.525 Judicial decisions giving rise to a transfer of property, such as judgements conferring a pledge to a creditor or adjudicating seized property, are equivalent to legal acts.526 The judge’s decision concerning whether the possessor possesses in good or in bad faith is an issue of fact, and as such it is sovereign.527

22.1.3. Bad faith possession (a)

Principle: full restitution

The possessor in bad faith – for instance a thief – has to return the gains with the property to the owner who claims his property. As a rule, restitution has to be effected “in full”. The possessor in bad faith has to return all the fruits he has received, irrespective of whether he still has them or whether he has consumed them; in the latter case he has to make restitution of the value of the consumed fruits.528

522 523 524

525 526 527 528

J. HANSENNE, I, n° 279, p. 278. J. HANSENNE, I, n° 280, p. 279-280. J. HANSENNE, I, n° 283, p. 282; H. DE PAGE and R. DEKKERS, VI, n° 175, p. 143144; F. LAURENT, VI, n° 206, p. 275-276. J. HANSENNE, I, n° 286, p. 284. J. HANSENNNE, I, n° 286, p. 285. F. VAN NESTE, o.c., n° 251, p. 430. J. HANSENNE, I, n° 269, p. 272.

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The possessor in bad faith even has to make restitution of the fruits he neglected to receive.529 Moreover, he must pay compensation to the owner for any fruits received by a third party in good faith, to whom he has transferred the property; this includes during the time after which the good faith of the third party has ceased.530 It is suggested by legal scholars that, in cases in which the restitution has to take the form of compensation, the value of the fruits should be valued at the moment of the restitution.531 The possessor in bad faith is also indebted to the real owner for interest on the fruits. As possession in bad faith is a delict, the interests run from the moment the possessor in bad faith has received the fruits, even if this moment is before the introduction of the action in revindication.532

(b)

Exception: moderations

The possessor in bad faith is entitled to request compensation for the production costs.533 This rule is based on the theory of necessary costs and more generally on the principle that nobody should be enriched, absent cause, at another’s expense.534 The possessor in bad faith does not have to make restitution of the fruits he has not received if he can prove that the owner would not have been able to receive them either.535 The possessor in bad faith also cannot be required to pay the interest on the value of the property by means of restitution of the fruits, when the property does not produce fruits.536 When the revindication fails because the possessor has acquired title to the property, the action in restitution of the fruits against the possessor fails as well.537 According to French legal scholars, the possessor in bad faith is entitled to keep the portion of the fruits that is the result of his personal industry.538 529 530 531 532

533

534 535 536 537 538

J. HANSENNE, I, n° 269, p. 272. J. HANSENNE, I, n° 269, p. 272. J. HANSENNE, I, n° 270, p. 273. J. HANSENNE, I, n° 271, p. 273. Also H. DE PAGE and R. DEKKERS, VI, n° 155, p. 134. F. VAN NESTE, o.c., n° 251, p. 430. Arg. article 548 C.C. that stipulates that the fruits of property belong to its owner under the obligation to compensate the costs of ploughing, cultivation and sowing. J. HANSENNE, I, n° 273, p. 275. J. HANSENNE, I, n° 271, p. 275. J. HANSENNE, I, n° 271, p. 275. J. HANSENNE, I, n° 272, p. 275. J. HANSENNE, I, n° 272, p. 274.

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22.1.4. Application to the obligation of restitution The question whether the debtor of a restitutionary claim will be able to invoke Article 549 C.C. if he is in good faith, is uncertain. The application of this provision is difficult to reconcile with the obligation to restore the situation as if no contract had been entered into, if the termination of the agreement has retroactive effect (“restitutio status quo ante”). Most Belgian authors argue that this argument prevails and the debtor of the restitutionary claim is not entitled to keep the fruits. He could not be considered a possessor in good faith.539 Complete restitution would, according to this view, also include restitution of the fruits. However, this contravenes French case law and legal scholarship, where Article 549 C.C. is applied to obligations to make restitution.540

22.2.

Loss and deterioration

22.2.1. Restitution following revindication The bad faith possessor, i.e. the possessor who knows he is unlawfully in possession of the property, is liable for all losses irrespective of whether he caused them fraudulently, negligently or whether they are the result of force majeure, and irrespective whether they date from before or after the introduction of the action in revindication. However, he is not liable for accidental losses if he proves that these would also have occurred if the property had remained with its real owner (arg. Article 1302 C.C.).541 The good faith possessor is only liable for losses finding their origin in an event dating from before the introduction of the action in revindication. This rule is justified by the idea that the possessor was, until that time, entitled to believe the property was his. It results that he should not compensate the real owner, not even if the losses are caused voluntarily. However, he is liable for losses caused negligently or voluntarily after the introduction of the action in revindication. Indeed, at that time, an obligation arises to conserve the property, which he may have to return.542 With regard to the restitution after retroactive termination of a translative agreement, most scholars do not make a distinction between the debtor 539 540

541 542

H. DE PAGE, II, n° 827; F. LAURENT, Principes, XIX, p. 66, n° 64. Cass. fr. 20 June 1967, D. 1968, 32, J.C.P. 1968, II, n° 15262, note J.A. and Rev. trim. dr. civ. 1968, 337, note BREDIN; G. BAUDRY-LACANTINERIE, Traité, XIV, n° 1969. J. HANSENNE, I, n° 673, p. 624-625. J. HANSENNE, I, n° 673, p. 625.

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in good faith and the debtor in bad faith. The debtor of the restitutionary obligation is bound by an obligation to reach that result. If the property has perished or the value of the property has diminished beyond the normal “usure”, he will have to restore the property at his own expense.543 However, the debtor of the restitutionary obligation is discharged if the property has perished pursuant to vis maior.544 It must be taken into account that this obligation to make restitution is only one side of a mutual obligation. If the debtor of the restitutionary obligation is discharged, the other party (the seller) is entitled to refuse repayment of the price.545 The economic risk would, according to this view, be on the purchaser who cannot make restitution.

22.2.2. Restitution at the end of a contract of lease At the expiration of the lease term, the lessee has to return the property in the same condition it was in at the beginning of the contract. The lessee is liable for losses and deterioration during the time of the lease, unless he proves he was not at fault (Article 1732 C.C.).

22.2.3. Restitution at the end of a contract of loan Here several rules have to be combined to determine the liability of the borrower for loss or deterioration of the property. Article 1884 C.C. stipulates that the borrower should return the property in the state it was in when he received it, except for deterioration caused by normal usage and by an extraordinary cause (cause étrangère). The borrower has the burden of proving the extraordinary cause. But, if the state of the property at the moment of delivery is not proved by the lender, the borrower seems to be relieved of his duty of restitution if he returns the property timely in the state it was in at the end of the contract; this is unless the lender proves it deteriorated due to the borrower’s fault or of that of people for whom he was liable. If the borrower does not return the property timely, he is liable for the losses and deterioration the property has suffered since the borrower is on notice of his non-compliance (Article 1245 C.C.).

543 544 545

T. STAROSSELETS, l.c., p. 80, n° 26. T. STAROSSELETS, l.c., p. 83, n° 36. J. LIMPENS, o.c., n° 1782; T. STAROSSELETS, l.c., p. 83, n° 36.

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As the lender remains the owner of the property, he bears the risk for accidental loss during the period of the loan. However, several exceptions to this rule exist.546 The borrower is responsible for the loss of the property, even if he accidentally uses the property for a purpose other than the one for which it is meant, or when he keeps the property for longer than the agreed time (1881 C.C.). According to Article 1302 C.C., the obligation of restitution of certain property disappears even when the debtor does not return the property on time and even if the risk rests on him, if he proves that the property would have perished even had he returned it on time. It is disputed whether this article applies to the contract of loan. The risk rests also on the borrower when he could have prevented the loss of the borrowed property by using his own property, or when the borrower deliberately chose his own property over that of the borrowed property when he could only save one of the two (Article 1882 C.C.). Further, the risk rests on the borrower if the property was valued by agreement between the parties in the beginning of the contract (Article 1883 C.C.). The estimation of value creates a reversible presumption that the borrower accepted the risk.

22.2.4. Restitution at the end of a contract of deposit The depositary only needs to return the property in the state it is in at the moment of the restitution (Article 1933 C.C.), but he has to return it. In case the depositary does not return the property, he is presumed liable. He can only overcome this presumption by proving an extraordinary cause (cause étrangère).547 In fact the courts are satisfied if the depositary proves that he has taken all measures necessary for a careful preservation of the property. Force majeure is then accepted if the depositary proves that he has done everything that can be expected from a careful person placed in the same circumstances.548

22.2.5. Restitution at the end of a contract of pledge The pledgee has to return the pledge at the moment of the extinction of the main debt. The pledgee will only be relieved from his obligation to return the pledge if he proves that the pledge has perished by accident or force 546 547 548

For these exceptions, see articles 772 et seq. C.C. B. TILLEMAN and A. VERBEKE, o.c., n° 983, p. 283. B. TILLEMAN and A. VERBEKE, o.c., n° 984, p. 283.

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majeure (Article 1147, 1148, 1302 C.C.). If compensation is paid by a third party for the perishing of the pledge, the right of pledge is then transferred to that compensating third party.549

22.2.6. Restitution following an action based on an undue payment Concerning corporeal movables, restitution takes place in natura if the property still exists and if the property has decreased in value or has deteriorated due to the fault of the accipiens. The accipiens in bad faith even has to stand in for accidental loss (Article 1379 C.C.). If the accipiens in good faith has already sold the property, he only has to pay the price of the sale (Article 1380 C.C.).

22.3.

Reimbursement for improvements and expenses incurred during the possession of the movable

22.3.1. Restitution after revindication Except when special rules exist, the obligations of reimbursement after revindication are determined by the theory of expenses. This theory states that necessary and useful costs have to be compensated, but not mere luxury expenses.550 Necessary expenses are those that are necessary for the preservation of the property (for instance, insurance premiums or expenses of repair); useful expenses are those that realize added value. Luxury expenses are those that are for mere personal satisfaction and only have a subjective usefulness.551 Legal scholars add a third category of costs: costs of maintenance. The underlying reasoning is that maintenance costs are usually paid with the revenues of the property and, as we have seen, the possessor in good faith is entitled to keep the revenues dating from before the introduction of the action in revindication; it is therefore logical to leave the maintenance costs for his account.552 With regard to the restitution after retroactive termination of a translative agreement, the debtor of the restitution may not claim any compensation for the increased value to which the object has been subject due to 549 550 551 552

R. DEKKERS and E. DIRIX, o.c., n° 940, p. 387. Cass. 23 December 1943, Arr.Cass. 1944, 60 and Pasicrisie 1944, I, 123. Civ. Leuven 23 March 1988, R.W. 1989-90, 824, note. J. HANSENNE, I, n° 675, p. 626-627. Comp. H. DE PAGE and R. DEKKERS, VI, n° 152, 3°, p. 132-133.

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purely economic developments.553 The debtor can however claim compensation for the improvements that are due to his activity, regardless whether he is in good or in bad faith.554 With regard to the expenses of maintenance, it emerges from case law that these expenses are often set off against the right of use and enjoyment with regard to the property. As a consequence, the seller would not be obliged to reimburse these expenses if the purchaser is not obliged to make restitution of the fruits.555

22.3.2. Restitution at the end of the rental contract The lessee has the duty to use the property in conformity with its kind and its intended purpose (Article 1728, 1° and 1730 C.C.). Apart from divergent contractual stipulations, the lessee is not entitled to build or rebuild the property. At the most he can make removable adaptations in conformity with the purpose of the property. At the end of the contract, the lessee can remove them. If he does not do so, the lessor can demand their removal. If lessor prefers to keep them, a compensation based on unjust enrichment is due.556 If the lessee carried out non-removable works, the lessor can demand their removal as well as restitution of the property in its original state and damages. The lessor can also decide to keep the works without having to pay any compensation.557 If the lessor gave the lessee permission to carry out certain works, parties will usually have made an agreement concerning possible compensation duties at the end of the contract. If not, and if the works are removable, the same rules as explained above seem to apply.558 Concerning non-removable works, it is sometimes said that they should be compensated on the basis of the theory of costs.559

553 554

555 556

557 558 559

T. STAROSSELETS, l.c., p. 79, n° 24. H. DE PAGE, II, n° 828; T. STAROSSELETS, l.c., p. 79, n° 24. Contra: J. HANSENNE, II, n° 721. J. HANSENNE, I, n° 273; T. STAROSSELETS, l.c., p. 79, n° 24; Cass. 23 April 1965, Pasicrisie 1965, 883 and R.W. 1965-66, 1158. According to this judgement the compensation consists of the surplus-value of the property and not of the price paid for the improvements and the materials. In fact the application of the rules on unjust enrichment would lead to an obligation to pay the smaller sum of the two: the impoverishment or the enrichment. B. TILLEMAN and A. VERBEKE, o.c., n° 548, p. 150-151. B. TILLEMAN and A. VERBEKE, o.c., n° 548, p. 150-151. B. TILLEMAN and A. VERBEKE, o.c., n° 548, p. 150-151.

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22.3.3. Restitution at the end of a contract of loan The lender will have to compensate the borrower for the exceptional expenses for the preservation of property that were so urgent that the borrower could not inform the lender in advance (Article 1890 C.C.). The borrower is not entitled to carry out improvements on the property. If he does, the owner seems to have the choice to either demand the borrower remove them (if possible) and / or claim damages, or keep the improvements without being held to pay for them.

22.3.4. Restitution at the end of a contract of deposit The depositor has to compensate the depositary for the costs he made for the preservation of the property and for the loss the deposit caused him (Article 1947 C.C.). The depositary is not entitled to carry out improvements on the property. If he does, the owner seems to have the choice to either demand the depositary remove them (if possible) and / or claim damages, or keep the improvements without being held to pay for them.

22.3.5. Restitution at the end of a contract of pledge The pledgor has to compensate the pledgee for all the useful and necessary costs of maintaining the property (Article 2080 C.C.). Article 20, 4° Mortgage Act attributes to the pledgee a privilege for the payment of this compensation.560

22.3.6. Restitution following an action based on undue payment The person to whom the property is returned has to compensate the accipiens, even the accipiens in bad faith, for all the necessary and useful expenses for the preservation of the property (Article 1381 C.C.).

560

R. DEKKERS and E. DIRIX, o.c., n° 941, p. 387.

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22.4.

Possessor’s right to retain the movable

22.4.1. Introduction The Civil Code does not organise a general right of retention. It only recognizes certain applications of it (e.g. Article 570, 867, 1612, 1673, 1749, 1948, 2028, 2087 C.C.). However, case law and legal scholarship have elaborated a more general right of retention, which is available as soon as the conditions of application are fulfilled.

22.4.2. Definition The right of retention is defined as the right of a creditor to retain property he has as a detentor until the debt concerning that property is paid.561

22.4.3. Conditions The right of retention is based on a material connection between an action and a certain movable (debitum cum re iunctum).562 The necessary material connection is available when an action of the possessor is narrowly connected to a movable belonging to his debtor.563 According to certain case law and legal scholarship, the right of retention can also be based on a legal connection between an action and (an obligation to make restitution of) a movable.564 561

562

563

564

H. DE PAGE and R. DEKKERS, VI, n° 793B, p. 749; E. DIRIX, “Retentierecht” in Voorrechten en Hypotheken, Commentaar met overzicht van rechtspraak en rechtsleer, Mechelen, Kluwer, 1999, n° 1. Liège 7 June 1996, J.L.M.B. 1997, 633; J.H. HERBOTS, “L’exception d’inexécution et la mesure à garder dans le contrat de bail”, R.C.J.B. 1990, (563), n° 9, p. 571; H. VANDENBERGHE, Voorrechten en hypotheken, Leuven, Wouters, 1998, p. 37, n° 38. Com. Antwerp 27 May 1964, R.W. 1965-66, 638; Pres. Com. Antwerp 8 August 1990, Rechtspraak Haven van Antwerpen 1992, 54; H. DE PAGE, VI, n° 813, p. 773. Concl. Att.-Gen. KRINGS, Cass. 7 October 1976, Pasicrisie 1977, I, 154; Brussels 7 December 1977, J.T. 1978, 330; A. CLOQUET, “Over twee twistpunten ter zake van het retentierecht”, R.W. 1954-55, (161) 161; P. VAN OMMESLAGHE, “Observations sur les effets et l’étendue du droit de rétention et de l’ “exceptio non adimpleti contractus” spécialement en cas de faillite du débiteur”, R.C.J.B. 1963, (69), p. 73, n° 3.

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In fact, it is generally accepted that under certain circumstances, a legal connection can suffice for the creditor to retain the movable. Only certain case law and legal scholarship prefer to call it the possessor’s right of retention based on a legal connection between the action and the movable exceptio non adimpleti contractus.565 To retain the movable, the possessor needs an actionable566 right against the party that demands the restitution of the movable / or its owner. The possessor’s action needs also to be certain (i.e. not contested).567 It need not be liquidated i.e. precisely defined in terms of money.568 The debtor must fail to execute his obligation voluntarily.569 The right of retention needs to be exercised in good faith;570 the possessor may not abuse his right of retention. The main criterion for abuse of a right is: use of a right in a way that is obviously not in conformity with the normal use of that right by a careful and concerned person.571 This criterion 565

566

567

568

569 570

571

E.g. Cass. 7 November 1935, Pasicrisie 1936, I, 38; H. DE PAGE, VI / 2, n° 792 / C, p. 751-752; L. LAMINE, Het retentierecht, in Recht en Praktijk, Deurne, Kluwer, 1993, p. 54-57, nrs. 75-78. E. DIRIX, “Retentierecht” in Voorrechten en hypotheken, n° 8; E. DIRIX and R. DE CORTE, Zekerheidsrechten, in Beginselen Belgisch Privaatrecht, Antwerp, Story-Scientia, 1999, n° 519, p. 347. M.E. STORME (“De exceptio non adimpleti contractus als uitlegvraag. Uitwerking van enkele aspecten in de verhouding tussen partijen, meer bepaald evenredigheid en volgorde van de prestaties en bewijslast”, R.W. 198990, p. 316, n° 9 and p. 317, n° 11) specifies concerning the exceptio non adimpleti contractus that the action should not necessarily be actionable: only, the excipiens should not be held to previous performance. When both of the obligations are not actionable, both parties can postpone their obligations. Also, in certain cases prescription could not be invoked. Com. Mons 18 September 1978, B.R.H. 1979, 88 and J.T. 1979, 219; Justice of the Peace Sint-Niklaas 14 January 1991, R.W. 1991-92, 1436; E. DIRIX, “Retentierecht” in Voorrechten en hypotheken, n° 8; P. HEURTERRE, o.c., T.P.R. 1992, n° 50, p. 1309. E. DIRIX, “Retentierecht” in Voorrechten en hypotheken, n° 8; E. DIRIX and R. DE CORTE, o.c., n° 519, p. 347; J.-L. FAGNART, o.c., R.C.J.B. 1979, p. 14, n° 5. E. DIRIX and R. DE CORTE, o.c., n° 519, p. 348. Justice of the Peace Sint-Niklaas 14 January 1991, R.W. 1991-92, 1436; E. DIRIX, “Retentierecht” in Voorrechten en hypotheken, n° 12; E. DIRIX and R. DE CORTE, o.c., n° 519, p. 348; L. LAMINE, o.c., p. 82-83, nrs. 123-127. Concerning the exceptio non adimpletu contractus: Cass. 18 March 1971, Arr.Cass. 1971, 697 and Pasicrisie 1971, I, 669; J.H. HERBOTS, “De exceptie van niet-nakoming”, T.P.R. 1991, n° 16, p. 387. Cass. 20 November 1987, Arr.Cass. 1987-88, 359, R.W. 1987-88, 1099, Pasicrisie 1988, I, 337 and Bull. 1988, 337; Cass. 18 February 1988, Arr.Cass. 1987-88, 790, R.W. 1988-89, 1226, Pasicrisie 1988, I, 728, Bull. 1988, 728 and T.B.H. 1988, 696; Cass. 1 February 1996, Bull. 1997, 158 and Arr.Cass. 1996, 139.

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has been divided into a number of more precise criteria.572 The criterion that is used most is that of proportionality between the damage caused and the benefit intended or received.573 On the basis of this principle, a moderation was needed of the traditional opinion that the right of retention is indivisible, which implies that the possessor may retain all the property as long as his debtor has not paid all of his debt.574 At present it is accepted that the retention should be proportionate to the non-payment.575 However, the courts do not and should not too easily find an abuse of right. Abuse of the right of retention (normally) will be further found if the possessor himself caused the non-payment of his debt, which he has invoked to justify the right of retention.576 The retentor needs to have factual power over the movable: he needs to have it factually in his possession or have it held for him by another person and he must have acquired that power in a lawful way.577 In fact, the retentor only needs to have detention over the movable,578 possession pro suo is not necessary. The possessor can only retain the property if he personally has an action against the owner of the property; he cannot retain the property in protection of another person’s action.579 Once the creditor has relinquished his power over the property, the right of retention is permanently lost; it does not “revive” when the credi-

572

573

574 575

576 577

578

579

On these criteria, see S. STIJNS, “Abus, mais de quel(s) droit(s)? Réflexions sur l’ exécution de bonne foi des des contrats et l’ abus de droits contractuels”, J.T. 1990, (33) 40-41. Cass. 30 January 1992, R.C.J.B. 1994, 185, note P.A. FORIERS, J.L.M.B. 1992 (abstract), 650, Bull. 1992, 475, R.R.D. 1992, 256, Pasicrisie 1992, I, 475, R.W. 1993-94, 1023 and Arr.Cass. 1991-92, 497. For an application concerning the right of retention, see Justice of the Peace Sint-Niklaas 14 January 1991, R.W. 1991-92, 1436. J.-L. FAGNART, o.c., R.C.J.B. 1979, n° 22, p. 30. J.H. HERBOTS, o.c., T.P.R. 1991, n° 27, p. 392-393; J.H. HERBOTS, o.c., R.C.J.B. 1990, (563), n° 24, p. 587-588. E. DIRIX, “Retentierecht” in Voorrechten en hypotheken, n° 8. Com. Brussels 7 September 1987, J.T. 1988, 607; H. DE PAGE, VI, n° 813, p. 772; E. DIRIX, “Retentierecht” in Voorrechten en hypotheken, n° 10; E. DIRIX and R. DE CORTE, o.c., n° 519, p. 347; L. LAMINE, o.c., p. 61, n° 88; H. VANDENBERGHE, o.c., p. 34, n° 31. E. DIRIX and R. DE CORTE, o.c., n° 519, p. 347 ; H. VANDENBERGHE, o.c., n° 29, p. 35. H. VANDENBERGHE, o.c., p. 34, n° 33.

22. The law of restitution of movables

333

tor regains possession over the property580 (except when he regains the property in the course of the same legal relationship).581 If the creditor involuntary loses possession of the property, he is able to claim the restitution of the property after which his right of retention revives. The creditor can claim revindication on the basis of Article 2279 C.C. (which might however fail when the real owner takes possession of the property).582 According to some scholars, the creditor can also base his claim on Article 1382 C.C. and the principle that the damage caused by a fault has to be compensated in natura.583 The creditor can further proceed to a “revindicative seizure” measure (Article 1462 et seq. C.C.).584 Given the rule of Article 2279 C.C, this is however impossible against a third party in good faith.585 According to a certain opinion, the right of retention can only be exercised over property that is fit for seizure.586 Other legal scholars only give a very narrow scope to this exclusion,587 and still others disapproved of the opinion.588 Articles 1613 and 1653 C.C. provide that the right to retain the movable ends if other sufficient security is offered. According to a classic au580

581

582

583

584

585 586

587

588

Brussels 26 February 1997, R.W. 1997-98, 1340; H. VANDENBERGHE, o.c., n° 33, p. 36. E. DIRIX, “Retentierecht” in Voorrechten en hypotheken, n° 10 and 45; E. DIRIX and R. DE CORTE, o.c., n° 519, p. 347. E. DIRIX, “Retentierecht” in Voorrechten en hypotheken, n° 11; L. LAMINE, o.c., n° 98 et seq., p. 65 et seq. L.S. HEYNING-PLATE and G. SUETENS-BOURGEOIS, “Enkele beschouingen over het retentierecht naar Belgisch en Nederlands recht”, T.P.R. 1970, 198. Contra: L. LAMINE, o.c., n° 100-101, p. 66-67. E. DIRIX, “Retentierecht” in Voorrechten en hypotheken, n° 11; H. VANDENBERGHE, o.c., n° 34, p. 36. E. DIRIX, “Retentierecht” in Voorrechten en hypotheken, n° 11. Brussels 1 December 1988, J.T. 1989, 76 and R.R.D. 1991, 167; Pres. Com. Bruges 18 November 1991, R.W. 1992-93, 1380. According to certain scholars one should distinguish between the reason why property is declared unfit for seizure. E. DIRIX and R. DE CORTE, o.c., n° 519bis, p. 349; L. LAMINE, o.c., n° 85, p. 60). Example: If the unfitness for seizure only serves to prevent that it would be sold against the debtor’s will (e.g. objects necessary for the execution of his religion), retention would possible. If the property is declared unfit for seizure to ensure the debtor’s continuous use (e.g. bedding), retention would be allowed (see L. LAMINE, o.c., n° 85, p. 60). H. DE PAGE, Traité, VI, n° 811, p. 771; A. VERBEKE and I. PEETERS, Vijf jaar voorrechten, hypotheken en andere zekerheden 1991-1995, Ghent, Mys en Breesch, 1997, n° 171, p. 95.

Belgium

334

thoritative author, this rule may not be extended to other cases.589 Recent case law590 and legal scholarship591 however also accept that in other cases than those foreseen by the mentioned articles, the right of retention may end if a sufficient security is offered. The right of retention may not make the performance of the obligation of the retentor entirely or partially permanently impossible, or cause any permanent damage.592 This rule will often hinder the suspension of continuous obligations, e.g. obligations of continuous provision of the use of the property, for example in cases of rent. An author specified that the suspension may not render the performance of one’s own obligation permanently impossible, unless the conditions for a final settlement are fulfilled, e.g. resolution of a contract or seizure.593

22.4.4. Real or personal nature An important part of Belgian legal scholarship considers the right of retention a mere personal defense and denies it every real effect.594 The right of retention would not provide the creditor any right on the property itself, nor would it provide him a right of preference or a right to follow the property. Nevertheless it is generally accepted that the creditor has the right to oppose the right of retention, not only against his debtor and his debtor’s successors under general title, but also against his debtor’s other creditors. A possible explanation for this external effect can be found in the nature of the right of retention: a type of “taking the law into one’s own hands” accepted by law and finding its foundation in the factual power over the property.595 This approach would however lead to the conclusion that the opposability of the right of retention should be accepted in all 589 590 591

592

593 594 595

H. DE PAGE, Traité, VI, n° 817, p. 777-778. Brussels 23 February 1994, DAOR 1994, n° 31, 103. A. VERBEKE and I. PEETERS, o.c., n° 173, p. 97-98. Also: E. DIRIX, “Retentierecht” in Voorrechten en hypotheken, n° 13 who thinks that the refusal of a sufficient security may be seen as contrary to the condition that the right of retention must be exercised in good faith. Some authors defend a more strict vision: see e.g. L. LAMINE, o.c., p. 157-159, n° 234-236 who distinguishes between reciprocal and non-reciprocal obligations. For the exceptio non adimpleti contractus: J.H. HERBOTS, o.c., R.C.J.B. 1990, n° 25, p. 589-590; J.H. HERBOTS, o.c., T.P.R. 1991, n° 28, p. 393-394; M.E. STORME, o.c., R.W. 1989-90, n° 19, p. 321-322. M.E. STORME, o.c., R.W. 1989-90, n° 19, p. 321-322. H. DE PAGE, VI, n° 823, p. 783. J.H. HERBOTS, o.c., T.P.R. 1991, n° 39, p. 398.

22. The law of restitution of movables

335

cases. This indistinct result does not conform to the resolutions developed by case law. The only satisfactory way to explain the external effect of the right of retention and conflicts with diverse third-party real rights of possession, consists in the recognition of the real effect of the right of retention. Conflicts with other real rights are generally resolved by the anteriority principle.596

22.5.

Expenses and place of restitution

22.5.1. Restitution pursuant to avoidance of the contract As explained before, the avoidance of a contract terminates the contract ex tunc. The parties have to be restored to the position that would have been theirs if the contract had never been concluded. This implies that the parties have to make restitution of everything they have received in performance of the contract. If one of the parties is at fault for the voidness of the contract, he has to bear the costs of the restitution of the movable. If neither of the parties has committed a pre-contractual fault, each party has to bear its own costs. In most cases parties will agree on the time and place for restitution of the property. If they cannot reach an agreement, it is arguable that it has to be returned at the place where the property was situated at the time the contract was concluded. This option seems to be most in line with the general rule that the parties have to be restored to the situation that would have been theirs if the contract had never been concluded. One could however argue that Article 1247 C.C. should be applied mutatis mutandis. This would imply that, if certain and defined property is concerned, the property should be returned at the place where it was situated at the time the debtor’s obligation came into existence, i.e. the time the contract was declared void. In any other case it should be returned at the domicile of the debtor, i.e. the person who has to return the movable.

22.5.2. Restitution when the right to use is invalidated The invalidity of the right of use will usually follow from the invalidity of the contract by which the right of use has been accorded. The same rules as under 22.5.1. will apply.

596

E. DIRIX, “Retentierecht” in Voorrechten en hypotheken, n° 6.

Belgium

336

22.5.3. Restitution when the right to use has ended In contracts governed by the Civil Code, such as rent and loan, the user is under an obligation to make restitution of the property at the end of the contract. The expense of the restitution is for the user. Time and place of restitution are usually contractually foreseen. If the place for restitution is not defined in the contract, Article 1247 C.C. has to be applied. If certain and defined property is concerned, the property should be returned at the place where it was situated at the moment the user’s obligation came into existence, i.e. time of conclusion of the contract. In any other case it should be returned at the domicile of the debtor, i.e. the person who has to return the movable. Because the system of obligations is “open”, parties can agree on other contracts providing a temporary right of use. They too seem necessarily to imply an obligation to make restitution of the property at the end of the contract.

22.5.4. Restitution in case of theft and similar cases Expenses of restitution are for the thief as part of the compensation due by him.

23.

Retention of title

23.1.

General overview

Ownership for security purposes in many European systems is the “queen of the security rights”.597 It confers on the creditor not a limited real right, which has to be executed in case of insolvency of the debtor, but full ownership in such a way that the property remains outside the estate of the debtor. Belgian law has however for many decades taken a rather hostile position with regard to retention of title. A title retention did not affect the validity of the agreement, but Belgian law did not recognize the opposability of title retention. In other words: title retention was considered a valid clause, but this clause did not have any proprietary effects.

597

J. STOUFFLET, “L’usage de la propriété à des fins de garantie” in A. BRUYNEEL and A.M. STRANART (eds.), Les sûretés, Brussels, Feduci, 1983, 320, n° 2.

23. Retention of title

337

This case law deprived title retention of its usefulness. As title retention could not be invoked by the seller against the competing creditors of the purchaser, it did not grant any security to the creditor.598

23.2.

Legal categorization of title retention

The qualification of title retention is the object of doctrinal debate. According to the majority opinion, title retention constitutes a suspensive condition to which the transfer of ownership is made subject. According to some legal scholars, title retention would create a mere real security right without any public notice.599 These authors argue that title retention is nothing more than a pledge in favour of the seller without dispossession of the pledgor (purchaser). The main argument in favour of this view is the fact that the purchaser is protected in case of insolvency of the seller. The seller is entitled to vindicate the assets out of the insolvency estate if he duly performs the payment of the purchase price.600 This entails that his position is protected by a kind of property right (the German “Anwartschaftsrecht”), which would not be justified if one considers the title retention as the retention of full ownership. However, another view is also defended. The main difference is that a real security right is granted / vested, while in title retention ownership is retained. The proprietary effects of a real security right are suspended until the opening of an insolvency proceeding against the debtor, while the proprietary effects are operating from the moment of the sales agreement. Until that moment, the principle “prior tempore, potior iure”, is prevailing. That is different from the functioning of title retention. The retained prop598

599

600

Cass. 9 February 1933, Pasicrisie 1933, I, 103 concl. Proc. Gen. LECLERCQ. This judgement was more recently confirmed in Cass., 22 September 1994, R.W. 1994-95, 1264, note E. DIRIX. In support of this view: M.E. STORME, “Van trust gespeend? Trusts en fiduciaire figuren in het Belgisch privaatrecht”, T.P.R. 1998, p. 723, n° 24; F. T’KINT and W. DERYCKE, “Dessaisissement et situation des créanciers en cas de faillite” in Le nouveau droit du concordat judiciaire et de la faillite: les lois des 17 juillet et 8 août 1997, Brussels, Bruylant, 1997, p. 206, n° 39. This rules is imposed by the European Regulation n° 1346 / 2000 of 29 May 2000 on Insolvency Proceedings on a European PIL-level: “The opening of insolvency proceedings against the seller of an asset, after delivery of the asset, shall not constitute grounds for rescinding or terminating the sale and shall not prevent the purchaser from acquiring title where at the time of the opening of proceedings the asset sold is situated within the territory of a Member State other than the State of the opening of proceedings”.

338

Belgium

erty has never been part of the insolvency estate of the purchaser. A title retention operates from the moment of the sales agreement, not from the moment of the insolvency. The seller under title retention does not have a priority over the sold property, rather this property remains excluded from the insolvency estate.601 In conclusion: title retention can, from a legal point of view, not be identified with a real security right, even if the economic finality of both is similar. Pursuant to the prevailing view in French law, Belgian scholars do not qualify title retention as a real security right, but as a guaranty with proprietary effects. It is closer to a full ownership than to a real security right.602 The assimilation between title retention and real security rights was also rejected by the Belgian parliament during the preparatory works of the Bankruptcy Act (1997).603 This debate is not merely theoretical, but has major practical implications. If one agrees that title retention creates a real security right, the exercise would automatically extinguish the obligation to which it is connected.604 However, it is mostly argued that the exercise of title retention does not extinguish the guaranteed obligation. After the exercise of the title retention, the seller will have to effect the termination of the sales agreement.605 This will be easily possible because of the non-compliance of the purchaser. If the second view prevails, the seller is not obliged to declare his claim within the time period set forth for creditors (even those with real security rights).606 The statutory provisions do not clearly distinguish the issue of who bears the risk for deterioration or destruction of the property under title retention. Most legal scholars defend the view that the seller has the risk

601 602

603

604

605

606

H. DE PAGE, VII, n° 11. V. SAGAERT, Zakelijke subrogatie, n° 164 et seq.; G. SCHRANS, “Het beding van eigendomsvoorbehoud en zijn externe werking tegenover de schuldeisers van de koper van een zaak”, T.P.R. 1982, 151, fn. 20. Amendement n° 5 of the Government, Parl. Proceedings Chamber of Representatives 1995-96, n° 330 / 2, 6-7. In this sense: A.M. STRANART, “Rapport de synthèse”, in Les sûretés. Colloque de Bruxelles des 20 et 21 octobre 1983, Paris, Feduci, 1984, 567. A.P.R., v° Afbetalingsovereenkomsten, n° 403-404; comp. M. GREGOIRE, “Questions liées à l’invocation d’une clause de réserve de propriété” in Mélanges offerts à Pierre Van Ommeslaghe, Brussels, Bruylant, 2000, p. 483, n° 25. Defending the same opinion: M. GREGOIRE, “Questions liées à l’invocation de la clause de réserve de propriété”, l.c., p. 479-480, n° 20; V. SAGAERT, Zakelijke subrogatie, n° 169.

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339

until the moment ownership passes (i.e. sales price has been paid).607 However, parties can contractually stipulate differently.

23.3.

Conditions for the proprietary effects of title retention

Belgian law was one of the last European legal systems to introduce proprietary title retention. Finally, the proprietary effects of title retention have been recognized in the amendment of the Bankruptcy Act of 8 August 1997. This amendment was largely and clearly inspired by the French provisions on title retention. The conditions for invoking title retention against other creditors of the purchaser are set out in Article 101 Bankruptcy Act. This provision rules as follows: “The bankruptcy proceeding does not impede the right of vindication of the owner of property that is in the possession608 of the debtor” (free translation). However, movable property that has been sold on the condition that transfer is suspended until full payment of the sales price can be vindicated on the grounds of that clause if it has been agreed in writing, at last at the moment of the delivery of the property. Moreover, the property must be in natura in the possession of the debtor and must not have been made immovable by incorporation or commingling with other movable property. The claim in restitution cannot be brought after the moment that the document that numbers the assets and debts is closed. Although only the Bankruptcy Act recognizes the opposability of title retention, this opposability is also accepted in other cases of insolvency such as collective debt arrangements (civil bankruptcy), liquidation of companies and reorganisation proceedings. Article 101 Bankruptcy Act clearly expresses that title retention cannot be exercised after the commingling of the property under title retention with private property of the purchaser. However, it is common opinion that a co-ownership can come into existence among the different sellers of this category of property.609 They can globally claim restitution of their property. We can refer to supra, Part IV, 23, for a more in depth analysis of the effects of title retention. A “Verarbeitungsklausel”, as in German law, cannot have any proprietary effects. Accessio excludes the possibility to claim restitution if the movable property cannot be disconnected without damaging the immovable property into which it has been incorporated. 607

608 609

E. DIRIX, o.c., R.W. 1997-98, p. 483, n° 7; J. RONSE, “Het risico bij verkoop op afbetaling met beding van eigendomsvoorbehoud”, R W. 1953-54, 1897 et seq. Possession is used in a non-technical sense, e.g. in the meaning of detention. E. DIRIX, o.c., R.W. 1997-98, p. 491, n° 30.

Belgium

340

If the property under title retention is seized by creditors of the purchaser, the seller will be entitled to oppose the seizure. In the same way, the purchaser will be entitled to oppose the seizure of the assets in case of insolvency of the seller.610 That is also the case if the seizing creditor has a legal lien. As we have seen, the purchaser has a right with proprietary effects against the seller. If he continues paying the sales price, he will be able to claim restitution of the property from the insolvency estate (cf. supra, Part II, 13).

23.4.

Effects of re-sale by the purchaser

What is the position of the seller (A) if the purchaser (B) becomes insolvent after he has already re-sold the property to C? If C is in bad faith, A will be entitled to vindicate the property from the hands of C (right to follow). C is protected if he is in good faith (cf. supra: Article 2279 C.C.). Can A claim priority over the proceeds of the sales agreement? Some authors argue that real subrogation cannot be invoked to support the position of the seller under title retention.611 They find support in the parliamentary proceedings of the new Bankruptcy Act, in which the Government stated that “title retention will remain without effect in relation to the bankrupt debtor if the latter has already sold the assets subject to title retention and the third-party purchaser has already taken possession of these assets” (free translation).612 However, it was correctly noticed by others that this statement merely aimed to protect the third-party purchaser in good faith and to exclude a restitution of the assets from his hands, but did not concern the question whether the proprietary interest could be upheld on the substitute.613 This solution is the only one that is coherent within the broader system of real rights, because a property right for security purposes, as it is vested by title retention, is in the middle between a full property right and a security right. A security right is generally protected by real subrogation: if the debtor sells the object of the real security right, the secured creditor can also 610 611

612

613

E. DIRIX, o.c., R.W. 1997-98, p. 494, n° 44. M. GREGOIRE, “Questions liées à l’invocation d’une clause de réserve de propriété” in Mélanges offerts à Pierre Van Ommeslaghe, Brussels, Bruylant, 2000, p. 492, n° 42; I. VEROUGSTRAETE, Manuel de la faillite et du concordat, Diegem, Kluwer Rechtswetenschappen, 1998, n° 845. Amendment n° 5 by Government, Parl. St. Kamer 1995-96, n° 330 / 2, 8. A member of parliament even declared that real subrogation should remain unapplicable. E. DIRIX, “Eigendomsvoorbehoud”, R.W. 1997-98, p. 491, n° 34.

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341

claim priority to the proceeds of the sale.614 Likewise, he can claim priority to the insurance proceeds if the object of the real security right is materially lost in circumstances covered by the insurance agreement contracted by the debtor.615 The same is true for the holder of a full property right: he can claim a proprietary interest also in the proceeds of the sale if the debtor has opened insolvency proceedings on the base of Article 103, § 2 Bankruptcy Act, which is similar to Article 122 French Bankruptcy Act. It would be illogical to exclude the seller under title retention, which is in the middle between the two former categories. In conclusion, there are very strong arguments in Belgian law for protecting the position of the seller under title retention, and also by applying the mechanism of real subrogation.616 Real subrogation operates by way of law. Hence, parties do not need (according to this opinion) to stipulate this expressly in the sales agreement. Such stipulation would not contribute to the position of the creditor. In order to ensure that the title retention covers both the proceeds of a resale and the claims for the contract price against the transferee’s buyers, a fiduciary transfer for security purposes would be necessary. According to the current state of Belgian law, this would be ineffective.617 Belgian law traditionally does not recognize the proprietary effects of a fiduciary transfer for security purposes.618 Even if some recent developments have diminished the strength of this starting point, it still remains de lege lata part of Belgian security law.

614 615

616

617 618

H. DE PAGE, VII, n° 26; E. DIRIX and R. DE CORTE, o.c., n° 217. This is expressly provided by article 10 Belgian Mortgage Act: “Lorsqu’un immeuble, des récoltes ou des effets mobiliers auront été assurés soit contre l’incendie, soit contre tout autre fléau, la somme qui, en cas de sinistre, se trouvera due par l’assureur, devra, si elle n’est pas appliquée par lui à la réparation de l’objet assuré, être affectée au payement des créances privilégiées ou hypothécaires, selon le rang de chacune d’elles. Il en sera de même de toute indemnité qui serait due par des tiers à raison de la perte, déterioration ou perte de la valeur de l’objet grevé de privilège ou d’hypothèque”. E. DIRIX, o.c., R.W. 1997-98, p. 491, n° 34; F. T’KINT and W. DERYCKE, “Dessaisissement et situation des créanciers en cas de faillite” in Le nouveau droit du concordat judiciaire et de la faillite: les lois des 17 juillet et 8 août 1997, Brussels, Bruylant, 1997, p. 206, n° 39. V. SAGAERT, Zakelijke subrogatie, n° 347. Cass. 17 October 1996, Arr.Cass. 1996, 930, Bull. 1996, 992, concl. J. PIRET, Tijdschrift voor Bank-en Financiewezen. 1997, 114, note I. PEETERS and R.W. 1996-97, 1395, note M.E. STORME.

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DEKKERS, R., “Du neuf sur les droit réels”, J.T. 1960, 697-698. DEKKERS, R., “Inzake roerend goed geldt bezit als titel, doch niet als wettige titel”, R.W. 1972-73, 1937-1940. DEKKERS, R. and DIRIX, E., Handboek burgerlijk recht, II, Zakenrecht, zekerheden, verjaring, Antwerp, Intersentia, 2005, XVI + 589 p. DELPORTE, F., De handgift, in AdvocatenPraktijk. Burgerlijk recht, Antwerpen, Kluwer, 1997, IV+52 p. DELVAUX, P.-H., “Les effets en droit belge de la résolution des contrats pour inexécution. Rapport belge” in FONTAINE, M. and VINEY, G. (eds.), Les sanctions de l’inexécution des obligations contractuelles. Etudes de droit comparé, Brussels, Bruylant, 2001, 669-697. DE PAGE, H. and DEKKERS, R., Traité élémentaire de droit civil belge, Brussel, Bruylant, 1961-1975, X volumes. DERINE, R., De grenzen van het eigendomsrecht in de negentiende eeuw, Antwerp, De Sikkel, 1955, 306 p. DERINE, R., VANNESTE, F. en VANDENBERGHE, H., Zakenrecht, Antwerpen, Standaard, 1974, IV volumes. DIEUX, X., “Observations sur l’article 1794 du Code civil et sur son champ d’application”, R.C.J.B. 1981, 528-546. DIRIX, E., “Eigendomsoverdracht bij gedwongen openbare verkoop van onroerend goed”, R.W. 1985-86, 997-999. DIRIX, E., “Actuele trends in de zakelijke zekerheidsrechten” in Zakenrecht: absoluut niet een rustig bezit, Antwerp, Kluwer, 1995, 1-32. DIRIX, E., “Eigendomsvoorbehoud”, R.W. 1997-98, 481-496. DIRIX, E., “Retentierecht” in Voorrechten en hypotheken. Artikelsgewijze commentaar met overzicht van rechtspraak en rechtsleer, Mechelen, Kluwer, 1999, 24 p. DIRIX, E., “De rechtsverhouding tussen principaal, commissionair en derde” in DIRIX, E., PINTENS, W., SENAEVE, P. and STIJNS, S. (eds.), Liber Amicorum Jacques Herbots, Antwerp, Kluwer, 2002, 97-110. DIRIX, E., “Faillissement en lopende overeenkomsten”, R.W. 2003-04, 201-211. DIRIX, E. and BROECKX, K., Beslag, in A.P.R., Antwerp, Kluwer, 2001, XXV + 573 p. DIRIX, E. and DE CORTE, R., Zekerheidsrechten, in Beginselen Belgisch Privaatrecht, Antwerp, Story-Scientia, 2006, 519 p. DIRIX, E. and VAN OEVELEN, A., “Kroniek van het verbintenissenrecht (1981-1984)”, R.W. 1985-86, 1-28. DIRIX, E. and VAN OEVELEN, A., “Kroniek van het verbintenissenrecht (1985-1992)”, R.W. 1992-93, 1209-1237. ENGELS, C., Het uitvoerend beslag op onroerend goed, Antwerp, Kluwer, 1981, XXVIII+ 44 p.

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het familiaal vermogensrecht, Leuven, Universitaire pers, 2002, XLVII+997 p. PLANIOL, M., Traité élémentaire de droit civil, Paris, Pichon, 1943-1948, III volumes. PLANIOL, M., and RIPERT, G., Traité pratique de droit civil français, Paris, L.G.D.J., 1952-1960, XIV volumes. POTHIER, R.-J., Oeuvres de Pothier, Paris, Beaucé, 1819, XI dln. PUELINCKX-COENE, M., Erfrecht: openvallen van de nalatenschap, devolutie, erfovereenkomsten, reserveregeling, Antwerp, Kluwer, 1996, XV + 508 p. PUELINCKX-COENE, M., GEELHAND, N. and BUYSSENS, F., “Giften 1993-1998”, T.P.R. 1999, 779-1117. RENARD, C., note on Cass. 30 October 1947, R.C.J.B. 1950, 24-44. RENARD, C., VIEUJEAN, E. and HANNEQUART, Y., Théorie générale des obligations, in Les Novelles, Droit civil, Brussels, Larcier, 1957, IV, 2 volumes. Répertoire pratique du droit belge: législation, doctrine et jurisprudence, Brussel, Bruylant, 1929-1967, XVII volumes + VII complements. RIGAUD, L., “A propos d’une renaissance du jus ad rem et d’un essai d’une classification nouvelle des droits patrimoniaux”, Rev. int. dr. comp. 1963, 557-567. RIGAUD, M., Le droit réel: histoire et théories: son origine institutionnelle, Toulouse, Thesis, 1912, xvi+486 p. RONSE, J., “Het risico bij verkoop op afbetaling met beding van eigendomsvoorbehoud”, R.W. 1953-54, 1897-1902.

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obligations: les sources (1985-1995)”, J.T. 1996, 689-752. STIJNS, S. and VUYE, H., “Tendances et réflexions en matière d’abus de droit en droit des biens” in KOKELENBERG, J., VAN NESTE,F., VUYE, H. and WÉRY, P. (eds.), Eigendom – Propriété, Bruges, Die Keure, 1996, 97-159. STOUFFLET, J., “L’usage de la propriété à des fins de garantie” in BRUYNEEL, A. and STRANART, A.M. (eds.), Les sûretés, Brussels, Feduci, 1983, 319-343. STORME, M.E., “De exceptio non adimpleti contractus als uitlegvraag. Uitwerking van enkele aspecten in de verhouding tussen partijen, meer bepaald evenredigheid en volgorde van de prestaties en bewijslast”, R.W. 1989-90, 313-324. STORME, M.E., “Het ingaan en de terugwerkende kracht van de ontbinding van wederkerige overeenkomsten”, T.B.B.R. 1991, 101-117. STORME, M.E., “Perspektieven voor de bevrijdende verjaring in het vermogensrecht met ontwerpbepalingen voor een hervorming”, T.P.R. 1994, 1077-2046. STORME, M.E., “De kwaliteitsrekening, zakenrechtelijk bekeken” in DIRIX, E. and VRIESENDORP, R.D. (eds.), Inzake kwaliteit, Deventer, Kluwer, 1997, 55-79. STORME, M.E., “Van trust gespeend? Trusts en fiduciaire figuren in het Belgisch privaatrecht”, T.P.R. 1998, 703-819. STRANART, A.M., “Rapport de synthèse”, in Les sûretés. Colloque de Bruxelles des 20 et 21 octobre 1983, Paris, Feduci, 1984, 551-573. SWENNEN, F., “Het misverstand van de “theorie van de versterkte toestemming” bij giften”, A.J.T. 1998-99, 569-574. T’KINT, F. and DERYCKE, W., “Dessaisissement et situation des créanciers en cas de faillite” in Le nouveau droit du concordat judiciaire et de la faillite: les lois des 17 juillet et 8 août 1997, Brussels, Bruylant, 1997, 173-207. TILLEMAN, B., Lastgeving, in Algemene Praktische Rechtsverzameling, Ghent, Story-Scientia, 1993, XVIII + 396 p. TILLEMAN, B. and VERBEKE, A., Bijzondere overeenkomsten in kort bestek, in Recht in kort bestek, Antwerp, Intersentia, 2005, XXXIV + 312 p. VANBELLE, J., “De revindicatie van onroerende en roerende goederen”, Jura Falconis 1994-95, 31-62. VAN DEN BERGH, J. en DE CALUWE, A., Afbetalingsovereenkomsten, financieringshuur, brouwerijovereenkomsten, in A.P.R., Ghent, Story-Scientia, 1975, XXXIII +570 p. VANDENBERGHE, H. and SNAET, S., Mede-eigendom, in Beginselen van Belgisch Privaatrecht, Ghent, Story-Scientia, 1997, XIII + 427 p. VAN GERVEN, W., Algemeen Deel, in Beginselen Belgisch Privaatrecht, Brussels, Story-Scientia, 1987, VI+519 p.

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Table of Abbreviations Act. dr. Ann. dr. Liège A.P.R. A.J.T. A.J.T.-Dossier Arr. Cass. Art. Att.-Gen.

Actualités du droit Annales de droit de Liège Algemene Praktische Rechtsverzameling Algemeen Juridisch Tijdschrift Algemeen Juridisch Tijdschrift. Dossier Arresten van het Hof van Cassatie Article Attorney-General

Belg. Jud. Bull. Bull. Bel. Bull.civ.

Belgique Judiciaire Bulletin des arrets de la Cour de cassation Bulletin der belastingen Bulletin des arrêts de la Cour de cassation (France)

C.C. Civ. CMI Concl. Com. Comp. compl.

Civil code Civil Court of first instance Comité Maritime International Conclusion Tribunal de commerce (Rechtbank van Koophandel) compare complément

D. DAOR

Dalloz Hebdomadaire Droit des affaires / ondernemingsrecht

ed. éd. eds. e.g. err. esp. et seq.

editor édition editors ex generis erratum especially et sequitur

Faill.W. fn.

Faillissementswet (= Insolvency Act) footnote

i.e. J.T.

id est Journal des Tribunaux

Table of Abbreviations

351

J.C.Br. J.C.P. J.L.M.B.

Jurisprudence commerciale de Bruxelles Semaine Juridique Revue de jurisprudence de Liège, Mons et Bruxelles

Limb. Rechtsl.

Limburgs Rechtsleven

n° Not. Fisc. M.

number Notariaat. Notarieel en fiscaal maadblad

o.c.

opus citatum

p. Pand. pér. Pas.

page Pandectes périodiques Pasicrisie belge

Rec. gén. enr. not. R.C.J.B. R.D. R.D.I.D.C. R.H.A. Rep. not. Rev. dr. pén. Rev. Liège Rev. not. b. Rev. prat. soc. Rev. trim. dr. civ. Rev. trim. dr. com. Rev. trim. dr. comp. Rev. trim. dr. fam. Rev. int. dr. comp. R.D.A.I. R.P.D.B. R.W.

Recueil général de l’enrigistrement et du notariat Revue critique de jurisprudence belge Royal Decision (Koninklijk Besluit) Revue de droit international et de droit comparé Rechtspraak van de Haven van Antwerpen Répertoire notarial Revue de droit pénal et de criminologie Jurisprudence de Liège Revue du notariat belge Revue pratique des sociétés civiles et commerciales Revue trimestrielle de droit civil Revue trimestrielle de droit commercial Revue trimestrielle de droit comparé Revue trimestrielle de droit familiale Revue international de droit comparé Revue de droit des affaires internationales Répertoire pratique de droit belge Rechtskundig Weekblad

T. Aann. T.B.B.R. T.G.R. T.P.R. T.R.V. T.Vred.

Tijdschrift voor aannemingsrecht Tijdschrift voor Belgisch Burgerlijk recht Tijdschrift voor Gentse rechtspraak Tijdschrift voor Privaatrecht Tijdschrift voor Rechtspersoon en Vennootschap Tijdschrift van de Vrede-en Politierechters

v° V&F

verbo Vennootschapsrecht en Fiscaliteit

National Report on the Transfer of Movables in Bulgaria Dimitar Stoimenov

Table of Contents Introduction: historical background and sources

361

Part I: Basic information on property law 1. Notion of ownership and property rights 1.1. General 1.1.1. Characteristics of rights in rem in contrast to rights in personam 1.1.2. The numerus clausus of property rights 1.1.3. Other principles of property rights 1.2. Notion of ownership 1.2.1. Definition and scope of ownership 1.2.2. Restrictions on ownership 1.2.3. Components of the right of ownership (a) Usus (b) Fructus (c) Abusus (d) Duties of the owner regarding specific movables 1.3. Other property rights 1.3.1. The pledge 1.3.2. The usufruct 1.4. Protection of property rights 1.4.1. Protection of ownership (a) Rei vindicatio (b) Actio negatoria 1.4.2. Protection of other property rights 1.4.3. Other remedies of protection (a) Claim for damages (tort law) (b) Claim for unjustified enrichment 1.5. Transferability of the ownership of movables 1.5.1. General 1.5.2. Transferability of other property rights in movables

365 365 366 367 367 367 368 369 369 371 372 373 373 373 375 377 377 378 379 380 381 381 381 383 383 384

Bulgaria

356

1.5.3. Restrictions on transferability based on agreements of non-alienation 1.5.4. The main movable and its accessories 2. Possession 2.1. Notion of possession 2.1.1. Definition 2.1.2. The objective element of possession (corpus possidendi) 2.1.3. The subjective element of possession (animus possidendi) 2.1.4. Other characteristics of possession (a) Permanence (b) Uninterrupted possession (c) Unequivocal possession (d) Passive possession (e) Manifest possession 2.1.5. Detention 2.1.6. Intensity of the actual control over the movable 2.1.7. Different forms of possession (a) Possession in good faith (i) Legal grounds as a prerequisite of possession in good faith (ii) The prerequisite of good faith (b) Possession in bad faith 2.1.8. Possession of rights 2.2. Functions of possession 2.2.1. General functions of possession 2.2.2. Functions of the possession in good faith 2.3. Acquisition of possession 2.3.1. Acquisition of possession through unilateral acts of the possessor 2.3.2. Acquisition of possession with the consent of the former possessor 2.3.3. Acquisition of possession by a third party 2.3.4. Possession of an inheritor 2.3.5. Constitutum possessorium 2.3.6. Traditio brevi manu 2.4. Protection of possession 2.4.1. General 2.4.2. Self-help

384 385

385 385 386 386 388 388 388 389 389 389 389 390 391 391 392 393 394 394 394 395 395 396 396 396 397 398 398 398 399 399 401

Table of Contents

357

3. Obligatory rights with similarities to the protection of absolute rights

402

4. Field of application and definitions 4.1. Field of application 4.2. Definitions

403 403

Part II: Derivative acquisition 5. Consensual system of transfer of ownership 5.1. Basics 5.1.1. General view of modes of acquiring ownership 5.1.2. Consensual transfer system 5.1.3. The principle of art. 24, p. 1 OblCA 5.2. Proprietary-obligatory effect of the contract 5.2.1. Transfer of specific property 5.2.2. Transfer of property that must be specified alternatively 5.2.3. The transfer of ownership of generic movables 5.2.4. Transfer of future movables 5.2.5. Transfer of ownership of movables not yet owned by the transferor 5.3. Contractual autonomy and transfer of title 5.4. Effect of the transfer of ownership 5.5. Requirement of a valid obligation to transfer ownership 5.5.1. Contracts that transfer ownership 5.5.2. Unilateral acts 5.5.3. Acquisition of ownership by a judicial act (court order) 5.5.4. Validity of the obligation and its effects on the transfer of ownership (a) Void contracts (b) Voidable transactions (c) Termination of a contract (d) Retroactive effect of the resolutive condition 5.6. Registration 5.6.1. Registration of vessels 5.6.2. Registration of aircrafts 5.6.3. Registration of motor-vehicles

405 405 406 407 407 407 408 409 411 411 412 412 414 414 414 415 415 416 416 417 418 418 418 419 419

358

Bulgaria

6. “Selling in a chain”

419

7. Transfer of acquisition by means of indirect representation

420

8. Insolvency of the transferor or transferee 8.1. General issues 8.1.1. Termination of contracts by the insolvency administrator 8.1.2. Legal remedies of the creditors in order to avoid contracts between the debtor and a third party 8.2. Insolvency of the transferor 8.2.1. Disposition of a movable before the opening of the insolvency proceedings against the transferor 8.2.2. Disposition of a movable after the occurrence of the insolvency 8.3. Insolvency of the transferee

422 422 423 425 425 426 426

Part III: Modes of original acquisition 9. Acquisition by accession, commixture or processing 9.1. Accession of movables 9.1.1. Accession into the ground of an immovable 9.1.2. Accession into the main movable 9.2. Commixture 9.3. Processing 9.4. Co-ownership of the commixed or the processed movable 10. Good faith acquisition 10.1. Field of application 10.1.1. No acquisition in good faith of lost or stolen movables 10.1.2. No acquisition in good faith of movables, the transfer of which requires a specific form by virtue of law 10.1.3. Applicability of the rule of art. 78 to other specific movables 10.1.4. Acquisition in good faith of a co-ownership share 10.2. The element of non-gratuity 10.3. The requirement of possession 10.4. The requirement of physical control

428 428 429 429 430 430

431 432

433 433 434 434 435 435

Table of Contents

10.5. 10.6. 10.7.

10.8.

10.4.1. The exception of “constitutum possessorium” 10.4.2. Physical control by a third party 10.4.3. Delivery of generic goods, object of the good faith acquisition Specific circumstances with respect to the transfer Good faith acquisition in case of a voidable contract Good faith 10.7.1. Object of good faith 10.7.2. Time-requirement of good faith 10.7.3. Presumption of good faith Property rights of a third person encumbering the movable acquired in good faith

11. Prescription 11.1. Functions of acquisitive prescription 11.2. Requirements of acquisitive prescription 11.2.1. Restrictions on acquisitive prescription 11.2.2. Requirement of possession 11.2.3. Importance of the bad or good faith of the possessor 11.2.4. Addition of the possession of the predecessor (a) Addition of the possession of an heir (b) Adding the possession of a predecessor who alienated the property (c) Common requirements for adding the possession of the predecessor (d) Special requirements for the adding of the possession of a universal or a singular predecessor (e) The question of “fictitious” succession 11.3. Period of prescription 11.3.1. Beginning of the prescription period 11.3.2. Suspension of the prescription period 11.3.3. Interruption of the prescription period 11.4.4. Legal remedies of the former owner against the acquirer 11.4.5. Real rights and charges on the movable 12. Other forms of original acquisition 12.1. Finding 12.2. Occupation 12.3. Separation from other property

359 435 436 436 437 437 437 437 438 438 438

439 440 440 440 441 441 441 442 442

443 443 444 444 444 446 446 447

447 448 448

360

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Part IV: Additional issues 13. Reservation of title

449

14. Abandonment

449

15. Co-ownership 15.1. General 15.2. Definition of co-ownership 15.3. Sources of co-ownership 15.4. Transfer of a share of co-ownership 15.5. Termination co-ownership 15.6. Separation of co-ownership 15.6.1. Contractual termination of co-ownership 15.6.2. Judicial termination of co-ownership

449 450 450 450 451 451 451 452

16. Restitution of the movable to the owner 16.1. Restitution of the movable in case of a void, avoided or retrospectively terminated contract 16.2. Restitution in case of the end of a contractual right to use the movable 16.3. Restitution of stolen property 16.4. Entitlement to the fruits resulting from the movable 16.4.1. Entitlement of the possessor in good faith 16.4.2. The situation of the possessor in bad faith 16.5. Loss and deterioration of the movable 16.6. Reimbursement for improvements and expenses incurred during the possession 16.6.1. Reimbursement for necessary expenses and improvements made by the possessor in good faith (a) The necessary expenses (b) Reimbursement for improvements made by the possessor in good faith 16.6.2. The situation of the possessor in bad faith 16.7. The right of the possessor to retain the movable

452 453 453 453 454 455 455 455 456 456 457 457 458

Table of Literature

461

Table of Abbreviations

465

Introduction: historical background and sources Introduction: historical background and sources The notion of “property law” within Bulgarian civil law constitutes an autonomous part of the Bulgarian legal system dealing in particular with the right of ownership, real rights, the possession of movables and immovables and registration. Focusing on property law questions (excluding those within the spectrum of intellectual and industrial property rights or relative rights such as assignment of claims) this report* will deal only with questions of the transfer of ownership of tangible movable property.1 In contrast to most legal orders in Continental Europe, the Bulgarian legal system does not have a codified civil law. Several proposals for a codification of civil law have been developed over the last 50 years. None of them became a reality. The failure of these past projects was the result either of the complicated statutory regulations for the state-owned business entities of the socialist economy in the times of the People’s Republic of Bulgaria (1946-1989)2 or of the later problem of integrating the acquis communautaire into the field of private law.3

*

1

2

3

I would like to sincerely thank my colleagues and friends Philip Mielnicki, Pádraic McCannon and Susan-Gale Wintermuth for their comments as to style. I have also been fortunate enough to discuss some of the controversial property law topics with Venzislav Tomov; to him I extend many thanks. Under Bulgarian property law, there is a distinction best translated as ‘movable’ (“движима”) versus ‘immovable’ property (“недвижима собственост”): herein the terms ‘tangible’ and ‘asset’ are also used for the conept of ‘movable’ property. Also, under Bulgarian law, utilities, such as electricity, are assumed to be movables (see art. 110, p. 2 The Ownership Act, Official Journal (OJ) nr. 92 from 16.11.1951, latest amendment OJ 113 from 28.12.2007). This assumption serves as an instrument for the criminalisation of the theft of electricity to fill the lacuna in the criminal law. In light of comparative legal arguments, an amendment to the Criminal Code seems to be a better course of action. For further details, see Pavlova, M., Grajdansko pravo, Obshta chast, Vol. 1, Sofia 1995, p. 39. The Project of 1999 is reviewed in detail in Popov, P.; Takov, Chr., Otnosno proekta za grajdanski kodeks, redakziya ot m. septemvri 1999, Turgovsko pravo 1 / 2000, p. 3-8.

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The main source of property law is the new Constitution of the Republic of Bulgaria, which entered into force on 13 of July 1991.4 The principal property law legislation is the Ownership Act (OA),5 which builds a system founded on two parts: a general part, consisting of general rules about things, and a specific part, consisting of chapters on the right of property, real rights over another’s property, acquiring, losing and defending property rights, possession and registration. The OA was created in the early fifties of the 20th century. It replaced the Assets, Property and Real Rights Act (APrRlRA6), which was a reflection of Romanic property law doctrine. It was essentially based on the system of the second Book of the Code Napoleon and the old Italian Codice Civile. The OA marked an advance on its predecessor in introducing a new systematic approach. Besides the OA there are many other statutes that contain rules relevant for the transfer of tangible property. Only the most important of them are cited here. The legal regime for different kinds of public property can be found in the State Property Act (SPrA7) and the Municipal Property Act (MPrA8). Issues regarding the transfer of tangible property owned jointly by both spouses by virtue of marriage are regulated by the Family Code (FC9). There is a special regulation for the transfer or establishment of property rights in movables, such as vehicles or vessels: cars in the Road Traffic Act (RTA10), ships in the Merchant Shipping Code (MSC11), and aircraft in the Civil Aviation Act (CAA12). Other statutes also provide restrictions on the disposition of movable property. An example of this would be tangible property that qualifies as cultural property. (Other statutory instruments 4

5 6

7

8

9

10

11

12

Constitution of the Republic of Bulgaria, OJ nr. 56 from 13.7.1991, latest amendment OJ nr. 12 from 6.2.2007. See fn. 1. Assets, Property and Real Rights Act, OJ nr. 29 from 7.2.1904, repealed by § 1, nr. 1 OA. State Property Act, OJ nr. 44 from 21.5.1996, latest amendment OJ 113 from 28.12.2007. Municipal Property Act, OJ nr. 44 from 21.5.1996, latest amendment OJ nr. 92 from 13.11.2007. Family Code, OJ nr. 41 from 28.5.1985, latest amendment OJ nr. 59 from 20.7.2007. Road Traffic Act, OJ nr. 20 from 5.3.1999, latest amendment OJ nr. 36 from 4.4.2008. The Merchant Shipping Code, OJ nr. 55 from 14.7.1970, latest amendment OJ nr. 36 from 4.4.2008. The Civil Aviation Act, OJ nr. 94 from 1.12.1972, latest amendment OJ nr. 36 from 4.4.2008.

Introduction: historical background and sources

363

that regulate specific property law topics13 will be mentioned at the relevant junctures in the text.) In connection with the legal sources of the law of property another specific branch of Bulgarian law should be mentioned, namely the interpretative decrees of the Bulgarian Supreme Court (in the period 19471996) and its successor the Supreme Court of Cassation (1996 to date).14 Art. 130 (2) Judicial System Act (JSA15) provides that the interpretative acts are binding for all courts, and organs of the executive arm of government. Although the interpretative acts are not legal sources, they are to be treated as being indirectly binding on the parties in civil litigation and administrative proceedings.16 A distinction must be drawn between two different types of interpretative acts. The first one is the interpretative decrees of the plenum of the Supreme Court of Cassation. Their objective is to ensure the uniform interpretation of law, thereby avoiding contradictory judgments.17 The second type of interpretative decree attempts to avoid contradictory interpretations of law between the Supreme Court of Cassation and Supreme Administration Court (Art. 124 JSA). An initiative for the issuing of an interpretative decree by one of the different plenums of the Supreme Court of Cassation or the joint plenum of the Superior Courts can be made by the President of the Supreme Court of Cassation, the President of the Supreme Administrative Court, the Chief Prosecutor, the Minister of Justice, the Ombudsman and the President of the Bulgarian Bar Association.18 The judicial interpretative decrees must be published in the bulletins of both Supreme Courts.

13

14

15 16 17

18

P. ex. Statutory instrument to the SPrA, OJ nr. 78 from 26.9.2006, latest amendment OJ nr. 51 from 26.06.2007. All decisions of the Supreme Court (later the Supreme Court of Cassation) will be cited with number, year and number of the civil chamber or indication of the judging court-body. Judicial System Act, OJ nr. 64 from 7.8.2007. Further details on this topic by Pavlova (fn. 2), p. 79. At this juncture, it should be underlined that not only the judgments of the first and second instance courts may be conflicting here, but also judgments of chambers of the Supreme Court of Cassation. See art. 125 JSA.

Part I: Basic information on property law 1.

Notion of ownership and property rights

1.1.

General

1.1.1. Characteristics of rights in rem in contrast to rights in personam Bulgarian property law follows the doctrinal division between rights in rem, as absolute rights, and rights in personam arising from an obligation, which are usually subdivided into two categories: claims and the right to change a legal relationship.19 The general distinction between rights in rem and rights in personam reflects the different economic functions of relative and absolute rights, as most commentators acknowledge. In contrast to claims arising from an obligation, which are orientated around the circulation and transfer of valuable assets, the function of absolute rights should be looked at in a static context: they are directed at the protection and use of those assets.20 This static function of rights in rem requires that there is no prescription of some absolute rights. In contrast to relative rights arising from an obligation, rights in rem are absolute rights, which have effects against third parties. This denotes that the person entitled to an in rem right encumbering property can exercise it against a successor in title to the property; in other words, his right follows the encumbered property (droit de suite). The opinion is widespread21 that claims arising from an obligation (other than an obligation of nonfeasance) are in fact obligations by which the creditor can demand a positive act on the part of the debtor. This is not a characteristic of rights in rem. In principle rights in rem presuppose passive conduct on the part of third parties. This main characteristic of absolute rights is referred to, in the context of their important role in the debate, as a part of the numerus clausus of property rights. 19

20 21

This doctrinal distinction seems to be influenced by the German differentiation between “Ansprüche” and “Gestaltungsrechte”, see Venedikov, P., Novo veshtno pravo, Sofia 1995, p. 30. Comp. Kojuharov, Al., Obligazionno pravo, Obshta chast, B. I, Sofia 1996, p. 9. See Kalaydjiev, A., Obligazionno pravo, Obshta chast, 1. ed., Sofia 2001, p. 37.

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1.1.2. The numerus clausus of property rights The Bulgarian system of property law operates with a closed catalogue of property rights. The numerus clausus principle restricts the possibility for the parties to establish other property rights than those whose content forms part of the property rights fixed by statute. The fact that there is a catalogue of property rights does not answer the question which property rights are in fact a part of the numerus clausus. One of the issues most discussed by legal scholars in older doctrine on property rights was the question whether or not the pledge and the mortgage are to be regarded as property rights. Under the present legal regime22 the mortgage should no longer be considered a property right. The old claim of devastation or waste – grounded in the old Roman hypothecaria in rem actio – entitles the mortgagee to demand from every third party23 not to damage the substance of the immovable property. It seems that the modern Bulgarian doctrine on property law does not recognize the mortgage as a property right because of the secondary importance of the devastation / waste claim as a part of the mortgage.24 Given the absence of a statutory provision resolving the point (in contrast to the old APrRlRA, which affirmed their property status), it could be asserted that the mortgage is not a substantive property right, but rather a relative right, which could be exercised in favour of the creditor to change an existing legal relationship.25 Yet more complicated is the question whether the pledge right is a part of the numerus clausus catalogue of property rights. The pledge consists of two different components. The first is the relative right of the creditor to satisfy his claim out of the price obtained by an execution sale. But that is not the whole substance of the creditor’s right under a pledge. Subject to the exception of 22

23

24

25

Art. 23 of the APrRlRA, which provided that the mortgage is a property right, was overruled by the OA. Even this is not considered as an entirely clear solution in the literature; against the opinion that the devastation claim could be made against third persons but not against the owner, see Markov, M., Ipotekata, Sofia 2008, p. 55. The topic is certainly highly controversial. For different opinions on this, see by Boyanov, G., Veshtno pravo, Sofia 2004, p. 19; by Markov (fn. 23), p. 69 et seq; by Stavrou, St. Vuprosi na bulgarskoto veshtno pravo, Sofia 2008, p. 415 et seq.; for the comparative details and profound analysis, see Venedikov, P., Ipoteki, zalog, privilegii, 3rd ed., Sofia 1994. Due to the restricted importance of this theoretical discussion about the legal nature of the mortgage, it shall not be addressed in detail at this point. This thesis by Venedikov seems not to prevail entirely at present, see Venedikov (fn. 19), p. 33; against this point of view, Stavrou (fn. 24), p. 416.

1. Notion of ownership and property rights

367

the so-called “special pledge”26 and some specific forms of pledge for movables such as ships and aircraft, the creditor’s rights under the pledge incorporate another component that has a typical characteristic of property rights. This is the right of the pledge creditor to detain the property. In view of this, the creditor’s right under the pledge is regarded as a mixed substantive right having elements of both a relative right and a property right.27

1.1.3. Other principles of property rights Apart from the principle of numerus clausus and the inviolability of property rights, Bulgarian property law operates on the principle of registration of acts that establish, change or preclude the right of ownership or other real rights in an immovable asset. The act of registration creates the possibility for the person entitled to the property right to oppose the registered right against third persons that claim to be entitled to the same right, but which has not been registered. In the case of movable assets, the principle of publicity permits the possibility of the holder of the real right, e.g. the ship-mortgagee, to oppose the registered ship-mortgage against every third person also claiming the existence of a real right encumbering the ship (see 5.5.1.). Another principle of Bulgarian property law represents the possibility for the person entitled to the property right to possess an asset that has been already specified. The right of ownership and real property rights can only exist if the asset has been specified. This issue is elaborated in Bulgarian property law in the doctrine on the transfer of the right of ownership of generic and specific movables.

1.2.

Notion of ownership

1.2.1. Definition and scope of ownership The right of ownership and the different types of ownership in Bulgarian law are set out in Art. 17 of the Constitution of the Bulgarian Republic.28 26

27 28

Special Pledge Act (SPlA), OJ nr. 100 from 22.11.1996, latest amendment OJ nr. 108 from 19.12.2007. Comp. Venedikov (fn. 19), p. 35. Art. 17 of the Constitution: (1) The right to property and inheritance shall be guaranteed and protected by law. (2) Property shall be private and public. (3) Private property shall be inviolable.

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Art. 17 (3) of the Constitution enacts the principle of the inviolability of private property. However, the notion of private ownership is not defined by the Constitution. Thus, the notion of ownership used in the Constitution is closely tied to the concept of ownership elaborated by civil law.29 Part II of the OA does not provide a legal definition for the right of ownership, but it is widespread in the literature that the right of ownership includes the right of the owner to possess, use and dispose of a specific asset, including the authority to demand from every third person that he not interfere with the asset.30

1.2.2. Restrictions on ownership The right of ownership can be legally restricted31 in different manners. Regarding tangible property it should be mentioned that those restrictions are mainly orientated around the right of the owner of the movable to dispose of it with complete freedom. A common restriction is exhibited by the possibility of one spouse to dispose of tangible property owned jointly by virtue of marriage (art. 22, p. 2 FC). The characteristic of the transfer

29

30 31

(4) The regime applying to the different units of state and municipal property shall be established by law. (5) Forcible expropriation of property in the name of state or municipal needs shall be effected only by virtue of a law, provided that these needs cannot be otherwise met, and after fair compensation has been ensured in advance. Sarafov, P., Ponyatieto sobstvenost spored Konstituziyata, Suvremenno pravo, VI / 2001, p. 7. See Boyanov (nr. 24), p. 47. The majority of the literature considers the restrictions on those assets that can not be owned by any legal or natural persons, due to a lack of capacity, not as a substantive restriction on a property right, see Sarafov, P., Ogranicheniya pri uprajnyavaneto na pravoto na sobstvenost, Suvremenno pravo 1 / 1999, p. 42 et seq. The problem of restrictions is related to the issues regarding the situation in which tangible things are used for activities that fall under a state monopoly (Art. 28(2) OA). This provision points to the activities listed as state monopolies in Art. 18 (4) of the Constitution. Without describing this in detail here, mention should be made that the legislator restricted the ownership of movable and immovable assets which are used in the activities subject to state monopoly. It could be the case that a person who no longer has a licence to exercise such an activity may be compelled to dispose of the goods in favour of another person with a license; a good overview of this scarcely discussed problem is given by Ruschev, I., Deznosti, za koitot sus zakon e ustanoven monopol na durjavata, i davane na razresheniya za izvurshvaneto im, Pravna misul, III / 1998, p. 45 et seq.

1. Notion of ownership and property rights

369

of such property will be considered in the parts of the text dealing with the transfer of those assets.

1.2.3. Components of the right of ownership Ownership is the most comprehensive property right. Although there is no legal definition of the right of ownership, legal doctrine32 takes the right of ownership to be an absolute property right that allows the owner, or those taking the property under him, to demand third parties refrain from interfering with the object of the property right. That is the reason why some of the authors33 adopt the view that the right of the owner to dispose of the property could be derived from (i) the legal position of the owner as the one who can demand from everybody else that he refrain from interfering and (ii) the proposition that, in contrast, nobody else can demand from the owner that he refrain from using the property as he, the owner, wishes. It is almost impossible to describe the complete spectrum of the right of ownership. The main characteristic of ownership is the possibility to exercise full control over the property. This complete control could be restricted by a real right, such as superficies, usufruct and pledge. Since the law of movables is the focus here, it is only necessary to mention pledge. Superficies is confined to immovable property. The right of usufruct could be theoretically established over tangibles, but this construction seems to have limited application.34 However, usufruct will be briefly analysed in 1.3.

(a)

Usus

Bulgarian property law received the Roman differentiation between various ingredients of the right of ownership, in particular the old distinction between the three ingredients of ownership usus, fructus and abusus. The first of these, ownership usus, is the right to possess the object of ownership. In contrast to possession (which is merely a factual state of affairs under Bulgarian law), the right of ownership usus is an inseparable component of the substantive property right of ownership.35 It is the most important component of the right of ownership and the prerequisite for exercising the two other vires of ownership. For that reason it is impossible 32 33 34

35

Venedikov (fn. 19), p. 75; for a more common definition Boyanov (fn. 24), p. 15. See fn. 31. See Venedikov (fn. 19), p. 67. For further details on the problem of real rights, see above 1.3. Boyanov (fn. 24), pp. 95 et sqq.

370

Bulgaria

to “remove” ownership usus from the person entitled to it, or to “restore” ownership usus to the (dispossessed) owner. Through vindication from the non-entitled party, the owner merely claims the re-establishment of the situation before his right of possession was infringed.36 The right of ownership could be jeopardized if the third party holding or possessing the movable was subject to an execution procedure or insolvency proceedings. In the first case the execution levied upon the non-owner’s property is a non-derivative method for the buyer to acquire ownership of the property sold. This is provided by Art. 482 (2) of the Civil Procedure Code (CPC37). The former owner merely has a claim for the value of the movable sold if the price has not been distributed between the debtor and his creditor in the execution proceedings (art. 482, p. 3, s. 1 CPC). If the price has been distributed between them, the former owner has a claim against the debtor and his creditor for the shares that they received (art. 482, p. 3, s. 2). If the creditor of the holder or possessor of the movable acquires the property and was not in good faith, the former owner has a tort law claim against the creditor.38 If the holder or possessor of the movable is insolvent, the protection of the right of ownership consists in not including in the insolvency estate the movables held by the insolvent debtor under a contract, such as a loan for use39 or a leasing contract.40 Hence, the claims regarding the protection of property rights of third parties are not suspended or precluded by the opening of insolvency proceedings. This is provided for by the new paragraph in art. 637, p. 5, nr. 1 of the Commercial Act (CA41). Until the amendment of the CA in 2006,42 the question whether claims aimed at the protection of property rights of third parties were precluded 36

37 38

39

40

41

See Petrov, Vl., Osnovi na pravoto, Dyal vtori-grajdansko pravo, Svishtov 1988, p. 138, criticising the misuse of terminology. Civil Procedure Code, OJ nr. 59 from 20.7.2007. The old Civil Procedure Code provided for an obstacle to the transfer of ownership if the creditor seeking to acquire the movable was in bad faith. This provision in art. 372 (4) of the old CPC was unfortunately not adopted in the new CPC. In this way it became the strongest basis of acquisition under Bulgarian law. For details on the old statutory regime, see Stalev, J., Bulgarsko grajdansko prozesualno pravo, 7. ed. Sofia 2001, p. 748. The term ‘loan’ refers to the loan of movable property to another who may use it; it does not refer to a financial obligation. Without going deeper into the problematics of protection of the ownership of movable assets owned by third persons before the realisation of the insolvency estate, see Madanska, N., Proiyvodstvo po nesustoitelnost, 2nd ed., Sofia 2005, p. 71. Commercial Act, OJ nr. 48 from 18.6.1991, latest amendment OJ nr. 104 from 11.12.2007.

1. Notion of ownership and property rights

371

caused the Supreme Court of Cassation to develop controversial case law.43 Under the present legal regime the movable asset owned by a third party can be removed from the insolvency estate either by a claim for vindication against the holder / possessor or by an action for a declaratory judgment. Similar to the position of the owner under execution proceedings, the person who owns the movable asset loses his right of ownership at the time of the sale or disposal of the insolvency estate. Under art. 717k, p. 1 CA, the buyer acquires ownership of the movable ex lege. If the price has not been paid yet the former owner can receive the sale price (art. 717k, p. 1, s. 1). However, if the creditors and the insolvent debtor have received the sale price for the asset, the former owner has a claim for conversion against them for the part they received (art. 717k, p. 1, s. 2 CA). If the movable property is owned jointly by co-owners, the whole of the property (and not merely the bankrupt’s undivided share) can be sold only if the co-owners have declared their consent in written form before the sale proceedings (art. 717m, p. 2 CA). Other problems in insolvency and execution proceedings arise where movables are owned jointly by both spouses by virtue of marriage44 and the spouse who is a sole trader, or a partner with unlimited liability, is the subject of an insolvency proceeding. Under art. 614, p. 2 and 3 CA, the assets, and rights related to those assets, are part of the insolvency estate. The many specifics of this topic, such as possession and the right to dispose of such assets, are elaborated upon in the following parts of this text. 42

(b)

Fructus

The second ingredient of the right of ownership is the right to the fruits of the property. The right to fruits includes the opportunity for the owner to use the movable in an appropriate way to extract its fruits. The fruits of a movable are the assets (in the sense of gains or growth) that do not 42 43

44

OJ nr. 38 from 9.5.2006 In favour of the interruption of revindication proceedings: Court order of the Supreme Court of Cassation nr. 147 / 1997, 5th civ. ch., against: Court order of the Supreme Court of Cassation nr. 141 / 1999, 4th civ. ch. All decisions of the Supreme Court and the Supreme Court of Cassation are cited from the internet-database www.ciela.net. Family Code (FC), OJ nr. 41 from 28.5.1985, latest amendment OJ nr. 59 from 20.7.2007. The main principle applicable to property owned jointly by both spouses by virtue of marriage (in German “Errungenschaftsgemeinschaft”) is that the property acquired during the marriage by one of the spouses is subject to that legal regime until the death of one of the spouses, divorce or important circumstances that require a separation of the assets (art. 19-30 FC).

Bulgaria

372

influence, or merely have an insignificant influence on, the substance of the tangible property.45 They can be classified46 in two categories: natural fruits and civil fruits. The natural fruits can in turn be subdivided into fruits that do not influence the substance of the property at all, such as the offspring of the livestock and the fruits of the trees, and those that insignificantly influence the substance of the property.47 Nonetheless, there are some natural fruits which do influence the substance of the property quite significantly, such as the mining of a pit, but are still regarded as natural fruits. In contrast to natural fruits, civil fruits of the property are not tangible property but relative rights. These are, for instance, the price paid for leasing the property or the interest that should be paid.

(c)

Abusus

The third ingredient of the right of ownership consists in the possibility for the owner to dispose of the movable. The right to dispose is functionally related to the transmission of rights, the establishment of real rights over the movable and the disposition of that property as a security.48 The disposition should be regarded as a juridical act that transfers, modifies, burdens, or extinguishes the property right.49 It does not matter if the disposition of the right of ownership is directed at the immediate loss of ownership (as in the case of sale, barter, or abandonment of ownership) or only a future possible loss (as in pledge), or even just the establishment of a real right over the tangible property.

45 46 47

48 49

Vassilev, L., Grajdansko pravo na NRB, 3rd ed., Sofia 1956, p. 277. See Venedikov (fn. 19), p. 25. Generally the natural fruits of an immovable can not be deemed the object of property rights before their separation from the main property. There is an exception. Bulgarian Civil procedure law (art. 476 CPC) introduced a fiction for the autonomous existence of the fruits as an object of a property disposition. With the sale (the act of disposition) the buyer acquires ownership. Regarding the interest of the buyer, the CPC provides that the sale of those fruits could be made at the earliest of one week before the reasonably expected season of earning begins; for further details, see Georgiev, Al., Plodovete na veshti i neobranite nasajdeniya kato obekt na prinuditelno izpulnenie, Sobstvenost i pravo, 2 / 2004, p. 5-11. For the alternative argument, see Boyanov (fn. 24), p. 101. A very similar definition is to be found in the Interpretative Decree nr. 91 / 1974 of the Supreme Court, General Assembly of the Civil Chambers.

1. Notion of ownership and property rights

(d)

373

Duties of the owner regarding specific movables

Bulgarian law imposes several duties on the owners of tangibles that are to be considered cultural property under The Cultural Property and Museums Act (CPrMA50). Their owners have to maintain them in reasonable condition, to inform the state and municipal authorities about changes in their condition and to provide free access to the artefacts (art. 20 CPrMA). Similar to the duties of the owner, municipal bodies or the state are subject to the duty to exercise the right of ownership in favour of the public interest (Art. 18, p. 6 of the Constitution) or in the interest of the municipal community (Art. 140 of the Constitution).

1.3.

Other property rights

Apart from the most comprehensive property right – the right of ownership as mentioned above (see 1.1.2.) – Bulgarian property law on movables recognizes two distinct rights in rem that can encumber movable property. These are (1) the pledge, which has a real character, and (2) the usufruct.

1.3.1. The pledge The right of pledge is comprised of a property element and a right to change a legal relationship. Only the real pledge is a property right. It can only be established by a contractual relationship. Other forms of pledge rights, such as the special pledge or the pledge established by virtue of law,51 do not presuppose the tradition of the property being the object of the pledge right. Hence, they will be disregarded. The pledge right is established by the conclusion of a contract that is real in character; the tangible property should be delivered to the pledge creditor (art. 156, p. 1 from The Obligations and Contracts Act52). This 50

51

52

The Cultural Property and Museums Act, OJ nr. 29 from 11.4.1969, latest amendment OJ nr. 30 from 11.4.2006. The pledge by virtue of law can be effected only to secure a commercial legal transaction (art. 310 et seq CC). The Obligations and Contract Act (OblCA), OJ nr. 2 from 3.1.1950, latest amendment OJ nr. 92 from 13.11.2007. If the movable was the object of a former pledge, the former pledge creditor must also give his consent to hold the property for the new pledge creditor, see Kalaydjiev (fn. 21), p. 554. Where the pledge object is held by a third person, the person who holds the property for the first creditor must accept the duty to exercise de facto control of the property for both creditors. The consent

374

Bulgaria

pledge right in rem consists of the possibility of the pledge creditor holding the movable himself or through a third person. The creditor can hold the tangible property as long as the debt of the pledge is not satisfied. This right is effective against the pledge debtor, the owner of the pledged object, and against any person entitled to the right of usufruct and so on. Not only movable property owned by the debtor may be given in pledge. Bulgarian property law allows for the acquisition in good faith of a pledge right.53 If the movable has been stolen or lost, a pledge right can not be acquired – even if the pledge creditor was in good faith (art. 78, p. 2 OA). The pledge-creditor can not use the property unless the contrary has been agreed by the parties (art. 157, p.2 COA). This could be either an obligatory legal act: p. ex. lease of the movable object of the pledge,54 or an establishment of a property right in the pledged property, such as the right of usufruct, which entitles the pledge-creditor to acquire ownership of the fruits of the property.55 The pledge right, as an absolute right, is enforceable against third parties. If the property has been taken away, the pledge creditor has a claim that appears similar to the revindication claim. It is the so-called actio quasi Serviana (art. 157, p. 3 OblCA). This claim could be made not only against third persons, but also against the owner of the movable. In the latter case, if the person who owns the property is the debtor of the contractual obligation, the creditor has to prove that the pledge object has not been returned to the debtor.56 This assumption serves the pledge debtor but not the third-party owner of the property. The practical importance of the claim under art. 157, p. 3 OblCA seems to be limited, due to the regime of acquisition in good faith (art. 78 OA) affording every third person in good faith the possibility to acquire the ownership of the object of the pledge. Bulgarian law does not permit the re-acquisition of the pledge object if the debtor does not perform the obligation that has been secured by the pledge (art. 152 OblCA). Such contractual terms are void.57

53

54 55 56

of the first creditor is not required; for the complexity of legal relationships resulting from those contracts, see Venedikov (fn. 24), p. 207. On the applicability of art. 78 OA to the pledge, see Tadjer, V., Veshtno pravo na NRB, Vladenie, B. IV, Sofia 1970, p. 102; Stavrou (fn. 24), p. 503; the contrary opinion by Stefanov, St., Vuzmojno li e pridobivane na zalojno pravo vurhu dvijima vesht po silata na chl. 78 ot Zakona za sobstvenostta?, Turgovsko pravo, 3 / 2003, p. 18 et seq, who denies the acquisition in good faith of a pledge right arguing that the pledge itself, contrary to the legal translation, which has been secured, could not have a gratuitous character. For a good example, see Decision nr. 1964 / 1957 of the Supreme Court, 4th civ. ch. See Stavrou (fn. 24), p. 503. Art. 159, s. 2 OA.

1. Notion of ownership and property rights

375

1.3.2.57 The usufruct Despite having little or no practical importance, the usufruct – as a right in rem that may be theoretically established in movables – should not be ignored completely. The usufruct is the most comprehensive property right that can encumber a movable owned by another person.58 It entitles the person in whose favour the right was established to use the property and to acquire the fruits of the property (art. 56, p. 1 OA), if doing so does not affect the substance of the property. The usufruct lasts until the entitled natural person dies or the legal person ceases to exist, if a concrete period of time has not been stipulated (art. 59, p. 1, 2 OA). The central problem regarding the right of usufruct relates to the problem of defining the appropriate way to use the property. In legal theory, the prevailing opinion is that the person entitled to the usufruct can not change the economic purpose of the property held.59 That is also the case if the holder of the property has incurred significant expenses that have increased the value of the property. If the person entitled to the usufruct influences the substance of the property, e.g. by investing in the property, the owner can protect himself by terminating the usufruct contractual relationship (art. 61 OA). In addition, the owner also has an actio negatoria according to art. 109 OA.60 Another specific feature of Bulgarian private law is the recognition of an unjustified enrichment claim (art. 59 OblCA), with regard to improvements made on property owned by another who cannot be regarded as possessor of the property but who, under property law, can be qualified as a holder or even co-holder.61 If expenditure on property is made by the 57 58

59

60 61

Decision nr. 1964 / 1957 of the Supreme Court, 4th civ. ch. The fact that the usufruct qualifies as the most comprehensive property right in other property, constitutes a general principle of Bulgarian property law, where superficies could be regarded merely as another form of ownership but not as a right in another’s property; for further details, see Venedikov (fn. 18), p. 132. Comp. Vassilev, L., Bulgarsko veshtno pravo, 2nd ed. Sofia 2001, p. 363. The main examples in practice are changing the way in which the immovable property is used: the converting of a dwelling into a pub or a hotel etc. Vassilev (fn. 59), p. 363. The following provisions of the OA apply to the claim for expenses incurred for the upkeep or improvement of the item of property (in German “Verwendungsanspruch”) of the possessor: Article 72 A bona fide possessor may, for the improvements made by him, claim the sum of which the value of the property has increased as a result of such improvements. Such increases shall be determined as of the date of the judgment rendered by the court.

376

Bulgaria

person entitled to the usufruct, that person can make a claim with regard to the value of the improvements that have enriched the owner, which follows from the basic elements of the general unjustified enrichment claim (art. 59 OblCA). The owner can require from the person entitled to the usufruct that a declaration be given in relation to the condition of the property before that person begins to exercise the right of the usufruct.62 If the holder of the usufruct does not detail the condition of the property, the owner can refuse to deliver the object of the usufruct, or even revindicate the property.63 However, there is the principle that the constituting of a usufruct does not rely upon a declaration in relation to the condition of the property, and thus the owner does not have a claim for the fruits of the property based on the holder’s failure to give the relevant declaration. Nonetheless, a declaration can be made by the municipal authority at the expense of the holder of the usufruct. The parties may also jointly assign a private person to carry out the declaration. The right of usufruct is effective against all third parties. Even if the movable property was delivered to a third party pursuant to a lease contract, but before the establishment of the right of usufruct, the lease is nonetheless not effective against the holder of the usufruct. Following the principle “Kauf bricht nicht Miete”, the relative rights of third persons are only effective with regard to the immovable property (arg. from art. 237 OblCA).

62 63

A bona fide possessor may ask that he be reimbursed for the necessary expenditure made for the maintenance of the property. He may hold the property until reimbursed for the improvements and expenses. Article 73 A mala fide possessor shall owe the owner the benefits he has derived or could have derived, as well as compensation for the profits of which he has deprived the owner, deducting the expenditure made for this purpose. The mala fide possessor may ask that he be reimbursed for the necessary expenditure made by him for the upkeep of the property. Article 74 A mala fide possessor may ask, for the improvements made by him, only the lesser of the sum total of all expenditures and the sum by which the value of the property has increased as a result of such improvements. Where the owner knew that improvements were being made on his / her property and has not objected, the rights of the possessor shall be arranged in accordance with Article 72. On the complexity of this issue, see Tzonchev, Kr., Podobreniyata, Sofia 2001, p. 36 et seq. These instances mainly concern the problems related to immovable property. Hence, they will not be described in further detail. See art. 57, p. 2 OA. Venedikov (fn. 19), p. 133.

1. Notion of ownership and property rights

377

The holder of the usufruct has the duty to inform the owner about any infringements on the property: dispossession or a revindication claim by a third person (art. 58 OA). Other questions connected to the termination of the right of usufruct arise from a specific situation, one in which the usufruct was established during a marriage in favour of only one of the spouses. The most widespread opinion considers the spouse in favour of whom the right of usufruct has been established as the only person entitled to the right.64 Hence, the right of usufruct ceases to exit after the death of the spouse entitled to the right. If the right of usufruct has been established in favour of both spouses, the surviving spouse will be in a position to exercise further the usufruct. The principles of non-transferability of the right of usufruct, and restraint against sharing, lead to the conclusion that, after the termination of co-ownership (in most cases due to the divorce of the spouses), the rules on termination of a co-ownership established during a marriage will not be applicable to the right of usufruct.65

1.4.

Protection of property rights

1.4.1. Protection of ownership The Law of Property Act provides in Chapter nine, “Protection of the right of ownership”, two claims that serve to protect the right of ownership. These are the property law claims of (1) revindication (art. 108 OA) and (2) actio negatoria (art. 109 OA). Chapter Nine PROTECTION OF THE RIGHT OF OWNERSHIP Article 108 The owner may request his / her property from any person who possesses or holds it without grounds to do so. Article 109 The owner may request the discontinuing of any act lacking grounds that obstructs the exercise of his right.

64

65

Comp. Venedikov, P., Vuprosi na suprujeskata imushtestvena obshtnost, Sofia 2000, p. 8. See Stavrou (fn. 24), p. 752-753.

Bulgaria

378

(a)

Rei vindicatio

Revindication is a claim that may be exercised by the owner of the movable property who is not in possession of the property. Hence, revindication cannot be claimed against persons who possess the property on behalf of the owner.66 The revindication claim can be made against possessors and holders of the property who do not have a legal ground to possess or to hold the property. If a claim has been made against a holder, the holder has the possibility to require the possessor be joined in the civil proceedings. Generic tangible property can not be the subject of a revindication claim.67 The jurisprudence has established the principle that a person who is in possession of, or holds, such property has the obligation to make restitution of the same generic property (i.e. the same quantity and quality), based on principles of unjustified enrichment law. The legal remedy in that case is a claim under art. 55, p. 1 OblCA and not art. 108 OA.68 In the instance of property that is to be returned but cannot be found by the respondent, the claimant can rely upon an unjustified enrichment claim but not a revindication claim. In such a case the revindication claim has to be rejected.69 Furthermore, the respondent in revindication proceedings has a defence if he holds or possesses the property on a legal ground. A legal ground can be based on a property right in another’s property (p. ex. pledge right). But the respondent may also have other defences, which rely upon an obligation. It is necessary that the legal relationship concerning such an obligation implies an obligation for the owner to deliver the possession or the tenancy to the other party. This is not the case if the owner is just a contractual party to a preliminary contract of sale. The principle of “promesse de vente vaut vente” has not been adopted in Bulgarian property law.70

66

67

68

69

70

E.g. the lessor does not need to make a claim of revindication against the lessee, because the possession of the lessor is not to be regarded as an interference. A claim under art. 108 OA can be made if the lessee has converted himself into a possessor; see Venedikov (fn. 19), p. 220. Bobatinov, M.; Vlahov, Kr.,Veshtno pravo, Prakticheski problemi, 2nd ed., Sofia 2007, p. 340. Decision nr. 98 / 1964 of the Supreme Court, General Assembly of the Civil Chambers. See Bobatinov, Vlahov (fn. 67), p. 340. It may be noted that civil procedural law allows for the execution of the corresponding value of the property where the movable cannot be found or has been destroyed (art. 521, p. 2 CPC). However, this is not related to the substantive elements of the vindication of title claim. For further details, see Venedikov (fn. 19), p. 228.

1. Notion of ownership and property rights

379

An interesting issue arises in the situation where the owner has obliged himself by a preliminary contract of sale to deliver the possession of the property before the conclusion of the final contract of sale, and the buyer is obliged to pay the price at the conclusion of the preliminary contract. In this case the buyer has a defence against the revindication claim of the seller, unless the right of the buyer to claim the conclusion of the contract has been precluded by prescription.71 Another rare case involves the situation where the claimant of a revindication claim has transferred tangible property owned by a third person to the respondent. Could it be possible for such a person to vindicate the property if he subsequently becomes the owner of the property (e.g. by succeeding the owner of the tangible)? In this case, the respondent can exercise the excercio rei venditae et traditae, which is in substance nothing other than the recovery of the ownership from the transferee.72 A successful defence by the respondent will cause the revindication claim to be rejected. However, not any type of defence leads to the rejection of the claim. The return of the property can be denied if the respondent has incurred expenses for the maintenance or improvement of the property (see 15.4.).

(b)

Actio negatoria

The ‘negatory’ action (art. 109 OA) allows the owner to assume that the enjoyment of the right of ownership shall not be interfered with by a third person. The claim can not only be made against persons who lack any kind of property right to the property, but also against co-owners and other persons who also hold a property right in the property.73 The objective of the ‘negatory’ claim is to restore the right of ownership to the state it was in before the interference. The claim can be made against a person who is not the possessor of the property but who unlawfully interferes with or exercises an influence over the property (in statu quo ante). It is not necessary that the influence still persists at the time of making the claim. The ‘negatory’ claim should be affirmed if there is a serious risk that the interference with, or the influence 71

72 73

See Decision nr. 1372 / 62 of the Supreme Court, 1st civ. ch. Preliminary contracts are mainly used in legal transactions concerning the ownership of immovable property. However, there is no restriction on the parties to conclude a preliminary contract for the transfer of movables according to art. 19, p. 3 OblCA. For a thorough analysis of this topic, see Venedikov (fn. 19), p. 229. Bobatinov, Vlahov (fn. 67), p. 343. Most of the ‘negatory’ claims are, of course, concerned with interferences with immovable property.

Bulgaria

380

on, the object of the right of ownership will continue. Where the interference may continue, the respondent shall be ordered to refrain from future interference.74 The ‘negatory’ claim can be joined with a tort law claim if damage has occurred in conjunction with the interference. The prevailing scholarly opinion indicates that a claim for damages is only possible if the damage inflicted has been caused through fault of another.75 There is no basis for suggesting that merely a claim based on one’s own wrongful conduct76 could be the subject of a joint claim brought against co-owners or other persons who also hold a right in the property, much less that a claim could be brought based on the interference caused by an animal or by the property itself.77 The burden of proving that the claimant is the owner of the property that has been interfered with rests on the owner even if the owner is in possession of the property.

1.4.2. Protection of other property rights Other property rights in movables, such as the right of usufruct, are protected by the possibility for the holder of the right to claim the property from the owner, or from any third party, by virtue of exercising the right.78 For example, the holder of the usufruct right has a revindication claim, as the owner of the fruits the property produced, against the person who possesses or holds the fruits.

74

75 76

77

78

The chosen method of Bulgarian civil procedural law is a fine of up to 400 Lewa (appr. 200 Euro) for every further interference with the property by the defendant. Venedikov (fn. 19), p. 243. The claim is based on the general clause of art. 45, p. 1 OblCA: “Every person must make good the damage which that person wrongfully caused to another person.” It seems that there is no logic to restrict the joinder of a negatory claim against every person that caused the damage (p. ex. art. 49 OblCA). This solution is based on the idea that it is not required that the claimant prove that the interference has been done culpably. This corresponds to the jurisprudence (see Decision of the Sofia City Court in civ. m. 169 / 2002, Civ.ch., 4th b) that allows the joinder of a revindication claim and a claim for damages grounded on the liability of the state for damages caused by its organs (art. 1and 2 The State and Municipal Liability for Damages Act, OJ nr. 60 from 5.8.1988, latest amendment OJ nr. 33 from 21.4.2006). Such damages are to be rendered according to the provisions of liability without fault (art. 50 OblCA). This action is often called, under the influence of the Roman civilian tradition, actio confessoria.

1. Notion of ownership and property rights

381

1.4.3. Other remedies of protection In addition to the remedies of protection of ownership and other real rights provided by property law, there are several remedies that derive from existing obligations. The protection of property interests related to insolvency and execution law have been already mentioned above (see 1.2.3. a).

(a)

Claim for damages (tort law)

In Bulgarian civil law claims for damages are governed in the part relating to extra-contractual obligations. More concretely they are regulated in Part II “Sources of the Obligations” and Chapter IV of the Obligations and Contract Act. As previously mentioned proprietary remedies are often accompanied by claims for damages. The successful awarding of damages for an infringement of a property right depends on the ground of liability. However, the Bulgarian law of tort provides for a presumption regarding the culpa of the tortfeasor (art. 45, p. 2 OblCA). Intention is not presumed, only negligence as a form of delictual culpability is implied by the presumption contained in art. 45, p. 2 OblCA.79

(b)

Claim for unjustified enrichment

Bulgarian unjustified enrichment law recognizes two discrete categories of restitutionary claims.80 The first category deals with rendering and obtaining without a legal ground (art. 55-58 OblCA). The second is often called enrichment by a disadvantage of another (art. 59, p. 1 OblCA) and connotes a general unjustified enrichment claim. The general restitutionary claim remains subsidiary to all other condictiones.81 Art. 57 OblCA (1) If the restitution of particular property is owed, the recipient shall owe the fruits from the moment the notice is given. (2) Should the property subject to restitution perish after the notice was given or should the recipient alienate or consume it following the discovery that it is 79

80

81

Details by Kalaydjiev (fn. 21), p. 373; Konov, Tr., Osnovanie na grajdanskata otgovornost, 2nd ed., Sofia 2002, p. 159 et seq. Vassilev, L., Obligazionno pravo, Otdelni vidove obligazionni otnosheniya, 2nd ed., Sofia 1958, p. 569. See art. 59, p. 2 OblCA.

382

Bulgaria held without legal ground, the recipient must return its actual value or the price he received for it, whichever is higher. However, if the property has perished or has been alienated or consumed by the recipient prior to the notice, he must return only what he has profited, excluding the fruits.

The revindication claim under art. 108 OA closely resembles the restitutionary claim under art. 57 OblCA. This merely derives from the fact that the remedies share a common objective: namely providing that the property that is held or possessed by the defendant without legal ground can be re-claimed. The prerequisites of the individual actions vary considerably.82 For example, the revindication claimant has to prove that he is owner of the property that should be returned. In contrast, the claim under art. 57, p. 1 OblCA does not require that the claimant prove his title of ownership or adduce proof that the defendant is a mere possessor or holder of the property. The sole requirement for this claim is the fact that the “disenriched” person rendered the movable property or the accepiens obtained the property. The remonstration of non-ownership by the claimant, which is a requirement under every other revindication claim, is not relevant under the restitutionary claim. It is not subject to the restrictive application of the subsidiarity principle. Hence, this claim is not precluded if a revindication claim and contractual legal remedies exist.83 The restitutionary claimant can elect freely between all remedies available to him. An interesting paradigm in this context is provided where the holder sells the property to a third person. The defendant can not demand that the claimant sue the third party, on the basis of a proprietary claim, instead of taking action against him under the art. 57, p. 2 OblCA. Notice of the claim of restitution given to the person that holds the property without a legal ground transfers the risk that the claimant will receive merely the profits that the holder obtained from the property, including the fruits (art. 57, p. 2, s. 2), if the property has been transferred, lost or consumed by the defendant. In the context of property law there is another rubric of an unjustified enrichment claim that ought to be examined. The general unjustified enrichment claim mentioned above is precluded if the claimant has a legal remedy based on another legal ground: namely contract, tort or a proprietary protection claim (art. 59, p. 2 OblCA). In the context of property law the general unjustified enrichment claim primarily pertains to, or is focussed on, casual situations where it is considered that increased protection should be proffered to the individual interests of the “disenriched” person.84 82

83

For an overview of the parallel existence of both claims, see Goleminov, Tch. Neosnovatelno obogatyavane, Sofia 1998, p. 77. Comp. Goleminov (fn. 82), p. 77.

1. Notion of ownership and property rights

383

84

According to art. 72 and 74 OA, a possessor of property, in good or bad faith, may claim expenditures; however a mere holder of property is excluded from their ambit. The latter has a cause of action against the owner of the property to claim what the owner obtained as enrichment, provided that it does not lead to the impoverishment of the holder (art. 59, p. 1 OblCA).85 Furthermore the general unjustified enrichment claim is also applicable in three-party relationships.86 This is p. ex. the claim for the value of construction materials sold by trader C that have not been paid and have been used in the construction of an improvement by possessor B on the immovable property of owner A. In this case owner A is the enriched person in relation to seller C.87 Further particulars will be provided below.

1.5.

Transferability of the ownership of movables

1.5.1. General Generally all movable property is freely transferable under Bulgarian property law. As mentioned above, several restrictions on the transferability of movable property exist in order to protect public interests. The restrictions on transferability of movable property can be subdivided into two categories. The first category has the objective of restraining the alienation of certain movable property88, and the second triggers restrictions on the transfer of some movables but only with regard to a certain group of persons who are licensed to own and to acquire specific property: such as ammunition, guns, explosives, narcotics and precursors etc.89 84 85

86

87

88

89

For an overview of all such cases, see Goleminov (fn. 82) p. 100 et seq. This is accord with the consistent practice of the Bulgarian Supreme Court, see Decision nr. 1909 / 69 of the Supreme Court, 1st civ. ch. Meant here are the broadly discussed “Dreieckverhältnisse” in the German legal literature to unjust enrichment law. The category of the three-party relationship is not elaborated in detail in Bulgarian civil law; very few authors like Vassilev (fn. 80), p. 600 discussed the topic on a broader basis. Such as property falling under so called “public state property”, which can not be acquired by transfer or prescription (art. 7 SPrA). Mainly regulated by special statutes and their statutory instruments, such as the statutory instrument to the application of the control of explosives, arm-guns and ammunitions, OJ nr. 78 from 3.9.1999, latest amendment OJ nr. 32 form 17.4.2007, The Control of Narcotic Substances and Precursors Act, OJ nr. 30 from 2.4.1999, latest amendment OJ nr. 36 form 4.4.2008. Concerning movable property necessary for exercising activities under state monopoly, see also fn. 28.

Bulgaria

384

Restrictions on the owner’s right to dispose90 can arise as a result of insolvency proceedings or as a result of an interim injunction during court proceedings. In case of an interim injunction being granted during court proceedings, the owner of the tangible asset can not dispose of it (art. 452, p.1 CPC).91 If the owner disposes of the asset in breach of an injunction, the third party, e.g. the buyer of the asset, can oppose the creditors’ claims only with the defence of having acquired the asset in good faith (art. 452, p. 1 CPC).

1.5.2. Transferability of other property rights in movables Other property rights in another’s movable property, such as the right of usufruct, are non-transferable rights (art. 56, p. 2 OA).

1.5.3. Restrictions on transferability based on agreements of non-alienation The possibility to alienate the right of ownership is part of the substance of the property right. As considered above, the content of the property right exists by virtue of law. This renders the principle that an acquired ownership right can not be restricted in its property effects if transferred to third persons, through a contractual agreement.92 In contrast to this restriction, there is the possibility for the contractual parties to establish an obligation for the person to whom the property is conveyed not to transfer the ownership further to a third person.93 Such an obligation shall be considered valid inter partes. It does not produce any 90

91

92

93

It is important to underline that the property belonging to the insolvency estate of the debtor are to be regarded as property under general restriction of the right to dispose. Under Bulgarian insolvency law the insolvency administrator has the right to dispose of the property merely if there is a court order that allows the disposal of the property by the insolvency administrator (art. 716, p. 2 CC). Interim injunctions of the court against the defendant, which secure proprietary claims, are often accompanied by the tradition of the removal by the bailiff to a third person, who has the function to secure the tangible property, comp. Stalev (fn. 38), p. 821. Bulgarian law differs from the writings of certain older French legal scholars concerning the terms of an agreement regarding a temporal restriction on the transferability of ownership due to serious reasons, see Venedikov (fn. 19), p. 158 For a comparative analysis concerning the validity of such contractual terms, see Venedikov (fn. 19), p. 158-159.

2. Possession

385

proprietary legal effect regarding the acquisition of rights from third parties. In case the movable property is further transferred, the former owner of the property can claim damages for breach of contract. Of course, such contractual obligations have to be handled with caution. The restrictions on the transferability of property should be considered void if they affect essential property, if the term has the purpose of restricting the disposition by any subsequent transferee, or if the restriction is for a very long time period.94

1.5.4. The main movable and its accessories Bulgarian law recognizes the practical difference between movables that are functionally independent and movables that have a close functional connection with the “main” movable. This distinction follows from art. 98 OA,95 which is a non-mandatory rule.96 The contractual parties are free to agree that only the main movable should be delivered, without the accessories. Otherwise, the transferor is obliged to deliver the main movable with the usual accessories, e.g. a car with a spare tire, a jack etc. Special legislation provides that certain movables for which an obligation to register exists, do not have to be registered if they are accessories of a main movable that has been registered. These are vessels that could be considered accessories to the main movable, e.g. life boats on a ship.97

2.

Possession

2.1.

Notion of possession

2.1.1. Definition The notion of possession in Bulgarian property law stems from the Roman legal doctrine under which possession consists of the actual control – the direct physical control – over property with the intention to hold it as the possessor’s own. 94 95

96 97

Venedikov (fn. 19), p. 158. Art. 98 OA: The accessory shall follow the main property in the absence of an agreement to the contrary. Comp. Boyanov (fn. 24), p. 37, Vassilev (fn. 59), p. 24. Provided by art. 11, p. 2 of the Government Decree for the Commercial Shipping, OJ nr. 79 from 2.10.1953, latest amendment OJ nr. 55 from 12.7.1991.

386

Bulgaria Art. 68 Ownership Act (1) Possession is the exercise of actual control over property that the possessor holds, either personally or through another, as his own. (2) Detention means exercising actual control over property which the person does not hold as the person’s own.

The definition of possession includes two elements: the actual control over the property (corpus) and the intention to hold it as one’s own (animus).

2.1.2. The objective element of possession (corpus possidendi) The “actual control” has to be understood as the opportunity to exercise dominance over the movable or immovable, the possibility to influence the property. The intention to exercise dominance over the property must be constant98 and to its full extent.99 If the actual control is not exercised to its full extent, this could be considered – if the partially exercised control corresponds to the content of a property right to another’s property – as a quasi-possession or a possession of a real right.100 The difference concerns the diverse range of activities exercised by the owner or the person entitled to the real right. Regarding the actual control it should be mentioned that the possessor has to be in a certain kind of physical proximity (realisable position) to the property. This principle should not be taken as absolute. The high possibility that the movable property should be kept by the possessor is deemed fully sufficient to accept the existence of actual control over the property.101

2.1.3. The subjective element of possession (animus possidendi) To answer the question whether a person holds property as a possessor or merely as a holder, Bulgarian law first poses the question whether the person 98

99 100

101

There is no actual control over property if a stranger spends a few nights in an empty house; more examples by Venedikov (fn. 19), p. 41. See Tadjer (53) p. 24 et seq. The construction of quasi-possession plays an important role by acquiring a real right through the acquisition of a real right (art. 78, p. 1, s. 2 OA); the possessory protection of a real right (art. 75 OA); and the acquisition of a real right by means of prescription. Analyzing the examples of Roman law Venedikov (fn. 19), p. 43, e.g. there is no possession if a wild animal is trapped by a hunter on real estate owned by another, see also Hausmaninger, H., Casebook po rimsko chastno pravo, Sofia 2000, p. 310.

2. Possession

387

is holding the property with or without the intention to hold it as his own. The differentiation between the diverse forms of animus marks the border between possession and quasi-possession. Hence, there is no possession, but a quasi-possession of a real right, if the person merely has the intention to hold the property and to use it. One example should establish clarity: the person who exercises full actual control in making improvements may acquire the property on which improvements are made by virtue of prescription provisions; however, if the person holds the property only with the intention to use it, this person will only acquire a usufruct right in relation to the improvements made to the property.102 Bulgarian legal doctrine103 considers the element of the intention to hold property as one’s own as dependent on the legal capacity of the possessor. A legally valid intention to possess is held by persons who are either fully legally capable or partially legally capable. Under Bulgarian civil law, persons between 14 and 18 years old, and persons who have a mental illness or deficiency that is not grave,, are considered partially legally capable.104 Persons who are not 14 years old, or for whom a court appointed a legal guardian, are legally incapable.105 They are regarded as not being capable to have the legally valid intention to hold property as one’s own and therefore to possess property.106 Bulgarian property law provides that the subjective element of possession is presumed until it is proven that this person holds the property for another (art. 69 OA107). The presumption is regarded as rebutted if it is proven that the ground of possession is a contractual one, e.g. custody, mandate or pledge, that binds the person to return the property.108 There is no possession for another person if the possessor has not demonstrated his / her own consent to possess through another person. Other problems are posed by the question of whether the animus sibi habendi should be always associated with the intention to hold the movable property as one’s own. This is considerably problematic if the possession should be exercised by an organ of a legal person. It has to be recognized that the 102 103 104

105 106 107

108

In this sense – Decision nr. 1667 / 68 of the Supreme Court, 1st civ. ch. See Venedikov (fn. 19), p. 42; Tadjer (fn. 53), p. 28. See art. 4 and 5 Persons and Family Act (PFA), OJ nr. 182 from 9.8. 1949, latest amendment OJ nr. 120 from 29.12.2002. Art. 3 and art. 5, p. 1 PFA Comp. Venedikov (fn. 19), p. 42. Article 69 OA: It shall be presumed that the possessor holds the property as one’s own until proven that this person holds it for another. Further details by Boyanov (fn. 24), p. 44. Some authors consider legal incapacity as a reason to rebut the presumption of art. 69 OA, see Venedikov (fn. 19), p. 42.

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legal person is only able to act through organs.109 In this case, the organs are acting for the legal person by virtue of law or terms of the company charter. Further it is possible that a third person, p. ex. an employee of the legal person, possesses on behalf of the legal person without being an agent or a legal representative. In this case, the legal representative of the legal person will not be able to affirm the possession of the third person. In the cited situation the animus of the employee can not be considered an intention on the part of the legal person to possess.110

2.1.4. Other characteristics of possession Additional to these general elements of possession, there are other characteristics of possession that are either important for the exercise of legal remedies or are merely derivative, dictated by practical reasons.

(a)

Permanence

Possession should be exercised as permanent actual control over the property.111 The permanence of the possession includes the efforts of the possessor to not allow disturbances of the possession by third persons. There is no permanent possession if the possessor does not raise a claim to protect his possession in a case where another person disturbs the possession with the intention to exercise his / her own possession of the property.

(b)

Uninterrupted possession

Possession shall be uninterrupted if the possessed property has to be acquired by virtue of prescription.112 However the prescription period may be 109 110 111

112

Comp. Tadjer (fn. 53), p. 57, for further details Stavrou (fn. 24), p. 725. See Stavrou (fn. 24), p. 727. More about the five additional characteristics by Tadjer (fn. 53), p. 28 et seq; Djerov, Al., Veshtno pravo, 6th ed., Sofia 2003, p. 59 et seq. The provision of art. 80 OA is relevant to movable property: it provides that the right of ownership of tangible property can be acquired after a period of five years. Another important role is played by uninterrupted possession in the case where the possessor claims protection due to an interference of the possession of an immovable. This possessory claim can be used only if the possessor was possessing for a period longer than six months (art. 75 OA). The possessor has to prove the uninterrupted possession, see Bobatinov; Vlahov (fn. 67), p. 18.

2. Possession

389

suspended for a period for which the possessor was not in possession of the property if this period is longer than six months (art. 81 OA).

(c)

Unequivocal possession

Possession has to be unequivocal. An obiter dictum113 repeats this requirement of the abolished APrRlRA (ab.) even if the provisions of the Ownership Act, which are in force, do not adopt the wording of art. 302 APrRlRA (ab.). The most widespread cases of complications related to unequivocal possession are cases in which the co-owner who possesses for the other co-owners begins to possess merely for himself.

(d)

Passive possession

The possession is passive if the possessor did not exercise violence to acquire it. If the possession has been interfered with by violence, the possessor has the remedy of art. 76 OA. If the person claims the return of the property, the interferer has no possibility to protect the possession he acquired by violence against the former possessor.114

(e)

Manifest possession

The possession has to be regarded as manifest and obvious. If it was acquired in a covert manner from the former possessor and the possession remains covert, it is not regarded as possession until it becomes manifest.115 The possession has not been acquired in a covert manner if the acquisition happened in front of persons that are bound by an obligation to inform the possessor, e.g. the lessee (art. 233, p. 2 OblCA).

2.1.5. Detention Bulgarian property law regards possession as a construct consisting of two elements: animus116 and corpus. If there is merely the second, detention is spoken of. The practical complications related to proving the subjective element of possession are more or less bridged by the legal presumptions 113 114 115

See Decision nr. 304 / 95 of the Supreme Court, 1st civ. ch. For a detailed argumentation and legal historical notes, see Tadjer (fn. 53), p. 32 et seq. Further on this topic, see Boyanov (fn. 24), p. 46.

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introduced by the Ownership Act. In the opinion of the Romanic educated lawyers, the results in practice are quite similar to systems that are grounded on the Roman notion of possession.117 Detention is nothing other than the actual control over property without the intention to hold it as one’s own (see art. 68, p. 2 OA). The detention could be based on a different contractual relationship between the detentor and the possessor, such as the entitled person of the right of ownership or another detentor (p. ex. in case of subleasing of the property).118 Hence, the custodian, the lessee, the bailee, and the forwarding agent are only holders of the property as intermediaries. Similar to possessors, detentors of movable property can use legal instruments to protect the property against interferences by third parties. Bulgarian law does not distinguish between possession by a possessor or by an intermediary. Possession may be acquired by an intermediary of specific or generic property. 116

2.1.6. Intensity of the actual control over the movable The person who exercises control over movable property has to actually exercise the control or it must be reasonably expected that the person is able to exercise it (see fn. 95). It could be admitted119 that the state of possession is stable even if the possessor is not in a situation to exercise actual control over the movable property, when there is not a corpus to the movable during the entire period of possession. The possession has to be considered as such unless there is a reason to conclude that it has been interrupted. For example, the person who places a coat in a coat-check is still the possessor. Hence, the possessor of a motor-vehicle does not loose possession if it is parked on a street. Issues related to the transfer of possession from one person to another are indeed similar to the questions of extent. Principally, the transfer of possession from one person to another must be complete. Thus, there are some situations where legal provisions provide that the person who has not yet obtained possession of property could nonetheless exercise claims to protect that possession. This is the hypothesis covered by art. 58 of the Law

116

117 118 119

In contrast to other jurisdictions in Europe, such as the German or the Austrian legal systems, the animus as an element of possession is to be understood as animus sibi habendi, see Vassilev (fn. 59), p. 29. Venedikov (fn. 19), p. 41 Without mentioning the last category, comp. Tadjer (fn. 53). This opinion represents the widespread view on the topic, see Tadjer (fn. 53), p. 61.

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391

of Succession Act (LSA).120 According to this provision, the successor of a person can raise claims, within the scope of protection of possession, until the succession is admitted. This provision has the objective of avoiding a future debate over property of the succession estate.

2.1.7. Different forms of possession The most significant practical distinction between the different forms of possession is the classification of possession as either possession in good faith or possession in bad faith.

(a)

Possession in good faith

According to art. 70 OA, a person who has possession on a legal ground that could make the possessor an owner is a possessor in good faith. Article 70 OA: (1) The possessor shall be deemed to possess in good faith when he possesses the property on a legal ground fit to make the possessor an owner, without knowing that the transferor is not an owner or that there is a defect in the form prescribed by the law. It is sufficient that good faith exists at the time that the legal ground arises. (2) Good faith shall be presumed until proven otherwise. (3) Where possession has been handed over on the ground of a preliminary contract concluded with the property owner, the possessor shall have the rights under Articles 71 and 72.

There are four elements of the rule of art. 70, p. 1 OA: the actual control over property, the intention of the person who exercises the control to hold the property as his / her own, the legal ground, and the subjective good faith of the possessor in relation to the existence of the legal ground (alt. there is a lack of form provided by law).121 The first two elements of possession have been analysed above. Of more interest is the question of what must be understood under the construct “legal ground”.

120

121

Law of Succession Act, OJ nr. 22 from 29.1.1949, latest amendment OJ nr. 59 from 20.7.2007. A very systematic overview of the legal theory of possession in good faith is undertaken by Vassilev (fn. 59), p. 36 et seq.

392

(i)

Bulgaria

Legal grounds as a prerequisite of possession in good faith

The notion of legal grounds should not be confused with the notion of causa as an element of a legal transaction (art. 26 OblCA) or with the term “legal ground” as a prerequisite for an unjustified enrichment claim under art. 55-59 OblCA. Legal grounds as an element of the rule of art. 70 means a bilateral legal transaction (e.g. contract), a unilateral legal transaction, (e.g. device or legacy), a multilateral transaction (the contribution in kind under company law), or an administrative or judicial act.122 The legal act that represents the legal grounds should be considered an act by the transferor himself to transfer the right, or an act of a state organ that binds the transferor.123 The juridical act, as legal grounds for good faith acquisition, plays two important roles in relation to the proprietary legal effects of the acquisition. The first function of the juridical act is orientated around the kind, content and boundaries of the actual control exercised over the movable property. When the category of juridical act affects the transfer of ownership, the bona fide possessor will be able to acquire ownership according to the prescriptive provisions under art. 80, p. 1 OA (movables) or under art. 79, p. 2 OA. It must be underlined at this point that, in the context of acquisition of property in good faith (art. 78 OA), possession in good faith only plays a role when the transferee acquires the right of ownership through a non-gratuitous legal transaction. In contrast, if the transferee acquired possession in good faith through a gratuitous legal act, e.g. donation, the transferee does not acquire ownership under art. 78, p. 1 OA. If the possessor has merely acquired quasi-possession of a real right, e.g. a quasi-possession of the usufruct right, the possessor has only a legal ground to acquire the right of usufruct of the property (see 2.1.7. below).124 122

123

For further details on the practical problems involved with the legal interpretation of taking possession in good faith, see Interpretative Decree nr. 6/74 of the Supreme Court, Plenum. Hence, judicial acts that can constitute a legal ground are only the decisions that are to be regarded as a substitution for the legal translation. In Bulgarian private law these are e.g. the constitutive court decisions that substitute the contractual conclusion, based on a preliminary contract (art. 19, p. 3 OblCA), or a decision affirming the termination of joint ownership by virtue of marriage (art. 26 FC). Thus, there is no legal ground which is not binding for the transferor. A practical example is the so called “examination of circumstances”, which has to be done before the notary who decides if the necessary requirements of the law are present to compile a notary act for acquiring property by virtue of the law of prescription. This notary act is not binding on the transferor and does not lead to bona fide possession. The assumption of ownership can be rebutted in court if it can be proven that the prescription had not expired at the time of the compiling of the notary act.

2. Possession

393

124

The second requirement for recognizing that possession is acquired by virtue of a juridical act is that the juridical act should be valid. If the juridical act is void, for example due to a lack of form,125 the possession acquired can not be regarded as possession in good faith. This lack of form should be distinguished from a so called “defect” in the form of the juridical act.126 This expression has to be understood in the sense that the form required by virtue of law has been granted externally and, therefore, the act may later be regarded as void.127 The legal grounds define the boundary of taking possession in good faith. Thus, in case the property is to be co-owned and one of the putative co-owners takes possession of it independently, the legal effects of good faith acquisition are merely triggered with regard to the share of the property that should have been transferred by the juridical act.128

(ii)

The prerequisite of good faith

The last prerequisite of the bona fide possession is the requirement of good faith. The possessor shall not have been aware that the transferor was not entitled to transfer the property right. The unawareness of this fact is presumed (art. 70, p. 2 OA). It is a widespread contention in the literature that the knowledge that the transferor was not the owner of the property can encumber the possession of good faith.129 Knowledge of the fact that the titulus could be invali-

124 125

126

127

128 129

See Vassilev (fn. 59), p. 43. By “lack of form” should be understood merely a the lack of the form prescribed by virtue of law regarding the validity of the legal transaction. An example would be the transfer of motor-vehicles. Art. 144, p. 2 RTA provides that motor-vehicles can be transferred by a written sale contractö for the transfer of the ownership of a motorvehicle, a notary verification of the parties’ signatures. If the contract is not concluded in accordance with these formal requirements, it will be considered as void. The most widespread case represents the notary act that is granted externally but that does not fulfil the requirement of validity: the immovable property found itself not in the district of the notary, the notary did not signed the notary act etc. This very complicated and controversial issue of defects of form has been broadly discussed in the literature, see Tzonchev, Kr., Podobreniyata, Sofia 2001, p. 78 et seq.; due to their particular significance for the transfer of immovable property, they will not be mentioned at this point in detail. Comp. Vassilev (fn. 59), p. 42. This opinion seems to have been adopted from the French legal doctrine of possession in good faith, see Venedikov (fn. 19), p. 58.

Bulgaria

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dated by one of the parties is not to be regarded as a circumstance that can influence the possession in good faith.130 If the bona fide possessor subsequently becomes aware of the fact that the transferor was not entitled to transfer the property right, the possessor does not become a possessor in bad faith, according to the principle of mala fides supervenient non nocet (art. 79, p. 1, s. 2).

(b)

Possession in bad faith

All other ways of acquiring possession are to be considered possession in bad faith (otherwise called “unusual” possession).131

2.1.8. Possession of rights In relation to the aforementioned, concerning the subjective element of possession, possession can exist not only of movable and immovable property but also of rights.132 Thus, quasi-possession as a category is applicable only to real rights; in the context of movables, these are: the right of usufruct and pledge.133 Bulgarian property law does not recognize the possession of relative rights due the fact that134 specific legal effects arising from the provisions on possession are specific to property rights.

2.2.

Functions of possession

The functions of the legal framework on possession can be summarized briefly. Before doing so, however, it should be noted that this legal frame130

131 132 133

134

This is the case if the transferor can claim that the avoiding of the act of transfer is due to a lack of capacity (art. 27 OblCA). See Tadjer (fn. 53), p. 115. On the notion of “possession of relative rights” and its use, Venedikov (fn. 19), p. 38. Quasi-possession is not possible by the mortgagee; this is another argument for the non-proprietary character of the mortgage. In respect to the pledge right, most authors are unanimous that the pledge right can be the object of quasi-possession, although the second ingredient – the right to change a legal relationship – has a relative character. Surely the bona fide quasipossessor acquires the entire pledge right, see Stefanov, St., Zakonut za osobenite zalozi i zalogut vurhu nalichni zenni knija, Turgovsko pravo, 3 / 2000, p. 53. For comparative solutions in other Romanic jurisdictions, see Venedikov (fn. 19), p. 38.

2. Possession

395

work is unrelated to several instances where the person in possession is not the owner of the property he or she holds as his or her own. In this case, the legal framework on possession does not protect the interests of the non-owner possessor.135 Firstly, the general functions of possession that are applicable to all forms of possession should be examined. Thereafter, the specific function of possession in good faith will be discussed.

2.2.1. General functions of possession The legal order awards protection to various forms of possession. This protection is unaffected by the fact that possession has been acquired legally or illegally. There are two reasons for this position: 1) in most cases possession is based on a legal ground; it enables an owner from whom the possession of the property has been taken to rely upon the more expedient claim of possessory protection, rather than the petitory actionable protection; 2) the legal order aims at protecting property rights without allowing the entitled person to resort to vigilantism. Another function of the legal framework on possession is implied by the necessity to regulate the legal relationships between possessors and persons who are entitled to the right of ownership.136 Therefore, the possessor, even if in bad faith, is entitled to make a claim against the owner for the expenditures that the possessor has incurred for the necessary maintenance of the property (art. 73, p. 2 OA).

2.2.2. Functions of the possession in good faith Bulgarian law assigns specific legal effects to the possession of property, making a distinction between possession in good and bad faith. Thus, the function of possession in good faith includes: 1) the possessor in good faith acquires the fruits of the property; 2) the bona fide possessor acquires the ownership of immovable property after expiration of a period of five years (art. 79, p. 2 OA); 3) the possessor in good faith has the right to retain the immovable or movable property until he receives reimbursement for expenditures incurred for necessary maintenance of or improvements to the property. 135

136

This does not conflict with the interests of the owner of the property. The person entitled to the ownership may at anytime require the protection given by the legal order, see Tadjer (fn. 53), p. 16 et seq. Meant at this point is the linguistically very successful German notion of “Eigentümer-Besitzer-Verhältnisse”.

Bulgaria

396

Some scholars137 consider another function of possession in good faith, namely good faith acquisition. As referred to above, the acquisition of movables by persons who are considered in good faith by virtue of a nongratuitous juridical act, is not an acquisition of possession but rather an acquisition of the right of ownership. From a dogmatic point of view, the moment at which the right of “ownership is acquired” can not also be considered the moment at which the “possession is acquired”. From the point the ownership is acquired on, the transferee acquires merely ownership and can not be regarded as the possessor in good faith.

2.3.

Acquisition of possession

2.3.1. Acquisition of possession through unilateral acts of the possessor Possession can be acquired through the unilateral acts of a person with the intent to exercise direct physical control over the property and to hold it as his own. If the property is found in the possession of another person, the new possessor must take the property from its present possessor. It is not necessary that the property is in the possession, or under the right of ownership, of another person.138

2.3.2. Acquisition of possession with the consent of the former possessor Possession can be acquired not only through unilateral acts of the (new) possessor but also, and this is the most common case, with the consent of the former possessor. Consent is not regarded as a legal act that transfers, changes or precludes rights.139 Thus, it does not require any form. If the traditio is a consequence of an obligation to deliver possession by virtue of 137 138

See Venedikov (fn. 19), p. 62. Under the People’s Republic of Bulgaria, the legal system did not know property that did not have an owner (res nullius), according to the abolished provision of art. 6, p. 2 OA; for further details, see Tadjer (fn. 53), p. 48. This article provided that any property that was not owned by someone, is owned by the state. After the abolishment of art. 6, p. 2, the property, object of the usurpation, could be the ground for acquiring the movable property by virtue of prescription (art. 80 OA), due to the fact that the usurpation could not be considered anymore a criminal offence (Art. 80, p. 2 OA provides that a person can not acquire ownership of a movable if the possession of the movable property has been obtained by a criminal offence).

2. Possession

397

a sale contract, a barter, a donation etc., the consent can be incorporated in a contractual term.140 The delivery of possession can take place not only by giving the property to the new possessor, but also by delivering it to the house of the new possessor; or under circumstances where it is clear that the new possessor will acquire the possession in the future and that the former possessor has surrendered possession.141 139

2.3.3. Acquisition of possession by a third party Bulgarian property law allows the acquisition of possession by a third party. The requirements for this kind of acquisition of possession are: 1) the potential possessor intends for the third person to hold the property for him,142 2) the third person exercises the actual control over the property, 3) the third person acquires the corpus of the property in order to possess the property, not as his or hers own, but for another.143 As mentioned above the acquisition of possession by a third person can be based on a contract of mandate, working contract etc. The possession is regarded as acquired if the third person acquires the corpus of the tangible property, relying that the animus of the possessor already was at hand due to a legal relationship between the possessor and the third party.144

139

140

141 142

143 144

Derived from the Decision nr. 803 / 94 of the Supreme Court, 1st civ. ch., Tadjer’s argument in support of the thesis that consent is not a juridical act, relies on the fact that the new possessor can acquire possession based on an illegally given consent; see Tadjer (fn. 53), p. 52. In practice the most common case concerns contractual terms to deliver the possession under a preliminary contract. Ex lege the possessor by virtue of a preliminary contract is a possessor who has the rights of a possessor in good faith regarding the acquisition of the fruits and the expenditures (art. 70, p. 3 OA). Comp. Venedikov (fn. 19), p. 44. Scholarship went even further and extended the case group, mentioned above, to contractual agents. This could be the situation where the principle by virtue of a contract of mandate empowered the representative to acquire possession, not only of movable property specified by the mandator, but to also acquire possession generally within the authority of a mandator regarding the property administration for another. Under Bulgarian law there is no restriction for acquiring possession if the mandator acts within the mandate contract and the principal has no concrete animus possidendi, see Tadjer (fn. 53), p. 57; Venedikov (fn. 19), p. 46. For further details, see Tadjer (fn. 53), p. 55. See Tadjer (fn. 53), p. 57.

Bulgaria

398

The general principles that apply to acquisition of possession, such as the principle of special proximity to the property, are also applicable to the acquisition of possession by a third person, e.g. it is sufficient for the third person to obtain the document that legitimates the possessor.145

2.3.4. Possession of an inheritor The abolished art. 309, p. 1 APrRlRA provided that the heir acquires the possession ex lege after the accrual of the inheritance even if the heir did not know about the accrual of the inheritance or the death. This provision has not been incorporated into The Ownership Act. Nevertheless, this principle can be deduced from several provisions. This point of view is widespread in the literature and seems to be recognized in the jurisprudence as well.146 An argument for this thesis is the protection of the possession granted by art. 58 LSA to the heir, and the possibility for the heir to cumulate the possession of the deceased person’s property with his or her own possession.147

2.3.5. Constitutum possessorium A specific type of acquisition of possession is the situation where the possessor ceases to be a possessor and merely becomes a detentor of the property. For example, a constitutum possessorium has to be presumed by virtue of a sale contract, which transfers the ownership of specific property, but the property has not been delivered yet to the new owner.148

2.3.6. Traditio brevi manu Another method to acquire possession is the so called traditio brevi manu, which occurs by the conversion of the detention into possession. This can be the case if the former detentor acquires the ownership of the property under a juridical act that is able to transfer ownership. The consent in the 145 146

147

148

E.g. a bill of lading. Categorical therefor: Decision nr. 759 / 96 of the Supreme Court, 1st civ. ch., Decision nr. 664 / 94 of the Supreme Court, 2nd civ. ch. ?; see also Vassilev (fn. 59), p. 32; Venedikov (fn. 19), p. 46. See Tadjer (fn. 53), p. 60. He suggests that the acceptance of the inheritance by the heir (art. 48 LSA) has effects ex tunc. For further details on the property effect of the sale contract, see Kojuharov (fn. 20), b. I, p. 114 et seq.

2. Possession

399

traditio brevi manu is implied in the juridical act that transfers ownership, p. ex. the lessor sells to the lessee the property in detention of the lessee.149

2.4.

Protection of possession

2.4.1. General Bulgarian civil law recognizes several methods for protecting all forms of possession. There is no difference if the possession has been acquired legally or illegally, or if the possession is considered made in bad or in good faith. Detention also enjoys possessory protection by means of the claim of art. 76 OA. The claims referred to in the following provisions intend to protect all kinds of possessors. These are in general the claims based on art. 75 and 76 of the Ownership Act. Not too long ago (under the legal regime of the old Civil Procedure Code (ab.)), a particularly expedient procedure for possessory protection existed. This kind of proceeding has not been adopted under the new Civil Procedure Code.150 Article 75 OA The possession of immovable property or a real right over such property, including servitude that has continued for more than six months, may be defended against any violation. The action must be brought within six months. Article 76 OA A possessor or a holder of movable or immovable property that has been taken from the possessor or holder through violent means or through concealment may, within six months, request that it be returned by the person who has taken it. This does not exclude the right of the person who has taken the property to bring an action under the previous Article.

Due to the restricted application of art. 75 OA to immovables, the protection granted by art. 76 OA is of primary interest here.

149 150

See Venedikov (fn. 19), p. 48. One of the arguments of the new project for a Civil Procedure Code against the so called “administrative” protection, consisted in the restoration of possession against an unknown interferer, cited in the online publications of the results of the working committee. However, the efficacy of these measures of protection cannot be disregarded. The court order used to be executed not by the bailiff, but by police organs or by the mayor of the municipality.

400

Bulgaria

The claim under art. 76 OA encompasses not only the protection of possession but the protection of detention of movable and immovable property as well. In contrast to art. 75 OA, the period of possession or detention is not a relevant prerequisite under art. 76 OA and the claim can be raised anytime. A very important characteristic of the claim under art. 76 OA is the possibility of the detentor to raise a claim against someone in possession of the property after depriving151 the detentor of the detention through violent means or concealment.152 “Violent means” involves the practice of violence or uttering a threat. The violence can be exercised not only against the possessor or the detentor, but also against the property itself, e.g. a by destroying a fence in order to take the property from the possessor or from the detentor. Concealment represents instances of the property being taken away from the possessor or the detentor when it is done in a manner or at a time that does not allow the possessor or the detentor to detect the deprivation. Concealment involves the attempt of the detentor, e.g. a lessee, to hold the property as his or hers own, denying the right of the possessor. Concealment is only identified in cases where the possessor is not aware of the interference. This is not the case if a person who holds the property for the possessor, e.g. as a lessee, must inform the possessor about any interference of the property.153 The two elements of the rule of art. 76 can not practically be cumulated. However, there could be situations that have the characteristics of both elements. The claim based on art. 76 OA can be brought not only against the person who deprived the possessor or the detentor of the actual control over the property, but also against the person who initiated the deprivation of the property. If the movable property that has been taken away is found by a third person, the possessor or the detentor cannot reclaim the tangible property from that third person, due to the personal character of this action. This represents the main difference between the claim under art. 75 OA and art. 76 OA. The claim under art. 76 can only be raised against a person who has deprived the possessor or the detentor of the actual control over the property, or the universal successors of that person, but not against any 151

152

153

Tadjer regards “deprivation” as a terminus technicus under art. 76 OA, which is subject to a broader interpretation. Deprivation has to be qualified, as not every interference completely deprives the possessor or the detentor of the actual control over the property, but merely part of the actual control, see Tadjer (fn. 53), p. 115. E.g. the lessor violently deprives the lessee of the detention; for more examples on the protection of persons entitled to a real right, regarding immovables, see Bobatinov; Vlahov (fn. 67), p. 20. See above 2.1.4.

2. Possession

401

third party. So far, this claim constitutes an incomplete instrument of protection against third parties that have acquired possession of the property.154

2.4.2. Self-help The right of the possessor to defend himself through self-help against acts of dispossession or interference is not provided by the Ownership Act. However, there is a comprehensive principle applicable:155 every possessor can defend his possession in order to reject attempts to dispossess him or to interfere with his possession. The possessor may use all means within the scope of legally permissible self-defence under criminal law requirements. This would not be the case if the person who exercises self-defence does so outside the boundaries of allowed self-defence (so called “excessive self-defence”). Moreover, under Bulgarian criminal law, the act of self-defence will not be considered excessive if the person who intends to take possession of the property has forcibly entered the house of the possessor,156 or if defence of the possession is made under the fear and anxiety of the possessor brought about by the interference.157 If the interferer dispossesses the possessor of movable property, the possessor may defend his property even after the wrongdoer has taken the property. The requirement for the re-establishment of the actual control over the property is that the violator has been caught at the place of the interference with the tangible property. If the movable has been taken away and the possessor has lost his possession, the only way for the possessor to re-establish possession is to raise a possessory claim against the transgressor.158 154

155

156

157 158

Art. 523 CPC is applicable to immovables, which allows for the execution against a third person who is in possession of the immovable property. This has to be regarded delege ferenda as a feature for future amendments. In order to more closely define the scope and the requirements under which the possession can be defended by way of self-help, some authors have recommended the codification of the institute of self-help, see Tadjer (fn. 53), p.76. The question whether the detentor may defend the detention in the same way as the possessor, has not been discussed, but it seems to be accepted in the literature. That may be supported, if the protection of possession is regarded not as a protection against interferences to substantive rights but as a violation of the prohibition of vigilantism, see Vassilev (fn. 59), p. 480. Comp. art. 12, p. 3 Penal Code (PC), OJ nr. 26 from 2.4.1968, latest amendment OJ nr. 19 from 22.2.2008. Art. 12, p. 3 PC. See Tadjer (fn. 53), p. 77.

Bulgaria

402

3.

Obligatory rights with similarities to the protection of absolute rights

As stated above, the rights in rem are absolute rights, which can be claimed against every third person. The differences mentioned above, however, are not exclusive. Thus, the problems affiliated with the distinction between absolute and relative rights are greater than the solutions Bulgarian legal scholars have accepted without question.159 In this context, there are several details, which have to be mentioned. Firstly, the main theoretical problem is the distinction between absolute rights and certain relative rights, such as the right to change a legal relationship of the mortgage due to the opportunity of the mortgage creditor to execute on the immovable property subject to the mortgage.160 Thus, it can not be ignored that the mortgage, as already mentioned, has an element that has an absolute character: the right to demand that no one exercise influence over the immovable property in any manner that can lead to a decrease in value. Secondly, as to whether the right of retention is de facto relative or absolute, it should be noted that the right of retention generally can not be claimed against a third person (for details see bellow 15.4.) and, therefore, there is no absolute right of retention. In contrast to these absolute rights, which compose property rights under Bulgarian law, a preliminary contract does not have a property law effect; it is not possible to transfer property rights by means of a preliminary contract. The only possibility for the contractual party to acquire ownership of the property is to claim according to art. 19, p. 3 OblCA. The constitutive court decision then replaces the conclusion of the final contract and can be joined with a revindication claim.161

159

160 161

The issue concerning if the mortgage and the right to retain property merely imply a privilege – which constitutes a right to satisfy the entitled persons against every third person, or if they are only securities, is not resolved, see Konov, Tr., Vuzrajenie za neizpulnen dogovor i pravo na zadurjane, p.67 et sec. Venedikov (fn. 24), p. 18 et seq. Comp. Kalaydjiev (fn. 21), p. 121.

4. Field of application and definitions

4.

Field of application and definitions

4.1.

Field of application

403

Bulgarian property law makes a distinction between the acquisition of obligatory and property rights. The transfer of obligatory rights, such as the assignment of claims, is governed by provisions of the law of obligations. Property law provisions are applicable to the transfer of the right of ownership and real rights in another’s property. A broadly discussed theoretical topic is the question whether the rules on transfer of ownership also affect the transfer of ownership of money. Some authors consider money tangible property that does not rely upon the rules on acquisition of movables in good faith (art. 78 OA).162 Other authors defend the thesis that some of the rules on the transfer of movables also apply to the legal regime of money.163 This point of view has to be accepted with the following qualification: the owner of the money can reclaim stolen money through revindication due to the fact that, in some cases, it is possible to identify stolen coins or banknotes; moreover, money that has a higher numismatic value can be revindicated, even if it is in circulation as local currency.

4.2.

Definitions

Under the definition of “property”, sometimes translated “thing”, Bulgarian property law includes all objects that have the quality of being corporal, with the exception of human beings. Even though electricity and other types of energy do not constitute a substance necessary to be corporal, Bulgarian property law defines them as a “movable thing” (art. 110, p.2 OA).164 The distinction between movable and immovable property is of fundamental importance. Under Bulgarian property law, immovable property includes all plots of land, plants, buildings and other objects that are attached permanently to land or buildings (art. 110, p. 1 OA). All other property shall be considered movable property (art. 110, p. 2 OA). Animals are considered movable property as well. However, there are several special rules that influence the transferability of animals, e.g. art. 11, 162

163 164

See Stalev, J., Vestnopravniyat rejim na parite, Suvremenno pravo, 1 / 1994, p. 7-16. Under this point of view, even the thief acquires ownership of stolen money. The former owner of the money has only a claim of unjust enrichment and not a revindication claim. Kalaydjiev (fn. 21), p. 166. See fn. 1 supra.

Bulgaria

404

p.1 of the Animal Protection Act165 prohibits the sale of animals to persons under the age of 18. Securities, such as negotiable instruments, are not considered “things”. Bulgarian law does not have a common definition for a security instrument. Rather, a security instrument constitutes a private document that has the form and content required by law, embodies a declaration of an intention to exercise the right that grants the actual control over the document and its traditio.166 Nonetheless, securities may, depending on their type, be transferred according to the rules on transfer of movables. Additionally, there may be other requirements for the transfer of certain instruments: the instruments made out to order may only be transferred if the requirement of endorsement is fulfilled, and bearer papers only through an assignment of claims.

165 166

The Animal Protection Act, OJ nr. 13 from 8.2.2008. Kalaydjiev, A., Bezkasovoto plashtane, Sofia 1999, p. 438.

Part II: Derivative acquisition 5.

Consensual system of transfer of ownership

5.1.

Basics

5.1.1. General view of modes of acquiring ownership Juridical facts that affect the establishment and preclusion of property rights are the so called acquisition modes of acquiring the right of ownership. Acquisition modes in Bulgarian property law are provided by law. Parties to legal transactions do not have the possibility to agree on other modes of acquiring and relinquishing property rights. Article 77 The right of ownership may be acquired through a legal transaction, by prescription or by other means provided by the law.

According to art. 77 OA, the two principle modes of acquiring the right of ownership are 1) original and 2) derivative acquisition. With regard to its applicability to all, or just to a particular kind of property (e.g. only to movable property), the mode of acquisition may be further qualified as specific or general. The original acquisition of ownership does not include the prerequisite of an existing ownership right of a person. The most important instances under Bulgarian property law are: 1) acquisition by virtue of prescription (art. 79 et seq OA), 2) acquisition through possession in good faith, 3) acquisition of found property by the municipal community (art. 89 OA), 4) acquisition of a treasure by the state, 5) acquisition by processing (art. 94 OA), and 6) acquisition through incorporation (art. 97 OA). Similar to other jurisdictions in Europe, the list of modes of acquisition is not exhaustive, e.g. an original mode is also the acquisition of movable property from a judgement debtor upon an execution levied by the creditor or by a third person (482, p. 2 CPC), or the acquisition of movable property from an insolvency estate (art. 717k, p. 2 CA). The derivative acquisition implies an acquisition of the right of ownership through a person who has been entitled to transfer the ownership to the transferee. Ownership will be acquired through legal succession.

Bulgaria

406

However, it is possible to acquire ownership by way of derivative acquisition even if there is no legal succession. This is the case where the owner of property acquires its fruits. The owner acquires ownership of the fruits merely due to his own right of ownership. Since the owner can not be a legal successor of himself, the acquisition of the fruits may be regarded as a derivative acquisition without legal succession.167 The fact that the transferor of the property is not the owner of the transferred property is not grounds for the invalidity of the transaction. The non-ownership of the transferor may only be legal grounds for terminating the contractual relationship.168 In this regard, Bulgarian civil law distinguishes between the validity of the contract and the possibility of the debtor to fulfil the obligation.169

5.1.2. Consensual transfer system Bulgarian law follows the French-Italian system170 of contractual transfer. Traditio of the movable property is not required for the transfer of ownership to the transferee. The consensual transfer system is a milestone in Bulgarian law of property and of obligations. It has been established mainly in favour of the protection of the transferee in order to ensure the transfer of ownership. If this would not be the case, the transferee would not have an efficient remedy, by means of a second legal proceeding with proprietary effect, to acquire ownership of the property from a previous owner unwilling to transfer the right of ownership.171 The derivative acquisition of ownership presupposes the existence of the right of ownership of the transferor. If the transferor is the owner of the transferred property, the transferee will acquire ownership of it. Art. 24 Obligations and Contract Act (1) In case of contracts for the transfer of ownership and for creating or transferring other property rights in specific property, the transfer or the creation shall occur on the strength of the contract itself and shall not require the property to be delivered.

167 168

169 170

171

Venedikov (fn. 19), p. 18. Only a valid contractual relationship may be terminated, Decision nr. 507 / 94 of the Supreme Court, 1st civ. ch., see also art. 189, p. 1, s. 1 OblCA. See Goleva, P., Obligazionno pravo, 4th ed., Sofia 2008, p. 188. Apostolov, Iv., Obligazionno pravo. Chast purva. Obshto uchenie za obligaziyata, Sofia 1990, p. 48. Comp. Apostolov (fn. 170), p. 48.

5. Consensual system of transfer of ownership

407

(2) In case of contracts for the transfer of ownership of generic property, ownership shall be transferred when the fungibles are specified by agreement of the parties and, in the absence of such agreement, when they are delivered.

Another consequence of the derivative nature of acquisition of ownership is its retroactive effect that can extinguish the title of the transferor, which is derived from the maxim resoluto iure dantis resolvitur ius accipientis.

5.1.3. The principle of art. 24, p. 1 OblCA The provision of art. 24, p. 1 OblCA introduces a general principle of obligations in Bulgarian law. The parties can not deviate from the effects of art. 24, p. 1. OblCA due to the numerus clausus of the modes of acquisition under Bulgarian law.172 If the parties agree that the proprietary effect of the contract should produce transitional effects after the delivery of the movable property, this term is considered void.

5.2.

Proprietary-obligatory effect of the contract

5.2.1. Transfer of specific property In the case of transfer of specific property, the transfer of ownership occurs at the moment of the conclusion of the contract. This follows from art. 24, p. 1 OblCA. The rule of art. 24, p. 1 OblCA is only applicable to obligations resulting from a contract. The proprietary-obligatory effect occurs if the parties have agreed that the transfer of ownership must be transferred by the conclusion of the contract. Such an agreement is implied in the contract, if the nature of the contract typically involves proprietary-obligatory effects at its conclusion and the opposite is not stipulated in the contract.173 An exception to this principle is when the arising of the proprietary-obligatory effect can be shifted to a later moment in time by contractual agreement of the parties. Typical cases are the sale under reservation of title (art. 205, p. 1 OblCA) and the sale on approval (art. 204 OblCA). In addition to the sale contract,174 a proprietary-obligatory effect of acquisition of property can occur through a donation, or a contract of assignment of claims – if the assignment transfers proprietary rights.175

172 173

Comp. Stavrou (fn. 24), p. 612-613. For further details, see Venedikov (fn. 19), p. 149.

408

Bulgaria

An exception to the principle of the proprietary-obligatory effect of the contract is the transfer of bearer security instruments. This follows from art. 185, p. 1 CA and art. 119, p. 3 MSC. Even if the security instrument has been specified, the acquirer of the instrument should acquire possession of the bearer instrument in order to realize the rights incorporated in the instrument.176 174 175

,

5.2.2. Transfer of property that must be specified alternatively If the contractual parties do not agree that ownership shall pass to the transferee, the proprietary-obligatory effect does not occur if the property must be additionally specified. In this case, the ownership right will be transferred after the property has been specified. The specification may only be affected by an act of the creditor, the debtor, a third party or by the court. The specification represents a unilateral act.177 After the notification of the specification, the specification becomes irrevocable (art. 130, p. 2 OblCA). The irrevocability of the specification follows from the character of the right to specify, the exercise of which invokes the proprietary effect of the contract.178 Under Bulgarian law if there is no other agreement, the debtor should have the right to specify (art. 130, p.1 OblCA). If the specification must be exercised by a third person, the specification becomes effective when notification of it has been given to both the transferor and the transferee. 174

175 176

177 178

The black-letter rule of Art. 183 OblCA does not correspond to the literal use of the expression that the seller has the obligation to transfer ownership to the buyer. This definition corresponds to the case where the transferred property is generic goods or has to be specified alternatively. Art. 183 OblCA: Under the contract of sale the seller has the obligation to transfer to the buyer the ownership of property or another right for a price, which the buyer has the obligation to pay to the seller. Kalaydjiev (fn. 21), p. 152. See Kalaydjiev (fn. 166), p. 444; Stavrou (fn. 24), p. 613. The delivery of the bearer paper is also required, if the bearer instrument embodies the acquisition of ownership of goods. The most common case under Bulgarian law is the bearer bill of lading used in merchant shipping (art. 119, p. 3 MSC). The delivery of the bearer bill of lading effects the transfer of ownership. Hence, after acquiring the possession of the instrument the acquirer can alienate the property right. Kalaydjiev (fn. 21), p. 158; Kojuharov (fn. 20), p. 128. If there are several creditors of the debtors, the specifying person has to make the specification only of one of them (art. 130, p. 2 OblCA).

5. Consensual system of transfer of ownership

409

In case the ius variandi is not exercised by the person who should specify the property to be transferred, the right to specify is passed to the other party. If the specification should be made by a third person and this person does not specify after the expiration of the time to specify, the specification is exercised by the court (art. 131, p. 3 OblCA). The question as to when the proprietary-obligatory effect occurs, when there is an obligation to specify between two or more alternatives, is widely discussed in the Bulgarian legal literature.179 The older doctrine180 qualified the moment of transfer of the right of ownership as the moment of the conclusion of the contract, based on the assertion that the specification has a retroactive effect (ex tunc). According to this opinion, the ownership is transferred at the time of the conclusion of the contract. This theory on the transfer of ownership has been criticized181 mainly due to the concern for the protection of the interests of third parties. The arguments affirming that specification under Bulgarian law merely has an ex nunc effect, do prevail. The four brief arguments in favour of this are: 1) Bulgarian law does include a legal rule that is similar to § 263, 2) the BGB provides for a retroactive effect of the specification, 3) retroactive effects are exceptions that are expressly governed law, and 4) this solution corresponds to the interests of third parties, since in this case the creditor could vindicate the specified property from the insolvency estate if the debtor becomes insolvent between the time of the conclusion of the contract and the specification. Consequently, the specification has to be regarded as having an ex nunc effect, which transfers the right of ownership of the specified property at the moment of specification. In case one of two alternative items of property, either of which may be transferred through specification, vanishes, but not due to the fault of the person who did not have the right to select the object of the performance, the transfer of ownership is accomplished regarding the property that can still be transferred by the other party (art. 132, p. 1 OblCA).

5.2.3. The transfer of ownership of generic movables Art. 24, p. 2 OblCA provides that the transfer of the right of ownership of generic goods occurs after the parties have agreed upon the identification of the goods or, in case of lack of such an agreement, the ownership of the

179 180 181

See Apostolov (fn. 170), p. 61 et seq. Instead all see Kojuharov (fn. 20), p. 129. Kalaydjiev (fn. 21), p. 159.

410

Bulgaria

goods is transferred at the moment of their delivery.182 “Delivery” is to be understood as the obtaining of the actual control over the property by the transferee.183 It is sufficient for the transfer of ownership, if the buyer receives the “document of title”, e.g. the bill of lading. The most common opinion in the legal literature184 and jurisprudence185 refers to the transfer of risk as the relevant moment, with regard to the delivery of generic goods, at which ownership is acquired by the transferee. Art. 186a, s. 1 OblCA provides that the risk during the sale of generic goods is passed on to the buyer of the goods after the agreement on the identification or the delivery of the goods. In case of a distinct sale contracts, the risk is passed to the buyer when the goods have been delivered to a forwarder or a carrier (art. 86, s. 1 OblCA). This lack of a more detailed non-mandatory rule under Bulgarian law has rendered a legal uncertainty regarding the question whether the moment of the delivery to a forwarder, or to a carrier, can be regarded as the time of identification and acquisition of the property transferred, or if this merely is the moment when the risk passes to the buyer of the goods. The dominating part of legal scholarship explores the time of delivery to a forwarder, or to a carrier, as the time of identification of the generic goods and thus the moment of transfer of the ownership of the movables.186 This opinion is founded on the rules concerning the place of performance by the debtor. According to art. 68, l. “c”, the debtor has to perform at his place of residence at the moment the obligation arises. De lege ferenda would be a non-mandatory rule that specifies the identification in case of delivery of the movables. Coming back to identification, which occurs through an agreement of the contractual parties, the identification can be made in different ways. The transferor and the transferee may come to an agreement, whereby they shall decide that the goods are to be identified only by the debtor, e.g. the 182

183

184 185 186

If there is a lack of identification of the goods that are to be transferred, the transfer of ownership occurs not merely through the acts that specify the generic goods, such as the weighing and the separation from the rest of the goods, but through the delivery to the transferee, see Decision nr. 237 / 55 of the Supreme Court, 4th civ. ch. For a dissenting opinion, see Venedikov (fn. 19), p. 151, asserting that the delivery should be understood as a bilateral transaction – as the acquiring of actual control over the property is not the only requirement for the identification, but also required is the consent of the buyer who has to accept the goods. This opinion can not be adopted, as the delivery merely serves to replace the lack of consent (art. 24, p. 2 OblCA). See Kalaydjiev (fn. 21), p. 156; Kojuharov (fn. 20), p. 122 et seq. Interpretative Decree nr. 5 / 64 of the Supreme Court, Plenum. See Kojuharov (fn. 20), p. 123.

5. Consensual system of transfer of ownership

411

goods have to be delivered to the store of the transferee or that the transferor gives a notice to the transferee of the specification made.

5.2.4. Transfer of future movables The most common case of transfer of future property concerns the contract of sale of future goods. Bulgarian law of obligations distinguishes between contractual agreements that set a condition (emptio rei speratae) and aleatory contracts of sale (emptio spei). In both cases the proprietary effect of the contract arises with the production of the goods. The moment of occurrence of the future property raises certain problems in conjunction with a divorce: what happens to property under a contract for construction ordered by a party during marriage, but constructed after the divorce (in other words, after the termination of the marital coownership). Under Bulgarian law future property is not an object of coownership by virtue of marriage.187 The right of ownership of future property is regarded as transferred only when that future property has been specified in such a way that there is no doubt that the property can be identified.188 If not, the rules on transfer of generic goods shall be applicable. Another question connected to the transfer of future property arises from the interdiction of art. 226, p. 2 OblCA, which restrains the transfer of future property by a contract of donation. Such contracts are void. Bulgarian legal doctrine, which briefly discusses this topic, is of the opinion that “future property” in this context has to be understood as only property for which the donor has no expectation of remuneration and for which the donor does not have to make any additional effort to acquire.189

5.2.5. Transfer of ownership of movables not yet owned by the transferor As already considered above, a contract of sale of movable property owned by someone other than the seller is valid and binding on the transferor. In this case, the transferee will acquire ownership of the property when the transferor acquires it.

187 188 189

Further details on the case law by Stavrou (fn. 24), p. 97. Decision nr. 455 / 2004 of the Supreme Court of Cassation, 2nd civ. ch. Further details on this rare discussed topic by Stavrou (fn. 24), p. 103.

Bulgaria

412

If the transferee does not know that the property is owned by another, it is sufficient for the transfer of ownership if the third party confirms the transaction.190

5.3.

Contractual autonomy and transfer of title

Thus, under Bulgarian law the parties may freely define the transfer of the risk (art. 9 and 186a OblCA) and the transfer of the right of ownership. This would be the case if the seller and the buyer agreed that ownership of the goods shall be transferred only if the full price of the goods sold is paid – reservation of title. Due to the protection of the interests of third parties, such as creditors of the contractual parties, the concept of retention of title by the seller can be opposed against the creditors of the buyer only if the agreement on retention of title has been fixed in a written document with an authenticated date (art. 205, p. 2 OblCA).

5.4.

Effect of the transfer of ownership

The acquisition of the right of ownership implies the possibility for the transferee to dispose of the movable. In case of reselling the acquired movable to a third person, the former owner of the property can oppose his right to retain also against the new owner of the property.191 It must be underlined at this point that under Bulgarian law the right to retain movable property (art. 91, p. 1 OblCA) can be exercised to secure a claim arising in connection with the preservation, maintenance, repair or improvement of movable property, or in connection with damage caused by the property, only if the person intending to retain the property did not acquire the direct physical control over it by an illegal intentional act.192 An example should clarify this situation: assume a herd of sheep owned by A damaged the property of B, who retains the animals because his tort law claim is not satisfied. In the meantime, A sells the herd to C who aims to vindicate the animals from B. The legal doctrine in this case provides 190 191

192

See Venedikov (fn. 19), p. 154. See Kalaydjiev, A., Obligazionno pravo. Obshta chast, 4th ed., Sofia 2007, p. 270. This could be derived from the principle that the right to withhold performance can be exercised only against the other party to the contractual relationship. This does not follow from the grammatical interpretation of the provision of art. 91, p. 1 OblCA (it uses the expression “not in good faith”) but from the comparative analysis of its origin: § 273, p. 2 of the German BGB, see Venedikov (fn. 19), p. 234; Kalaydjiev (fn. 191), p. 273.

5. Consensual system of transfer of ownership

413

that the right to retain the movables can be opposed as well against C due to the fact that here the right to retain is similar to a real pledge, which can be opposed against every third person.193 This conclusion results from the main function of the right to retain – that being to secure the interest of the retainor by giving him a privilege (art. 91, p. 5 OblCA). This is not the case if the person retains the property in order to exercise a right to withhold performance of a synallagmatic obligation (art. 90, p. 1 OblCA). Following this legal logic, the right to withhold performance in order to obtain performance could not be exercised against third persons such as e.g. the further owners of the movable property.194 The situation is even more complicated due to the fact that the Bulgarian legal system recognizes different rights to retain property based on, in some cases, overlapping juridical facts. One of them is the right to retain by merchants, which is ruled by art. 315 CA. In contrast to the right to retain under art. 91, p. 1 OblCA, the commercial right to retain is limited to goods and security instruments given to a party in a bilateral commercial transaction. It is applicable as well in cases where the person that owns the goods becomes insolvent, even if the obligation of this person is not due yet (art. 315, p. 5 CA). Due to a poor transposition of the provision in art. 369 from the German Commercial Code,195 the commercial right to retain the goods or the security instruments can be exercised merely against the creditors and the universal successors of the parties to the commercial transaction, but not against the persons that acquired the property or the security instrument by a legal transaction (arg. from art. 315, p. 3 CA). Another problem connected to the commercial right to retain the property is the requirement that the retainor exercise direct physical control over the property, which could restrict the applicability of this legal instrument to situations where the creditor has to exercise his right of stoppage in transit. Some of these complications are partly solved by the fact that certain creditors, e.g. the carrier (art. 375 CA) or the commissioner (art. 357 CA), have a legal right of pledge that encumbers the goods over which they exercise actual control. Apart from these problems, there are the following further effects of the transfer. The person who acquired ownership of the movable property can claim vindication of it from a third person who stole the property from the former owner. The transferor is no longer entitled to the fruits of the 193

194

195

Kojuharov (fn. 20), p. 179. Categorically for the absolute character of the jus retentionis, Konov (fn. 159), p. 79. But it can be opposed against third persons, such as the assignee or a subrogated third person, see Kalaydjiev (fn. 191), p. 269. Further details by Kalaydjiev (fn. 191), p. 280.

Bulgaria

414

tangible property and therefore cannot claim restitution (art. 59 OblCA) in the event the object had been used unlawfully by a third party. The unjustified enrichment can be claimed only by the owner of the property due to the fact that only the owner is entitled to lease the movable property, if it should have been leased to the enriched person.196

5.5.

Requirement of a valid obligation to transfer ownership

5.5.1. Contracts that transfer ownership The contracts that can transfer ownership under Bulgarian law include the following (non-exclusive): 1) sale, 2) barter, 3) transfer of property for caretaking and maintenance, 4) donation, 5) short-term loan for use, and 6) partnership. The main contract that can transfer the right of ownership is the sale contract. Here, certain specific features of donation should briefly be examined. A donation under Bulgarian civil law is considered a unilateral, gratuitous contract. In contrast to other contracts that transfer ownership, the contract of donation of movable property requires written form with notary validation of the signatures, or delivery to the donee (art. 225, p. 2 OblCA). Another particularity of donation is represented by the restriction prohibiting a contract of donation of future property and prohibiting a preliminary contract197 in order to conclude a final contract later. Such contracts are void (art. 226, p. 1, 2).

5.5.2. Unilateral acts Other juridical acts that can transfer ownership are unilateral acts. They include will and legacy. A legacy that attempts to transfer specific property of the legator’s patrimonium is void, if at the commencement of the estate the property is not to be found in the estate of the deceased (art. 19, p. 1 LSA). In contrast to specific property, generic property that is the object of a legacy and that can not been found at this point is nonetheless considered valid (art. 19, p. 2 LSA).

196 197

See Goleva (fn. 169), p. 292. The possibility to conclude a preliminary contract by the later conclusion of a gratuitous contract, is restricted by art. 226, p. 1 OblCA; see Takov, Chr., Predvaritelni dogovori-nyakoi neizyasneni aspekti, Turgovsko pravo, 1 / 2004, p. 32-62.

5. Consensual system of transfer of ownership

415

5.5.3. Acquisition of ownership by a judicial act (court order) Property may also be acquired by virtue of a constitutive judicial decision. Within the context of transfer of movables,198 these are: the decision to declare a preliminary contract as subsequently concluded (art. 19, p. 3 OblCA) and the decision to grant movable property, intended for the education and care of children, to one of the spouses (art. 28, p. 2 FC). The action to declare a preliminary contract as concluded is one special way of acquiring ownership of property. The court decision substitutes a final agreement between the parties and directly transfers the ownership of the property that is the subject of the preliminary contract (art. 19, p. 2 OblCA).199 The second action that can lead to a court order that serves as title to acquire ownership, concerns property that was co-owned by spouses by virtue of marriage, and that at the moment of the divorce was intended for the education and care of the children (art. 28, p. 2 FC). This claim can be raised one year after the custody over the children has been awarded.200

5.5.4. Validity of the obligation and its effects on the transfer of ownership As earlier examined, the derivative mode of acquisition presupposes the existence of a valid judicial act that can transfer the right of ownership to the transferee. The derivative character of the contractual acquisition has the following consequence: if the transferee acquires ownership and the transfer is avoided, this will lead to the voiding of the title of the transferee. The applicability of this principle, also called resolute iure dantis resolvitur ius accipientis, is essentially restricted under Bulgarian law by the possibility to acquire ownership over movables through the original mode of possession in good faith. The different defects of the legal transaction that can affect the retroactive effect of the transfer of ownership should be briefly mentioned here.

198

199 200

Within the context of immovable property, there are two other kinds of court decisions that could transfer ownership in a derivative way. The first of these deals with the acquisition of ownership of immovable property, by buying back the share of a co-owner that has been sold without having been offered to the other claimant-coowner (art. 33, p. 2 OA). The second constitutive court decision represents a claim to provide a share of the inheritance of immovable property (art. 349 CPC). Stalev (fn. 38), p. 618 et seq. See also Nenova, L., Semeyno pravo na Republika Bulgaria, Sofia 1994, p. 219.

Bulgaria

416

(a)

Void contracts

Void legal transactions suffer from severe defects and do not have the legal effect that is intended by the parties. The grounds for such nullity are: infringement or circumvention of the law; violation of bonos mores; the object of the agreement is a future inheritance; the contract has an impossible objective; lack of consent; lack of form prescribed by law; lack of a causa; and a simulated contract (art. 26, p. 1, 2 OblCA). The void transaction does not produce any legal effects, and therefore anyone may rely on the defect of the legal transaction. Void juridical acts can not be cured so as to result in a valid title of transfer of ownership. The nullity of a void contract does not need to be declared by a court in order to lack any legal effects.

(b)

Voidable transactions

Voidable transactions (art. 27-33 OblCA) are valid until the person entitled to claim the avoidance of the transaction raises the claim. After claiming avoidance, the transfer of title shall be regarded as extinguished by the retroactive effect of the avoidance ex tunc (art. 34 OblCA). Grounds for the avoidance of legal transactions include: lack of capacity of a contracting party, fraud, mistake, threat and unfair exploitation. The right to claim the avoidance is precluded after a period of three years (art. 32, p. 2 OblCA). Here only two grounds of avoidance will be examined: lack of capacity of a contracting party and mistake. Article 27 OblCA provides that contracts concluded by persons who are incapable, or concluded by their legal representative but counter to the requirements of law, are voidable. This rule is applicable only to legal transactions that are not sanctioned by art. 73, p. 3 FC, which declares all gratuitous contracts of a incapable minor person, such as donation, loan for use, or security, are void. The mistake is another ground of voidance of a legal transaction. According to art. 28, p. 1 OblCA, mistake can be a wrong comprehension of the circumstances.201 A distinction must be made between mistake with regard to the object of the legal transaction and mistake with regard to the person of the contractual party. The former mistake may refer to characteristics of the object of the transaction, e.g. the material from which the goods are made. The mistake may also refer to the legal characteristics of the object of the transaction, e.g. as to which restrictions are foreseen for the construction work on the real estate etc. 201

See Pavlova (fn. 2), p. 168.

5. Consensual system of transfer of ownership

417

A mistake regarding the personal characteristics of the co-contractual party is only a ground for voidance of the legal translation if the personal characteristics of the co-contractual party were of significant importance for the conclusion of the contract. The typical case involves a person who at conclusion of a service contract placed importance in the special abilities of the other contracting person, such as a doctor, lawyer etc., and mistook the other contracting party as having these abilities. However, such matters as the solvency of the other contractual party can not be regarded as grounds for claiming the voidance of the legal transaction.202 A mistake of calculation is also not a ground for avoidance, but may serve as a ground to correct the mistake (art. 28, p. 2 OblCA).

(c)

Termination of a contract

Under Bulgarian law, a bilateral contract203 may be terminated as a result of the non-performance of a contractual party. There are two basic requirements for termination: 1) termination can be exercised only as a last legal remedy,204 therefore the terminating party has to give fixed additional time to the other party to perform, 2) the termination must be exercised by the terminating party through notice addressed to the debtor (art. 87, p. 3 OblCA). The only exception to these requirements for a non-judiciary termination concerns contracts that have transferred, established or precluded a property right in an immovable (art. 87, p. 3 OblCA). The legal effect of termination is retroactive (art. 88, p.1 OblCA). However, this is not the case if the terminated contract was a long-term contract or a contract of periodic performance. The retroactive effect has the consequence that the parties have to return everything that they received in conjunction with the contract. The legal ground to retrieve the performed money or property is a claim of condictio indebiti (art. 55, p. 1 OblCA). As to whether a party shall retrieve the property, the restitution rule of art. 57 OblCA is applicable. If the termination has to be proclaimed by a court, the restitution of the property can not be awarded by the court ex officio, but only upon application therefor by one of the parties.205

202

203

204 205

For further details on the non-termination of the agency on this ground, Takov, Chr., Dobrovolnoto predstavitelstvo, Sofia 2006, p. 418. Unilateral contracts such as donation may not be terminated, cf. Decision nr. 1267 / 99 of the Supreme Court of Cassation, 2nd civ.ch. See Interpretative Decree nr. 3 / 1973 of the Supreme Court, Plenum. Decision nr. 65 / 81 of the Supreme Court, General Assembly of the civil chambers.

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(d)

Retroactive effect of the resolutive condition

The contractual parties are free to make their legal relationship subject to a resolutive condition (art. 25, p. 1 OblCA). An example of this legal situation is the typical case where a person makes a donation (e.g. pair of very expensive golden earrings) under the resolutive condition that, if the donee does not marry the son of the donor, the contract shall be terminated.206 If the condition is triggered (the woman does not marry the son of the donor), the title of ownership shall be regarded as terminated due to the retroactive effect of the triggered resolutive condition (art. 25, p. 2 OblCA).

5.6.

Registration

Certain kinds of movable property, such as ships, aircrafts and cars, are subject to specific registration regimes, which can influence the form of the legal transaction and the transfer of certain proprietary rights. Thus, this has to be considered at this point.

5.6.1. Registration of vessels The registration of vessels has no effect on the transfer of the right of ownership of a ship. The registration of the ownership has only a declarative nature. However, art. 47, p. 1 MSC provides that the transfer of ownership of a vessel, or a vessel under construction, may only be opposed against third parties after registration in the ship register. It is sufficient for the acquisition of the right of ownership of a ship if the juridical act that transfers the ownership of the vessel fulfils the form requirements posed by law. With regards to ships, the requested form is notary validation of the signatures (art. 46, p. 1 MSC). This is not the effect with regard to ship mortgages. The establishment of the mortgage and the following registration has a constitutive legal effect (art. 47, p. 2 MSC). The ship register is a public register.207 It is kept by the state Agency “See Administration”.

206

207

The example is taken from Decision nr. 1212 / 1994 of the Supreme Court, 4th civ. ch. See Statutory instrument nr. 1 from 10.1.2003 about the Registrations in the ship register, OJ nr. 7 from 24.1.2003, latest amendment OJ nr. 91 from 10.11.2006.

6. “Selling in a chain”

419

5.6.2. Registration of aircrafts Similar to the registration of ships, the registration of aircrafts has no constitutive effect on the transfer of ownership. Furthermore, the form requirements for the transfer of aircrafts are even lower. The juridical act that transfers the ownership of the aircraft is to be merely in written form (art. 23, p. 1 CAA). As with ships, the acquisition of the ownership is opposable against third persons only if the transfer has been registered in the aircraft register (art. 23, p. 2 CAA). Just like the establishment of a ship-mortgage on a vessel, the registration of the aircraft-mortgage is required in order to have a legal effect (art. 23, p. 4 CAA).

5.6.3. Registration of motor-vehicles The regime of registration of cars in Bulgaria is not connected with the transfer of ownership of other property rights, as opposed to some other jurisdictions. The transfer of ownership of a registered motor-vehicle requires written form with notary verification of the signatures of the parties (art. 144, p. 2 RTA). However, ownership may also be transferred by mere written form regarding motor-vehicles that are not registered.

6.

“Selling in a chain”

“Selling in a chain” implies that seller A delivers goods directly to buyer C, in accordance with his sale contract with B. C shall acquire ownership of the goods simply by the conclusion of the contract with B, if the goods already have been individualized (art. 24, p. 1 OblCA). If the object of the sale contract is generic goods, the transfer of the right of ownership and the risk will take place in connection with the individualization or delivery of the property to a forwarder or a carrier (art. 24, p. 2 OblCA). If the contract between A and B is void, has been voided by one of the parties, or terminated ex tunc, the principle resoluto iure dantis resolvitur ius accipientis will merely have a restricted application due to the legal effects of art. 78 OA. A has only a condictio indebiti claim under art. 55, p. 1, alt. 2, against the buyer B. In event that the legal transaction B-C was void, became voidable, or has been terminated by one of the parties, B can reclaim the property sold either through the condictio indebiti claim, or by virtue of vindication.

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In the situation where both contracts are void, voidable or terminated due to the non-performance of the parties (art. 87, p. 1 OblCA), A can reclaim the property directly with the help of a vindication claim. Another possibility is condictio indebiti claims between A-B and B-C. Regarding the fact that A, as owner of the property, could vindicate it from C, there is no possibility for A to raise an unjustified enrichment claim directly against C under art. 59, p.1 OblCA (the general unjustified enrichment claim). This is the result of the established principle of unjustified enrichment in Bulgarian law that the “disenriched” person can claim, under art. 59, p. 1 OblCA, only if there is no other legal remedy against the person enriched. The rule of art. 59, p. 2 OblCA is more popular as a “principle of subsidiarity of the general unjustified enrichment claim”.

7.

Transfer of acquisition by means of indirect representation

The question as to when property is acquired by the indirectly represented person is by most scholars regarded as the same moment when the indirect representative concludes the contract with the third person.208 Hence, the majority of authors209 admit that the rights, which the indirect representative has acquired from the third person, have to be regarded as rights of the principal. However, this point of view can not be fully supported by virtue of a simple analysis of the statutory texts. Art. 292, p. 2, s. 1 OblCA provides that the rights and the obligations, which arise by virtue of a legal transaction between the indirect representative and the third party, have direct effect for the indirect representative if the representative acts in his own name. The same applies under art. 349, p. 1 of the Commercial Act. Hence, the rights of the representative have to be transferred by another separate legal transaction to the principal, in order to be exercised against third persons (with regards to commission agency contracts, see art. 349, p. 4 CA). However, the majority of legal scholars210 accept the view that the principal can (with exceptions under art. 349, p. 4 CA) acquire the property directly from the third party, e.g. in case of a mandate between the representative and the principal. 208

209

Against this opinion is the text of art. 292, p. 2 OblCA, by which it has to be understood that there is a necessity of a transferring legal transaction between the represented person and the indirect represent, see Takov, Chr. Personalnata simulaziya-vidove, hipotezi, sravnenie s drugi pravni figure, Yuridicheski svyat, 2 / 2005, p. 1-28 (cited after the online edition of the article). See Kassabova, K., Turgovski predstavitel, Sofia 2005, p. 141 et seq.

7. Transfer of acquisition by means of indirect representation

421

The rights of the principal are protected against the creditors of the indirect representative under art. 292, p. 2, s. 2 OblCA, which provides that the rights of the principal can be opposed against creditors of the representative in good faith if the contract of the mandate has a verified date. This principle also applies without restriction to the creditors of the commission agent (art. 349, p. 2 CA). This protection of the interests of the principal can not be understood as a principle of complete transfer of the rights that the indirect representative acquired by virtue of the legal transactions with the third party. More or less the protection granted in this case is focused on certain legal relationships between the principle and the indirect representative, or between the principle and some third persons. Put another way, the protection granted by the law in this situation can not be classified as a full, absolute protection awarded within the effect of direct acquisition of property rights, but a partial and a relative protection against certain third-persons as the creditors of the indirect representative. The rights acquired by the indirect representative on behalf of the principal may, with regards to an agency enterprise, be exercised by the principle only if the indirect representative has already transferred the rights to the principal. If not, they are still to be regarded as rights of the indirect representative. For example, if the contract of agency has no verified date it can not be opposed against creditors in good faith of the indirect representative (arg. from art. 292, p. 2, s. 3 OblCA). The complexity and the contradictory nature of this issue support an argument for the ad hoc proprietary effect of the conclusion of the legal transaction with the third person regarding the patrimonium of the principal. The first argument for the lack of necessity for the indirect representative to transfer the rights to the principle considers a problem of Bulgarian tax law, which will not be discussed here but which relates to the taxation of both legal transactions. Legal scholars211 are concerned with the double taxation of the transactions, between the representative and the third party, and between the representative and the principal. Notwithstanding the substance of this argument, it is not at the centre of a civil law discussion. As mentioned above (the electricity example), it is often inappropriate to try to solve problems in other legal areas with the instruments of private law. 210

210

211

Vassilev (fn. 45), p. 378, Venedikov (fn. 20), p. 157. The jurisprudence is quite controversial on this topic; against this point of view, see Decision of the Appeal Court Sofia in civ. m. 1763 / 2002. See Kassabova, (fn. 209), p. 141.

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The second argument refers to the notion that the principal should be protected in any case against third persons, when the indirect representative alienated the acquired movable property by transferring it to another person. The principal, as an “owner ex lege”, has to prove that these persons were not in good faith at the time of the acquisition of possession of the property. In this case, the owner of the property should be protected by granting him the possibility to vindicate from persons who are in bad faith.212 However, the legal regulation of the mandate contract can not lead to the conclusion that the legal transaction with the third party automatically affects the acquisition of ownership of the property by the principal. This is not the policy decision covered by art. 292, p.2, s. 3 OblCA. Bulgarian civil law states clearly that in case of a non-verified date of the contract of mandate, it can not be opposed against third persons in good faith.

8.

Insolvency of the transferor or transferee

8.1.

General issues

8.1.1. Termination of contracts by the insolvency administrator The issues of insolvency proceedings are regulated in Part IV of The Commercial Act. Regarding the specific position of the debtor in insolvency proceedings, the insolvency administrator can exercise the right to terminate each contract of the insolvent debtor that has not been fulfilled or has been fulfilled only partially (art. 644, p. 1 CA). This termination right of the insolvency administrator concerns all kinds of contracts concluded by the debtor, such as commission contracts, commercial sale contracts, rental agreements etc. The termination of the contract occurs without bringing a claim, merely by notice of the insolvency administrator to the contractual party that the contract should be regarded as terminated after the expiration of a period of 15 days. The other contractual party is entitled to inquire whether the contract is to be regarded in the future as terminated or valid. In this case the insolvency administrator must answer within 15 days after receiving the inquiry (art. 644, p. 3, s. 1 CA). If there is no answer from the insolvency administration in the period provided by law, the contract between the insolvent debtor and the third party has to be regarded as terminated. 212

Vassilev (fn. 80), p. 379.

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423

If a contract of periodic performance has not been terminated by the insolvency administrator, the contractual party can not request payment for deliveries or rents matured before the opening of the insolvency proceeding (art. 644, p. 5 CA).

8.1.2. Legal remedies of the creditors in order to avoid contracts between the debtor and a third party Every creditor of the insolvency estate can request the avoidance of contracts or other dispositions of the debtor, if these are considered a disadvantage to the creditors of the insolvency estate. The claims used in order to protect the interests of the creditors are 1) the actio Pauliana and the 2) special claims under art. 647 CA. The actio Pauliana (art. 135 OblCA) can be raised by the insolvency administrator or a creditor of the insolvency estate. In these proceedings the claimant has to prove that the insolvent debtor made a disposition that is classified as a disadvantage to the insolvency estate and made with the intention of the debtor to reduce the size of the insolvency estate.213 In case that the legal transaction was gratuitous, the claimant has to also prove the knowledge of the third person that the interests of the creditors, as a consequence of the disposition, would be injured.214 Art. 135, p. 2 OblCA provides that the knowledge of the disadvantage shall be presumed if the third party is a spouse, relative by blood in direct line, brother or sister of the debtor. The jurisprudence extends this presumption to persons who are members of the organs of a legal person that is a party to the transaction and who are spouses or relatives of the debtor.215 A specific method of voidance of dispositional acts of the insolvent debtor represents claims under art. 647 CA. The competence to bring these claims belongs to the insolvency administrator. A creditor of the insolvency estate can raise a claim under art. 647 CA as well, if the insolvency administrator failed to do so, in order to accrete the insolvency estate (art. 649, p. 1 CA). In contrast to the actio Pauliana, this claim can be raised within one year after the opening of the insolvency proceedings against the debtor and offers the insolvency administrator and the creditors an easier way to avoid dispositional transactions of the debtor that affect the size of the

213 214 215

For further details, see Madanska (fn. 40), p. 87. Decision nr. 345 / 99 of the Supreme Court of Cassation, 2nd civ. ch. Comp. Decision nr. 120 / 00 of the Supreme Court of Cassation, 5th civ. ch.

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insolvency estate. These are the legal transactions that could be voided under art. 647 CA: (1) Donation made to a “connected person”216 within three years before the opening of the insolvency proceedings against the debtor, unless it involves a usual gift (art. 647, nr. 1 CA), (2) Gratuitous transaction made to a third person within two years before the opening of the insolvency proceedings, (art. 647, nr. 2 CA) (3) Non-gratuitous transaction made within two years before the opening of the insolvency proceedings against the debtor, if the value obtained by virtue of the transaction is relatively small in relation to the contra-performance (art. 647, nr. 3 CA). (4) Redemption of a debt within three months before the opening of the insolvency proceedings against the debtor through the transfer of ownership of property, if the return of the property could be considered an augmentation of the sum realizable from the insolvency estate (art. 647, nr. 4 CA). (5) Establishment of a mortgage or a pledge right, or another security, for securing a debt within one year before the opening of the insolvency proceedings, if the debt had not been secured before (art. 647, nr. 5 CA); if that person in favour of whom the security has been given is a shareholder or holder of a share in a partnership, the possible period for raising the claim is two years (art. 647, nr. 6 CA). (6) Transaction concluded by a connected person to the debtor within two years before the opening of the insolvency proceedings against the debtor (art. 647, nr. 7 CA).

The specific claims under art. 647 CA are merely a method to make more simple the voidance of the legal transactions of the debtor that could be regarded, in respect to the insolvency estate, as a disadvantage. There is no difficulty for the insolvency administrator to raise a claim, based on art. 135 OblCA, within the prescription period of five years, if the claim under art. 647 CA is already precluded. The effect of voiding of the transaction under art. 647 CA involves the duty of the third party to return the property acquired by the transaction to the insolvency estate. If the property given to the third person is not part of the insolvency estate, or the third person has to return money, the third person becomes a creditor of the insolvency estate (art. 648 CA).

216

Defined in § 1 CA.

8. Insolvency of the transferor or transferee

8.2.

425

Insolvency of the transferor

8.2.1. Disposition of a movable before the opening of the insolvency proceedings against the transferor If the movable property has been acquired by the transferee before the opening of insolvency proceedings against the transferor, the transferee is protected by the acquisition of property. The transaction could be voided only if the prerequisites of art. 647, nr. 1, 2, 3, 4, 7 CA, or of the actio Pauliana, are present. In any other case the transferee could reclaim the movable property that has been included in the insolvency estate according to the principle that movable property owned by third persons can be reclaimed under art. 637, p. 5, nr. 1 CA. The transferee can be considered protected as well if the sale of the movable property occurred before the opening of the insolvency proceedings against the transferor, but the transferor retained ownership. In this situation the obligation of the transferee will not be transformed, according the provision of art. 617, p. 1 CA, into an obligation still due simply by virtue of the court decision that opens the insolvency proceedings against the transferor. The obligation to pay the price (subject to any condition precedent) will fall due according to the provisions of the law of obligations, and not according to the special regime created by insolvency law.217 In the case where the movable property is not yet manufactured, the transferee is not protected under present insolvency law due to the fact that the ownership of future property will be acquired at the moment of its manufacturing. If this does not precede the opening of the insolvency proceeding against the transferor, the insolvency administrator can terminate the contract under art. 644, p. 1 CA. Another situation is the partial manufacturing of movables. The most cited example is the partially manufactured ship. If the act that transfers the ownership of the ship under construction has been registered in the ship register, the ownership acquired can be opposed against the creditors of the insolvency estate (arg. from art. 46, p. 1 CSC). As already stated above (see 7.1.1.), the act that transferred ownership of the property, before the opening of the insolvency proceedings, can be voided by the insolvency administrator or, if he fails to raise the claim, by the creditors of the insolvency estate (art. 647 CA). Regarding gratuitous legal transactions, this could be a unilateral contract, or a transferee to someone connected to the transferor, within three years before the opening of the insolvency proceedings. If the transferee 217

Popova, V., Komentar na Turgovskiya zakon, chast chetvurta-nesustoyatelnost, Sofia 1996, p. 200.

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is not a “connected person” in the sense of § 1 CA, a creditor can bring a claim to void the unilateral legal transaction if was concluded within two years before the opening of the insolvency proceedings (art. 647, p. 2 CA). The subject of that transfer can be any unilateral legal act that transfers ownership: e.g. contract of donation or a will. Widespread in the literature is the opinion that the donation made by the transferor to the transferee, namely the movable property acquired by the transferee before the opening of the insolvency proceedings, should become part of the insolvency estate after admitting the voiding claim by the court.218 This could be applicable as well to the establishment of a foundation by a donation, if the property becomes property of the foundation before the opening of the insolvency proceedings.

8.2.2. Disposition of a movable after the occurrence of the insolvency According to art. 646 CA, all legal transactions that transfer gratuitously or non-gratuitously property of the debtor’s patrimonium after either the occurrence of the insolvency, or the incurrence of excess liabilities over assets, are to be considered void in regard to the creditors of the insolvency estate. These could be gratuitous legal transactions that transferred ownership of property to the transferee after the occurrence of the insolvency (art. 646, p. 2, nr. 2 CA) or non-gratuitous contractual transactions that are to be regarded as gravely exceeding the value of the counter-performance of the other contractual party (art. 646, p.2, nr. 4 CA). Legal transactions alienating property from the insolvency estate should be considered as relatively void as to the creditors of the estate (art. 646, p.1, nr. 3 CA).

8.3.

Insolvency of the transferee

If the insolvency proceedings against the transferee of the property have been opened, and the contract that transferred ownership has been concluded before the opening of the proceedings, movable property acquired by the transferee will become part of the insolvency estate (art. 614, p.1, nr. 1 CA). Several problems result when the insolvent debtor has been deprived of the possibility to conclude legal transactions without the consent of the 218

Popova (fn. 217), p. 151.

8. Insolvency of the transferor or transferee

427

insolvency administrator (art. 635, p. 1, s. 2 CA). The main one is whether the debtor can conclude legal transactions without the consent of the insolvency administrator when the conclusion of the legal transaction depends only on the judgement of the insolvent transferee. This would be the case if the transferee has to conclude a donation contract under burden of further obligation. Some legal scholars regard this situation as not requiring special attention.219 In this case, the opinion prevails that the insolvent debtor cannot be forced to conclude the donation contract under burden, but the insolvency administrator can substitute the consent of the debtor by the way of art. 635, p. 2 CA, which allows the insolvency administrator to conclude the donation contract alone without the participation of the debtor.

219

Popova (fn. 217), p. 153.

Part III: Modes of original acquisition 9.

Acquisition by accession, commixture or processing

9.1.

Accession of movables

9.1.1. Accession into the ground of an immovable Accession is an original mode to acquire the ownership of movable property that becomes an inseparable part of an immovable. Under Bulgarian law objects of the accession are the plants and the buildings connected to the property (art. 92 OA). If there is no other agreement, the owner of the immovable acquires ex lege the ownership of the property that has been used to construct the building or to seed the plants. The first requirement for acquiring the right of ownership of these movables is that the property should be permanently annexed to the ground of the immovable. Only in this case is the accession complete; the movable property has lost its independence and become part of the immovable.220 The second requirement for the original acquisition of property by way of accession is that the plant or the building could not be separated from the immovable property without causing disproportionate damage or costs connected with the extraction of the property. Some authors221 take the view that the extraction of the property returns the ownership to the person who used to be owner of the movable property before it became part of the immovable. This opinion can not be supported due to the argument that the right of ownership can not be lost without a rule of law that expressively so provides. Accordingly, it must be mentioned that the person who had the ownership of the materials that were used for the construction of the building annexed to the immovable has an obligatory claim based on unjustified enrichment against the owner of the immovable.222 This could also be the case in a third party relationship. If the materials were owned by third person C, who has not been paid for the materials by the constructor of building B on the immovable property of A, C can raise 220 221 222

Boyanov (fn. 24), p. 307. Comp. Venedikov (fn. 19), p. 212. See Venedikov (fn. 19), p. 212; Vassilev (fn. 80), p. 600.

9. Acquisition by accession, commixture or processing

429

an unjustified enrichment claim, based on art. 59, p. 1 OblCA,223 against the owner of the immovable who acquired ownership by accession. Even if the building is destroyed, C can claim only that which can be attributable to the enrichment of A. The provisions of art. 92-97 are not mandatory and the parties can waive them by contractual agreement.224

9.1.2. Accession into the main movable Art. 97 of The Ownership Act provides similar grounds for acquisition – the so called “accession of another’s property into the main property”. The property that was owned by another must be accessed into the main property in such a way that it is not possible to separate them without destroying the property accessed into the main property. By the accession into the main property, the good faith of the owner of the main property is not a requirement for the acquisition of ownership of the property accessed. Which property should be regarded as the “main” property is a factual question taking into consideration the value and the importance of both properties. In contrast to the accession into the ground of an immovable, accession into the main property can be made into movable property as well. The owner of the main property has to reimburse the accessed property owner (art. 97 OA).

9.2.

Commixture

Commingling is not ruled by Bulgarian property law. If two goods of the same kind are mixed together, e.g. wine, oil, or straw etc, the commingled property will be co-owned by both owners of the formerly separate properties. Legal doctrine does not regard commingling as a case that can be subsumed under the rule of art. 97 OA.225

223

224 225

The general unjustified enrichment claim of art. 59, ß. 1 OblCA, does not require that the enrichment has to still be present at the moment when the claim has benn made against the enriched person, see Vassilev (fn. 80), p. 598. See Stavrou (fn. 24), p. 539. This opinion by Boyanov (fn. 24), p. 310.

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9.3. Processing Processing is an original mode226 to acquire ownership of movable property, if the person that produced the new property did not know that the materials were owned by another person and if the value of the work is more significant than the value of the materials of which the new property has been produced, e.g. a sculpture is made from granite owned by another person. According to art. 94 OA the requirements of processing are: (1) The property has to be produced as new property that has not been ordered by the owner of the material by means of a contractual obligation; (2) The property has to be regarded as new property, in other words, as having new features in comparison with the materials from which it has been produced; (3) The value of the work invested in producing the new property has to be higher than the value of the materials from which it was made; (4) The person who produces the new property has to do so in good faith concerning the fact that the substantial materials are owned by another person. If one of these four elements of processing is not present, the owner of the materials acquires the ownership of the new property (art. 94, p. 1 OA). In case the property has been produced from materials owned by several persons, the owner of the main property becomes owner of the whole new property (art. 95, p. 1 OA). The question of which of the materials is to be considered the main material, depends on the value and the importance of the material for the production of the new property. In the case where none of the materials owned by different persons can be regarded as the “main material”, the new property will be co-owned by all former owners of the materials. (art. 95, p. 2 OA). The relationship between the former owners of the materials and the new owner of the property has to be resolved under principles of the unjustified enrichment law.

9.4.

Co-ownership of the commixed or the processed movable

The shares of co-ownership of commixed property, or property that was the object of processing, are deemed to be equal, unless the opposite is proven (art. 30, p. 2 OA). 226

It is possible as well that the producer of the new asset has knowledge that the material is owned by another person, and the owner about the processing of a new asset. In this case Boyanov regards the acquisition of ownership as a derivative, see Boyanov (fn. 24), p. 314.

10. Good faith acquisition

10.

Good faith acquisition

10.1.

Field of application

431

The good faith acquisition, under Bulgarian property law, is an original mode to acquire ownership of movable property and bearer instruments from a transferor who is not an owner. The rule is in natural conjunction with the provision of art. 24, p. 1 OblCA, governing the proprietary-obligatory effect of contractual obligations. Article 78 OA (1) A person who acquired non-gratuitously the possession of movable property or a bearer instrument on legal grounds, even though not from the owner, but without knowledge of that fact, shall acquire the ownership. The same rule shall also apply to acquisition of other real rights in movable property. (2) The owner of lost or stolen movable property may seek such property from a bona fide possessor within three years from the moment in which it is stolen or lost. This rule shall not apply when the possessor has acquired the property from a state or municipal enterprise.

Due to the proprietary-obligatory effect of the contract of transfer, the transferor can lose ownership without having delivered the movable property to the transferee. If the transferor sells the property a second time (double sell) to a third person, this person shall acquire ownership of the property despite the fact that the property has been acquired from a non-owner. The rule of acquisition by possession in good faith is a corollary of the derivative principle of transfer of property, introduced as an original mode of acquiring ownership regarding the security of property in civil intercourse.227 The scope of art. 78 OA encompasses situations where the transferee has never been owner of the movable property or the bearer instrument. In the case where a person has acquired tangible property by virtue of a contract that later has been voided or terminated with retroactive effect, the title must be regarded as non-existing and the transferee will not be able to refer to art. 78, p. 1 OA.228 The acquisition of certain movable property is restricted and does not fall within the field of application of art. 78 OA.

227

228

On the history of the rule “en fait des meubles possession vaut titre”, see Venedikov (fn. 19), p. 203. This represents an uniform opinion, cf. Boyanov (fn. 24), p. 304, Tadjer (fn. 53), p. 159.

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10.1.1. No acquisition in good faith of lost or stolen movables According to the provision of art. 78, p. 2 OA, lost or stolen property can not be acquired originally by possession in good faith. With “stolen property” should be understood only movable property that has been the object of the criminal offence of theft (art. 194 PC) or robbery (art. 198 PC).229 “Lost” is tangible property that is owned by a person who has lost the possession of it and is not aware of its location. Another person who has located such a movable has the duty to return the property to the owner or to the person who has lost it, or otherwise hand over the lost property at the relevant ‘Municipal Property’ office (art. 88, p. 1 OA). The owner of the lost or stolen property can raise a vindication claim within a period of three years after the third person acquired the possession of it (art. 78, p. 2, s. 1 OA). After the expiration of the time limit of three years, the possessor in good faith becomes owner of the tangible. In contrast to the possessor in good faith, the possessor in bad faith can not become owner of the lost or stolen property even after the expiring of three years, but if the possessor in bad faith sells the tangible property to another person afterwards, the new possessor, if in good faith, will acquire ownership of the property stolen or lost.230 The exception of art. 78, p. 2 does not apply if the acquiring possessor in good faith bought the movable property from a state or a municipal enterprise.

229

230

Boyanov (fn. 24), p. 304. Only criminal offences that incorporate the illegal dispossession of the property from the owner can be regarded as restrictions on the applicability of the acquisition of good faith, see Decision 1703 / 60 of the Supreme Court, 1st civ. ch. In this case a lessee sold the movable property, which had been owned before the good faith acquisition of a third party, by the lessor – no restriction here of the good faith acquisition due, to the fact that the sale of another’s property not acquired by theft or robbery. Boyanov states that delege ferenda the protection of the restriction on good faith acquisition should be extended to other criminal offences, e.g. misappropriation as in the case cited above. This point of view has not to be accepted without any further arguments. The legislator must clearly separate the criminal offences in which the owner has been dispossessed directly by the criminal and situations in which the offence has been committed by a detentor of the property. Regarding the scope of the different legal policies behind both situations, a political decision should be taken carefully. Boyanov (fn. 24), p. 303.

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10.1.2. No acquisition in good faith of movables, the transfer of which requires a specific form by virtue of law Under the legal regime of good faith acquisition, only tangible property and bearer instruments that do not require a specific form for their valid transfer may be acquired (art. 78, p. 1, s.1 OA). As already mentioned above, there is no requirement of a notary form for the transfer of movable property. The sole two exceptions are registered vehicles (art. 144, p. 2 RTA) and ships (art. 46, p. 1 MSA), which require written form with notary verification of the signatures.

10.1.3. Applicability of the rule of art. 78 to other specific movables With regards to several specific kinds of movable property acquisition in good faith is subject to certain exceptions. For bearer instruments, acquisition is not governed by the requirement of good faith, if a third person acquires possession of a stolen or lost instrument. Rather, merely the acquisition of possession establishes ownership for the third party (arg. from art. 78, p. 2 OA). In order to protect the owner of the bearer instrument, the legislator has created a special regime that governs the document that embodies the rights of the bearer instrument (art. 560-568 CPC). The protection provided by that regime may also be relied upon by the owner of a bearer instrument who has lost the possession of it against his will, or if the bearer instrument has been destroyed (art. 560 CPC). But bearer instruments are not the only specific movable property for which art. 78 OA has a limited, or any, application. Among most legal scholars,231 it is considered that money can not be the object of good faith acquisition under art. 78 OA. As already stated above, there is no reason not to award a revindication claim in a case where the owner of the money can identify the coins or banknotes. The question whether, in absence of particular provisions on the universitas facti and universitas rerum, it may be held that there are no exceptions for acquisition in good faith of bulk goods and the universitas facti has not been really discussed in the literature on property law. However, it may also be contended that bulk goods and movables, as part of a specific functional entity, can not be regarded as property that could be acquired. This is a grammatical interpretation of art. 78, p. 1 OA (“a movable asset”, “a bearer instrument”). 231

Stalev (fn. 162), p. 9.

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Consequently, a person who has bought a herd of 50 head of cattle that are not owned by the transferor, the possessor in good faith will acquire each head of livestock, if he was in good faith with regard to each of them.232

10.1.4. Acquisition in good faith of a co-ownership share Another untypical situation is the possibility of acquiring a co-ownership share by one who is only entitled to a smaller share than the whole of the object of the transfer. In this case, the transferee will acquire the fractional share that is factually owned by the transferor in a derivative manner; the difference between the share mentioned in the acquisition and the true share of the co-owner will be acquired in an original way due to art. 78, p. 1 OA.233

10.2.

The element of non-gratuity

The Bulgarian concept of acquisition through possession in good faith implies the element of non-gratuity in the legal relationship between the transferor and the transferee. The policy behind this kind of “consideration” of the acquisition of ownership through a possession in good faith, aims at balancing the interests of the third person possessor in good faith and the owner of the movable property. Bulgarian legal scholars consider that if the third party could have the possibility to acquire the right of ownership gratuitously, the owner would not have the possibility to vindicate it. It is not regarded as an appropriate legal policy.234 The requirement of non-gratuity of the transaction between the possessor in good faith and the transferor (non-owner) does not mean that the transferee has to have paid the price for the property. It is sufficient that the good faith possessor has taken on the obligation to pay the price for the movable property. If the price has not been paid yet, the owner of the property, who may claim damages, can apply for a court order in a special procedure to obtain security for a future execution against the transferor, in order to satisfy his monetary claim.235 Other problems are posed where the price paid for the property is merely symbolical and gravely under the market value of the property. In this situation it has to be admitted that the requirement of non-gratuity of the 232 233 234 235

Supported by Venedikov (fn. 19), p. 204, however without further elaboration. On the same opinion Stavrou (fn. 24), p. 628. See Tadjer (fn. 53), p. 186. Vassilev (fn. 59), p. 198.

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transfer act has not been fulfilled and there is no place for acquisition in good faith due to art. 78, p. 1 OA. Unfortunately due to the lack of published case law relevant to the topic, there is no established criteria marking the border between the two groups of cases – when the requirement is fulfilled and when the transaction would not produce a proprietary effect.

10.3.

The requirement of possession

Another substantial element of the acquisition in good faith of the right of ownership, or of the pledge, is the acquisition of possession by the transferee. As stated already, the animus by the acquisition of ownership in good faith has to be differentiated from the animus of the possession, due to the fact that the possessor becomes owner only after acquiring actual control of the movable property. The intention to possess the property as one’s own refers to the immediate acquisition of the property.236 Therefore, under art. 78 OA, there is no room to put the possession into question later on in order to change the possession into possession in bad faith. The possession can be acquired by every mode of acquisition of possession. The only exception is the acquisition of possession based on the so called “constitum possessorium”. This case will further be examined (see 12.4. below). Possession can be acquired from every person who exercises the actual control over the property. This could be the possessor or the mere detentor of the tangible property. The lessee can alienate the ownership of property that is the object of a lease contract, so that a third person in good faith can acquire ownership. The opinion of legal scholars on this point is that the acquisition of possession has to occur with the consent of the transferor of the movable property. It can not be based on the sole acts of the transferee.237

10.4.

The requirement of physical control

10.4.1. The exception of “constitutum possessorium” Possession of property can be acquired by virtue of all kinds of acquisition of possession, with the exception of the instance where the transferor is

236 237

Vassilev (fn. 59), p. 199. Vassilev (fn. 59), p. 199; see also Tadjer (fn. 53), p. 186; Venedikov (fn. 19), p. 206.

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obliged to hold the property after the finalization of the contract that transfers ownership to the transferee (constitutum possessorium). The following illustration may be given. Assume movable property is owned by E, but A, as a possessor of the property, sells it to B, who does not know that A is not entitled to the right of ownership of the property. B asks A if he may pick up the movable the next morning. A agrees. Meanwhile, C, the son of A, borrows the movable with the promise to return it the next morning. On the way to his house, C sells the tangible property to a stranger D, who does not know that C is not the owner of the tangible. In this illustration, merely person D, who is in good faith, can acquire ownership according to art. 78 OA. B never acquired ownership due to the fact that good faith acquisition requires a third person taking control over the property. Even if C had not sold the movable property, bona fide B has no protection238 if the owner E claims the vindication of the property in the meantime. It is not in conformity with the objectives of art. 78 OA.239

10.4.2. Physical control by a third party As considered in nr. 12.4.1, the transferee can not acquire possession of the tangible property by way of the institute of the “constitutum possessorium”. Certainly it is possible to acquire the tangible property if the direct physical control over it is exercised by a third person, who holds it for the transferor. In this case, the transferee can acquire possession directly through the third party if the transferor consents to it. In the illustration above, if B acquires possession from the son of A, C, it will result in the acquisition of the right of ownership.

10.4.3. Delivery of generic goods, object of the good faith acquisition If the contract, on which the acquisition of ownership in good faith is based, represents a distance sale, the acquisition of the possession of the goods (the same moment as acquisition of ownership) is accomplished if the transferor delivers the goods to a forwarder or to a carrier.240

238

239 240

According to the opinions in the legal literature, B would have a vindication claim only if the acquirer E is in bad faith. See Tadjer (fn. 53), p. 184. This is the most common point of view, see Vassilev (fn. 80), P. I, p. 208.

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10.5.

437

Specific circumstances with respect to the transfer

Bulgarian law does not impose any further requirements regarding specific circumstances related to the good faith acquisition of ownership of movables.

10.6.

Good faith acquisition in case of a voidable contract

The “legal ground” under art. 78 OA is a valid juridical act that would have transferred ownership if the transferor was the owner of the alienated movable property. If the juridical act between the parties is void, the possessor in good faith may not acquire ownership of the tangible property due to the defect in the legal ground for the transfer of ownership. But if the legal ground is merely subject to future possible legal effects of avoidance or termination of contract, there is a right of the transferor to change the legal relationship.241

10.7.

Good faith

10.7.1. Object of good faith Good faith, as a subjective element of good faith acquisition, focuses on the question whether the possessor in good faith knew that the transferor had no ownership right in the property. Hence, this principle applies, not only to the acquisition in good faith of the right of ownership, but also to all real rights that can be acquired by a possessor in good faith. The question of whether the lack of knowledge (that the transferor was not entitled to dispose of the movable property) is excusable or not, is not relevant for the acquisition of ownership.242 The lack of knowledge is presumed. The owner of the property must prove that the transferee was in bad faith at the time of the acquisition of the possession.243 241

242

243

This is mentioned as obvious in all property law studies, see Vassilev (fn. 59), p. 199 Venedikov (fn. 19), p. 207. Comp. Vassilev (fn. 59), p. 201. Due to the lack of case law and legal theory on this topic, it is complicated to draw conclusions. It may only be stated that considerations of public policy such as the non-acquisition of the movable property, due to gross negligence of the transferee, which has to be proved by the owner of the property, should be discussed more intensively in the future. Tadjer (fn. 53), p. 186.

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10.7.2. Time-requirement of good faith In contrast to art. 70, p. 1 OA, governing possession in good faith, the good faith requirement of art. 78 has to be assessed with regard to the time of the acquisition of possession and not the time of the conclusion of the contract between transferor and transferee. In view of more complicated contractual transactions, such as permanent delivery contracts, the time at which the acquirer of the goods is regarded to be in good faith shall be considered separately in relation to each delivery of the goods.244 Several problems can be noticed with acquisition through possession in good faith if the parties used an intermediary possessor in good faith to transfer ownership to the final buyer, who could be considered to be in bad faith with respect to the fact that the seller was not entitled to the ownership.245

10.7.3. Presumption of good faith Good faith, the knowledge of the entitlement of the transferor, is presumed. The owner of the movable property has to rebut it in order to vindicate the property from the acquirer. This follows from the presumption of art. 70, p. 2 OA, that possession is deemed to be possession in good faith, if the contrary has not been proved.

10.8.

Property rights of a third person encumbering the movable acquired in good faith

Another aspect of the acquisition of property in good faith is all the real encumbrances of the movable property, e.g. pledge right. This relies upon the principle that third parties can not oppose against the acquirer in good faith to any further extent than against the former owner of the property. Thus, the pledge creditor can not raise a claim under art. 157, p. 2 OblCA

244 245

Vassilev (fn. 59), p. 202. Vassilev considers that in the situation the owner may vindicate the movable property from the possessor in bad faith, who acquired the possession of the property as a second buyer, see fn. 199. This is technically not easily constructed, due to the fact that the intermediary acquired ownership according to art. 78, p. 1 OA and the second buyer of the movable property has to be in good faith only regarding the ownership of the transferor.

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against an acquirer in good faith if the pledge creditor has lost the detention of the movable property. However, the pledge creditor, as one entitled to a “quasi-vindication” claim, can prove that the acquirer was not in good faith and thereby rebut the assumption of good faith.246 Good faith refers to the ownership right of the transferor, nonetheless the possessor in good faith must be in good faith also regarding the existence of the pledge or another real right that encumbers the movable property. If the person who acquired ownership was aware of the existence of the real right, pledge or right of usufruct, that person can not acquire the tangible property without the encumbrances.

11.

Prescription

11.1.

Functions of acquisitive prescription

Bulgarian private law contains the so called “acquisitive” prescription in art. 77, 79 et seq OA. It provides the possibility for a possessor to acquire ownership as result of a long period of possession of the property (usucapio), or the possibility to acquire a real right that corresponds to the scope and content of possession. The main reasons for the introduction of acquisitive prescription into the Bulgarian property law system are two. The first one concerns the necessity to accord the factual situation, which has been changed essentially, with the legal situation. This idea is justified by the fact that a person, who makes no claim for the protection of the legal order during a long period of time, can not enjoy it forever. Hence, the second reason for the existence of acquisitive prescription is more important. It is based on the assertion that the original mode to acquire ownership represents an essential capacity for the new owner to prove the acquisition of the property, i.e. it would be impossible to prove ownership if a person who raises a vindication claim against a possessor of an immovable property is also required to prove that his own transferor was entitled to dispose the property. This is why the practical importance of acquisitive prescription in property law is that it is a means of stability in legal interactions.

246

Venedikov (fn. 19), p. 206, Vassilev (fn. 59), p. 205

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11.2.

Requirements of acquisitive prescription

11.2.1. Restrictions on acquisitive prescription The restrictions on the acquisition of property through acquisitive prescription can be divided into two categories: 1) objective, regarding property that cannot be acquired through prescription, and 2) subjective, in order to exclude certain persons from the possibility to acquire ownership through prescription. The movable property that cannot be acquired through acquisitive prescription is movable property that represents public ownership and is owned by the state and the communities (art. 86 OA). With regard to persons who cannot acquire ownership through prescription, the Ownership Act prohibits acquisition through prescription by persons who have acquired possession of the property as a result of a criminal offense (art. 80, p. 2 OA). Furthermore, there is no possibility for acquisition in this way if the person is validly entitled to ownership of the property by virtue of contract, e.g. contract of sale, donation etc.

11.2.2. Requirement of possession Acquisitive prescription is an original mode to acquire ownership, but only if the person who refers to its expiration was a possessor of the property. A mere detentor can not acquire ownership of the property.247 Bulgarian property law requires of the possessor that his possession should not be acquired by virtue of dispossession of the former possessor by violent means or concealment. It must be underlined that the acquisition of possession by this way could be a hindrance to the acquisition by prescription, but only if the interference continues. This could be a problem for acquiring ownership but only as against the person against whom the interference has been made. Bulgarian property law contains two advantages for the possessor who wants to benefit from acquisitive prescription. The first of these is the rule that an interruption of possession for less than six months does not influence the period of the prescription, if the possession is reacquired within six months after the dispossession.248 247

248

A mere detentor can not acquire the ownership of the property through prescription, see Decision nr. 336 / 58 of the Supreme Court, 4th civ. ch. Decision nr. 319 / 2004 of the Supreme Court of Cassation, 4th civ. ch. In the case the dispossessed person re-claimed the movable property (vehicle) by using the claim of art. 76 OA within the period of six months of the dispossession.

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The other rule in favour of the acquisitive possessor is the presumption of art. 83 OA that provides that the possessor has to be regarded as a possessor for the entire period, if he can prove that he was possessing at the beginning and end of the possession period.

11.2.3. Importance of the bad or good faith of the possessor The acquisitive prescription does not require that the possessor be in good faith. The fact that the possessor is in bad faith can only influence the period of prescription required to acquire the ownership of the property. This principle is only applicable to immovable property. The possessor in bad faith acquires the ownership after a period of 10 years (art. OA). The possessor in good faith can acquire the ownership after a five years period of prescription has expired. The ownership of movable property, regardless of good or bad faith of the possessor, is acquired after five years249 from the beginning of the prescription period.

11.2.4. Addition of the possession of the predecessor The possessor who relies on the acquisitive prescription may add, or tack, the expired prescription period of his own predecessor. Two kinds of possible additions of the predecessor possession must be distinguished.

(a)

Addition of the possession of an heir

An inheritor acquires the possession of the inherited property from the accrual of the inheritance if he has accepted it. In case that the deceased person has been a possessor in good faith, e.g. acquired the possession of movable property by virtue of a contract of donation in good faith, the successor will also be regarded as a possessor in good faith, even if this person obtained knowledge that the transferor of the predecessor was not entitled to transfer the ownership, before the opening of the inheritance (art. 70, p. 1 OA). In the case referred to above, the successor will be able to add the good faith possession of the predecessor, even if he knew about the quality of “non-owner” of the donor before the opening of the inheritance estate. 249

Art. 80 of the Ownership Act: Movable property can be acquired through prescription by uninterrupted possession for five years.

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Contrary, if the predecessor has been a possessor in bad faith, the inheritor shall be regarded as a possessor in bad faith even if this person did not know about the defect in the legal grounds on which the predecessor acquired possession. As already mentioned above, this is not of practical relevance for acquisitions by virtue of prescription of movable property, due to the equivalent prescription period for both kinds of possession.

(b)

Adding the possession of a predecessor who alienated the property

Under the second kind of adding the possession of the predecessor, the acquiring possessor has to acquire possession from the former possessor (art. 82 OA250). The type of possession-acquisition is not of importance, e.g. the acquisition of possession can occur through constitutum possessorium or by traditio brevi manu. Contrary to the adding of possession of the universal successor, the singular successor does not obtain the same “quality” possession compared to the possession of the predecessor. The possession of the transferee may be in good faith, even if the possession of the predecessor was in bad faith. In the example above, the donor can be in bad faith and the donee in good faith. This means that, due to the same prescription periods for acquiring a movable, the donee can acquire the tangible property after five years of possession.

(c)

Common requirements for adding the possession of the predecessor

The common requirements for adding the possession of the predecessor are applicable to both kinds of succession – the universal and the singular. They may be summarized as follows: 1. The possessed tangible property has to be in possession of a person who can not be qualified as an owner of the property: e.g. the possessor can not add the possession of the predecessor if the latter acquired possession by virtue of a void, avoided or ex tunc terminated contract. The possessor that acquired the possession by virtue of a preliminary contract can also not add the possession of the owner of the property. 2. The possession that shall be added has to be regarded as an unbroken chain. If the possessor who wants to rely on acquisitive prescription can

250

Art. 82 of the Ownership Act: The possessor may add the possession of the his predecessor to his own possession.

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not add the possessor of the former possessor, he may also not add the possession of the predecessor of the former possessor. 3. The third common requirement is the non-interruption between the possessions that should be added. If the possession has been interrupted by the possession of a third person, the interruption may not have lasted for longer than six months. 4. Possession that shall be added, has to refer to the same property right, e.g. if the former possessors possessed a mere pledge right, the possessor can only acquire a pledge right through addition of the possession of the predecessor.

(d)

Special requirements for the adding of the possession of a universal or a singular predecessor

If the possessor acquired possession of the property due to a universal succession, the addition of the possession of the predecessor requires that the juridical act, by virtue of which the universal succession occurred, is effective. This involves instances where the will of the former possessor has been declared void or has been avoided, or if the successor is incapable to inherit due to his own “gross ingratitude”. With regards to singular succession, the new possessor must have acquired possession of the property by virtue of a juridical act. The addition of the possession of the former possessor can not take place, if the new one acquired the possession merely by self declaration. Regarding the act in respect to which the possession has been transmitted, it is not necessary that the juridical act shall correspond to a legal ground in the sense of art. 70, p. 1 OA, due to the fact that the possession of the former possessor may be in good faith and the possession of the new one in bad faith.

(e)

The question of “fictitious” succession

As in other Romanic jurisdictions, the question has been raised whether the possessor can add, to his own possession, the possession of a person who does not have the quality of a predecessor. This is the case if a possessor, as a transferor of property, terminates the contract with the transferee and re-acquires possession. In this case, Bulgarian scholars deny the application of the so called “fictitious” succession due to the fact that Bulgarian law does not imply such a fiction.251 251

For further details, see Venedikov (fn. 19), p. 193.

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11.3.

Period of prescription

The provisions governing the acquisitive prescription, due to ex-lege, are mandatory (art. 84 OA in conjunction with art. 113 OblCA). Hence, the possessor and his transferor can not agree upon another prescription period, neither longer nor shorter. In Bulgarian law the prescription period for immovables amounts to five years for acquisitions of immovables in good faith and ten years for acquisitions in bad faith (art. 79, p. 1,2 OA). Movable property may be acquired if the prescription period of five years has expired.

11.3.1. Beginning of the prescription period The prescription period begins with the acquisition of possession by the possessor who wants to acquire the property by virtue of prescription. If this person has to add the possession of the predecessor, the new possessor has to prove the beginning of the former possession. In case that the possession has been acquired through violent means or concealment, the period of prescription begins with the termination of the violent means or concealment. The calculation of the prescription period has to be made under the general rules of calculation of periods (art. 72 OblCA).

11.3.2. Suspension of the prescription period The prescription is running if the possession of the property is regarded as “un-interrupted”. The suspension of the prescription has the consequence that both the periods before and after the interruption of the prescription have to be added. The suspension of prescription relieves the owner of the burden of vindicating the property from the possessor. In some cases the owner will have an interest in vindicating despite the suspension of the prescription. The most widespread situation is the suspension of the prescription between spouses who live separately from each other, but who are not divorced yet. In this case, the spouse who is the owner of the property should vindicate the property from the other spouse in order to hinder the acquisition of ownership of the fruits of the property. In particular, the prescription is suspended in the following instances (art. 84 OA refers to art. 115 OblCA):

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(a) Between children and parents as long as the latter exercise parental rights (art. 115, l. “a” OblCA). If one of the parents loses custody by a court order, the prescription begins to run; (b) Between persons under guardianship or custody and their guardians or custodians as long as the guardianship or custody lasts (art. 115, l. “b” OblCA); (c) Between spouses (art. 115, l. “c” OblCA); (d) For claims of persons whose property is placed under trusteeship by operation of law or a by court ruling, against the trustee as long as the trusteeship lasts(art. 115, l. “d” OblCA); (e) For claims for damages of legal entities against their managers as long as the latter are in office (art. 115, l. “e” OblCA); (f) For claims of minors and persons under judicial disability for the period of time during which they have no appointed legitimate representative or custodian and six months after such a person is appointed or after the incapacity ends (art. 115, l. “f” OblCA); and (g) The prescription is suspended during the court proceedings between the possessor and the owner, if the owner has raised a vindication claim against the possessor (art. 115, l. “g” OblCA). From a strict interpretation of art. 115, l. “g”, one could hold that the period of prescription continues to run after the decision of the court on vindication (in connection with a proprietary claim) has been rendered, if the claim is admitted. However, the main contention in the literature suggests the result following such a court decision is not suspension of the prescription, but interruption of it. That is derived from the provision of art. 116, l. “b” OblCA (see also 11.4.3.), which obviously collides with the provision of art. 115, l. “g” OblCA. Thus, if the vindication claim is rejected, the prescription is to be considered as neither suspended nor interrupted. The suspension of the prescription in this case is to be required because of the fact that after the interruption of the prescription a new prescription period shall begin to run (art. 117, p. 1 OblCA). The suspension of prescription prevents the possessor from being disadvantaged by a new prescription, which should have been running under art. 117, p. 1 OblCA during the long court proceedings. This is the aim of art. 115, l. “g” OblCA. The grounds for the suspension of prescription are listed exclusively in art. 115 OblCA. The sole exception is the possibility to introduce a moratorium orientated to suspend a prescription period by virtue of a statutory act.252

252

For further details, see Vassilev (fn. 59), p. 235.

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11.3.3. Interruption of the prescription period The acquisitive prescription may be interrupted before the entire period of the prescription has come to an end and the prescription period will be unaffected by the interruption: the period is regarded as irrelevant with regard to the acquisition of the property. According to art. 84 of OA, in conjunction with art. 116 OblCA, the grounds for the permissible interruption of the prescription are numerus clausus. No other acts can be considered grounds for interruption of the prescription. Notary invitations, notifications that the owner has given to the possessor, do not interrupt the prescription. The most important ground of interruption of the prescription is raising a claim in court (art. 116, l. “b” OblCA). It is sufficient that the service of process is delivered before the period of prescription has expired. If the claim is rejected by the court, the interruption of the prescription is considered not to have occurred. The interruption can also be, on rare occasion, the result of pleading of an objection in a court proceeding. An example therefor is an objection of the owner that aims to void the juridical act that is the grounds for the possession in good faith of the possessor. In this situation, the only way to benefit from the period of the acquisitive prescription will be the opportunity to plead acquisition by prescription due to a possession of bad faith (period of ten years). Another ground for the interruption of the prescription is the executive proceedings253 levied on the property (art. 84 OA in conjunction with art. 116, l. “c” OblCA). In this case the prescription, which advances in favour of the possessor between the date of the court decision and the beginning of the executive proceedings, is interrupted. In contrast to the situation where the prescription has to be interrupted only if the court affirms the right of the claimant, the beginning of an executive proceeding over the property leads always to interruption of the prescription period.254 Even if the proceeding acts in the case of levying execution over the property have been annulated ex tunc, there will be interruption of the period of prescription.

11.4.4. Legal remedies of the former owner against the acquirer With the acquisition through prescription, the former owner of the property looses the ownership of the property. 253 254

See also art. 424 et seq. CPC. Stavrou (fn. 24), p. 915.

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The former owner can merely claim the fruits of the property if the possessor was in bad faith during the prescription period, based on the fact that a mala fide possessor can not acquire the fruits of the property by virtue of art. 78 OA. The possessor is thereby in bad faith and can not refer to legal grounds. The mala fide possessor must return the fruits that he extracted during the period of the prescription. All other fruits extracted before the prescription period of five years, have to be regarded as acquired by the possessor in bad faith due to the five year prescription under art. 80, p. 1 OA. If the fruits of the property are civil fruits, such as rent amounts, the bad faith possessor has to return only those rents with regards to which the prescription period (right to performance) has not yet expired. The aforementioned is also applicable to claims based on unjustified enrichment or tort law. At this point it has to be mentioned that if the acquirer in good faith paid a below-market price for the object of the transfer, but which price could not be regarded as a “gratuitous” transfer (see also 10.2.), the true owner could not make an unjustified enrichment claim against the transferee, due to the security function under art. 78 OA.

11.4.5. Real rights and charges on the movable The acquisition by virtue of prescription is an original mode to acquire ownership of property. Hence, the new owner of the property shall acquire ownership free of all charges and real rights of third persons encumbering the property.255 The element of good faith is not a requirement for the acquisition of movables by virtue of prescription. Therefore, the new owner acquires the tangible property without encumbrances on the property. Seizures of movable property, rendered by a court order, shall also be regarded as suspended.256

12.

Other forms of original acquisition

12.1.

Finding

The rules on finding are provided in art. 91 OA. The object of a finding may be movable property that has an owner, but where he or she is not known. The characteristic of found property is that it is buried in the ground, walled-in, or hidden in another manner. Legal doctrine has expanded the 255 256

Decision nr. 2109 / 69 of the Supreme Court, 1st civ. ch. Bobatinov; Vlahov (fn. 67) p. 50.

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scope of found objects, including property of a historical, archaeological, artistic or other comparable importance of public interest.257 Otherwise, the value of the property has to be determined according to the criteria for “cultural property” provided by art. 3 CPrMA. Persons who find such property shall inform the municipal authority seven days after the property is found. The former may seek a remuneration of 25 % of the value of the property (art. 91 OA). The found property can only be owned by the Republic of Bulgaria. The state acquires the ownership right of the property as of the moment the property is found.

12.2.

Occupation

The occupation of movable property occurs merely by acquisition of the possession of the property. The only requirement for the acquisition is that the former owner has relinquished his ownership.

12.3.

Separation from other property

A tangible object can be separated from other property – movable or immovable. Movable property acquired by separation from other property has to be considered, under property law, as owned by the same person who owns or owned the property. This is the case where the owner of a building will acquire the ownership of the materials if the building is destroyed. An exception to this principle is triggered when the movable property that has been separated from the other property is incorporated as another’s property into the main property (art. 97 OA).

257

Boyanov (fn. 24) p. 318.

Part IV: Additional issues 13.

Reservation of title

In Bulgarian civil law, the reservation of title is a specific contractual term of the contract of sale. The seller and the buyer may stipulate that the ownership shall be reserved until the buyer pays the full price for the property (art. 205, p. 1 OblCA). If there is no other agreement on the transfer of risk, the risk is borne by the buyer (art. 205, p. 2 OblCA). After transferring the possession to the buyer, the owner retains the ownership of the property until the buyer pays the full price for the property. Under property law, the buyer does not acquire any right in rem before that. The reservation of title shall be made in written form. This requirement is not a condition for the validity of the agreement, but the written form has the effect that the reservation can be opposed against third parties. In certain cases, the reservation of title shall be registered, if not, it will not be opposable against a person who has established a special pledge right in the movable (art. 12, p. 1 SPA). The registration has to be made in the register of special pledges.

14.

Abandonment

The owner of movable property can abandon the ownership of the property by a unilateral act (abandon; see art. 99 OA). It is sufficient if the possession is abandoned at a place where usually abandoned movable property can be found, or merely if the abandoning person puts the property in a place where anybody could acquire the possession of it.

15.

Co-ownership

15.1.

General

Movable property can be owned as well by multiple persons. Bulgarian civil law recognizes several forms of co-ownership. Additionally to co-ownership as a proprietary relationship between the co-owners

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established by virtue of property law, there are several specific kinds of co-ownership that are regulated by other branches of law: the joint ownership by virtue of marriage, the co-ownership of the common shares in a residential building, and the joint ownership by virtue of partnership under civil law.

15.2.

Definition of co-ownership

Co-ownership of property is a complex legal relationship between several persons entitled to the right of ownership, which includes relationships orientated to the joint use, maintenance and fruits of the co-owned property by virtue of the shares or undivided shares of the property.258

15.3.

Sources of co-ownership

Co-ownership of property can arise as a result of inheritance, either by law of succession or by testamentary will. The co-ownership may be grounded as well if the deceased person made a legacy in favour of several persons regarding specific property of the estate of the deceased person. Co-ownership can be established as well in the case that several persons acquire property jointly by virtue of contract. Another juridical act that can lead to the establishment of co-ownership is the expiration of the acquisitive prescription, if the property has been in possession of one of the co-possessors who used to possess the property for all co-possessors. Further, co-ownership arises by virtue of a processing of new property, if the materials from which the new property has been made were owned by several persons and none of the materials could be regarded as the “main” material (art. 95, p. 1 OA).

15.4.

Transfer of a share of co-ownership

Each of the co-owners has his own right of ownership of the property. From this principle it could be concluded that the co-owner can freely dispose of the share owned by him. However, this principle has several important exceptions. The first of these is the duty of the co-owner to offer his own share to the others coowners. This provision of art. 33 OA is only applicable to immovable prop258

For further details on this topic, see Vassilev (fn. 59), p. 99 et seq.

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erty. If the co-owner who wants to sell his own share did not first offer his share to the other co-owners, the co-owner whose interest has been injured can acquire the ownership of the immovable property by re-claiming the property from its buyer. The other exception concerning movable property relates to the disposition of co-inherited property. Acts of disposal by a co-heir of specific inheritance objects shall be void, unless said objects go into his or her share upon division (art. 76 LSA).259

15.5.

Termination co-ownership

The co-ownership of movable property is to be regarded as terminated in the following situations: 1) the property perishes; 2) a co-owner or a third person acquires ownership, regardless of the mode of acquisition of the property; and 3) there is a waiver of a share, if the property is co-owned merely by two persons.

15.6.

Separation of co-ownership

Co-ownership can be terminated under Bulgarian law with the help of a specific instrument: the termination of co-ownership. The termination of co-ownership can be ground on a contractual agreement between the co-owners of the property. However, the most widespread method to terminate a co-ownership is the judicial termination of co-ownership (art. 34 OA). The judicial termination of co-ownership is possible unless the law provides the opposite, or unless the purpose of the use of the property contradicts the termination of the co-ownership.

15.6.1. Contractual termination of co-ownership As mentioned above, co-ownership can be terminated by virtue of a specific contract for termination of the co-ownership. In the most common case the contract to terminate the co-ownership is a kind of barter contract.260 Certainly, it is possible that one of the co-owners acquires the ownership of 259

260

Under the recent jurisprudence of the Supreme Court of Cassation, see Interpretative Decree nr. 1 / 2004 of the Supreme Court of Cassation, General Assembly of the Civil Chambers, art. 76 LSA, according to which it has to be interpreted that the disposition of property by a co-inheritor is void relative to the other co-inheritor. See Venedikov (fn. 19), p. 109.

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the whole property and the other co-owner a sum of money corresponding to his share of the property.

15.6.2. Judicial termination of co-ownership In case that there is no agreement between the co-owners, each of them can raise a claim in order for the court to decide. Waiver of this claim before the first court proceeding is not valid. The judicial separation of co-ownership occurs in two main phases. In the first phase it must be determined which property is the object of the separation, who are the co-owners of the property, and the shares of each of the co-owners. In the second phase of the judicial separation the court compiles the so called “separation” protocol and the shares are determined by lots or by the court. If the immovable property can not be separated, the immovable property has to be sold at public auction.

16.

Restitution of the movable to the owner

16.1.

Restitution of the movable in case of a void, avoided or retrospectively terminated contract

The restitution of movable property in regard to a void, voidable or terminated contract underlies the restitution rules of Bulgarian unjustified enrichment law. More concretely, these cases can be subsumed under the elements of the rule of art. 55, p. 1 OblCA. The first of these concerns the restitution of property obtained by the other party based on a void contract. However, the lack of legal grounds, in the sense of art. 55, p. 1, alt. 1 OblCA, can be examined not only in the case of a void contract. This is the case as well where the enriched person obtained something without legal grounds: the typical case is the assignment of claims where the assignor obtains payment from the debtor despite the notification of the assignment made to the debtor. The second alternative under art. 55, p. 1 concerns the case, not of the initial lack of a legal ground, but a legal ground that is to be considered as a retrospective lapse of the legal ground. This includes the case of the terminated contract due to the non-performance of the counter-party, voided legal transactions, or the occurrence of a dissolutive condition that has a retrospective effect.261 261

For the details, see Vassilev (fn. 80), p. 584 et seq.

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There is no disadvantage for the claimant of the movable property to choose between a vindication claim and a condictio indebiti claim.

16.2.

Restitution in case of the end of a contractual right to use the movable

In case that the contractual obligation ended with a non-retrospective effect (ex nunc effect if there is a long-term contract, art. 88, p. 1, s. 2 OblCA), e.g. due to the expiration of a leasing contract, the owner of the movable property can demand restitution with the help of a vindication claim due to the fact that the holder or possessor of the property will not have the possibility to defend based on the obligatory relationship.

16.3.

Restitution of stolen property

The restitutionary remedy to re-acquire possession from a thief is the revindication claim. This is due to the fact that the thief can not acquire ownership of the property by good faith possession of it. Bulgarian tort law does not provide a specific legal remedy to restore the legal situation before the theft occurred. The owner of the stolen property can revindicate it, within three years after its theft, from a good faith possessor of the property. After the expiration of this period there will be no place for a vindication claim (art. 78, p. 2 OA). As stated above, if the property has not been stolen, but merely the object of a conversion of the property, the owner of the property will not be able to re-claim the property from the possessor.

16.4.

Entitlement to the fruits resulting from the movable

Regarding the acquisition of the fruits, the Ownership Act does not distinguish between civil and natural fruits. The difference between both species of fruits is that the bona fide possessor acquires the right of ownership of the natural fruits and an obligatory claim for the civil fruits of the property. Generally the Ownership Act distinguishes between the possessor in good faith and the possessor in bad faith.

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16.4.1. Entitlement of the possessor in good faith According to the provision of art. 71 OA, the possessor in good faith acquires the ownership of the fruits of the possessed movable property until the raising of a claim of the owner against him. After this moment the possessor has to be regarded as a possessor in bad faith. In the Bulgarian legal theory it is accepted that not every claim orientated to the return of property converts the good faith possessor into a possessor mala fide.262 This is not the case if the claim that has been raised by the owner of the property against the possessor is a declarative claim for ownership, a possessory claim, or an obligatory claim for return of the property. Under the notion of “claim raised against the possessor” should be included the revindication claim of the owner against the possessor. The owner can ask only the reimbursement for the use of the property and the reimbursement of the fruits obtained after the raising of the revindication claim. If the possessor has not yet received the civil fruits of the property, e.g. rents, the possessor is obliged to assign the claim against the third party to the owner.263 The jurisprudence admits that the owner has no a claim for the reduced value of the property due to normal deterioration.264 The deterioration of the property could have happened even if the property were in possession of the owner. This is the situation only if the possessor used the property as a good possessor. If the possessor negligently impacted the value of the property, the owner will have the possibility to claim damages under the general regime of art. 45 et seq OblCA. Due to the acquired ownership of the fruits, the possessor in good faith can not demand reimbursement of the fructification expenses due to the fact that the possessor acquired ownership of the fruits. If there is a raised revindication claim against the possessor, he can not be regarded as a bona fide possessor, so he has to reimburse the fruits obtained after the owner re-claims the property. The fructification expenses incurred after the revindication claim has been raised can be set off against the value of the civil fruits that have to be returned to the owner. If the expenses for the fructification are greater than the obtained fruits of the property due to, p. ex. a bad agriculture season, the possessor may ask to set off the expenses incurred merely to the extent of the value of the fruits that have to be returned to the owner.265 262 263 264

See Vassilev (fn. 59), p. 62. Vassilev (fn. 59), p. 62. Comp. Decision nr. 2172 / 55 of the Supreme Court, 4th civ. ch. The argumentation of the Supreme Court is based on art. 57, p. 2, s. 2 OblCA, which provides that the person entitled to ask for the return of property carries the risk of the property perishing. Hence, the owner has to bear the risk for the deterioration of the property.

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16.4.2. The situation of the possessor in bad faith 265

According to art. 73 OA the possessor in bad faith has to reimburse all fruits that he obtained or could have obtained during the period of possession. The mala fide possessor is obliged to return the value of the property that he could have obtained but which has not been obtained. Certainly, this rule concerns only the situation of the possessor in bad faith, because the possessor in bad faith is not entitled to acquire the fruits of the property. The bona fide possessor can surely not be made liable for not having obtained enough fruits for him / herself.

16.5.

Loss and deterioration of the movable

For the loss or the deterioration of the movable property cause either intentionally or by negligence of the possessor, the owner can claim damages according to the principle of delictual compensation for damages. If tort law liability has no place in the relationship between the possessor and the owner, the rule of art. 57, p. 2 OblCA will be applicable. According to this provision, the person who is obliged to return specific property has to return the factual value of the property, if that property perished or was alienated (art. 57, p. 2, s. 1 OblCA) after the person was on notice that the property must be returned but held it without legal grounds. The knowledge of the lack of legal grounds art. 57, p. 2 OblCA relates to the notice made to the person. This subjective element is of importance only for the amount of the restitution, not for the existence of a legal ground. If the person obliged to return the property did not have knowledge that the property was held without legal grounds, the person entitled to the restitution can only claim that which represents the benefit to the enriched person, e.g. if the movable property that must be returned is a motor-vehicle that has crashed in a traffic accident, the entitled person can demand only the benefit that the person received by way of selling the salvaged parts of the vehicle.

16.6.

Reimbursement for improvements and expenses incurred during the possession

Bulgarian legal doctrine266 distinguishes between four kinds of expenses incurred in conjunction with the possession of the property. These are: 265 266

See Tadjer (fn. 53), p. 270 et seq. See Tadjer (fn. 53), p. 252.

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i) the necessary expenses made in order to maintain and conserve the property (impensae necessariae), ii) the improvements, called as well “useful expenses”, iii) the luxury expenses (impensae voluptuariae), and iv) the fructification expenses. The two requirements of the reimbursement claim of the possessor, whether in bad or in good faith, are: the expenses should be made by the possessor and the property must be existent at the moment of claiming the expenses.

16.6.1. Reimbursement for necessary expenses and improvements made by the possessor in good faith Under Bulgarian property law the possessor in good faith can claim reimbursement for the improvements and necessary expenses made for the conservation of the property.

(a)

The necessary expenses

Under “necessary expenses” has to be understood expenses made in order to maintain the property, e.g. food for the animal, repair of any deterioration, reconditioning of a watch, or even expenses occurred in connection with a chance event that affected the property and the expenses incurred for the further conservation of the property. There is no claim for necessary expenses if the expenses occurred as the result of damage to property by the possessor, or by a person for whom the possessor is liable, according to tort law provisions. Most authors consider that the possessor also could not claim reimbursement for necessary expenses if they are made in connection with the ordinary use of the movable property; an example would be the case where the possessor changes the oil of the engine of the motor-vehicle. In this sense the necessary expenses that could be reimbursed from the owner of the property are those that have the attribute of necessity and not made only in order to use the property, e.g. the small repairs that are not characteristic for the conservation of the property.267 Not reimbursed have to be expenses that are not made for the conservation of the property, but rather merely to augment the useful effect of the property.268 The possessor who has a claim for reimbursement for the necessary expenses has to prove the objective necessity of incurring the expenses and their amount. The owner has to reimburse only the expenses that have 267 268

Tzonchev (fn. 127), p. 195 et seq. Decision nr. 1100 / 55 of the Supreme Court, 4th civ. ch.

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been in fact made by the possessor. Hence, it is of no importance if the costs of the necessary expenses were higher-priced than that which could have been obtained at the moment of their expenditure.

(b)

Reimbursement for improvements made by the possessor in good faith

The improvements, or otherwise called “useful expenses”, are the expenses that increased the value of the property possessed. This is the difference between the value of the property at the moment of the court decision and the value of the property at the same moment if the improvements would not have been made by the possessor.269 It can be deduced from the interpretation of art. 72, p. 1 OA that the possessor can not be forced to remove the improvements (the APrRlRA (ab.), known as ius tollendi). Vice versa there is no possibility for the possessor to remove the improvements from the property. The possessor can only claim reimbursement for the increased value of the property.270 The APrRlRA (ab.) used to provide the possibility for the owner to ask from the possessor that he remove the improvements from the property. This provision of the old legal regime has not been adopted in the Ownership Act. One of the arguments for this is to limit the possibility for the owner to put the possessor in a worse financial position by forcing the possessor to remove the improvements. Another right271 granted to the owner by the APrRlRA (ab.) used to be the possibility for the owner to force the good faith possessor to buy or to lease the property, in case that the owner was not able to reimburse the possessor for the improvements made. The non-adoption of this provision in the Ownership Act became the subject of strong criticism272 regarding the situation where the owner is forced to sell the property in order to pay the possessor for the improvements made.

16.6.2. The situation of the possessor in bad faith The possessor in bad faith can ask from the owner to be reimbursed for the necessary expenses (art. 73, p. 2 OA) and improvements incurred (art. 74, p. 1 OA). In contrast to the possessor in good faith, the bad faith possessor 269 270 271 272

Comp. Decision nr. 360 / 68 of the Supreme Court, 1st civ. ch. Tadjer (fn. 53), p. 264. This solution had been adopted under the influence of the Spanish Código Civil. Comp. Tzonchev (fn. 127), p. 220.

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can claim only the smaller sum between the increased value of the property and the amount of the expenses incurred. So, if the mala fide possessor invested 5000 Lewa to exchange the engine of the motor-vehicle for a more powerful one, and the value of the vehicle increased by 6000 Lewa, the bad faith possessor shall be reimbursed merely for 5000 Lewa. This is the sanction for making improvements on another’s property. Under Bulgarian property law the bad faith possessor is equated with the possessor in good faith, if the bad faith possessor made the improvements with the knowledge of the owner and the owner did not disapprove the improvements (art. 74, p. 2 OA).

16.7.

The right of the possessor to retain the movable

According to art. 72, p. 3 OA, the possessor in good faith has the right to retain the property if the owner has not yet reimbursed the possessor for the improvements and necessary expenses. The right to retain the tangible property is a right of the possessor that can be established only by virtue of a court decision. It cannot be established by a contract between the possessor and the owner of the property.273 The right to retain the property represents a privilege (art. 137, p. 4 OblCA). The person entitled to retain the movable property can satisfy his claim for reimbursement before the pledge-creditor’ (art. 137, p. 4, s. 2 OblCA). The right to retain the movable property is not a right in rem. Thus, the good faith possessor cannot exercise the right anymore, if the detention of the movable property has been lost and the property finds itself in the hands of the owner or a third person.274 The persons who have the right to retain the movable property under Bulgarian law are the possessor in good faith, the possessor who acquired possession of the property by virtue of a preliminary contract, and the possessor in bad faith who made the improvements with the knowledge and without the disapproval of the owner. The right to retain the property is an accessory right. If the claim for the reimbursement of the necessary expenses or improvements is the subject of an expired prescription, the possessor would not be able to exercise the right to retain the property. The right to retain encumbers the movable property, the improvement made on the property and the fruits of the property. The jurisprudence adopted the model that the person entitled to retain the property can ex273 274

See Tadjer (fn. 53), p. 276. Decision nr. 48 / 61 of the Supreme Court, General Assembly of the Civil Chambers.

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ercise this right only as a detentor of the property and can use the property only as a lessee.275 In case that the person exercising the right to retain the movable property obtains the fruits of the property, they have to be reimbursed to the owner; the possessor may set off the fruits with the claim for reimbursement of the necessary expenses or improvements. An interesting situation represents the case where the owner of the movable property alienated the property in favor of a third party, or the third person acquired the property by virtue of succession. May the possessor claim reimbursement for the necessary expenses or improvements made by the new owner of the property? The jurisprudence276 established the opinion that the possessor has the right to exercise the right to retain the property, not only against the former owner of the property, but also against a buyer of the property who acquired it non-gratuitously – no matter if the third person is to be regarded as in good or bad faith. That stated above represents the common principles established by Bulgarian property law. However, there are several exceptions connected with the normative application of the principles on the right to retain movable property. The right to retain movable property is also ruled by the provision of art. 91 OblCA. The relationship between the older Ownership Act and the Obligations and Contract Act seems to be in favor of the application of art. 91 OblCA.277 The main difference between the requirements of both regimes consists in the fact that art. 91 OblCA does not require that the person entitled to exercise the right of retention be “in good faith”. The question of what should be understood by the requirement of “good faith” must be answered in light of the comparative legal scientific method. Art. 91 OblCA has been indirectly adopted278 from § 273 of the German BGB. This is the reason why the prerequisite of good faith in this case has to be regarded as applying to every person who did not acquire possession as a result of an intentional criminal offense. The right to retain the movable property would be applicable not only to the possessor of the property, but also to the detentor. The second difference between both rules embodies the amount of the reimbursement claim, which has to be secured through the right of retention. In contrast to art. 72 OA, which provides that the retentor can seek the difference between the increased value of the property and the value of the property if the improvements would not have been made, art. 91 275

276

277 278

See Decision nr. 556 / 60 of the Supreme Court, 4th civ. ch., Decision nr. 2063 / 58 of the Supreme Court, 2nd civ. ch. The most important decision in this direction, Decision 48 / 61 of the Supreme Court, General Assembly of the Civil Chambers. Venedikov (fn. 19), p. 231 et seq. About the intermediary source of reception, see Venedikov (fn. 19), p. 232.

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OblCA does not mention any amount for which the claim should be considered as secured. In view of this absence, it can be suggested that the principle of unjustified enrichment applies, and the detentor can only ask the smaller sum between the increase in the value of the movable property and the expenditures made. The right to retain the movable property cannot be exercised if the owner of the property gives security to the person entitled to the right of retention (art. 91, p. 4 OblCA).279

279

Vassilev (fn. 59), p. 79.

Table of Literature Apostolov, Ivan, Obligazionno pravo. Chast purva. Obshto uchenie za obligaziyata, Sofia 1990, photprint ed.; Апостолов, Иван, Облигационно право. Част първа. Общо учение за облигацията (The law of obligations. Part one-General theory of the obligation) Bobatinov, Mario; Vlahov, Krasimir, Veshtno pravo, Prakticheski problemi, 2nd ed., Sofia 2007; Бобатинов, Марио; Влахов, Красимир, Вещно право, Практически проблеми (Property law, Practical problems) Boyanov, Georgi, Veshtno pravo, 6th ed., Sofia 2004; Боянов, Георги, Вещно право (Property law) Djerov, Alexander, Veshtno pravo, 6th ed., Sofia 2003; Джеров, Александър, Вещно право (Property law) Georgiev, Alexander, Plodovete na veshti i neobranite nasajdeniya kato obekt na prinuditelno izpulnenie, Sobstvenost i pravo, 2 / 2004, p. 5-11; Георгиев, Александър, Плодовете на вещи и необраните насаждения като обект на принудително изпълнение, Собственост и право, кн. 2 / 2004 (Fruits of property and fruits that have not been earned yet as an object of execution proceedings) Goleminov, Tchudomir, Neosnovatelno obogatyavane, Sofia 1998; Големинов, Чудомир, Неоснователно обогатяване (Unjustified enrichment) Goleva, Polya, Obligazionno pravo, 4th ed., Sofia 2008; Голева, Поля, Облигационно право (Law of obligations) Hausmaninger, Herbert, Casebook po rimsko chastno pravo, 1st ed., Sofia 2000; Хаусманингер, Херберт, Casebook по римско вещно право (Casebook on Roman property law) Kalaydjiev, Angel, Bezkasovoto plasthane, Sofia 1999, Калайджиев, Ангел, Безкасовото плащане (Cashless payment) Kalaydjiev, Angel, Obligazionno pravo, Obshta chast, 1st ed. and 4th ed., Sofia 2001 (2007); Калайджиев, Ангел, Облигационно право, Обща част (The law of obligations, General Part) Kassabova, Kamelia, Turgovski predstavitel, Sofia 2005; Касабова, Камелия, Търговски представител (Commercial agent)

462

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Kojuharov, Alexander, Obligazionno pravo, Obshta chast, B. І, ІІ, Sofia 1996; Кожухаров, Александър, Облигационно право, Общо учение за облигационното отношение (The law of obligations, General theory of the obligation) Konov, Trayan, Osnovanie na grajdanskata otgovornost, 2nd ed., Sofia 2002; Конов, Траян, Основание на гражданската отговорност (The ground of the civil liability) Konov, Trayan, Vuzrajenie za neizpulnen dogovor i pravo na zadurjane, Sofia 1996; Конов, Траян, Възражение за неизпълнен договор и право на задържане (The right to withhold performance and the jus retentionis) Madanska, Neli, Proiyvodstvo po nesustoitelnost, 2nd ed., Sofia 2005; Маданска, Нели, Производството по несъстоятелност (The bankruptcy proceedings) Markov, Metodi, Ipotekata, Sofia 2008; Марков, Методи, Ипотеката (The mortgage) Nenova, Lilyana, Semeyno pravo na Republika Bulgaria, 2nd ed., Sofia 1994; Ненова, Лиляна, Семйно право на Република България (Family law of the Republic of Bulgaria) Pavlova, Maria, Grajdansko pravo, Obshta chast, B. 1, 2, Sofia 1995; Павлова, Мария, Гражданско право, Обща част (Civil law, General art) Petrov, Vladimir, Osnovi na pravoto, Dyal vtori-grajdansko pravo, Svishtov 1988, p. 138; Петров, Владимир, Основи на правото, Дял втори-гражданско право (General theory of law, Part II – Civil law) Popov, Petko; Takov, Christian, Otnosno proekta za grajdanski kodeks, redakziya ot m. septemvri 1999, Turgovsko pravo, 1 / 2000, p. 3-8; Попов, Петко; Таков, Кристиан, Относно Проекта за граждански кодекс, редакция от м. септември 1999, Търговско право, кн. 1 / 2000; (About the project of a civil code, red. September 1999) Ruschev, Ivan, Deznosti, za koitot sus zakon e ustanoven monopol na durjavata, i davane na razresheniya za izvurshvaneto im, Pravna misul, 3 / 1998, p. 45-58; Русчев, Иван, Дейности, за които със закон е установен държавен монопол на държавата, и даване на разрешения за извършването им, Правна мисъл, кн. 3 / 1998 (Activities for which exists a statutory state monopoly and license regime for exercising such activity) Sarafov, Pavel, Ogranicheniya pri uprajnyavaneto na pravoto na sobstvenost, Suvremenno pravo 1 / 1999, p. 40-50, (Restrictions on exercising the right of ownership)

Table of Literature

463

Sarafov, Pavel, Ponyatieto sobstvenost spored Konstituziyata, Suvremenno pravo, 6 / 2001, p. 7-14; Сарафов, Павел, Понятието собственост според Конституцията, Съвременно право, кн. 6 / 2001 (The notion of ownership under the Constitution) Stalev, Jivko, Bulgarsko grajdansko prozesualno pravo, 7th ed. Sofia 2001; Сталев, Живко, Българско гражданско процесуално право (Bulgarian civil procedure law) Stalev, Jivko, Veshtnopraviniyat rejim na parite, Suvremenno pravo, 1 / 1994, p. 7-16; Сталев, Живко, Вещноправният режим на парите, Съвременно право, кн. 1:1994 (The property law regime of money) Stavrou, Stoyan, Vuprosi na bulgarskoto veshtno pravo, Sofia 2008; Ставру, Стоян, Въпроси на българското вещно право (Questions of Bulgarian property law) Stefanov, Stefan, Zakonut za osobenite zalozi i zalogut vurhu nalichni zenni knija, Turgovsko pravo, 3 / 2000, p. 53-63; Стефанов, Стефан, Законът за особените залози и залогът върху налични ценни книжа, „Търговско право”, кн. 3 / 2000 (The Special Pledge Act and the pledge of chartered rights) Stefanov, Stefan, Vuzmojno li e pridobivane na zalojno pravo vurhu dvijima vesht po silata na chl. 78 ot Zakona za sobstvenostta?, Turgovsko pravo, 3 / 2003, p. 18-35; Стефан, Стефанов, Възможно ли е придобиване на заложно право върху движима вещ по силата на чл. 78 от Закона за собствеността?, „Търговско право”, кн. 3 / 2003 (Is it possible to acquire a right of pledge of a movable by virtue of art. 78 of the Ownership Act?) Tadjer, Vitali, Veshtno pravo na NRB, B. IV, Vladenie, Sofia 1970; Вещно право на НРБ, Част четвърта, Владение (Property law of the People Republic of Bulgaria, Part IV, Possession) Takov, Christian, Dobrovolnoto predstavitelstvo,1st ed., Sofia 2006; Таков, Кристиан, Доброволното представителство (Voluntary agency) Takov, Christian, Predvaritelni dogovori-nyakoi neizyasneni aspekti, Turgovsko pravo, 1 / 2004, p. 32-62; Таков, Кристиан, Предварителни договоринякои неизяснени аспекти, Търговско право, кн. 1 / 2004 (The preliminary contract – some unexplained aspects) Tzonchev, Krustyo, Podobreniyata, Sofia 2001; Цончев, Кръстю, Подобренията (The improvements in property) Vassilev, Lyuben, Grajdansko pravo na NRB, 2nd ed. Sofia 1956; Василев, Любен, Гражданско право на НРБ (Civil law of the People Republic of Bulgaria) Vassilev, Lyuben, Bulgarsko veshtno pravo, 2nd ed. revised by Tchudomir Goleminov, Sofia 2001, Василев, Любен, Българско вещно право, втора редакция Чудомир Големинов (Bulgarian Property law)

464

Bulgaria

Vassilev, Lyuben, Obligazionno pravo, Otdelni vidove obligazionni otnosheniya, 2nd ed., Sofia 1958; Василев, Любен, Облигационно право, Отделни видове облигационни отношения (Law of obligations. Specific part) Velinov, Lyuben, Pogasitelnata davnost po bulgarskoto chastno pravo,1st ed., Sofia 2007; Велинов, Любен, Погасителната давност по българското частно право (The prescription after Bulgarian private law) Venedikov, Petko, Ipoteki, zalog, privilegii, 3th ed., Sofia 1994; Венедиков, Петко, Ипотеки, залог, привилегии (Mortgages, pledge, privilegies) Venedikov, Petko, Novo veshtno pravo, Sofia 1995; Венедиков, Петко, Ново вещно право (New property law) Venedikov, Petko, Vuprosi na suprujeskata imushtestvena obshtnost, Sofia 2000; Венедиков, Петко, Въпроси на съпружеската имуществена общност (Questions of the co-ownership acquired by virtue of marriage)

Table of Abbreviations ab. alt. appr. arg. art. APrRlRA CAA civ. ch. civ. m. CPC CA c. ch. comp. CPrMA FC JSA LSA l. MPrA MSC n. OblCA OA p. p. ex. PC PFA RTA s. SPlA SPrA

abolished alternatively approximately Argument article Assets, Property and Real Rights Act Civil Aviation Act civil chamber civil matter Civil Procedure Code Commercial Act commercial chamber compare Cultural Property and Museums Act Family Code Judicial System Act Law of Succession Act letter Municipal Property Act Merchant Shipping Code number Obligations and Contracts Act Ownership Act paragraph par example Penal Code Persons and Family Act Road Traffic Act sentence Special Pledge Act State Property Act

National Report on the Transfer of Movables in Poland Jerzy Pisuliński Kamil Zaradkiewicz

Table of Contents Part I: Basic information on property law 1. Property law – general issues 1.1. Acts related to property law 1.2. Real rights in general

473 475

2. Notion of a “thing” in Polish law 2.1. Corporeal nature of a thing 2.2. Res extra commercium 2.3. Contractual restrictions – art. 57 C.C. 2.4. Specific and generic things 2.5. Accessories and parts of a thing 2.6. Fruits 2.7. Registered movables

479 483 484 485 487 489 490

3. Publicity principle in property law

491

4. Rule (presumption) of good faith

493

5. Possession 5.1. Nature and notion 5.2. Presumption connected with possession 5.3. Transfer of possession 5.3.1. Traditio corporalis and longa manu traditio 5.3.2. Delivery equivalents (a) Constitutum possessorium (b) Traditio brevi manu (c) Other delivery equivalents 5.4. Protection of possession 5.4.1. Self-defence and self-help of the possessor 5.4.2. Judicial protection

494 497 498 498 499 499 499 500 500 501 502

6. Nature and notion of ownership 6.1. Definition of ownership 6.2. Limitations and restrictions 6.3. Duties and responsibilities 6.4. Protection of ownership

503 505 507 508

470

Poland

7. The issue of fiduciary transfer of ownership

508

8. Other real rights in movables 8.1. Usufruct 8.2. Pledge

513 514

9. Rights of extended effectiveness (real obligations) 9.1. Real obligations 9.2. So-called subordinated absolute rights

516 517

Part II: Transfer of ownership (derivative acquisition) 10. Consensual system 10.1. Rules 10.2. The issue of the real agreement

518 519

11. Impact of dropping the obligation on the real effect of an agreement

521

12. Rule of traditio

527

13. Rule of causal transfer

528

14. Good faith acquisition from a non-owner

531

15. Payment

534

16. Double sale

535

17. Transfer by means of indirect representation

536

18. Selling in a chain

538

19. Insolvency

540

Table of Contents

471

Part III: Original acquisition of ownership 20. Notion of original acquisition of ownership

543

21. Acquisitive prescription (usucapio) 21.1. Requirements 21.2. Functions

544 544 547

22. Acquisition of res nullius (occupation)

547

23. Finding

548

24. Treasure

549

25. Separation

549

26. Transformation, joining, mixing

549

Part IV: Additional questions 27. Abandonment

551

28. Reservation of title

551

29. Co-ownership 29.1. Notion of co-ownership 29.2. Joint ownership 29.3. Co-ownership in divided shares 29.3.1. The essence and nature of co-ownership and shares 29.3.2. Specific rights and duties of co-owners (a) Management of a co-owned thing (b) Use of a thing 29.3.3. Protection 29.3.4. Lifting of co-ownership

553 553 554 555 555 556 556 557 558 558

30. Protection of real rights 30.1. Rei vindicatio – action for recovery of a thing 30.2. Actio negatoria (negatorian action)

560 560 561

Poland

472

30.3. Convergence of the action for recovery of a thing with other actions 30.4. Complementary actions 30.4.1. Actions against the independent possessor in good faith 30.4.2. Actions against the independent possessor in good faith who learnt about an action brought against him for delivery of a thing 30.4.3. Actions against an independent possessor in bad faith 30.4.4. Relation of complementary actions to other actions

561 562 564

565 566 568

Table of Literature

570

Table of Abbreviations

579

Part I: Basic information on property law 1.

Property law – general issues

1.1.

Acts related to property law

Under Polish law, ownership and other real rights are regulated mainly by the Civil Code (Kodeks cywilny)1 of 1964 replacing the Decree of 11 October 1946 – Property Law.2 The Decree was supposed to supersede three different legal systems imposed by three neighbouring powers – Prussia (Germany), Austria and Russia3 – that partitioned the whole territory of the Kingdom of Poland from 1795 to 1918. Additionally, the Napoleonic Code was applicable in Poland’s central part, as well as some Hungarian acts in several small provinces in the southern part of the former Polish territory. When Poland regained its independence in 1918, foundations for the new Polish property law were laid long before the Second World War, owing to the activity of the Codification Commission of the Republic of Poland (1919-1939). In 1937, the Commission published the first draft of the property law legislation4 (and the second in 19395). In some of its aspects, this draft regulation was an exceptional and original work by the most brilliant Polish lawyers of the time. However, regarding some basic rules and notions, it was strongly influenced, especially by German and also by Swiss and Austrian legal systems.6 1 2 3

4

5

6

Dziennik Ustaw (Official Journal, Dz. U.) No. 16, item 93 as amended. Dekret z 11 października 1946 r. – Prawo rzeczowe, Dz. U. No. 57, item 319 as amended. Russian (Tsarist) Collection of Laws (Svod Zakonov, vol. X part 1) remained in force in the eastern part of Poland after 1918. Komisja Kodyfikacyjna. Podkomisja Prawa Rzeczowego. Zeszyt 1. (The Codification Commission. The Property Law Subcommission. Fascicle 1) Projekt prawa rzeczowego uchwalony w pierwszym czytaniu przez Podkomisję Prawa Rzeczowego Komisji Kodyfikacyjnej, Warszawa 1937. The text published in the Kwartalnik Prawa Prywatnego 1993, No. 4, p. 520. For more information about property law codification work see: L. Górnicki, Prawo cywilne w pracach Komisji Kodyfikacyjnej Rzeczpospolitej Polskiej w latach 1919-1939, Wrocław 2000, p. 312 et seq. See: L. Górnicki, Prawo cywilne w pracach Komisji Kodyfikacyjnej …, p. 312 et seq., imprimis pp. 353-354; on basic rules and motives see e.g.: F. Zoll, Pojęcie praw rzeczowych

474

Poland

The draft of the property law legislation of 1937 introduced the principle of publicity, by requiring the delivery (traditio) of property (later referred to as a “thing”); and regarding the control of rights to immovables, the principle of entry (zasada wpisu) in the property rights register (księga wieczysta). Basically, most of the general guidelines of the draft from 1939 – excluding, however, both principles mentioned above – were repeated in the Decree of 1946 and, afterwards, in the Civil Code (C.C.) of 1964 presently in force. Nowadays, beyond the Civil Code, several special questions regarding property (real) rights are regulated by acts such as: – Ownership of Flats Act;7 – Property Rights Register and Mortgage Act;8 – Register of Pledge and Non-possessory Pledge Act;9 – Immovable Economy Act;10 – Housing Cooperatives Act;11 – Act on Some Financial Securities.12 The current members of the Commission for Civil Law Codification (Komisja Kodyfikacyjna Prawa Cywilnego), whose term of office began in 2006, have been drafting a brand new civil code,13 which would supersede

7

8 9

10

11

12

13

w projekcie polskiego kodeksu cywilnego, in: J. Krčmář (ed.), Randův jubilejni památnik; K 100-mu výroci narození Antonína Randy, Praha 1934, p. 310 et seq.; same author, Zagadnienia kodyfikacyjne z zakresu prawa rzeczowego. Istota i rodzaje praw rzeczowych i system norm, do nich się odnoszących, Przegląd Notarialny (Notarial Review, PN) 1936, No. 9, pp. 187 et seq.; same author, Przedmiot praw rzeczowych, Kwartalnik Prawa Prywatnego (Private Law Quarterly, KPP) 1938, No. 3, p. 203 et seq. Ustawa z 24 kwietnia 1994 r. o własności lokali, unified text, Dz. U. of 2000, No. 80, item 903 as amended. Dz. U. No. 19, item 147, unified text, Dz. U. of 2001, No. 124, item 1361. Ustawa z 6 grudnia 1996 r. o zastawie rejestrowym i rejestrze zastawów, unified text, Dz. U. of 2009, No. 67, item 569 as amended. Ustawa z 21 sierpnia 1997 r. o gospodarce nieruchomościami, unified text, Dz. U. of 2004, No. 261, item 2603 as amended. Ustawa z 15 grudnia 2000 r. o spółdzielniach mieszkaniowych, unified text, Dz. U. of 2003, No. 119, item 1116 as amended. Ustawa z 2 kwietnia 2004 r. o niektórych zabezpieczeniach finansowych, Dz. U., No. 91, item 871. See: Z. Radwański (ed.), Zielona księga. Optymalna wizja Kodeksu cywilnego w Rzeczpospolitej Polskiej, Ministerstwo Sprawiedliwości Warszawa 2006. For proposed changes in the future civil code pertaining to real rights see also G. Bieniek, Zagadnienia prawa rzeczowego, Monitor Prawniczy (Legal Monitor, MoP) 2007, No. 14 (supplement), pp. 14-16; see also: E. Gniewek, Katalog praw rzeczowych w przyszłej kodyfikacji prawa cywilnego – refleksje wstępne, Rejent (Notary) 1998, No. 4, pp. 25 et seq.; Z.

1. Property law – general issues

475

the often-amended Civil Code of 1964. Regarding the regulation of real rights in movables, their efforts focus mainly on issues relating to limits on the disposition of secured interests in property (e.g. pledge and fiduciary transfer of ownership). There is also a body of opinion in favour of the restoration of the principle of publicity (entry in the property rights register as a condition of any disposition of real rights in immovables14). There are also plans to introduce general regulations pertaining to the disposition of real rights in “things” to be disclosed in other public registers (e.g. register of ships, aircraft register, patent register).

1.2.

Real rights in general

Similarly to Roman traditions, the Civil Code defines subjective property rights (prawa rzeczowe) as those that are protected by real action (real claim instead of Roman actio in rem15). Therefore, these rights – in contrast to the obligatory rights (prawa obligacyjne) – are of an absolute nature, effective erga omnes, and the authorized person is given the direct power over the “thing”.16 The principle of the closed catalogue of property rights (numerus clausus) is generally recognized.17 In the Polish literature, the principle of the closed list has not been attacked so far (see art. 244 C.C., which enumerates limited real rights).

14

15

16

17

Radwański, Zielona Księga. Optymalna wizja kodeksu cywilnego Rzeczypospolitej Polskiej, Ruch Prawniczy, Ekonomiczny i Socjologiczny (Legal, Economic and Sociology Movement, RPEiS) 2007, No. 1, pp. 9-12; J. Pisuliński, Ograniczone prawa rzeczowe w wybranych systemach prawnych a przyszła regulacja tych praw w nowym Kodeksie cywilnym, Studia Prawa Prywatnego (Private Law Studies, SPP) 2008, No. 4, pp. III-V. See for instance: B. Zdziennicki, Regulacja prawna ksiąg wieczystych, Studia Prawnicze (the Legal Studies, S.P.) 2001, No. 2, pp. 17-18. About the notion of Roman law see for instance: E. J. Bekker, Über die actiones in rem, Jahrbuch des gemeinen deutschen Rechts 1860, vol. IV, p. 178 et seq. See for instance: Z.K. Nowakowski, Prawo rzeczowe. Zarys wykładu, ed. 3, Warszawa 1980, pp. 12-13; J. Ignatowicz, K. Stefaniuk, Prawo rzeczowe, ed. 3, Warszawa 2009, pp. 27-29. See for instance: S. Grzybowski, Prawo cywilne. Zarys prawa rzeczowego, ed. 2, Warszawa 1989, p. 35; J. Ignatowicz, K. Stefaniuk, Prawo rzeczowe, p. 35-36; S. Wójcik, in: J. Ignatowicz (ed.), System prawa cywilnego, vol. II, Prawo własności i inne prawa rzeczowe, Wrocław-Warszawa-Kraków-Gdańsk 1977, p. 21; P. Machnikowski, in: T. Dybowski (ed.), System Prawa Prywatnego, vol. 3. Prawo rzeczowe, ed. 2, Warszawa 2007, pp. 38-39; E. Gniewek, Prawo rzeczowe, ed. 7, Warszawa 2008, pp. 20-22.

476

Poland

However, the principle of the closed list is basically understood in two different manners.18 According to the part of Polish doctrine representing a point of view that may be called the “restrictive approach”, the only existing real rights are those that are expressly recognized by law (i.e. specifically termed “real rights”, being the normative criterion).19 This point of view is opposed by a second group of jurists: this second view presented in literature refers to the basic characteristics of the real rights. This view defines real rights not only as those that are recognized as such by the Civil Code or other Acts of Parliament, but also whose real nature is determinable by way of interpretation of applicable regulations.20 Beyond ownership as the most complete right giving the authorised person the largest power over the thing, the other real rights are: perpetual usufruct (użytkowanie wieczyste), being a right similar to superficies or German Erbbaurecht; usufruct (użytkowanie); real and personal servitudes (służebności gruntowe and osobiste); co-operative rights in flats (spółdzielcze prawa do lokali);21 pledge (zastaw), including non-possessory pledge; and mortgage (hipoteka). The Polish legal system does not recognize any other real rights (like real burdens, proprietary pre-emption or redemption rights).22 According to the terminology defined by Josef Kohler,23 the first four of these are rights in the substance (in German: Substanzrechte), and the last two are rights to the value (in German: Wertrechte). The perpetual 18 19

20

21

22

23

See for instance: P. Machnikowski, in: System Prawa Prywatnego, vol. 3, pp. 38-39. See especially E. Drozd, Numerus clausus praw rzeczowych, in: S. Sołtysiński (ed.), Problemy kodyfikacji prawa cywilnego (studia i rozprawy). Księga pamiątkowa ku czci Profesora Zbigniewa Radwańskiego, Poznań 1990, p. 263; also for instance: P. Machnikowski, in: System Prawa Prywatnego, vol. 3, p. 39; E. Gniewek, Prawo rzeczowe, p. 20. See for instance S. Wójcik, in: System prawa cywilnego, vol. II, p. 21; S. Grzybowski, Prawo cywilne. Zarys prawa rzeczowego, p. 36; J. Ignatowicz, K. Stefaniuk, Prawo rzeczowe, p. 35-36. In principle in this case a right may not be established as of July 31, 2007 due to the interdiction contained in Art. 7 Section 1 of the Act of 14 June 2007 (Dz. U. No. 125, item 873) as amended. Some rights are, however, of a specific nature, as the so-called real obligations (e.g. rent and lease of immovables). J. Kohler, Lehrbuch des Bürgerlichen Rechts. Band II. Vermögensrecht. Teil 2. Sachenrecht, Berlin 1919, p. 267 et seq., 366 et seq.; J. Kohler, Substanzrecht und Wertrecht, Archiv für die civilistische Praxis 1901, Bd. 91, p. 155 et seq.; as concerns the divisions comp. also for instance: J. Ignatowicz, K. Stefaniuk, Prawo rzeczowe, p. 195; P. Machnikowski, in: System Prawa Prywatnego, vol. 3, p. 44; K. Zaradkiewicz, Tzw. zastaw nieakcesoryjny w polskim prawie cywilnym. Uwagi ogólne na tle ustawy o zastawie rejestrowym i rejestrze zastawów, KPP 2000, No. 2, p. 303-304; J. Jastrzębski, K. Zarad-

1. Property law – general issues

477

usufruct and the co-operative rights in flats benefit from the special place in this catalogue and in some ways they are close to the ownership right. Especially because of the limit of powers, the first right is almost generally considered the one closer to ownership than to other real rights and that is why it is considered a right in rem sui generis.24 The second, sometimes in several different forms resulting from the historical development of this institution, may encumber an immovable belonging to the housing cooperatives (spółdzielnie mieszkaniowe), but the limits of application of the right depend on having an exclusive possibility to avail oneself of the flat or of other usable space belonging to the immovable. Since the co-operative right is negotiable and hereditary, its specific nature allows the permanent divide of powers (entitlements) composing the content of ownership. Traditionally speaking, property (real) rights are a distinct category of subjective rights, unconnected with personal, obligatory rights. A part of Polish doctrine takes a view that real rights constitute a category within the larger scope of obligatory relationships that bind individuals, and particularly the relationship between the individual entitled to a limited real right and the obligated owner of the encumbered thing.25 What is more, the advocates of this viewpoint maintain that the subjective

24

25

kiewicz, Akcesoryjny dług gruntowy a problem jawności i odpowiedzialności (I), Przegląd Prawa Handlowego (Commercial Law Review, PPH) 2005, No. 5, p. 18. For more on this subject see in particular: Z. Truszkiewicz, Użytkowanie wieczyste. Zagadnienia konstrukcyjne, Kraków 2006, p. 154 et seq.; see also for instance: S. Grzybowski, Prawo cywilne. Zarys prawa rzeczowego, p. 108; J. Ignatowicz, K. Stefaniuk, Prawo rzeczowe, p. 190; A. Cisek, in: E. Gniewek (ed.), System Prawa Prywatnego, vol. 4, Prawo rzeczowe, ed. 2, Warszawa 2007, p. 149-151; E. Gniewek, Prawo rzeczowe, p. 170; see also: decision of the Supreme Court (SC) of 22 October 1968, III CZP 98 / 68, Orzecznictwo Sądu Najwyższego Izba Cywilna (Jurisprudence of the Supreme Court. The Civil Chamber, OSN, OSNC or OSNCP) 1969, No. 11, item 188; judgment of the SC of 17 January 1969, III CRN 360 / 68, OSNCP 1969, No. 12, item 222, judgment of the SC of 9 December 1969, III CZP 95 / 69, OSNCP 1970, No. 10, item 172, decision of the SC of 29 November 1972, III CZP 82 / 72, OSNCP 1973, Nos. 7-8, item 125; decision of the SC of 17 January 1974, III CRN 316 / 73, OSNCP 1974, No. 11, item 197; judgment of the Constitutional Tribunal (CT) of 12 April 2000r., K. 8 / 98, Dz. U. No. 28, item 325; publ. Orzecznictwo Trybunału Konstytucyjnego Zbiór Urzędowy (Judgments of the CT, Official Gazette) 2000, No. 3, item 87; judgment of the SC of 24 August 2005, II CK 34 / 05, OSNC 2006, Nos. 7-8, item 125. See first of all: A. Klein, Elementy stosunku prawnego prawa rzeczowego, Wrocław 1976; see also recent writings, for instance P. Machnikowski, in: System Prawa Prywatnego, vol. 3, p. 5-6, 9 et seq.

478

Poland

property right (including ownership) results from a definite relationship under civil law (e.g. a relationship of ownership). The assumption is based on the argument that subjective rights in general result from legal relationships. This theory describing the structure of the property right by means of complex obligatory relations, referring to the 20th century personalistic concepts, including the famous theory propounded by Marcel Planiol (1853-1931),26 has however not gained general acceptance and has even been criticized by some representatives of the doctrine.27 In this context it is important to stress that the legislator gives some personal rights an extended effectiveness (covering also parties other than parties to an agreement; by making them, due to their nature, the so-called real obligations – zobowiązania realne, Realobligation, obligation propter rem).28 A typical example of this kind of a personal right is a rental agreement (umowa najmu). Its extended effectiveness has several aspects. The Civil Code states (art. 678) that in case of transfer of ownership of a thing, the new owner takes over all rights and obligations of the previous one arising from a rental agreement (following the rule expressed by the German adage: Kauf bricht nicht Miete). The “extended effectiveness” of the liability may also be considered in some other cases. It is particularly possible when the act allows the publicity of the relative right in the property rights register (art. 16 of the Property Rights Register and Mortgage Act). 26

27

28

M. Planiol, G. Ripert, Traité pratique de droit civil français. Tome III. Les biens, ed. 2, Paris 1952, p. 42 et seq. T. Dybowski, Ochrona własności w polskim prawie cywilnym (rei vindicatio – actio negatora), Warszawa 1969, p. 88; same author, Rzecz o stosunku prawnym prawa rzeczowego, Państwo i Prawo (The State and Law, PiP) 1978, No. 5, p. 68 et seq.; M. Pyziak-Szafnicka, in: M. Safjan (ed.), System Prawa Prywatnego, vol. 1, Prawo cywilne – część ogólna, Warszawa 2007, p. 723 and 724, see also ibid, p. 725. See for instance: Z. Radwański, Najem mieszkań w świetle publicznej gospodarki lokalami, Warszawa 1961, p. 204 et seq.; T. Dybowski, Ochrona własności w polskim prawie cywilnym, pp. 90-91; A. Kubas, Rozszerzona skuteczność wierzytelności, Studia Cywilistyczne (Civil Law Studies, StC) 1969, vol. XIII-XIV, p. 211 et seq.; P. Machnikowski, in: System Prawa Prywatnego, vol. 3, p. 57-59; Z. Radwański, Prawo cywilne – część ogólna, ed. 10, Warszawa 2009, p. 93-94; K. Zaradkiewicz, a gloss to the judgment of the SC of 22 January 1998, III CKN 365 / 97, Orzecznictwo Sądów Polskich (Jurisprudence of Polish Courts, OSP, formerly OSPiKA) 1998, No. 10, item 170, p. 483; see also: M. de Juglart, Obligation réelle et servitudes en droit privé français, Thèse Bordeaux 1937; A. Jost, Die Realobligation als Rechtsinstitut, Bern 1956; H. Aberkane, Essai d’une théorie générale de l’obligation propter rem en droit positif français, Thèse Paris 1957; H. Deschenaux, Obligations propter rem, in: Jus et Lex, Festgabe für Max Gutzwiller, Basel 1959, p. 711 et seq.; D. Scacchi, L’obligation “propter rem” et les droits personnels annotés au registre foncier, Thèse Locarno 1970.

2. Notion of a “thing” in Polish law

479

Indication of basic rules of Polish property law may cause problems, as Polish literature has never paid great attention to them. Moreover, they have not been particularly defined in any legal act and specifically not by the Civil Code. Therefore, their definition depends on resolving the question whether “basic rules” means rules supported by any of the Act’s dispositions, or maybe rules accepted by the jurisprudence, or by the doctrine.

2.

Notion of a “thing” in Polish law

2.1.

Corporeal nature of a thing

The doctrine generally indicates that, in principle, the object of a property right is a thing (rzecz). At the same time, it underlines that the law foresees some exceptions to this rule. Some property rights, such as pledge and usufruct, may also have as their object other rights, constituting transferable rights (art. 265 and 327 C.C.).29 Some property rights enumerated in the Act may also be the object of a mortgage (perpetual usufruct, mortgage debt and co-operative ownership right in a flat, art. 65 of the Property Rights Register and Mortgage Act). Under the unified Polish law, including the binding Civil Code, only corporeal objects are considered “things” (see art. 45 C.C.).30 It is recognized that the latter constitutes “corporeal parts of nature” in an original or a man-processed form that is independent, i.e. “separate to the extent enabling their treatment as independent goods”.31

29

30

31

S. Grzybowski, Prawo cywilne. Zarys prawa rzeczowego, p. 34; J. Ignatowicz, K. Stefaniuk, Prawo rzeczowe, p. 18-19; P. Machnikowski, in: System Prawa Prywatnego, vol. 3, p. 27; see also: J. Wasilkowski, Prawo rzeczowe w zarysie, Warszawa 1957, p. 8; S. Wójcik, in: System prawa cywilnego, vol. II, p. 12; E. Gniewek, Prawo rzeczowe, p. 3. See for instance: J. Ignatowicz, K. Stefaniuk, Prawo rzeczowe, p. 19; W.J. Katner, in: System Prawa Prywatnego, vol. 1, p. 1179; Z. Radwański, Prawo cywilne – część ogólna, p. 112. J. Ignatowicz, K. Stefaniuk, Prawo rzeczowe, s. 19; see also e.g.: J. Wasilkowski, Prawo rzeczowe w zarysie, p. 9; S. Grzybowski, in: same author (ed.), System prawa cywilnego, vol. I. Część ogólna, Wrocław-Warszawa-Kraków-Gdańsk-Łódź 1985, p. 411; A. Wolter, J. Ignatowicz, K. Stefaniuk, Prawo cywilne. Zarys części ogólnej, ed. 2, Warszawa 2001, p. 233; W.J. Katner, Rozważania nad pojęciem rzeczy ruchomej, Studia Prawno-Ekonomiczne 1985, vol. XXXIV, p. 29, same author, in: System Prawa Prywatnego, vol. 1, p. 1179; Z. Radwański, Prawo cywilne – część ogólna, p. 112-113.

480

Poland

The goods failing to meet such premises are not things32 (including so called res incpororales33), and consequently may not – in principle – be considered objects of property rights. This applies in particular to immaterial goods (dobra niematerialne).34 During the preparatory works, authors of the Code followed German guidelines and principles (see definition of a thing in § 90 BGB35); they intended not to widen this notion and excluded the wide scope of things, which involves the so-called incorporeal things (res incorporales). The draft property law regulations prepared in the 1930s contained a reference to an appropriate application of property rights regulations to goods other than things (vide art. 20 of the 1939 draft).36 As it has been pointed out in relevant literature “narrowing this notion to corporeal things enables an easier differentiation of things among other goods, which is additionally based on a property that has proven helpful in building specific legal institutions”.37 The basic scheme recognized by the Polish law and applicable to things consists in the differentiation between movable (ruchomości) and immovable property (nieruchomości). However, the Civil Code defines only the latter.38 Therefore, it is recognized that each self-contained object, separated from the environment, that is not an immovable, should be considered 32 33

34

35

36

37

E.g.: J. Ignatowicz, K. Stefaniuk, Prawo rzeczowe, s. 19. See more about this term: W. Dajczak, Rzymska res incorporalis a kształtowanie się pojęć „rzeczy“ i „przedmiotu praw rzeczowych“ w europejskiej nauce prawa prywatnego, Poznań 2007. S. Grzybowski, Prawo cywilne. Zarys prawa rzeczowego, p. 30; J. Ignatowicz, K. Stefaniuk, Prawo rzeczowe, p. 19; W.J. Katner, in: System Prawa Prywatnego, vol. 1, p. 1179. “Sachen im Sinne des Gesetzes sind nur körperliche Gegenstände”; see: Z. Żabiński, Wpływ pojęcia rzeczy na kształtowanie się systemu prawa cywilnego, Zeszyty Naukowe Uniwersytetu Jagiellońskiego Prace z Wynalazczości i Ochrony Własności Intelektualnej (Jagiellonian University Research Journal, Papers on Inventiveness and Protection of Intellectual Property, ZNUJ PWOWI) 1974, No. 1, p. 254. See e.g.: F. Zoll, Przedmiot praw rzeczowych, p. 210 et seq.; L. Górnicki, Dobra nie będące rzeczami (inne dobra) w projekcie prawa rzeczowego z 1937 i 1939 roku, Acta Universitatis Wratislaviensis No. 3015, Prawo CCCIII, Wrocław 2007, p. 233 et seq. Z. Radwański, Prawo cywilne – część ogólna, p. 113. As the chairman of the post-war Codification Commission, J. Wasilkowski, indicated in the course of the post-war work “the prevailing view was that a broad objective scope of ownership consisting in making this notion identical with the notion of property, that is with the notion of general rights relating to property would be hardly useful from a legislative point of view”, J. Wasilkowski, Prawo własności w PRL. Zarys wykładu. Opracowane przy współudziale M. Madeya, Warszawa 1969, p. 19; see also e.g.: Z. Żabiński, Wpływ pojęcia rzeczy na kształtowanie się systemu prawa cywilnego, p. 259-260.

2. Notion of a “thing” in Polish law

481

a movable asset.39 The immovable thing being land (grunt, nieruchomość gruntowa) is, as defined in art. 46 C.C., a portion of the earth’s surface40 and, in cases described by the law, contains also buildings attached to it that are called “construction immovable property”, as well as flats that are called “flat immovable property”. According to the general rule of accession (superficies solo cedit, art. 191 C.C.), the latter two categories may be treated as separate immovables only in specific cases (e.g. under specific provisions of the Ownership of Flats Act). Things that are single entities, and only in their entirety, may particularly be a subject of ownership or some other property right. It is not possible to create a property right in a physical or an ideal part of the thing (art. 46 § 1 and art. 47 § 1 C.C.). Animals are not considered things and, following some foreign legislation (e.g. art. 641a of the Swiss ZGB, § 285a of the Austrian ABGB and § 90a of the German BGB), the Polish law treats animals in a particular way only with some references to dispositions regarding things (art. 1 of the Animals’ Protection Act41). Neither watercourses (aqua profluens), nor volatized gas nor natural mineral resources are considered things although the Polish legislation 38

38

39

40

41

See for instance: S. Grzybowski, in: System prawa cywilnego, vol. I, p. 413; A. Wolter, J. Ignatowicz, K. Stefaniuk, Prawo cywilne. Zarys części ogólnej, p. 234; W.J. Katner, in: System Prawa Prywatnego, vol. 1, p. 1180; Z. Radwański, Prawo cywilne – część ogólna, p. 114. See e.g.: A. Wolter, J. Ignatowicz, K. Stefaniuk, Prawo cywilne. Zarys części ogólnej, p. 234; see also for instance S. Grzybowski, in: System prawa cywilnego, vol. I, p. 413; recently on the same subject e.g.: W.J. Katner, in: M. Pyziak-Szafnicka (ed.), Kodeks cywilny. Część ogólna. Komentarz, Warszawa 2009, p. 460. However, in literature according to different criteria there are different definitions of land, see e.g.: A. Klein, Ewolucja pojęcia nieruchomości w polskim prawie cywilnym, in: B. Kordasiewicz, E. Łętowska (ed.), Prace z prawa cywilnego wydane dla uczczenia pracy naukowej Profesora Józefa Stanisława Piątowskiego, Wrocław-Warszawa-KrakówGdańsk-Łódź 1985, p. 93-95; W. Pańko, Własność gruntowa w planowej gospodarce przestrzennej. Studium prawne, Prace naukowe Uniwersytetu Śląskiego w Katowicach No. 230, Katowice 1978, p. 48, 56-58, same author, Uwagi o przedmiocie prawa własności nieruchomości gruntowej, in: A. Agopszowicz (ed.), Problemy Prawne Górnictwa, vol. 2, Katowice 1978, p. 100, 101 i n.; A. Wolter, J. Ignatowicz, K. Stefaniuk, Prawo cywilne. Zarys części ogólnej, s. 234; A. Lipiński, Cywilnoprawne problemy geologii i górnictwa, KPP 1996, No. 4, p. 658; A. Lipiński, R. Mikosz, Ustawa – Prawo geologiczne i górnicze. Komentarz, 2nd ed., Warszawa 2003, p. 56; B. Swaczyna, Prawne wyodrębnienie gruntu na powierzchni ziemi, Rejent 2002, No. 12, p. 88; P. Mysiak, O pojęciu nieruchomości gruntowej, Rejent 2004, No. 8, p. 132. The Act of 21 August 1997, unified text, Dz. U. of 2003 No. 106, item 1002 as amended.

482

Poland

sometimes uses the term of “water ownership” and “minerals ownership”.42 Nevertheless, it is generally approved that the meaning of ownership is different in these cases than the one used by dispositions in the Civil Code.43 Although there is a great deal of controversy about that, it seems to be correct that the enterprise, though it does not correspond with the definition of a thing as provided by the Civil Code, may still be an object of property rights.44 In 1990, the disposition defining this particular object of turnover was added to the Civil Code. An enterprise is an organized set of material and immaterial elements used to pursue business activity 42

43

44

See for instance Art. 7 section 1 of the Geological and Mining Law Act of February 4, 1994 (ustawa z 4 lutego 1994 r. – Prawo geologiczne i górnicze, unified text, Dz. U. of 2005 No. 228, item 1947 as amended) which provides that the mineral deposits not constituting a component part of a land immovable property are the State Treasury property. For more see e.g.: A. Agopszowicz, Własność wód (Jej istota i charakter prawny), Zeszyty Naukowe Uniwersytetu Jagiellońskiego. Prace z Zakresu Prawa Cywilnego i Praw na Dobrach Niematerialnych 1973, vol. CCCXLVI, No. 1, p. 25 et seq; S. Rudnicki, O własności wód, Nowe Prawo (The New Law, NP) 1982, Nos. 7-8, p. 78 et seq.; A. Lipiński, Własność złóż kopalin, StC 1977, vol. 23, p. 182183; E. Gniewek, W kwestii statusu prawnorzeczowego powierzchniowych wód płynących i współwystępujących elementów naturalnych środowiska wodnego, Przegląd Prawa i Administracji 1990, vol. 21, p. 82. See S. Wójcik, Problem uprawnień do złóż kopalin (w związku z reformą prawa górniczego), PiP 1992, No. 1, p. 60. There are, however, opinions in favour of encumbrance of sui generis property right over enterprise. For more see for instance: F. Zoll, A. Kraus, Polska ustawa o zwalczaniu nieuczciwej konkurencji, Poznań 1929, p. 28-30; F. Zoll, Przedsiębiorstwo przedmiotem własności, Przegląd Prawa i Administracji 1925, p. 121 et seq.; J. Widło, Zastaw na przedsiębiorstwie (Uwagi de lege lata i de lege ferenda), PPH 1997, No. 9, p. 29 et seq., same author, Rozporządzanie przedsiębiorstwem, Kraków 2002; same author, Zastaw rejestrowy na prawach, Warszawa 2008, p. 473 et seq.; R. Stroiński, Przedsiębiorstwo, charakter prawny oraz zbycie w prawie amerykańskim, francuskim i polskim, Warszawa 2003, p. 324 et seq.; see also: M. Wilejczyk, Zbycie przedsiębiorstwa, Wrocław 2004, p. 246-247; W.J. Katner, in: System Prawa Prywatnego, vol. 1, p. 1227; Z. Radwański, Prawo cywilne – część ogólna, p. 127-128; against e.g.: I. Karasek, Przedmiot zastawu rejestrowego, KPP 1998, No. 3, p. 478-503. The doctrine postulates for the introduction of a mortgage on an enterprise, like S. Sołtysiński, O potrzebie wprowadzenia nowych form zabezpieczenia kredytu gospodarczego, in: M. Pazdan, M. Sośniak, M. Staszków (ed.), Prace prawnicze dla uczczenia pracy naukowej Karola Gandora, Katowice 1992, p. 185. A similar problem is considered regarding the admissibility of establishing a property right on a farm as defined in Art. 553, C.C. See for instance J. Górecki, Gospodarstwo rolne jako przedmiot zastawu, Rejent 2003, No. 4, p. 50 et seq.; D. Kokoszka, Gospodarstwo rolne. Zagadnienia konstrukcyjne, KPP 2008, No. 4, p. 985 et seq.

2. Notion of a “thing” in Polish law

483

purposes. The Civil Code enumerates some examples of elements that may compose an enterprise (art. 551 C.C.). Introduction of the definition of an enterprise is connected with the introduction of particular rules regarding acquirer and vendor obligations, and especially with the allowed possibility of disposing of the enterprise by way of a legal act (uno actu).45 As a matter of fact, the legal act’s particular nature may produce other consequences than particular legal dispositions (art. 552 C.C.).

2.2.

Res extra commercium

Neither the Civil Code nor any other legal act introduces general premises or indicates which properties might render the thing’s transfer impossible. Therefore, it is possible to accept the fact that the general Civil Code rule consists in the liberty of disposing of the things belonging to an authorized person. It does not mean, however, that there are no separate regulations excluding or limiting the ability to dispose of some goods (however the category of res extra commercium is not defined in either the Civil Code or in any other Act of Parliament).46 This kind of restriction may basically result from the necessity to protect cultural and national heritage, public security (e.g. public roads or military objects47), other people’s life, health, goods, or for moral reasons. An example of things excluded from turnover under Polish law are archaeological heritage items (i.e. some movable heritage items) that constitute State Treasury property (see art. 35 section 1 of the Heritage Preservation and Protection Act of 23 July 200348),49 and also archival material incorporated 45

46

47

48

49

See in particular art. 751 C.C., which regulates the form of a contract of transfer of an enterprise or establishment of the right of usufruct thereon. For more on the notion of res extra commercium see for instance: S. Rudnicki, G. Rudnicki, Komentarz do Kodeksu cywilnego. Księga druga. Własność i inne prawa rzeczowe, 9 ed., Warszawa 2008, pp. 27-28; W.J. Katner, in: M. Pyziak-Szafnicka (ed.), Kodeks cywilny. Część ogólna, pp. 466-468; decision of the SC of 13 October 2006, III CZP 72 / 06, OSNC 2007, No. 6, item 85; decision of the SC of 26 October 2007, III CZP 30 / 07, OSNC 2008, No. 5, item 43. See: decision of the SC of 21 September 1993, III CZP 72 / 93, OSNCP 1994, No. 3, item 49; see also: S. Rudnicki, G. Rudnicki, Komentarz do Kodeksu cywilnego. Księga druga, p. 27-28. Ustawa z 23 lipca 2003 r. o ochronie zabytków i opiece nad zabytkami, Dz.U. No. 162, item 1568 as amended. See: M. Drela, Własność zabytków, Warszawa 2006, pp. 184-189; M. Trzciński, Nagroda pieniężna czy znależne – problemy z określeniem właściwej gratyfikacji za odkrycie bądż znalezienie zabytku, Przegląd Legislacyjny (Legislative Review) 2008, No. 2, pp. 30-31.

Poland

484

in the national archival resource, which under art. 7 of the National Archival Resource and Archives Act of July 14, 198350 shall not be transferable. Moreover, the objects excluded from turnover, which, however, are not treated as things, include human corpses, as well as cells, tissues and organs detached from the body (see the Act of October 26, 1995 on collection and transplantation of cells, tissues and organs51).52

2.3.

Contractual restrictions – art. 57 C.C.

The Civil Code considerably restricts the possibility of a contractual prohibition regarding the transfer of property rights. Basically, contracting parties may not exclude the right of a subsequent third-party owner to freely transfer those rights. Article 57 provides that “one may by legal action neither exclude nor limit the powers to transfer, encumber, change or cancel the right if the right is statutorily transferable” (see § 137 BGB). Moreover, in regard to pledge and mortgage regulations, there is an express indication defending the owner of the thing (a pledger, an owner of hypothecated immovable) against any contractual provision of transfer or encumbrance of the thing before the pledge or the mortgage extinction (see art. 311 C.C., concerning pledge and art. 72 of the Property Rights Register and Mortgage Act, concerning mortgage).53 It is, however, possible to limit such a possibility (freedom of disposition) and this problem is regulated in the general part of the Civil Code. The only acceptable solution is that the authorized person will not accomplish any of “determined dispositions of the right” (§ 2 of art. 57 C.C.). This obligation does not, however, cause inefficacity of dispositions accomplished by the authorized person, but it may explain the obligation to fix the damage caused by the negotiation.54 50

51 52

53

54

Ustawa z dnia 14 lipca 1983 r. o narodowym zasobie archiwalnym i archiwach, Dz. U. of 2002, No. 171, item 1396 as amended. Dz. U. No. 138, item 682. Z. Radwański, Prawo cywilne – część ogólna, p. 113; the legal nature of human corpses and parts of the human body may be regarded as disputable; some authors recognize a human corpse as a thing; see: S. Grzybowski, in: System prawa cywilnego, vol. I, p. 411; see however: E. Skowrońska-Bocian, in: K. Pietrzykowski (ed.), Kodeks cywilny. Komentarz do artykułów 1-44911, vol. 1, ed. 5, Warszawa 2008, p. 248 and literature cited. An exception is envisaged under art. 14 section 1 of the Register of Pledge and Non-possessory Pledge Act, which permits contractual exclusion of transfer or encumbrance of a pledged object. See judgment of the SC of 5 March 1981, II CR 39 / 81, OSNC 1981, No. 12 item 239.

2. Notion of a “thing” in Polish law

485

Obviously, concluding a contract of assignment on some conditions (a suspending or a dissolving condition) or with a term clause (a dies, ad quo) is a different problem. Contrary to the immovables, it is possible only in case of transfer of movable property.55 Therefore, it seems possible that the temporal ownership of movables does exist in Polish law (własność czasowa, dominium ad tempus) and there have been many controversies regarding this problem for a long time.56 It is worth noting that in accordance with the judgment of the Supreme Court, “ownership is (…) an absolute right, not limited in time and effective for any person controlling a thing without any entitlement having effect against the owner”.57

2.4.

Specific and generic things

The basic legal division of things, according to the Civil Code, is between those that are determinable by their identity (rzeczy oznaczone co do tożsamości) and those that are determinable by their kind (rzeczy oznaczone co do gatunku, res, quae pondere numero mensura constant). Although the Civil Code refers to this division in its many dispositions, there is no explanation of these two categories and when each should be considered. The division’s criteria are simply not clear-cut and may give rise to many doubts.58 The solution is supposed to be found within the doctrine and by the jurisprudence. For instance the Supreme Court pointed out in its decision of 30 December 1988, III CZP 48 / 88, that “things determinable by their identity are irreplaceable, particularly things manufactured for a specific, 55

56

57

58

Generally a term clause is possible in case of dispositions of real rights other than ownership. S. Wróblewski, Podstawienie powiernicze, Czasopismo Prawne i Ekonomiczne 1903, No. 4, p. 51 et seq.; same author, Zarys wykładu prawa rzymskiego. Prawo rzeczowe, Kraków 1919, p. 3-4; F. Zoll, Prawo cywilne opracowane głównie na podstawie przepisów obowiązujących w Malopolsce. Tom II. Prawa rzeczowe i rzeczowym podobne, 3rd ed., Poznań 1931, p. 8-10; same author, Prawo cywilne w zarysie. Prawo rzeczowe. vol. II, Part 1, Kraków 1947, p. 162 et seq.; J. Wasilkowski, Zarys prawa rzeczowego, Warszawa 1963, p. 156; S. Ritterman, Pojęcia materialne w prawie cywilnym, Kraków 1962, p. 303-304; T. Dybowski, Ochrona własności w polskim prawie cywilnym, p. 274; A. Stelmachowski, in: System Prawa Prywatnego, vol. 3, p. 230. Judgment of the SC of 22 November 1994, II CRN 127 / 94, LEX No. 82293; see also e.g.: A. Stelmachowski, in: System Prawa Prywatnego, vol. 3, p. 231. For more on this division see e.g.: S. Grzybowski, in: System prawa cywilnego, vol. I, pp. 424-426; E. Skowrońska-Bocian, in: K. Pietrzykowski (ed.), Kodeks cywilny. Komentarz do artykułów 1-44911, vol. 1, pp. 249-250; W.J. Katner, in: M. PyziakSzafnicka (ed.), Kodeks cywilny. Część ogólna, pp. 461-462.

486

Poland

individualized contracting party characterized by specific properties. On the other hand, new, bulk manufactured things differing only in terms of some external features or a set of accessories are determinable only by their kind. The basic criterion enabling the differentiation between the two categories is replaceability or irreplaceability, and not their identity”.59 It has been even indicated that this division is of a subjective nature, by assigning a decisive role to the parties’ will.60 Certainly the notion of a thing determinable by its identity is applicable when a choice was made of a specific object exhibiting individualizing features, e.g. a colour or a number of component parts (as in the case of a vehicle’s engine).61 Generally speaking it is recognized that things determinable by their identity are objects “exhibiting individual properties”. On the other hand, the things determinable by their kind are those “that exhibit only some generic properties”.62 Usually it is indicated that immovables shall at all times constitute things determinable by their identity.63 In principle an object of subjective real rights – as distinct from personal rights arising from obligatory relationships – is a thing determinable by its identity. It may be a generic thing only in a few cases (e.g. art. 264 C.C., regulating irregular usufruct). It should be noted that the objects of real rights may be things that exist physically and are individualized.64 Estates, including collections of things, a so-called collective thing (rzecz zbiorowa) as distinguished in foreign legal systems (a matter of issue),65 and collections of rights (universitas rerum, universitas iuris), are not things under Polish law.66 59 60 61

62 63

64 65

66

OSNC 1989, no. 3, item 36. J. Ignatowicz, K. Stefaniuk, Prawo rzeczowe, p. 23. See Judgment of the SC of 13 April 1983, I CR 46 / 83, LEX No. 8526, comment of E. Łętowska in: PiP 1983, No. 12, p. 132. J. Ignatowicz, K. Stefaniuk, Prawo rzeczowe, p. 23 For this see for instance: Z. Radwański, Prawo cywilne – część ogólna, p. 117; W.J. Katner, in: M. Pyziak-Szafnicka (ed.), Kodeks cywilny. Część ogólna, p. 461. J. Ignatowicz, K. Stefaniuk, Prawo rzeczowe, p. 20. For more on this subject see e.g.: S. Grzybowski, in: System prawa cywilnego, vol. I. pp. 456-457; W.J. Katner, in: M. Pyziak-Szafnicka (ed.), Kodeks cywilny. Część ogólna, p. 464; both authors use the term “collective object” instead of collective things; see also S. Rudnicki, G. Rudnicki, Komentarz do Kodeksu cywilnego. Księga druga, p. 28, authors for “collective thing” use the term universitas rerum. A swarm of bees which is a specific object of real rights may be treated as a “collective thing”, see ibidem, p. 268, also B. Hofmański, Kwalifikacja prawnorzeczowa roju pszczół i jego składników według kodeksu cywilnego, NP 1989, Nos. 5-6, p. 78 ff.; J. Buczek, Cywilnoprawna problematyka hodowli pszczół, Przegląd Sądowy (Court Review, PS) 2003, No. 2, pp. 34-35; P. Księżak, Rzeczy niczyje, Rejent 2006, No. 4, s. 74. J. Ignatowicz, K. Stefaniuk, Prawo rzeczowe, p. 20.

2. Notion of a “thing” in Polish law

2.5.

487

Accessories and parts of a thing

Similarly to other European legislation, the Polish Civil Code identifies the elements creating a thing (component parts, części składowe) and accessories (appurtenances, przynależności). The component parts may be referred to only if a thing is not of a uniform nature (composition), but is composed of various elements usually made of different materials.67 A component part is a part of a thing – being therefore identified with the thing itself – and, for this reason, it may not be held as an independent object of a real agreement (art. 47 § 1 C.C.).68 It is therefore impossible to acquire a separate, independent real right (including ownership and limited rights) in a component part. In accordance with the definition provided in art. 47 § 2 C.C., “a component part of a thing is anything that may not be separated without material alteration or damage of the thing in whole or of the part being separated”. A component part shall not be one connected with a thing only for temporal, occasional use (art. 47 § 3 C.C.). Unlike the German Civil Code (see § 93 BGB69), the Polish code does not introduce any subdivision regarding component parts.70 Component parts may include elements attached to an immovable (land, a structure, a flat), as well as to a movable. The notion of parts of a thing is connected with the issue of the nature of a thing as a whole. Firstly, a component part of a thing may not be treated as an “addition” to a thing, or as an element not constituting a part of the whole. In this sense the sometimes used notion of “the main thing” (rzecz główna) to make a distinction between the basic element and the additional one, identified as “its component part”, is imprecise. It needs to be recognized that each of the parts of a thing, which is distinguishable by its physical properties, constitutes “a component part” of a thing, regardless of whether it constitutes a basic or an additional element. Secondly, it is arguable whether only a thing as a whole may be an object of possession or its component part as well.71 The first view that one may possess only a thing as a whole – at least regarding real rights – might 67

68 69

70 71

E.g.: J. Ignatowicz, K. Stefaniuk, Prawo rzeczowe, p. 23; Z. Radwański, Prawo cywilne – część ogólna, s. 117; W.J. Katner, Rozważania nad pojęciem rzeczy ruchomej, p. 33; same author, in: System Prawa Prywatnego, vol. 1, p. 1191. T. Dybowski, Części składowe rzeczy, NP 1969, No. 1, p. 80. German law recognises a cathegory of so called “wesentlichen Bestandteilen” (basic component parts) and “Scheinbestanteilen” (apparent component parts). See W.J. Katner, in: System Prawa Prywatnego, vol. 1, p. 1192. On acquisifive prescription of a part of immovable see e.g.: H. Gardocka, Zasiedzenie udziału lub części fizycznej nieruchomości wspólnej przez współwłaściciela, Palestra 2008, Nos. 7-8, p. 68-69.

488

Poland

be substantiated by the reasoning of the Supreme Court, which recognizes that “the admissibility of possession is resolved by the admissibility of the establishment of a real right”. Though the judgment concerned an immovable and its component parts, it needs to be recognized that the proposition contained therein has a broader meaning.72 An ensuing statement is that one may not take possession by way of usucapio (acquisitive prescription) of a dwelling unit that has not been separated as a separate object of ownership73(e.g. in the event that an agreement establishing a separate ownership of a dwelling unit is found illegal). This view, however, may arouse doubts as possession needs to be distinguished from its effects. Not in every case a person who is an independent owner of a thing (exercises control over a thing as an owner – art. 336 C.C.), may acquire ownership by way of usucapio (e.g. a foreigner needs a permission to acquire ownership by way of usucapio74). For this reason the possibility of acquiring ownership may not determine the possibility of independent (proprietary) possession of a thing. By the same token independent possession of a component part of a thing may be admissible, but shall not lead to acquisition of ownership. As distinct from component parts, accessories are independent corporeal objects called things.75 The notion of accessories refers however only to movables. An accessory is a movable thing that is needed to make use of another thing called the main thing in compliance with the purpose of this use. An accessory and the main thing are supposed to stay in real connection with one another complying with their purpose (art. 51 § 1 C.C.). A temporal lack of a real connection does not take away from a thing its aspect of an accessory (art. 51 § 3 C.C.). The existence of subject identity (i.e. the same person being the owner of the two things) is necessary to consider a movable thing as an accessory. Therefore, one person should be the owner of the main thing and of the accessory (art. 51 § 2 C.C.). The crucial meaning of this division consists in the fact that, basically, the legal act concerning the main thing is also effective regarding the accessory. Different arrangements (excluding this effect) are also possible in accordance with the content of a legal act or a particular disposition (art. 52 C.C.).

72 73

74

75

Judgment of the SC of 6 June 1973, I CR 413 / 73, LEX No. 7265. See for instance J. Ignatowicz, K. Stefaniuk, Prawo rzeczowe, p. 148; E. SkowrońskaBocian, in: K. Pietrzykowski (ed.), Kodeks cywilny, Komentarz do artykułów 1-44911, vol. I, p. 619; E. Gniewek, Kodeks cywilny. Księga druga. Własność i inne prawa rzeczowe. Komentarz, Kraków 2001, p. 287. See art. 1 section 4 of the Act of 24 March 1920 on the acquisition of immovable property by foreigners (unified text Dz. U. of 2004 No 167, item 1758 as amended). Z. Radwański, Prawo cywilne – część ogólna, p. 119.

2. Notion of a “thing” in Polish law

2.6.

489

Fruits

The Polish civil law knows three categories of fruits (pożytki): 1) natural fruits of the thing (pożytki naturalne rzeczy), 2) civil fruits of the thing (pożytki cywilne rzeczy) and 3) fruits of the right (pożytki prawa, see art. 53 C.C.).76 Basically these three categories are established depending on what the object (source) of the fruit actually is. As a result, only fruits of the thing and fruits of the right should be distinguished and, regarding fruits of the thing, only natural and civil fruits should be considered.77 Natural fruits are fruits of the earth and other component parts disconnected from the thing “provided that according to principles of regular economy they constitute normal revenue from the thing” (art. 53 § 1 C.C.). Civil fruits are revenues acquired on the basis of the legal relationship (art. 53 § 2 C.C.). An authorisation is required to obtain revenues from the fruits. In the case of natural fruits of the thing, the authorised person acquires them as disconnected from the thing, but only during the period of authorisation’s validity. On the other hand, in the case of civil fruits, it is “in relation to the duration of authorisation’s validity” (art. 55 § 1 C.C.). If a person authorised to benefit from the fruit has incurred costs to acquire the fruit and the third person has taken advantage of it, the authorised person might claim pay for costs incurred. Nevertheless, the pay may not be of higher value than the fruit (art. 55 § 2 C.C.). Fruits of the right are “revenues that the right may bring in accordance with its socio-economic purpose” (art. 54 C.C., e.g. interest on debts78). Under art. 13 section 1 of the Water Law Act of 18 July 2001,79 fish and other organisms living in water are its fruits and the owner of the water is entitled to collect them. A person authorised to collect fruits in a fishbreeding water container situated on public inland surface stream waters is its owner (section 1a), whereas a person authorised to collect fruits (by way of fishing) in an artificial water container situated on public inland surface stream waters is the director of a regional water economy administration if maintenance and management of this particular water container lies within his competence (section 1b). 76

77

78

79

A. Wolter, J. Ignatowicz, K. Stefaniuk, Prawo cywilne. Zarys części ogólnej, p. 240; Z. Radwański, Prawo cywilne – część ogólna, p. 120. A. Wolter, J. Ignatowicz, K. Stefaniuk, Prawo cywilne. Zarys części ogólnej, p. 240; Z. Radwański, Prawo cywilne – część ogólna, p. 120-121. Vide decision of the SC of 30 May 1979, III CZP 29 / 79, OSN 1979, No. 11 item 214. Ustawa z 18 lipca 2001 r. – Prawo wodne, unified text, Dz. U. of 2005, Nr 239, item 2019 as amended.

Poland

490

In the case of co-ownership, the fruits and other revenues obtained from a co-owned thing fall to co-owners on the basis of divided shares (art. 207 C.C.).

2.7.

Registered movables

The institution of registered movables is basically alien to Polish law. The Polish Civil Code does not know such a separate legal category. There is no register that would disclose movables in general. One need not forget however that in a few cases specific registers have been introduced for certain kinds of movables. Although a vehicle register (e.g. the car register, see art. 80a of the Road Traffic Law Act of 20 June 199780) represents a specific register, nevertheless the fact of having been entered in it entails no real right effects. The same applies to the heritage (monuments) register (see art. 10 of the Heritage Preservation and Protection Act). A typical example of a movable that is to be entered in a separate register is a sea-going ship (statek morski) defined as “any watercraft intended for or used in maritime navigation” (art. 2 § 1 of the Maritime Code – Kodeks morski81). The shipping register (rejestr okrętowy) entries cover ships: 1. being Polish property and treated as such (a permanent register), 2. that obtained temporal Polish nationality (a temporal register), 3. under construction (a register of ships under construction). The shipping register entries contain inter alia registered owner identification number, maritime mortgage and restrictions in the disposition of a ship (art. 29 § 1 M.C.). A ship that drowned, was damaged, lost, lost Polish nationality and / or lost the sea-going ship status shall be deleted from the register (art. 31 § 1 M.C.). Upon entry in the register, a ship obtains a ship certificate or – in the case of a ship under construction – a certificate for a ship under construction (see art. 36 M.C.). An agreement to transfer ownership of a sea-going ship, that is Polish property and obligatorily entered in the shipping register, should be made in writing with signatures of the parties certified by a notary public (see art. 74 M.C.). Any provision on the transfer of a ship applies respectively to the transfer of a share in the ownership of the ship (art. 75). The assessment of effects of entries in the shipping register shall be governed by respective property rights register and mortgage regulations (art. 35 § 2 M.C.). 80

81

Ustawa z 20 czerwca 1997 r. – Prawo o ruchu drogowym, Dz. U of 2005. No. 108, item 908 as amended. The Act of 18 June 2001, unified text: Dz. U. of 2009, No. 217, item 1689.

3. Publicity principle in property law

491

The duty of registration applies also to inland navigation ships. They are entered in the so-called administrative register of Polish inland navigation ships (for details see art. 18 ff. of the Inland Navigation Act of 21 December 200082). There is also a separate aircraft register (Civil Aircraft Register, Rejestr cywilnych statków powietrznych). It is kept by the Chairman of Civil Aviation Office (See art. 34 of the Air Law Act of 3 July 200283). Entered in the Civil Aircraft Register are civil aircraft owned by a natural person of Polish nationality, a legal person with a registered office in the territory of Poland or a foreign person with a permanent place of residence in Poland (art. 35 of the Air Law). The register entries contain the aircraft owner data, as well as any encumbrances (e.g. a pledge) established on the aircraft (art. 36 section 1 of the Air Law). Similar to sea-going ships entered in the shipping register, the assessment of effects of entries in the aircraft register is governed by the respective regulations of the Property Rights Register and Mortgage Act (art. 38 section 2 of the Air Law). Although under this Act the acquisition of aircraft ownership shall not depend on entering it in a register, nevertheless in relation to third parties the owner may invoke his real right only upon entry in the register (art. 38 section 1 of the Air Law). A special kind of register is the register of pledges (rejestr zastawów). It discloses pledges in movables by registration (See also below, No. 8.2). There also exists a separate register of pledges of the State Treasury (or fiscal, tax pledges, zastaw skarbowy, see art. 41 ff. of the Tax Ordinance of 29 August 199784).

3.

Publicity principle in property law

While the codification work in 1930s was in progress, pursuant to some of the traditional solutions of a number of other European legislations, the idea emerged to introduce the publicity principle regarding transfer or other dispositions (e.g. encumbrance with a limited real right) of things by way of a legal act. In the case of dispositions of real rights in movables, the publicity was supposed to be achieved by way of a duty of imposed on the acquirer (traditio corporalis or other way of transfer of possession regulated 82

83

84

Ustawa z 21 grudnia 2000 r. o żegludze śródlądowej. unified text: Dz. U. of 2006, No. 123, item 857 as amended. Ustawa z 3 lipca 2002 r. – Prawo lotnicze, Dz. U. of 2006, No. 100, item 696 as amended. Ustawa z 29 sierpnia 1997 r. – Ordynacja podatkowa, unified text: Dz. U. 2005, No. 8, item 60.

492

Poland

by the law) and, in the case of dispositions of real rights in immovables, by way of a registration (wpis) in the real property register. Regarding the principle of entry in a property register, this system was strongly criticised by one of the most famous Polish lawyers of the time, Fryderyk Zoll (1865-1948). He condemned irregularities, appearing mostly in the Polish territory occupied by Austria in 1795-1918, regarding the registration procedure for the transfer of immovables.85 He was convinced of the necessity of abandoning this registry principle, or at least of introducing appropriate legal instruments protecting those who had obtained immovables after the contract conclusion but without registration (imprimis by way of introducing petitory protection of legal possession, the so-called actio publiciana in rem).86 Although the Codification Commission did not appreciate F. Zoll’s ideas before 1939, its new members, who were making efforts to unify the property law after the Second World War, found those ideas important enough to abandon the registry principle. Probably, the Commission members considered F. Zoll’s objection in the light of difficulties encountered in the application of the registry principle and the necessity of bulk creation of real property registers after WW II.87 Last but not least there was an urgent necessity to restore ownership relationships ruined by the war and its effects (although acts passed by German Nazi occupants in 1939-1945 were considered null and void, nonetheless because of the loss of eastern territories to the former Soviet Union and the political situation of the time, the problem of legislation concerning eastern territories of the Republic of Poland was never discussed). Abandonment of the registry principle as applied to disposition of real rights in immovables also caused the lifting of the traditio principle (transfer of possession as a means of fulfilling the requirement of publicity principle in 85

86 87

See e.g.: F. Zoll, Na marginesie projektu prawa rzeczowego. Zasada wpisu a posiadanie prawne, KPP 1938, No. 1, p. 17 et seq.; same author, Prawo cywilne w zarysie. Prawo rzeczowe. vol. II, Part 1, p. 48 et seq.; same author, Petytoryjna ochrona posiadania prawego, PN 1947, vol. II, pp. 15-17. See above cited publications of F. Zoll. See the unpublished F. Zoll’s vota separata to the property law draft, Archiwum Akt Nowych (The New Records Archives), Record: the Ministry of Justice file No. 4421; F. Zoll, Znaczenie wpisów w księgach gruntowych w przyszłym kodeksie cywilnym polskim, Czasopismo Prawnicze i Ekonomiczne 1945, No. 7-12, p. 72 et seq.; see also same author, Petytoryjna ochrona posiadania prawego, p. 17; S. Szer, Nabycie własności nieruchomości według nowego prawa rzeczowego, PiP 1946, Nos. 9-10, pp. 56-57 L. Górnicki, Problem prawnej ochrony własności nieruchomości, nie wpisanej do ksiąg gruntowych w okresie zaborów i w Polsce niepodległej, Acta Universitatis Wratislaviensis No. 2367. Prawo CCLXXVI, Wrocław 2002, pp. 201-202.

4. Rule (presumption) of good faith

493

cases of disposition of real rights in movables. Similarly to the French Civil Code, the system abandoning the publicity principle was maintained by the Decree of 1946,88 and also by the Code of 1964. The unified Polish legal system is the so-called consensual transfer system.89 This is not to say however that Polish law abandoned the publicity requirement altogether.90 The registration or the transfer of possession was respectively maintained in all appropriate cases and, above all, in cases of security interests in real rights (i.e. pledge and mortgage).

4.

Rule (presumption) of good faith

The good faith principle is not usually found in Polish literature. Notwithstanding, considering the binding nature of regulations, it may serve a purpose. Good faith (dobra wiara) in the so-called subjective sense, i.e. as a statutory notion relating to a person’s mental condition, is of relevant importance, particularly so long as a property law institution is concerned.91 It should be stressed that the Civil Code introduces a general presumption of good faith (art. 7). This means that bad faith must be proved by the person who denies the presence of good faith. Good faith in property law may concern the whole body of circumstances that justify a conclusion about either the existence or non-existence of a specific real right. In particular, good faith may be construed as one’s conviction that property belongs to him or her. The basis of good faith may be dependent on either possession or the status disclosed in a respective public register. It should also be noted that this notion is not unequivocally construed either in general terms under real right regulations or with reference to individual institutions.92 88

89

90 91

92

See e.g.: F. Zoll, Prawo cywilne w zarysie. Prawo rzeczowe. vol. II, Part 1, p. 53; same author, Petytoryjna ochrona posiadania prawego, p. 17. See for instance: Komitet Nauk Prawnych PAN i Ministerstwo Sprawiedliwości, Materiały dyskusyjne do Projektu Kodeksu Cywilnego Polskiej Rzeczypospolitej Ludowej, Warszawa 1955, p. 121 ff., 139 ff. See for instance: P. Machnikowski, in: System Prawa Prywatnego, vol. 3, pp. 45-53. For more see e.g.: B. Janiszewska, Koncepcje dobrej wiary w przepisach prawa rzeczowego. Zasiedzenie nieruchomości, roszczenie o wykup gruntu, Warszawa 2005. For instance differences in construing the notion of good faith emerge on grounds of usucapio regulations and art. 231 C.C. regulating a claim of an independent possessor of an immovable where he erected a building for transfer of ownership of this immovable, see particularly the judgment of the SC of 20 May 1997,II CKN 172/97, OSN 1997, No. 12 item 196 and therein recalled earlier judgments. This direction of jurisprudence is opposed by a part of jurists, see E. Gniewek, Kodeks cywilny …, p. 576.

Poland

494

Good faith, considered as the conviction justified by the case’s circumstances that possession status complies with the subjective right (providing the absence of negligence on the part of interested person, fulfils the same function in all property law relationships; hence, it should in principle be assigned the same meaning for various property law institutions (art. 172 § 1 C.C., 169 § 1 C.C., 224-229 C.C.)”.93 The Supreme Court recognizes that the notions of good and bad faith constitute general provisions and, consequently for the actual status assessment, they should encompass various circumstances. Consequently they may not be assessed identically “once for all”.94 However it has been indicated that good and bad faith is “a matter of the owner’s consciousness”.95

5.

Possession

5.1.

Nature and notion

Possession (posiadanie) is a separate institution in Polish civil law, but despite this it is regulated in the property law book of the Civil Code. Nevertheless, the Polish Civil Code does not explicitly define what possession is.96 The doctrine neither considers it a subjective right97 nor, in particular, a real right, but merely a legally relevant fact.98

93

94 95 96 97

98

Judgment of the Court of Appeal in Lublin of 7 November 1996, I ACr 288 / 96, see above. Judgment of the SC of 29 March 1979, III CRN 59 / 79, LEX Nr. 8176. Judgment of the SC of 28 July 1978, III CRN 126 / 78, LEX Nr. 8126. Z.K. Nowakowski, Prawo rzeczowe. Zarys wykładu, p. 232. Cf. (opposite view): A. Stelmachowski, Istota i funkcja posiadania, Warszawa 1958, pp. 42, 54 et seq., same author, Środki usuwania sprzeczności między układem stosunków faktycznych a układem stosunków prawnych w prawie cywilnym, ZNUJ PWOWI 1974, vol. 1, p. 143, same author, Zarys teorii prawa cywilnego, Warszawa 1998, pp. 255-257; see also: A. Ohanowicz, Recenzja pracy A. Stelmachowskiego, NP 1958, No. 5, p. 103; S. Ritterman, Pojęcia materialne w prawie cywilnym, p. 299; B. Zdziennicki, Charakter prawny posiadania, Palestra 1976, No. 11, p. 7. See e.g.: S. Grzybowski, Prawo cywilne. Zarys prawa rzeczowego, p. 178; J. Ignatowicz, K. Stefaniuk, Prawo rzeczowe, p. 325; E. Gniewek, Prawo rzeczowe, pp. 272-273; J. Gołaczyński, in: System Prawa Prywatnego, vol. 4, pp. 23-24; some authors recognize it as “more than a mere fact”, see A. Kunicki, Zewnętrzna i wewnętrzna istota posiadania w prawie polskim, Roczniki Nauk Społecznych KUL Prawo-ekonomia-socjologia 1949, vol. 1, p. 116; see also same author, Elementy romańskie i germańskie w konstrukcji posiadania według kodeksu cywilnego, Studia Prawnicze 1970, z. 26-27, pp. 77-78.

5. Possession

495

Possession is an institution distinct from custody (dzierżenie) and from precarium.99 Following the Civil Code definition, a custodian is the one who “controls a thing physically on behalf of another person”, in other words, alieno nomine (art. 338). A custodian, and in particular a person holding a thing under precarium (permissive occupation), has no animus possidendi. Polish law did not share Roman ideas dividing possession into possession of things and possession of rights (possessio rei, i.e. ownership on the one hand and possessio iuris on the other),100 nor the German idea of a uniform notion of possession according to which there is no other kind of possession than a direct and an indirect one. In the Civil Code, they were replaced by the distinction between independent possession (posiadanie samoistne) and dependent possession (posiadanie zależne).101 An independent possessor is the one who exercises control over a thing as an owner. On the other hand, a dependent possessor is the one who governs a thing in a way proper for a person entitled to use on the basis of usufruct, pledge, and rental or lease right, or any other right, which enables exercising control over someone else’s thing (art. 336 C.C.). Despite its particular properties, the doctrine seems to rather believe that a dependent possessor is also a possessor of an immovable in a way proper for perpetual usufruct.102 99

100 101

102

See e.g.: Z.K. Nowakowski, Prawo rzeczowe. Zarys wykładu, pp. 240-242; S. Grzybowski, Prawo cywilne. Zarys prawa rzeczowego, p. 183-184; J. Ignatowicz, K. Stefaniuk, Prawo rzeczowe, pp. 324-325; E. Gniewek, Prawo rzeczowe, pp. 271-272. S. Grzybowski, Prawo cywilne. Zarys prawa rzeczowego, p. 180-181. For more on this subject see e.g.: A. Kunicki, Elementy romańskie i germańskie w konstrukcji posiadania …, passim. In terms of structure perpetual usufruct resembles the construction right existing in some countries (e.g. Germany, Austria). It is not, however, a limited real right; it is regulated by the Civil Code by regulations placed between ownership regulations and limited real rights’ regulations (Arts. 232-243); for more on possession: J. lgnatowicz, in: Z. Resich, J. Ignatowicz, J. Pietrzykowski, J.I. Bielski (ed.), Kodeks cywilny. Komentarz. Vol. 1. Warszawa 1972, p. 772; J. Winiarz, in: System prawa cywilnego, vol II, p. 595; S. Wójcik. Z problematyki użytkowania wieczystego, NP 1977, No. 6, p. 804; J. Ignatowicz, K. Stefaniuk, Prawo rzeczowe, pp. 320-321; Z. Truszkiewicz, Posiadanie w zakresie prawa użytkowania wieczystego, in: S. Prutis (ed.), Profesorowi Andrzejowi Stelmachowskiemu. Studia Iuridica Agraria. vol. V, Białystok 2005, p. 229 et seq.; same author, Użytkowanie wieczyste. Zagadnienia konstrukcyjne, p. 312 et seq.; J. Gołaczyński, in: System Prawa Prywatnego, vol. 3, p. 7-8; judgment of the SC of 28 June 1973, III CRN 154 / 73, OSNC 1974, No. 6, item 111; judgment of the SC of 18 June 1975, II CR 238 / 75, OSPiKA 1976, Nos. 7-8, item 150; opposite: judgment of the SC of 17 April 1997, I CKU 32 / 97, Prok.i Pr. 1997, No. 10, p. 35; judgment of the SC of 28 September 2000, IV CKN 103 / 00, LEX No. 52513.

496

Poland

Independent possessor does not lose his possession while giving the thing in dependent possession to another subject (art. 337 C.C.). It is possible to admit that there are two different kinds of possession at the same time – an independent (but then indirect) and a dependent one.103 Temporal non-performance of control does not deprive the possessor of the possessor’s capacity. Thus he does not lose possession. An essential element is the actual possibility of exercising control in as an owner.104 Turning the thing over to a third party for further dependent possession also does not cause – by analogy to art. 337 C.C. – the possessor to lose dependent possession.105 The possibility of joint performance of control by more than one subject is not to be excluded. There is a possibility of co-possession of the same thing by various persons in a variety of configurations despite the fact that the co-possession institution has not been regulated by the Civil Code. The same thing may be co-possessed in divided shares corresponding with physical parts of a thing, separately by each co-possessor (with a separate part assigned to each of the co-entitled parties) within the scope of the same or various subjective rights.106 Possession is composed of two elements – intention to hold a thing (animus rem sibi habendi) and physical control over a thing (corpus possessionis). Literature refers to these elements as internal and external sides of possession.107 Physical control over a thing is treated as an actual relationship granting impact on the thing in question by way of direct physical measures. The latter implies not only the actual performance, but also the mere possibility of exercising actual power108. In the light of jurisprudence, possession implies not only actual performance, thus actual use of a thing (the proverbial “walking on the ground”109), but also the mere possibility of control.110 An essential proposition regarding the nature of control with 103 104 105 106

107

108

109

J. Gołaczyński, in: System Prawa Prywatnego, vol. 4, p. 6. See Judgment of the SC of 7 April 1994, III CRN 18 / 94, LEX No. 137701. Judgment of the SC of 19 November 1993, II CRN 130 / 93, LEX No. 78220. For more on this subject see e.g.: J. Ignatowicz, Ochrona posiadania, Warszawa 1963, p. 99 et seq. German “äussere und innere Seite”: L. Piniński, Der Thatbestand des Sachbesitzerwerbs nach gemeinem Recht, Leipzig 1885, p. 31; see also: A. Kunicki, Zewnętrzna i wewnętrzna istota posiadania w prawie polskim, Roczniki Nauk Społecznych KUL Prawo-ekonomiasocjologia 1949, vol. 1, p. 107; J. Ignatowicz, Ochrona posiadania, p. 52. For more on the same subject also: J. Gołaczyński, in: System Prawa Prywatnego, vol. 4, p. 5. J. Gołaczyński, System Prawa Prywatnego, vol. 4, p. 4; vide also ruling of the SC of 3 June 1966, III CR 108 / 66, OSP 1967, No. 10, item. 234. See: Celsus, D. 41, 2, 18: « possidere me certum est, quamquam id nemo dum attigerit », see for more on this subject: S. Wróblewski, Prawo rzeczowe, pp. 109-110.

5. Possession

497

respect to possession was included by the Supreme Court in its judgment of 15 June 1972 wherein it indicated that “possession is an actual state consisting in actual control, construed as the mere possibility of exercising control over a thing. The efficient use of a thing (an immovable) in the economic sense is not a prerequisite of possession”.111 In its jurisprudence the Supreme Court emphasizes the existence of a relation between control and performance of the right by the possessor.112 Though it is not explicitly provided for in possession regulations, possession is recognized as an actual state subject to succession and may compose an inheritance.113 This conclusion may be drawn on the basis of the provisions under art. 176 § 2 C.C. concerning usucapio (see below part III chapter 21). Heredity of possession is accepted by the Supreme Court.114 It indicates that succession implies “passing on to heirs – ex lege, upon opening of an inheritance – of all legal effects, resulting from possession by a testator, whereas it does not depend on whether heirs took actual control over a thing hitherto held in possession of the testator, hence, whether they continue his possession or not”.115 110

5.2.

Presumption connected with possession

Although the Polish civil law, as compared to other systems, does not reflect exactly the publicity principle consisting in the obligation to deliver the thing or to make an entry in the appropriate register, the Polish legislator, for several reasons, decided to leave traditional presumptions that had developed from this legal principle in the group of legal pronouncements concerning possession. 110

111 112

113

114

115

Judgment of SC of 14 March 2003, V CKN 1739 / 00, LEX No. 146422; see also: Judgment of the SC of 3 June 1966, III CR 108 / 66, OSP 1967, No. 10, item 234. Judgment of the SC of 15 June 1972, III CRN 121 / 72, LEX No. 7096. Judgment of the SC of 12 December 1977, II CR 463 / 77, OSP 1978, No. 6 item 112; for more see also: S. Grzybowski, Prawo cywilne. Zarys prawa rzeczowego, p. 178; J. Ignatowicz, K. Stefaniuk, Prawo rzeczowe, p. 320-321; E. Gniewek, Prawo rzeczowe, p. 269; J. Gołaczyński, in: System Prawa Prywatnego, vol. 4, p. 6-7. See e.g.: J. Gołaczyński, in: System Prawa Prywatnego, vol. 4, p. 35-37; compare also especially: S. Wójcik, Czy posiadanie jest dziedziczne?, in: W. Osuchowski, M. Sośniak, B. Walaszek (ed.), Rozprawy prawnicze. Księga pamiątkowa dla uczczenia pracy naukowej Kazimierza Przybyłowskiego, Warszawa-Kraków 1964, p. 515 et seq. See: decision of the SC of 26 January 1968, III CZP 100 / 67, OSN 1968, Nos. 8-9, item. 134; also: judgment of the SC of 20 May 1968, I CR 247 / 68, OSN 1969, No. 11 item 198. Decision of the SC of 28 April 1999, I CKU 105 / 98, OSN 1999, No. 11 item 197.

Poland

498

Firstly, it is presumed that the person having actual control over the thing is an independent possessor (vide art. 339 C.C.). The doctrine indicates that indeed two presumptions exist116 – (1) presumption of possession (“he who actually controls a thing is its possessor (…)”) and – (2) presumption of an independent nature of possession (“he who (..) actually controls is an independent possessor”). Presumption indicated in art. 339 C.C. should be refuted by a person who applies for confirmation of usucapio.117 Secondly, the Civil Code introduces the presumption of compliance of possession with the law. This kind of presumption applies also to the possession exercised by the previous possessor (art. 341 C.C.). It should be noted, however, that the general rule of the Civil Code is based on the presumption contained in its general part, wherein good faith is presumed only when legal consequences depend on good or bad faith in accordance with the Civil Code (art. 7 C.C.). The presumptions arising from art. 339 and from art. 341 C.C., cited above, entail the conclusion that, as the matter of fact, the civil law introduces the principle of presumption of ownership118 on the part of the person effectively exercising control over a thing. Such control eliminates necessity of proving the ownership.119 Thirdly, as to the possession’s duration period, two presumptions have been introduced. The first one states that the continuity of possession is recognized and, if the impossibility of possession was caused by a temporal obstacle, the possession was not interrupted. (art. 340 C.C.). The second one states that restored possession is considered as continuous (art. 345 C.C.). Restored possession, with the restoration effect indicated in art. 345 C.C., may be deemed as such only if it was effected by way of legal restoration of effective control over a thing.120

5.3.

Transfer of possession

5.3.1. Traditio corporalis and longa manu traditio The basic manner of transfer of possession known by the C.C. is delivery of a thing. i.e. traditio corporalis (art. 348 in princ. C. C.). It may be identical with transfer of possession.121

116 117 118 119 120

J. Ignatowicz, K. Stefaniuk, Prawo rzeczowe, p. 326. Decision of the SC of 6 February 1998, I CKN 484 / 97, LEX No. 50540. See: E. Gniewek, Prawo rzeczowe, p. 281. J. Ignatowicz, K. Stefaniuk, Prawo rzeczowe, p. 326. Decision of the SC of 16 November 1989, III CZP 92 / 89, LEX No. 78204.

5. Possession

499

The Civil Code considers delivery of documents allowing the exercise of control over a thing and delivery of measures giving effective power over a thing as equal to delivery. It means that in cases when the act’s pronouncements make the creation of certain legal effects dependent on the thing’s delivery, it is not necessary to physically transfer control over the thing: it is enough to deliver appropriate documents or other measures that enable the performance of such control (see: art. 348 in fine C.C.). Delivery of documents is also sufficient if the provision requires delivery of the thing, as for instance provided for in art. 535 C.C.,122 defining the contract of sale. Under this article “by contract of sale the seller shall oblige himself to transfer ownership of the thing to the buyer and deliver the thing to him” (i.e. its § 1). 121

5.3.2. Delivery equivalents (a)

Constitutum possessorium

Beyond traditio, also several other manners of possession are possible. As to independent possession, it is possible to transfer it in a manner that allows the previous independent possessor to still exercise control over the thing, as a dependent possessor or as a custodian. This kind of situation may arise on the basis of a legal transaction or may be agreed by both parties (art. 349 C.C.). This manner plays a particular role in the case of a contract of fiduciary transfer of ownership of a movable (German: Sicherungsübertragung): the creditor shall then acquire ownership of the thing which still remains in dependent possession or is held by the party establishing a security (the hitherto owner).

(b)

Traditio brevi manu

It is also possible to transfer independent possession to a dependent possessor or to a custodian on the basis of the same contract concluded between the parties (art. 351 of the C.C.). This may be exemplified by acquisition of a movable by its lessee, who possesses this movable as a dependent possessor.

121

122

Judgment of the Court of Appeal in Lublin of 17 June 1993, I ACr 202 / 93, Palestra 1995 Nos. 5-6. p. 270, as commented by J. Mojak. Judgment of the SC of 28 February 2003, V CKN 1701 / 00, MoP 2005, No. 18 p. 909.

Poland

500

(c)

Other delivery equivalents

The Civil Code knows still another manner of possession transfer, which occurs when the person having actual control over a thing is a direct possessor or a custodian without being a party to a legal transaction (concluded between an independent possessor and a third party). In such a case, the transfer of independent possession occurs on the basis of a contract concluded between both parties with notification given to the direct possessor or custodian (exercising control over the thing, art. 350 C.C.). Jurists have discussed the effects of default in notification. The prevailing view is that notification of a dependent possessor or a holder is a prerequisite for transfer of independent possession (even if transfer of ownership took place).123 Polish law does not know the institution of transfer of possession by way of transfer of a claim for delivery (cessio vindicationis). The dominant standpoint in scientific writings is that a claim for delivery, should it ensue from ownership protection regulations (see art. 222 C.C.), may not be transferred without simultaneous transfer of ownership.124

5.4.

Protection of possession

Basically, regardless of all possible circumstances, Polish law does not allow one to deliberately infringe upon possession, even if the possessor acts in bad faith (art. 342). The interdiction of unlawful infringement applies not only to independent possession, but also the dependent one. The possessor both in good and bad faith is subject to protection. This interdiction is justified by the necessity to prevent unlawfulness and ensure public order.125 It is also underlined that possessory protection is indispensable in regard to benefits guaranteed to the possessor by the law. This doctrine indicates important advantages of the existence of possessory protection.126 The owner is protected under the provisions of possessory protection (if the owner possesses the thing) and the provisions 123 124

125

126

See J. Gołaczyński, in: System Prawa Prywatnego, vol. 4, p. 34 and there cited literature. E.g. T. Dybowski, Ochrona własności w polskim prawie cywilnym, pp. 275 – 277; S. Wójcik, in: System prawa cywilnego, vol. II, p. 476; E. Gniewek, Kodeks cywilny …, p. 494. For a different view see K. Gandor, Przelew roszczenia windykacyjnego, StC 1969, vols. XIII-XIV, p. 29 et seq. J. Ignatowicz, K. Stefaniuk, Prawo rzeczowe, p. 327, J. Gołaczyński, in: System Prawa Prywatnego, vol. 4, p. 48. See for instance: J. Ignatowicz, Ochrona posiadania, passim, impr. pp. 16-50; S. Grzybowski, Prawo cywilne. Zarys prawa rzeczowego, p. 190-191; J. Ignatowicz, K.

5. Possession

501

related to the property.127 Against this background it has been indicated that the first ones are simpler, and consequently protection performed with their use is more effective.128

5.4.1. Self-defence and self-help of the possessor Only very specific cases allow self-defence or self-help against the subject who infringes on another’s possession or custody (these legal principles apply not only to the possessor, but also to the custodian, art. 343 § 3 C.C.). As to necessary self-defence (obrona konieczna), the Civil Code grants this right to the possessor in the event that it is unavoidable in refuting unlawful infringement of possession (art. 343 § 1 C.C.). Necessary self-defence permits the use by the possessor of adequate measures, including physical force, against the person perpetrating an infringement. It is possible even when “the goods protected by the possessor represent a lesser value than the goods endangered by destruction or damage in self-defence”.129 Self-defence should take place immediately, i.e. the moment an attempt is made. Basically the possibility of using it after an infringement was perpetrated should be excluded. As indicated by the Supreme Court, we deal here with the unity of time and place – “simultaneity of the possessor’s action with the infringement of his possession perpetrated by the other party”.130 On the other hand, self-help (samopomoc) is acceptable in case of infringement of possession of an immovable or a movable; however, different principles apply. As to the possession of an immovable, the possessor of such a thing is able to restore the previous state on his own, if his acts occur immediately after unlawful infringement of possession. In such cases, however, it is forbidden to use violence against other people. On the other hand, immediately upon deprivation of possession the possessor of the movable may apply indispensable self-help in order to re-establish the previous state, but only if there is a danger of an irreparable loss (art. 343 § 2 C.C.). Permitted self-help to regain possession of a movable is allowed within a very short time, i.e. immediately upon perpetration of an infringement.131

127

128 129

130

Stefaniuk, Prawo rzeczowe, p. 327; J. Gołaczyński, in: System Prawa Prywatnego, vol. 4, p. 48. T. Dybowski, Ochrona własności w polskim prawie cywilnym, pp. 81, 114, 241-242; J. Ignatowicz, Ochrona posiadania, p. 161; see also judgment of the SC of 2 September 1957, 1 CR 511 / 57, OSPiKA 1958, item 184. T. Dybowski, Ochrona własności w polskim prawie cywilnym, p. 242. Judgment of the SC of 27 May 1985, I CR 152 / 85, OSN 1986, Nos. 7-8 item 119 in conjunction with an approving comment by A. Szpunar, NP 1987, No. 6, p. 120. Judgment of the SC of 27 March 1968, II CR 69 / 68, LEX No. 6305.

Poland

502

5.4.2.131 Judicial protection Possession is protected by the law. The Civil Code guarantees the possessor possessory protection. However, separate petitory protection of possession (actio publiciana or similar, cf. § 372 ABGB, § 1007 BGB) has not been established.132 The possessor of a thing, being deliberately deprived of his possession, may use possessory protection. Possessory protection is intended to provide the possessor with fast or “even emergency” protection.133 The possessor of a thing whose possession was unlawfully infringed upon is entitled to advance a claim against the infringer and the person benefitting from this infringement for restoration of the previous state and discontinuation of infringements. This is a claim independent of good faith of the possessor.134 In cases concerning infringement of possession the court examines only the last state of possession and the fact of its infringement. The court does not inquire into the right itself or the good faith of the defendant (art. 478, of the Code of Civil Procedure,135 C.C.P.). A court, while considering a possessory case, may examine the law solely to ascertain that the deprived person was indeed a possessor and her or his possession has been infringed.136 The Civil Code provides for one exception to this rule of not examining the compliance of possession with the law, which is applicable in a situation when a valid judgment of a court or other competent authority given already after the infringement of possession affirms that “the state of possession caused by the infringement complies with the law” (art. 344 § 1 in fine C.C.). In the event that the claim for restoration of possession is allowed the court should designate the manner of restoration of possession.137 The pos131 132

133 134 135 136 137

Judgment of the SC of 27 March 1968, II CR 69 / 68, LEX No. 6305. See e.g.: F. Zoll, Prawo cywilne w zarysie, p. 48 et seq.; F. Zoll, Petytoryjna ochrona posiadanie prawnego, PN 1947, Nos. 7-8, p. 11 et seq.; W. Chojnowski, Akcja petytoryjna a prawo posiadania, PN 1947, No. 4, p. 311 et seq.; A. Kunicki, O potrzebie ochrony publicjańskiej, PiP 1961, No. 12, p. 975; J. Ignatowicz, Ochrona posiadania, p. 246 et seq.; I. Ignatowicz, K. Stefaniuk, Prawo rzeczowe, p. 334. Judgment of the SC of 17 October 1997, III CKU 37 / 97, LEX No. 50773. See e.g.: J. Ignatowicz, K. Stefaniuk, Prawo rzeczowe, p. 327. The Act of 17 November 1964, Dz. U. No. 43, item 296. Judgment of the SC of 3 June 1966, III CR 108 / 66, OSP 1967, No. 10, item 234. Decision of a bench of 7 judges of the SC of 20 September 1988, III CZP 37 / 88, OSN 1989, No. 3, item 40. Judgment of the SC of 19 April 2007, I CSK 27/07, OSN Zbiór Dodatkowy (Additional Series) 2008/A, item 25 (a court should appoint an expert ex officio to determine the value of a thing if a consumer transferring ownership is questioning the regularity of a sale by which a claim is satisfied).

6. Nature and notion of ownership

503

sessory claim shall expire within a year of the occurrence of the infringement (art. 344 § 2 C.C.). In possessory protection actions a cross action is not allowed. However, it is possible to alter the object of action – it may be modified from a possessory claim to a claim of ownership and vice versa.138 Restitution of lost possession is a requirement of a possessor’s claim for damages.139 Possessory claim for protection is not allowed in mutual relationships between co-possessors of the same thing, however, only in the event that the scope of co-possession cannot be determined (art. 346 C.C.). The Civil Code’s possessory protection regulations regulate also the claim for a stay of construction (art. 347 C.C.).

6.

Nature and notion of ownership

6.1.

Definition of ownership

Actually, the ownership right (własność) cannot be considered an institution disconnected from the Constitution of the Republic of Poland of 1997.140 It is impossible because the Constitution addresses the “essence” of ownership – istota własności (albeit in a wider sense than the appropriate term used in C.C.). It should be noted that the constitutional notion of ownership is not similar to the notion of ownership found in the civil law (according to the major opinion of the doctrine and the Constitutional Tribunal’s jurisprudence). The first important provision of the Constitution of 1997 pertaining to ownership is its article 21. Its section 1 provides that the Republic of Poland shall protect ownership and the right of inheritance (prawo dziedziczenia),141 138 139 140 141

Decision of the SC of 7 April 1992, III CZP 29 / 92, OSN 1992, No. 11, item 192. Decision of the SC of 4 November 1976, II CR 294 / 76, OSN 1977, No. 10, item 185. Dz. U. No. 78, item 483 as amended. This is a constitutional right, however it is not clear whether such right exists under civil law,for more see e.g.: judgment of the CT of 31 January 2001, P 4 / 99, OTK ZU No. 1 / 2001, item 5; L. Garlicki, Comments to art. 64 of the Constitution, in: same author (ed.), Konstytucja Rzeczypospolitej Polskiej. Komentarz, vol. III, Warszawa 2003, p. 10-11; A. Szpunar, Uwagi o pojęciu dziedziczenia, Rejent 2002, No. 5, p. 13 et seq.; A. Mączyński, Konstytucyjne prawo dziedziczenia, in: L. Ogiegło, W. Popiołek, M. Szpunar (ed.), Rozprawy prawnicze. Księga pamiątkowa Profesora Maksymiliana Pazdana, Kraków 2005, imprimis pp. 1169, 1172; M. Pyziak-Szafnicka in: System Prawa Prywatnego, vol. 1, p. 732-733. For more on constitutional notion of ownership see for instance: S. Jarosz-Żukowska, Konstytucyjna zasada ochrony własności,

504

Poland

whereas its section 2 outlines the allowed premises of deprivation of ownership (expropriation – wywłaszczenie). Deprivation shall be allowed solely “for public purposes and with just compensation”. These are the very constitutional premises of any regulatory acts that introduce solutions consisting in deprivation of ownership, in the constitutional sense that it is without the will of the entitled person. However, the jurisprudence of the Constitutional Tribunal provides that deprivation of ownership connected with acquisition by another private person, may not be assessed from the perspective of the regulation laid down in art. 21 section 2 of the Constitution.142 The second regulation of key importance for the matter analysed is article 64 of the Constitution. Its section 1 states the rule pursuant to which everyone is entitled to acquire ownership, other property rights, and the right of inheritance. It follows, first, that ownership in the constitutional sense shall not cover such property rights that fail to meet the characteristic features of the complete content of the ownership. Moreover, it is worth stressing that pursuant to the Constitutional Tribunal’s jurisprudence the right to ownership covers the guaranty of freedom to acquire ownership (freedom of appropriation in the economic meaning).143 It shall not however imply the existence of any specific right “to obtain ownership”.144 The regulation laid down in art. 64 section 2 introduces the principle of equal protection of ownership, other property rights and the right of inheritance for all. Section 3 outlines the allowed scope of limitation of ownership to be specified by statute. Under this regulation any limitations of ownership may not infringe upon the essence of this right. The Constitu-

142

143

144

Kraków 2003 and E. Łętowska, Własność i jej ochrona jako wzorzec kontroli konstytujcyjnej. Wybrane problem, KPP 2009, No. 4, p. 889-919; Z. Radwański, Systemowe pojęcie własności w Konstytucji Rzeczypospolitej Polskiej (art. 21 i art. 64 Konstytucji), in: Podstawowe założenia Konstytucji Rzeczypospolitej Polskiej, Trybunał Konstytucyjny, Warszawa 2010, p. 47 et seq. See the judgment of the CT of 17 December 2008, P 16 / 08, OTK ZU No. 10 / A / 2008, item 181, wherein it was indicated that “private law regulations stipulating the transfer of the right of ownership, even against the will of the title holder, to another person, and not to the State Treasury, should not be assessed as expropriation. The regulations such as those appealed against may, however, constitute a prohibited interference with the right of ownership in form of excessive limitation of this right”; for this see also the earlier judgment of 29 May 2001, K 5 / 01, OTK ZU No. 4 / 2001, item 87, p. 541, of 21 June 2005, P 25 / 02, OTK ZU No. 6 / A / 2005, item 65. See e.g.: B. Banaszkiewicz, Konstytucyjne prawo do własności, in: M. Wyrzykowski (ed.), Konstytucyjne podstawy systemu prawa, Warszawa 2001, p. 31; L. Garlicki, Comments to art. 64 of the Constitution, p. 7 See for instance the judgment of 5 September 2006, K 51 / 05, OTK ZU No. 8 / A / 2006, item 100.

6. Nature and notion of ownership

505

tion, however, does not interpret the meaning of the notion of “essence” of ownership. Traditionally, the Civil Code recognizes ownership as the most complete of all real rights.145 However, it is commonly admitted that it is not an unlimited and “absolute” right (so called ius infitinitum).146 Notwithstanding all considerations about the limits of this notion laid down in the Constitution, the Civil Code obviously introduces limits – granice, i.e. borders (not only limitations) of ownership. These limits are fixed by both statutory pronouncements and general social cohabitation principles (zasady współżycia społe cznego). The latter is also a general clause taken from Soviet legal terminology147 that basically replaced, during the communist times, the notion of good practices or the notion of good faith in its objective meaning. Following these limits, the owner is entitled to use a thing and to dispose of it. Using a thing includes above all obtaining the fruits and other revenues from the thing. On the other hand, disposition of a thing means transfer of its ownership, as well as encumbrance of the thing with limited real rights, or its abandonment. All these rights should be performed by the owner in compliance with their socio-economic purposes (społeczno-gospodarcze przeznaczenie, art. 140 C.C.).

6.2.

Limitations and restrictions

Pursuant to the content of art. 140 C.C. and the doctrine of civil law, the “essence” of ownership does not imply that ownership is an unlimited right, since it is restricted by statutory or other limitations – but rather it is a right 145

146

147

See for instance: T. Dybowski, Ochrona własności w polskim prawie cywilnym, pp. 5657; same author, Własność w przepisach konstytucyjnych według stanu obowiązywania w 1996 roku, in: Konstytucja i gwarancje jej przestrzegania. Księga pamiątkowa ku czci prof. Janiny Zakrzewskiej, Warszawa 1996, p. 310, see also e.g.: J. Ignatowicz, K. Stefaniuk, Prawo rzeczowe, pp. 65, 66; A. Stelmachowski, in: System Prawa Prywatnego, vol. 3, p. 223. See e.g. judgments of the Constitutional Tribunal: of 12 January 2000, P. 11 / 98, OTK ZU No. 1 / 2000, item. 3; of 21 June 2005, P 25 / 02, OTK ZU No. 6 / 2005, item 65; of 18 September 2008, K 7 / 07, OTK ZU No. 7 / A / 2008, item 123; for more see also: J. Ignatowicz, K. Stefaniuk, Prawo rzeczowe, pp. 66, 67; A. Stelmachowski, in: System Prawa Prywatnego, vol. 3, p. 146, 239; S. Rudnicki, G. Rudnicki, Komentarz do Kodeksu cywilnego. Księga druga, p. 32. For details see: E. Rott-Pietrzyk, Klauzula generalna rozsądku w prawie prywatnym, Warszawa 2007, pp. 301-302; M. Pyziak-Szafnicka, in: System Prawa Prywatnego, vol 1, p. 798 et seq.

506

Poland

fixed within certain limits.148 Moreover, the pertinent problem is not the question of performance of the right, but its abstract content. A similar direction on constitutional grounds is pursued by the Constitutional Tribunal, which has underlined many a time that ownership – despite the most complete scope of powers – shall not be an absolute right in the ius infinitum sense. It needs, however, to be noted that this applies to ownership in the constitutional sense of the term, and at the same time it certainly accommodates the right of ownership in the sense assigned to this institution by the Civil Code. In its judgments the Constitutional Tribunal often refers to the content of Article 64 of the Constitution, which among others, introduces the interdiction to limit ownership to the extent whereby this might interfere with the essence of this constitutional right. In the light of the Tribunal’s jurisprudence, the notion of the essence of ownership needs to be construed as the basic scope of powers constituting the very “core” of this right. For example, as indicated in the judgment of 25 May 1999, SK 9 / 98, “while stating that ownership is not ius infinitum and that legal regulations provide for the limits of ownership, one should not fall into the other extreme – being that any statutory limitation shall be allowed because it sets the limits of ownership. Statutory limitations may not frustrate the basic powers creating the content of ownership, such as the possibility to use, obtain fruits, [and] directly or indirectly exploit the object of ownership (T. Dybowski, Własność w przepisach konstytucyjnych wedle stanu obowiązywania w 1996 roku [Ownership in Constitutional Regulations for the year 1996]; [in:] Konstytucja i gwarancje jej przestrzegania, Księga pamiątkowa ku czci prof. Janiny Zakrzewskiej [The Constitution and Guarantees of its Observation. The Commemorative Book in Honour of Professor Janina Zakrzewska], Warszawa 1996, p. 321)”.149 In this judgment, the Constitutional Tribunal further underlines that “the concept of the essence of rights and freedoms is based upon the assumption that within each specific right and freedom certain fundamental elements (the core, the nucleus) might be distinguished for want of which this right or freedom shall not exist at all, as well as some additional elements (the frame), which might be deducted and modified in a variety of ways without detriment to the identity of the specific right or freedom. For instance, expropriation by its very nature represents interference with the essence of the right of ownership since it equals complete deprivation of this right and hence it must have a separate constitutional basis and is 148

149

See e.g. J. Wasilkowski, Prawo rzeczowe w zarysie, pp. 98-99; same author, Prawo własności w PRL, 104-106; A. Stelmachowski, in: System Prawa Prywatnego, vol. 3, p. 227. OTK ZU 1999, No. 4, item. 78.

6. Nature and notion of ownership

507

allowed only against just compensation (article 21 section 2 of the Constitution). On the other hand, though the establishment of various kinds of servitudes (e.g. access road on private land) admittedly represents an interference with the right of ownership, nevertheless since it does not undermine the essence of this right, it may be established by means of a statute (however – pursuant to the principle of proportionality – it may be applied only if necessary)”.150 The limits of ownership (granice) specified under art. 140 C.C., should not be construed as identical with limitations (ograniczenia) that may be defined as “external limitations” consisting in the possible interference with the scope of performance of ownership by way of establishing encumbrances or imposing other burdens on the possessor connected with the object of his right.151

6.3.

Duties and responsibilities

The Polish Constitution does not expressis verbis stipulate the rule that “ownership obliges” (“Eigentum verpflichtet”). Despite this, the Constitutional Tribunal stresses in its jurisprudence the existence of duties of an owner. It is underlined, that “since ownership obliges, the owner’s rights may be subject to various limitations, particularly if required by the rules of social solidarity” (judgment of 12 January 2000, P 11 / 98152). Referring to the general codification related to the very meaning and content of the real right, the Civil Code does not directly identify the duties or limits of an owner’s responsibilities either. However, both the doctrine and the jurisprudence (including the jurisprudence of the Constitutional Tribunal, e.g. in the judgment of the Constitutional Tribunal of 6 September 2005, K 46 / 04,153 judgment of 28 February 2008, K 43 / 07,154 and the respective meaning of the judgment of 12 January 2000, P 11 / 98155) recognize that the owner is indeed encumbered with such duties and responsibilities.156

150

151

152 153 154 155 156

For more on the concept of the essence the right of ownership see E. Łętowska, Własność i jej ochrona …, p. 911-913. The limits indicated in Art. 140 C.C., are deemed as “colourable limitations”, fixing the normal scope of ownership, see J. Wasilkowski, Prawo własności w PRL, pp. 104-105. OTK ZU 2000, No. 1, item 3. OTK ZU No. 8 / A / 2005, item 89. OTK ZU No. 1 / A / 2008, item 8. OTK ZU No. 1 of 2000, item 3. See e.g. A. Stelmachowski, in: System Prawa Prywatnego, vol. 3, p. 248.

Poland

508

The Civil Code introduces a disposition allowing the use and even destruction of the thing by a different person, irrespective of the owner’s objection. Such destruction is possible when necessary to reverse the danger directly threatening the person or the third party sphere of personality. In such a case, the owner is entitled to request the repair of the ensuing injuries. This provision applies also where the proprietary good is in danger unless imminent injury is clearly and incommensurably less important than the owner’s potential injury (art. 142 C.C.). Specific obligations may be imposed on the owner of a thing by a contract or a statute. For instance, under art. 26 section 1 of the Heritage Protection and Preservation Act of 23 July 2003, a contract of sale, exchange or lease of an immovable heritage monument entered in a register of heritage monuments and owned either by the State Treasury or a municipality (a local government unit) setting forth a manner of use of the monument, should contain a provision that if required (by the monument’s condition) the acquirer or lessee shall be under legal duty to perform indispensable conservation of the monument within a specified time. A typical example of a legal duty imposed on the owner of the premises is the tidiness and order duty (sees art. 5 of the Act of 13 September 1996 r. on tidiness and order within municipalities157).

6.4.

Protection of ownership

In this report, all issues relating to the protection of ownership will be discussed below in chapter 30.

7.

The issue of fiduciary transfer of ownership

The issue of admissibility and validity of a contract of fiduciary transfer of ownership made in order to secure debts (the so-called fiduciary transfer of a thing – przewłaszczenie na zabezpieczenie) has been the subject of numerous statements in the doctrine and jurisdiction. The issue was raised even before the passing of the Civil Code in 1964.158 157 158

Dz. U. 2005, No. 236, item 2008 as amended. See: W. Prądzyński, Powiernicze przeniesienie własności celem zabezpieczenia wierzytelności, PN 1947, vol. I, No. 4, p. 319 et seq.; J. Namitkiewicz, Zagadnienie “przeniesienia własności na zabezpieczenie” na gruncie prawa polskiego, PN 1948, vol. II, Nos. 11-12, p. 435 et seq.; J.J. Litauer, Zagadnienie tzw. przewłaszczenia na zabezpieczenie, PN 1948, vol. I, Nos. 7-8, p. 20 et seq.; decision of the SC of 10 May 1948, C. Prez. 18 / 48, OSN 1948, No. 3, item 58.

7. The issue of fiduciary transfer of ownership

509

The problem appeared particularly in connection with immovables. Under art. 157 C.C., it is impossible in such a case to transfer ownership with a condition or a term clause. While the discrepancies in the admissibility of fiduciary transfer of an immovable159 have continued to exist, it is basically not denied in the case of movables. Most authors160 and the fundamentally uniform jurisdiction on this point, including the Supreme Court, accept the admissibility and validity of this type of contract.161 Fiduciary transfer of a thing is allowed on the grounds of the freedom of contract principle (art. 3531 C.C.).162 Fiduciary transfer of ownership may occur on a dissolving condition. Until full payment of the secured debt, the creditor shall be deemed as a “full” owner, i.e. vested with any powers composing the content of such right.163 The debtor transferring the ownership for security may keep the thing of designated identity in his possession “in the character agreed with the creditor”.164 159

160

161

162

163

164

Vide the approving standpoint of the Supreme Court in the judgment of 29 May 2000, III CKN 246 / 00, OSN 2000, No. 11, item 213, confirmed in the later judgment of the Supreme Court of 8 March 2002, III CKN 748 / 00, OSP 2003, No. 3, item 37 with the gloss by J. Pisuliński. See, instead of many authors, J. Gołaczyński, Przewłaszczenie na zabezpieczenie, Warszawa 2004, p. 42 et seq. See however the judgment of the SC of 19 April 2007, I CSK 27 / 07, OSN Zbiór dodatkowy (Additional Collection) 2008A, item 25, in whose justification the Supreme Court stated the existence of “serious doubts about reconciling fiduciary transfer with some absolutely binding regulations, in particular with the provisions stipulating satisfaction of the creditor in case of real securities by way of an execution procedure”. Extra-execution methods of satisfaction of the creditor under the Polish law are stipulated in case of pledge (Art. 22 – 27 of the Register of Pledge and Non-possessory Pledge Act), maritime mortgage (Art. 84 of the Maritime Code) and pledge established for the benefit of the National Bank of Poland (Art. 50a of the National Bank of Poland Act of 29 August 1997, unified text, Dz. U. 2005, No. 1, item 2 as amended). See, instead of many authors, J. Gołaczyński, Przewłaszczenie na zabezpieczenie, p. 66; as concerns fiduciary acts see e.g. Z. Radwański, in: the same author (ed.), System Prawa Prywatnego, vol. 2. Prawo cywilne – część ogólna Warszawa 2008, pp. 213-215; same author, Prawo cywilne – część ogólna, p. 227; cf. e.g.: F. Zoll, gloss to the judgment of the SC of 29 May 2000, III CKN 246 / 00, OSP 2001, No. 2, item 26, pp. 84, 84, 86; J. Pisuliński, gloss to the judgment of the SC of of 8 March 2002, III CKN 748 / 00, OSP 2003, No. 3, item 37, p. 168; K. Zaradkiewicz, in: J. Rajski, W. J. Kocot, K. Zaradkiewicz, Prawo kontraktów handlowych, Warszawa 2007, p. 483-486. Judgment of the Court of Appeal in Poznań of 29 August 1995, I ACr 140 / 95, Prawo Gospodarcze (Economic Law, Pr. Gosp.) 1996, No. 6, p. 44. Judgment of the SC of 19 November 1992, II CRN 87/92, OSN 1993, No. 5, item 89.

510

Poland

In case of non-performance of an obligation by the debtor, the creditor shall no longer be a “limited” owner of a thing (and “shall become an owner of a thing being the object of transfer with no limitations”165). The manner of satisfaction should be determined in the contract, and for want of a specific provision, the creditor may choose the manner that he deems fit, unless it contradicts the “content of a legal relationship between the parties, the contract and / or social cohabitation principles”.166 The creditor may enforce his claim for satisfaction out of the transferred thing e.g. by way of transfer or commitment to charged use etc.167 However, the Court of Appeal in Cracow found that the interdiction of an agreement of forfeiture pertaining to the pledge rights, the so-called lex commissoriae, applies also to fiduciary transfer of ownership and in this sense represents “a general standard”.168 Fiduciary transfer of a thing shall not be treated as a specific relationship of property law, but as an obligatory agreement. It is assumed that within the scope of the fiduciary transfer of ownership the transfer is effected in conjunction with the obligation of the creditor to enable “the use by the debtor of his right of ownership within limits fixed by the parties”.169 Fiduciary transfer of ownership has been rudimentarily regulated in the Banking Law Act of 29 August 1997 (see art. 101)170 and in the Insolvency and Reorganization Act of 28 February 2003,171 InsA (i.a. art. 701). In the light of the available jurisprudence, this institution may not be treated as a specific one, applicable only in banking.172 More importantly, it has been pointed out that such an agreement should contain essential elements (es165

166 167

168

169

170

171

Judgment of the Court of Appeal in Lublin of 19 September 1996, I ACr 231 / 96, Apel.-Lub. 1997 / 1 / 4. Judgment of the SC of 27 June 1995, I CR 7 / 95, OSN 1995, No. 12, item 183. Judgment of the Court of Appeal in Lublin of 19 September 1996, I ACr 231 / 96, Apel.-Lub. 1997, No. 1, p. 4. However, in the justification of the judgment of 19 April 2007 the SC stated that the courts should particularly thoroughly examine the manner of satisfying the creditor and its execution assumed in the agreement of fiduciary transfer of a thing. It found that the court should even admit ex officio a proof of correctness of satisfaction from the thing by the owner. Judgment of the Court of Appeal in Kraków of 5 September 1996, I ACr 286 / 96, Transformacje Prawa Prywatnego (Transformations of Private Law, TPP) 2000, No. 4, p. 105. Judgment of the SC of 10 January 1997, III KKN 56 / 96, Prokuratura i Prawo (Prosecution and Law, Prok.i Pr.) 1997, No. 6, item 6. Ustawa z dnia 29 sierpnia 1997 r. – Prawo banowe, unified text, Dz. U. of 2002, No. 72, item 665 as amended. Ustawa z dnia 28 lutego 2003 r. – Prawo upadłościowe i naprawcze, unified text Dz. U. of 2009 No. 175, item 1361 as amended.

7. The issue of fiduciary transfer of ownership

511

sentialia negotii). These in turn are in principle distinguished with regard to statutorily defined agreements. In the case of a fiduciary transfer of a thing, one such element is the clause obligating the reverse transfer of ownership upon full payment of the debt.173 For want of regulation in the Civil Code or another legislative act regarding the issue of overcollateralization,174 a debtor may establish various securities, including real securities, for the same title holder (a creditor). There is thus the possibility of simultaneous existence of both a fiduciary transfer of a thing and a pledge of another thing, both in order to secure the same debt. In the event that another security is established next to a fiduciary transfer, for want of clauses of agreement stipulating otherwise, the order and scope of enforcement of each of these securities shall be decided upon by the creditor.175 The insolvency and reorganization law originally stipulated that, in the event of declaration of insolvency of the party that established a security (in conjunction with liquidation of the estate), an agreement of fiduciary transfer of ownership should be effective against the bankruptcy estate if it had been concluded in writing with a certified date (art. 101 section 2 InsA, in the original wording).176 The scientific study of law assumed that in this case the creditor was entitled to request exclusion of the thing from the bankruptcy estate (art. 70 and 72 InsA).177 In the event of declaration of the creditor’s insolvency (in conjunction with liquidation of the estate), until the secured debt was paid in full, it was 172

172

173

174

175 176

177

Similarly in the science of law the prevailing view is that Art. 101 of the Banking Law is of an informational nature and does not decide the admissibility of the fiduciary transfer of a thing. For this see e.g. G. Tracz, F. Zoll, Przewłaszczenie na zabezpieczenie rzeczy ruchomych po wejściu w życie ustawy o zastawie rejestrowym i rejestrze zastawów oraz nowego prawa bankowego, PPH 1998, No. 1, p. 15. Judgment of the SC of 19 July 2001, III CKN 1225 / 98, Wokanda (Docket) 2001, No. 12, p. 9. Polish literature makes scant reference to this subject. See I. Karasek, Granice dopuszczalności ustanawiania zabezpieczeń – nadmierność zabezpieczeń, TPP 2003, No. 4, p. 65. Decision of the SC of 5 May 1993, III CZP 54 / 93, OSN 1993, No. 12, item 219. The matter when a writing obtains a certified date is regulated under Art. 81 C.C. (i.a. in case of date certification by a notary). See for instance J. Gołaczyński, Przewłaszczenie na zabezpieczenie, p. 241; S. Gurgul, Prawo upadłościowe i naprawcze. Komentarz, Warszawa 2004, p. 211; P. Janda, Skutki ogłoszenia upadłości dla umowy przewłaszczenia na zabezpieczenie, MoP 2003, No. 17, p. 776. A critical view on this is taken by: J. Pisuliński, M. Liebscher, Dingliche Sicherheiten nach dem neuen polnischen Gesetz über Konkurs und Sanierung, Krakauer – Augsburger Rechtsstudien, Kraków-München 2004, p. 236 et seq.

512

Poland

recognized that the party establishing a security was not entitled to a claim for exclusion of a thing from the bankruptcy estate.178 A claim for return of a thing by the party establishing the security was transformed then into a pecuniary claim for cash payment of its equivalent (art. 91 section 2 InsA).179 In case of an arrangement made in the course of insolvency proceedings, art. 272 section 1 InsA (in its original wording) provided that the arrangement also covered debts secured by transfer of ownership.180 Despite this, the creditor could request exclusion from the bankruptcy estate of a thing that was the object of security if the date of payment of the secured debt expired prior to the declaration of insolvency (with the possibility of concluding an arrangement).181 The Act of 6 March 2009 on the amendment of the Insolvency and Reorganization Act,182 introduced a change as of 2 May 2009 in regard to determination of effects of fiduciary transfer of a thing and fiduciary assignment of receivables in case of declaration of insolvency of the security establishing party. Like previously, the effectiveness of a deed of fiduciary transfer of a thing or fiduciary assignment against the bankruptcy estate depends on it being made in writing with a certified date (new art. 84 section 2 InsA). However the effects of a fiduciary transfer of a thing and a fiduciary assignment of receivables have been made equal with the right of pledge, thus the creditor being the beneficiary of the transfer has been granted only 178

179

180

181

182

For this see: S. Gurgul, Prawo upadłościowe i naprawcze, p. 211. D. Chrapoński, in: A. Witosz (ed.), Prawo upadłościowe i naprawcze, Komentarz, Warszawa 2007, p. 120. See, however, S. Gurgul, Upadłość przedsiębiorcy – beneficjenta zabezpieczenia wierzytelności wynikającego z czynności powierniczych, MoP 2005, No. 15, p. 739, where the author admits a request for excluding a thing from a bankruptcy estate. For this see: D. Chrapoński, in: Prawo upadłościowe i naprawcze, p. 120. For a different view see: J. Gołaczyński, Przewłaszczenie na zabezpieczenie, p. 249, who maintains that Art. 91 Section 2 of the Insolvency and Reorganization Act shall not be applicable in this case and the party establishing a security – upon payment of the secured debt – may request exclusion of the thing from the bankruptcy estate if the agreement of fiduciary transfer of a thing was concluded in writing with a certified date. For a probably similar standpoint see: J. Chyczewska, Przewłaszczenie nieruchomości na zabezpieczenie w świetle prawa upadłościowego i naprawczego, PPH 2008, No. 2, p. 29. Whereas the arrangement does not cover debts secured by pledge and mortgage (Art. 273 Section 2 of the Insolvency and Reorganization Act in the original wording). See J. Pisuliński, Ziele des Insolvenzverfahrens und dingliche Sicherheiten, in: J. Stelmach, R. Schmidt (ed.), Rechtliche Steuerung von Wirtschaftsprozessen, Krakauer – Augsburger Rechtsstudien, Warszawa 2008, p. 252. Dz. U. No. 53, item 434.

8. Other real rights in movables

513

the so-called rights of dissent (vide new art. 701 InsA). An arrangement concluded by the bankrupt with creditors shall not infringe upon the rights of the creditor secured by a fiduciary transfer or a fiduciary assignment (new art. 291 InsA). The amended regulations are applicable in proceedings wherein the declaration of insolvency took place after the act entered into force (the a contrario argument under art. 5 of the Act of 6 March 2009).

8.

Other real rights in movables

8.1.

Usufruct

Usufruct is a limited real right, distinct from personal servitudes (and not one of the servitudes at all). It can be established both on movable and immovable property. Usufruct’s content may be modified by a contract: it may be limited by excluding some uses of the thing (art. 253 § 1 C.C.). However, it is impossible to exclude all uses of the thing and non-regulated use should be considered one of the possible forms of personal servitude. Consequently, it is possible to establish the right of usufruct only on immovables. As all real rights, usufruct encumbers the whole thing. However, it is possible to limit its execution to a designated part. Thus, it only relates to immovables (art. 253 § 2 C.C.). Basically, usufruct may not be transferred (inter vivos and mortis causa) and it expires at the latest upon the death of the entitled physical person (excluding the usufruct as a particular form of timesharing on an immovable; art. 2701 C.C.). As to natural persons, the Civil Code does not indicate the maximum duration period of this right (de lege lata it may last ad infinitum, in fact permanently “dividing” the right of ownership). The usufruct by physical persons and natural persons (basically, excluding agricultural societies using the State Treasury land, art. 275 C.C., and in some other cases the land contributed by members, art. 278 C.C.) may not concern the substance of the thing. The usufructuary should execute his right in compliance with the principles of reasonable economy (art. 256 C.C.). The usufruct expires when it is unexecuted (non usus) within the period of ten years. Contrary to pledge (C.C. does not recognize pignus irregulare), the Civil Code permits establishment of an “incorrect” usufruct (użytkowanie nieprawidłowe – ususfructus irregularis). It refers to the money or other things determinable by their kind (art. 264 C.C.). In such a case, from the moment of delivery, the usufructuary becomes the proprietor of these things. Loan regulations shall apply in case of the return of a thing or money by the user upon extinguishment of “incorrect” usufruct.

Poland

514

8.2.

Pledge

Under the Civil Code a pledge is construed only as a possessory one: from the moment of its establishment and throughout its existence, the delivery of a thing to the pledgee or to the third person accepted by both parties is necessary. A separate act of 1996 regulates the registered pledge institution (zastaw rejestrowy).183 Originally such pledge might be established to secure claims of the State Treasury, local government authorities, banks, entities conducting economic activity in the territory of Poland and some other entities (See art. 1 section 1 of the Act of 1996 in the original wording). The Act of 5 September 2008,184 which amended the Act of 1996, lifted this limitation. Thus at present a registered pledge may be established to the benefit of any creditor. The Act does not stipulate any limitations as to the pledgor (it may be a debtor or a third party). Establishment of the registered pledge requires a deed of pledge in writing (under sanction of invalidity, ad solemnitatem) and an entry in the register of pledges (art. 2 section 1 of the Act of 1996). The pledge register is kept by the district courts (their economic departments). The transfer of possession is not necessary, though not excluded. The objects of such pledge may be movables (excluding sea-going ships entered in the register of ships) and transferable property rights. It may particularly encumber generic things, if in the deed of pledge the parties indicate the quantity and a way to single them out from other similar things. It may also encumber a collection of things or rights constituting an economic entity (but not an enterprise in the legal sense of the term!),185 even if its composition is changeable (See art. 7 section 2 of the Act of 1996). A registered pledge may also comprise things or rights, which the pledgor shall acquire in the future. In such cases, encumbrance of things or rights shall take effect as of the moment of such acquisition (art. 7 section 3 of the Act of 1996). Basically, both the possessory and registered pledge is an accessory right, however, a registered (non-possessory) pledge may simultaneously secure more than one debt.186 A particular exception is indicated in art. 18 of the Register of Pledge and Non-possessory Pledge Act, which allows the parties 183 184

185

The Register of Pledge and Non-possessory Pledge Act of 6 December 1996. Dz. U. No. 180, item 1113. The act came into force as of 11 January 2009. More about this amendment see J. Gołaczyński, M. Leśniak, Zastaw rejestrowy po 11.1.2009 r., Part I, MoP 2009, No. 19, p. 1031-1040 and Part II, MoP 2009, No. 20, p. 10991105. See e.g. I. Karasek, Przedmiot zastawu rejestrowego, p. 503; J. Gołaczyński, in: System Prawa Prywatnego, vol. 4, p. 723. For a different view see J. Widło, Zastaw rejestrowy na prawachp. 478.

8. Other real rights in movables

515

to keep the pledge even in case of extinguishment of the secured debt. This disposition was, however, very carefully interpreted by the jurisprudence.187 The amended Act of 5 September 2008 specified the provision in detail under art. 18. Pursuant to the new art. 18 section 2, the registered pledge shall not expire if in the deed of pledge the parties defined the legal relationship and a new debt subject to collateral that may ensue thereof, the term of its establishment (it may not exceed 6 months), and the maximum collateral amount (however, not higher that the amount disclosed in the register).188 Contrary to the general regulation of the Civil Code, the priority of the possessory pledge was regulated in a very specific manner. The Civil Code says that the pledge established later has a priority over the right established earlier, unless the pledgee acts in bad faith (art. 310 C.C.). A specific registered pledge may be established on a ship entered in the ship register. Such a pledge is called a maritime mortgage (hipoteka morska). For that which is unregulated by the Maritime Code, the civil law provisions relating to a mortgage on immovable property shall apply. To establish a maritime mortgage it needs to be entered in the ship register (see art. 76 et seq. M.C.). An agreement of transfer of ownership of a ship encumbered with maritime mortgage with a foreign party (in the meaning of art. 5 par. 2 of the Act of 2 July 2004 on freedom of economic activity)189 requires prior approval in writing of the mortgage creditor, with his signature certified by a notary (art. 80 M.C.). Provisions on maritime mortgage apply also to the establishment of a pledge on registered inland vessels (art. 25 of the Act of 21 December 2000 r. on inland navigation190). A particular kind of registered pledge is a treasury pledge intended to secure payment of taxes and social security premiums (art. 41 of the Tax Ordinance and art. 27 of the Social Security System Act of 13 October 186

186

187

188

189 190

See e.g.: T. Czech, Zabezpieczenie zastawem rejestrowym wielu wierzytelności, PS 2009, No. 7-8, p. 11 et seq. (part one), PS 2009, No. 9, p. 49 et seq. (part two). See Decision of the SC of 9 July 2002, III CKN 806 / 99, OSN 2003, No. 6, item 82 with the glosses by A. Stangret, Prawo Bankowe (Banking Law) 2003, No. 5, p. 33, M. Leśniak, PS 2003, No. 6, item 141, J. Mojak and J. Widło, PS 2003, No. 9, p. 148, T. Czech, PPH 2004, No. 4, p. 49. See also: K. Zaradkiewicz, Tzw. zastaw nieakcesoryjny w polskim prawie cywilnym … passim. For more on accessory nature of the registered pledge see: M. Leśniak, Kilka uwag dotyczących akcesoryjności zastawu rejestrowego po wejściu w życie ustawy z 5 września 2008 roku, in: P. Machnikowski (ed.), Prace z prawa cywilnego dla uczczenia pamięci Profesora Jana Kosika, Wrocław 2009, p. 300 et seq. Unified text Dz. U. 2007, No. 155, item 1095 as amended. Unified text Dz. U. 2006, No. 123, item 857 as amended.

Poland

516

1998191). It is a compulsory pledge assumed by way of entry in the register kept by inland revenue offices (art. 42 of the Tax Ordinance). On the other hand, a variation on the pledge on rights is a financial pledge (zastaw finansowy, see art. 5 section 1 Pt. 2 of the Act of 2 April 2004 on some financial securities192 – the act implements in this regard the regulations of the directive 2002 / 47 / EC of the European Parliament and of the Council of 6 June 2002 on financial collateral arrangements193). This pledge is applicable only to cash debts and financial liabilities requiring the entity to deliver financial assets.

9.

Rights of extended effectiveness (real obligations)

As mentioned above (see part I, chapter. 1.2), next to absolute rights, Polish legislation knows rights that are in principle relative, however of so-called “extended” effectiveness. They include (a) real obligations, and (b) subordinated absolute rights. Only a legislative body may grant the socalled “extended” effectiveness to relative rights. By the same token, they create, similarly to real rights, a closed catalogue.

9.1.

Real obligations

Real obligations (zobowiązania realne) are obligations of persons having a well-defined situation in terms of real rights – they are legal bonds binding the subjects in relation to a specific thing. The parties are determined “indirectly”. The obligor is each and every participant of a defined real right situation (e.g. owner or possessor of a thing).194 Typical examples of such obligations are obligations ensuing from contractual relationships between co-owners of a thing.

191

192

193 194

Ustawa z 13 października 1998 r. o systemie ubezpieczeń społecznych, unified text, Dz. U. of 2009, No. 205, item 1585 as amended. Ustawa z 2 kwietnia 2004 r. o niektórych zabezpieczeniach finansowych, Dz. U. No. 91, item 871. O.J. L 168 of 27.06.2002. Z. Radwański, Prawo cywilne – część ogólna, p. 93-94; P. Machnikowski, in: E. Łętowska (ed.), System Prawa Prywatnego, vol. 5. Prawo zobowiązań – część ogólna, Warszawa 2006, pp. 123-124.

9. Rights of extended effectiveness (real obligations)

9.2.

517

So-called subordinated absolute rights

The newer doctrine distinguishes the so-called subordinated absolute rights (przyporządkowane prawa bezwzględne) from real obligations. Therefore, these are rights that may be defined as being “geared” towards the dominating right of a relative nature. The examples of such structures under the Polish law are leases of flats and life annuity agreements.195

195

Z. Radwański, Prawo cywilne – część ogólna, p. 94.

Part II: Transfer of ownership (derivative acquisition) 10.

Consensual system

10.1.

Rules

The Polish regulation concerning the transfer of things is in general a consensual system. However, one may distinguish two separate rules. The first rule always refers to things determinable by their identity. In such a case, the ruling effect of the transfer of ownership occurs – following the dominate opinion – at the moment of the conclusion of an appropriate obligatory contract (e.g. sale, change, donation). However, it is possible for the parties to abandon this principle thereby requiring an additional event. The Civil Code also permits the existence of appropriate special regulations (art. 155 § 1 C.C.). The second rule concerns things determinable by their kind and future goods. In such a case, it is necessary, in addition to the appropriate contract, to transfer the possession (art. 155 § 2 C.C.). In other words, it requires the individualisation of the object of the transfer of ownership. Therefore we should rather say that two separate rules exist in Polish law – both a consensual system and a system of traditio; or perhaps it should be said that the first one exists only partially (and within a limited scope). A legal transaction (a contract) that, in order to become effective, (i.e. to transfer) requires a change of actual control over a thing is called a “real” contract (umowa realna, contractus reales). A transaction that requires entry in a separate register to become effective is usually not treated as a “real” contract – not only in relation to third parties, but also – as concerns the right itself – inter partes.196 Scholarly literature has addressed the fact that “these are transactions noticeable for the environment and therefore a legislative body resorts to constructing real legal transactions chiefly in

196

Z. Radwański, Prawo cywilne – część ogólna, p. 220; same author, in: System Prawa Prywatnego, vol. 2, p. 185-186. It is, however, not a universally accepted view. For instance: J. Ignatowicz, K. Stefaniak, Prawo rzeczowe, p. 89, treat agreements that require entry in a separate register to become effective as an exception to the principle of consensuality. Similarly J. Majorowicz, in: Kodeks cywilny. Komentarz, vol. I, Warszawa 1972, p. 417.

10. Consensual system

519

situations where the meaning of a mere declaration might be uncertain, and also to guarantee publicity of legal transactions”.197 The transfer of possession may – as it should be assumed – occur basically in each of the statutory manners (traditio vera, symbolica, constitutum possessorium etc.). Polish legislation admits the possibility of an obligation to dispose of a future, non-existent thing and the one which, until the establishment of an obligation, does not belong to the obligor. Such an obligatory agreement is valid.198 In case of default, to fulfil the assumed obligation, the transferor bears a compensation responsibility ex contractu towards the second party (see art. 471 et seq. C.C.). It is worth mentioning that the construction contained in art. 155 C.C., in regard to transfer of ownership applies to dispositions, i.e. establishment and transfer, of other rights in rem (see art. 245 and 2451 C.C.). A similar model has been introduced in the system of assignment of claims (in the law of obligations) and in the inheritance law, as it concerns transfer of inheritance (see art. 510 and art. 1052 C.C.).

10.2.

The issue of the real agreement

The issue of defining a specific category of legal acts that can be described as “real” acts or “arrangements” (in Polish, umowa rzeczowa; and in German, dingliche Rechtsgeschäft) has been long addressed.199 The doctrine basically presents three fundamental concepts on this issue.200 According to the first one, the real effect of an agreement of transfer 197 198

199

200

Z. Radwański, Prawo cywilne – część ogólna, pp. 219-220. J. Wasilkowski, Prawo własności w PRL, p. 163; E. Drozd, Przeniesienie własności nieruchomości, Warszawa-Kraków 1974, p. 47-48; J.S. Piątowski, in: System prawa cywilnego, vol. II, p. 233; E. Gniewek, Kodeks cywilny …, p. 264; judgment of the SC of 18 December 1996, I CKN 27 / 96, OSNC 1997, No. 4, item 43; judgment of the SC of 11 February 2003, V CKN 1651 / 00, Legalis; judgment of the SC of 2 February 2005, IV CK 474 / 04, (not published). See e.g.: F. Zoll, Jakiej umowy potrzeba do przeniesienia własności rzeczy ruchomych?, PN 1947, Nos. 7-8, p. 67 et seq.; same author, Prawo cywilne w zarysie. vol. II, No. 2, pp. 6-7; W. Prądzyński, Umowy o przeniesienie własności nieruchomości i rzeczy ruchomych, PN 1947, vol. II, Nos. 9-10, p. 199 et seq.; J. Górecki, Przeniesienie własności rzeczy ruchomej, Wrocław 1950, p. 19 et seq.; W. Czachórski, Czynności prawne przyczynowe i oderwane w polskim prawie cywilnym, Warszawa 1952, p. 91 et seq.; J. Wasilkowski, Prawo rzeczowe w zarysie, pp. 141-144; S. Szer, Nabycie własności nieruchomości, PiP 1947, No. 1, p. 66 et seq.; W. Górski, Przeniesienie własności w nowym prawie rzeczowym, Szczecin 1948-1949. See E. Drozd, Przeniesienie własności nieruchomości, p. 26 et seq.

520

Poland

of ownership takes place by virtue of the very law. A related view to this first one is that the real effect of an agreement of transfer of ownership is covered by a statutory presumption that may however be reversed by proving that the parties did not want to transfer ownership. The second concept assumes that an agreement of sale, change, and donation (and other agreement of transfer of ownership listed in art. 155 C.C.) is in fact solely a real agreement as the parties’ will is directed towards transfer of ownership. On the other hand, an obligation is an effect of legal fiction assumed by the law. Finally, the third concept assumes that transfer of ownership requires the will to transfer ownership. There is, however, no agreement on how this should be revealed. The dominating view is probably that the parties, by concluding a real agreement, at the same time express the will to transfer ownership. On the basis of this assumption the law stipulates that only in the event that the parties do not intend to transfer ownership, they must include an appropriate provision in the real agreement.201 In other words an inclusion of a clear provision that the agreement shall transfer the ownership of a thing is not necessary in a real agreement. This view assumes that a double effect agreement is in fact one legal transaction directed towards causing two effects: an obligatory and a real effect. This is the opinion of the major part of the doctrine and the homogeneous opinion present in the Supreme Court’s jurisprudence.202 There are however some authors who recognize the necessity of making a distinction for real arrangements that are necessary for a transfer, or other real effect (e.g. encumbrance). One of the better known is the theory that could be called “two joint legal acts theory” (teoria dwu zespolonych czynności prawnych).203 Its advocates recognize that even with the act tending directly to accomplish the real effect, the obligatory and real contract 201 202

203

For this see: E. Drozd, Przeniesienie własności nieruchomości, p. 37. Decision of a bench of seven judges of the Supreme Court of 17 November 1981, III CZP 12 / 81, OSNCP 1982, No. 4, item 44. For this see e.g.: W. Prądzyński, Umowy o przeniesienie własności nieruchomości i rzeczy ruchomych, pp. 202-204; A. Szpunar, Nabycie własności ruchomości od nieuprawnionego, ed. 2, Kraków 1999, p. 47; K. Zaradkiewicz, Numerus apertus abstrakcyjnych czynności prawnych w polskim prawie cywilnym?, KPP 1999, No. 2, p. 275. Not clear enough is the standpoint of W. J. Katner, Przeniesienie własności rzeczy ruchomej, Acta Universitatis Lodziensis, Łodź 1988, pp. 145-148, who writes that an agreement of transfer of ownership (always a real transaction) overlaps with an obligatory agreement (e.g. an agreement of sale). According to this author e.g. in an agreement of sale two layers may be distinguished – an obligation consisting in delivery and collection of a thing, and a real transaction in form of transfer of ownership and payment of price.

11. Impact of dropping the obligation on the real effect of an agreement

521

conclusion is accomplished simultaneously. The difference between the view treating the double effect agreement as actually two joint legal acts (having both an obligatory and real effect) and the view treating the double effect agreement as one legal transaction intended to cause two effects – an obligatory and real effect) reveals itself in the case of the so-called subsequent lapse of an obligation. If it is assumed that the double effect agreement is one legal transaction, then lapse of an obligation (e.g. as a result of renunciation of an agreement), out of necessity, must result in such an agreement not entailing a real effect. If however a double effect agreement were in fact made up of two joint legal acts, the lapse of an obligatory agreement would not have to entail the lapse of a real agreement.204 Since this issue raises many doubts among jurists and in jurisprudence, it shall be separately discussed.

11.

Impact of dropping the obligation on the real effect of an agreement

The issue of the impact of lapse of the obligation on the real effect of an agreement has long been a subject of numerous doctrinal disputes.205 The available jurisprudence on this point, including the jurisprudence of the Supreme Court, is wavering and hardly homogenous. The fundamental problem relates to the question whether the lapse of an obligatory agreement causes ex lege the collapse of a real effect or merely creates a disposition of transfer back to the transferor on the part of the purchaser. Interestingly enough, the matter has been solved differently in jurisprudence with respect to movables and immovables, despite the fact that dispositions regarding these categories of things are in principle unregulated. In Polish jurisprudence, the prevalent view is that renunciation of an immovable property sale agreement (as well as other similar legal transactions, such as renunciation of a agreement of transfer of perpetual usufruct or dissolution of an immovable property sale agreement), exerts only an obligatory effect and does not cause automatic transfer of the ownership of the immovable back to the transferor, but rather that it requires the submission of an appropriate declaration of will by the parties concerning the transfer of ownership back to the transferor. This position was adopted by the Supreme Court as grounds for the decision of 17 November 1993 204 205

For this see E. Drozd, Przeniesienie własności nieruchomości, p. 32. For this see J. Pisuliński, Übertragung des Eigentums an beweglichen Sachen im polnischen Recht, in: J. Rainer, J. Filip-Fröschl, Transfer of Title Concerning Movables Part I – Eigentumsübertragung an beweglichen Sachen in Europa Teil I, Frankfurt a.M. 2006, p. 122 et seq.

522

Poland

(III CZP 156 / 93)206 concerning renunciation of an agreement of transfer of perpetual land usufruct right and sale of buildings located on such land, in the opinion relating to a decision of a bench of seven judges of 30 November 1994 (III CZP 130 / 94)207 concerning renunciation of an immovable property sale agreement, and the decision of 27 April 1994 (III CZP 60 / 94)208 concerning a dissolution of an immovable property sale agreement. A similar position was adopted by the Supreme Court in other judgments related to the effects of cancellation of an immovable property donation agreement (e.g. the decision of a bench of seven judges of 7 January 1967, III CZP 32 / 66209 and the decision of the full bench of the Civil Chamber of 28 September 1979, III CZP 15 / 79210). As it was clearly indicated in the decison of the Supreme Court of 27 February 2003, III CZP 80 / 02,211 the regulation of the effects of conclusion and renunciation of an immovable and movable property sale agreement, and also in a well-grounded standpoint of the Supreme Court on the merely obligatory effects of renunciation of an immovable property sale agreement, do not prejudge the adequacy of the same standpoint for the effects of renunciation of a movable property sale agreement. In the cited decision, the Supreme Court referred to its reasoning in the above-mentioned decision of 30 November 1994 (III CZP 130 / 94), in which the court made a clear reservation that the standpoint adopted therein applied only to the effects of renunciation of an immovable property sale agreement and did not refer to other property turnover. In the decision of 27 February 2003, the Supreme Court also stressed that “similarly to the judgments concerning renunciation of an immovable property sale agreement, the obligatory effect of this transaction was first of all derived from the specific limitations concerning only the immovable property turnover and the requirement of ensuring certainty of such a turnover, thus from the purpose-related considerations pertaining to immovable property, and not from grammatical and systemic interpretation”. On the other hand, however, as it was also pronounced in the decision of 27 February 2003, there is no uniform standpoint of the Supreme Court and there are also hardly unanimous opinions on the doctrine regarding the assessment of the effects upon the exercise by a party of the statutory 206 207

208 209 210 211

OSN 1994, No. 6, item 128. OSN 1995, No. 3, item 42; with a critical gloss by E. Drozd, in: PS 1995, No. 10, p. 109 et seq. See also E. Gniewek, a gloss to the decision of the SC z 27 February 2003, OSP 2003, No. 11, item 140. “Biuletyn SN” (Bulletin of the Supreme Court) 1994, No. 4, p. 16. OSN 1968, No. 12, item 199. OSN 1980, No. 4, item 63. OSNC 2003, No. 11, item 141.

11. Impact of dropping the obligation on the real effect of an agreement

523

right to renounce a movable property sale agreement. The opinions also vary as regards the assessment of effects of renunciation of an immovable and movable property sale agreement. The doctrine represents two trends, which assume either obligatory or real effects of this transaction. This division was reflected in several judgments of the Supreme Court. In the judgment of 26 November 1997 (II CKN 458 / 97)212 concerning the effects of renunciation of a movable property sale agreement by the buyer due to a fault of this property (art. 560 § 1 C.C.), the Supreme Court found that this transaction causes transfer of ownership of the movable property back to the transferor, thus it creates a real effect. The Supreme Court adopted the same position in a judgment of 22 January 2002 (V CKN 660 / 00)213 in relation to the effects of renunciation by the seller of a movable property sale agreement for reasons defined under art. 491 C.C. (in case of delay in performance). The above standpoint is convergent with the trend in jurisprudence assuming the real effect of other, similar legal transactions, including the dissolution of a life usufruct agreement (judgment of the Supreme Court of 28 May 1973, III CRN 118 / 73214 and decision of 4 July 1997, III CZP 31 / 97215), dissolution of a farm transfer agreement (decision of 5 May 1993, III CZP 9 / 93216), and donation cancellation (decision of 17 October 1963, III CO 51 / 63217). Article 494 C.C. provides that a party renouncing a mutual agreement shall be obliged to return to the other party everything that it received from it by virtue of the agreement and may not only request return of everything that it provided, but also repair of damage caused by failure to perform an obligation. In the judgment of 26 March 2002 (II CKN 806/99)218 concerning renunciation of a movable property sale agreement by the buyer due to a fault of this property, the Supreme Court, referring, among others, to the universal nature of a sale agreement renunciation regulation laid down in art. 494 C.C., and the well-established jurisprudence concerning the merely obligatory effect of renunciation of an immovable property sale agreement, adopted only this effect of renunciation of a movable property sale agreement. The issue of effects of renunciation of a movable property sale agreement was finally settled in a decision of the bench of seven judges of the Supreme Court of 27 February 2003 (III CZP 80 / 02).219 In this judgment, 212 213 214 215 216 217 218 219

OSN 1998, No. 5, item 84. OSP 2003, No 1, item 2. OSN 1974, No. 5, item 93. OSN 1998, No. 1, item 2. OSN 1993, No. 12, item 215. OSN 1964, No. 9, item 170. MoP 2003, No. 2, p. 88. OSN 2003, No. 11, item 141.

524

Poland

which evoked criticism from some legal scholars,220 the Supreme Court found that renunciation of a movable property sale agreement, pursuant to art. 491 § 1 and art. 560 § 2 C.C., causes transfer of ownership of the property back to the transferor. The Supreme Court pronounced in this decision (III CZP 80 / 02) that art. 494 C.C., directly or indirectly referred to under art. 560 § 2 and art. 491 § 1 C.C., did not regulate the effects of renunciation of a sale agreement within the scope of property ownership, “likewise such effects are not governed by specified regulations governing renunciation of a sale agreement due to a fault and due to delay caused by one of the parties in performance of an obligation under a mutual agreement”. In the opinion of the Supreme Court, both the content of art. 494 C.C. and its placement in book three of the Civil Code concerning obligations and effects of their non-performance, indicate that this provision “regulates only the duties of parties renouncing a mutual agreement without prejudice to the effects of such a renunciation of ownership being the subject of the agreement”. Therefore, as it was pronounced in this decision, the effects thus need to be sought in book two of the Civil Code on property law referring to ownership, “and in particular in articles 155 and 156 C.C. pertaining to transfer of ownership of a thing, which are applicable to the agreement of sale regulated under art. 535 C.C.”. The provision contained under art. 155 § 1 C.C. sets down the principle governing the obligatory-real, double effect (skutek zobowiązującorozporządzający) of an agreement transferring ownership of a thing determinable by its identity. In accordance with the prevalent doctrinal views (see earlier remarks in part II chapter 10.2) the provision in question attests that the legislator adopted a structure of one agreement transferring ownership of things constituting one legal transaction but having a double, obligatory and real, effect.221 The above regulations shall without fail impact the interpretation of regulations concerning the effects of renunciation of an ownership transfer 220

221

See M. Podrecka, a gloss to the decision of the SC of 27 February 2003, PS 2004, Nos. 7-8, pp. 223 et seq.; M. Warciński, a gloss to the decision of the SC of 27 February 2003, PS 2004, Nos. 7-8, pp. 237 et seq.; B. Janiszewska, a gloss to the decision of the SC of 27 February 2003, PPH 2004, No. 11, p. 49. According to these authors renunciation of an agreement of sale of a movable thing should have an obligatory effect, whereas E. Gniewek accepted the standpoint of the SC, though he found that also renunciation of an agreement of sale of an immovable property should carry a real effect (a gloss to the decision of the SC of 27 February 2003, OSP 2003, No. 11, item 140). For another opinion In favour of the real effect of renunciation of an agreement see also E. Drozd, Przeniesienie własności nieruchomości, p. 127. Instead of many see Z. Radwański, Prawo cywilne – część ogólna, p. 222.

11. Impact of dropping the obligation on the real effect of an agreement

525

agreement. This is also the opinion of the Supreme Court pronounced in the above cited decision of 27 February 2003, in which the Court underlined that “since under art. 156 C.C., the ownership transfer agreement is of a causal nature, and under art. 155 C.C., it is an obligatory-real agreement, renunciation of a sale agreement, frustrating the cause of its conclusion, leads to a collapse of both effects of the ownership transfer agreement, both an obligatory and a real effect”.222 In the opinion of the Court, the renunciation of an agreement of sale of a thing determinable by its identity, causes thus ex tunc the return of its ownership to the transferor, by virtue of art. 155 § 1 and art. 156 § 2 C.C., and the provision of art. 494 C.C. regulates only mutual obligations and settlements between parties arising from the renunciation of an agreement. As it was further stated in the decision, it may not be deemed a specific provision with reference to art. 156 C.C. The Court indicated that the return is not an effect of the one-sided declaration of will of renunciation of an agreement “merely causing a collapse of a cause of sale which by virtue of law frustrates its real effect”. Similar effects according to the Supreme Court are caused by the performance of a contractual right to renounce the agreement (umowne prawo odstąpienia) regulated under art. 395 § 2 C.C. The provision therein contained states clearly that in the event of the performance of a right of renunciation the agreement is deemed unconcluded, and what the parties have already delivered shall be returned in an unchanged condition, unless the change was necessary within the limits of regular administration. It has been generally accepted in the literature that the contractual right of renunciation is effective ex tunc and, as a result of its performance, the agreement is treated as if it were never concluded.223 A unilateral declaration of will of renunciation of the agreement causes the recovery of the legal situation prior to the conclusion of the agreement as if it never existed, which in the event of an agreement of sale means automatic return of the ownership of the property to the transferor.224 There 222

223

224

See also decisions of the SC of 27 April 1994, III CZP 60 / 94, Radca Prawny 1994, No. 4, p. 78, of 30 November 1994, III CZP 130 / 94, OSNC 1995, No. 3, item 42, and with regard to the effects of cancellation of a donation – decision of 17 October 1963, III CO 51 / 63, OSNC 1964, No. 9, item 170. See e.g. W. Popiołek, in: K. Pietrzykowski (ed.), Kodeks cywilny, Komentarz do artykułów 1-44911, vol. I, p. 1175; P. Drapała, in: System Prawa Prywatnego, vol. 5, p. 946. See M. Brożyna, Odstąpienie od umowy przenoszącej własność a zastrzeżenie prawa własności, TPP 2003, No. 2, pp. 36-37. For a different view however see P. Drapała, in: System Prawa Prywatnego, vol. 5, p. 946, in whose view renunciation of an agreement evokes only an obligatory effect (it obliges to back transfer of ownership).

526

Poland

are no reasonable arguments why performance by either party of the statutory right of renunciation of a sale agreement might cause other effects, the more so that it shall not be justified by the above-presented interpretation of provisions regulating the statutory right to renounce a mutual agreement. As the Supreme Court referred to art. 155 C.C. in its reasoning, it needs to be considered whether the distinction provided therein, between transfer of ownership of things determinable by their identity and things determinable by their kind, impacts the effects of renunciation of a sale agreement, hence whether if an object of a sale agreement has been a thing determinable by its kind then, in case of renunciation of the agreement, in order to transfer ownership of property back to the transferor, a transfer of ownership stipulated in art. 348-351 C.C. shall also be necessary or not. It needs to be stated that renunciation of an agreement always refers to an individualized, concrete thing determinable by its identity, since such was the object of the sale agreement. For this reason it is the thing – and not the thing determinable by its kind – that the buyer is obliged to return. The ownership of this specific thing is thus returned to the seller. There are no grounds whereby, in order to make the transfer of ownership back to the transferor effective, a statutory requirement of transfer of ownership of property should be applied for contractual transfer of ownership of a thing determinable by its kind to achieve a goal, which upon renunciation of an agreement no longer exists, since the thing in question has been previously individualized.225 Transfer of ownership of a movable thing back to the transferor occurs, thus, the moment the contracting party is effectively notified of the declaration of will of renunciation of the sale agreement, irrespective of whether the transfer of ownership of the thing back to the transferor has actually taken place or not. Also, the provision contained in art. 548 § 2 C.C., regulating the transfer of risk of accidental loss or damage of a sold thing, bears no impact on the definition of the manner and moment of transfer of ownership of a movable thing back to the transferor upon renunciation of a sale agreement. The provision contained therein regulates neither the manner of transfer of ownership upon conclusion of a sale agreement nor the effects of transfer of ownership of things. The moment either party effectively renounces an agreement of sale, the seller becomes the owner of the thing again, whereas the buyer benefitting from the right of retention becomes its indirect possessor. As of this moment, the seller – as the owner – shall be encumbered with all public tributes connected with the ownership of the thing, as well as burdens and benefits stipulated under the civil law and the owner’s risk burden of ac225

A similar standpoint was taken by the SC in the justification of the judgment of 12 February 1997, II CKN 94 / 96, OSN 1997, Nos. 6-7, item 85.

12. Rule of traditio

527

cidental loss of the thing (casum sentit dominus). He will also be entitled to a claim for delivery in conjunction with the simultaneous offer of return of the price, whereas the buyer, if he possesses the thing within the right of retention, may not use it and is obliged to pay the seller (the owner) remuneration for use of the thing. The buyer shall also be held responsible for the culpable loss, damage, and wear and tear of the thing.226 The Supreme Court underlined, in the justification of the judgments of 26 November 1997 and 22 January 2002, that adopting merely an obligatory effect of renunciation of a sale agreement of movable things would greatly hinder the performance of this right by the party renouncing the agreement. It would simply entail the necessity of concluding an agreement transferring ownership of the movable property back to the transferor upon renunciation of the agreement, and in case of lack of consent of the other party, the necessity of bringing an action for submission of an appropriate declaration of will pursuant to art. 64 C.C. This might considerably delay the transfer of ownership of things back to the transferor. This would be justified neither in consumer turnover nor in professional turnover, due to the bulk nature of sale of movable things and to the purpose of statutory renunciation of such agreements. The provisions under the Act of 27 July 2002 on specific conditions of consumer sale, and the amendment of the Civil Code227 (implementing the directive 1999 / 44 / EC of the European Parliament and of the Council of 25 May 1999 on certain aspects of the sale of consumer goods and associated guarantees228), do not contain regulations that might be in favour of the above discussed possibilities of interpretation of regulations concerning renunciation of a movable property sale agreement, or justify the differentiation of the effects of renunciation of an agreement depending on whether a professional or a consumer turnover is applicable. There are thus no grounds to make such a differentiation.

12.

Rule of traditio

Traditio is not a general, uniform rule of the Civil Code regarding dispositions of things. To transfer, establish or abandon the real right, it is basically 226

227

228

Vide judgment of the Supreme Court of 3 July 1980, II CR 190 / 80, OSN 1981, No. 1, item 18 and the justification of the decision of the full bench of the Civil Chamber of the Supreme Court of 30 December 1988, III CZP 48 / 88, OSN 1989, No. 3, item 36. Ustawa z 27 lipca 2002 r. o szczególnych warunkach sprzedaży konsumenckiej oraz o zmianie Kodeksu cywilnego, Dz. U. No. 141, item 1176. OJ L 171, 7.7.1999, p. 12-16.

Poland

528

not necessary to deliver the thing. The real effect occurs (beyond exceptions already mentioned in part II chapter 10.1 above) on the basis of an agreement. Even for transfer of things identifiable by kind or those that shall come into being in the future, the Civil Code does not require the delivery of the thing, but also permits other manners of transfer of possession.229 By way of an exception, the Civil Code also foresees, however, certain specific situations when the real effect depends on the delivery of the thing. One of them is the establishment of a possessory pledge on a movable thing (art. 307 C.C.). Delivery is also one of the premises of acquisition of a movable thing from an unauthorized person (a non domino, art. 169 C.C.). In this case, referring to traditional solutions functioning in many European legal systems, the Civil Code has not abandoned the publicity requirement.

13.

Rule of causal transfer

Since pre-codification times, the Polish civil law has acknowledged the existence of the so-called general principle of causality (generalna zasada kauzalności). This rule has been accepted nearly unanimously despite the lack of an appropriate regulation that would explicitly grant it a statutory status.230 Despite certain modifications in its comprehension (regarding obligatory transactions), it has not been basically undermined in the area of dispositions of real rights. The Supreme Court has unequivocally stated that as far as immovable property is concerned “an agreement of transfer of ownership (…) is always of a causal nature (…)”.231 This argument has, however, a broader impact 229

230

See e.g.: E. Skowrońska-Bocian, in: K. Pietrzykowski (ed.), Kodeks cywilny, Komentarz do artykułów 1-44911, vol I, p. 599; also judgment of the SC of 10 November 1999, I CKN 201 / 98, OSNC 2000, No. 5, item 93. It is assumed that it has been recognized as binding in the light of reasoning contained in the work by W. Czachórski, Czynności prawne przyczynowe i oderwane … In more recent literature the existence of the general principle of causality has been questioned, see G. Tracz, Aktualność generalnej zasady kauzalności w czynności prawnych przysparzających w prawie polskim, KPP 1997, No. 3, pp. 499 et seq., M. Safjan, Umowy związane z obrotem gospodarczym jako najważniejsza kategoria czynności handlowych, PPH 1998, No. 2, p. 6; K. Zaradkiewicz, Numerus apertus abstrakcyjnych czynności prawnych w polskim prawie cywilnym?, p. 273 et seq.; R. Trzaskowski, Właściwość (natura) zobowiązaniowego stosunku prawnego jako ograniczenie zasady swobody kształtowania treści umów, KPP 2000, No. 2, pp. 365-366, 368; same author, Granice swobody kształtowania treści i celu umów obligacyjnych. Art. 3531 k.c., Kraków 2005, p. 361-362; M. Safjan, K. Zaradkiewicz, in: J. Okolski (ed.), Prawo handlowe, ed. 2, Warszawa 2008, and literature invoked therein.

13. Rule of causal transfer

529

and relates to any real right dispositions created by legal transactions.232 Definitely bearing in mind the controversies over the existence of the rule of causality in the pre-codification property law (on the basis of the decree of 1946), it was found that it is necessary to express it within the regulations of the Civil Code on the transfer of ownership. This arises from the analysis of the works and debates on the Code’s draft.233 Pursuant to the content of art. 156 C.C., “if the conclusion of an ownership transferring agreement occurs in the performance of an obligation arising from a previously concluded agreement obligating transfer of ownership, from a legacy, unjust enrichment or another event, the validity of the ownership transferring agreement depends on the existence of this obligation”. As it can be seen, this provision refers directly to a situation whereby parties conclude a real agreement, separately from the obligation. It is also recognized, however, that for obvious reasons causality refers also to situations whereby the increment is achieved by virtue of an obligatory agreement itself (in this case, however, causa arises directly from the content of the agreement).234 The existence of the principle of causality is recognized as a dogma in relation to real right dispositions.235 231

231 232

233

234

235

Judgment of the SC of 10 April 2000, V CKN 168 / 00, LEX No. 52666. See, however, E. Drozd, Umowa zobowiązująca jako podstawa prawna dla umów z zakresu prawa rzeczowego, in: Rozprawy prawnicze. Księga pamiątkowa Profesora Maksymiliana Pazdana, pp. 863 et seq., who maintains that some dispositions (e.g. establishment of limited real rights) do not need to be based on an obligatory agreement. Thus in these cases the lack of causae does not lead to ineffectiveness of the disposition. As concerns mortgage see also: J. Pisuliński, Hipoteka kaucyjna, Kraków 2002, p. 180-182; same author, in: System Prawa Prywatnego, vol. 4, p. 836; B. Swaczyna, Hipoteka umowna, Warszawa 2007, p. 64; judgment of the SC of 3 October 2007, IV CSK 193 / 07, OSNC 2008, No. C, item 78. The principle of causality of increment in the civil law has not been stated expressly in the provisions of the Civil Code, despite the fact that its introduction was planned when the drafting process was in progress – “when in the content of a legal transaction the legal basis of increment has not been expressly stated, its existence shall be presumed”, PN 1948, vol. I, fascicles 2-3, p. 224; for more on this topic see: M. Lisiewski, Projekt części ogólnej kodeksu cywilnego (II), PN 1948, vol. I, No. 5, pp. 420-421. See e.g.: J.St. Piątowski, in: System prawa cywilnego, vol. II, p. 231; E. Gniewek, Kodeks cywilny …, p. 204-205; see also: same author, Prawo rzeczowe, pp. 87-88; E. Skowrońska-Bocian, in: K. Pietrzykowski (ed.), Kodeks cywilny, Komentarz do artykułów 1-44911, vol. 1, p. 602. As concerns transfer of ownership see e.g.: J.St. Piątowski, in: System prawa cywilnego, vol. II, p. 231; E. Gniewek, Kodeks cywilny …, p. 204; J. Ignatowicz, K.

530

Poland

Traditionally three forms of causae are distinguished: causa obligandi, solvendi and donandi.236 Some dogmatists and the jurisprudence of the Supreme Court indicate a fourth form – causae cavendi. They maintain that the cause consisting in securing the right (the debt) should be treated as a separate form.237 Other authors, however, reject this form of a legal cause on the grounds that a security may be described by means of a traditional triad of causae.238

236

237

238

Stefaniuk, Prawo rzeczowe, p. 90; A. Stelmachowski, in: System Prawa Prywatnego, vol. 3, p. 327. See for instance: W. Czachórski, Czynności prawne przyczynowe i oderwane …, p. 103; A. Wolter, J. Ignatowicz, K. Stefaniuk, Prawo cywilne. Zarys części ogólnej, p. 271; Z. Radwański, Prawo cywilne – część ogólna, p. 226; same author, in: System Prawa Prywatnego, vol. 2, p. 196. See e.g.: J. Skąpski, Przewłaszczenie na zabezpieczenie, StC 1969, vols. XIII-XIV, pp. 315-316; Z. Radwański, in: S. Grzybowski (ed.), System prawa cywilnego, vol. III, part 2. Prawo zobowiązań – część szczegółowa, Wrocław-Warszawa-Kraków-Gdańsk 1976, p. 1062; B. Błażejczak, Powstanie hipoteki i jej przedmiot, Poznań 1968, p. 63; E. Łętowska, Charakter przejęcia długu i poręczenia w Kodeksie cywilnym, RPEiS 1967, No. 2, p. 65; same author, Umowa o świadczenie przez osobę trzecią, Warszawa 1970, p. 101; A. Szpunar, Zabezpieczenia osobiste wierzytelności, Sopot 1997, p. 35; Z. Strus, M. Strus-Wołos, Ustawa o zastawie rejestrowym i rejestrze zastawów. Komentarz, ed. 2, Warszawa 1999, p. 21; E. Gniewek, Kodeks cywilny …, p. 188; A. Wolter, J. Ignatowicz, K. Stefaniuk, Prawo cywilne. Zarys części ogólnej, p. 271; M. Pazdan, Przelew wierzytelności na zabezpieczenie, KPP 2001, No. 1, pp. 137-138; J. Widło, Umowa przelewu wierzytelności. Zagadnienia wybrane, Nowy Przegląd Notarialny (New Notary Review) 2002, No. 1, p. 81; J. Gołaczyński, Przewłaszczenie na zabezpieczenie, p. 4445; for jurisprudence see: judgment of the SC of 19 November 1992, II CRN 87 / 92, OSNCP 1993, No. 5, item 89, decision of the SC of 5 May 1993, III CZP 54 / 93, OSP 1994, No. 10, item 176; judgment of the SC of 27 June 1995, I CR 7 / 95, OSNC 1995, No. 12, item 183; decision of the SC of 28 September 1995, III CZP 125 / 95, OSNC 1996, No. 1, item 11; decision of a bench of seven judges of 30 September 1996, III CZP 85 / 96, OSNC 1996, No. 12, item 153; judgment of the SC of 29 May 2000, III CKN 246 / 00, OSNC 2000, No. 11, item 213; judgment of the SC of 8 March 2002, III CKN 748 / 00, OSNC 2003, No. 3, item 33; judgment of the SC of 25 August 2004, IV CK 589 / 03, LexPolonica No. 368611; judgment of the SC of 14 November 2006, II CSK 205 / 06, OSNC 2007, No. 9, item 139; decision of the SC of 26 September 2007, IV CSK 118 / 07, OSP 2008, No. 12, item 125, with a critical gloss by S. Rudnicki. For this i.a.: W. Czachórski, Czynności prawne przyczynowe i oderwane …, p. 103, 170, 171; G. Tracz, Aktualność generalnej reguły kauzalności …, p. 521; for a critical view see also: E. Drozd, Przeniesienie własności nieruchomości, p. 106-107.

14. Good faith acquisition from a non-owner

531

The Supreme Court recognizes that it is not possible within a real agreement to modify the content of an obligatory agreement consisting in introducing into the real agreement, obligations not contained in the content of the obligatory agreement.239 The science of law makes a distinction between the principle of causality in the substantive and in the formal sense.240 In the substantive sense, the principle of causality means that the lack of causae (non-existence of an obligation) entails invalidity of a real agreement concluded in order to perform an obligation. On the other hand, in the formal sense, the principle of causality signifies the order to indicate in a real agreement an obligation (thus causae) for the performance of which a real agreement is concluded. In the formal sense, causal is the nature of a real agreement transferring ownership of an immovable property that was concluded in order to perform an obligation (pursuant to art. 158 C.C. in fine). By contrast, in the real agreement transferring ownership of a movable property, in order to perform an existing obligation there is no duty to indicate this obligation (a real agreement in this sense is a formally detached, though a substantively causal agreement).241

14.

Good faith acquisition from a non-owner

Both in the case of immovables as well as movables, it is possible to acquire ownership in good faith from a person who is not a titleholder (acquisition a non domino). The same applies to dispositions of other real rights. In the case of movables, the fundamental standards covering acquisition from a person without title are provided within the scope of ownership transfer regulations. The view that prevails in Polish doctrine is that the acquisition of ownership a non domino is of a derivative nature, though partisans of the opposing view have also emerged.242

239

240

241

242

See judgment of the SC of 14 April 1971, III CRN 57 / 71, LEX No. 6906. A convincing criticism of this view was presented by E. Drozd, Umowa zobowiązująca …, p. 865. See: J. Skąpski, Przewłaszczenie na zabezpieczenie, p. 315; A. Wolter, J. Ignatowicz, K. Stefaniuk, Prawo cywilne. Zarys części ogólnej, p. 273. In particular see J.St. Piątowski, in: System prawa cywilnego, vol. II, p. 231; J. Ignatowicz, K. Stefaniuk, Prawo rzeczowe, p. 90. See e.g. J. St. Piątowski, in: System prawa cywilnego, vol. II, p. 306; A. Szpunar, Nabycie własności ruchomości od nieuprawnionego, p. 62 et seq.; E. Skowrońska-Bocian, in: K. Pietrzykowski (ed.), Kodeks cywilny, Komentarz do artykułów 1-44911, vol. 1, p. 616; for original nature of acquisition: J. Górecki, Przeniesienie własności rzeczy

532

Poland

The effective acquisition of ownership from a person unauthorised to dispose of a thing (thus not exclusively a person professing to be the owner) requires that the following prerequisites are met (art. 169 § 1 C.C.): – good faith of the acquirer including conviction that the transferor is authorised to dispose of the thing; – legal transaction of disposition meeting other criteria of validity; – delivery of the thing by the transferor; – taking possession of the thing by the acquirer; Upon meeting the above criteria, the acquirer becomes the owner of the thing. Good faith of the acquirer should concern the entitlement of a transferor to dispose of a thing.243 Certainly, the acquisition of ownership would not be possible if the transferor and purchaser had not concluded an appropriate agreement with a real effect (acquisitive).244 This, however, applies solely to things that the transferor was entrusted with by the owner, which does not mean that the Civil Code does not permit bona fide acquisition of things that the owner lost against his will. It is then, however, only possible after three years elapse from the time of the loss (caused by mislaying, theft etc.). It is also obviously necessary to meet the above general prerequisites. Good faith of the possessor who acquired control over the thing lost by the owner should exist until acquisition becomes possible after the three-year term elapses (mala fides superveniens nocet).245 There are no doubts that the three-year term indicated in art. 169 is not a term to acquire a thing by usucapio, but a statutory term of – as often indicated – a preclusive nature.246 Postponement of the possibility of acquiring ownership of a lost thing was, however, excluded in the case of cash, bearer securities or things acquired at an official public auction or in the course of execution proceedings (art. 169 § 2 C.C.). The Supreme Court orders that delivery of a thing by

243

244 245

246

ruchomej, p. 87; S. Grzybowski, in: System prawa cywilnego, vol. I, p. 242; A. Wolter, J. Ignatowicz, K. Stefaniuk, Prawo cywilne. Zarys części ogólnej, p. 146. Judgment of the SC of 15 November 2002, V CKN 1340 / 00, OSP 2003, No. 11, item 143 with a gloss by W.J. Katner. Judgment of the SC of 15 November 2002, V CKN 1340 / 00, see above. For this see i.a. A. Szpunar, Nabycie własności ruchomości od nieuprawnionego, p. 109110; S. Rudnicki, G. Rudnicki, Komentarz do kodeksu cywilnego. Księga druga. p. 202; E. Skowrońska-Bocian, in: K. Pietrzykowski (ed.), Kodeks cywilny, Komentarz do artykułów 1-44911, vol. 1, p. 615. For jurisprudence see judgment of the SC of 28 August 1984, I CR 261 / 84, OSN 1985, Nos. 5-6, item 71. For this see the Supreme Court’s justification of the judgement of 18 October 1994, I CRN 98 / 94, LexPolonica No. 309274 and A. Szpunar, Nabycie własności ruchomości od nieuprawnionego, p. 128.

14. Good faith acquisition from a non-owner

533

an owner to another person as a result of deceit should be treated as the thing’s loss.247 The decision of the Supreme Court is controversial in which it found that, in the case of control of a thing within a three-year period by several persons “who transferred it one after the other, the prerequisite that acquisition of ownership shall be in good faith applies not only to the last one of them, but also to all previous unauthorised possessors”.248 It is unanimous in the jurisprudence and the doctrine that acquisition from an unauthorised person may not be accomplished by transfer of possession by way of constitutum possessorium.249 As the Supreme Court underlines, ownership may not be acquired on the basis of the rules concerning the acquisition from a non-owner in cases of transfer of possession in a manner indicated in art. 349 and 350 C.C.250 In case of transfer of ownership of a thing encumbered with the right of a third party, the latter is extinguished upon delivery of the thing to the acquirer, unless he acts in bad faith. As far as the thing lost by an authorized person is concerned (i.e. a third party vested with a limited real right in the thing), the regulations on acquisition of ownership a non domino concerning things lost by the owner (art. 170 C.C.) are applicable. Thus, for instance, acquisition of ownership without the knowledge of the purchaser about the existing pledge causes its extinguishment.251 The regulations in art. 169-170 C.C., concerning acquisition from an unauthorised party, are respectively applicable to the establishment of a possessory pledge (art. 309 C.C.) and art. 2 section 3 of the Register of Pledge and Non-possessory Pledge Act.252 In this context, it is worth mentioning that, in connection with the good faith rule, the Civil Code regulates priority between pledge and other real rights. Under art. 310 C.C., “[i]f upon establishment of a pledge a thing is encumbered with another real right, the pledge established later shall have priority over the pledge established earlier, unless the pledgee acted in bad faith”.

247 248

249

250 251 252

Judgment of the SC of 20 April 2004, V CK 431 / 02, MoP 2005, No. 7, p. 349. Judgment of the SC of 10 October 1997, II CKN 378 / 97, OSP 1998, No. 6, item 111 with a critical gloss by A. Szpunar. See e.g.: J. St. Piątowski, in: System prawa cywilnego, vol. II, p. 299; A. Szpunar, Nabycie własności ruchomości od nieuprawnionego, p. 80-81; E. Geniwek, Kodeks cywilny. Komentarz, p. 267-268. Judgment of the SC of 18 April 2002, II CKN 1226 / 00, OSN 2003, No. 4, item 59. See also Art. 13 pt. 1 of the Register of Pledge and Non-possessory Pledge Act. These provisions refer to provisions on acquisition from an unauthorised person of ownership of a movable thing. In the case of registered pledge instead of the delivery of the thing to the acquirer acting in good faith, an entry in the register of pledges is required.

Poland

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15.

Payment

Payment of the price is not a prerequisite for acquisition of ownership of a movable thing253 (neither is it a prerequisite for effectiveness of this transfer to third parties). In principle the acquirer becomes the owner of a thing upon conclusion of an agreement (in the case of things determinable by their identity). As the Civil Code allows the reservation of a condition in the agreement transferring ownership of a movable thing, the parties might decide that the ownership of a movable thing shall be transferred to the acquirer only upon payment of the price (for more on the reservation of ownership of a sold thing see remarks, infra part IV chapter 28). Payment of price shall thus constitute a suspending condition (art. 89 C.C.),254 the fulfillment of which shall be a prerequisite of transfer of ownership on the acquirer. If prior to the payment of price the transferor transfers the thing to another person (the third party), then this transfer shall lose legal force upon fulfillment of a condition reserved in the first agreement, i.e. payment of price (art. 92 § 1 C.C.), unless the acquirer from the second agreement did not know about the conclusion of the first one (in this case the regulations on acquisition of a thing from a person unauthorised to dispose of the right shall apply – art. 92 § 2 C.C.). To secure himself against the possibility of transferring the thing to another person (the third party), the acquirer should agree with the transferor that the thing shall be delivered still prior to the payment of price. Should the acquirer fail to pay the price, the transferor may renounce the agreement (art. 491 C.C.) and request return of the thing from the acquirer (as to the effects of renunciation vide earlier remarks under part II chapter 11). If the transfer of ownership is based upon a mutual agreement, the transferor may also refrain from delivery of the thing until the acquirer pays the price. The transferor is then entitled to the non adimpleti contractus claim (art. 488 § 2. C.C.). This, however, does not prevent the transfer of the thing to the acquirer. The parties may include a clause in the agreement securing the liability to pay the price to the transferor (e.g. by means of establishing a pledge on the sold thing).

253

254

See e.g. judgment of the SC of 8 October 1997, II CKN 366 / 97, LexPolonica no. 2027972. See: judgment of the SC of 31 March 2005, V CK 490 / 04, LexPolonica no. 1573285; cf. decision of the SC of 5 March 1999, I CKN 1069 / 98, OSNC 1999, No. 9, item 160; judgment of the SC of 5 June 2002, II CKN 701 / 00, OSP 2003, No. 10, item 124.

16. Double sale

16.

535

Double sale

The case of sale of the same movable thing to two different persons needs to be considered both with reference to the thing determinable by its identity and the thing determinable by its kind. In the case of sale of a movable thing determinable by its identity, the ownership of this thing shall, as a rule, be transferred to the buyer upon conclusion of an agreement, unless the parties either included a condition clause governing the transfer of ownership (see supra part II chapter 10.1) or extinguished the real effect (whereupon a second agreement is necessary – the real agreement). If the seller then sold the same thing to another person (the third person), acquisition of ownership of this thing by this person would be possible if the prerequisites, defined under art. 169 C.C., were met (see under supra part II chapter 14, remarks on acquisition of ownership by a person unauthorized to dispose of the thing). If the acquirer from the second agreement concludes this agreement in good faith and other prerequisites under art. 169 C.C. are met (especially when the thing has been delivered by the seller), the buyer from the first agreement of sale will lose ownership of the thing. He will then be entitled to claim adjustment of the incurred loss from the seller.255 On the other hand, in the case of sale of a movable thing determinable by its kind, the ownership of the thing is transferred to the acquirer only upon transfer of possession (art. 155 § 2 C.C.). Until this happens, the seller shall remain the owner of the thing. The buyer is then entitled to a claim for delivery of the thing (art. 535 C.C.). For this reason if the seller sold the thing to another person (the third party), this person could acquire ownership of this thing even if she knew of the conclusion of the earlier agreement by the seller (since it acquires the thing from the owner). If this second agreement was also an agreement of sale of a movable thing determinable by its kind, then the legal situation of this buyer would be similar to the legal situation of the buyer from the first agreement of sale. Ownership of the thing shall be acquired by the acquirer (either from the first or from the second agreement) to whom the seller earlier transferred possession of this thing. Acquisition of ownership by a third person (buyer from the second agreement of sale) shall obviously not relieve the seller of the obligation to transfer ownership of the thing arising from the first 255

Any claims for adjustment should primarily be based on the regulations on nonperformance of an obligation (art. 471 C.C.). The sale of the same thing to another person may also constitute a delict whereupon the seller shall be held responsible for the loss inflicted upon the buyer from the first agreement, also on the basis of regulations on extracontractual responsibility (art. 415 C.C.). The Civil Code permits convergence of such claims (art. 443 C.C.).

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agreement of sale (it shall not become impossible to execute in line with the genus perire non censetur principle). The buyer from the first agreement of sale may continue to request delivery of a thing of the same kind as defined in the agreement. He may also request compensation from the seller for non-performance of the obligation (art. 471 C.C.).

17.

Transfer by means of indirect representation

The Civil Code does not provide a general standard (like § 185, BGB) regarding the possibility of granting a person authorisation to dispose of the right on her own behalf, but on the account of another person in whom this right is vested.256 Nevertheless, the Civil Code regulates the agreement of consignment (art. 765 – 773), whereby the consignee makes an obligation to buy and sell a movable thing on the account of the consignor. The consignee in performing the agreement of consignment thus concludes an agreement of sale on his own behalf, but on the account of the consignor. It is generally accepted that in the case of sale of a thing entrusted to a consignee by a consignor, the ownership of this thing passes – as a result of an agreement concluded by the consignee with the buyer – directly from the consignor to the buyer.257 If the consignor is not entitled to ownership of a consigned thing or if an agreement of consignment turns out invalid,258 the buyer shall acquire ownership of this thing only if the prerequisites of acquisition of ownership from an unauthorised person defined under art. 169 C.C., have been met (see remarks in supra part II chapter 14). Until the conclusion of an agreement of sale by a consignee (in the case of a thing determinable by its identity), or until the moment of transfer of possession to the buyer (in case of a thing determinable by its kind), the consignor shall remain the owner of the thing. If within that time (i.e. prior to the transfer of ownership to the buyer), the insolvency of the consignee was declared, the consignor could – upon renunciation of the agreement of consignment (art. 102 section 2 InsA) – request exclusion of the thing from the bankrupt’s estate and its delivery (art. 70 InsA – see remarks below in part II chapter 19.).

256

257

258

I. Karasek, Zabezpieczenia wierzytelności na zbiorze rzeczy lub praw o zmiennym składzie. Zagadnienia konstrukcyjne, Kraków 2004, p. 130. See i.a. A. Szpunar, Stosunki własnościowe przy komisie, Rejent 1994, No. 1, p. 35 et seq.; J. Frąckowiak, in: J. Rajski (ed.), System Prawa Prywatnego, vol. 7. Prawo zobowiązań – część szczegółowa, ed. 2, Warszawa 2004, p. 595 and literature invoked therein. In both cases the consignee shall not be entitled to dispose of the thing.

17. Transfer by means of indirect representation

537

On the other hand, in the case of purchase of a thing by the consignee, the prevalent view is that the ownership of a thing is acquired by the consignee, who is obliged to transfer this right – while performing the agreement of consignment – to the consignor (art. 766 C.C.).259 The agreement transferring ownership of a thing acquired by the consignee is a real agreement. If insolvency of the consignee was declared prior to the transfer of ownership of this thing to the consignor, the consignor would not be entitled to request the right of exclusion of this thing from the bankrupt’s estate. The agreement of consignment does not expire as a result of the consignee’s insolvency (art. 102 section 2 InsA). Since an agreement of consignment is a fiduciary transaction, which particularly applies to an agreement ordering a purchase of a thing,260 the effects of the declaration of the consignee’s insolvency prior to the transfer of ownership of the purchased thing to the consignor should be the same as in the case of other fiduciary agreements. Thus the remarks on the effects of the declaration of the creditor’s insolvency on an agreement of fiduciary transfer of a thing shall remain valid (see part I.7 above). Similar to the effects of consignment are the effects of conclusion of an agreement transferring ownership concluded by the agent on his own behalf, with a third party, while performing a contract of mandate.261 The ownership of a thing passes directly from the principal to the third party with whom the agent (on his own behalf, but on the account of the princi259

260

261

See Z. Radwański, J. Panowicz – Lipska, Prawo zobowiązań – część szczegółowa, Warszawa 2004, p. 195, A. Szpunar, in: System prawa cywilnego, vol. III, part 2, p. 671. J. Frackowiak, in: System Prawa Prywatnego, vol. 7, p. 598 (only in relation to things determinable by their kind, acquired by the consignee; in case of things determinable by their identity in his view the ownership of such a thing – upon its acquisition by the consignee – is transferred on the consignor). For a different view see J. Kasprzyszyn, Cechy charakterystyczne umowy komisu, Prawo Spółek, 2002, No. 1, p. 42, in whose view the effects of purchase and sale of the thing by the consignee should be defined homogeneously, and this means that the consignor becomes a direct owner of the thing without the need of concluding any agreement with the consignee. See: L. Ogiegło, in: K. Pietrzykowski (ed.), Kodeks cywilny, Komentarz do artykułów 450 – 1088, vol. 2, ed. 5, Warszawa 2009, p. 649; similarly: J. Frąckowiak, in: System Prawa Prywatnego, vol. 7, p. 572. The contract of mandate may oblige the agent to conclude various agreements, not only the agreement of sale (purchase) of a movable thing (art. 734 § 1 C.C.). If not agreed otherwise, the agent is authorised to conclude an agreement on behalf of the principal (art. 734 § 2 C.C.). Moreover, the agent does not have to be an entrepreneur (like the consignee, art. 765 C.C.), and the contract of mandate may always be concluded free of charge (consignment is always a payable agreement – a commission is payable to the consignee, art. 772 C.C.).

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pal) concluded an agreement of transfer of ownership. In turn, if the agent acquires the ownership of a thing from a third party, he shall be obliged to transfer ownership of this thing to the principal (art. 740 sent. 2 C.C.).262 The science of law permits granting an authorisation to dispose of another person’s right on one’s own behalf also in cases other than those regulated by the Civil Code. In practice, such a situation occurs in the case of transfer of ownership of a thing (usually a collection of things), in order to secure a liability, when the party establishing a security is authorised by the creditor, being the owner of the thing, to transfer the thing on his own behalf on condition of replacing it with another thing of the same kind and value263 (The effects of declaration of insolvency on the party establishing a security, or on the creditor, are discussed in part II chapter 19 below.)

18.

Selling in a chain

Transfer of ownership in the case of “selling in a chain” needs to be considered separately from the sale of a thing determinable by its identity and from the sale of a thing determinable by its kind. If the object of sale is a thing determinable by its identity, then the applicable principle is that the ownership of such a thing is transferred to the buyer (B) upon conclusion of the agreement. Thus immediately upon the conclusion of an agreement of sale, the buyer (B) may sell the same thing to the next person (C), who shall acquire its ownership (acquires the thing from the owner marked as B). Since the buyer from the second agreement of sale (C) is not bound by an agreement with the seller (A) from the first agreement of sale, the buyer from the second agreement of sale (C), as the owner of the thing, may request delivery of the thing from the seller from the first agreement of sale (A)only on the basis of regulations on protection of ownership (rei vindicatio – see further remarks in part IV chapter 30.1 below). If the thing was delivered to the buyer from the first agreement of sale (B), the buyer from the second agreement of sale (C) shall claim from him the delivery of the thing under regulations on the agreement of sale (art. 535 C.C.), irrespective of a claim on the account of protection of ownership (convergence of claims). Declaration of insolvency of the buyer from the first agreement of sale (B) upon conclusion of the second agreement 262

263

See L. Ogiegło, in: System Prawa Prywatnego, vol. 7, pp. 438 and 448; A. Szpunar, in: System prawa cywilnego, vol. III part 2, p. 400. For jurisprudence see judgment of the SC of 28 December 1976, III CRN 302 / 76, OSN 1977, No. 7, item 121. See I. Karasek, Zabezpieczenia wierzytelności …, p. 129 et seq.

18. Selling in a chain

539

of sale, in principle, bears no impact on the effectiveness of acquisition of ownership by the second buyer (C) who may request delivery of this thing from the seller from the first agreement of sale (A), if the latter still holds possession of this thing or may request exclusion of the thing from the bankrupt’s estate from the official trustee (if the thing was held in possession of the buyer from the first agreement of sale (B), when insolvency was declared) and delivery of this thing (on the basis of art. 70 InsA – see remarks in the next chapter). In the case of conclusion of two agreements of sale of things determinable by their kind (between A and B, and between B and C), transfer of possession is necessary to acquire ownership by B buying from A, and by C buying from B (art. 155 § 2 C.C.). Each buyer in relation to the seller is entitled to a claim for delivery of a thing on the basis of the agreement of sale (i.e. buyer B advances a claim for delivery of a thing from A, whereas buyer C advances a claim for delivery of a thing from B). There is no doubt that if A delivers the thing to buyer B, the latter will obtain ownership of this thing. Next, upon delivery of the thing by B to buyer C, buyer C shall acquire its ownership. If prior to delivery of the thing to buyer C the insolvency of B is declared, buyer C shall not be allowed to request exclusion of the thing from the bankrupt’s estate (if the thing was held in possession of buyer B) and its delivery as he did not become its owner. Buyer C shall, however, be allowed to request delivery of the thing on the basis of regulations of sale if he performed his obligation (paid a price) or if the performance of the obligation was requested by the official trustee (see remarks in the next chapter). The question arises, whether it is possible in this case to acquire ownership of the thing, if the seller from the first agreement of sale (A) delivered the thing directly to the buyer from the second agreement of sale (C). Delivery of the thing by seller A to the buyer from the second agreement (C) may take place either on the basis of an authorisation granted to the seller by the buyer from the first agreement (B)264 or as a result of transfer on the buyer from the second agreement (C) of a claim advanced against the seller A for delivery of the thing arising from the first agreement of sale (art. 509 C.C.). In all these cases it needs to be recognized that delivery of the thing by seller A directly to the buyer from the second agreement of sale (C) also constitutes performance of the obligation of this seller (A) against the buyer from the first agreement (B). The imminent conclusion is that the buyer from the first agreement of sale (B) becomes – for the so-called juridical sec264

Such an authorisation may result from the transfer of benefit (art. 9211 C.C.), or directly from an agreement of sale (which takes the form of an agreement to provide third party benefit, art. 393 C.C.).

Poland

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ond – the owner of the thing upon its delivery to the buyer from the second agreement (C). For the effects of declaration of insolvency of the buyer from the first agreement (B) prior to delivery of this thing by the seller (A) to the buyer from the second agreement (C), see remarks in the next section.

19.

Insolvency

The effects of a declaration of insolvency of the transferor (e.g. seller) need to be considered separately from the effects on the acquirer (e.g. buyer). The present study will focus only on the effects on these two parties of an insolvency involving a liquidation of the estate.265 In the event of declaration of insolvency of the transferor, he loses the right to dispose of things composing the bankrupt’s estate (art. 75 section 1 InsA). Here the impact of declaration of insolvency on the agreement transferring ownership of a movable thing needs to be considered in two situations: when the ownership of the thing was transferred still prior to the declaration of insolvency by the acquirer, but the thing was not delivered to him (this applies first of all to transfer of ownership of a movable thing determinable by its identity), and the ownership of the thing was not transferred prior to the declaration of insolvency by the acquirer (e.g. because the agreement evoked only an obligatory effect or was concluded under a suspending condition). If the ownership of the thing was transferred to the acquirer prior to the declaration of insolvency, the acquirer may in principle request exclusion of this thing from the bankruptcy estate under art. 70 and 72 InsA.266 In the event of failure to perform an agreement, in whole or part, under which the acquirer acquired ownership (e.g. the acquirer did not pay the whole price), the official trustee may request performance of the agreement (e.g. payment of the price and collection of the thing) or renounce this agreement (art. 98 InsA). It is, however, disputable that, as a result of renunciation of the agreement by the official trustee, the bankrupt’s contracting party is obliged to return the obtained benefit or not,267 and that, by the same token, the ownership of the thing returns to the bankruptcy estate.

265

266

Polish law stipulates also the possibility of declaration of the debtor’s insolvency with the possibility of arrangement (art. 14 InsA). We have omitted in the present study the cases when as a result of the declaration of insolvency of the transferor the agreement of transfer of ownership concluded still prior to the declaration of insolvency becomes ineffective by force of law against the bankruptcy estate (art. 127 and 128 InsA). In this case the official trustee may request delivery of this thing from the acquirer.

19. Insolvency

541

If the ownership of the thing was not transferred to the acquirer, and the acquirer also failed to perform his obligation in whole or in part, then the official trustee may request performance of the obligation, but then he either must provide the benefit to which the transferor (the bankrupt) was obliged or renounce the agreement (art. 98 InsA).268 If the official trustee requests performance of the obligation by the acquirer (e.g. payment of price), and the acquirer fulfils this obligation, the ownership of the thing will either be transferred to the acquirer at this moment (e.g. in the event that transfer of ownership depended on the payment of price), or the official trustee shall be obliged to conclude a real agreement with the acquirer (e.g. when the agreement of sale contained merely an obligation to transfer ownership) or he shall be obliged to transfer possession of the thing (e.g. when the parties concluded an agreement of sale of the thing determinable by its kind). The Insolvency and Reorganization Act regulates the effects of declaration of insolvency of the buyer in a specific manner. Under art. 100 section 1 InsA, the seller may request return of a movable thing sent to the buyer without the payment of price, if the buyer failed to assume control of the thing. The performance of this right prevents the effect of a transfer of ownership to the buyer.269 The owner of the thing becomes again the seller,270 who may request delivery of the thing. The seller is, however, obliged to return the advance payments received from the buyer and the expenses he incurred (art. 100 section 2 InsA). The official trustee may also retain the 267

267

268

269

270

For this see F. Zoll, Szkice z prawa upadłościowego. Szkic pierwszy o skutkach odstąpienia przez syndyka od umowy wzajemnej, TPP 2006, No. 1, p. 113 et seq., who maintains that within the scope of the effects of renunciation by the official trustee of an agreement there are no grounds to apply art. 494 C.C. For a different view see S. Gurgul, Prawo upadłościowe i naprawcze …, p. 317; D. Chrapoński, in: Prawo upadłościowe i naprawcze … p. 162. The official trustee shall not be entitled to a choice between request for performance of the agreement and renunciation thereof if the acquirer performed his obligation in full, for this see S. Gurgul, Prawo upadłościowe i naprawcze …, p. 313. In this case the acquirer would have to report his debt to have it admitted to the bankruptcy estate. Since as a result of declaration of insolvency a non-monetary obligation transforms into a monetary obligation (art. 91 Section 2 InsA), the acquirer would not be allowed to request transfer of ownership from the official trustee, e.g. if the agreement of sale had only an obligatory effect. It is particularly possible in concluding an agreement of sale of a movable thing determinable by its identity in which case ownership is transferred to the buyer in principle as of the moment of conclusion of the agreement. For this see A. Jakubecki, in: A. Jakubecki, F. Zedler, Prawo upadłościowe i naprawcze. Komentarz, Kraków 2003, p. 264.

542

Poland

thing if he pays or secures the price due to the seller. The official trustee shall hold this right for a month from the time of receipt of the request to return the thing from the seller (art. 100 section 3 InsA). This regulation shall also be applicable in a situation where the thing has still not been sent by the seller to the buyer.271 If the seller has reserved the ownership of the thing until the moment of payment of the price by the buyer, this reservation shall be effective against the bankruptcy estate, if the requirements defined in the Civil Code are met (see more remarks in part IV chapter 28 below). If these requirements are not fulfilled, the reservation of ownership shall expire and the ownership of the thing becomes part of the bankruptcy estate (art. 101 section 1 InsA). Apart from the invoked regulations, the insolvency and reorganization law does not regulate the effects of declaration of insolvency on the thing’s acquirer. If the parties have concluded a mutual agreement of transfer of ownership (other than sale), art. 98 InsA may apply. If for instance the insolvent acquirer concluded an obligatory agreement of transfer of ownership of the thing with the transferor and the agreement had not been performed in whole or in part before bankruptcy of the acquirer was declared (and especially the ownership had not been transferred on the acquirer), the official trustee may request performance of this agreement from the transferor, thus he may request conclusion of a real agreement.272

271 272

For this see S. Gurgul, Prawo upadłościowe i naprawcze …, p. 319. For this see M. Pannert, Wpływ upadłości likwidacyjnej na wykonanie zobowiązań z umów wzajemnych, Warszawa 2010, p. 98 ff.

Part III: Original acquisition of ownership 20.

Notion of original acquisition of ownership

In legal literature is no agreement so far on the notion and essence of the original acquisition (nabycie pierwotne). Moreover, as exemplified by the structure of acquisition from an unauthorised person, there is no unity of opinion that would clarify in which situations we are dealing with original acquisition, and in which with derivative acquisition.273 However, this is a problem not only in Polish doctrine.274 It has been traditionally recognized that the main feature of original acquisition is the independence of the right that arose out of the earlier established right. It has also been admitted that original acquisition precedes, not only the extinguishment of the previous, analogous right that existed earlier, but also the earlier existing encumbrances.275 It needs to be stressed, however, that the latter statement is disputable. This view seems to assume the existence of a correlation between e.g. ownership and limited real rights 273

274

275

For opinions in favour of a derivative nature of acquisition a non domino: A. Szpunar, Nabycie własności ruchomości od nieuprawnionego, PN 1949, Nos. 7-8, p. 50; same author, Nabycie własności ruchomości od nieuprawnionego, [monograph, ed. 2] p. 62 et seq.; J. Wasilkowski, Prawo własności w PRL, pp. 185-187; J.S. Piątowski, in: System prawa cywilnego, vol. II, p. 306; E. Gniewek, Kodeks cywilny …, pp. 274-275; A. Szpunar, Uwagi o nabyciu własności ruchomości od nieuprawnionego, in: Rozprawy z prawa cywilnego i ochrony środowiska ofiarowane Profesorowi Antoniemu Agopszowiczowi, Prace naukowe Uniwersytetu Śląskiego No. 1298, Katowice 1992, p. 271; E. Skowrońska-Bocian, in: K. Pietrzykowski (ed.), Kodeks cywilny, Komentarz do artykułów 1-44911, vol. 1, p. 616; M. Pyziak-Szafnicka, in: System Prawa Prywatnego, vol. 1, p. 762; for a different view see: J. Górecki, Przeniesienie własności rzeczy ruchomej, p. 87; A. Wolter, J. Ignatowicz, K. Stefaniuk, Prawo cywilne. Zarys części ogólnej, p. 146. See e.g.: H. Hübner, H. Lehmann, Allgemeiner Teil des bürgerlichen Gesetzbuches, ed. 2, Berlin-New York 1996, p. 202; for more on the distinction for instance A. v. Tuhr, Der Allgemeine Teil des Deutschen Bürgerlichen Rechts. Zweiter Band. Erste Hälfte, Berlin 1914, pp. 34 ff.; in the Polish literature: M. Pyziak-Szafnicka, in: System Prawa Prywatnego, vol. 1, pp. 753, 754-755. For this e.g.: Z. Radwański, Prawo cywilne – część ogólna, p. 101; M. Pyziak-Szafnicka, in: System Prawa Prywatnego, vol. 1, p. 755-756.

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existing in the thing. A telling argument is that in some cases of original acquisition the doctrine assumes the existence of “exceptions” from a thus defined rule (e.g. in the case of usucapio).276 The acquisition of ownership of a movable thing by a creditor pending court executive proceedings is regarded as original acquisition happening ex lege. However, in this case the provisions on acquisition in good faith apply, whereas pending the proceedings against the purchaser acting in bad faith, an action for recovery of the thing shall be admissible.277

21.

Acquisitive prescription (usucapio)

21.1.

Requirements

In contrast to acquisition a non domino, it is obvious that acquisition by usucapio (zasiedzenie) constitutes original acquisition.278 Polish law allows usucapio with respect to both movables and immovables, however slightly different rules apply in each case. Polish law does not know the institution of prescriptible real rights (e.g. Verjährung des Eigentums). Prescription applies solely to property claims (incl. real claims, excluding those concerning protection of ownership of an immovable property). Next to usucapio, the law permits prescription of the owner’s protective claims and / or those belonging to another entitled person holding real rights. Prescription of such claims is extinguished in case of claims falling to the holder of title to an immovable property (first of all the owner, but also another person vested with another real right on an immovable property). On the other hand it is allowed in case of claims falling to the owner of a movable thing. 276

277

278

See J. Ignatowicz, K. Stefaniuk, Prawo rzeczowe, p. 109; J. St. Piątowski, in: System prawa cywilnego, vol. II, p. 340; E. Skowrońska – Bocian, in: K. Pietrzykowski (ed.), Kodeks cywilny, Komentarz do artykułów 1-44911, vol. I, p. 626; S. Rudnicki, Nabycie przez zasiedzenie, Warszawa 2007, p. 119. For jurisprudence see judgment of the SC of 29 December 1967, III CR 59 / 67, OSN 1968,No. 7, item 128 and the decision of the SC of 8 July 1975, III CZP 51 / 75, OSN 1976, No. 6, item 91. Judgment of the Court of Appeal in Warsaw of 30 August 1995, I ACr 570 / 95, Orzecznictwo Sądów Apelacyjnych (Jurisprudence of Courts of Appeal, OSA) 1997, No. 2, item 12. It is a generally accepted view. See e.g. J. Ignatowicz, K. Stefaniuk, Prawo rzeczowe, p. 109; J. St. Piątowski, in: System prawa cywilnego, vol. II, p. 340; E. Skowrońska – Bocian, in: K. Pietrzykowski (ed.), Kodeks cywilny, Komentarz do artykułów 1-44911, vol. 1, p. 626. For a similar standpoint see the judgment of the CT of 14 December 2005, SK 61 / 03, OTK ZU No. 11/A/2005, item 136.

21. Acquisitive prescription (usucapio)

545

The general principle holds that prescription of the claim for recovery of a thing takes place within 10 years of the claim’s eligibility. The effect of prescription shall not be the extinguishment of the claim, but only a possibility of quashing the duty to deliver the thing by the person otherwise obliged to perform this duty. This situation may lead to creation of specific “ownership without (an) object” (dominium sine re).279 In regard to movable things, acquisition of ownership by usucapio is possible if a specified person possesses a thing for a period of 3 years (art. 174 C.C.). Possession must be of an independent nature (corresponding with the content of ownership) and uninterrupted. Independent possession as a requirement of acquisition of ownership by usucapio means that “the possessor must perform actual transactions indicating a self-contained, real status of control, independent of the will of another person”.280 The Civil Code permits acquisition of a thing solely by a possessor in good faith. In contrast to immovable property, a movable thing may not be acquired by usucapio in case of the possessor’s bad faith. Moreover, in this case the existence of good faith is necessary throughout the whole period required for usucapio (mala fides superveniens nocet).281 As the Court of Appeal in Cracow indicated in its judgment of 17 August 1995 (II AKz 396 / 95), “Good faith of an independent possessor of a movable thing is indispensable for acquisition of ownership of the thing by usucapio, not only at the time of taking possession of the thing, but also throughout the entire three-year period stipulated by the law (art. 169 § 2 C.C.)”.282 Consequently, as the Supreme Court found “acquiring knowledge by the possessor of a movable thing before the period of usucapio elapses, that he acquired the thing from an unauthorised person, causes that from the beginning of its possession he should be treated as a possessor in bad faith”.283 This enables a situation whereby in the face of prescription of a claim for recovery of a thing the owner may not perform his rights against the thing, while the possessor is not able to acquire ownership on account of bad faith. According to the Supreme Court, good faith of the possessor signifies not only a conviction that he does not infringe upon anybody’s right, but also that he is an owner of the thing, and “this conviction of his finds 279

280 281

282 283

J. Wasilkowski, Prawo rzeczowe w zarysie, p. 194; T. Dybowski, Ochrona własności w polskim prawie cywilnym, pp. 299-300; A. Szpunar, Nabycie własności ruchomości od nieuprawnionego, p. 111. Decision of the SC of 18 September 2003, I CK 74 / 02, LEX No. 141416. Vide decision of the SC of 16 September 2003, IV CKN 467 / 01, LEX No. 82275; for this see also decision of the SC of 17 May 2000, I CKN 730 / 98, LEX No. 50835. Prok. i Pr. 1996, Nos. 2-3, item 23. Decision of the SC of 17 May 2000, I CKN 730 / 98, LEX No. 50835.

546

Poland

objective justification in given circumstances” (the so-called traditional interpretation of good faith).284 The Supreme Court underlines that “the good faith of an independent possessor is extinguished by the possessor’s failure to make an appropriate effort to discover whether the transferor is actually a person entitled to dispose of the transferred thing”.285 In regard to the running of the period of usucapio, the respective regulations on the running of the period of prescription of property claims shall apply (art. 175 C.C.). The latter envisage, among others, situations whereby the running of the period of prescription is interrupted or suspended. The view of the Supreme Court that reference to art. 175 C.C. provides no grounds “to apply regulations on suspension or interruption of the running of periods of usucapio” is apparently beside the point and isolated.286 The Civil Code specifically regulates the situation wherein, while the period of usucapio was running, the transfer of possession was effected. Thereupon, under Article 176 § 1 C.C., the present possessor may add to his time of possession the time of possession of his predecessor. The same applies to a situation whereby the present possessor is an inheritor of the previous one which gives rise to a conclusion that possession, though not a subjective right, is hereditary. The rule of adding time of possession by the inheritor applies both to statutory inheritance and to last will inheritance.287 According to the Supreme Court, the period of usucapio shall not run for the possessor “who is a co-owner to the extent corresponding with his share in co-ownership”. In case of transfer of possession of a thing, adding the period of possession of the previous possessor “to the extent corresponding with his share in co-ownership” (accessio temporis) is then not permitted.288 Accession applies to all inheritors.289 It may apply to the previous possessor and the one before, however as the Supreme Court underlines, admittedly not very precisely, “if this entitlement was vested in a person who possessed the immovable property directly prior to the present possession”.290 Adding together the periods of possession is excluded in a situation where acquisition of ownership was brought into effect to the benefit of the previous possessor.291 284 285 286 287

288 289 290 291

Decision of the SC of 5 December 2000 r., IV CKN 180 / 00, LEX No. 52506. Decision of the SC of 18 May 2000, III CKN 802 / 98, LEX No. 51362. Decision of the SC of 11 July 2002, IV CKN 1218 / 00, LEX No. 80266. Decision of the SC of 10 December 1998, I CKU 63 / 98, Prok. i Pr. 1999, No. 4, item 28. Decision of the SC of 9 October 1996, II CKN 23 / 96, Wokanda 1997, No. 1, p. 7. Decision of the SC of 25 April 1974, III CRN 69 / 74, LEX No. 7475. Decision of the SC of 29 April 1987, III CRN 96 / 87, OSN 1988, No. 11, item 157. Decision of the SC of 3 November 1966, III CR 223 / 66, OSN 1967, No. 5, item 91.

22. Acquisition of res nullius (occupation)

21.2.

547

Functions

It follows from jurisprudence and statements in the doctrine that usucapio fulfils essential functions, similarly to other institutions that are part of the general notion of long duration (like prescription or concealment). The key issue is to provide for stabilisation of legal relations and security of turnover.292 The legislator assumes that in a situation of long-term control of the thing by an unauthorised person, who is nonetheless acting in good faith, the state of congruity between the actual state of control and the actual legal state needs to be achieved. It may also be justified by the lack of interest in the thing and its fate on the part of the hitherto entitled person.293 This institution finds approval also in the jurisprudence of the Constitutional Tribunal294 despite the attempts that have been made to eliminate it as an institution allegedly contradicting the constitutional principle of protection of ownership.

22.

Acquisition of res nullius (occupation)

Acquisition of ownership movables belonging to nobody is basically regulated under one provision of the Civil Code – art. 181. It needs to be underlined that the existence of immovables that belong to nobody has not been stipulated under Polish law (unlike for instance the German law). Under the abovementioned provision, the acquisition of a movable belonging to nobody295 occurs by way of assumption of its independent possession. Thus the possessor should have the will to control the thing for himself – cum animo dominii. It is worth adding that the Civil Code stipulates a specific regulation concerning a bee swarm, namely that may become nobody’s property if the owner does not find it within three days of the day of swarming (art. 182 § 1 C.C.). He may chase the swarm onto somebody else’s ground, but in this case he should repair any damage thereby caused.

292

293 294 295

See e.g.: judgment of the CT of 14 December 2005, SK 61 / 03, OTK ZU No. 11 / A / 2005, item 136; vide also on reasons for instance: E. Janeczko, Zasiedzenie, ed. 3, Zielona Góra 2002, pp. 31-32; S. Rudnicki, Nabycie przez zasiedzenie, p. 115; J. Ignatowicz, K. Stefaniuk, Prawo rzeczowe, p. 104. Judgment of the CT of 14 December 2005, SK 61 / 03. Judgment of the CT of 14 December 2005, SK 61 / 03. For more see e.g. P. Księżak, Rzeczy niczyje, ibidem.

Poland

548

23.

Finding

In the case of finding (znalezienie), the finder does not become the owner of the thing upon the moment of finding. He is obliged to immediately notify the person entitled to its collection (thus usually the owner) that he has found it. In case of lack of knowledge about the entitled person or its place of residence, the finder should immediately notify an appropriate state authority of the finding (art. 183 § 1 C.C.). As far as valuable objects are concerned, i.e. valuables, money, securities as well as “objects of scientific or artistic value”, the finder is obliged to immediately turn them over for storage to an appropriate state authority. If such objects are not collected by the title holder within a year of the date of the call issued by the authority, they become property of the State Treasury. The same applies to a situation whereby there is no possibility of sending a call, however, in this case the State Treasury acquires ownership after two years elapse from the finding (art. 187 in princ. C.C.). In the case of other things, this should happen only upon request of this authority (art. 184 § 1 C.C.). In other cases the finder may store the found thing at his home. In such cases the regulations on free storage shall apply (art. 184 § 2 C.C.). As to things that are not valuable, after the one-year period elapses from the notification, or respectively a two-year period from the finding, they shall become the finder’s property upon his fulfillment of his duties. When the thing is kept in storage with an appropriate authority, the finder may collect it, however, he should reimburse the expenses of storage thereof (art. 187 C.C. in fine). If the finder has fulfilled his duties, he may request the so-called finder’s reward. It amounts to one tenth of the thing’s value. This right is vested in the finder on condition that he advanced this claim no later than upon delivery of the thing to a person entitled to collect it (art. 186 C.C.). The regulations pertaining to found things also apply to things abandoned without the intention to rid oneself of their ownership, and also to stray and runaway animals (art. 183 § 2 C.C.). Specific regulations concerning found things were laid down in the Regulation of the Council of Ministers of 14 June 1966 on found things.296 It specifies that the appropriate authority to be notified of the finding shall be the competent regional authority of general government administration in the area where the thing was found (at present, the district governor – starosta). The Civil Code extinguishes the application of regulations on finding to things found in a public building, a building or facility open to the public 296

Dz. U. No. 22, item 141 as amended.

24. Treasure

549

and found in a railcar, aboard a ship or in other means of public transport. In such cases the duty of returning the thing is vested in the administrator of the building or the public transport authority. Thereupon the appropriate administrator or authority should proceed with the thing as stipulated by separate regulations. It is worth mentioning that a number of regulations on finding are included in the Maritime Code (as concerns objects found at sea or along a sea coast, see art. 282-291) and Heritage Preservation and Protection Act. The latter orders the person who accidentally found the object, which presumably is an archeological heritage item, to secure it with accessible means and mark the place of finding. Moreover, she should immediately notify the appropriate governor (voivodeship) of heritage conservator of the finding (and if impossible then the appropriate village mayor, town mayor or town president, art. 33 section 1 of the Act). This person shall be entitled to a reward if he has fulfilled these duties (art. 34 of the Act). Such found objects constitute State Treasury property (art. 35 of the Act).

24.

Treasure

Treasure (skarb), i.e. under the Civil Code (art. 189) a thing of significant material, scientific and artistic value, is an object that was found “in such circumstances wherein a search of an owner would be obviously pointless”. In such cases the finder should turn the thing over to the appropriate state authority, whereas the found thing becomes State Treasury property. The finder shall be entitled to an appropriate remuneration. The term “becomes” used in the Act suggests that the State Treasury acquires ownership of the thing upon either finding or turning the thing over to an appropriate authority. It needs to be recognized that the first interpretation is correct.

25.

Separation

The Civil Code basically does not contain any provisions that would exhaustively regulate the issue of separation. However, as defined in art. 190 C.C., the person entitled to derive fruits from a thing acquires ownership by separation of fruits from the thing.

26.

Transformation, joining, mixing

Transformation is an activity consisting in creating a new movable thing out of somebody else’s materials. In this case the person acquiring the new

550

Poland

thing becomes its owner so long as the value of the expenditure of labour is greater than the value of the materials, and the person acted in good faith. In an opposite case, i.e. if the transformation was effected in bad faith or the value of materials exceeds the value of expenditure of labour, the created thing becomes the property of the person who owns the materials (art. 192 C.C.). Joining or mixing is basically treated homogeneously as the Civil Code states that in the event that movables have been joined or mixed in such a way that recovery of the previous state would entail excessive difficulties or expenses, the owners of things become co-owners of the entire object. It shall be co-ownership in divided shares, whereas shares are based on the relation between values of joined or mixed things. However, in the case of joining, if one thing has a greater value than all the others, then the latter ones shall become its component parts (art. 193 C.C.). Regulations pertaining to transformation, joining or mixing do not prevent claims for damages ex delicto or benefits on account of unjust enrichment.

Part IV: Additional questions 27.

Abandonment

The owner of a movable may rid himself thereof by abandonment. However, the intent to rid oneself of ownership shall be necessary (art. 180 C.C.). The thing then becomes ownerless.

28.

Reservation of title

Reservation of ownership of a thing sold is an institution regulated under the Civil Code within the law of obligations (Book Three) pertaining to the agreement of sale. Reservation of ownership has only been stipulated in the case of movable things. In case of doubt it is recognized that transfer of ownership occurred under a suspending condition (art. 589 C.C.). Reservation of ownership requires a written form if the thing, being an object of the agreement of sale, has been delivered to the buyer. With respect to creditors of the buyer, such a reservation is effective when an agreement made in writing bears a certified date (art. 590 C.C.). This regulation is of particular importance in the case of declaration of the buyer’s insolvency. If the written document with a certified date has not been kept, the reservation of ownership shall expire (art. 101 section 1 of the bankruptcy and reorganization law) and the seller shall lose the right of ownership of the thing, which then becomes part of the bankruptcy estate (see earlier remarks in part II chapter 19). On the other hand, if the reservation of ownership was made in writing with a certified date, it is effective as against the bankruptcy estate. The official trustee may pay the price and then the thing shall become part of the bankruptcy estate or he may renounce the agreement as provided for under art. 98 of the insolvency and reorganization law, whereupon the seller may request delivery of the thing as provided for under art. 70 of the insolvency and reorganization law. In the case of reservation of ownership the seller remains its owner until the payment of the full price. Upon payment, the suspending condition is fulfilled and the ownership of the thing is transferred ex lege to the buyer without the need of concluding an additional agreement.297

552

Poland

The disputed issue in the science of law is the question of admissibility of making the transfer of ownership of the sold thing dependent not only on the payment of price, but also other dues of the buyer towards the seller.298 The reservation of ownership covering payment of all dues of the buyer towards the seller is unanimously regarded as invalid.299 According to the Supreme Court, if the buyer falls into delay with the payment of price, he shall lose the title to control the thing and the seller may request its return.300 This view raises doubts. It has been justly underlined that as a result of delay the agreement shall not be automatically dissolved, and the seller – if he wishes to request the return of the thing – should renounce the agreement of sale as provided for under art. 491 C.C.301 While collecting the thing, the seller may request the appropriate remuneration from the buyer for the wear or tear or damage of the thing (art. 591 C.C.). The science of law admits also the so-called prolonged reservation of ownership. However, it provides different explanations of the title to dispose of the thing by the buyer prior to the payment of the whole price (as the seller remains the owner of the thing). Some authors maintain that the buyer may only dispose of the expected right of ownership (a conditional right of ownership),302 whereas others claim that the seller may grant the buyer a title to dispose of the thing on his behalf, but on the account of the seller.303 Yet, there are no doubts whatsoever about the admissibility of transfer by the buyer to the seller of the future claim for the payment of price.304 297

297

298

299

300 301

302 303 304

We assume that the parties concluded a double effect agreement (a real – obligatory agreement) and the thing sold was earlier delivered to the buyer. For other situations see T. Siemiątkowski, P. Radomski, Sprzedaż z zastrzeżeniem prawa własności, PS 2000, Nos. 11-12, pp. 19-21. For the opinion in principle in favour of such admissibility see: M. Safjan, in: K. Pietrzykowski (ed.), Kodeks cywilny. Komentarz do artykułów 450-1088, vol. 2, p. 311, for the opinion against see: W. Katner, in: System Prawa Prywatnego, vol. 7, p. 19; ambiguous is the standpoint of S. Rudnicki, Zastrzeżenie własności rzeczy sprzedanej, MoP 1996, No. 12, p. 442. For this especially A. Szpunar, Zastrzeżenie własności rzeczy sprzedanej, PiP 1993, No. 6, p. 38, M. Safjan, in: K. Pietrzykowski (ed.), Kodeks cywilny. Komentarz do artykułów 450-1088, vol. 2, p. 311. Judgment of the SC of 21 January 1999, I CKN 955 / 97, OSN 1999, No. 10, item 169. For this see the apt comment by M. Safjan, in: K. Pietrzykowski (ed.), Kodeks cywilny. Komentarz do artykułów 450-1088, vol. 2, p. 311. For this see S. Rudnicki, Zastrzeżenie własności …, p. 442. For this probably: I. Karasek, Zabezpieczenia wierzytelności …, p. 119. For jurispridence see the decision of the SC of 19 September 1997, III CZP 45 / 97, OSN 1998, No. 2, item 22 and K. Zawada, Umowa przelewu wierzytelności, Kraków

29. Co-ownership

553

In case of transformation by the buyer of the sold thing upon which a reservation of the seller’s ownership title has been made, the buyer shall not become its owner even if the value of his expenditure of labour was greater than the value of the thing. The buyer, while performing the transformation, is aware that the thing is not his property, hence he acts in bad faith (art. 192 § 2 C.C.).305 An additional provision that would reserve ownership of the newly created thing for the benefit of the seller is thus not needed.306 In the case of mixing and joining of the thing in reference to which a reservation of the seller’s ownership has been made, the provisions of art. 193 C.C. shall apply (see earlier remarks in part III chapter 26). The seller shall lose ownership of the thing if it is attached to an immovable property in a way that it becomes its component part (art. 191 C.C.).

29.

Co-ownership

29.1.

Notion of co-ownership

Co-ownership (współwłasność) under Polish law is both a dogmatic and a statutory notion. Usually authors distinguish various categories of divisibility of the right of ownership (including divisibility in time or by content).307 However, the Civil Code does not comprehensively regulate all forms of divisibility of the right of ownership. Similarly, the Civil Code does not provide regulations that would generally pertain to community of other real rights. The existence of community of rights other than ownership is obvious. Several persons may, for instance, hold a usufruct title (co-usufruct). Within this scope it is recognized that the co-ownership regulations should per analogiam apply to community of other rights.308 The Polish civil law knows two forms of co-ownership – joint ownership (współwłasność łączna) and co-ownership in divided shares (współwłasność

305 306 307 308

1990, p. 37 et seq.; K. Zawada, O przelewie wierzytelności przyszłych, in: Ars et usus. Księga pamiątkowa ku czci sędziego Stanisława Rudnickiego, Warszawa 2005, p. 343 et seq.; J. Kuropatwiński, Umowne rozporządzenie wierzytelnością przyszłą, ToruńBydgoszcz 2007, p. 143. For this see I. Karasek, Zabezpieczenia wierzytelności …, p. 169. For this see S. Rudnicki, Zastrzeżenie własności …, p. 442. See J. Ignatowicz, K. Stefaniuk, Prawo rzeczowe, pp. 118-119. See e.g. E. Skowrońska-Bocian, in: K. Pietrzykowski (ed.), Kodeks cywilny, Komentarz do artykułów 1-44911, vol. 1, p. 649; J. Ignatowicz, K. Stefaniuk, Prawo rzeczowe, p. 126; see also: decision of the SC of 16 June 1967, III CZP 45 / 67, OSNC 1968, No. 1, item 3.

Poland

554

w częściach ułamkowych, for this see: art. 196 § 1 C.C.). It indicates that creating other forms of co-ownership apart from the above mentioned is inadmissible. Otherwise, this would infringe upon the rule of the closed list (numerus clausus) of real rights. The existence of any specific community of rights, e.g. in case of common-law marriage is thus inadmissible.309 The science of law highlights three features of co-ownership: 1) unity of the object (the same thing belongs to several persons); 2) multitude of subjects (the thing is owned by at least two persons); and 3) indivisibility of the joint right (each co-owner holds an equal right to the whole thing limited only by the same title, none of the co-owners holds an exclusive right to a designated physical part of the thing).310

29.2.

Joint ownership

The Civil Code does not provide a separate and comprehensive regulation of joint ownership. Article 196 § 2 C.C., in princ. provides that “joint ownership shall be regulated by provisions concerning relationships wherefrom it stems”. A typical example of such a relationship is civil partnership (art. 860 ff. C.C.). Under art. 863 § 1 C.C., “a partner shall not dispose of his share in the partners’ joint property nor of his share in particular elements of such a property”. He may also not request division of the partners’ joint property. The establishment of joint ownership occurs also in the case of acquisition of ownership of a thing (both movable and immovable) by spouses sharing marital property (art. 31 and art. 35 of the Family and Guardianship Code of 25 February 1964311). The particular feature of this kind of joint ownership is that it may arise and exist only while another legal relationship between joint owners continues to exist, whose nature is superior as against the relationship of joint ownership (e.g. a civil partnership relationship).312

309 310

311

312

Judgment of the SC of 17 April 2000, V CKN 281 / 00, LEX No. 52557. See: J. Ignatowicz, K. Stefaniuk, Prawo rzeczowe, pp. 119-120, A. KarnickaKawczyńska, J. Kawczyński, Współwłasność jako szczególna forma własności, Warszawa 2004, p. 12. Ustawa z 25 lutego 1964 r. – Kodeks rodzinny i opiekuńczy, Dz. U No. 9, item 59 as amended. For more e.g. J. Ignatowicz, K. Stefaniuk, Prawo rzeczowe, p. 120-121, Z. K. Nowakowski, in: System prawa cywilnego, vol. II, p. 388.

29. Co-ownership

29.3.

555

Co-ownership in divided shares

In contrast to joint ownership, the Civil Code provides a comprehensive regulation of co-ownership in divided shares.313

29.3.1. The essence and nature of co-ownership and shares The Civil Code introduces a presumption whereby the shares of co-owners are equal. This means that the presumption shall apply in the case of lack of proof indicating another scope of shares. The co-owners may, without the consent of other co-entitled persons, dispose of their shares. The entitlement to dispose of a share is a fundamental entitlement of each of the co-owners within the scope of the relationship of co-ownership. The co-owner may thus both encumber the share and transfer it to the benefit of another person (art. 198 C.C.).314 A different regulation applies to the case where the object of disposition is a co-owned thing. Then any dispositions require the consent of all co-owners. The same applies to other transactions exceeding the scope of simple management. If such consent is not obtainable, the co-owners having at least a half of a share, may request an appropriate judicial decision. The court should pass a ruling upon considering the purpose of transactions and the interests of all co-owners (and thus not only those who request the performance of the transaction, art. 199 C.C.). In certain cases discussed further on (see part IV chapter 29.3.2, the Civil Code requires consent of the majority of co-owners. It is calculated by the majority of shares (art. 204 C.C.). Co-ownership in divided shares is deemed as a state of transition,315 which in principle may not last infinitely (ad infinitum). The legislator deems that the community of law in divided shares should not bind the interested parties without granting them the possibility of exiting it – in this sense, without granting them the possibility of becoming independent from other co-entitled persons. Henceforth the Civil Code provides that each of the co-owners may request that co-ownership be lifted (actio communi dividundo, art. 210 C.C.; see also below). 313

314

315

For various theories attempting to explain the essence of ownership in divided shares see Z. K. Nowakowski, in: System prawa cywilnego, vol. II, pp. 397-402. If however co-ownership has arisen as a result of inheritance then disposition of the share in a thing by one of the co-owners (one of the inheritors) requires consent of the other co-owners (co-inheritors). This is pursuant to art. 1036 C.C. For this e.g. J. Ignatowicz, K. Stefaniuk, Prawo rzeczowe, p. 122, Z. K. Nowakowski, in: System prawa cywilnego, vol. II, p. 421.

Poland

556

Throughout the duration of the joint right and by way of contract, co-owners may: (1) determine management of the co-owned thing; (2) determine manner of use of the co-owned thing (quoad usum use); (3) extinguish for some time the entitlement to lift co-ownership. Such legal transactions may be effective not only inter pares, but also against the purchaser of share. The condition of this effectiveness is the awareness of such transactions or the possibility of easy enquiry about them. This concerns also the case when the manner of use of the thing was determined in a court decision (art. 221 C.C.). It is one of the cases of the so-called “extended” effectiveness of a contract.

29.3.2. Specific rights and duties of co-owners (a)

Management of a co-owned thing

Management of a co-owned thing may be performed by all co-owners, by one and / or several of them, or by a third party. The general principle provides that co-owners have a duty to cooperate in the management of a co-owned thing (art. 200 C.C.). According the Supreme Court, the duty entails a presumption that each co-owner, even a minority one, acts in accordance with the will of all co-entitled persons. It is not clear whether the outflows and burdens indicated under art. 207 C.C. are in the nature of a real obligation, since they apply to each and every co-owner of the thing and not to concrete, individualized subjects,316 or they create an obligation that is not effective against future shares’ acquirers. Both views are presented by the doctrine and Supreme Court’s jurisprudence.317 If management is performed by the co-owner, he may request remuneration from other co-owners. It should correspond with the justified expenditure of labour of the co-owner – manager (art. 205 C.C.). On the other hand, each co-owner who does not perform management may request a bill of management on appropriate dates. The Civil Code distinguishes the activities of simple management of a co-owned thing318 and those that exceed the scope of simple management. The performance of the first one requires consent of the majority of co316 317

318

Judgment of the SC of 25 July 2003, V CK 141 / 02, LEX No. 157318. For more on this topic see K. Sznajder, Charakter prawny roszczenia współwłaściciela o zwrot nakładów na rzecz wspólną, Rejent 2009, No. 2, p. 147 et seq. These are transactions intended to preserve the thing in the hitherto condition in compliance with its purpose and to enable its use and collection of fruits there from by co-owners. It has been also emphasized that these transactions should not entail excessive outlays. see Z. K. Nowakowski, in: System prawa cywilnego, vol. II, p. 412.

29. Co-ownership

557

owners. For want of due consent each of the co-owners may request a court authorisation to perform the activities (art. 201 C.C.). The Civil Code introduces at the same time a mechanism serving the protection of the co-owners’ minority in a situation where the co-owners’ majority decides to perform an activity that glaringly contradicts the principles of proper management of a co-owned thing, each remaining co-owner may request an appropriate decision by the court (art. 202 C.C.). For want of consent of the majority concerning issues of simple management, each of the co-entitled persons may take a legal action for appointment of a manager. This is also possible when the majority infringes upon principles of proper management or wrongs the minority (art. 203 C.C.).

(b)

Use of a thing

It follows from the essence of co-ownership that each co-owner is entitled to control the thing and derive fruits therefor. At the same time, however, the titles held by all remaining co-entitled persons need to be respected. The Civil Code states that each of the co-owners may both possess a co-owned thing and use it (thus make actual use and collect fruits). This entitlement, however, is vested in the co-owner to the extent whereby it complies with co-possessing and use of the thing by other co-owners (art. 206 C.C.). It appears that the entitlement to possess and use a thing is not influenced by the size of co-owners’ shares. A co-owners’ agreement may specify the manner of use of the thing since a division of use of the co-owned thing (quoad usum) may be specified by way of an agreement, hence differently than indicated under art. 206 C.C. Also various definitions of the manner of exercising control over a thing are allowed. Certainly first of all the nature of the co-owned thing needs to be considered. In principle either simultaneous joint use or use by individual co-owners in specified periods (e.g. on specified days) is possible. In the first case, each of the co-owners may use the thing and possess it in a respective physical part. In the second case – control may cover the whole thing; however each of the entitled persons may enforce her entitlements within a specified time. Usually, as the Supreme Court indicates, the division of the thing for use (quoad usum) needs to be qualified as a simple management transaction.319 Notwithstanding, in the science of law this view has been questioned.320 Such a division is deemed as not definitive. It may be altered 319 320

Decision of the SC of 6 March 1997, I CZ 7 / 97, OSN 1997, No. 8, item 111. See E. Gniewek, Kodeks cywilny …, p. 400, in whose view the change of principles of use of a co-owned thing is not an activity being part of management.

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either in a co-owners’ agreement or by a court decision – by way of lifting co-ownership.321 Fruits and other revenues derived from the thing fall to co-owners by size of shares. Likewise they incur both the benefits (outflows) and burdens related to the co-owned thing (art. 207 C.C.).

29.3.3. Protection According to the general principle of the Civil Code, indicated in art. 209, each of the co-owners may perform any activities and enforce any claims in order to protect the right of co-ownership. The view held by the Supreme Court that a claim under art. 209 may be enforced by the co-owner not only against third parties, but also against other co-owners gives rise to doubts.322 In their internal relations, i.e. among themselves, co-owners may resort to appropriate protective measures. In the event that one of them infringes upon the entitlements of the other to use the thing, which entitlements arise from the relationship of co-ownership, the latter may request access to co-owning (art. 206 C.C.) or recovery of the lawful state and desistance from infringements.323

29.3.4. Lifting of co-ownership Co-ownership in divided shares is of a transitional nature. Each co-entitled person may request that it be lifted. The entitlement to lifting of co-ownership may be extinguished by way of a legal transaction (i.e. by way of an agreement). The extinguishment, however, may cover a period not longer than five years. Recognizing however the purposefulness of further duration of co-ownership, an extension for the next five years shall be possible within the last year before the date reserved in the agreement elapses. The extension shall be renewable (art. 210 C.C., in fine). The claim for lifting of co-ownership is not subject to prescription, thus it may be enforced at any time throughout the duration of co-ownership (art. 220 C.C.). Such a claim may also neither be lifted nor limited except for cases indicated in the law. In connection with the possibility of requesting the lifting of co-ownership the code introduces appropriate regulations specifying manners of lifting co-ownership. In compliance with the hitherto jurisprudence of the 321

322 323

Decision of the SC of 12 November 1973, III CRN 188 / 73, OSN 1974, No. 11, item 183. Judgment of the SC of 25 June 1971, III CRN 137 / 71, LEX 6947. Judgment of the SC of 9 July 2003, IV CKN 325 / 01, LEX No. 141408.

29. Co-ownership

559

Supreme Court the general principle in this case is to effect total lifting of co-ownership, i.e. to the creation of a state whereby the thing no longer remains an object of a joint right.324 Lifting of co-ownership may be effected by way of an agreement or by force of a court’s decision. The basic preferable manner of lifting co-ownership is the physical division of things. This manner should be primarily preferred in the event that co-ownership is lifted by the court (see Art 623 C.C.P.).325 The Supreme Court passed a decision wherein such a division is deemed as “the most just and desirable one”.326 However, if all co-owners submit a unanimous petition wherein they indicate a different manner of lifting co-ownership (e.g. sale of the thing or granting its exclusive ownership to one of the coowners), the court will in principle be bound by this petition (art. 622 § 2 of the code of civil procedure). Under art. 211 C.C., each of the co-owners may request the lifting of co-ownership by division of the co-owned thing. A manner contradictory to statutory regulations or the socio-economic purpose of the thing may prevent such lifting of co-ownership. Moreover, the lifting of co-ownership by physical division may be prevented by the nature of the thing causing that, as a result of the division, the thing might be significantly altered or its value significantly lowered, being a very frequent case in the event of co-ownership of a movable thing. If the thing being an object of a joint right may not be divided, its ownership may be granted, all circumstances considered, to one of the co-owners. He shall then be burdened with the duty to pay off the others (by paying an amount equivalent to the value of their shares). The thing may also be sold pursuant to the regulations of the code of civil procedure (art. 212 § 2 C.C.). In the event that the court determines a surcharge or full payment, it should designate the time / date, way of payment and the time / date and amount of payment of interest. If necessary it may also determine the manner of securing the payment. Arranging installments for a surcharge and full payment is also possible.327 Therewith, however, the aggregate maturity of installments may not exceed the period of 10 years, whereas “in cases deserving particular consideration and upon request of the debtor the court may extend the date of payment of the already matured installments” (art. 212 § 3 C.C.).

324 325 326 327

Decision of the SC of 4 June 2003, I CKN 447 / 01, LEX No. 83839. Decision of the SC of 2 February 2001, IV CKN 251 / 00, LEX No. 52532. Decision of the SC of 19 January 2001, V CKN 1436 / 00, LEX No. 52398. Decision of the SC of 21 November 1977, III CZP 79 / 77, OSN 1978, No. 8, item 132.

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Article 210 ff. C.C. provides that the community of the estate in the form of an inheritance acquired by several inheritors may not be lifted. In this case division of the inheritance is required (art. 1037 ff C.C.).

30.

Protection of real rights

As the owner may use the thing with the exclusion of other persons, in case of infringement of his entitlement he may be authorised to bring appropriate actions against the person who perpetrated the infringement. Depending on the manner of infringement of his ownership, the owner shall be entitled to either an action for recovery of a thing or a negatorian action (art. 222 C.C.), and / or also other actions against the possessor of the thing defined by the science of law as complementary actions (art. 224 and 225 C.C.). The protection of the right of ownership stipulated under the Civil Code is of an objective nature, i.e. an action for recovery of a thing or a negatorian action against an infringing party is not dependent on circumstances of a subjective nature, i.e. on bad or good faith of the person perpetrating an infringement or on his fault. They arise by the mere fact of unlawful infringement of ownership.328 The rules for basic real actions, i.e. action for recovery of a thing and negatorian action, and the so-called complementary actions against the possessor of a thing (in good or bad faith) are laid down in the regulations on ownership. However, at least with respect to the two first claims, they should be applied as appropriate also in the case of other real rights, i.e. perpetual usufruct and limited real rights. As laid down under art. 251 C.C., “in limited real rights protection the ownership protection regulations shall apply”.

30.1.

Rei vindicatio – action for recovery of a thing

The action for recovery of a thing (roszczenie windykacyjne) is a real action, i.e. it serves to protect ownership. It coexists with the real right and in conjunction with the negatorian action it predetermines the essence of this right as being absolute and effective for all (erga omnes). It is an action vested in the owner not possessing the thing against the person who controls the thing for want of a legal title. Pursuant to art. 222 § 1 C.C., “the owner may request from the person who actually controls the thing

328

Instead of many see J. Ignatowicz, K. Stefaniuk, Prawo rzeczowe, p. 162.

30. Protection of real rights

561

that the thing be delivered to him, unless this person is effectively entitled to control the thing in relation to the owner”. In its jurisprudence the Supreme Court justly refuses to apply the provision of abuse of a subjective right to an action for recovery of a thing if this could prevent the possibility of renewing a request for delivery of the thing by the owner. As it has been underlined “taking a different position in this dispute would eventually rule out the subjective right”.329

30.2.

Actio negatoria (negatorian action)

Next to the action for recovery of a thing the negatorian action (roszczenie negatoryjne) is traditionally treated as the second basic real action vested in the owner of a thing. It is an action directed against a person infringing upon ownership in a different manner than by way of depriving the owner of the actual control over the thing. Its content is to request restoration of the lawful state and desistance from infringements. In the case of movable things this action hardly plays any major role.

30.3.

Convergence of the action for recovery of a thing with other actions

If the owner turned a movable thing over to another person for use (e.g. on the basis of a contract of lease or leasing), then upon termination of this relationship the thing should be returned to him (art. 675 C.C. and art. 70917 C.C.). Thereupon the person using the thing (lessee, leasing contractor) loses the right to possess and to use it. For this reason it is recognized that in case of non-performance of the duty to return the thing, the owner may – irrespective of enforcing the return of the thing pursuant to regulations of e.g. lease or leasing – request its delivery under the regulations on protection of ownership (art. 222 § 1 C.C.). The admissibility of convergence of an action for recovery with an action arising from a contract is generally accepted in the science of law.330 If the owner acquires the thing by inheritance, an action for delivery of the thing under ownership protection regulations may converge with an

329 330

Judgment of the SC of 22 November 1994, II CRN 127 / 94, LEX 82293. See for instance T. Dybowski, Ochrona własności w polskim prawie cywilnym, p. 230; S. Wójcik, in: System prawa cywilnego, vol. II, p. 491; E. Skowrońska-Bocian, in: K. Pietrzykowski (ed.), Kodeks cywilny, Komentarz do artykułów 1-44911, vol. 1, p. 702.

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action for delivery of things that are part of the inheritance and subject to control of another person not being an inheritor (art. 1029 C.C.).331 If the owner of the thing possessed it, in case of being deprived of control over the thing, he may – instead of an action for protection of ownership (art. 222 § 1 C.C.) – enter an action for recovery of the infringed possession (art. 344 C.C.).332 This is particularly important in the case of movables as it might often prove difficult for the owner to provide an ownership title (the owner needs to satisfy the requisite evidential burdens), as the owner may not have kept any title documents. However, the issue that raises doubts among jurists is whether an action for recovery of a thing may converge with an action over unjust enrichment. Both the view admitting convergence of such actions and the view claiming that these actions exclude each other have been presented.333

30.4.

Complementary actions

Next to the action for recovery of a thing and the negatorian action falling within the scope of ownership protection provisions, the Civil Code has regulated the issue of the so-called complementary actions (roszczenia uzupełniające). These are actions vested in an owner against a possessor – an independent and in principle a dependent one (in regard to the latter issue see reference to art. 230 C.C.). These include the actions of an owner: (a) for remuneration for use of a thing, (b) for return of fruits or payment of their value, (c) for repair of damage caused by impairment of a thing. The provisions on complementary actions also regulate the issue of actions of a possessor (independent or in principle dependent) against the owner for return of outlays on the thing. In the case of settlements between an owner and a dependent possessor (and not independent) provisions on complementary actions apply only while the owner and the dependent 331

332

333

The scopes of art. 1029 C.C., and art. 222 § 1 C.C., may cross. For this i.a. T. Dybowski, Ochrona własności w polskim prawie cywilnym, p. 241; E. Drozd, in: J. St. Piątowski (ed.), System prawa cywilnego, vol. IV, Prawo spadkowe, WrocławWarszawa-Kraków-Gdańsk-Łódź 1986, p. 341. Admissibility of the convergence of an action for recovery of a thing with a possessory action is universally accepted. See e.g. T. Dybowski, Ochrona własności w polskim prawie cywilnym, p. 241; S. Wójcik, in: System prawa cywilnego, vol. II, p. 489. For more on the same topic see T. Dybowski, Ochrona własności w polskim prawie cywilnym, p. 234 et seq.

30. Protection of real rights

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possessor are not bound by a specific legal relationship consisting in use of a thing. In such a case, the provisions, which regulate such a legal relationship, shall apply to complementary actions.334 Complementary actions may be brought irrespective of an action for recovery of a thing. According to the Supreme Court, they may be transferred to another subject and are of an obligatory nature.335 The Supreme Court takes a view that the owner’s action for return of outlays is also of an obligatory nature.336 The provisions under art. 224 ff. apply to the so-called non-contractual relationships. It is possible, however, to regulate mutual settlements in a different way, on the basis of a contract.337 In principle the Civil Code makes the entitlements and duties of the possessor, in case of complementary actions, dependent on his good or bad faith. Moreover, it particularly regulates the possessor’s legal situation until the moment he learns about an action brought against him for recovery of a thing. The notion of good or bad faith as defined in the analysed provisions was explained by the Court of Appeal in Warsaw in a sentence of 2 June 2004, VI ACa 1000 / 03.338 It was there indicated that good faith is an erroneous conviction of the possessor, justified under given circumstances, about the existence of some right or legal relationship. The erroneousness of this conviction consists in the fact that, in terms of objective assessment, the actual legal state is different. The possessor in bad faith, in turn, is a person who knows and also should know “on the basis of accompanying circumstances” that the performed right is not vested in her. In general terms, an independent possessor whose duty is to deliver a thing to the entitled owner is obliged to restore the previous legal state. In such a situation he may, however, take away the objects that he joined with the thing even if, as a result of this joining, they became its component parts (art. 227 § 1 C.C., for more on the possessor in bad faith see above part I chapter 4). In the event that the possessor unlawfully infringes on the possession of the owner, he shall not be vested with the right to request repair of the damage in order to redress the unachieved benefits – as these should fall to the owner.339 Complementary actions (both actions of the owner against the possessor, and actions of the possessor against the owner for return of outlays on 334

335 336

337 338 339

Judgment of the SC of 19 November 1998, III CKN 33 / 98, OSN 1999, No. 6, item 110. Judgment of the SC of 11 February 1998, III CKN 354 / 97, LEX No. 164264. Judgment of the SC of 17 March 1997, II CKN 57 / 96, OSN 1997, Nos. 6-7, item 92. Judgment of the SC of 28 November 1974, III CRN 287 / 74, LEX 7621. OSA 2005, No. 6, item 27. Judgment of the SC of 21 May 1982, IV CR 110 / 82, LEX 8422.

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the thing) are subject to prescription within a year of the date of return of the thing (art. 229 § 1 C.C.). The return of the thing may also take place as stipulated under art. 349 C.C.,340 i.e. the hitherto independent possessor may continue to control the thing as a dependent possessor or a holder. The notion of “return of a thing” means not only physical delivery of the thing by the possessor to the owner. It also refers to “any cases of recovery by the owner of control over the thing”.341 Within this time, i.e. within a year of the date of return of the thing, the owner may request remuneration for the period of the last ten years wherein the possessor in bad faith used his thing.342 The provisions on complementary actions regulate also actions serving the independent possessor of the plot of land against the owner in the case of a building having been erected by the possessor and the appropriate actions of the owner for the purchase of the plot of land occupied by the building or another facility against the independent possessor (art. 231 C.C.).

30.4.1. Actions against the independent possessor in good faith The independent possessor in good faith has no duty to provide remuneration for the use of the thing. He is also not liable for the wear and tear, impairment or loss of the thing (art. 224 § 1 in princ. C.C.). The jurisprudence points to the fact that the owner may not request remuneration from the possessor for non-contractual use of the thing when the latter uses it in good faith.343 In the opinion of the Supreme Court, the claim for remuneration regulated in art. 224 C.C. may be realised, when the requirements justifying the advancement of the action for recovery are fulfilled.344 On the other hand, it is complementary to an action for recovery only – as the Supreme Court recognizes – in the sense of the law of substance. In the sense of procedure, a complementary action “preserves autonomy against an action for recovery, which means that it may be effectively brought as an independent action,

340 341

342

343 344

Decision of the SC of 22 July 2005, III CZP 47 / 05, OSN 2006, No. 6, item 100. Judgment of the Court of Appeal in Katowice of 16 May 2002, I ACa 1400 / 01, OSA 2004, No. 3, item 9. See also the judgment of the Court of Appeal in Warsaw of 4 October 2007, I ACa 952 / 06, Apelacja Warszawska 2009, No. 1, item 4. Judgment of the SC of 4 December 1980, II CR 501 / 90, OSN 1981, No. 9, item 171 and judgment of the SC of 3 December 2004, IV CK 613 / 03, LEX 359461. Judgment of the SC of 24 May 2005, V CK 48 / 05, MoP 2005, No. 12, p. 571. Judgment of the SC of 15 April 2004, IV CK 273 / 03, LEX 183707.

30. Protection of real rights

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irrespective of an action under art. 222 § 1 C.C.”. Thus an inseparable bond between these actions does not exist.345 An independent possessor acquires ownership of natural fruits derived from the things that were separated from the thing at the time when he possessed it. He may retain the civil fruits that he derived when they matured during the period of possession (art. 224 § 1 in fine C.C.). The calculation of the value of fruits that have been used and should be returned to the possessor under art. 224 § 2 and art. 225 C.C. shall be based on prices existing in “individual economic periods of the use of the thing”.346 The possessor in good faith may request return of the necessary outlays, if they are not covered by the benefits obtained from the thing. He shall carry the evidentiary burden, thus he should provide evidence that he has not found full coverage in the obtained benefits from the thing.347 In the case of other outlays, both useful and excessive, he may request their return, upon delivery to the owner, to the extent that they increased the value of things (art. 226 § 1 in princ. C.C.).

30.4.2. Actions against the independent possessor in good faith who learnt about an action brought against him for delivery of a thing The Civil Code orders a different treatment of the possessor in good faith as of the moment when he learns about the action brought against him for delivery of a thing. As of this moment he shall bear the duty of remuneration for the use of the thing and shall bear the responsibility for its wear and tear, impairment or loss. The latter duty arises not only when the impairment or loss have been caused by fault of the possessor. Moreover, the possessor shall bear the duty to return to the entitled person the fruits obtained as of the moment he acquired knowledge about the action brought against him – to the extent to which he has not used them – and return the value of the fruits used (art. 224 § 2 C.C.). In the event that an independent possessor has made outlays on the thing after he acquired knowledge of the action brought against him, he may request the return of exclusively necessary outlays (art. 226 § 1 C.C. in fine).

345 346 347

Judgment of the SC of 25 February 2004 II CK 32 / 03, LEX No. 162199. Judgment of the SC of 5 June 1984, III CRN 101 / 84, OSN 1985, No. 1, item 17. Judgment of the Court of Appeal in Warsaw of 21 February 2002, I ACa 910 / 01, Wokanda 2003, No. 11, p. 39.

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In the case of settlements under art. 226 § 1 C.C., it is necessary to take into account the benefits that the possessor obtained prior to learning about the action brought against him. This means taking into account the benefits obtained throughout the entire period of possession and not only those obtained after the moment defining the loss of good faith.348 The same rights and duties are vested in the possessor of the thing being the object of state property when he has been requested by the appropriate state authority to deliver the thing (art. 228 C.C.).

30.4.3. Actions against an independent possessor in bad faith The Civil Code imposes on an independent possessor in bad faith the same duties as those vested in the independent possessor in good faith after he learnt about the action brought against him for delivery of the thing. Moreover, it is still his duty to refund the entitled person the value of those fruits “which due to bad management he did not collect and he shall be held responsible for the impairment and loss of the thing unless the thing would have been impaired or lost also if it had been in possession of the entitled person” (art. 225 C.C.). The appropriate moment for the assessment of a complementary action under art. 225 C.C. is when the possessor acquires knowledge “about such circumstances that should arouse a grounded suspicion that he is not vested with the right to exercise control over the thing, which he actually performs”.349 The possessor in bad faith holds responsibility under art. 225 C.C., for the damage or impairment of the thing unless it would have occurred “if the thing had been in possession of the entitled person”.350 The remuneration of the possessor in bad faith for the use of a thing (art. 224 § 2 and 225 C.C.) covers its normal wear and tear allowed in proper use. Consequently, the damages for wear and tear or impairment cover only the state that goes beyond the effects of proper use.351 In regard to outlays, an independent possessor in bad faith may request their reimbursement only in the case of necessary outlays. However, in comparison to the possessor in good faith who learnt that an action had been brought against him, the possessor in bad faith may only request it 348

349

350 351

Judgment of the SC of 12 July 1974, II CR 337 / 74, OSN 1975, Nos. 10-11, item 148. Judgment of the Court of Appeal in Warsaw of 2 June 2004, VI ACa 1000 / 03, Apelacja Warszawska 2005, No. 1, item 9. Judgment of the SC of 21 August 1969, II CR 290 / 69, LEX 6547. Judgment of the SC of 26 February 1969, II CR 13 / 69, LEX 6463.

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“only insofar as this caused unjust enrichment of the owner at his expense” (art. 226 § 2 C.C.). It must be conceded that a controversial view on this matter has been taken by the Supreme Court, namely that the possessor in bad faith may request reimbursement of the necessary outlays even prior to delivery of the thing to the owner,352 whereas in light of the binding provisions, the scope of this action depends on the moment of delivery of the thing (the value of the owner’s enrichment needs to be assessed upon this moment). An independent possessor, while restoring the previous state, may take away the objects that he joined to the thing, even when as a result of the joining they have become component parts (art. 227 § 1 C.C.). However, the owner may keep these objects in the case of the possessor in bad faith and also the one who, while acting in good faith, learnt that an action had been brought against him for delivery. He, however, shall then refund the possessor their value and labour costs or an amount equivalent to the increase of the thing’s value (art. 227 § 2 C.C.). The provision of art. 227 C.C. is treated as lex specialis in relation to art. 226 C.C.353 As the Supreme Court has explained,354 the entitlement to retain the outlays was introduced in order that, when the act of taking away by the possessor of the outlays in kind is imminent, the owner interested in delivery of the thing in conjunction with the refunding of the outlays may be entitled to request it. This entitlement is vested in the owner as long as the possessor exercises control over the thing. On the ground of this provision the Supreme Court indicates, moreover, that in regard to retention of the objects joined by the independent possessor, the owner should refund these expenses “within the scope of impoverishment”.355 This means that this should cover the outflows for the purchase of objects joined to the thing, and also outflows for labour or its value upon completion. The actions under art. 227 § 2 C.C., may be brought only against the owner of the thing. The possessor may not request reimbursement of these outlays from other persons that use the thing as dependent possessors (e.g. a user).

352

353 354 355

Judgment of the SC of 10 August 1988, III CRN 229 / 88, OSN 1990, No. 12, item 153. See also the judgment of the SC of 26 July 2001, IV CKN 407 / 00, Wokanda 2001, No. 12, p. 10, wherein the Supreme Court aptly found that the request to refund the outlays by the possessor is not premature if the owner obtained a valid sentence ordering the return of the thing, but has failed to comply therewith. Judgment of the SC of 14 October 2005, III CK 97 / 05, Wokanda 2006, No. 2, p. 8. Judgment of the SC of 27 July 1983, III CRN 262 / 82, LEX 8558. Judgment of the SC of 10 April 1974, II CR 103 / 74, OSP 1974, No. 11, item 235.

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30.4.4. Relation of complementary actions to other actions A number of doubts arise concerning the relation of actions of the owner against the possessor of the things regulated under art. 224 and 225 C.C., to actions for unjust enrichment and actions for damages. Similar doubts arise in connection with actions for reimbursement of outlays for the thing incurred by the possessor under art. 226 and 227 C.C., to actions over unjust enrichment. The present study may merely signal this problem. First of all, attention needs to be drawn to the fact that the ownership protection regulations grant the owner the right to request repair of the damage done as a result of the thing’s wear and tear, its impairment or loss. They thus do not regulate repair of the damage that the thing’s loss may cause to the owner’s entire property.356 The owner may request repair of the loss within this scope under the delictual responsibility (art. 415 ff. C.C.) or contractual responsibility provisions (art. 471 C.C.).357 In the case of theft, the owner may also – under delictual responsibility provisions – demand that the thief repair the loss consisting in the damage or destruction of the thing, irrespective of the action that he may bring under art. 225 § 2 as related to art. 225 C.C.358 Far more complex is the issue of the relation between complementary actions vested in the owner and actions for reimbursement of outlays vested in the possessor, and actions over unjust enrichment. On the one hand, there is an opinion that the regulations concerning unjust enrichment may apply as long as ownership protection fails to regulate the issue of settlements between the owner and possessor of the thing.359 This indication flows from the judgment of the Supreme Court wherein it was found that “the provisions on unjust enrichment (art. 405 ff. C.C.) come into play when nothing else follows from the relationship that binds the parties or from the property law provisions”.360 356

357 358

359

360

For instance a theft of a computer steering another device caused its damage or destruction. See T. Dybowski, Ochrona własności w polskim prawie cywilnym, p. 192. See, however, the judgment of the SC of 10 January 1974, II CR 746 / 74, LEX 7376, wherein the SC excluded – within the scope regulated under Art. 225 C.C. – cumulation of the action with an action for repair of the damage on the basis of provisions of delictual responsibility (art. 415 C.C.). For instance the return by the possessor in good faith of revenues from the thing whose nature is not that of natural fruits or collected civil fruits and which had not achieved maturity when he exercised possession. For this see T. Dybowski, Ochrona własności w polskim prawie cywilnym, p. 179. Judgment of the SC of 19 August 1971, II CR 224 / 71, LexPolonica nr 309238. See also the judgment of the SC of 30 December 1969, II CR 356 / 69, LEX 6642.

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The regulations on unjust enrichment may also be applicable in the case of transfer of the thing by the possessor insofar as their application is not extinguished by the property law provisions (art. 224 ff. C.C.).361 On the other hand, it is excluded that the owner shall enter an action over the use of the thing or an action for reimbursement of the outlays incurred by the possessor under the provisions on unjust enrichment after the period of prescription of actions under art. 229 § 1 C.C., elapses.362

361 362

Decision of the SC of 7 April 1970, II CR 209 / 70, LEX 6711. For this see J. Ignatowicz, in: Kodeks cywilny komentarz, vol. I, Warszawa 1972, p. 601 and 609 and the decision of the SC of 11 May 1972, III CZP 22 / 72, OSN 1972, No. 12, item 213.

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Wróblewski S., Podstawienie powiernicze, Czasopismo Prawne i Ekonomiczne 1903, No. 4. Wróblewski S., Zarys wykładu prawa rzymskiego. Prawo rzeczowe, Kraków 1919. Zaradkiewicz K., Numerus apertus abstrakcyjnych czynności prawnych w polskim prawie cywilnym?, Kwartalnik Prawa Prywatnego 1999, No. 2. Zaradkiewicz K., Tzw. zastaw nieakcesoryjny w polskim prawie cywilnym. Uwagi ogólne na tle ustawy o zastawie rejestrowym i rejestrze zastawów, Kwartalnik Prawa Prywatnego 2000, No. 2. Zawada K., O przelewie wierzytelności przyszłych, (in:) Ars et usus. Księga pamiątkowa ku czci sędziego Stanisława Rudnickiego, Warszawa 2005. Zawada K., Umowa przelewu wierzytelności, Kraków 1990. Zdziennicki B., Charakter prawny posiadania, Palestra 1976, No. 11. Zdziennicki B., Regulacja prawna ksiąg wieczystych, Studia Prawnicze 2001, No. 2. Zoll F., Jakiej umowy potrzeba do przeniesienia własności rzeczy ruchomych?, Przegląd Notarialny 1947, Nos. 7-8. Zoll F., Na marginesie projektu prawa rzeczowego. Zasada wpisu a posiadanie prawne, Kwartalnik Prawa Prywatnego 1938, No. 1. Zoll F., Petytoryjna ochrona posiadania prawego, Przegląd Notarialny 1947, vol. II. Zoll F., Petytoryjna ochrona posiadanie prawnego, Przegląd Notarialny 1947, Nos. 7-8. Zoll F., Pojęcie praw rzeczowych w projekcie polskiego kodeksu cywilnego, (in:) Krčmář J. (ed.), Randův jubilejni památnik; K 100-mu výroci narození Antonína Randy, Praha 1934. Zoll F., Prawo cywilne opracowane głównie na podstawie przepisów obowiązujących w Małopolsce, Tom II, Prawa rzeczowe i rzeczowym podobne, ed. 3, Poznań 1931. Zoll F., Prawo cywilne w zarysie. Prawo rzeczowe. vol. II, Part 1, Kraków 1947. Zoll F., Przedmiot praw rzeczowych, Kwartalnik Prawa Prywatnego 1938, No. 3. Zoll F., Przedsiębiorstwo przedmiotem własności, Przegląd Prawa i Administracji 1925. Zoll F., Szkice z prawa upadłościowego. Szkic pierwszy o skutkach odstąpienia przez syndyka od umowy wzajemnej, Transformacje Prawa Prywatnego 2006, No. 1. Zoll F., Zagadnienia kodyfikacyjne z zakresu prawa rzeczowego. Istota i rodzaje praw rzeczowych i system norm, do nich się odnoszących, Przegląd Notarialny 1936, No. 9. Zoll F., Znaczenie wpisów w księgach gruntowych w przyszłym kodeksie cywilnym polskim, Czasopismo Prawnicze i Ekonomiczne 1945, Nos. 7-12. Zoll F., Kraus A., Polska ustawa o zwalczaniu nieuczciwej konkurencji, Poznań 1929. Żabiński Z., Wpływ pojęcia rzeczy na kształtowanie się systemu prawa cywilnego, Zeszyty Naukowe Uniwersytetu Jagiellońskiego, Prace z Wynalazczości i Ochrony Własności Intelektualnej 1974, No. 1.

Table of Abbreviations ABGB art.

Allgemeines Bürgerliches Gesetzbuch (Austrian Civil Code) Article

BGB

Bürgerliches Gesetzbuch (German Civil Code)

C.C. C.C.P. CT

Civil Code Code of Civil Procedure Constitutional Tribunal

Dz. U.

Dziennik Ustaw (Official Journal)

ed. e.g. et seq.

editor, edition exempli gratia (for example) et sequentes (and the following page[s])

ff.

and the following pages

i.a. i.e. InsA

inter alia id est (that is) Insolvency Act

KPP

Kwartalnik Prawa Prywatnego (Private Law Quarterly)

MoP

Monitor Prawniczy (Legal Monitor)

No(s). NP

number(s) Nowe Prawo (The New Law)

OSA

Orzecznictwo Sądów Apelacyjnych (Jurisprudence of Courts of Appeal) OSN, OSNC Orzecznictwo Sądu Najwyższego Izba Cywilna or OSNCP (Jurisprudence of the Supreme Court. The Civil Chamber) OSP, Orzecznictwo Sądów Polskich formerly OSPiKA (Jurisprudence of Polish Courts)

Poland

580 OTK ZU

Orzecznictwo Trybunału Konstytucyjnego Zbiór Urzędowy (Judgments of the CT, Official Gazette)

p., pp. PiP PN PPH

page(s) Państwo i Prawo (The State and Law) Przegląd Notarialny (Notarial Review) Przegląd Prawa Handlowego (Commercial Law Review) Prawo Gospodarcze (Economic Law) Prokuratura i Prawo (Prosecution and Law) Przegląd Sądowy (Court Review)

Pr. Gosp. Prok.i Pr. PS RPEiS

Ruch Prawniczy, Ekonomiczny i Socjologiczny (Legal, Economic and Sociology Movement)

SC S.P. SPP StC

Supreme Court Studia Prawnicze (The Legal Studies) Studia Prawa Prywatnego (Private Law Studies) Studia Cywilistyczne (Civil Law Studies)

TPP

Transformacje Prawa Prywatnego (Transformations of Private Law)

vol.

volume

ZNUJ PWOWI

Zeszyty Naukowe Uniwersytetu Jagiellońskiego Prace z Wynalazczości i Ochrony Własności Intelektualnej (Jagiellonian University Research Journal, Papers on Inventiveness and Protection of Intellectual Property)

National Report on the Transfer of Movables in Portugal José Caramelo-Gomes José Carlos de Medeiros Nóbrega

Table of Contents Introduction A. B. C.

Historical contextualization Rethinking the Portuguese private law in the light of the Europeanisation of law Disseminating Portuguese private law and its sources

589 591 595

Part I: Basic information on property law 1. 1.1. 1.2. 1.3.

Ownership and other property rights General basics Principles and characteristics of rights in rem Categories of rights in rem 1.3.1. Enjoyment rights 1.3.2. Security rights 1.3.3. The acquisition rights 1.4. The general basics of property rights 1.4.1. Definition of “coisa” 1.4.2. Transferability of movables (a) Transferability of accessories (b) Contractual restrictions to transferability 1.4.3. Definition of “direito de propriedade” 1.4.4. Forms or species of property (a) The “titularity” criterion (b) The property of buildings 1.5. The minor rights in rem: ius in re aliena 1.5.1. Usufruct 1.5.2. Right of use and inhabitation 1.5.3. Easements 1.5.4. Emphyteusis 1.5.5. The surface right 1.5.6. Timeshare 1.5.7. Possession (first remarks) 1.6. Protection of property rights 1.6.1. Actions / remedies

599 602 604 606 608 609 609 610 613 614 614 616 617 617 618 619 619 620 620 621 621 622 622 623 623

Portugal

584

1.6.2. Additional remedies (a) Provisional remedies (interim relief) (b) Accumulation of claims (c) Compensation for damages (d) Unjustified enrichment

626 626 627 627 627

2. Possession 2.1. Notion of possession 2.1.1. Legal construction of the definition of possession 2.1.2. Types of possession (a) Entitled possession (b) Good or bad faith possession (c) Peaceful or violent possession (d) Public and concealed possession (publicity) (e) Direct and indirect possession (f) Individual possession and co-possession 2.2. Requirements of possession 2.3. Acquisition of possession 2.3.1. Original acquisition 2.3.2. Delivery 2.3.3. Constitutum possessorium 2.3.4. Inversion of title 2.4. Protection of possession 2.4.1. Provisional remedies 2.4.2. Preventive action 2.4.3. Direct action 2.4.4. Action for the maintenance of possession 2.4.5. Action for the restitution of possession 2.4.6. Protection of detention 2.4.7. Limitation of actions 2.4.8. Consequences of the success of actions 2.4.9. Self-help

628 628 630 630 631 632 632 633 633 634 635 635 636 637 637 638 638 638 639 639 640 640 640 640 641

3. Rights to hold, use or acquire on the borderline 3.1. Lease 3.2. Rights to acquire in connection with a contract for sale 3.2.1. Right of pre-emption 3.2.2. Option to buy and agreement to conclude a contract 3.2.3. Sale on approval 3.2.4. Right to repurchase 3.2.5. Reservation of title

641 643 643 644 645 646 646

Table of Contents

585

4. Field of application and definitions 4.1. Field of application 4.1.1. Basics (a) Contract (b) Succession (c) Acquisitive prescription (d) Occupation (e) Accession 4.1.2. Derivative acquisition (a) General (b) Registration of particular types of movables (i) Registration of motor vehicles (ii) Registration of vessels (iii) Registration of aircrafts

647 647 647 648 648 649 649 650 650 653 653 653 655

Part II: Derivative acquisition 5. Which system of transfer is used? 5.1. Overview and basic characteristics 5.1.1. Identification of generic goods and alternative obligations 5.1.2. Effects of the sales contract 5.1.3. Validity requirements 5.1.4. Payment 5.2. Party autonomy 5.3. Requirement of a valid obligation to transfer ownership 5.3.1. Sources of the obligation to transfer ownership 5.3.2. Validity of the obligation – different forms of defects regarding the obligation and their effects on the transfer of ownership (a) Legal capacity of the parties (i) Lack of legal capacity (ii) Lack of legitimacy (b) Defects of the will to contract (i) Intentional absence of the will to contract (ii) Non-intentional absence of the will to contract (iii) Mistake and fraud (iv) Threats

656 658 658 659 659 660 661 661

662 664 664 665 666 666 667 667 669

Portugal

586

(c) Defects in the object or aim of the contract (d) Defects in the formality of the contract (e) Termination of contract and contract subject to condition 5.4. Registration 5.5. Consensual system 5.5.1. Justification 5.5.2. Specific situations (a) Generic goods (b) Future goods and alternative obligations (c) Suspension condition (d) Other situations 5.5.3. Effects of the transfer by contract (a) Protection of the seller against non-payment (b) Protection of creditors (c) Multiple selling (same asset sold twice to different persons) (d) Use of the movable between property transfer and delivery

669 671

6.

678

Double sales

671 672 672 672 673 673 673 673 674 674 674 675 677 678

7. Which are the rules for “selling in a chain”? 7.1. General rules, valid contracts 7.2. Rules when contracts fail

679 679

8.

Transfer or acquisition by means of indirect representation

679

9.

Consequences of insolvency

680

10.

Passing of risk and passing of ownership

682

Part III: Original acquisition 11. 11.1. 11.2. 11.3.

Acquisition by accession, commixture, specification Accession of movables Union or commixture Specification, processing

684 684 685 686

Table of Contents

12. Good faith acquisition 12.1. Good faith acquisition in civil law – a negative approach 12.1.1. Protection of third parties in case of a sales contract of another’s assets 12.1.2. Protection due to rules of registration 12.1.3. Protection through prescriptive acquisition 12.2. Good faith acquisition in commercial law – a positive approach? 12.3. Reform of the rules on good faith acquisition 13. 13.1. 13.2. 13.3. 13.4.

Acquisitive prescription Function and justification of acquisitive prescription Requirements of acquisitive prescription Prescription of ownership Accession of possession and usucapio

14. Other forms of original acquisition

587

687 688 691 691 691 692 693 694 694 699 699 700

Part IV: Additional issues 15. Reservation of title

701

16. Abandonment

703

17. Co-ownership

703

18. Further rules applying to unspecified goods?

704

19. Consequences of restitution of the movable to the owner 19.1. Entitlement to benefits (“fruits”) resulting from the movable 19.1.1. Distinction between categories of fruits 19.1.2. Relevant criteria as to the entitlement to benefits (a) Good faith and bad faith (b) Time 19.1.3. Reimbursement for fructification expenses 19.1.4. Fruits that the movable could have potentially generated 19.2. Loss and deterioration of the movable 19.3. Reimbursement for improvements and expenses incurred during the possession of the movable

704 704 704 705 705 705 705 706 706 707

588

Portugal

19.4. Possessor’s right to retain the movable 19.5. Who bears the expenses of the restitution of the movable to the owner? 19.5.1. Restitution of the movable in case of transfer based on a void or avoided contract or invalid right to use 19.5.2. Restitution of the movable in case a right to use the movable has ended (e.g. after expiration of a leasing contract) 19.5.3. Restitution of the movable in case of theft or similar cases 19.5.4. Restitution of a movable acquired from a non-owner or in case of a right to use granted by a non-owner 19.5.5. “Garage cases”

708

Systematic of the Portuguese Civil Code

711

Table of Literature

715

Table of Abbreviations

722

709 709

709 709 709 709

Introduction Introduction* A.

Historical contextualization

Portugal became independent in the 12th century making it one of the oldest nations in Europe. Moreover, the national borders today are basically the same as those certified by the Tratado de Alcanizes in 1297, apart from the time of the Unification of the Iberic Crowns (1580-1640). This long period of political unity and Portugal’s peculiar geographical situation on the western-most coast of the continent, together influenced the foundations of its legal system.1 Thus considering the efforts of consolidating a national law, the internal normative system in Portugal can be understood in at least three historical periods, a division which applies for property law.2 A first period comprises the ius commune and the compilation of the Kingdom’s Ordinations, known after the kings’ names as Ordenações Afonsinas (1446), Ordenações Manuelinas (1521) and Ordenações Filipinas (1595), followed by the jus-rationalist environment of Marquês de Pombal and his Lei of 18 August 1769, the, later on, so-called Lei da Boa Razão / Good Reason Act; a second period was established with the first modern civil codification, known after its draftsman as the Código de Seabra of 1867; and a third one emerged out of the Código Civil of 1966, in force since 1 June 1967.3 *

1

2

3

This Introduction was written by José Carlos de Medeiros Nóbrega, based on his experience as a comparative lawyer and as one of the researchers of the Study Group on a European Civil Code with responsibility for Portuguese law. The report as such was written in co-authorship by José Caramelo-Gomes and José Carlos Nóbrega, who are deeply in debt with Susan-Gale Wintermuth for an enthusiastic, careful and detailed revision of this report, largely surpassing the first quality editing any author may wish. Susan’s commitment makes the authors anticipate with joy the possibility of further work. For an overview in English, see Nogueira da Silva, Portuguese legal history: a brief account (working paper FDUNL 02 / 02), available under http: // www.fd.unl.pt / Anexos / Downloads / 231.pdf. See Vieira, Direitos Reais (Coimbra 2008), p. 35 ff. For further details see Almeida Costa, História do Direito Português3 (Coimbra 2000), p. 273-293, 364-372, 432440, 486-491. Civil Code (Código Civil) of 25 November 1966 (DL no. 47344, DG 274 / 1966 I-A), as amended by among others DL no. 496 / 77 of 25 November 1977 (DR 273 / 1977 I-A) and DL no. 116 / 2008 of 4 July 2008 (DR 128 / 2008 I).

590

Portugal

As a consequence of the Revolution of 25 April 1974, which ended the dictatorship that had prevailed for almost 50 years, the new Constitution of 19764 resulted in profound changes, especially in family and succession laws.5 The same cannot be said of property law, except for the repeal of emphyteusis (long lease)6 and for some occasional modifications.7 In what concerns the normative system of direitos reais (rights in rem), the present Código Civil is marked by stability and thus little permeability to change.8 After having applied in 1977, Portugal joined the European Union (then European Economic Community) on 1 January 1986, together with Spain. At that time the work of one of the most important academic initiatives for harmonising private law in Europe was already on course, like the Commission of European Contract Law, which had began its work in 1982 and which work was continued and revised by the Study Group on a European Civil Code (Study Group) and the Research Group on EC Private law (Acquis Group).9 On the occasion of the Portuguese Presidency of the European Council in the first semester of 2000, the official conference called “A Civil Code 4

5 6

7

8 9

Constitution (Constituição da República Portuguesa) in force since 25 April 1976 (Decreto de Aprovação da Constituição of 10 April 1976, DR 86 / 1976 I-A), as revised by Lei Constitucional no. 1 / 2005 of 12 August 2005 (DR 155 / 2005 I-A). Through DL no. 496 / 77 of 25 November 1977. Arts. 1491 till 1523 CC were repealed by DL no. 195-A / 76 of 16 March 1976 and DL no. 233 / 76 of 2 April 1976. Some references to enfiteuse are nevertheless kept in this report. See Vieira, Direitos Reais, p. 38, about the few changes that occurred in Book 3 (Direito das coisas) of the Civil Code. The right to private property is nevertheless a constitutional right, in the sense that “everyone is secured, in accordance with the Constitution, the right to private property and to its transfer during lifetime or by death”, art. 62 (1), Constitution of the Portuguese Republic of 25 April 1976. So Vieira, Direitos Reais, p. 41. The direct contribution of Portuguese scholars in the academic efforts for Europeanisation of Private Law began at the latest in 1986 itself, as Prof. Isabel de Magalhães Collaço (Universidade de Lisboa) joined the so-called Lando-Commission. She was followed by Prof. Carlos Ferreira de Almeida (Universidade de Lisboa / Universidade Nova de Lisboa). Concerning the Study Group, Prof. Júlio Gomes (Universidade Católica Portuguesa / Porto) and Prof. Jorge Sinde Monteiro (Universidade de Coimbra) were members of the Co-ordinating Group, while in several Working Teams legal researchers were responsible for Portuguese law, among others Dr. Rui Cascão, Teresa Pereira, Inês Couto Guedes, Manuel Braga, Marta Lívia dos Santos Silva and José Carlos de Medeiros Nóbrega. Prof. Carlos Ferreira de Almeida and Prof. Assunção Cristas (Universidade Nova de Lisboa) contributed recently with additional notes under Books I-III of the DCFR. Members of the Acquis Group were Prof. António Pinto Monteiro

Introduction

591

for Europe” took place in the Universidade de Coimbra,10 which, like the previous conference “Towards a European Civil Code”11 under the Dutch Presidency in 1997, was a response to the Resolutions of the European Parliament in 1989 and 1994 on efforts to harmonise the private law of the Member-States and on the possibility of drawing up a Common European Code of Private Law;12 it was a response as well to the Presidency Conclusions of Tampere European Council in 1999 about the request for an overall study of the need to approximate Member States’ legislation in civil matters.13

B.

Rethinking the Portuguese private law in the light of the Europeanisation of law

Can we then say that since 1986 a new period of time for the internal normative system in Portugal was just beginning? In a certain way, the answer

10

11

12

13

and Prof. Paulo Mota Pinto (both Universidade de Coimbra). See detailed information under www.sgecc.net and www.acquis-group.com. About all academic contributors to the DCFR, see von Bar / Clive / Schulte-Nölke et al. (eds.), Principles, Definitions and Model Rules of European Private Law. Draft Common Frame of Reference (DCFR) Outline Edition (München 2009), p. 41 ff; see now von Bar / Clive (eds.) Principles, Definitions and Model Rules of European Private Law. Draft Common Frame of Reference (DCFR) Full Edition (München 2009 / Oxford 2010), vol. I, p. 25-31. Cfr. foreword (also in French and in English) of Prof. Sinde Monteiro to the conference transcript, in: Um Código Civil para a Europa, A Civil Code For Europe, Un Code Civil pour l’Europe, BFD Studia Iuridica 64 (Coimbra 2002), p. 17 ff. See the conference transcript now in its 3rd fully revised and expanded edition: Hartkamp / Hesselink / Hondius et al (eds.), Towards a European Civil Code (Nijmegen 2004). Concerning property law, see for example in both conferences: Drobnig, Property Law in a future European Civil Code, in: Um Código Civil para a Europa, p. 103-115 and Drobnig, Transfer of property, in: Hartkamp / Hesselink / Hondius et al (eds.), Towards a European Civil Code, p. 725-740. Official Journal of the European Communities (OJ) C 158 / 400 (1989) and OJ C 205 / 518 (1994), respectively. For an overview for later Resolutions of the European Parliament concerning a Common Frame of Reference, see von Bar / Clive / SchulteNölke et al. (eds.), Draft Common Frame of Reference (DCFR) Outline Edition, p. 41, fn. 50. Presidency Conclusions, Tampere European Council 15 and 16 October 1999, SI (1999) 800.

592

Portugal

must be positive, as the transposition of communitarian directives into the Portuguese legal system is a reality.14 In this sense, the main arguments named by the Portuguese Ministry of Justice,15 in order to initiate a debate about the reform of the civil law, were: (i) the harmonisation between Portuguese and Community law, (ii) the new legislative acts (diplomas legislativos) that resulted in the amendment of the Civil Code as well as in the promulgation of statutory law concerning civil law, but systematically outside the Civil Code, (iii) examples of other national systems that modernised their civil codes, like Germany and Italy, (iv) the initiatives of the European Parliament and the European Commission for a more coherent and more harmonised European Contract Law, and (v) the profound economical and social changes in Portugal in the last decades. To this matter, some of the most representative Law Faculties were charged with the task of delivering a study with a profound and general character that would raise the elements to be considered for forthcoming statutory law and for an eventual revision of the Portuguese Civil Code. The protocol agreement between the Ministry of Justice and the Universities of 27 May 2003 was published in 2005,16 together with the preliminary reports of their Law Faculties.17 14

15

16

17

See for all Poiares Maduro and Pereira Coutinho, EU Law and Portuguese Law, in: Ferreira de Almeida / Cristas / Piçarra (eds.), Portuguese law: an overview (Coimbra 2007), p. 51-71, distinguishing between “law in the books” and “law in action”, with the conclusion that “EU law is increasingly embraced in Portuguese doctrinal and legislative discourse but appears to be held at a distance by the courts”. Through its Gabinete de Política Legislativa e Planeamento (GPLP – Bureau of Legislative Politic and Planning), now Direcção-Geral da Política de Justiça (General Direction of Justice Politic), see www.dgpj.mj.pt. See Ministério da Justiça, Reforma do Direito Civil. Relatórios preliminares elaborados ao abrigo do protocolo celebrado entre o Gabinete de Política Legislativa e Planeamento do Ministério da Justiça e as Faculdades de Direito da Universidade de Coimbra, da Universidade de Lisboa, da Universidade Católica Portuguesa e da Universidade Nova de Lisboa (Coimbra 2005). The reports counted on the participation of an extensive number of scholars, who were represented by the Coordinators of their respective Law Faculties: Prof. Leite de Campos (Universidade de Coimbra), Prof. Menezes Cordeiro (Universidade de Lisboa), Prof. J. Gomes and Prof. Carvalho Fernandes (Universidade Católica Portuguesa / Porto, with contributions also from Universidade do Minho / Braga) and Prof. Ferreira de Almeida (Universidade Nova de Lisboa). There were only a few questions directly about property law, and note that the answers were very diverse, as for example while one Law Faculty sees no need for a reform of Book 3 (Law of Things) of the Civil Code, another Law Faculty points out that the “Book on Things and on Rights in

Introduction

593

In this context of evaluating the process of Europeanisation of private law and its relations to the national private law, one question concerns all Europe and refers to the process of harmonisation and unification of private law itself.18 The Portuguese national law has two other concerns as a point of departure. The first one is the need to clarify if it is necessary or even convenient to have a debate on the reform of the Portuguese private law. The initiatives of the Ministry of Justice in 200319 and the so-called preliminary reports by the Faculties of Law concerning the reform of the Civil Code are still to be understood as just the first seeds thrown in this large field of a not certain, but eventually, reform of the civil law.20 Furthermore the unity of the whole private law system is open to discussion due to possibilities and challenges of modernising the Commercial Code of 28 June 1888, of creating an au-

18

19

20

rem” is the one that least survived the passage of time, showing solutions that can be considered, in the face of the experience of almost 50 years of application of the Civil Code, not satisfactory and not corresponding any longer to the Portuguese reality. The references to the reports to property law will be cited in the appropriate sections throughout this paper. But focusing on a Portuguese perspective of the process of Europeanisation of private law, see among others Sinde Monteiro, Conclusions, in: Um Código Civil para a Europa, p. 291-306; Patrício, Do Euro ao Código Civil Europeu? Aspectos da convergência legislativa (Coimbra 2001), p. 91 ff; Calvão da Silva, Bicentenário do Code Civil (o Código Civil e a Europa: influências e modernidade), in: RLJ 134 (2001-02), p. 271 ff; Moura Vicente, Um Código Civil para a Europa? Algumas reflexões, in: Direito internacional privado – Ensaios vol. I (Coimbra 2002); Pereira, Proposta de reflexão sobre um Código Civil Europeu, in: ROA 2004, p. 497-608, also available online; Pinto Duarte, Direito comunitário e direitos reais, in: FS Galvão Telles IV, p. 451-466; Menezes Cordeiro, Da modernização do direito civil I (Coimbra 2004), p. 119-120, p. 137 ff; Moura Vicente, Direito comparado I (Coimbra 2008), p. 575 ff. See also in Portuguese, but edited in Brazil: Nóbrega, Princípios do Direito Europeu: contribuição jurídico-científica para a integração europeia, in: Revista Científica Integração (2006-1), p. 87-93. These first impulses came along during the XV Governo Constitucional (2002-2004), which had Maria Celeste Cardona as Minister of Justice. For the time being, it is unclear how politics will manage this question, but the academic discussion seems to be moving on. See for example the transcript of the conference “Código Civil Português – 40 anos de vigênca” held in May 2007 at the Universidade Nova de Lisboa in: Themis 2008, Edição especial, Código Civil Português – evolução e perspectivas actuais. See foreword of Prof. Assunção Cristas (at the time Director of the GPLP – Bureau of Legislative Politic and Planning), in: Ministério da Justiça, Reforma do Direito Civil, p. 5-8.

594

Portugal

tonomous Consumer Code or (instead) of implementing consumer and commercial statutory law into the Civil Code.21 The second concern is that Portuguese scholars argue (correctly) that it is now time to enhance the power and the standing (potenciar) of the Portuguese civil law system and to develop its potential (potencialidades), in the sense that after 40 years existence of the Civil Code, there is still much to do in terms of doctrine and case law22 and, at the same time, there is still much to do to make the Portuguese civil law more accessible abroad.23 21

22

23

See Oliveira Ascensão, Direito Civil e Direito do Consumidor, in: Themis 2008, p. 165-182 and Pinto Monteiro, Harmonização legislativa e protecção do consumidor (a propósito do anteprojecto do Código do Consumidor português), in: op. cit., p. 183-206. Forthcoming Cristas, O Código Civil no contexto do direito privado (lecture held at Jahrestagung 2007 der Deutsch-Lusitanischen Juristenvereinigung, in Lisbon). Cfr. also Cristas, Portuguese Contract Law: the search for regimes unification?, in: ERCL 5 (2009) 3, p. 357-367. See on this point a critical view in Menezes Cordeiro, Da modernização do direito civil I (2004), p. 200-201, in the sense that even if the reform of the Portuguese Civil Code has no urgent character and that discussions about the reform should maturate in the universities with studies on comparative and case laws, if such a reform does not take place (as fast, broad and profound as possible), the Código Civil “would be open for all kinds of bastardising under the pretext of ‘European’ actualizations” (sic). The author adds that with its modernization of the law of obligations, the German Civil Code became as untouchable as ever and that the Portuguese law should act immediately in order to survive. He argues finally that an upcoming reform of the Portuguese law, in order to become effective and practicable, just needs the leadership of the national Ministry of Justice, as the Universities as such are already very much equipped to carry out the legal scientific basis work (op. cit, p. 201). Five years after the eminent opinion of Prof. Menezes Cordeiro (Universidade de Lisboa) has been published, it is then worth remembering that some of the declared purposes of the Draft Common Frame of Reference are to serve as a contribution for legal science and research, as well as to serve as a possible source of inspiration for reform projects at both national and Community law levels, so that “(i)f the content of the DCFR is convincing, it might contribute to a harmonious and informal Europeanisation of private law”, cfr. DCFR Outline edition (2009), Intr. 8-10, p. 7 ff. Furthermore see debate about the role of European contract law in the private law reforms in Germany and in other European countries in the transcript of the Würzburg Conference in: Remien (ed.), Schuldrechtsmodernisierung und Europäisches Vertragsrecht: Zwischenbilanz und Perspektiven (Tübingen 2008); see also Müller-Graf, Kodifikationsgewinn durch Inkorporation des Inhalts von Schuldrechtsrichtlinien der EG in das BGB?, in: GPR 3/2009, p. 106-120. See for this Mota Pinto, O Código Civil Português: “de uma possível tendência para o esvaziamento a uma também possível necessidade de reforma”? Algumas reflexões, in: Themis 2008, p. 25-46. The author makes clear that an entire translation of

Introduction

C.

595

Disseminating Portuguese private law and its sources

It is exactly because of the growing demand for approximation of laws within the European Union that codes, like the Portuguese Código Civil, which represent a bridge of compromise between different national laws, are meriting greater attention than they currently received.24 This national report on the transfer of movables in Portugal, just to cite one example, results from the activities of the Study Group25 and belongs thus to the recent efforts to make the Portuguese (but of course not only Portuguese) law more known in an accessible language like English.26 Therefore, especially for those who are used to reading legal sources in Romanic languages or for those who have Portuguese as their official language,27 it is worth indicating an overview of the original sources avail-

24

25

26

27

the Código Civil just does not exist and that a translation into German, French or English is important not only because of the dissemination of the civil code, but also for economic purposes (p. 28, fn. 8). He also points out that there is only one entire commented edition of the Código Civil (p. 46, fn. 40), citing Pires de Lima and Antunes Varela (with the contribution of Mesquita), Código Civil Anotado: vol. I: arts. 1-761 (4th ed., Coimbra 1987), vol. II: arts. 762-1250 (3rd ed., Coimbra 1986), vol. III: arts. 1251-1575 (2nd ed., Coimbra 1987), vol. IV: arts. 1576-1795 (2nd ed., Coimbra 1992), vol. V: arts. 1796-2023 (1st ed., Coimbra 1995), vol. VI: arts. 2024-2334 (1st ed., Coimbra 1998). Similarly formulated by Prof. Christian von Bar (Universität Osnabrück) with reference to tort law, but applicable for all private law system, in: v. Bar, The Common European Law of Torts I (Oxford 1998), p. 384. Cfr. Preface in Faber / Lurger (eds.), National Reports on the Transfer of Movables in Europe I (Munich 2008), p. v-vi. For this purpose, see also Ferreira de Almeida / Cristas / Piçarra (eds.), Portuguese law: an overview (Coimbra 2007), considered as a pioneer work. Specifically on property law see also Dias Pereira, Introduction to Portuguese private law / Transfer of title in Portuguese law, in: Rainer / Filip-Fröschl (eds.), Transfer of title concerning movables – Part I (Frankfurt am Main 2006), p. 129ff. See furthermore with focus on real property law (i.e. immovables): Passinhas, Portuguese property law, in: BFD 81 (2005) 865 ff. Estimated at about 220 million speakers among the Community of Portuguese Speaking Countries (www.cplp.org) constituted by Portugal, Brazil, five countries in Africa namely Angola, Cape Verde, Guinea-Bissau, Mozambique, São Tomé and Príncipe, and Timor-Leste in Asia. See about the influence of Portuguese law in these countries and in other former territories of Portugal like Goa, Daman and Diu (India) and Macao (China), in: Dias Pereira, op. cit., p. 129 ff. See also Jayme, Das Recht der lusophonen Länder (Baden-Baden 2000) and Jayme / Schindler (eds.), Portugiesisch – Weltsprache des Rechts: Studien, Referate, Gutachten zu den Rechtssystemen von Angola, Brasilien, Osttimor und Portugal (Aachen 2004). For Africa

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able in Portuguese, as well. For this purpose, the material used for this report is pre sented in this introduction in a more extensive way, even if the details are to be found only in the tables of abbreviations and literature.28

28

29

30

see the new collection Estudos de Direito Africano, especially its first title dedicated to property law: Pinto, Direitos Reais de Moçambique (Coimbra 2006). For Brazil and Portugal, see among others Santos Justo, A base romanista do direito luso-brasileiro das coisas, in: ROA 2009, vol. I / II; and conjoint editions like Leite de Campos / Martins (eds.), O Direito Contemporâneo em Portugal e no Brasil (Coimbra / São Paulo 2004). Of special interest is the Macau Civil Code of 1999, which can be considered an updated version of the Portuguese Civil Code of 1966, adapted to this Special Administrative Region of the People’s Republic of China, cfr. Godinho, The Macau Civil Code – An English partial translation, in: http: // ssrn.com / abstract=1280595. Cfr. also the registers in volume VI of the Draft Common Frame of Reference (Full Edition), with references to Portuguese abbreviations, Portuguese statutory law (more than 60 codes and statutes) and Portuguese literature (around 20 pages in the editorial version that I assisted in preparing). For Diário da República Electrónico see www.dre.pt. For non-official sources requiring subscription see for example http: // bdjur.almedina.net / dr.php, www.jusnet.pt or www.legix.pt. Translation of the most important legal dispositions concerning rights in rem are available in this report in English; for the same in German see report with translations in: v. Bar / Seabra / Xavier, Sachenrecht in Europa (Portugal), p. 402 ff.; see also partial translations of the Portuguese Civil Code into German in: Nóbrega, Der rechtsgeschäftliche Eigentumserwerb an beweglichen Sachen in Deutschland und Portugal, p. 79 ff. Recent case law as the judgments of the Portuguese Supreme Court of Justice (STJ – Supremo Tribunal de Justiça), but also Courts of Appeal (for example, CA Lisbon standing for Tribunal da Relação de Lisboa or as usual Relação de Lisboa), among others, are now available under www.dgsi.pt, which corresponds to the juridicaldocumentary basis of the Institute of Technologies of Information in Justice, belonging to the Ministry of Justice. The form of citation varies, therefore as it is easier to find a judgment in this database by using the number of the proceeding. Most of the judgments are no longer published in paper publications as the publication of the official periodical BolMinJus (for example) came to an end with the publication of no. 499, even if there was an attempt to keep the periodical in an electronic version, see the actually last number (no. 501) in http: // www.gddc.pt / actividade-editorial / versao-online-ultimo-num-bmj.html Case law, often with comments, is to be found in almost every academic periodical (see references below). For a very extensive and praise-worthy “lista de jurisprudência” on rights in rem see Pinto Duarte, Direitos reais2, p. 336-350.

Introduction

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The material mostly used for this Report comprises statutory law,29 case law,30 case books,31 commentaries or annotations,32 monographs,33 legal

31

32

33

See Part II – The Case Studies, in: Kieninger (ed.), Security rights in movable property in European Private Law / The Common Core of European Private Law (Cambridge 2004), with Portuguese report by Prof. Menezes Leitão (Universidade de Lisboa). Even if there is not actually a tradition of case books in Portugal, the collection “Casos Práticos Resolvidos” counts already more than ten volumes in different areas of law. For property law, see Duarte Manso and Teodósio Oliveira, Direitos reais & registo e notariado. Casos práticos resolvidos (3rd. ed. Lisbon 2008). See also Peralta, Direitos reais – casos práticos, in: Colectânea de casos práticos 3 (Lisbon 2001), p. 199 ff and Gouveia Andrade, Prática de direitos reais (Lisbon 2009), p. 117 ff. Besides the established Civil Code commentary of Pires de Lima and Antunes Varela (see footnote 23). More than just a curiosity, it is important to note that Prof. Pires de Lima was one of the drafters of the Civil Code in property law (see e.g. Pires de Lima, Das coisas, BolMinJus 91 (1959) 207-222 and Direito de propriedade, BolMinJus 123 (1963) 225-281 – consisting his drafts only of “black letter rules” and some notes, but no comments or justifications) and that Prof. Antunes Varela was the Minister of Justice and thus responsible for the revision of the preparatory works and of the drafts of the Código Civil, so that their commentary is subject to criticism, as it can be understood as an “official” ratification of the legal dispositions and thus not very innovative (cfr. Vieira, Direitos reais, p. 42). There are still editions of the Código Civil with notes, see specially Neto, Código Civil anotado (15th ed. Lisbon 2006), but also Capelo de Sousa and França Pitão, Código Civil e legislação complementar (2 vols., Coimbra 1979). Considering property law, see also Rodrigues Bastos, Direito das coisas segundo o Código Civil de 1966 (4 vols., Viseu 1975). Manuals, doctoral theses and other monographs are to be consulted in the table of literature and footnotes. It is nevertheless important to notice that the traditional mainstream legal literature by Portuguese authors usually makes well-founded and extensive references to foreign law systems. There are also comparative studies in the law of property that have been published recently, see for example about Spain, England, Brazil and Germany: Cristas and Gouveia, Transmissão de propriedade de coisas móveis e contrato de compra e venda – Estudo de direito comparado dos direitos português, espanhol e inglês; Neves, A proteção do proprietário desapossado de dinheiro, in: Cristas / Gouveia / Neves, Transmissão da propriedade e contrato (Coimbra 2001); Perissinotto, Compra e venda com reserva de domínio / propriedade – comparação dos direitos brasileiro e português, in: Themis VI (2005) 65 and Nóbrega, Der rechtsgeschäftliche Eigentumserwerb an beweglichen Sachen in Deutschland und Portugal (2009).

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periodicals34 and other collective works.35 Electronic sources are cited in form of footnotes, when they are linked to a virtual database.36 Especially because of the non-existence of an official or non-official translation of the Código Civil into English, legal dispositions are presented here in full, sometimes with modifications.

34

35

36

Among others, see: O Direito, Revista de Legislação e Jurisprudência (RLJ), Boletim do Ministério de Justiça (BolMinJus), Colectânea de Jurisprudência (CJ), Boletim da Faculdade de Direito da Universidade de Coimbra (BFD), Revista da Faculdade de Direito da Universidade Nova de Lisboa (Themis), Cadernos de Direito Privado (CDP), Revista da Ordem dos Advogados (ROA). The last one is also available (since the first edition of 1941) under http: // www.oa.pt / Publicacoes / revista / default. aspx?idc=30777&idsc=2691. For detailed information, please see table of abbreviations. Like the transcripts of conferences, the overview of the Portuguese Law in English described above (see footnote 26), and publications in form of Festschrift (FS are usually called “Estudos em homenagem”). As for example for the original legal sources from the 19th century till the first half of the 20th century and their electronic version at the Biblioteca digital Ardies (Universidade Nova de Lisboa / Fundação para a Ciência e a Tecnologia): http: // www. fd.unl.pt / ConteudosAreas.asp?Area=BibliotecaDigital.

Part I: Basic information on property law 1.

Ownership and other property rights

1.1.

General basics

The right of ownership played a central role in the so-called Código de Seabra.37 The preliminary dispositions in the third part of that Code and the definition of direito de propriedade in art. 2167 ff allowed, as Oliveira Ascensão remarks, at least five different interpretations: all rights a person acquires, all patrimonial rights that a person acquires, all rights in rem, one particular right in rem, and the object of any such right in rem.38 Nowadays the systematic organisation of the Portuguese Civil Code of 1966 (hereinafter CC), which corresponds to the one in the German Civil Code, is as follows:39 Book I: Book II: Book III: Book IV: Book V:

General Part (Parte Geral) – arts. 1-396 Law of Obligations (Direito das Obrigações) – arts. 397-1250 Law of Things (Direito das Coisas) – arts. 1251-1575 Family law (Direito da Família) – arts. 1576-2023 Succession law (Direito das Sucessões) – arts. 2024-2334

Considering the civil codification,40 most of the legal dispositions on property law are thus included in Book III on Direito das Coisas (“Sachenrecht”).41 37

38 39 40

Seabra, A propriedade. Filosofia do direito. (Coimbra 1850), in: http: // www.fd.unl. pt / Anexos / Investigacao / 1580.pdf, see about it in: Almeida Ribeiro, A propriedade de Antonio Luiz de Seabra: enquadramento geral e análise crítica (working paper FDUNL 01 / 03), available under http: // www.fd.unl.pt / Anexos / Downloads / 242.pdf The so-called Seabra’s Code (old Portuguese Civil Code of 1867) is availabe under http: // www.fd.unl.pt / Anexos / Investigacao / 1664.pdf. Oliveira Ascensão, Direitos reais, p. 25-27. See details in the annex to this report. As noted, the right to private property is stated in the Constitution of the Portuguese Republic in art. 62, including the right of fair compensation in case of requisition of property or its expropriation for public purposes (art. 62 (2)). Besides the Constitution and the Civil Code, there are several other statutes with relevance to immovable property law and industrial property law that are not priority in this report,

Portugal

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This book is in turn divided into six titles: (1) Possession (posse),42 (2) Property right (direito de propriedade),43 (3) Usufruct (usufruto) and rights to use and inhabit (direitos de uso e de habitação),44 (4) Long lease (enfiteuse),45 (5) Surface right (direito de superfície)46 and (6) Easements (servidões prediais).47 The rights regulated in the third Book are commonly known as the enjoyment rights in rem. All matters related to the other two commonly recognised rights categories of in rem – acquisition rights and securities – are regulated elsewhere in the Civil Code, namely in the second Book, The Law of Obligations. The traditional division of the rights in rem into three different categories, which we will discuss further, is also recognised in the Portuguese Civil Code, as in art. 1539.48 In the sense of art. 1306 CC, the first classification of property rights usually results from the comparison between direitos reais (real rights or rights in rem) and obrigações (obligations). The real rights are thus under41

41

42 43 44 45 46 47 48

but will be referred to as these rules comprise the category of “movables subject to register”. Note that especially with regard to immovable property and register rules, there were significant changes through DL no. 116 / 2008 of 4 July 2008. Some Portuguese doctrine is very much occupied with differentiating between “direito das coisas” as it is called in the Civil Code and “direitos reais” as it is otherwise denominated, and as it still gives name to this area of law in legal education and manuals. Both expressions can be synonyms, cfr. about “direito [objectivo] das coisas” and “direitos [subjectivos] reais” in Oliveira Ascensão, Direito Civil – Reais, p. 18 and Menezes Cordeiro, Direitos reais, p. 14, fn. 12. The expression “direitos reais” can also be considered a more comprehensive expression, see for a résumé Pinto Duarte, Direitos reais2, p. 14 f. Furthermore the main Portuguese legal concept in property law is that “direitos reais” or “direito das coisas” are equivalent to “derechos reales”, “droits réels”, “diritti reali” and “Sachenrecht”, (…) nevertheless the branch of law named “direitos reais” does not cover some of the topics that are considered by English lawyers to fall within the scope of property law, inter alia succession on death and marriage settlements, see about this in Pinto Duarte, Property law, in: Ferreira de Almeida / Cristas / Piçarra (eds.), Portuguese law: an overview, p. 207 f. Arts. 1251 till 1301 CC. Arts. 1302 till 1438-A CC. Arts. 1439 till 1483 and arts. 1484 till 1490 CC, respectively. Arts. 1491 till 1523 CC were repealed. Arts. 1524 till 1542 CC. Arts. 1543 till 1575 CC. Art. 1539 (Extinction of the rights in rem established under the surface right) 1. The extinction of the surface right at the end of the agreed period of time implies the extinction of any enjoyment rights or securities established by the surface right beneficiary in favour of any third party.

1. Ownership and other property rights

601

stood as absolute rights, as they are opposable erga omnes; rights arising out of obligations are inter partes and, thus, considered relative.49 Property and obligation rights can therefore have a common source, as explicitly stated in art. 408 CC, on the category of contratos com eficácia real, which are contracts that create real rights about certain and determinate things. Furthermore the principle of numerus clausus grounds all the development of Portuguese property law.50 Art. 1306 (Numerus clausus) 1. The creation of restrictions with a proprietary effect upon the right of ownership, or of dividing up that right, is only permitted in the cases provided by law; any restriction of that right resulting from a legal transaction (negócio jurídico) that does not comply with these conditions, has the character of an obligation.

Article 1306 and the principle of numerus clausus is probably one of the reasons for the scientific backwardness in the field of property law, as the development of rights in rem are actually treated as problematic as compared to obligation law, an area that has merited a lot more attention from the Portuguese civil law scholars in the last decades.51 Besides this, there is some criticism of the way the Code is structured, mainly from Oliveira Ascensão,52 who considers that there are too many casuist solutions in the Code, such as the insertion of the prescriptive acquisition within the title regulating possession and determination, right beside the causes of creation or extinction of such rights, leading to needless repetitions. The only chapter or section where provisions seem sufficiently general to Oliveira Ascensão is the one dedicated to property rights. All the defects that he finds in the Code are the reason why, in his view, that there is little doctrinal conceptualisation about the principles of the rights in rem in Portugal. One of the first consequences is that only in recent years has a general theory of rights in rem arisen in Portugal, much due to the contribution of Prof. Oliveira Ascensão (Universidade de Lisboa) in the 1970s.53

49

50

51 52 53

See for all Antunes Varela, Obrigações em geral I10, p. 166 ff; Almeida Costa, Obrigações11, p. 91 ff. Cfr. e.g. Sequeira Campos, Analogia e tipicidade em direitos reais, in: FS Inocêncio Galvão Telles IV (Coimbra 2003), p. 467-494. See Vieira, Direitos reais, p. 210. Oliveira Ascensão, Direitos reais, p. 25-27. Cfr. about this in Vieira, O contributo renovador de José de Oliveira Ascensão para o sistema científico de Direitos Reais, in: FS José de Oliveira Ascensão – vol. I (Coimbra 2008).

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The starting point for a general theory is the definition of the underlying concept: real rights or rights in rem are considered to be subjective rights, as they are defined as a legal attribution of goods (afectação jurídica de um bem) for the fulfilment of an interest of one or more persons.54 This basic definition is the starting point for several theories about the nature of the power that is included in the concept and these theories can be grouped into three categories: the ones that consider the power to be a direct power over a thing, the ones that consider the power to be absolute, i.e. enforceable erga omnes, and the ones that consider this power to be a blend of the previous.

1.2.

Principles and characteristics of rights in rem

The Portuguese doctrine developed an extensive theory of normative principles for the law of rights in rem, which was inspired by the German legal system and legal literature.55 The guiding principles, which are specifically for property law, are thus applicable to rights in rem,56 but other general principles of law, like the one on private autonomy, are applicable to rights in rem as well. Due to the numerus clausus in art. 1306 CC, the first principle of rights in rem is typicality (princípio da tipicidade), which means that only the rights the law establishes exist. Because it is a power over a given thing, the second principle of rights in rem is inherence (princípio da inerência), in the sense that the right is so closely connected to its object that it only exists while its object exists (see e.g. art. 1476 (1) lit. d concerning usufruct). The sequel (sequela) is thus considered as a dynamic consequence of this principle in the sense that the subject of the right, the right’s owner, may follow the object of the right wherever it may be. The third principle is the one of speciality or individualisation (princípio da especialidade): a right in rem has an individualised and specific object

54

55

56

Oliveira Ascensão, Direitos reais, p. 44 in line with Gomes da Silva, O dever de prestar e o dever de indemnizar (Lisbon 1944). See about the development of princípios de direitos reais in the Portuguese legal literature and education and its sources in German law in: Vieira, Direitos reais, p. 203-205. See an extensive explanation about these principles in Vieira, Direitos reais, p. 206266. This section on principles is very much based in the explanation of Prof. José Alberto Vieira (Universidade de Lisboa) due to its up-to-dated and very well-founded character, which comprises a great number of references to Portuguese doctrine, for further consultations.

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(thing); it exists while and because that thing exists and if the thing perishes, then the right over it ends, too (see art. 408 (2)). The fourth principle is absolutility. That rights in rem are absolute rights is the central point of absolutility (princípio da absolutidade). Rights of this nature are thus what the Portuguese doctrine calls absolute rights, opposed to relative rights. The latter are the ones that allow its owner to demand a given behaviour from an identified subject or group of subjects, such as the right of the creditor to be paid by the debtor. Such right cannot be enforced against a person not involved and obliged, in any manner, in satisfying the credit. Absolute rights empower, at the very least, their owners to demand that all other persons refrain from unlawfully disturbing their interest. The fifth principle is consensuality (princípio da consensualidade or princípio do consensualismo) with a very clear expression in art. 408 (1) as the creation or transfer of rights in rem on a determined thing happens by means of the contract. The same principle has exceptions, but is confirmed concerning the sale contract (art. 879, lit. a) and the donation contract (art. 954, lit. a). The sixth principle comprises causality and unity (princípios da causalidade e da unidade) and also refers to the acquisition of the right in rem, which depends on the efficacy of the contract, so that ownership cannot be transmitted when the contract is void. Opposite to the principles of causality and unity are the principles of abstraction and separation, as in German civil law.57 A seventh principle relates to good faith (princípio da boa fé). Even if it is a parameter for the entire civil law,58 it is nonetheless subject to debate on rights in rem, firstly because good faith lies within the regime of possession, as a requisite for prescriptive acquisition and acquisition resulting from accession, but also because of the maximum “possession vaut titre”, which is not recognised in Portuguese law,59 so that good faith acquisition of movables from third parties is not possible.60 Territoriality is the eighth principle (princípio da terriorialidade), as it is known in the context of collisions of norms, so that the property law regime to be determinated for things located in Portuguese territory is the Portu57

58 59

60

See among others Vieira, Direitos reais, p. 239-245 and Nóbrega, Der rechtsgeschäftliche Eigentumserwerb an beweglichen Sachen in Deutschland und Portugal, passim. See for all Menezes Cordeiro, Da boa fé no direito civil (2 vols., Coimbra 1984). Cfr. Pires de Lima and Antunes Varela, Código Civil Anotado I4, note 3 under art. 409, p. 376. Cfr. Caramelo-Gomes, Good faith acquisition – why at all?, in: Faber and Lurger, Rules for the transfer of movables – a candidate for European harmonisation or national reforms? (Munich 2008), p. 155-160.

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guese legal system, remembering that Portugal is (together with the United Kingdom, Ireland, Cyprus and Malta) one of the Member-States of the EU that has not acceded to the United Nations Convention on Contracts for the International Sale of Goods (CISG). Another and ninth principle of rights in rem is publicity (princípio da publicidade), which has minor importance in Portuguese property law, because of the strength of consensuality, so that publicity is not relevant to the creation or transmission of rights in rem, as it is for example in Germany law. Without wanting to be exhaustive, there are nevertheless several other characteristics that are taken in account by the majority doctrine for didactic purposes,61 as for example consolidation, which means that rights in rem tend to actually expand and include all the powers and functionalities that, in abstract, are included therein; actuality, in the sense that the object of the right must exist in the present time. Things to be created cannot be the object of a right in rem (though they obviously can be the object of contracts). Another characteristic of rights in rem is compatibility or exclusion; this means that over a given thing only compatible rights may exist. Rights of the same nature and content over the same thing are not, in principle, compatible and thus one excludes the other. One last characteristic of the rights in rem would be prevalence, which gives the owner of the right the power to oppose it against any other subject not vested previously with an incompatible right over that same thing, in which case, the second right would be void.

1.3.

Categories of rights in rem

Portuguese law of rights over things has developed in light of these principles (see 1.2 above), the first one being the principle of numerus clausus, so that the rights in rem are those, and those alone, created by law. Basically these rights in rem can be better understood by considering two categories: (i) one distinguishing between major and minor rights in rem and (ii) one considering the function of the right in rem. Rights in rem are a generic category of rights over things that include the property right (ownership – propriedade / domínio), which, in fact, is con61

See a résumé about “common characteristics and orientating principles of the rights in rem” in Pinto Duarte, Direitos reais2, p. 14 f, where the authors Carvalho Fernandes and Oliveira Ascensão are cited referring to the category of “characteristics”, Orlando de Carvalho and H. Mesquita to the “principles”, and Mota Pinto and Penha Gonçalves to “characteristics and principles”.

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sidered the strongest and most important amongst them.62 This category, though generic, is limited in its components. Hence, the doctrine distinguishes between the “direito real máximo” and “direitos reais menores”, so that all rights in rem are seen as forms of limitations or restrictions on the property right, at least traditionally.63 The starting point for this legal construction of the rights in rem in Portugal is the idea that if a thing exists and is not qualified as res nullius, it will always be the object of property rights. Consequently, any right that may be established to or over that thing, other than the property right, will surely be a restriction on the latter; some restrictions on the property right appear as a dismembering or division of it and, as long as matching the legal definition of a minor right in rem, will have, because of the nature of the right they detached from, absolute protection.64 Rights in rem Functionality criterion

Enjoyment rights

Security rights

Acqusition rights

Diagram 1 – Rights in rem categories, functionality criterion65

Furthermore the rights in rem the CC recognises are organised into three categories: enjoyment rights, security rights, and rights of acquisition. The criterion of this classification of the rights in rem is the function of the right. Any right in rem aims to allow its subject one of three different purposes: the enjoyment of the thing, the security of a credit, or the acquisition of an enjoyment right.65 62 63

64

65

Cfr. e.g. STJ 06 June 2002, Processo 02B1320. This is due to the influence of the French civilistic, which had expression in art. 2187 of Código de Seabra. See a critical view, based on arguments of the German civilistic in Menezes Cordeiro, Direitos Reais, p. 346-349. Just to give an example, the owner of the land has the right to build in it, but can also transfer that right to another as a surface right. But if on the same land there is also a building, the owner of the land and the building may use the later or determine that somebody will have the usufruct of the building; in such case, the owner of the land will have restricted his property right in two ways: by transferring the right to build on part of his land and by transferring the power to enjoy the benefits of the existing building. For an exhaustive explanation of the tables and diagrams in this report, see Caramelo-Gomes, The Law of Real Property In The European Community – A Comparative Study (Salford 2002)

Portugal

606 Categories

Contents

Rights included

Enjoyment Rights

enjoyment of the thing

property right usufruct use and inhabit easements emphyteusis surface right possession

Security Rights

security for a credit

pledge hypothec retention right distress and seizure

Acquisition Rights

acquisition of an enjoyment right

pre-emption

Table 1 – Rights in rem

The Portuguese system of enjoyment rights in rem in movables includes the property right, the usufruct, the use and the possession. Rights such as inhabit, easements, emphyteusis and the surface rights apply only, by nature and definition, to immovable things. All security and acquisition rights in rem can have movables as its object.

1.3.1. Enjoyment rights The category of enjoyment rights (direitos reais de gozo) comprises the property right (ownership, as the major right in rem) and the usufruct; the right to use and inhabit, the easements, the emphyteusis, the surface right and the possession, are considered minor rights in rem.66 Even if the enjoyment (gozo) is not described in any legal disposition of the Civil Code, it can be said that this is more than the use, enjoyment or transformation of a thing: it can also be understood as the right of revindication or the right to exclude third persons from the enjoyment of the thing.67 Also timeshare (direito real de habitação periódica) is considered an enjoyment right. It is regulated in a special statute.68

66 67 68

Oliveira Ascensão, Direitos reais, p. 25-27. See Vieira, Direitos reais, p. 321-323. Timeshare Act (Direito Real de Habitação Periódica), DL no. 275 / 93 of 5 August 1993 (DR 182 / 1993 I-A), revised by DL no 180 / 99 of 22 May 1999 (DR no. 119 / 1999 I-A).

1. Ownership and other property rights Right

Powers

Property Right

– – – –

Usufruct

607 Main Obligations

Ius utendi Ius fruendi Ius abutendi Ius excludendi

Duration

– Legal limitations of the right: – Property social function – Collision of rights – Public interest, mainly related to the ius edificandi

– Perpetual and only exceptionally temporary (exceptions strictly determined by law)

– Ius utendi – Ius fruendi

– Legal and contractual

– Temporary

Right to use and inhabit

– Ius utendi

– Legal and contractual

– Temporary

Easements

– Ius utendi

– Legal and contractual

– Perpetual

Emphyteusis

– Ius utendi – Ius fruendi – Ius abutendi

– Legal and contractual

– Perpetual

Surface Right

– Ius utendi – Ius fruendi – Ius abutendi

– Legal and contractual

– Temporary or perpetual

Timeshare (Direito real de habitação periódica)

– – – –

– Legal and contractual

– Temporary or perpetual

Possession

– Ius utendi – Ius fruendi

Ius utendi Ius fruendi Ius abutendi Ius excludendi

– Separately considered is always temporary

Table 2 – Enjoyment rights Right

Forms of acquisition

Forms of transmission

Property Right

Contract Will Intestate succession Usucaption

Contract Will Intestate succession

Usufruct

Contract Will Usucaption

Contract

Portugal

608 Right

Forms of acquisition

Forms of transmission

Right to use and inhabit

Contract Will Usucaption

Not transmissible

Easements

Contract Will Usucaption

Transmissible only accompanied with the transmission of the land it is intended to serve

Emphyteusis

Contract Will Usucaption

Contract Will Intestate succession

Surface Right

Contract Will Usucaption

Contract Will Intestate succession

Possession

Practice of material acts

Delivery of the thing possessed

Table 3 – Forms of acquisition

1.3.2. Security rights Security rights (direitos reais de garantia) are the rights of a creditor over things belonging to the debtor, to ensure the satisfaction of his or her credit. These rights are always accessory to a credit satisfaction and are to be exercised in the judicial courts.69 The CC establishes four main security rights in rem: the pledge, the hypothec, the retention right or lien (which entitles the creditor to retain possession of a thing belonging to the debtor, when the credit originated related to that thing), and the distress and seizure. The pledge consists of the power of the creditor to satisfy his or her credit with the value of a movable thing belonging to the debtor, with preference over any other creditors (art. 666). The settlement of the pledge is only by the delivery of the thing to the creditor (arts. 669 and 677). This security right does not include the right to enjoy, even in cases of possession of the thing. Art. 671, lit. b even determines the obligation of the pledge creditor to not use the thing, which is applicable also in case of the right of retention (art. 758).70 The hypothec produces exactly the same effects as the pledge, with the one difference that the object of the hypothec must be an immovable thing (art. 686) or a movable subject to registration (art. 688 (1) lit. f). 69 70

Vieira, Direitos reais, p. 325. See Vieira, Direitos reais, p. 324-325.

1. Ownership and other property rights

609

Security rights are regulated in Book II of the CC on Obligations. This is especially remarkable in the case of hypothec, as this security right is regulated in other civil law legislations as systematically belonging to the law of property.71 Right

Powers

Duration

Pledge

credit satisfaction with preference over any other creditors

Temporary

Hypothec

credit satisfaction with preference over any other creditors

Temporary

Retention Right

credit satisfaction with preference over any other creditors

Temporary

Distress and Seizure

credit satisfaction with preference over any other creditors

Table 4 – Security rights

1.3.3. The acquisition rights The rights in acquisition (direitos reais de aquisição) are rights related to a thing that allow its owner to acquire an enjoyment right over that thing. The main right in acquisition included in the CC is pre-emption, which may have a legal (statutory) or a contractual origin. Pre-emption (pacto de preferência) is defined as the agreement by which one party is obliged to prefer another when selling an asset (art. 414). Right

Powers

Pre-emption

To acquire the asset if an offer is considered

Table 5 – Acquisition rights

1.4.

The general basics of property rights

It is widely accepted that the property right is the paradigm of the rights in rem in Portugal. For this reason, we will give detail to its analysis, as its characteristics will apply, mutatis mutandis, to all other rights in rem.

71

Cfr. for Portugal Müller-Bromley, Die Modernisierung des portugiesischen Hypothekenrechts, p. 120.

Portugal

610

1.4.1. Definition of “coisa” To exemplify this with a question that is important to the whole doctrine of rights in rem, as well as to the subject “transfer of movables”, let us start with the definition of “movable thing”. The definition of “coisa”72 is to be found in art. 202 (1) of Book I (General Part), but should be interpreted together with arts. 1302 and 1303 CC of Book III (Title II – Property law). The Portuguese Civil Code defines “coisa”, as being “tudo aquilo que pode ser objecto de relações jurídicas”. Art. 202 (Definition) 1. Thing is whatever may be the object of legal relationships. 2. (…)

This broad definition allows that a “coisa” can be corporeal, incorporeal or even a right.73 It can be said that this concept also includes animals, liquids, gas, electricity and money. Nevertheless art. 1302 limits rights in rem to the corporeal things, as Portuguese law followed the historical lesson of the German pandectist.74 It is thus to conclude that the object of a right in rem has to be a “coisa corpórea” like German Civil Code § 90, and as it is stated in art. 1302 port. CC: Art. 1302 (Object of property right) Only corporeal things, movables or immovables, can be the object of the property right regulated in this Code.

Matters on incorporeal things are left for other areas of law (art. 1303). In this sense, protection of software and data bases in the internet,75 for example, is to be provided by special legislation on intellectual property.76 72

73

74

The authors are aware that the translation of “coisa” as “thing” is technically incorrect. The discussion in English involving terms like “asset”, “goods” or “mov(e)able” corresponds to the terminological variety in the Portuguese CC itself, as terms like “coisas” and “bens” are used like synonyms (compare e.g. arts. 880 and 882), even if “coisas” is to be considered more representative in Portuguese civil law, cfr. Menezes Cordeiro, Tratado de Direito Português – Das coisas2, p. 24, fn. 65. Note that in other Romanic languages, the correspondent term to “bens” might have prevailed in comparison to “coisas”. Cfr. Cristas, Transmissão contratual do direito de crédito, p. 522. See in the preparatory works to the Civil Code: Pires de Lima, Das coisas, BolMinJus 91 (1959) 207-209. This concept of “coisa” includes all rights, and also the ones included in negotiable instruments. The Portuguese doctrine is (almost) unanimous about this, see for all Vieira, Direitos reais, p. 131ff, 217.

1. Ownership and other property rights

611

Art. 1303 (Intellectual property)75,76 1. The author’s rights and industrial property are subject to special legislation. 2. The rules of this Code are however applicable to the author’s rights and industrial property, in a subsidiary way, when these rules harmonise with the nature of those rights and are not contrary to the special regime established for them.

Another categorisation of “coisas” is the differentiation between “coisas móveis” and “coisas imóveis”. The CC defines movables in art. 205 by reference and exclusion of the definition of art. 204, immovable things. In general, anything other than land, buildings or that which is attached to them, is considered movable. Thus, the concept of movable includes whatever may the object of a juridical relationship as long as it does not qualify as an immovable. Art. 204 (Immovable things) 1. Immovable things are: a) Land and urban land; b) Waters; c) Trees, bushes and natural fruits while attached to the earth’s soil; d) All rights in the immovable things mentioned in the alineas above; e) The integrant parts of the land and of the urban land. 2. Land (prédio rústico) is a limited part of the soil and all edifications therein that have no economic autonomy; urban land (prédio urbano) is a building integrated in soil with the land that surrounds it and with which they are connected.77 75

76

77

See details in Menezes Cordeiro, Tratado de Direito Português – Das coisas2, p. 113116, including reference to first case law in Portugal about protection of intellectual property in cases of non-authorized copies of softwares, as CA Lisbon 28 April 1994 (CJ XIX [1994-2] 130) and CA Lisbon 12 October 1995 (CJ XX [1995-4] 109). See recently STJ 30 April 2008 Processo 08P1214, which affirms previous case law. Cfr. Código do Direito de Autor e dos Direitos Conexos (DL no. 63 /85 of 14 March 1985, DR 61 / 1985 I-A) and Código da Propriedade Industrial (DL no. 36 / 2003 of 05 March 2003, DR 54 / 2003 I-A), both revised and republished by Lei no. 16 / 2008 of 01 April 2008, an act which corresponds to the transposition of the Directive 2004 / 48 / EC of 29 April 2004 – Directive on the enforcement of intellectual property rights. Please compare part of the translation of Art. 204 (1) lit. a., (2) and (3) refering to “prédios rústicos” and “prédios urbanos” with a translation into German (v. Bar / Seabra / Xavier, Sachenrecht in Europa – Portugal, p. 403): Art. 204 (2) Unter landwirtschaftlichen Grundstücken versteht man einen begrenzten Anteil des Erdbodens, und die auf diesem vorhandenen Bauten, die wirtschaftlich nicht selbständig sind, und unter städtischen Grundstücken versteht man jedes Gebäude, das mit dem Erdboden verbunden ist, mit den Grundstücken, die diese als Nutzfläche dienen. Art. 204 (3) Bestandteil ist jede bewegliche Sache, die mit dem Grundstück mit fortdauernden Charakter materiell verbunden ist.

612

Portugal 3. Integrating part is any movable thing that is materially connected with a permanent character to the land (prédio).78 Art. 205 (Movable things) 1. All the things not included in the previous article are movable. 2. The rules about movable things are applicable to registered movables if no specific regulation exists.

Some movables are subject to being registered, such as motor vehicles, airplanes and boats, firearms, but also commercial society’s shares and cooperative shares. In all these situations there will be formal requirements for the transfer of property or any other right in rem. This is to be regulated mainly in the Code of Register of Movable Goods (CRMG).79 Some other discussions about a right being a “movable thing” or an “immovable thing” result from the dogma presented above, as rights will qualify as movable things only when they do not qualify as a immovable thing, i.e., when the object of the right is not an immovable; in such case, the right will qualify as an immovable thing. Due to difficulties around the definition of “coisa” and maybe because of possible legal constructions (e.g. about a “direito” being “móvel” or “imóvel”…), the Ministry of Justice raised three points of discussion in the questionnaire about property law, especially regarding the definition of “thing”. See questions of the Ministry of Justice and answers of the Law Faculties in their preliminary reports, as follows: – Should art. 202 (1) be reformed? (Answer 1) In general, no reform is necessary in Book III (Law of Things). (Answer 2) This subject needs more reflection, even to draw preliminary remarks. (Answer 3) A revision of the concept of thing (coisa – art. 202) and of improvement (benfeitoria – art. 216) is convenient, but the legal regime about animals should be autonomous; it might be helpful to clarify the legal regime of money and of the legal nature of the rights concerning money and the possibility of revindication of the value. (Answer 4) It is no doubt necessary to discuss if the criticism in the literature about the legal definition of “thing” justify a reform of art. 202; but from the beginning it is important to note that (i) a theo78

79

Cfr. about the legal meaning of “prédio” as “land / Grundstück” (otherwise “prédio” means also “building / Gebäude”) in Prata, Dicionário jurídico5, p. 1096 ff. Código do Registo de Bens Móveis of 25 October 1995 (DL no. 277 / 95, DR 247 / 1995 I-A), which still needs to be regulated in order to get in force; cf. Pinto Duarte, Direitos reais2, p. 159-160. Nevertheless case law considers CRMG already, like STJ 24 February 2005 Processo 05B006 and STJ 13 March 2008 Processo 08B395.

1. Ownership and other property rights

613

retical correction of legal definitions can be irrelevant, or almost irrelevant, since they are destined only to limit the scope of application of the norms, (ii) there is no doctrinal consensus about the notion of thing and (iii) the legal definition did not cause any major problems of application to the norms they are important to, so that (iv) a point that also merits discussion is that the legislation could renounce a definition of thing.80 – Should art. 204 about the classification of immovables be reformed, considering there are doubts about whether the list of immovables just contains illustrations or whether it corresponds to a closed rating? (Answer 1) In general no reform is necessary in Book III (Law of Things). (Answer 2) This subject needs more reflection, even to draw preliminary remarks. (Answer 3) A revision of the concept of thing is convenient. (Answer 4) The enunciation of immovables as in art. 204 did not cause any major problems of application to the norms they are important to.81 – Should there be a reference in the Civil Code to the protection of animals, like German Civil Code § 90a? Until now, animals can be considered as “things”. (Answer 1) A reference to animal protections could be provided in the Civil Code, but considering that the case law and the doctrine make clear that animals are protected, no reform is urgent. (Answer 2) Animals are not things and have legal protection, a reference expressly to animals is justified (Answer 3) The concept of thing should be revised, but the legal regime about animals should de autonomous. (Answer 4) There are already acts on legal protection of animals [citing Menezes Cordeiro], so that the legal regime about animals exceeds the purpose of civil law, even if a reference in the Civil Code in the way of German Civil Code § 90a seems to be an example of a good legislative option.82

1.4.2. Transferability of movables There are corporeal movables not transferable under Portuguese law; these are called “things out of trade” (res extra commercium) and include all things belonging to the public domain, things that will potentially become public 80

81

82

See Ministério da Justiça, Reforma do Direito Civil, p. 16 (the question), p. 27, 40, 69, 77 (the answers of the Law Faculties). See Ministério da Justiça, Reforma do Direito Civil, p. 17 (the question), p. 27, 40, 69, 78 (the answers of the Law Faculties). See Ministério da Justiça, Reforma do Direito Civil, p. 17 (the question), p. 27, 41, 69, 78 (the answers of the Law Faculties). See about the extensive legal protection of animals provided by law, as cited in: Menezes Cordeiro, Tratado de Direito Português – Das coisas2, p. 217-226.

Portugal

614

domain and not appropriable things. i.e., things that can not be appropriated. Art. 202 (Definition) 1. (…) 2. However, things considered out of trade cannot be the object of private rights, as well as those that belong to the public domain and those things that, due to their nature, are not susceptible to individual appropriation.

(a)

Transferability of accessories

The rule included in art. 210 (2) CC determines that all contracts transferring the main asset do not transfer accessories unless otherwise stated: Art. 210 (Accessories) 1. Accessories are movable things that, although not being integrant parts, are attached in a permanent way to the service or decoration of another thing. 2. Contracts on the main thing do not include, unless otherwise declared, accessories.

In this matter, it is necessary to consider another specie of assets in specific close connection with the main asset: integrant parts. These integrant parts are movable things permanently connected to an immovable thing and can be transferred separately only if detached from the main asset: Art. 204 (Immovable things) (…) 3. Integrant part is any movable thing that is materially connected in a permanent way to the land.

(b)

Contractual restrictions to transferability

First of all, it is important to note that the creation or transfer of rights in rem in a determined movable happens by means of the contract, as stated in art. 408(1) CC. Nevertheless restrictions are possible under Portuguese law, as in art. 405 CC: Art. 405 (Freedom to contract) 1. Within the limits of the law, the parties are free to determine the contents of the contracts they enter, to complete contracts other than the ones regulated in this Code, or to include in such contracts the contents they deem suitable.

1. Ownership and other property rights

615

2. The parties may merge in the same contract, rules pertaining to two or more contracts totally or partially regulated by law.

Its effects, however, are limited inter partes, as stated in art. 406 CC: Art. 406 (Contract effects) 1. Any contract must be fully performed and can only be modified or terminated by mutual consent or in situations established by law. 2. Contracts will only have effects on third parties in those situations especially determined by law.

To accept that such provision or contract would be effective against third parties would breach the principle of numerus clausus established in art. 1306 CC. There are, nonetheless, four situations in which Portuguese law admits that transferability may be limited and restrictions recognised erga omnes: (i) Reversible sales, art. 927 CC: Art. 927 (Definition) A reversible sales contract is one in which the seller has the power to terminate the contract.

(ii) Donation with reservation of the right to transfer, art. 959 CC: Art. 959 (Reservation of the right to transfer an asset) 1. The donor may reserve the right to transfer, by succession or contract, the things or some of the things included in the donation; the donor may also reserve the right to a certain amount of money resulting from the transfer of the donation. 2. The right that is retained by the donor is not transmitted to his or her successors and, as far as it concerns immovable or movable assets that are entered into a national register, this right must be registered.

(iii) Reversible donation, art. 960 CC: Art. 960 (Reversion clause) 1. The donor may establish the reversion of the gift. 2. Reversion may occur when the donor survives the beneficiary, or the beneficiary and his or her descendents; if nothing is determined in the title as to this matter, reversion will happen only if the donor outlives the beneficiary and all his or her descendents. 3. Reversion clauses, concerning immovable assets or movables that are subject to national register, must be registered.

Portugal

616

(iv) Contractual pre-emption, art. 421 CC: Art. 421 (Erga omnes effect) 1. Pre-emption may, if the parties agree, enjoy erga omnes effects, if, related to immovable or movable property subject to national register, the legal requirements of contract formality and publicity requested by art. 413 apply. 2. Article 1410 (pre-emption action) shall apply, with the necessary amendments, in this situation.

Some of these exceptions have, however, limited scope in conferring erga omnes effects to the restrictions imposed by the transfer of the asset: this effect will only be accomplished if the movable or immovable is subject to the national register and the restriction is entered – art. 421 CC regarding pre-emption and art. 932 CC regarding reversible sales: Art. 932 (Erga omnes effects) The right to repurchase may be opposed against third parties if the object sold is an immovable or a registered movable and the right was entered into the register.

1.4.3. Definition of “direito de propriedade” The “property right” has no legal definition in Portugal. Therefore art. 1305 CC includes some elements that help determine its contents, even if a definition is not provided. Art. 1305 (Contents of the property right) The owner enjoys fully and exclusively the right to use, enjoy and dispose of the things that belong to him, within the limits of the law and applicable legal restrictions.

The elements included in art. 1305 CC show that the property right is full, i.e. it includes all the conceivable powers one may have over a thing. These powers are related with the use, fruition and disposability of the thing. Property right Powers included

Ius fruendi

Ius abutendi

Diagram 2 – Powers within the property right

Ius disponendi

Ius excludendi

1. Ownership and other property rights

617

The property right is consolidated in the sense previously defined: it tends to actually expand and include all the powers and functionalities that, in abstract, are included therein. Art. 1305 CC also determines that, in principle, the property right is perpetual in the sense that, whilst a thing exists, there will be a property right over it, even though at a given time no owner can be determined. This is merely an identification problem. The perpetuity in general is not, as far as the Portuguese doctrine considers, prejudiced by the fact that the CC allows for temporary property in art. 1307 (2). Art. 1307 (Temporary and reversible property) 1. The property right may be established conditionally. 2. The temporary property [right] is only admissible when allowed by law.

The concept of transmissibility is also included in art. 1305, even though this is not exclusive to the property right and, in fact, is a characteristic of many other rights. The truth is that this is not common to all rights in rem. Some of them, such as the right to use and inhabit, art. 1488 CC, are not transmissible. Art. 1488 (Non transmissibility of the right) The user and the resident user may not transfer or lease his or her right, nor can he or she establish any burden on it in any manner.

1.4.4. Forms or species of property (a)

The “titularity” criterion

The first criterion used to distinguish the different species of property is the number of persons (individual or legal) who share the title. If there is but one owner, property is singular. If more than one person shares the right, that is joint ownership in the sense that the property right belongs jointly to more than one person (art. 1403 CC). Art. 1403 (Definition) 1. Property in common ownership, or co-propriety, is when two or more persons are simultaneously holders of the title of property right in the same thing. 2. The rights of the partners or co-owners in the common thing are equal in quality, although they can be different in quantity; shares are presumed equal in quantity if not expressed otherwise in the title.

Co-owners have no powers or rights over specific parts of the thing. They have, however, some powers over the entire thing.

Portugal

618

Portuguese law admits that the shares may be different in quantity, while they must be equal in nature. This means that one co-owner can have 90 % of the right and the other 10 %. Yet different in quantity, both co-owners rights are of the same nature (art. 1403 CC). Co-owners have the power to regulate between them the use of the thing. If they do not use this power, then all can use the thing within two limits: that they use it for its intended use and that they use their powers in such a manner that it does not conflict with the other co-owners powers (art. 1406 CC). Art. 1406 (Use of the common thing) In the absence of an agreement about the use of the common thing, any of the co-owners may use the thing as long as he or she does not use it for a different purpose and does not obstruct the other partners from the use, in which they have an equal right. The use of the common thing by one of the co-owners does not constitute exclusive possession or possession in a superior share as to the other co-owner, except if an inversion of title occurred.

All co-owners must share the maintenance expenses in a proportional way (art. 1411 CC), have equal powers to manage the thing, have the right to demand the division of the common thing, have the right to sell their share and have the right to preferentially acquire the other shares. Art. 1411 (Necessary expenses) 1. All co-owners must participate, proportionally to their shares, in the expenses necessary to retain and enjoy the common thing, without prejudice to the difficulties that the co-owners may have to release themselves from this burden by renouncing to their right. 2. (…) 3. (…)

(b)

The property of buildings

Portuguese law includes the concept of horizontal property (propriedade horizontal).83 This type of property is exclusive for buildings and means that the building is divided into several autonomous fractions sharing a common area. Each of the fractions is the object of a property right called horizontal property and there will be as many property rights over that building as it has autonomous fractions (art. 1420 CC). 83

See arts. 1414 till 1438-A CC, as revised through DL no. 267 / 94 of 25 October 1994.

1. Ownership and other property rights

619

Art. 1420 (Rights of the owners) 1. Each owner has an exclusive property right to the autonomous part of the building owned and is, at the same time, co-owner of the common parts of the building. 2. The two property rights cannot be separated, nor can one be transferred without the other, nor can the co-owner renounce the right of use of the common parts of the building in order to avoid contributing to the expenses.

The right over a fraction of the building includes all the powers found in the property right, plus some powers and obligations found in the coownership. In fact, the owner of the horizontal property right is, by that fact, co-owner of the common parts of the building: stairs, external walls, roofs and so on.

1.5.

The minor rights in rem: ius in re aliena

1.5.1. Usufruct Usufruct is one of the minor rights in rem: ius in re aliena and entitles its owner to fully use and enjoy the thing during a limited period. There is a separation, however, between the property right and some of the powers (e.g. to use and enjoy) that are transmitted to the usufructuary. Art. 1439 (Definition) Usufruct is the right to temporarily fully enjoy a thing or right belonging to another, as long as this use does not change the form or substance of the thing or the right.

The usufruct is established in view of its beneficiary, thus presenting itself as intuitus personae. This fact justifies its time limits: the usufruct is always limited in time, whether for a number of years or for the lifetime of the beneficiary (art. 1476 CC). Art. 1476 (The extinction of the usufruct) 1. The usufruct terminates: a) With the death of the beneficiary or by the end of the time period, if the right was not conferred for life; b) By the reunion, in the same person, of the property right and the usufruct; c) By its non-exercise for 20 years, whatever the reason; d) By the loss of the thing; e) By renouncing it. 2. Renunciation does not require the owner’s consent.

Portugal

620

Pending its duration, the usufruct may be transmitted inter vivos, even if not extended, as the contents of the right are kept unchanged (art. 1444 CC). Art. 1444 (Transfer to third party) 1. The beneficiary may transfer his or her right to a third party, definitively or temporarily, as well as raise a charge on it, with the exception of restrictions imposed by constitutive title or by law. 2. The beneficiary is liable for the damages caused to the thing due to fault of the person that substituted him or her.

The termination of the time period or the death of the beneficiary enables the owner of the property right to recover full powers over the thing.

1.5.2. Right of use and inhabitation The right of use and inhabitation is the use of the thing to satisfy the owner’s personal and family needs (art. 1484 CC). Art. 1484 (Definition) 1. The right of use consists in the power of using one thing belonging to another and collecting its fruits (natural or legal), insofar as it is required by the beneficiary or his or her family’s needs. 2. When this right refers to a residence, it is called right of inhabitation.

It is a minor right in rem, as it is limited by its objective: to satisfy someone’s needs and thus is established intuitus personae, i.e., in the very interest of the beneficiary. Again, there is a separation between the “titularity” (nature of the title) of the property right and some of its powers that are delivered to the owner of the right of use and inhabitation. The major difference between this right and the usufruct is that this is a much more limited right, as no transmission is ever allowed.

1.5.3. Easements Easements are rights belonging to a subject because of its ownership over land. They are not autonomously transmitted and depend, for their maintenance, on the land’s needs. There are, as to the creation method, two categories of easements: the legal and the contractual. The first are the ones arising from law and thus subject to being created by a court of law, and the latter are the ones arising from contract and merely enforceable in a court of law. Legal easements are the rights of way and the water easements.

1. Ownership and other property rights

621

Easements are not autonomously transmitted and are included within the property right they are intended to serve.

1.5.4. Emphyteusis The emphyteusis institute was abolished in 1976, when arts. 1491 to 1523 CC were repealed.84 The emphyteusis was a direct heritage from the Glose School of Roman Law and from the Commentators School of Roman Law. It was and still is a vivid subject of discussions in legal doctrine with important reflections in the legislation.85 It consisted in splitting the property right into two different domains: the direct domain and the useful domain, each belonging to a different subject. The direct domain remained with the landlord and the useful domain passed to the tenant, who pays an annual fee (art. 1491). The emphyteusis was perpetual and both domains were transmissible by contract, will or intestate succession (arts. 1499 and 1501). The emphyteusis, however, terminated if both domains were reunited in the same subject, if the land or building was lost or the fee was unpaid. Both domains could be reunited if the landlord acquired, by contract or succession, the useful domain, or if the tenant acquired, by contract, succession or remission of the fee, the direct domain. The remission of the fee was a down payment and was a right of the tenant after a minimum number of years (art. 1511). Subemphyteusis was prohibited.

1.5.5. The surface right The surface right is defined as the right to build and / or retain a building or crops on somebody else’s land. Art. 1524 (Definition) The surface right is the power to build or maintain, perpetually or temporarily, a building on someone else’s land, or the power to grow and maintain crops on that land.

This right may be, depending on the title, perpetual or temporary and for it, the owner must pay a fee, either in a single payment or in periodic in84

85

As referenced before in the Introduction, through DL no. 195-A / 76 of 16 March 1976 and DL no. 233 / 76 of 2 April 1976. For an innovative view about “extinction and survival” of emphyteusis, see Menezes Cordeiro, Da enfiteuse: extinção e sobrevivência, in: O Direito 140 (2008-2) 285-315.

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stalments. The surface owner becomes owner of the crops or building and may transmit his or her property, or part of it, by contract or succession. The property right over the corps or building is temporary if the surface right is temporary.

1.5.6. Timeshare Timeshare (direito real de habitação periódica) is an enjoyment right in rem established by DL no. 275 / 93 of 5 August 1993, as revised by DL no. 180 / 99 of 22 May 1999, so that tourist lodging units may be the object of a timeshare limited to a given period within a year (art. 1). Timeshare is, unless otherwise agreed upon and included in the title, perpetual. The minimum duration of the right is 15 years and the period within the year for the timeshare must be settled between a week and a month. Timeshare has all the generic characteristics of the rights in rem and thus allows its owner the same sort of legal protection as any other right in rem. It is noticeable, however, that as to transfer or any other contract effecting ownership (i.e. the creation of securities or any other right in rem), the formality required is simply the inscription of the newly constituted right in the register deed: Art. 12 DL no. 275 / 93 1. The creation of any minor right in rem or the transmission of timeshare is performed by the inscription of the fact on the registry deed. The signatures of the transferring or constituting party shall be recognised in presence of a public notary.

1.5.7. Possession (first remarks) Possession is the first mentioned right in rem in Book III of the Portuguese Civil Code (arts. 1251 till 1301), before even the property right (arts. 1302 till 1438-A). The possessor is presumed to be the holder of the real right (property, usufruct, etc.) correspondent to the corpus and the animus of his or her possession. Art. 1268 (Presumption of ownership of the right) 1. The possessor enjoys the presumption of ownership of the right, unless it exists in favour of another based on a registered title previous to the beginning of the possession. 2. If registry based presumptions conflict, register law will define priority among them.

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Apart from the fact that possession is implicit in all enjoyment rights in rem and is autonomously justiciable, its main effect is that when its exercise does not match the ownership of a justifying right in rem, given some circumstances, it may be a means to acquire that right through prescriptive acquisition. Possession has thus several functions in Portugal, the first of which is to allow the possessor to enjoy the asset under legal and judicial protection, if necessary; in the second place, possession determines the legal presumption established by art. 1268 CC in favour of the possessor, and last but not the least, possession is determinant for acquisitive prescription. Because of the importance of these peculiarities, possession will be treated in this report later on (see section 2 below). Even if the Código Civil differentiates in its systematic approach between “protection of possession” in arts. 1276 till 1286 and “protection of ownership” in arts. 1311 till 1315, there are internal references, for example between arts. 1277 and 1314 to art. 336, so that the legal construction, and thus this report, are not free of overlapping.

1.6.

Protection of property rights

1.6.1. Actions / remedies Actions and remedies for the protection of property rights in Portugal can be structured into two main categories: extra-judicial and judicial means, depending on whether there is a court of law intervention or not. They all belong to the area of property law. The first category includes, by means of art. 1314 CC as to the property right, and art. 1277 CC as to possession, direct action and self-defence86 as established in arts. 336 and 337 CC: Art. 1314 (Direct action) The defence of the property right through direct action is admitted, as described in article 336. Art. 1277 (Direct action and judicial remedies) The possessor who is disturbed or dispossessed may retain or regain possession by his or her own force and authority, on the grounds of article 336, or ask a court of law to maintain or return the possession. 86

Although art. 1314 CC only refers to art. 336 (direct action), doctrine generally agrees that self-defence, as established in art. 337 CC, is also applicable. See references in Neto, Código Civil Anotado15, p. 280 ff.

624

Portugal Art. 336 (Direct action) 1. Force can be used in order to perform or protect one’s right, when direct action is the only means available because no useful response may be obtained using regular enforcement means and the absence of protection would, in practice, preclude the right in need of protection; the agent must not exceed the necessary force to avoid the damage. 2. Direct action may consist of the appropriation, destruction or damaging of a thing, in eliminating any resistance unlawfully opposed to the exercise of such right or any other similar action. 3. Direct action is not allowed when the interests to be sacrificed are superior to the ones the agent aims to protect. Art. 337 (Self defence) 1. It is justified to take any action aiming to stop any present and unlawful aggression against the body or assets of the agent or third party, as long as regular means of protection are not available in due time and the damage that the action may cause is not clearly higher than the one that may result from the aggression. 2. The action will be justified even if there is an excess of self-defence, if the excess is due to justified fear of the agent.

The second category includes the possessory actions and the action for recovery of property (legal designation revindication), as stated in art. 1311 CC: Art. 1311 (Action for revindication) 1. The owner may demand in a court of law that any possessor or detentor of a thing recognise [the owner’s] property right and its consequent restitution. 2. When the right is recognised, restitution may only be refused in those situations determined by law.

This action applies to the protection of any right in rem recognised under Portuguese law, ex vi art. 1315 CC: Art. 1315 (Protection of other rights in rem) The preceding rules apply, with the necessary amendments, to the protection of any right in rem.

The system of judicial protection of the rights in rem starts with the so called “possessory actions” included in arts. 1276 through 1286 CC. Although these rules are grouped in Book III, “Law of things”, Title I, “Possession”, Chapter V, “Possession’s defence”, they apply to the protection of possession arising from the exercise of any right in rem that implies possession of an asset. This means that the possession arising from all enjoyment rights

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is included; but it also means that the one arising from security rights87 in rem may be protected by these actions. This is the way Chapter 5 (Possession’s defence) establishes five different means of judicial remedies: (a) Action in prevention, art. 1276 CC: Art. 1276 (Action in prevention) If the possessor has a justified fear of being disturbed or dispossessed by another, the author of the threat will, following a request of the possessor be ordered to refrain under penalty of fine and liability for any damages caused.

(b) Action in maintenance and action in restitution, art. 1278 CC: Art. 1278 (Maintenance and restitution in possession) 1. The court shall maintain or reinstate the possessor who was dispossessed while the matter of the title remains undecided. 2. If the possession was shorter than one year, the possessor can only be maintained or reinstated against those who have no better possession. 3. Better possession is the one that is titled; in the absence of title, the oldest; and, if they are of the same age, the present.

(c) Action in restitution against violent loss, art. 1279 CC: Art. 1279 (Violent dispossession) Without prejudice to the previous articles, the possessor who is violently dispossessed has the right to be provisionally reinstated without the dispossessor being heard.

(d) Third party intervention, art. 1285 CC: Art. 1285 (Third-party proceedings) The possessor whose possession is disturbed by a court’s garnishment order or diligence may defend his or her possession through third-party proceedings, as defined by procedural law.

The actions in maintenance and restitution referred to in (b) and (c), with or without violence, may include the request for damages and expenses, art. 1284 CC:

87

Security rights in rem that imply possession are the pledge and the retention right, as described above 1.3.2.

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Art. 1284 (Compensation for damages and expenses with restitution) 1. The possessor maintained or reinstated in possession has the right to compensation for damages suffered as a consequence of the disturbance and the infringement of the possession. 2. The restitution in possession occurs at the expense of the disturbing party and at the place of the disturbance.

The system of protection concludes with a redundant remedy: the action for recovery of property (legal designation revindication, art. 1311 CC), which includes the power to demand, in a court of law, both (i) the restitution of the thing and (ii) the recognition, by the possessor or holder, of the existence of the claimant’s right. The “acção de reivindicação” would be indeed redundant only if the one who has a legal or contractual title to possess or hold the asset is the dispossessed possessor or holder him or herself. The dispossessed who is not the the owner may use the remedies referred to above in b) and c), whereas the possessor who is not the owner but is still in possession, may ask for a restraining order from the court. A so-called “acção negatória” can be nonetheless lodged, by the possessor who is also the owner, in order to obtain from the court a declaration of non-existence of third-party rights in the asset that would be incompatible with the claimant’s property right.88 This is a preventive action, which is not expressly stated in the Portuguese Civil Code, but made possible under art. 4 (2) lit. a port. Code of Civil Procedure89.90

1.6.2. Additional remedies (a)

Provisional remedies (interim relief)

In case of “violent dispossession”, the possessor can ask for provisional remedies under the terms of the Code of Civil Procedure (arts. 393 to 395 CCP). As stated in art. 394 CCP, in case of so-called “esbulho violento”, the judge can decree immediate restitution without hearing the interferer.91 If the disturbance was not violent, common proceedings will apply (art. 395 CCP).

88

89

90 91

Pires de Lima and Antunes Varela, Código Civil Anotado III2, note 2 under art. 1311, p. 113, with reference to art. 949 Italian Civil Code and its “azione negatoria”. Código de Processo Civil of 28 December 1961 (DL no. 44129 / 61), revised by DL no. 329-A / 95 of 12 December 1995 (DR 285 / 1995 I-A), as amended by DL no. 303 / 2007 of 24 August 2007. Cfr. CA Coimbra 15 May 2007, Processo 194 / 03.3TBMDA.C1. Cfr. STJ 29 September 1993, Processo 084424.

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(b)

627

Accumulation of claims

Portuguese procedural law (art. 470 CCP) admits the accumulation of claims and thus the same action may be used to claim restitution, damages and losses: Art. 470 CCP (Accumulation of claims) 1 – The plaintiff may accumulate claims against the same defendant in a single case, as long as the claims are compatible and accumulation bars are not applicable.

(c)

Compensation for damages

Portuguese tort rules (art. 483 et seq. CC)92 establish the obligation to pay compensation as a consequence of an unlawful behaviour: Art. 483 (General principle) 1. A person who intentionally or negligently unlawfully infringes someone else’s rights, or any legal rule aimed to protect someone else’s interests, shall compensate the damage resulting from the infringement. 2. Compensation for damages regardless of fault only exists when specified by law.

The compensation obligation includes damages and loss of benefits – art. 564 CC: Art. 564 (Compensation calculation) 1. The obligation to compensate includes both the damage and the lost profits that the claimant incurred because of the damaging act. 2. In determining the compensation quantum, the court may consider predictable future damage; if that damage is not determinable, the decision on the compensation quantum will be made later.

(d)

Unjustified enrichment

Portuguese law recognises unjustified enrichment93 as a source of obligations and consequently enables claims for compensation – art. 473 CC:

92

See overview and details in: Principles of European Law. Study Group on a European Civil Code. Non-contractual liability arising out of damage caused to another. Prepared by Christian von Bar (2009).

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Art. 473 (General principle)93 1. A person who obtains, without legal grounds, enrichment at another’s expense is bound to restore what was unjustifiably obtained. 2. Restitution under unjustified enrichment aims especially at the object that was unduly acquired, or received on the grounds of a cause that ceased to exist or of an effect that did not happen.

This remedy has a subsidiary nature: it will be available only if no other remedy / action is possible under the applicable law – art. 474 CC: Art. 474 (Subsidiary nature of the obligation) There shall be no restitution for unjustified enrichment when the law allows the impoverished person to receive compensation for restitution by other means, denies the right to restitution, or ascribes other effects to the enrichment.

This is the case for property law claims, especially the revindication claim in art. 1311 CC and, thus, unjustified enrichment claims are not possible in such a matter,94 but sometimes compensation is to be calculated according to the dispositions of unjustified enrichment, as stated for example in art. 1273 (2) CC on improvements.95

2.

Possession

2.1.

Notion of possession

2.1.1. Legal construction of the definition of possession The rules about possession in the Portuguese Civil Code were inspired by the Italian Civil Code of 1942.96 Art. 1251 combined with art. 1253 CC 93

94

95

96

See overview and details in: Principles of European Law. Study Group on a European Civil Code. Unjustified enrichment. Prepared by Christian von Bar and Stephen Swann (2010). See on this subject the excellent theses Gomes, Conceito de enriquecimento and Menezes Leitão, Enriquecimento sem causa. Cfr. PEL / von Bar /Swann , Unj. Enr., Chapter 1, Article 1:101, Notes, II, 7 and Chapter 7, Article 7:101, Notes, III, 21. See 19.3. below. Cfr. also PEL / von Bar /Swann, Unj. Enr., Chapter 4, Article 4:101, Notes, IV, 35. See details in Menezes Cordeiro, Posse3, p. 38 ff; especially about the development of case law and the Portuguese doctrine about possession and detention, see accurate research available in Menezes Cordeiro, op. cit., p. 54 ff. For an updated study, see for all Vieira, Direitos reais, p. 509-656.

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define possession as an intentional demonstration of the powers included in the property right or other right in rem:97 Art. 1251 (Definition) Possession is the power declared when someone acts towards a thing as the owner of the property right or any other right in rem.

Possession requires two different elements: the corpus, a material element that consists of the factual behaviour of the possessor, and the animus, the subjective element that considers the will of the possessor. Only the first element is clearly laid out in art. 1251, whereas the second element results a contrario sensu from the provision of art. 1253 CC, which expounds on the concept of detention: Art. 1253 (Detention) One is considered a holder: a) When exercising de facto power with no intention of acting as the beneficiary of the right; b) When simply taking advantage of the tolerance of the owner; c) When representing or acting on behalf of the possessor and, in general, whenever possessing in the name of another person.

The CC defines it thus as the power shown when someone acts towards a thing in such a manner that he or she appears to be exercising the property right (art. 1251). There is little discussion on what may the object of possession as defined in the CC: only corporeal things may be possessed, as long as they are not “out of trade”,98 and thus only the rights in rem, to which art. 1251 CC refers, are the rights established in the Code. There are several characteristics that qualify possession and have effects within the regime of prescriptive acquisition, defence of possession, fruits and improvements. Such characteristics are the eventual existence of a title (causa), the good or bad faith of the possessor, the peace or violence of the acquisition and the visibility or invisibility of possession.

97

98

Security and acquisition rights in rem are excluded from the concept, as by definition, no possession can be hold in such case, although, as it concerns the pledge and retention right, as defined above, detention may be discussed. See definition in Art. 202 (2), referred to in chapter 1.4.2 above.

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2.1.2. Types of possession There are several types of possession recognised in art. 1258 CC: Art. 1258 (Types of possession) Possession may be entitled or not, in good or bad faith, peaceful or violent, public or concealed.

Between the several types of possession there are two that produce no effects: the violent and the concealed; this, however, may change as soon as the characteristics of the possession change.99

(a)

Entitled possession

Art. 1259 CC defines entitled possession: Art. 1259 (Entitled possession) 1. Legitimate acquisition is entitled possession, regardless of the right of the transferor or the validity of the contract. 2. There is no presumption of title, and thus the possessor must prove its existence.

An entitled possession (posse titulada) results from any legitimate way of acquiring (justa causa traditionis), irrespective of the validity of the transmitter’s right (acquisition a non domino) or the substantive validity of the legal transaction (art. 1259 CC). A title exists if, for instance, the seller is transferring a right that he or she does not have (acquisition a non domino), or if the legal transaction is vitiated by simulation, mistake, violation of ordem pública, gute Sitten etc. However, even if an entitled possession is possible in case of substantive invalidity, it is not possible in case of invalidity of the legal transaction due to formality. The title is not presumed, and must be proved (art. 1259 (2) CC).100

199

100

See, for instance, the delays for acquisitive prescription on table 6 in chapter 13.1 below. Cfr. Pires de Lima and Antunes Varela, Código Civil Anotado III2, note 2 under art. 1259, p. 18-19.

2. Possession

(b)

631

Good or bad faith possession

Art. 1260 defines good faith possession: Art. 1260 (Possession in good faith) 1. Possession is in good faith if the possessor was ignorant that, at the time of acquisition, he or she was infringing upon another’s right. 2. Entitled possession is presumed to be in good faith and non-entitled possession is presumed to be in bad faith. 3. If the possession is acquired with violence, even if entitled, it is always considered in bad faith.

Good faith possession exists when the possessor was ignorant, while acquiring it, that he or she was infringing another person’s right (art. 1260 (1) CC). This is a psychological rather than ethical concept of good faith, and there is no inquiry about the reasonability or censurability of the possessor’s ignorance. The assessment of whether or not possession is in good faith is at the moment of acquisition: mala fides superveniens non nocet. If there is a title, possession is presumed juris tantum in good faith; if there is no title, it is presumed in bad faith (art. 1260 (2) CC), though possession acquired by means of violence is always presumed to be in bad faith – albeit titled (art. 1260 (3) CC). There are detailed dispositions in the Civil Code about different consequences of possession in good faith or possession in bad faith: – Loss or deterioration of the thing Art. 1269 (Loss or decay of the thing) If the possessor is in good faith, he or she is only liable for the loss or decay of the thing insofar as he or she was at fault.

– Fruits Art. 1270 (Good faith possession of fruits) 1. If the possessor is in good faith, he or she acquires the fruits of the thing, until the moment that he or she realises that he or she is infringing upon another person’s right. (…) Art. 1271 (Bad faith possession of fruits) If possession is in bad faith, the possessor is liable for the restitution of the received fruits, in addition to those that a diligent possessor would have realised.

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– Improvements Art. 1273 (Necessary or useful improvements) 1. Both the good faith and the bad faith possessor are entitled to compensation for necessary improvements or to retrieve, insofar as retrieval does not deteriorate the thing, the useful improvements. 2. When necessary to prevent the deterioration of the thing, the owner shall pay the possessor compensation according to the rules of unjustified enrichment. Art. 1275 (Unnecessary improvements) 1. The good faith possessor has the right to retrieve, insofar as retrieval does not deteriorate the thing, any unnecessary improvements. 2. The bad faith possessor looses any improvements he or she performed.

(c)

Peaceful or violent possession

The concept of peaceful or violent possession results from art. 1261 CC: Art. 1261 (Peaceful possession) 1. Peaceful possession is one acquired without violence. 2. Violent possession is the one acquired with coercion or fear as determined in article 255.

Possession is peaceful when it was thus acquired without violence (art. 1261 (1) CC). It is considered violent if the possessor employed physical or psychological coercion (i.e. physical or moral violence) in the sense of art. 255 CC in order to obtain possession.

(d)

Public and concealed possession (publicity)

The definition of publicity of possession is given in art. 1262 CC: Art. 1262 (Public possession) Public possession is the one performed in such a way that any interested person may know about it.

Possession is considered public if it is exercised in a way persons having an interest in the status of the thing can know about it (art. 1262 CC). In the case of immovables and movables subject to registration, publicity relates to registration. In the case of normal movables, publicity depends on the circumstances. Commentators give the following example: the possessor of

2. Possession

633

a book need not transform his or her personal library into a public library, it being enough that the book is not hidden.101

(e)

Direct and indirect possession

Art. 1252 CC regulates possession through a third party: Art. 1252 (Possession through a third party) 1. Possession can be exercised directly [personally] or through another person. 2. In case of doubt, there is a presumption of possession in favour of the one exercising de facto power over the thing, without prejudice to the rule in article 1257 (2).

According to art. 1252 (1) CC, possession can be carried out personally (direct possession) or through an intermediary (indirect possession). This intermediary can be an employee, an agent, a tenant, a depositor, etc. In the latter case the acts of the intermediary are effective on behalf of – and to the detriment of – the possessor.

(f)

Individual possession and co-possession

Three different situations relating to possession can, according to Pires de Lima and Antunes Varela, emerge in Portuguese law:102 (i) Composed, or where several persons have shares of the possession of a real right (art. 1286 CC): this is possible, though one co-possessor cannot have an action for the defence of possession against the other(s); (ii) Several persons have possession of different real rights: e.g., one has possession with the intention of acting as a proprietor and another with the intention of acting as a holder of a right of usufruct or of a servitude. This problem is virtually irrelevant concerning possession of movables. (iii) A theoretical problem could emerge in the situation of a plunderer violating the possession of A and acting as a possessor, until A succeeds in the action for the defence of his or her possession. In this case, it is considered as though the plunderer never possessed the thing.

101

102

Pires de Lima and Antunes Varela, Código Civil Anotado III2, note 4 under art. 1262, p. 24. Cfr. Pires de Lima and Antunes Varela, Código Civil Anotado III2, notes under art. 1286, p. 62 f.

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2.2.

Requirements of possession

Art. 1253 clearly determines that possession requires an animus rem sibi habendi. This is, in fact, the criteria for distinguishing “possession” from “detention” (where the person holding the movable has no intention to hold the movable as his or her own). Any persons who can reason and even those who can not reason are competent to acquire possession according to art. 1266 CC: Art. 1266 (Ability to acquire possession) Anyone, having use of reason, may acquire possession, and even those who do not have use of reason, may acquire possession of assets, which are subject of occupation.

Physical control without animus is considered detention. Cases of detention are determined in art. 1253 CC: those who have no animus; those who simply take advantage of the owner’s tolerance; and, those who have control on behalf of another. Possession, in the Portuguese legal system, refers only to the situation where the person holding the thing acts as the owner of a right in rem over that thing. All other situations described are classified as detention under Portuguese law. The possessor (considered as such under Portuguese law) may possess (exercise the physical control) directly or through a third party (employee, lessee, custodian, borrower, depending on the contractual or legal relation between the possessor and the holder), as stated in art. 1252 CC. Any third party in physical control of a thing without animus is considered in detention of that thing, not a possessor. Examples included in this category are employees (using, for instance, a company car), lessees (e.g. a person renting a car from a car hire firm) or someone entitled to use the movable gratuitously, a custodian or other person obliged to retain and / or take care of the asset as an accessory obligation to another legal relationship (such as a garage keeper who takes over a car to repair it103) and a family member or other household member who is allowed to use the asset. Holders (those physically holding the asset without animus) may use the rules concerning the protection of possession to defend the right of the possessor (the one on whose behalf they hold the asset, for whatever reason). This ability may result from a power or a duty, depending on the reason why the holder holds the asset.

103

As in STJ 22.04.1986, BolMinJus 356 (1986) 352; cfr. about this sentence and its repercussions in Portuguese law in: Nóbrega, ERPL (2002-4) 583 f.

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635

In general terms, the holder may protect the possessor’s right as an “intervener” (negotiorum gestor) as foreseen in art. 464 CC. This institute allows anyone to assume someone else’s interest without authorisation. Although the phrasing of the rule may imply that only a “business” can be the subject of such management, doctrine in general considers that this institute applies to the management and protection of any interest.104 As to the corpus, the subject matter of such a relationship between the possessor and the asset, Portuguese law requires only a repeated practice of the material acts included in the exercise of the right. This means that it is not necessary to maintain a physical and permanent relation with the object in order to maintain possession as far as the corpus is concerned.105

2.3.

Acquisition of possession

The acquisition of possession is regulated in art. 1263 CC, which establishes four different ways to acquire possession: original acquisition, delivery, constituto possessorium and inversion of title: Art. 1263 (Acquisition of possession) Possession is acquired: a) By renewed practice, with publicity, of the material acts that match the exercise of the right; b) By the material or symbolic delivery of the thing by the previous possessor; c) By the constituto possessorium; d) By the inversion of title.

2.3.1. Original acquisition Original acquisition of possession has several requirements: that no transfer from the former possessor has occurred, that a material relationship is established with the thing, that this relationship is public, and that the acts integrating the relationship correspond to the exercise of a real right.

104

105

See details in: Principles of European Law. Study Group on a European Civil Code. Benevolent intervention in another’s affairs. Prepared by Christian von Bar (2006): PEL / von Bar, Ben. Int., Introduction, A, 5. Art. 464 CC is phrased there as follows: “There is negotiorum gestio, when a person assumes the direction of another’s business in the interest and for the account of the principal concerned, without being authorised to do so.” Mesquita, Direitos reais, p. 97.

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The material relationship consists of a publicly repeated practice of material acts that match the contents of a real right; this practice, in itself, does not lead to possession if there is no animus possidendi, but without it there can not be possession: the first rule in art. 1263 completes the rule in art. 1251. The concept of material acts includes all the acts that reflect a material power over a thing rather than a juridical or legal power: if we consider the property right, it includes the power to use and enjoy, material powers, and legal or juridical powers, the ones of managing and transfer (disposition). The material acts must match the exercise of a right in rem, and the possession that those acts may create is limited to the right that apparently is used: if one crosses someone else’s land on a regular bases, the material act corresponds to the exercise of a right of way (servitude) rather than the property right; thus, this practice, if accompanied with the animus, would only originally create the possession of a servitude and not the possession of the thing as an owner.106 These considerations have major consequences, especially on the object to be acquired by acquisitive prescription. All the acts must be public so that they may lead to possession. The concept of publicity is not easy to define, as it varies according to the circumstances and, thus, there is no legal definition. The main rule in this matter is art. 1262 CC and defines public possession as the one that is exercised in such a manner that anyone interested may know about it; a contrario, concealed possession shall be the one that is exercised in a manner that prevents or aims to prevent anyone interested from acquiring knowledge about it.

2.3.2. Delivery The second form of acquisition is delivery, by the transfer of possession from the former possessor to a new one. This situation is regulated in art. 1256 CC and applies to any form of accession other than mortis causa. Art. 1256 (Accession of possession) 1. The one that follows another in possession for any reason other than by testamentary will or intestate succession may add his or her possession to the one of the predecessor. 2. If the previous possession is of a different nature than that of the successor, accession will occur within the limits of the stricter possession.

106

Cfr. Pires de Lima and Antunes Varela, Código Civil Anotado III2, notes under art. 1263, p. 25 f.

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Mortis causa accession is regulated in art. 1255 CC: Art. 1255 (Succession mortis causa in possession) Upon death of the possessor, possession continues with the successor from the moment of death, regardless of the material acquisition of the asset. Delivery may be material or symbolic. Commentators107 consider that within the concept of delivery included in art. 1263, lit. b the law accepts traditio brevi manu.

2.3.3. Constitutum possessorium The CC includes a special rule for the “constituto possessório” in art. 1264. Art. 1264 (Constitutum possessorium) 1. If the owner of the right in rem, who is in possession of the thing, transfers such right to another, possession is considered transferred even if, for any reason, the first continues to hold the thing. 2. If the holder of the thing at the time of the transfer is a third party, possession is nevertheless considered to have been transferred even if the detention is to continue.

The constitutum possessorium consists of an acquisition of possession solo consensus, without the need of a material or symbolic act that may reveal it. It arises from an agreement by which the possessor that for some reason transmits possession retains, for himself or herself, the detention of the asset; the difference in circumstances is that the former possessor, now detainer or holder, changes his or her animus from animus possidendi to animus alieno nomine detinendi. From the moment constitutum possessorium occurs, the new owner may, when applicable, use any means of protection of possession provided by law.

2.3.4. Inversion of title The CC regulates inversion of title in art. 1265. The interversio possessionis replaces a situation of detention, or possession on someone’s behalf, by possession strictu sensu:

107

Cfr. Pires de Lima and Antunes Varela, Código Civil Anotado III2, note 8 under art. 1263, p. 29.

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Art. 1265 (Inversion of the title of possession) The inversion of the title of possession may occur by opposition of the holder against the one on whose behalf he or she possessed, or by any action of a third party capable of transferring possession.

The inversion of title vests the former detainer (holder) situation into a possession situation. All the rules about possession will apply from that moment: depending on the circumstances, the newly acquired possession may be entitled or not, violent or peaceful, in good or bad faith. Rules for each of the possible situations shall apply accordingly.

2.4.

Protection of possession

The rules in this matter were outlined above in section 1.6. on the protection of property rights. Because of the difficulties for the owner (proprietário) to prove his or her ownership (direito de propriedade), as the probatio diabolica resulting from art. 342 (rules on proofs) in the action of revindication (art. 1311), it might be easier for the owner to prove his or her possession (direito de posse), so that protection of possession can be useful to protect ownership, if it is the case.108

2.4.1. Provisional remedies In case of “esbulho” (violent dispossession), the possessor can ask for provisional remedies under the terms of the Code of Civil Procedure (arts. 393395 CCP). The dispossession must have been violent, so that the judge can decree immediate restitution without hearing the interferer (art. 394 CCP).

2.4.2. Preventive action In case of imminent or serious threat of trespass or disturbance, the possessor has a preventive action (art. 1276 CC). Art. 1276 (Action in prevention) If the possessor has a justified fear of being disturbed or dispossessed by another, the author of the threat will, following a request of the possessor be ordered to refrain under penalty of fine and liability for any damages caused.

108

See among others Carvalho Fernandes, Lições de direitos reais, p. 250.

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The preventive action was considered by the Commentators of the Civil Code as useless; the only reason why this disposition was kept in the new civil codification was because it was traditionally provided in Código de Seabra.109 Art. 1276 would also not fit protection of ownership, as it is only an “action in prevention”, meaning, it is only to be used before the possession right was actually violated.110

2.4.3. Direct action In case of trespass or disturbance of possession, the possessor can resort to a direct action for the defence of his or her property, in the terms of arts. 1277 and 336 CC, insofar as the direct action is absolutely necessary, considering the impossibility of resorting in due time to public authority in order to effectively defend his or her right.

2.4.4. Action for the maintenance of possession This action derives from the Roman interdictum retinendae possessionis. A possessor can resort to this action when his or her possession has been trespassed, but he or she has not been deprived of it. According to art. 1278 CC, the effect of this action will be that the judge will decree the maintenance of possession if that possession lasted more than one year (posse de ano e dia). If the possession is more recent, then it is only maintained against one who does not have a “prevalent” possession (melhor posse). A prevalent possession is that which has a title. If a title is lacking, then the older possession is considered prevalent. If none of them is older, then the current possession prevails (art. 1278 (2) and (3) CC). Art. 1278 (Maintenance and restitution in possession) 1. The court shall maintain or reinstate the possessor who was dispossessed while the matter of the title remains undecided. 2. If the possession was shorter than one year, the possessor can only be maintained or reinstated against those who have no better possession. 3. Better possession is the one that is titled; in the absence of title, the oldest; and, if they are of the same age, the present.

109

110

Cfr. Pires de Lima and Antunes Varela, Código Civil Anotado III2, notes under art. 1276, p. 46 f. Menezes Cordeiro, Direitos Reais, p. 583.

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2.4.5. Action for the restitution of possession This action derives from the Roman interdictum recuperandae possessionis. It works exactly the same way as the aforementioned action for maintenance, except that it applies to situations where the possessor was deprived of his or her possession.

2.4.6. Protection of detention Exceptionally, holders may enjoy protection of possession. However the causa petendi is not possession, but the specific provision of the legal framework entitling them to exceptional protection of their detention, e.g. leasehold, deposit, transportation, etc. Compare arts. 1037 (2), 1125 (2), 1133 (2) and 1188 (2) CC.

2.4.7. Limitation of actions Actions for protection of possession are limited to one year after the trespass or the deprivation of possession, or one year after knowledge of the facts, if they happened secretly, as stated in art. 1282 CC. Art. 1282 (Expiry) The action in maintenance or restitution in possession expires, if not lodged within one year from the moment of disturbance, or of knowledge of it if it was concealed.

2.4.8. Consequences of the success of actions If the possessor prevails in the action, it is considered that he or she was never affected in any way (art. 1283 CC) and he or she is entitled to compensation for his or her damages emerging from the trespass or deprivation of possession (art. 1284 CC). Art. 1283 (Effects of the action in maintenance or restitution) The possessor who is maintained or judicially reinstated in possession is considered not to ever have been disturbed.

3. Rights to hold, use or acquire on the borderline

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Art. 1284 (Compensation for damages and expenses with restitution) 1. The possessor maintained or reinstated in possession has the right to compensation for damage suffered as a consequence of the disturbance and the infringement of the possession. 2. The disturbing party shall indemnify the lawful possessor for the expenses of restitution at the time of that restitution.

2.4.9. Self-help The rules in this matter were outlined above in section 1.6. on the protection of property rights above. Nonetheless, self-help is admitted by means of art. 1314 CC as to the property right, and art. 1277 CC as to possession, in the form of direct action and self-defence as established in arts. 336 and 337 CC.

3.

Rights to hold, use or acquire on the borderline

The rights to hold, use or acquire movables may be obligatory rights or rights in rem, although only the ones regulated in the CC as such qualify as rights in rem. All other, as shown above,111 are considered obligatory rights.

3.1.

Lease

The lease is usually called “contrato de locação” and is regulated in the arts. 1022 to 1063 CC. Acoording to art. 1023 CC the lease of movables is called “aluguer” (but also “locação”) and the lease of immovable is called “arrendamento”. The lease may thus have different objects – movables, land or buildings – and its object will determine the applicable law. This applies especially to land or urban buildings, as the “arrendamento” is regulated in special legislation, which is complementary to the Civil Code.112 The CC regulates the lease in the Book II, related to the Obligations, instead of doing it in the Book III, where most of the matters of the rights 111 112

See chapter 1.3 on categories of rights in rem. See Novo Regime do Arrendamento Urbano (Lei no. 6 / 2006 of 27 February 2006). See also recently for land in general Novo Regime do Arrendamento Rural (DL no. 294 / 2009 of 13 October 2009), which repealed the former acts on Rural Lease (Regime do Arrendamento Rural – DL no. 385 / 88 of 25 October 1988, as revised by DL no. 524 / 99 of 10 December 1999) and on Forest Lease (Regime do Arrendamento Florestal – DL no. 394 / 88 of 8 November 1988).

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in rem are regulated. This, topped with the numerus clausus principle, is the first argument that the majority of the Portuguese authors use to support the view that the lease is not a right in rem but only a contractual right.113 The lease is the temporary transfer of the use of a thing in exchange for a pecuniary compensation, see art. 1022 CC: Art. 1022 (Definition) Lease is a contract by which one party is obliged to allow the other the temporary enjoyment of a thing in return for a price.

Although the rights arising from the lease have (systematically) a contractual nature, the lessee enjoys some possessive protection, as results of art. 1037 (2): Art. 1037 (Actions that prevent or diminish the use of the thing) 1. In spite of an agreement determining otherwise, the lessor may not take action that prevents or diminishes the use of the thing by the lessee, with the exception of those actions the law or practices allow or that the lessee himself or herself admits case by case; the lessor has no obligation to ensure the use against third-party actions. 2. The lessee, who is deprived or disturbed in the use of the thing, may use, even against the lessor, available legal means to protect possession as stated in article 1276 and following.

Thus, the lessee has the right to use (even against the lessor) the remedies available to defend possession: (i) Direct action, as established in art. 336 CC, (ii) Action in prevention, art. 1276 CC, (iii) Action in maintenance or restitution, art. 1278 CC, (iv) Action in restitution against violent lost, art. 1279 CC, and (v) Third party intervention, art. 1285 CC.

113

See a well done résumé in Pinto Duarte, Direitos reais2, p. 299-300. Furthermore there is an almost unanimity amongst the various authors in this matter (for it being an obligation right), such as Antunes Varela, Direito das Obrigações; Galvão Teles, Arrendamento; Pires de Lima, Anotação ao acórdão STJ de 22 de Novembro de 1966, in: RLJ 100; Henrique Mesquita, Direitos Reais; Pereira Coelho, Direito Civil I. Against this solution, see Menezes Cordeiro, Da natureza do direito do locatário, in ROA 1980 p. 138 ff and Oliveira Ascensão, Direito Civil – Reais5, p. 536 ff. New literature like Pinto Duarte cites Menezes Cordeiro, Posse, p. 72-73, in the sense that the contraposition between rights in rem and obligation rights must not be a dichotomy, so that the right of the lessee (direito do locatário) is an example of a patrimonial private right that just does not fit to this differentiation between “direito real” and “direito obrigacional”.

3. Rights to hold, use or acquire on the borderline

3.2.

643

Rights to acquire in connection with a contract for sale

3.2.1. Right of pre-emption Pre-emption (preferência) may have a legal (statutory) or contractual origin. Art. 414 (Definition) Pre-emption is the agreement by which one is obliged to prefer another when selling an asset.

The Portuguese Civil Code includes no definition of such right; instead, it includes the definition of the agreement by which a contracting party is obliged to prefer the other if selling a given asset. At the same time, the CC includes a number of rules creating, in favour of individuals, the right to prefer on buying assets that are in a special relationship with them or with their property. These special relationships consist of situations considered less advantageous to an efficient exploitation of the asset: as in the cases of property in common (arts. 1409 and 2130 CC), property charged with minor enjoyment rights in rem (arts. 1535 and 1555 CC) and size of neighbouring agricultural plots (art. 1380 CC). The right of pre-emption may or may not qualify as a right in rem. If its origin is contractual, it will only have erga omnes effect if the parties so agree and its object is an immovable or movable asset subject to registration; if related with any other object, a pre-emption agreement will have only contractual effects. If its origin is statutory, it will have erga omnes effect. The statutory right of pre-emption (and thus with erga omnes effects) is applicable to movable assets in very limited cases: when the movable has more than one owner (art. 1409 CC), or more than one successor (art. 2130 CC). Art. 1409 (Right of pre-emption) 1. The co-owner has pre-emptive first place as between legal pre-emptors in case of sale or transfer of the share of any other co-owner to any third party. 2. The rules of articles 416 to 418 are applicable to the pre-emption of the coowner, with the necessary amendments. 3. If there are two or more pre-emptors, the share being transferred is divided in proportion to the shares. Art. 2130 (Pre-emption) 1. When an inheritance share is to be sold or transferred, co-successors enjoy pre-emption according to the rules applying to co-ownership. 2. The delay in exercising such right is [limited to] two months from the notice of pre-emption.

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In such cases, the pre-emptor may oppose his or her right against the thirdparty acquirer, if the pre-emption right was not respected, and if necessary in a court of law: there is a specific action, the pre-emption action for this purpose, as stated in art. 1410 CC: Art. 1410 (Pre-emption action) 1. The co-owner who was not informed of the sale or transfer has the right to purchase the share that was transferred, as long as he or she exercises this right within six months from the moment he or she learned about the essential elements of the transaction, and the price must be delivered to the court’s order in the first 15 days after lodging the action. 2. Pre-emption right and the corresponding action are not prejudiced by any modification or dissolution of the transfer even when that modification results from confession or transaction in a court of law.

3.2.2. Option to buy and agreement to conclude a contract Under Portuguese law, the option to buy is considered in art. 411 CC a unilateral promise (promessa unilateral) to sell and is regulated in the same section as the agreement to conclude a contract later on (contrato-promessa, art. 410).114 These agreements may have erga omnes effects in limited situations: according to art. 413 CC, this effect can be attributed to contracts to sell (or to sell and buy) immovable or registered movable property. When referring to any other asset, such contracts have only inter partes effects. Art. 413 (Erga omnes effect of the promise) 1. The parties may confer on the promise of transfer, or on the creation of a right in rem in immovable or registered movable, erga omnes effect, as long as it is specifically mentioned and inscribed in the register. 2. Without prejudice to other legislative acts on the matter, the promise to which the parties confer erga omnes effect must be concluded in a public deed or through a particular document with authentication; therefore, if the law does not require such formality for the promised contract, a particular document with a recognized signature [by a public notar] of the party or both parties suffices.115 114

115

Book 2 Obligations, Title 1 Obligations in general, Chapter 2 Sources of obligations, Section 1 Contracts, Subsection 2, Agreement to conclude a contract later. Art. 414(2) was revised by DL no. 116 / 2008 of 4 July 2008. This was a measure to simplify documentation by the public notary, so that a particular document with authentication (documento particular autenticado) has the same legal value as a public deed (escritura pública), and in some cases a particular document in the presence of a public notary who recognizes one or both signatures will suffice.

3. Rights to hold, use or acquire on the borderline

645

3.2.3. Sale on approval The Portuguese legal order recognises three different modalities of “sales on approval”: the so-called first modality of sales on approval (primeira modalidade de venda a contento) in art. 923 CC, second modality of sales on approval (segunda modalidade de venda a contento) in art. 924 CC, and conditional sales (venda sujeita a prova) in art. 925 CC. The first modality of sales on approval limits the contract effects to those of a proposal, until approval or, if a delay is set and there is delivery, its end – art. 923 CC: Art. 923 (First modality of sale on approval) 1, The sales contract on approval has the effect of an offer. 2. The offer shall be considered accepted if, after delivery, the buyer rests until the end of the acceptance delay, as determined in art. 228 n. 1. 3. The goods must be made available to the buyer to exam.

The second modality of sales on approval has full contractual effect, but the parties agree that the buyer has the right to terminate the contract in general terms – art. 924 CC: Art. 924 (Second modality of sale on approval) 1. If the parties agree that the buyer may terminate the contract if the goods are not approved, article 432 et seq. shall apply. 2. Delivery does not prevent termination. 3. The seller may set a reasonable delay for termination, if none results from the contract or trade practices.

The third modality of sales on approval can be called conditional sales (venda sujeita a prova) – art. 925 CC: Art. 925 (Conditional sales) 1. The sales contract is considered conditional if it includes a suspension clause regarding the suitability of the goods, their ability to fulfil their aims, and their conformity to the characteristics outlined by the seller. The parties may determine that the above-mentioned clause is a terminating one. 2. The proof shall be produced during the delay and in the method agreed upon, or in accordance with practice, if not agreed; if no agreement or practice exists, the seller shall determine the delay and the buyer shall determine the method, within reasonable limits. 3. If the result of the proof is not transmitted to the seller during the delay, the suspension clause is considered to have happened or the terminating clause considered not to have happened, whichever the case. 4. The goods shall be made available to the buyer as proof.

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Parties in sales on approval shall specify what modality was chosen. If the matter is absent in the contract, there is a legal presumption that parties have choose the first modality – art. 926 CC: Art. 926 (Doubts about the modality of the sales [contract]) If it is not clear which modality of sales on approval the parties have chosen, it is presumed they chose the first.

3.2.4. Right to repurchase The rules on the right to repurchase are included in arts. 927 to 933 CC. As in the previous situations, this right will have effect erga omnes in limited situations: only with regard to immovable property or registered movable assets and if the right is entered into the register – art. 932 CC: Art. 932 (Erga omnes effects) The right to repurchase may be opposed against third parties if the object sold is an immovable thing or a registered movable and the right was entered into the register.

3.2.5. Reservation of title Reservation of title (reserva da propriedade) is regulated in Book II (Obligations) in art. 409 CC in the sub-section that categorises contract as a source of obligation, so that reservation of title is an expression of private autonomy in a sales contract. It is based on an agreement of the parties.116 Contrary to the previous situations, where the effects of the right against third parties is limited to immovable or registered movables, the reservation of title is enforceable also in case of unregistered movables. Art. 409 (Reservation of title) 1. In a transfer contract, the transferor may reserve the title until the transferee fully performs his or her obligations or until an established event occurs. 2. If the object of the transfer is an immovable thing, or a registered movable, the reservation of title can only be opposed against third parties if it was entered into the register.

The legal positions of seller and buyer under a sale subject to retention of title are not completely clarified in Portuguese doctrine, which creates 116

Antunes Varela, Obrigações I10, p. 304 ff.

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academic as well as practical difficulties.117 The traditional view is that the contractual agreement on a reservation of title has the effect that the real agreement is subject to a resolutive condition. The understanding, unter this view, traditionally was that the seller remains the full owner (propietário pleno) until the price is paid. However, taking into account the developments in German law, it is nowadays assumed that the buyer acquires a contingent right (expectativa de direito), which is considered to be a proprietary, i.e. in rem, right to acquire (direito real de aquisição) and creates effects erga omnes.118 In this context, art 860-A CCP should be mentioned, which provides that the seizure of rights and contingent rights to acquire assets (penhora de direitos ou expectativas de aquisição de bens) shall be treated as equal to the seizure of claims (penhora de créditos). As to retention of title, see also chapter 15. below.

4.

Field of application and definitions

4.1.

Field of application

4.1.1. Basics For proposes of this section we consider that “transfer of movables” is a derivative acquisition of a property right in a movable. It is therefore necessary to determine the ways to acquire the property right under Portuguese law and in particular the forms of derivative acquisition, as stated in art. 1316 CC: Art. 1316 (Acquisition of the property right) The property right may be acquired by contract, succession, acquisitive prescription, occupation, accession, and by other means established by law.

(a)

Contract

There are two different paradigms for the transmission of the property right by means of a contract. The first paradigm may be considered a causal system, as its core is the title (titulus) or cause of the acquisition (causa adquirendi), whereas the second is a procedural system, as its core is the modus adquirendi.

117 118

Pinto Duarte, Direitos reais2, p. 263. Peralta, A posição jurídica do comprador na compra e venda com reserva da propriedade, p. 154 ff.

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The Portuguese system in general follows the causal paradigm as it clearly results from arts. 408 and 1317 CC, which stipulate that property is transferred by means of the contract alone: Art. 408 (Contracts with real effects) 1. The creation or transfer of rights in rem in a determined thing happens by means of the contract, with exceptions established by law. 2. If the transfer relates to a thing to be, or to an undetermined thing, the right shall be transferred when the thing is acquired by the seller or determined with the knowledge of both parties; this is without prejudice to the rules on generic obligations and those of the building contract; if the transfer refers to natural fruits or components or integrant parts, the transfer shall occur in the moment of the harvesting or separation of the crop. Art. 1317 (Moment of the acquisition of the property right) The moment of acquisition of the property right is: a) In case of a contract, the moment designated in articles 408 and 409; b) In case of mortis causa succession, the moment of the opening of the succession; c) In case of acquisitive prescription, the moment when possession commenced; d) In the case of occupation or accession, the time of the respective acts.

Transfer of immovable property and recordable movable property is, however, not completed until registration of the transfer,119 and constitutes one of the exceptions considered under art. 408 (1).

(b)

Succession

The property right may be acquired by succession, i.e., mortis causa, when the heir receives property from the de cujus by means of legal or voluntary succession (see art. 1317, lit. b).

(c)

Acquisitive prescription

Acquisitive prescription or usucaption (usucapião) is the acquisition of property through possession of the thing over a given period, as stated in art. 1287 CC: 119

See on this point after the reform in 2008: Müller-Bromley, Portugiesisches Immobilienrecht – Abschaffung des obligatorischen notariellen Kaufvertrages und Einführung des konstitutiven Grundbucheintrags, in: ZfIR (2008) 778 ff.

4. Field of application and definitions

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Art. 1287 (Definition) Possession of the property right, or any other enjoyment right in rem, held for a certain period of time, enables the possessor, unless otherwise established by law, the acquisition of the right to which exercise of his or her actions match; this is called acquisitive prescription (usucapião).

(d)

Occupation

Occupation (ocupação) is the acquisition of an ownerless thing, because either it never belonged to anyone or its owner became uncertain or unknown, art. 1318 CC: Art. 1318 (Things that may be occupied) Animals and other movable things that were never owned, or were abandoned, lost, or hidden by their owners, may be acquired by occupation within the limits of the next articles.

This form of property acquisition is restricted to movable things, as an immovable thing whose owner is unknown belongs to the state, cfr. art. 1345 CC: Art. 1345 (Immovable things with unknown owner) Immovable things without a known owner are considered property of the State.

(e)

Accession

Accession (acessão) is the acquisition of the property right in a thing by the fact that it was integrated into another thing previously belonging to the acquirer, art. 1325 CC: Art. 1325 (Definition) There is accession when with the thing that somebody owns is united with another thing that did not belong to it.

The accession may be natural or human (also called industrial): Art. 1326 (Species) 1. Accession is natural when it results solely from the forces of nature; industrial accession happens when by means of a human act different objects, belonging to different owners, are merged, or when someone works on a thing belonging to another person, merging the work with the other person’s property.

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2. Industrial accession may be movable or immovable, depending on the nature of the things.

The first happens when the thing is incorporated by natural means and the latter when the thing is incorporated by artificial means: when a river or stream adds land to a plot, that is natural accession (art. 1328 CC) and when a building is built that is human or industrial accession (art. 1338 CC).

4.1.2. Derivative acquisition (a)

General

The different means of acquiring property outlined above and established in art. 1316 CC include both original and derivative acquisition. The CC does not give a legal distinction for this matter and for that reason we shall consider, for proposes of the present section, the contract; to do so, we must include some basic concepts of Portuguese contract law. Portuguese contract law is guided by the principle of the freedom of contract. Parties may conclude whatever contract they want within the limits of the law, can conclude any type of especially regulated contract, and can merge into a single contract typical contents of two or more species of contracts. When dealing with contracts whose object is a thing, the major restriction that the law imposes is the one resulting from the numerus clausus principle included in art. 1306 CC. Amongst the several nominated contracts included in the CC there are a number that are suitable to transfer rights in rem: sales contract (compra e venda – art. 874), donation (doação – art. 940), perpetual rent (renda perpétua – art. 1231), and lifetime rent (renda vitalícia – art. 1238 CC). Art. 874 (Definition) The sales contract [contract of buying and selling] is the contract by which property of a thing or right is transferred against a price. Art. 940 (Definition) 1. Donation is the contract by which a person, in a spirit of liberality and at his or her own expense, transfers a thing or a right, free of charge, or assumes an obligation for the benefit of the other party. 2. There is no donation when a party renounces rights or waves an inheritance or legacy, nor does it exist for gifts that are for a social purpose.

4. Field of application and definitions

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Art. 1231 (Definition) Perpetual rent contract is the one in which a person transfers in favour of another a certain amount of money or any other movable or immovable, or a right, and the other commits to, without time limits, pay, as rent, a certain amount of money or other replaceable thing. Art. 1238 (Definition) Lifetime rent contract is the one in which a person transfers in favour of another a certain amount of money or any other movable or immovable thing, or a right, and the other commits to pay, as rent, a certain amount of money or other replaceable thing for the life of the seller or third party.

All these contracts may be used and the respective rules apply regardless of the nature of the asset being transferred. There are, however, differences that may arise from the nature of the asset being transferred. The transfer or creation of a right in rem over an immovable thing requires additional formalities:120 (i) the first formality used to be that the transfer of right in the form of a deedhad to be completed before a notary (escritura pública), now this is no longer mandatory,120since the reform of 2008121 allowed the option that the formality can be in this form of “escritura pública” or alternatively in form of “documento particular autenticado”122 and (ii) the second formality is that it must be entered into the national immovable property register.123 This is equally true even if the asset being transferred is, for instance, a claim secured by a hypothec.124 In fact, a general principle may be found under Portuguese law that, if there is a national register for the generic type of asset, any transfer or creation of a right in rem must follow the minimum formality established by law, in order to allow its registration. Another general principle as to registration is that all facts that constitute, modify or extinguish a right in rem in the registered asset must be entered into the register. Failure to do so will have an impact on the erga omnes effect of the right. Registration is also necessary and even obligatory in some transfer of movables, as there are movable assets subject to the national register: mo120

121 122

123

124

As stated for sales contract (art. 875), donation (art. 947), perpetual rent (art. 1232), lifetime rent (art. 1239 CC), respectively. DL no. 116 / 2008 of 4 July 2008; see footnote 114 above. Cfr. art. 377 CC about the probative force of the “particular documents with authentication”, as they are considered “authentic documents”. Art. 2 (1) Código do Registo Predial (Code of Register of Immovable) of 06 July 1984 (DL no. 224 / 84, DR 155 / 1984 I-A), revised among others by DL no. 116 / 2008 of 4 July 2008 (DR 128 / 2008 I)), cf. CA Oporto 10 October 2003 Processo 0553440. Art. 578 (2) CC.

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tor vehicles (automobiles, motorcycles, boats, airplanes) and companies (commercial societies, including co-operative societies). Governing rules are (should be) the Code of Register of Movable Goods (CRMG)125 and the Code of Commercial Register (CCR).126 As to movables subject to registration, the CRMG determines in art. 10, that motor vehicles, as defined in the Road Code, boats and airplanes must be registered in the national register of movables, so as to publicize the facts related to the creation, modification and extinction of rights in rem in them. Art. 10(2) CRMG establishes a sanction precluding the transfer of rights or creation of a security in the movable, unless its acquisition is registered. The Portuguese legislator has been particularly precise in indicating a list of facts to be registered. According to art. 11 CRMG, the following facts concerning movables are subject to registration: Art. 11 (Facts subject to registration) 1. The following facts must be registered: a) The rights of ownership and usufruct; b) Hypothec, its modification, transmission and extinction, as well as the extinction of the secured credit; c) Pledge; d) Lease and the transmission of related rights; e) Lease longer than one year; f) Any court order that affects the free transmission of the goods; g) Cancellation or extinction of rights or burdens, as well as destruction, physical loss, or loss of nationality of the goods; h) Promise of sale or pre-emption of sale or security concerning the goods, if a legal effect in rem was stipulated; i) Any other facts subject to registration by law. […]

This list is not exhaustive and it has to be supplemented by all those actions, intending to declare, modify or extinguish any of the registered rights – art. 12 CRMG.

125

126

Código do Registo de Bens Móveis of 25 October 1995 (DL no. 277 / 95, DR 247 / 1995 I-A). Código do Registo Comercial (DL no. 403 / 86 of 03 December 1986, DR 278 / 2006 I-A, last revised by DL no. 122 / 2009 of 21 May 2009, DR 98 / 2009 I).

4. Field of application and definitions

(b)

Registration of particular types of movables

(i)

Registration of motor vehicles

653

The CRMG dedicates a special section to motor vehicles. Art. 41 CRMG reminds us what can be registered under the item “motor vehicle”, underlining that mopeds and military vehicles are excluded from the registration. The article, referring to art. 31, points out that registration has to be considered a verification of conformity with the required elements for the entry and the complementary documents issued, once the vehicle is registered, supporting its physical identification.127 This statement does nothing but confirm that publicity is made by means of the register128 and does not have any constitutive effect. Also, in this case it has to be argued that, if the registry-keeper verifies the lack of conformity with the required elements,129 he or she can oppose the registration. However, during the verification time, the transferee will be provided a short-term registry number. It lets us presume, hence, that such temporary registration gives a sort of protection against claims being brought before the complete verification of the required documents has taken place. (ii)

Registration of vessels

As for the motor vehicle registration, the relevant law is supposed to be the CRMG. Therefore, the introductory notes, relating to the motor vehicles, shall be applied to vessels (navios). As for vehicles, a short section of the governmental act is specifically dedicated to the vessels; however, it has to 127

128

129

The main rules on automobile register are still those of DL no. 54/75 and Decree no. 55/75, both of 12 February 1975, as amended by among others Act no. 39/2008. The registration is deemed compulsory from an administrative law viewpoint. There are administrative sanctions, such as the seizure of the movable and / or fines. In case of vehicles, registration or amendments to registration must take place within 60 days (Art. 42 (1) Automobile Document Act [Documento Único Automóvel] of 28 October 2005, DL no. 178-A / 2005, DR 208 / 2005 I-A). Beyond this term, the Traffic Authorities can seize the vehicle, until registration is carried out (Art. 168 (1) lit. e Traffic Code [Código da Estrada], DL no 265-A / 2001 of 28 September 2001, DR 226 / 2001 I-A). As concerns motor vehicles the competent entity for the registration is the Conservatórias do Registo Automóvel (Automobile Registration Authorities at the Ministry of Justice). The register-keeper is not in a position to know either about the transferor’s behaviour or the existence of contemporary multi-transfers; hence, he or she cannot question the validity of the transfer; cf. CA Oporto 20 February 2001 Processo 0020601.

654

Portugal

be supplemented by DL nos. 42644 and 42645/59 of 14 November 1959 and by DL no. 150 / 88 of 20 April 1988,130 which establishes particular provisions for commercial fleet ships.131 Accordingly, some other documents need to be registered: (i) construction contracts, and (ii) major repair contracts (art. 46 CRMG). Moreover, the registration is extended not only to the existing vessels, but also to the vessels under construction (art. 44 CRMG). On the contrary, military vessels are excluded. The registration is performed once the transferee exhibits to the competent office the contract and an accurate description of the object. In case of vessels under construction a declaration of the shipbuilder suffices. However, registration will not be definitive until the end of the construction (art. 47 CRMG). Although nothing is generally stated in respect to the form of the contract, in art. 3 DL no. 150 / 88, the Portuguese legislator states that: Art. 3 DL no. 150 / 88 A sale contract of a vessel, as well as a bill of sale, is subject to written form and to the material identification of the signature of the seller.

The legislator, moreover, states that before registration, the parties have to give notice to the competent authority (Inspecção-Geral de Navios) of any document concerning transfer, modification or creation of property rights in the movable as well as any document concerning its construction (arts. 4 to 6 DL no. 150 / 88). Nonetheless, the aim of these provisions has to be understood in connection with the art. 7(1) of the same decree. It states that: Art. 7 DL no. 150 / 88 (1) A vessel, to which this document refers, cannot be the object of registration in the harbour-office (capitanias dos portos) without the presentation of the document issued by the General Inspectorate of Vessels (Inspecção-Geral de Navios), in which it is certified that the technical requirements of art. 2 are satisfied.

This statement simply expresses that the competent authority cannot proceed with the registration if the vessel does not pass the inspection in respect to the minimum security measures. However, it is provided that a

130

131

Acquisition of Commerce Ships Decree Law (Regime de aquisição e alienação de embarcações do comércio) of 28 April 1988 (DL no. 150 / 1988, DR 98 / 1988 I), as revised by DL no. 119 / 95 of 30 May 1995, DR 125 / 1995 I. The authority competent for keeping the register is the Conservatórias do Registo de factos relativos a navios mercantes at the Direcção-Geral de Serviços Jurídicos, a department of the Ministry of Justice.

4. Field of application and definitions

655

period of six months is granted in order to complete the definitive registration, time in which the vessels will be under a temporary registration. (iii)

Registration of aircrafts

The relevant law is DL no 133/98 of 15 May 1998. The introductory notes on the CRMG in respect to motor vehicles (see 4.1.2 a above), shall apply to aircrafts.132 As for vehicles and vessels, a short section of CRMG is specifically dedicated to the aircrafts. This short section gives a brief description of what can be considered an aircraft133 (art. 49 CRMG) and supplements the list of documents provided by art. 11 CRMG. Art. 51 CRMG prescribes a duty of publicity. Also, in this case there is the reference to art. 30 CRMG, which lists the elements to be indicated in the register. Among them, art. 30 (1), (2), (4) and (5) comprise particularly important rules, since they establish the need to give to the registry-keeper all those documents useful to have a complete overview of the legal status of the movables (i.e. not only descriptive elements of the vehicle, but also any modification of the property rights in it).

132

133

The competent authority to keep the register is the Instituto Nacional de Aviação Civil (Civil Aviation Authority), as stated now by DL no 145/2007 of 27 April 2007. According to it, aircraft is any flying device that is able to fly by its own means of propulsion and that can be the object of trade.

Part II: Derivative acquisition 5.

Which system of transfer is used?

5.1.

Overview and basic characteristics

The Portuguese system of transfer of ownership is definitely unitary, or uniform. The law specifies the moment in time when the right is transferred in art. 1317 CC and the transfer includes all the aspects of the right to be transferred, regardless of the source of the obligation to transfer property. There are indeed special situations, as for example the case when the transferor limits the scope of the right to be transferred (or the transferor and transferee agree to such limits); or when the owner may decide to constitute an usufruct in favour of a third party and retain the property for himself or herself, donate the property but retain the usufruct, and so on. Note that if the right to be transferred is less than the property right, the transfer is, by definition, limited. The system is consensual: the transfer of property is completed by means of the contract alone – art. 408 (1) CC,134 or by the opening of the succession that occurs the moment of the death of the de cujus – art. 2031 CC: Art. 408 (Contracts with real effects) 1. The creation or transfer of rights in rem in a determined thing happens by means of the contract, with exceptions established by law. (…) Art. 2031 (Moment and time) Succession is open at the time of death of the de cujus at the place of his or her last residence.

Traditio is hardly ever necessary to complete the transfer of ownership in Portugal.135 There are, however, a few situations where the sales contract 134

There are some exceptions: reservation of title, art. 409 CC, suspension clause, either certain or uncertain, arts. 270 and 278 CC, generic obligations, art. 541 and 542 CC, alternative obligations, art. 543 CC. In these situations the transfer of property is only completed upon full payment, verification of the suspension event or delivery. See a critical view in Ferreira de Almeida, Transmissão contratual da propriedade – entre o mito da consensualidade e a realidade de múltiplos regimes, Themis VI (2005) 5 ff.

5. Which system of transfer is used?

657

has no immediate automatic real effects and the right is not immediately transferred: 135 1. Sales of generic goods, art. 539 CC: Art. 539 (Determination of the object) If the object of the obligation is determined only by generic characteristics, the debtor shall determine it, if there is no agreement determining otherwise.

2. Sales contract with alternative obligations, art. 543 CC: Art. 543 (Definition) 1. The obligation is alternative that includes two or more objectives, allowing the debtor to perform the one that will be designated. 2. Unless otherwise agreed, the choice belongs to the debtor.

3. Sales of things to be (future things: as things that have no present existence, such as a crop, or that do not belong to the transferor because he or she has not acquired it yet, but with an expectancy that he or she will – emptio rei speratae), art. 211 CC: Art. 211 (Future things) Future things are those not available to the transferor, or those to which he or she has no legal right, at the time of the declaration.

In these situations, the moment of the transfer of property is not the moment of the contract conclusion. The transfer is to occur at a later moment – art. 408 (2): Art. 408 (Contracts with real effects) 1. (…) 2. If the transfer relates to a thing to be, or to an undetermined thing, the right shall be transferred when the thing is acquired by the seller or determined with the knowledge of both parties; this is without prejudice to the rules on generic obligations and those of the building contract; if the transfer refers to natural fruits or components or integrant parts, the transfer shall occur in the moment of the harvesting or separation of the crop.

135

Whereas the donation of movable assets, if not in writing, requires traditio, as established in art. 947 (2) CC: “Movables donation requires no formality if the donation is accompanied by the delivery; if there is no delivery, this donation must be completed in writing.”

Portugal

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As to generic goods, transfer of property will happen when its specification is known by both parties, art. 541 CC: Art. 541 (Specification of the obligation) The obligation shall be specified before performance, when the parties have agreed that performance is limited to a minimum quantity, when the creditor is delayed, or accordingly to art. 797.

In sales with alternative obligations, property shall be transferred when the obligation is chosen and known by both parties, arts. 408 (2) and 543 CC. When the sales contract is about things to be, the transfer of property will occur the moment of the physical or legal acquisition of the thing by the seller, art. 408 n. 2 CC.

5.1.1. Identification of generic goods and alternative obligations The mutual knowledge of identification (concentração) of the obligation constitutes the moment of transfer of the property, if the object of the sales contract is generic or in the alternative. As a general rule, unless otherwise agreed, this operation is performed by the seller, art. 539 CC, although it may be attributed to the buyer or to a third party, art. 400 CC: Art. 400 (Identification of the obligation) 1. The identification of the obligation may be attributed to either party or to a third party; in either case, it should be done according to equity if other criterion was not agreed. 2. If the identification can not be done, or was not done in due time, the court shall do it without prejudice to the rules about generic and alternative obligations.

5.1.2. Effects of the sales contract The sales contract has “real” effects and “contractual” effects, arts. 408 (see 1.1 above) and 879 CC: Art. 879 (Essential effects) The essential effects of the sales contract are: a) The transfer of the property or the right; b) The obligation to deliver the thing; c) The obligation to pay the price.

5. Which system of transfer is used?

659

When the real effects of the sales contract are to be postponed, the contract produces only contractual effects: the obligation to deliver the thing and the payment. When the real effects are automatically produced there are two possibilities as to the destiny of the asset: either there was material or symbolic136 traditio, or possession is transferred under the constitutum possessorium.137

5.1.3. Validity requirements The Portuguese system of transfer of property by means of a contract includes validity requirements; void contracts (nullity – contratos nulos, nulidade) are never able to transfer property and avoidable contracts (annulability – contratos anuláveis, anulabilidade) are not able to do so until confirmation138 occurs.

5.1.4. Payment Price is an essential element of the sales contract (see art. 879 CC above); in fact, it is the element that clearly distinguishes the sales contract from the gift and, to a lesser extent, the sales contract from the rent contract.139 Although price is an essential element, its payment is not a requirement for the production of the real effects of the sales contract, unless there is a reservation of title clause. The transfer of property will always occur independently of the payment and there is no implied reservation of title; there is, however, the possibility of denial of performance grounded in the failure of the other party to perform (exceptio non adimpleti contractus), art. 428 CC: Art. 428 (Definition) 1. In bilateral contracts, where there are no terms to the contrary regarding fulfilment of the obligations, each party may withhold performance until the counter-performance by the other party, or until a simultaneous performance. This exception may not be set aside even by the delivery of securities.

136 137 138 139

If, for instance, the thing was already in detention of the buyer (traditio brevi manu). Art. 1264. See above, chapter 2.3.3. As of 4:114 PECL, see also DCFR II. – 7:211. Lifetime rent and perpetual rent above.

Portugal

660

5.2.

Party autonomy

Party autonomy is one of the main principles of Portuguese contract law. It is formulated in art. 405 CC on liberdade contratual and it is commonly understood that this principle comprehends several aspects: the possibility to contract or not, to autonomously determine the contents of the contract, to set aside the typical (in the sense of nominated and regulated by law) species of contracts, to blend two or more such contracts, and to change, if deemed necessary, the normal content of nominated contract. Art. 405 (Freedom to contract) 1. Within the limits of the law, the parties are free to determine the contents of the contracts they enter, to complete contracts other than the ones regulated in this Code or to include in such contracts the contents they deem suitable. 2. The parties may merge in the same contract, rules pertaining to two or more contracts totally or partially regulated by law.

All these possibilities are limited only by law, and those limits are to be found in arts. 280 and 281 CC, scattered in the rules applicable to the differently nominated contracts, and in the numerus clausus principle (art. 1306 CC). Art. 280 (Requirements of the object of the transaction) 1. It is null the transaction whose object is physically or legally impossible, contrary to the law, or indeterminable. 2. It is null the transaction contrary to the public order or against the public moral. Art. 281 (Objective contrary to the law, public order or moral) If the only aim of the transaction is against the law, the public order or moral, the transaction shall be null, if the aim is common to both parties.

Hence, the main limit to contracts transferring property of movables lies in art. 1306 CC: parties cannot create any rights in rem different from the ones existing in law. This does not mean that parties cannot agree differently; the only consequence in such case is that the right the parties intend to create will have strictly contractual effects. Art. 1306 (Numerus clausus) The creation of restrictions with a proprietary effect upon the right of ownership or of dividing up that right is only permitted in the cases provided by law; any restriction of that right resulting from a legal transaction which does not comply with these condictions, has the character of an obligation

5. Which system of transfer is used?

5.3.

661

Requirement of a valid obligation to transfer ownership

5.3.1. Sources of the obligation to transfer ownership The transfer of ownership is closely connected to the ways of acquiring property. In this matter art. 1316 CC sets forth that the property right may be acquired by contract, succession, acquisitive prescription, occupation, accession, and other means determined by law. The first category, contracts, includes the different species of nominated contracts as sales, donation, lifetime rent, and perpetual rent (as seen in section 4.1.2 above). Because Portuguese contract law is largely based on the parties’ autonomy, there is room for parties to tailor-make their transfer of property with one major restriction, but such contracts will not create real rights other than the ones established by law. Any such right (if included in the contract) will have a strictly contractual nature. Furthermore, unilateral promises are not recognised as a source of obligations under Portuguese law, with some exceptions, as stated in art. 457 CC: Art. 457 (General rule) Unilateral promise is only binding in the circumstances established by law.

The general rule about obligations is the so called “principle of the contract” and this means that other than the situations where the obligation arises from law (e.g. unjustified enrichment, tort law), an agreement is required.140 The only exception is the unilateral promise. There are two different species of unilateral promise: the promise to perform and debt recognition, art. 458 CC, and the public promise, art. 459 CC: Art. 458 (Promise to perform and debt recognition) 1. If someone unilaterally promises to perform, or recognizes a debt, without reference to the cause, the creditor shall be free from proving the underlying relationship whose existence is presumed, until proved otherwise. 2. The promise or recognition must be in writing, if no other formality is required to prove the underlying relationship. Art. 459 (Public promise) Whoever makes a public announcement of a promise is obliged to the person, from the moment of issuing [the announcement], who is in the [announced] situation or who performs the action described.

140

Vaz Serra, Fontes das Obrigações. O contrato e o negócio jurídico unilateral como fontes das obrigações, BolMinJus 77 (1958) 127-217.

Portugal

662

If not otherwise declared, the announcer shall be obliged to anyone who is in the announced situation or has performed the [announced] action, even if he or she did not intend to fulfil the announcement or even if it was performed without the knowledge of the promise.

The classical examples of the second specie are public rewards and public contests. Although there is no specific rule about the moment of the transfer of property in such cases, it is our opinion that property is acquired the moment the beneficiary rightfully claims it, as this is the moment when the condition is fulfilled. This solution implies an extended interpretation of art. 1317 (1) lit. a, in conjunction with art. 408 CC, both cited above.

5.3.2. Validity of the obligation – different forms of defects regarding the obligation and their effects on the transfer of ownership There are several defects that may affect the validity of the obligation, especially when arising from a contract and which lead to one of the two degrees of contractual invalidity existing in Portugal:141 nullity (nulidade) 141

See for another typology of invalidity in Menezes Cordeiro, Tratado de Direito Português – Introdução, p. 566, citing authors like Windscheid and Kipp, hence mostly influenced by the German doctrine: I) Unwirksamkeit im weiteren Sinne (ineficácia em sentido amplo) or Ungültigkeit (invalidade), respectivly: a) Nichtigkeit (nulidade) b) Anfechtbarkeit (anulabilidade) c) Gemischte Ungültigkeiten (invalidades mistas) II) Unwirksamkeit im engeren Sinne (ineficácia em sentido estrito). But there is also some traditional doctrine, mostly influenced by the French law and the old Portuguese Civil Code of 1867 that classifies invalidity in three degrees: nonexistence, nullity and annulability. In this sense, sometimes nulidade is also called nulidade absoluta, while anulabilidade is called nulidade relativa. I) The first degree, non-existence, would refer to situations where it is so obvious that no intention to contract is present, that no legal effects whatsoever can be extracted from the situation; the classical examples of such situations are physical coercion (if someone’s arm is pushed during an auction as opposed to moral coercion considered in Portuguese law as an illegal intimidation with or without infliction of physical or psychological harm) and non-serious declarations (e.g., when a law professor gives an example in class). II) Nullity occurs when the interests that the law protects when establishing the cause of invalidity are, although protecting one, both or none of the parties, public

5. Which system of transfer is used?

663

or annulability (anulabilidade). The main differences between nullity and annulability are due to the nature of the underlying interests, the limited legitimacy to argue annulability, the general legitimacy to argue nullity, and the powers of the ex officio declaration that exist in relation to nullity, but that do not exist in relation to annulability.142 In this sense, the significance of this differentiation resides in the form of opposability – being the nullity evocable at all times by any person and that it can be declared ex officio by the court (art. 286 CC), while the annulability can be evoked only by the persons considered legitimated by law to do so and who must do so before a year has passed from the conclusion of the cause of annulability (art. 287 CC).143 Furthermore, an annulable (avoidable) contract can be rendered valid through confirmation (art. 288 CC). Note once again that the consequences of the contract’s invalidity are therefore established equally, with regard to both nullity and annulability, so that the differentiation between both forms of invalidity loses importance under art. 289 CC. Hereafter the effects that were apparently produced must be reversed. Art. 289 (Effects of the nullity declaration and of annulability) 1. Both nullity declaration and annulation of the transaction have retrospective effect; all that was performed must be undone, and if it is not possible, its value must be returned.

142

143

interests; in such case, the cause for invalidity may be relied upon by any interested third party and may be raised, ex propriu motu, by a court of law. III) Annulability, on the other hand, applies to the situation where the interest protected by the law establishing the invalidity is a party’s interest – the classical situation includes the mistake theory in the formation of contracts. Considering the systematic of the Civil Code of 1966, which introduced the General Part in the Portuguese civil codification, the “inéxistence” of Napoleon Code was not undertaken in its General Part CC, but only in family law (art. 1628 ff), so that cases considered not valid due to non-existence should actually be considered not valid due to nullity; in this sense, the solutions to the problems of invalidity are to be found in the dichotomy nulidade and anulabilidade (cfr. Hörster, Parte Geral do Código Civil, p. 518). See Caramelo-Gomes, Good Faith Acquisition – Why at all?, in: Faber / Lurger (eds.), Rules for the Transfer of Movables, A Candidate for European Harmonisation or National Reforms, p. 155-160. See details in Pires de Lima and Antunes Varela, Código Civil Anotado I4, note 1 to art. 287, p. 264; Menezes Cordeiro, Tratado de Direito Português – Introdução, p. 571.

Portugal

664

2. If any of the parties gratuitously transfers a thing that should be returned, and if it is impossible to recover from the donator the value of the thing, the beneficiary is responsible, up to the value of his or her enrichment. 3. The rules of arts. 1269 onwards [= possession] shall apply to the cases included in the previous paragraphs.

The causes affecting the invalidity of the obligation may be grouped under a number of categories: the defects arising from the legal capacity of the parties, the ones arising from the formation of the will to contract, the ones arising from the object or aim of the contract, and the ones arising from the formality of the contract itself.

(a)

Legal capacity of the parties

(i)

Lack of legal capacity

The validity of a specific contract depends on the parties’ capacity in the first place. This capacity (or lack of it) may arise from two different situations: the party has no legal capacity to contract (because the party has an incapacity to legally run his or her own affairs, such as a person under 18) or the party has no capacity to contract because he or she lacks a special relationship with the object of the contract (under Portuguese law, legitimacy, expressing, for instance, the idea that only the owner or his or her representative have legitimacy to sell his or her assets, whereas the non-owner has no legitimacy to sell another person’s assets). The lack of capacity of a person per se arises from different situations with regard to physical persons. First, it may be the consequence of the person being under the age of 18 years, art. 122 and 125 CC: Art. 122 (Underage) The person who has not completed eighteen years is underage. Art. 125 (Avoidability of contracts entered into by one underage) 1. Without prejudice to art. 287 (2), contracts entered into by one underage may be avoided: a) By request of, depending on the circumstances, the parent in exercise of family authority, the guardian or the conservator, as long as the case is lodged within a year from the moment the applicant knew of the challenged act and the underaged remains so, with the exception of art. 131; b) By request of the underaged himself or herself within a year from acquisition of legal capacity;

5. Which system of transfer is used?

665

c) By request of any of the underaged’s successors, within a year from the death of the underaged, if this has occurred within the time limits of the previous alinea. 2. An otherwise avoidable contract may become legally enforceable by confirmation of the contract by the underaged after acquiring legal capacity, or by the parent in exercise of family authority, or by the guardian or the conservator, if the act to be confirmed falls within the respective powers of representation.

Second, it may be the consequence of a person over 18 having some sort of disability that diminishes or eliminates his or her capacity to run his or her own affairs. A general rule about the consequences of the lack of legal capacity of an individual per se may be extracted from the rules applying to the different situations: arts. 125 CC as to under age, art. 148 CC as to the interdicted and disabled, in the last case ex vi art. 156 CC: the contracts are avoidable (annullable). Art. 148 (Acts of the interdicted after the register of the judgement) The acts performed by the interdicted after the registration of the judgement are avoidable. Art. 156 (Subsidiary rules) The rules of the previous subsection relating to interdiction shall apply to the disability if not otherwise regulated in this subsection.

(ii)

Lack of legitimacy

The lack of legitimacy of the transferor implies the nullity of the contract: that is the case when selling or giving someone else’ assets, arts. 892 and 956 CC: Art. 892 (Nullity of sales contract [of someone else’s assets]) The sales contract on someone else’s assets is null [void ab initio], if the seller had no legal right to conclude it; however, the seller may not enforce the nullity against the good faith buyer, as the bad faith buyer may not against the good faith seller. Art. 956 (Donation of someone else’s assets) 1. A donation of someone else’s assets is void; the donor, however, may not claim it against the good faith beneficiary. 2. The donor shall be liable for the damage caused to the beneficiary only if the later is in good faith and one of the following facts is proven: a) If the donor has expressly assumed this obligation; b) If the donor acted with intention (animus dolendi);

Portugal

666

c) If the donation acts as retribution; d) If the donation implies a burden to the beneficiary, in which case the donor’s liability is limited to the value of the burden. 3. The value of the thing or right that was given shall be added to the damages; the profits that were lost shall not. 4. If there is no right to compensation, the beneficiary will receive the rights that the donor may have in relation to the thing or right that was given.

(b)

Defects of the will to contract

There are several defects that may affect the will to contract under Portuguese law. Such defects may arise in the absence of the will to contract (although there is an appearance of the will to contract) or from a malformation of the will to contract. There are two main situations involving the absence of will to contract (whilst there is an appearance of the will to contract): (i) intentional and (ii) unintentional. The malformation of the will falls into two main categories: (iii) mistakes and frauds and (iv) threats. (i)

Intentional absence of the will to contract

The intentional absence of the will to contract may fall under the concept of sham (simulação) in art. 240 CC, mental reserve (reserva mental) in art. 244 CC, and non-serious declarations (declarações não sérias) in art. 245 CC. Art. 240 (Sham) 1. When the parties, with intent to deceive, declare differently from their actual will, it is considered sham. 2. The contract is null because of sham. Art. 244 (Mental reserve) 1. There is mental reserve when a party makes a declaration contrary to his or her will so to deceive a third party. 2. The reserve does not affect the declaration unless it is known to the other party. In such case, mental reserve will produce the same effects as sham. Art. 245 (Non-serious declaration) 1. Non-serious declaration, if made considering that the other party knows its nature, will have no effect.

5. Which system of transfer is used?

667

2. If the declaration is produced in circumstances that lead the other party to believe in its authenticity, this party shall have the right to compensation for damages.

The first, sham, requires bilateralism and the animus decipiendi from both parties. The second, mental reserve, is unilateral and the animus decipiendi affects only the will of one of the parties, and, in the third, there is no animus decipiendi. Some of the consequences of these different situations are not the same. Sham implies the nullity of the contract (under the Portuguese concept of nullity, see 5.3.2 above), the mental reserve has no effects on the validity of the contract and the non-serious declaration of will produces no effect (in the sense that there is no contract). (ii)

Non-intentional absence of the will to contract

There are two main circumstances of non-intentional absence of the will to contract: unawareness of the declaration and physical coercion (falta de consciência da declaração e coacção física), as in art. 246 CC. The classical example for both situations is the auction; in the first case, somebody waves to someone else, not aware that such a wave produced an offer, and in the second situation someone is physically compelled to raise the arm by someone. Art. 246 (Lack of awareness of the declaration and physical coercion) Declaration shall have no effect if its author is unaware of making it or is physically coerced to do so; if the author is responsible for the lack of awareness of the declaration, he or she shall be liable for compensation for damages.

(iii)

Mistake and fraud

Mistakes and frauds are regulated in arts. 247 till 254 CC. There is a clear distinction made among the various facts on which the mistake may have happened. Art. 247 CC deals with the errors that may have occurred when spelling the will (erro na declaração); art. 249 CC deals with writing or calculus errors (erro de cálculo ou escrita); art. 250 CC deals with the errors of transmission (erro na transmissão da declaração); art. 251 CC concerns mistakes about the other party or the object of the contract (erro sobre a pessoa ou sobre o objecto do negócio); art. 252 CC with the mistakes on the motives leading to the contract (erro sobre os motivos); and art. 253 CC deals with fraud (dolo).

668

Portugal Art. 247 (Error in the declaration) When, because of error, the declared will does not match the real will of its author, the declaration is avoidable, if the other party knew or should have known of the essential nature of the author’s error. Art. 249 (Error calculation or writing) The simple error of calculation or writing, disclosed in the proper context of the statement or under the circumstances in which the statement is made, only gives the right to rectification of this. Art. 250 (Error in transmitting the declaration) 1. A declaration inaccurately transmitted, by whoever is responsible for the transmission, may be avoided pursuant to art. 247. 2. When, however, the inaccuracy was intentionally introduced by the intermediary, the declaration is always avoidable. Art. 251 (Error about the person or the object of the transaction) The error affecting the reasons determinant of the will, when it relates to the other party or to the object of the transaction, makes this avoidable under art. 247. Art. 252 (Error about the grounds) 1. An error about the grounds determinant of the will, but not referring to the other party or to the object of the transaction, is only avoidable if the parties have recognized, by agreement, the essential nature of the grounds. 2. If, however, the error is based upon circumstances that form the basis of the transaction, provisions about settlement or modification of the contract due to changed circumstances shall apply. Art. 253 (Fraud) 1. It is considered fraud or deception, any suggestion that someone produces with the intention of deceiving the author of a declaration; the concealment by a party to a contract, or by a third party, of an erroneous conviction of the other party to the contract is also fraud or deception. 2. It is not considered fraud, any practice or suggestion deemed fair in the legal trade, when there is no obligation to elucidate the author required by law, by agreement or by legal trade practice.

The general rule is that the contract is avoidable (cfr. art. 254 CC) if the aspect on which the mistake occurred is essential for the formation of the will to contract and the other party knows, or should be aware, of the essential nature of such aspect.

5. Which system of transfer is used?

(iv)

669

Threats

Threats (or moral coercion) are regulated in arts. 255 and 256 CC. To qualify as a defect of will, the threat (coação moral) must fulfil two aspects: it must be unlawful (the threat to exercise a right is not, in itself, unlawful) and must induce fear in the contracting party. The contract concluded under threat is avoidable. Art. 255 (Moral coercion) 1. The declaration is made under moral coercion if it is given out of fear of harm on the part of its author, who was unlawfully threatened in order to obtain the declaration from him or her. 2. The threat can be against the person, the finances or the honour of the author, or of a third person. 3. There is no moral coercion in the normal exercise of a right or simple reverential fear. Art. 256 (Effects of coercion) The declaration obtained by coercion is avoidable, even if this comes from a third party; in this case, however, it is necessary that the threat must be one of serious harm and that there was justified fear of its infliction.

(c)

Defects in the object or aim of the contract

Defects in the object or aim of the contract, when resulting from its legal or physical impossibility, affect the contract’s validity according to arts. 280 and 281 CC, above. The general rule is that the contract is null. A different situation arises from defective goods. The relevant rules in such cases are laid down in arts. 913 to 922 CC, completed with the rules of the arts. 905 to 912 CC, pertaining to the sales of burdened goods, applicable ex vi art. 913 CC.144 Art. 913 (Reference) 1. If the goods sold have any defect that diminishes their value or prevents the fulfilment of their intended use, or does not have the qualities ensured by the 144

In case of contracts between merchants or producers and consumers, the governing rules are included in the Regime jurídico para a conformidade dos bens móveis com o respectivo contrato de compra e venda (Consumer Sales Decree Law) of 8 April 2003 (DL no. 67 / 2003, DR 83 / 2003 I-A, revised by DL no 84 / 2008 of 21 May 2008, DR 98 / 2008 I) that transposed to the Portuguese legal order the Council Directive 1999 / 44 / EC.

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Portugal seller or necessary for the achievement of that end, the rules in the preceding section shall apply with the necessary adaptations, in all that is not modified by the provisions of the following articles. 2. When the contract does not mention the use for which the goods sold is intended, it shall be considered the normal function of goods in the same category. Art. 914 (Repair or replacement of goods) The buyer has the right to require the seller to repair the goods or, if it is necessary and they have a fungible nature, to replace them; this obligation does not exist, if the seller was justifiably unaware of the defect or lack of quality. Art. 915 (Compensation in the case of simple error) Compensation under article 909 is not due, if the seller was in the condition referred to at the end of the previous article. Art. 916 (Notice of defect or lack of quality) 1. The buyer should report to the seller the defect or lack of quality of the goods, unless the seller engaged in fraud. 2. The notice [of the defect or lack of quality] must be made within thirty days after the defect is known and within six months after delivery of the goods. 3. The delays mentioned in the previous paragraph are, respectively, one and five years, if the goods are immovable. Art. 917 (Loss of action) Avoidance proceedings for simple mistake expire upon the deadlines in the previous article, if the buyer has not made the complaint; or otherwise in six months after the complaint without prejudice in the latter case to the provisions of article 287 (2). Art. 918 (Supervening defect) If the goods, having been sold and before delivery, deteriorate, acquire defects or loose qualities, or if the sale is of future or undetermined goods, the rules for non-compliance with obligations shall apply. Art. 919 (Sales by sample) If the sale is by sample, the seller guarantees that the goods being sold have the same qualities as the sample, unless it results from the contract or from practice that the sample only indicates approximated qualities of the goods. Art. 920 (Sale of defective animals) The sale of a defective animal shall be governed by special laws or, in their absence, by trade practices.

5. Which system of transfer is used?

671

Art. 921(Guarantee of proper functioning) 1. If the seller is obliged, by agreement of the parties or by virtue of practices, to ensure the proper operation of the goods sold, he or she must repair or replace them when the replacement is necessary and the goods have a fungible nature, regardless of the seller´s fault or of the buyer’s mistake. 2. Unless otherwise stated in the contract, the term of the warranty expires six months after the delivery of the goods, if the use does not establish a longer period. 3. Any defect in the operation should be noticed to the seller within the period of guarantee and, unless stipulated to the contrary, within thirty days of becoming known. 4. The action proceedings expire as soon as the deadline for complaining is achieved without the buyer doing so, or after six months from the date that the complaint was made. Art. 922 (Goods that must be transported) In the sale of goods that must be transported from one place to another, the delays established under articles 916 and 921 start to run from the day the buyer receives the goods.

(d)

Defects in the formality of the contract

Portuguese law establishes, as a general rule, that no special formalities are required for the completion of a contract, unless otherwise required – art. 219 CC: Art. 219 (Informality principle) The validity of the declaration does not depend on the compliance with any formality, except for those situations required by law.

In some special situations a specific formality may be required by law. In such case, non-compliance with such requirement generates nullity, art. 220 CC: Art. 220 (Disregard of formality requirements) The declaration that does not fulfil the formality requirements established by law is void, unless another sanction is specifically required by law.

(e)

Termination of contract and contract subject to condition

Termination of contract and contract subject to condition are not considered invalidity issues under Portuguese law.

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5.4.

Registration

The transfer of property rights in registered movables is no different than that of any other asset, with the exception that the transfer must be entered into the register. Assets subject to this requirement are vehicles in general (automobiles, motorcycles, boats, airplanes and helicopters). See 4.1.2. above.

5.5.

Consensual system

5.5.1. Justification The Portuguese system of transfer of property is consensual. The main reason appears to be historical,145 as this was the approach of the 19th century Civil Code. During the preparatory works of the 20th century Civil Code in 1950s and 1960s, there was a clear option in Portugal to maintain the consensual principle as received from France and modernized by Italy, or not.146 This historical argument, however, should not be enough to keep the system unchanged, as before the 19th century the old compilations of the Kingdom’s Ordinations followed the Roman law system and its split approach (titulus and modus); the unitary approach (consensus parit proprietatem) was a reform influenced by Napoleon Code.147 As both approaches are not free of exceptions, but to the contrary, bear many of them, a strict differentiation between the two approaches does not correspond to the recent developments in legal studies.148

145

146

147

148

Cfr. v. Bar / Drobnig, The interaction of contract law and tort and property law in Europe, no. 486. See drafts in BolMinJus 119 (1962) 35 and BolMinJus 123 (1963) 230; cfr. in the doctrine about the influence of French and Italian legislation in Romano Martinez, Direito das obrigações – Contratos, p. 29; Pires de Lima and Antunes Varela, Código Civil Anotado I4, note 1 under art. 408, p. 374 f. Almeida Costa, Obrigações11, p. 290f and Santos Justo, A base romanista, no. 2. Note furthermore that both Spanish and Brazilian civil laws, just to cite two examples of law systems in countries that share deep historical roots with Portugal, still follow the split approach derived from the Roman law. See for further references Ferreira de Almeida, Transmissão contratual da propriedade – entre o mito da consensualidade e a realidade de múltiplos regimes, Themis VI (2005) p. 5-17.

5. Which system of transfer is used?

673

5.5.2. Specific situations (a)

Generic goods

The transmission of a right in rem in goods that are not generic (thus specific goods)149 is a general rule of art. 408 (1) that confirms the unitary approach, as that is the way the property right is transferred by means of the contract alone (contract quoad effectum). The first exception is governed by art. 408 (2) CC, considering not specified goods, but generic ones. Contracts falling within the scope of this disposition are not able to transfer property per se, requiring delivery (contract quoad constitutionem).150 This is due to the fact that the passing of ownership of generic goods requires the identification of the asset and only occurs at this moment of identification of the goods and not at the moment of contract conclusion. See reference about identification in 5.1., above.

(b)

Future goods and alternative obligations

Future goods are considered things that do not exist at the moment of the contract conclusion, but there is an expectancy that they will exist. The meaning of “non-existence” includes both things that have no existence and things not yet belonging to the transferor. The property right shall be transferred in the moment the thing is acquired by the seller, see also 5.1. above.

(c)

Suspension condition

The general rule about a suspension condition is included in art. 270 CC. A suspension condition allows parties to a contract to link its effects to an uncertain future event; the transfer of property being the first effect of the contract (sales or another), the moment of the transfer of the right is the one when the suspension condition is verified.

149

150

See about “coisa específica” as an deductable but not usual terminus in Cristas / Gouveia, Transmissão da propriedade e contrato de compra e venda, p. 29. Considering that the terminology in Portuguese “contratos reais” is very generic, these Latin complements are usually necessary to make clear that “contratos reais quoad effectum” correspond to “dingliche Verträge” and “contratos reais quoad constitutionem” to “Realverträge”, respectively; see about this in Almeida Costa, Obrigações11, p. 288.

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Art. 270 (Definition of condition) The parties may submit the effects of the legal transaction or its resolution to a future and uncertain event: in the first case [production of effects], there is a suspension condition; in the second [resolution], a decisive condition.

(d)

Other situations

The main situation of not passing the right by means of the contract alone is the reservation of title, art. 409 CC, above.

5.5.3. Effects of the transfer by contract The transfer of ownership upon the conclusion of the contract produces effects erga omnes. The acquirer (now owner) enjoys all the powers included in the right that was acquired and consequently may resell the good, art. 1305 above.

(a)

Protection of the seller against non-payment

The general rules for the moment and place of the payment in a sales contract are established in art. 885 CC: unless otherwise agreed, the moment and place of the payment is the moment and place of delivery. Art. 885 1. The price must be paid at the time and place of delivery of the goods sold. 2. But if by stipulation of the parties or as a result of the practice between the parties, the price is to be paid at a time different from delivery, payment will be made at the place of domicile that the creditor has at the time of performance.

The rule in art. 885 (1) allows the seller to refuse the transfer of property on the grounds of exceptio non adimpleti contractus. In any other situation, when it is agreed that the price is not to be paid simultaneously with the contract and delivery, or if no such agreement exists, but nonetheless the seller accepts in that moment that the payment is delayed, the seller may not terminate the contract on the grounds of non-payment – art. 886 CC: Art. 886 (Failure to pay the price) If the ownership of the goods, or the right in them, has been transferred and the goods delivered, the seller may not, unless agreed otherwise, rescind the contract for failure to pay the price.

5. Which system of transfer is used?

(b)

675

Protection of creditors

There are three main remedies to protect creditors: the declaration of nullity (declaração de nulidade, art. 605 CC), the actio pauliana (impugnação pauliana, art. 610 CC), and the right of the insolvency administrator to terminate the contract, art. 120 and 121 of the Insolvency and Corporate Recovery Code (ICRC).151 Art. 605 (Legitimacy of creditors) 1. The creditors have standing to invoke the nullity of the acts of the debtor, whether prior or subsequent to the establishment of the credit, provided that they have an interest in the declaration of nullity; it is not required that the act produces the insolvency of the debtor or worse. 2. Nullity shall benefit the creditor that has invoked it, as well as all others. Art. 610 (General requirements of the actio pauliana) Any non-personal acts implying a reduction of the asset value may be challenged by the creditor if the following circumstances exist: a) When the act is prior to the credit, the act is performed intentionally in order to prevent the satisfaction of the right of the future creditor; and b) The result of the act is the impossibility for the creditor to obtain the full satisfaction of his or her claim, or the aggravation of this impossibility. Art. 120 ICRC (General principles) 1 – Any acts prejudicial to the bankruptcy estate, performed or omitted in the four years preceding the date of commencement of the insolvency proceedings, can be resolved for the benefit of it. 2 – Prejudicial to the bankruptcy estate are the acts that diminish, prevent, hinder, delay or endanger the satisfaction of creditors in bankruptcy. 3 – Prejudicial to the bankruptcy estate, without admission of evidence to the contrary, are acts of any of the types mentioned in the following article, even if carried out or omitted in the deadlines contained therein. 4 – Except as regards to the article below, resolution requires the bad faith of the third party, which is presumed in relation to acts whose practice or omission has occurred within the two years preceding the beginning of the process of bankruptcy and which has participated or benefited a person especially related to the bankrupt, even if the special relationship did not exist at that date. 5 – Bad faith is considered the knowledge, at the moment of the act, of any of the following circumstances: a) The debtor was in a state of insolvency; 151

Código da Insolvência e da Recuperação de Empresas (DL no. 53 / 2004 of 18 March 2004, as revised by DL no. 200 / 2004 of 18 August 2004).

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Portugal b) The prejudicial nature of the act and that the debtor was on that date in a situation of imminent insolvency; c) The opening of bankruptcy proceedings. Art. 121 ICRC (Unconditional resolution) 1 – Can be resolved for the benefit of the bankrupt estate any of the acts listed below, without further requirements: a) Division of inheritance performed less than a year before the opening of bankruptcy proceedings, in which the share of the bankrupt has been essentially composed of assets easily secreted and immovable property that was attributed to the other successors. b) Acts concluded by the debtor gratuitously within two years preceding the date of commencement of bankruptcy proceedings, including the repudiation of heritage or legacy, with the exception of donations conforming to social practices; c) Creation by the debtor of securities for existing debts or new debts replacing pre-existent ones, in the six months preceding the date of commencement of bankruptcy proceedings; d) Personal warranties, endorsements and credit mandates, granted by the insolvent within the period mentioned in the previous paragraph, and not respecting a legitimate interest of his or hers (the debtor); e) Creation of securities by the debtor simultaneously with the creation of debts, within the 60 days preceding the date of commencement of bankruptcy proceedings; f) Payment or other acts of extinction of obligations due subsequently to the date of commencement of the bankruptcy proceedings, which occurred within six months from the commencement of the bankruptcy proceedings, or after this but prior to maturity; g) Payment or other extinguishment of obligations within the six months preceding the date of commencement of the insolvency proceedings in an unusual way in the legal trade and that the creditor would not require; h) Any compensated act performed by the bankrupt within the year preceding the date of commencement of bankruptcy proceedings, in which the obligations assumed by him clearly exceed those of the counterparty; i) Reimbursement of capital, when taking place within the same period mentioned in the previous paragraph. 2 – The provisions of the preceding paragraph are subject to laws that exceptionally require bad faith, or other requirements.

All three remedies apply to both the transferor and to the transferee’s creditors.

5. Which system of transfer is used?

(c)

677

Multiple selling (same asset sold twice to different persons)

The seller may only lawfully sell to the first person, who acquires the property due to the contract, independently of receiving the goods purchased (art. 408 (1)). Traditio is irrelevant and property is not transferred, as a general rule, subject to the exceptions seen above. Multiple selling is thus considered under the Portuguese law as sell of someone else’s assets, as the seller himself or herself is not owner of the goods anymore; the same applies when the seller has no legitimacy to conclude the contract. Hence the second sales contract is void, a situation governed by art. 892 till 904 CC (venda de bens alheios).152 Art. 892 (Nullity of sales contract [of someone else’s assets]) The sales contract on someone else’s assets is null [void ab initio], if the seller had no legal right to conclude it; however, the seller may not enforce the nullity against the good faith buyer, as the bad faith buyer may not against the good faith seller.

The most important exception is called aquisição tabular (register acquisition) and is based on registering property rights. The object of register acquisition is, necessarily, immovable property or movable property that is subject to the register. This basically allows the good faith buyer who registered the acquisition to oppose his or her right against the declaration of nullity of the contract on whatever grounds, as a result of art. 291 (2) and (3) CC: Art. 291 (Unenforceability of a null or avoidable contract) 1. A declaration of nullity or avoidance of a legal transaction, the object of which is immovable property or movable property subject to registration, does not prejudice the rights acquired in property for consideration by a third party in good faith, if the registration of the acquisition is prior to the registration of the lodging of the action of nullity or avoidance or the registration of the agreement between the parties about the invalidity of the transaction. 2. The rights of a third party are not, however, recognized, if the action is lodged and registered within three years after the conclusion of the transaction. 3. It is considered in good faith, the purchaser who at the time of acquisition was unaware, without fault, of the void or avoidable of the legal transaction.

152

See details in Nóbrega, Der rechtsgeschäftliche Eigentumserwerb an beweglichen Sachen in Deutschland und Portugal, p. 44 ff; see furthermore for a revisional view Miranda, Venda de coisa alheia, in Themis (2005), p. 111 ff.

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(d)

Use of the movable between property transfer and delivery

The seller is considered a guardian of the asset from the moment the contract is concluded until the time the asset must be delivered in the condition it was at the time of the sale art. 882 CC: Art. 882 CC (Delivery of the thing) 1. The thing must be delivered in the state it was at the time of sale. 2. The obligation of delivery includes, unless otherwise agreed, the integrant parts, the fruit pending and the documents relating to the thing or right 3. If the documents contain other matters of interest to the seller, he or she is bound to deliver a legalized copy of the part concerning the right or thing that is the subject of the sale, or photocopy of equal quality.

The seller is liable for any depreciation or defects that may arise, if it was his or her fault, arts. 918 and 798 CC: Art. 918 (Supervening defect) If the goods, having been sold and before delivery, deteriorate, acquire defects or loose qualities, or if the sale is of future or undetermined goods, the rules for non-compliance with obligations shall apply. Art. 798 (Liability of the debtor) The debtor who wrongfully fails to comply with the obligation becomes responsible for the damage caused to the creditor.

6.

Double sales

Due to the consensual approach applied in Portuguese law, selling the same specific goods a second time to another person is considered a sale of someone else’s property, as the seller himself or herself is not owner of these goods anymore. The second sales contract is consequently void. See 5.5.3.(c) above for a closer discussion of the issue.

7.

Which are the rules for “selling in a chain”?

A sells to B and B to C, A delivers the movable directly to C.

8. Transfer or acquisition by

7.1.

679

General rules, valid contracts

As a consequence of the Portuguese consensual system of transfer of property by contract, or by specification in case of generic goods or alternative obligations, ownership is transferred from A to B and then from B to C. Any limitations that may be imposed on ownership by any of the parties, if admissible by law, such as a reservation of title, will limit the contents of the right from that transfer on.153

7.2.

Rules when contracts fail

There are different species of invalidity under Portuguese law, as seen above. If the defect of the contract allows later confirmation, there is no reason to discuss its consequences if such confirmation occurs (either because the parties have “validated” the contract or because the delay within which one may raise the defect has ended). If the defect is such that it does not allow confirmation and the contract is therefore null, property is not transferred.

8.

Transfer or acquisition by means of indirect representation

Party X transfers or acquires a movable asset in his or her own name, but on account of or in the interest of another person A (indirect representation as opposed to direct representation). The indirect representative acquires the rights and assumes the obligations arising from the acts he or she performs, art. 1180 CC: Art. 1180 (Indirect representation) The indirect representative, if acting in his or her own name, acquires the rights and assumes the obligations of the acts that he or she performs, even if the mandate is known by the third party participating in or receiving the acts.

The representative is obliged to transfer such rights and obligations to the represented party, but this obligation has contractual effect only, art. 1181 CC: Art. 1181 (Rights acquired under indirect representation) 1. The representative is obliged to transfer to the principal the rights acquired in executing the mandate. 153

See details in Cristas / Gouveia, Transmissão da propriedade e contrato de compra e venda, p. 55 ff.

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2. The principal can replace the representative in exercising the corresponding rights of credit.

The rights acquired by indirect representation that enter into the indirect representative’s patrimony may not be considered as such in case of the intermediary’s insolvency, if the mandate was given in writing prior to the moment of distrainment and, if the rights are subject to registration, they had not yet been registered, art. 1184 CC: Art. 1184 (Liability of the assets acquired by the representative) The assets that the representative acquired in implementation of the mandate and that should be transferred to the principal under article 1181 (1) shall not secure the obligations of the representative, provided that the mandate was recorded in a document prior to the date of judicial execution of the goods and the purchase has not been registered, if it is subject to registration.

If the powers of the indirect representative imply the ability to transfer ownership (to dispose), the rules about the sale of someone else’s assets shall apply: the sales contract will, in such case, be valid as the seller has the power to dispose of the asset by means of indirect representation. The principal has limitless power to bypass the representative and exercise the rights of a creditor that the representative acquired on his or her behalf. This rule does not apply to the acquisition of rights in rem.

9.

Consequences of insolvency

The insolvency154 administrator has the right to terminate contracts not yet fulfilled by the parties, art. 102 ICRC (Insolvency and Corporate Recovery Code):155 Art. 102 ICRC (General rules about unfulfilled contracts) 1. Without prejudice to the following articles, performance of any contract not yet fulfilled by the insolvent or by the [other] party at the moment of the insolvency declaration, will be suspended until the administrator chooses between performance and termination. 2. The other party may set a reasonable delay for the administrator to exercise this option, after which it is considered that performance is denied.

154

155

This section would not have been possible without the help of our colleague, Pedro Ortinz Bettencourt, whom we deeply thank. Note that the text of art. 102 ICRC was revised by DL no 53 / 2004.

9. Consequences of insolvency

681

3. If performance is denied by the administrator, and without prejudice to the separation of the thing, if such is the case: a) None of the parties shall have the right to restitution; b) The administrator has the right to demand the amount due by the other party for payment of the performed obligation; c) The other party has the right to demand, as a credit on the insolvency asset, the value of his or her credit deducted from the amount that was received and the proportional part of the contract that was not performed; d) The right to compensation in damages: i) Exists only up to the value of the obligation referred to in b); ii) Shall be deducted from the amount to which the other party is entitled in application of c); iii) Is a credit on the insolvency asset. e) Any party to the contract may compensate the obligations referred to in c) and d) with the one referred to in b) up to an equivalent value. 4. The option to execute is abusive if performance by the bankrupt estate is unlikely.

This right is not limited by the nature of the goods, but when the obligation of the transferor may not be divided from the other obligations and the administrator chooses to terminate the contract, the transferor has the right to restitution, under certain limitations, art. 103 ICRC: Art. 103 ICRC (Indivisible obligations) 1. If the contract requires one party to fulfil an obligation that is not divisible [from the other obligations], or that may be performed in parts functionally connected [to the other obligations] and the administrator terminates the contract: a) The right referred to in number 3 b) of the previous art. is replaced by the right to demand restitution of what had been performed at the time of the insolvency declaration; b) The object of the right referred to in number 3 c) of the previous art. shall be the difference, if in favour of the other party, between the values of the contractual obligations; c) The other party has the right, as creditor of the insolvency estate, to the reimbursement of the cost, or the restitution of whatever was delivered until the moment of the insolvency declaration, depending on the nature of the obligation. 2. The other party, however, has the right to complete his or her obligation and to demand, as a credit of the bankruptcy estate, the part of the counter obligation not yet performed, in which case the rule in number 1 of this article and all the previous articles shall not apply. 3. If the insolvency administrator does not refuse to perform, the right of the other party will only constitute credit on the bankrupt estate insofar as it ex-

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ceeds the value of what would result from the application of number 1 c) in case the administrator had chosen not to perform. 4. If an obligation of the nature referred to in number 1, imposed on the insolvent by contract, and the administrator refuses to perform: a) The right referred to in number 3 b) of the previous article terminates or is replaced by the right to restitution of the amount delivered prior to the declaration of insolvency, depending on the nature of the obligation; b) The rule in number 1 b) shall apply and the other party will, additionally, have the right to reimbursement of what was delivered as a credit on the insolvency asset. 5. If the administrator does not refuse to perform an obligation, arising from contract, with the nature referred to in number 1, the other party’s right shall constitute a credit on the bankrupt estate. 6. If a non-replaceable obligation is to be performed in autonomous fractions, some of which are already delivered, the rules in the previous numbers shall apply solely to the unperformed fractions, splitting the counterpart’s obligation proportionally.

The administrator’s right to terminate a contract that affects the bankrupt estate includes also contracts, actions and omissions concluded or omitted in the last four years prior to the start of the insolvency proceedings, see arts. 120 and 121 ICRC, above. These rules apply to insolvency situations of any part of a contract, transferee or transferor and, in practice, replace any other remedy available to creditors of the insolvent.

10.

Passing of risk and passing of ownership

The rules for passing the risk in contract law result from art. 796 CC: Art. 796 (Risk) 1. In contracts that transfer control over a certain thing, or constitute or transfer a real right in it, loss or deterioration of the thing due to causes not attributable to the transferor is at the risk of the purchaser. 2. If, however, the thing has continued under the control of the transferor as a result of an agreement delaying the transfer for his or her benefit, the risk only passes with the expiration of the delay or the delivery of the thing, without prejudice to article 807. 3. When the contract is under a termination condition, the risk of perishing during the delay of the condition belongs to the purchaser, if the thing has been delivered; if there is a suspension clause, the risk belongs to the transferor pending the delay.

10. Passing of risk and passing of ownership

683

The general rule is that the risk belongs to the buyer from the moment he or she acquires the right, either the moment of the conclusion of the contract or the moment of the specification of the goods. There are nevertheless some exceptions, as follows: (i) the loss or damage occurred as a result of the seller’s actions or omissions, for which he or she will be responsible, (ii) if the thing remained, by agreement, in possession of the seller for a certain period of time for his or her own interest and until such delay has ended (iii) if the contract depends on a termination clause and the thing remains with the seller and (iv) if the contract is under a suspension clause and the thing remains with the seller and until the moment when the event established in the suspension clause occurs. The general rule for the passing of risk in case of late delivery is in art. 807 CC – the seller is liable for damages unless he or she proves that the buyer would suffer such damages even if the delivery had been performed on time: Art. 807 (Risk mora debitoris) 1. Mora debitoris makes the debtor responsible for the damage that the creditor suffers as a consequence of the loss or deterioration of what should be delivered, even if these facts are not due to the debtor. 2. The debtor is, however, permitted to prove that the creditor would also have suffered damage if the requirement had been fulfilled on time.

As to the rules for default of acceptance, art. 815 establishes that the risk passes to the buyer except for the damages caused by the fault of the seller: Art. 815 (Risk mora creditoris) 1. Mora creditoris makes the creditor bear the risk of a supervening impossibility of performance resulting from a fact not attributable to fraud of the debtor. 2. If the contract is bilateral, the creditor who, being in arrears, lost all or part of his or her credit, is not exonerated from payment. If, however, the debtor benefits by the extinction of his or her obligation, the value of the benefit shall be deducted from the payment.

Part III: Original acquisition 11.

Acquisition by accession, commixture, specification

11.1.

Accession of movables

Art. 1325 CC considers accession (acessão) the fact that one thing is integrated into another: Art. 1325 (Definition) Accession is when the thing that is owned by someone joins and is incorporated into another thing that did not belong to it.

There are two main species of accession: natural and industrial, art. 1326 CC: Art. 1326 (Species) 1. Accession is natural when it results solely from the forces of nature; industrial accession happens when by means of a human act different objects, belonging to different owners, are merged, or when someone works on a thing belonging to another person, merging the work with the other person’s property. 2. Industrial accession may be movable or immovable, depending on the nature of the things.

Natural accession (acessão natural) occurs as a consequence of the forces of nature and industrial accession (acessão industrial) by human labour. Everything that is added to a thing by force of nature is thus owned by the thing’s owner (art. 1327 CC).156 The human labour may be applied to merge things belonging to different owners or to shape someone else’s property. Depending on the nature of the things, industrial accession may be movable or immovable. The concept of good faith in all the various species of industrial accession depends on the knowledge of the author regarding the ownership of the movable in the first place, but is not limited to such cases. Commenta156

Natural accession is indeed considered as a justifying cause in the sense of the law of unjust enrichment, so that an action for restitution under art. 473 CC is not possible, cfr. Menezes Leitão, Enriquecimento sem causa, p. 857.

11. Acquisition by accession, commixture, specification

685

tors consider that the concept of good faith for this purpose must be the one included in art. 1260 CC relating to the good faith possessor: the author of the industrial accession must be ignorant of the fact that his or her action is harmful to someone else’s right.157 Focusing on industrial movable accession, we then have union or commixture (união ou confusão, arts. 1333-1335 CC) and specification (especificação, arts. 1336-1338 CC). Union or commixture consists in the union or merger of two objects belonging to different owners in a manner that it cannot be undone, or that such action would result in damages for either owner. Specification consists in transforming by labour a thing belonging to someone else.

11.2.

Union or commixture

Union or commixture (união ou confusão) can be in good or bad faith, or casual, as follows: Art. 1333 (Union or commixture in good faith) 1. If anyone, in good faith, unites or commixtures his or her object with another person’s asset, so that the separation of them is not possible, or otherwise prejudices any of the parties, the owner of the most valuable object will keep the result, provided that proper compensation is paid or an equivalent thing is returned. 2. If both things are of equal value and the owners do not agree on which one is to retain it, they shall bid for the object and the highest will receive the object; from that price, the winner shall pay the other his or her share. 3. If the parties do not want to bid, the thing shall be sold and shares will be paid to both. 4. In all cases provided in the preceding paragraphs, the author of the union or commixture is obliged to acquire the thing, if the other party chooses compensation. Art. 1334 (Union or commixture in bad faith) 1. If the union or commixture has been made in bad faith and someone else’s thing can be separated without prejudice, they will be returned to their owners, without prejudice to the right that the second party has to be compensated for damage. 2. If, however, the thing can not be separated without suffering loss or damage, the author of the union or commixture shall restore the value of the thing and 157

Pires de Lima and Antunes Varela, Código Civil Anotado III2, note 3 under art. 1333, p. 151 f.

Portugal

686

compensate its owner, if the latter does not prefer to retain both things and pay to the author of the union or commixture a value calculated under the rules of unjustified enrichment. Art. 1335 (Unintentional commixture) 1. If the commixture happened unintentionally and the things can not be separated without damage to any of them, the owner of the most valuable will retain both, provided that fair payment is made; if he or she does not want to do so, the owner of the less valuable may exercise this right. 2. If none of them want to retain the thing, it will be sold, and each of them will share the respective part of the price. 3. If both things are of equal value, article 1333 paragraphs 2 and 3 shall apply.

For the cases of good faith union or commixture, the rule is that the owner of the greatest valued object will retain both, either paying to the other the value of his or her object before commixture or giving him a similar one. If the value of the things is the same, there shall be an auction between the owners and if no bids are placed, the object shall be sold and the payment proportionally divided. If the bad faith union or commixture can be undone the object is to be returned to the owner who will have the right to compensation for damages. If the union or commixture cannot be undone, or if this implies damage to the thing, the author of the reunion shall retain the thing and compensate the owner, if he or she does not choose to retain the thing paying compensation to the author. In the casual commixture, the rule is that the owner of the most valuable thing that can no longer be separated without loss will retain it and pay to the other owner the fair price.

11.3.

Specification, processing

Specification is defined as reshaping or processing by labour a movable belonging to another.158 Art. 1338 (Cases of specification) Specification may consist of writing, painting, drawing, photographing, printing, engraving and other similar act, made with the use of someone else’s materials.

158

Contracts for works and services are not qualified as a case of accession under Portuguese law.

12. Good faith acquisition

687

It can be performed in good or bad faith and this fact will have an impact on the destiny of the asset: the good faith author may, under certain circumstances, receive the thing, whereas the bad faith author may not. The good faith author will receive the thing when the specification cannot be undone, or this return implies the loss of the specification’s value – if superior to the original value of the thing; in such cases the author must compensate the owner for the value of the thing. The bad faith author will never receive the thing. The most he or she can receive is compensation for the specification, if the value of the thing was increased by more than a third and only in the amount that exceeds that third. Art. 1336 (Specification in good faith) 1. Who, in good faith by means of work, reshapes a movable thing belonging to another, obtains ownership of the thing transformed, if it can not be returned to the original form or it is impossible to do so without loss of the value created by the specification. In the latter case, however, the owner of the thing has the right to retain it, if its value does not exceed the one of the specification. 2. In both cases referred to in the preceding paragraph, the party retaining the thing is obligated to compensate the other for the respective value. Art. 1337 (Specification of bad faith) If the specification has been made in bad faith, the thing will be returned to its owner in whatever shape it is and compensation for damage is to be paid by the author. The author shall, nevertheless, be compensated if the specification increased the value by more than one-third of its value. Compensation is limited, in such case, to the excess value.

12.

Good faith acquisition

12.1.

Good faith acquisition in civil law – a negative approach

The Portuguese civil law does not recognise the good faith acquisition of movables.159 There are no rules comparable to §§ 932-934 German CC and furthermore the principle of “possession vaut titre” does not apply. The lack of these rules is thus a very restrictive and consequent application of the consensual principle. It does result from this legal construction that the sales contract, by which the seller is a person who (i) is not the owner, or

159

See Caramelo-Gomes, Good faith acquisition – why at all?, in: Faber / Lurger (eds.), Rules for the transfer of movables – a candidate for European harmonisation or national reforms?, p. 115-160.

Portugal

688

(ii) is not legally entitled to represent the owner, is thus considered void (art. 892 CC).160 Art. 892 (Nullity of sales contract [of someone else’s assets]) The sales contract on someone else’s assets is null [void ab initio], if the seller had no legal right to conclude it; however, the seller may not enforce the nullity against the good faith buyer, as the bad faith buyer may not against the good faith seller.

This would mean, if no exception is made, that the invalidity of the contract could be relied upon by any interested third party as well as between the parties themselves at all times (art. 286 CC) and that the nullification would produce retrospective effects (art. 289 CC): Art. 286 (Nullity) Nullity can be relied upon at all times by anyone interested and may be raised by the court on its own motion (ex proprio motu) Art. 289 (Effects of the declaration of nullity and avoidance) 1. Both the declaration of invalidity and the avoidance of the transaction have retroactive effect and everything that has been provided should be returned or, if the restitution in kind is not possible, the corresponding value. 2. If any of the parties gratuitously transferred that which should be returned, and the restitution of the value by the transferor is impossible, the acquirer is required to compensate to the extent of his or her own enrichment. 3. Provisions of articles 1269 and thereafter on possession, shall apply, directly or by analogy, to the cases provided for in the preceding paragraphs.

Another situation where the good faith buyer enjoys legal protection against the original owner is a sham contract: the original owner who simulated a sale cannot argue the nullity against the good faith buyer – arts. 240 and 243 CC.

12.1.1. Protection of third parties in case of a sales contract of another’s assets The situation described above is not applicable to the case of a sale of a thing by someone who has no legitimacy to do so. 160

For an overview, see among others Bártolo, Venda de bens alheios, in: FS Galvão Telles vol. IV, p. 383-436; Nóbrega, Der rechtsgeschäftliche Eigentumserwerb an beweglichen Sachen in Deutschland und Portugal, p. 40 ff.

12. Good faith acquisition

689

In the first place, there is a limitation on the right to claim the nullity: the seller may not bring such claim against the good faith buyer, as art. 892 CC clearly shows. In the second place, contrary to the general rule that null contracts cannot be confirmed, art. 897 CC imposes on the seller a mandatory confirmation; i.e., when the buyer is in good faith the seller must validate the contract by acquiring the asset, although there is no obligation of the original owner to agree to this validation; the basic principle of the freedom to contract (art. 405 CC) applies to him without restrictions. Furthermore the breach of the obligation to confirm vests the seller with the duty to additionally compensate the good faith buyer (art. 900 CC). Because the sales contract, when the seller lacks the legitimacy to sell, is null, the original owner has the power to demand the asset before a court of law; if he or she has been dispossessed, according to art. 1311 CC, he or she may take direct action within the limits of arts. 1314 CC and 336 CC and may bring a negatory action before the court. The good faith buyer is entitled to compensation in any case, even if he or she has not been evicted.161 The compensation is provided in several situations, as in arts. 894 and 898-900 CC: Art. 894 (Restitution of price) 1. As the sales contract of another’s assets is void, the purchaser in good faith has the right to claim the integral restitution of the price, even if the asset was lost, deteriorated, or had its value diminished for any other reason. 2. But if the purchaser received some advantages from the loss or diminution of the value of the asset, these advantages are to be deducted from the amount of the price and of the indemnification the seller has to pay him. Art. 898 (Compensation in case of deception) If one of the contracting parties proceeded in good faith and the other party with deception, the first one has a right of compensation, according to the general rules, for the damage that he or she would not have suffered, had the contract been valid from the beginning, or had the contract not been concluded; the measure of compensation will depend on the legalisation of the contract. Art. 899 (Compensation if there is no deception or fault) The seller is obliged to compensate the purchaser in good faith, even if the seller acted without deception or fault; but in this case, the compensation comprehends only the damages suffered that do not result of luxurious improvements.

161

Lopes, Do contrato de compra e venda no direito civil, comercial e fiscal, p. 543.

690

Portugal Art. 900 (Compensation due to non-validation of the sales contract) 1. If the seller is responsible for the lack of fulfilment of the obligation to correct the cause of the invalidity of the sales contract, or for the delay of this obligation, the compensation [for the lack of validation] is to be added to the compensation in the former articles, except for the part in which the loss is shared. 2. But in the case governed by art. 898, the seller can choose between compensation for loss of profit due to the invalidity of the contract and compensation for loss of profit due to the lack or delay of validation.

Furthermore there is still another rule in the Civil Code that confers protection on the purchaser in good faith, which is indeed sui generis: Art. 1301 (Asset purchased from a trader) The person who demands goods from a third person, which goods were purchased in good faith by this third person from a trader who deals in similar assets, is obliged to compensate the purchaser for the price paid for the asset, but the demanding person has therefore the right of recourse against the one that negligently caused the loss.

The owner can revindicate the asset from the purchaser, but the latter is only obliged to give the asset back after being compensated by the owner, who has in his or her turn a right of recourse against the trader.162 The importance of art. 1301 is to provide security for every day trade. It can be applied only in the case of movables that are not subject to registration, since it is considered that the registration itself is a more efficient form of providing security in trade.163 Even if there is a right of compensation or indemnification, it is important to emphasize that the purchasing of someone’s assets does not result in good faith acquisition in all situations described above. The third party will not acquire ownership of the asset, as this sales contract does not have any legal consequence according to property law (sachenrechtlich), only obligation rights (schuldrechtlich), like the obligations resulting from arts. 894, 898-900 and 1301 CC.164

162

163 164

See with further references Nóbrega, Der rechtsgeschäftliche Eigentumserwerb an beweglichen Sachen in Deutschland und Portugal, p. 42-44. See STJ 30 March 1982, BolMinJus 315 (1982) 296. Cfr. v. Bar / Seabra / Xavier, Sachenrecht in Europa (Portugal), p. 367.

12. Good faith acquisition

691

12.1.2. Protection due to rules of registration Another “exceptional” situation where the good faith buyer is protected under Portuguese law relates to the assets subject to registration in a national register (the case of immovables, and assets to be registered); in such cases, when the inscription of the acquisition in the national register is still pending, then nullification has no effects on the good faith buyer (doctrine of register acquisition) – art. 291 CC. This could result in good faith acquisition.165 See registration of movable, 4.1.2. above.

12.1.3. Protection through prescriptive acquisition Good faith acquisition of assets that were lost or somehow disappeared is not possible, but acquisition based on prescription (usucapião) might occur.166 The general rules on acquisitive prescription apply to the good faith acquirer, and the particular circumstances of a case may determine the existence of special solutions. This is the case of the reduced period for acquisitive prescription of lost or missing movables, if the finding was announced (one year instead of three or six years, depending on the type of possession of the movable – art. 1299 CC), as stated in art. 1323 CC. The Portuguese system of acquisitive prescription establishes different acquisitive prescription periods depending on the nature of the asset and the type of possession. As to movable assets, the acquisitive prescription period is three or six years, depending on whether the possession is in good or bad faith possession; “entitled” possession is presumed to be good faith possession (entitled possession is the one that is grounded on a regular modus of property acquisition, even if invalid for some reason) – arts. 1259 CC, 1260 (2) CC and 1299 CC.

12.2.

Good faith acquisition in commercial law – a positive approach?

According to art. 467 (2) of the Commercial Code of 1888, the contract by means of which the seller sells another person’s assets is valid. For the purpose of art. 467 the seller has to be a professional trader, he or she is thus 165

166

See for details Nóbrega, Der rechtsgeschäftliche Eigentumserwerb an beweglichen Sachen in Deutschland und Portugal, p. 48-52. See Nóbrega, Der rechtsgeschäftliche Eigentumserwerb an beweglichen Sachen in Deutschland und Portugal, p. 41.

Portugal

692

obliged to acquire the asset in a legalized way and later on deliver it to the buyer, otherwise he or she is liable for damages (art. 467 parágrafo único). Is there indeed a rule of good faith acquisition in the Portuguese Commercial Code? First of all, the purchaser can only acquire ownership of the asset by means of a contract under 467 CCom, if the seller himself or herself acquires the ownership on it, this corresponds in reality to the solution of art. 897 CC (about the validation of the void contract). Thus even if the contract is considered valid in art. 467 CCom, it has rather obligation consequences, like the obligation to compensate for damages, but it does not result in transfer of title.167 The doctrine considers that the regime of commercial sales contract is subject to the dispositions of the Civil Code.168 Hence although there is a different degree of validity of contract [the contract now a valid contract pursuant to CCom], for the good faith acquirer to retain the asset it is required that legalisation occurs, that property is acquired by acquisitive prescription or that rules on sham contracts or on registration in the national registry apply. Therefore the answer to the question if good faith acquisition is possible under commercial law is quite the same under civil law,169 i.e., only if the contract is validated in the sense that the seller himself or herself acquires the property right (art. 467 CCom corresponding to arts. 895 and 897 CC). Otherwise the purchaser cannot acquire this property right in the asset, but legal protection is provided, as the purchaser will be compensated for not acquiring the property through the sales contract (art. 467 CCom and arts. 900, but also 1301 CC).170

12.3.

Reform of the rules on good faith acquisition

Specifically as to the problem of good faith acquisition, the introduction of the “possession vaut titre” principle in the Portuguese law is being mentioned, exactly to provide more protection to the good faith “acquirers” of assets not subject to registration.171 As seen above, the good faith acquisition is dealt with in the area of sales law. Taking thus this paradigmatic example of sales law with (i) the 167 168 169

170

171

Miranda, Venda de coisa alheia, Themis 2005, p. 139 Menezes Cordeiro, Manual de direito comercial I, p. 616 ff. See details in Nóbrega, Der rechtsgeschäftliche Eigentumserwerb an beweglichen Sachen in Deutschland und Portugal, p. 46 f. Cfr. among others Romano Martinez, Direito das obrigações – Contratos2, p. 120; Menezes Leitão, Obrigações III4, p. 92. See Ministério da Justiça, Reforma do Direito Civil, p. 69, no. 1.

13. Acquisitive prescription

693

dispositions on contract of purchase and sale (contrato de compra e venda) in the Código Civil, (ii) the sales contract rules under the Código Comercial, (iii) the transposition of EU directives on sales contract into the Portuguese national law in a way that is considered unsystematic, and (iv) later on the recent and vivid discussion about the creation of a Código do Consumidor, it can now be said that the Portuguese government, legislators and scholars should consider the problem of coherence among all private law, and not only about reforms of the civil codification.172

13.

Acquisitive prescription

The acquisitive prescription rule is found in arts. 1287 till 1301 CC. Portuguese law names it usucapião. Art. 1287 (Definition) Possession of the property right, or any other enjoyment right in rem, held for a certain period of time, enables the possessor, unless otherwise established by law, the acquisition of the right to which exercise of his or her actions match; this is called acquisitive prescription (usucapião).

The Código Civil of 1966 took the usucapio out of the dispositions about prescription and put it between the rules on possession, where the usucapio has its historical origins, thus putting an end to the terminological discussion about the so-called “prescrição aquisitiva” (usucapião) and “prescrição extintiva” (prescrição).173 Nevertheless the dispositions on prescrição (arts. 300-327) in Book I – the General Part of the CC – are also relevant to usucapião, as established in art. 1292. About the prescription, in general, see the following rules: Art. 300 (Mandatory nature of the system of prescription) Any agreements intended to change the time for legal prescription, or to facilitate or otherwise prevent the conditions under which prescription operates, are null and void.

172

173

Cristas, O Código Civil no contexto do direito privado (in print, to be edited by Deutsch-Lusitanische Juristenvereinigung in the transcript of the Lisbon conference of 2007). See already Cristas, Portuguese Contract Law: the search for regimes unification?, in: ERCL 5 (2009) 3, p. 357-367. About the reform of civil law in Portugal, see Introduction above. Cfr. Vieira, Direitos reais, p. 40.

Portugal

694

Art. 302 (Waiver of prescription) 1. Waiver of the prescription is only allowed after the delay has elapsed. 2. Waiver may be tacit and need not be accepted by the recipient. 3. Only the ones who can benefit from the right created by prescription have standing to waive it. Art. 303 (Claim of prescription) The courts can not apply prescription ex propriu motu; prescription needs to be invoked judicial or extra-judicially to be effective, by its beneficiary or representative. Art. 305 (Enforceability by third parties) 1. Prescription is enforceable by creditors and by others with a legitimate interest in the debtor’s declaration, even if the debtor waives it. 2. But if the debtor has waived it, the prescription may only be invoked by creditors for whom the requirements for actio pauliana are fulfilled. 3. If, having been sued, the debtor does not allege prescription and a judgment is enter against him or her, the does not affect his or her creditors.

13.1.

Function and justification of acquisitive prescription

Acquisitive prescription is one means to acquire property or any other enjoyment right in rem under Portuguese law. The main argument is grounded on the social function of property: the interest that things should perform their intended function.

13.2.

Requirements of acquisitive prescription

There are no limits to the nature of the assets that can be acquired, except for the ones referred to in art. 1293 CC: invisible servitudes (invisible easements) and the right of use and inhabit cannot be acquired by means of acquisitive prescription. Any other asset, movable or not, subject to registration or not, may be acquired. Any difference in regime will grounded on the movable or immovable nature of the thing, the register, when applicable, the good or bad faith of possession, and will have an impact on the delay for acquisition.174 In short, for a valid obligation or title there is no need to acquire possession, nor to have done so in good faith. The requirements are that the possession is peaceful and public (not concealed). The nature of the asset, 174

See types of possession, 2.1.2. above.

13. Acquisitive prescription

695

the title, and the good faith only impact on the delay for acquisitive prescription. Art. 1260 (1) CC determines that it shall be considered good faith possession the one by which the possessor is ignorant of the fact that his or her possession was damaging someone else’s right. Any title for possession, although putative, enables a good faith presumption. Indirect possession is allowed and so is succession and accession in possession. Nevertheless, as stated, it is required that possession be public (not concealed) and peaceful (art. 1297 in conjunction with art. 1300 CC).175 According to art. 1297 CC, if the possession is violent or concealed, the duration of time for usucapio only begins to run after the violence comes to an end and the possession becomes public. Therefore these provisions would preclude a thief from acquiring ownership by continuous possession.176 The delay for acquisitive prescription follows the same rules that apply to prescription specifically for suspension (arts. 318, 319, 320 and 321 CC), interruption (arts. 323, 324 and 325 CC), the mandatory nature of the rules, renounciability, justiciability, and third party effects, all of which ex vi art. 1292 CC. Art. 1292 (Suspension and interruption provisions) The provisions relating to the suspension and interruption of the prescription, as well as the rules in articles 300, 302, 303 and 305, are applicable to acquisitive prescription, regarding the necessary adaptations.

One of the provisions about causes of suspension is art. 318 CC. According to art. 318 lit. a, for example, the period for the acquisition of ownership by continuous possession does not run as between spouses, even if they are legally separated. The period for the acquisition of ownership by continuous possession is suspended as between persons under an incapacity and their legal representatives (art. 318, lit. b). See other similar cases in this article: Art. 318 (Causes of bilateral suspension) Prescription does not start or run: a) Between spouses, even if judicially separated; b) Between those who exercise parental power and persons subject to it, between the guardian and the person under guardianship or between the curator and the person under curatorship; 175

176

Possession is peaceful if it was acquired without physical or moral violence (art. 1261 CC) and it is public if it is exercised in a way that can be known by interested persons (art. 1262 CC), see STJ 15 May 2008, Processo 08B862. Cfr. Pires de Lima and Antunes Varela, Código Civil Anotado III2, note 2 under art. 1261, p. 23.

696

Portugal c) Between the owner and the administrator of the assets, when the administrative powers are a consequence of a legal rule, a court order or a third party decision. The prescription may start running from the moment the final accounting of the period of administration is approved; d) Between legal entities and their directors regarding responsibility for the exercise of their office, during such office; e) Between domestic workers and their employers, while the contract lasts; f) While the debtor has the usufruct of a contractual right or has a right of lien on it. Art. 319 (Suspension in favour of military personnel or personnel subject to military forces) The prescription does not start or run against military personnel during the time of war or mobilization, inside or outside the country, or against people who are, by reason of service, subject to the military.

In general, the period will also not start to run against persons subject to an incapacity who are legally represented, before one year has passed from the point in time when the incapacity has ended (art. 320 (1) in fine CC). Persons subject to an incapacity are minors (art. 123 CC) and disabled persons (art. 138 CC), to whom protection is granted by the same provisions (art. 139 CC). Following this, art. 320 CC is applicable to disabled persons as well, with the difference that the disability as such is considered to have ended, if not having ceased before, three years after the end of the period that would have elapsed had there been no suspension (art. 320 (3) CC). Art. 320 (Suspension in favour of minors, persons in interdiction or with disability) 1. The prescription does not start or run against minors who have no representative or asset administrator, unless the prescription relates to acts for which he or she has legal capacity; even if the minor has a legal representative or asset administrator, the prescription against him or her will not start before a year from the end of the incapacity. 2. In the case of presumptive prescriptions, the prescription is not suspended, but is not completed until a year after the date on which the minor had a legal representative or asset administrator, or acquired full capacity. 3. The provisions of the preceding paragraphs shall apply to persons in interdiction or incapability who are not able to exercise their right, with the difference that the incapacity is considered ended, if it had not yet ended, three years from the end of the period that would apply if the suspension were not applicable.

Note that art. 320 (2) CC on the so called presumptive prescriptions, i.e. prescriptions based on the presumption of performance (see art. 312 CC),

13. Acquisitive prescription

697

concerns claims and is not applicable to the acquisition of ownership by continuous possession.177 Art. 321 (Suspension due to force majeure or fault of the debtor) 1. Prescription is suspended during the time that the holder is unable to enforce his or her right, due to force majeure, during the last three months of the term. 2. If the holder has not exercised his or her right as a result of fraud committed by the debtor, the provisions of the preceding paragraph shall apply.

As said before, art. 1292 CC (on suspension), arts. 318-322 CC (on interruption), and arts. 323-327 CC (on prescription) are applicable to the acquisition of ownership by continuous possession. See the dispositions about interruption, as follows: Art. 323 (Interruption promoted by the holder of the right) 1. The prescription shall be suspended by summons or any act that expresses, directly or indirectly, the intention to exercise the right, whatever the process to which the act belongs, and even if the court has no jurisdiction. 2. If the summons is not completed within five days after being requested, for reasons not attributable to the applicant, prescription is suspended. 3. The annulment of the summons does not prevent the suspensive effect provided for in the preceding paragraphs. 4. For the purposes of this article, any other legal means by which the debtor acquires knowledge of the exercise of the right is equal to a summons. Art. 324 (Arbitration agreement) 1. An arbitration agreement suspends the prescription of the right whose enforcement is sought. 2. If there is an arbitration clause, or if the arbitration is required by law, prescription is suspended in any of the situations provided for in the previous article. Art. 325 (Recognition) 1. Prescription is interrupted by the recognition of the right, made to the holder by the one against whom the right can be exercised. 2. Tacit recognition is only relevant when it results from facts that unequivocally express it.

177

Cfr. Pires de Lima and Antunes Varela, Código Civil Anotado III2, note 3 under art. 1292, p. 71.

Portugal

698

Art. 326 (Effects of the interruption) 1. Interruption voids prescription for the entire elapsed time, and a new prescriptive period must start from the time of the suspending act, without prejudice to the provisions of paragraphs 1 and 3 of the following article. 2. The new prescription is subject to the delay of the original prescription, except as provided in art. 311. Art. 327 (Duration of the interruption) 1. If the interruption results from a summons, notice, or equivalent act, or arbitration, the new prescription period does not begin to run until the time of the decision that terminates the proceedings. 2. When, however, the case is withdrawn or dismissed, or proceedings are considered abandoned, or the arbitration agreement is without effect, the new prescription term starts to run after the suspensive act. 3. If, for procedural reasons not attributable to the holder of the right, the defendant is exonerated in the case, or if the arbitration agreement is without effect, and the period of prescription has finished or will finish within two months after the entry of the decision or verification of the fact making the agreement ineffective, prescription will be effective after those two months.

The acquisition of property through acquisitive prescription requires possession and so does, in general, the exercise of any right in rem in a movable (even security rights: under Portuguese law, the pledge requires that the movable is delivered to the creditor, or that a document conferring exclusive powers to dispose of the asset is delivered instead, as in art. 669 CC). As such, the only possible situation of a limited right in rem coexisting with possession is that of a pledge constituted by documentation. The principle of usucapio libertatis determines that, if the movable was possessed free from encumbrances, then the property is acquired as free from encumbrances.178 The following table presents the delays for acquisitive prescription:

Type of possession

Delay for

Delay for

Delay for

movables

registerable movables

immovables

2 years

10 years

10 years

15 years

Good faith, entitled, registered, peaceful and public Good faith, entitled, peaceful and public

178

3 years

Cfr. Pires de Lima and Antunes Varela, Código Civil Anotado III2, note 7 under art. 1287, p. 66.

13. Acquisitive prescription

699 Delay for

Delay for

Delay for

Type of possession

movables

registerable movables

immovables

Good faith, peaceful and public

6 years

10 years

15 years

4 years

15 years

Bad faith, entitled, registered, peaceful and public Bad faith, entitled, peaceful and public

6 years

10 years

20 years

Bad faith, peaceful and public

6 years

10 years

20 years

Violent or concealed

Never

Never

Never

Table 6 – Length of periods (delays) required for acquisitive prescription

13.3.

Prescription of ownership

There is no prescription of ownership in Portugal: an owner may always bring a revindication action against a third party, unless acquisitive prescription applies. Art. 1313 CC determines that action on revindication does not prescribe: Art. 1313 (Non-applicability of prescription to the action on revindication) Without prejudice to the rights acquired by prescriptive acquisition, the action of revindication is not subject to a statute of limitations.

13.4.

Accession of possession and usucapio

In Portugal the possessor is allowed to add the period of possession of his or her predecessor for the calculation of the period for the acquisition of ownership by continuous possession. The importance of the accessio possessionis resides precisely in the prescriptive acquisition.179 The acessão de posse is at the possessor’s discretion and is not mandatory.180 Furthermore, art. 1256 (2) CC states that the previous possession can be of a different nature from that of the follower, so that the actual possessor in good faith can add the period of possession in bad faith of the previous

179

180

Cfr. Vieira, Direitos reais, p. 414; Menezes Cordeiro, Posse3, p. 131; STJ 16 October 2008, Processo 08B2352. STJ 27 November 2007, Processo 07A3815.

Portugal

700

possessor, but will then be subject to the longer acquisition periods due to bad faith.181 Art. 1256 (Accession of possession) 1. The one that follows another in possession for any reason other than by testamentary will or intestate succession may add his or her possession to the one of the predecessor. 2. If the previous possession is of a different nature than that of the successor, accession will occur within the limits of the stricter possession.

This so called acessão de posse is thus expressly stated in art. 1256 CC, which applies to any form of accession other than mortis causa. The succession mortis causa in possession is provided in art. 1255 CC, with the difference that the possession does not require the physical acquisition of the goods. Art. 1255 (Succession mortis causa in possession) Upon death of the possessor, possession continues with the successor from the moment of death, regardless of the material acquisition of the asset.

14.

Other forms of original acquisition

As to occupation (occupatio) see references in section 4.1.1.(d) above.

181

Vieira, Direitos reais, p. 421.

Part IV: Additional issues 15.

Reservation of title

Reservation of title (reserva da propriedade) is regulated in art. 409 CC, above. It consists of a suspension clause inserted into a transfer contract (sales or any other) that suspends the transmission effect until its verification. The condition may be the full performance of the other parties’ obligations or any other fact upon which the parties agree. The transferor in a contract under reservation of title retains the property right.182 It is not a security right, but the property right itself and the adequate remedy in such case is the recovery action. There is no specific requirement to make the reservation of title effective against third parties, unless it is a specific requirement in the contract itself: the Portuguese system as far as formality is concerned is consensual, in the sense that no requirements are necessary if not required by law, art. 405 CC above. As a consequence, as to any other movable, this clause may be freely established, as the principle of “possession vaut titre” is not binding under Portuguese law.183 But if the contract’s object is an immovable thing or a registered movable, the reservation of title must be entered to be effective against third parties. The reservation of title enables the transferor to oppose his or her rights in the movable against the creditors of the transferee and the same right assists the transferee against the seizure of the asset by the creditors of the transferor, art. 351 of the Code of Civil Procedure, CCP: Art. 351 CCP (Grounds for third party opposition) 1 – Any court order of seizure or any other measure that determines the surrender of property, possession, or that affects a right in rem of a third party, may be challenged through third-party opposition. 2. Third party opposition is not admitted against seizure of assets held in proceedings of recovery of a company in bankruptcy. 182

183

See for details Peralta, A posição jurídica do comprador na compra e venda com reserva da propriedade. See also Nóbrega, Der rechtsgeschäftliche Eigentumserwerb an beweglichen Sachen in Deutschland und Portugal, p. 32 ff. Cfr. Pires de Lima and Antunes Varela, Código Civil Anotado I4, note 3 under art. 409, p. 376.

702

Portugal

If the seizure occurs as a consequence of the insolvency of the transferee, the transferor may oppose his or her right if the reservation of title clause was agreed in writing prior to the delivery of the asset (art. 104 (4) ICRC – Insolvency and Corporate Recovery Code). In case of insolvency of the transferor, the transferee may oppose the demand for the performance of the contract (art. 104 (1) ICRC Code). Art. 104 ICRC Sales with reservation of title and similar operations 1. The contract of sale with reservation of title in which the seller is the insolvent, the other party may require the performance of the contract if the thing has already been delivered on the date of the declaration of insolvency. 2. The provisions of the preceding paragraph apply in case of insolvency of the lessor, the contract of lease and the contract of lease with a clause that the thing leased becomes property of the lessee after satisfaction of all agreed rents. 3. If the buyer or lessee is the bankrupt, and is in possession of the thing, the deadline for the bankruptcy administrator, under art. 102 (2) thereof, can not end before five days after the date of assessment of the report, unless the property value is likely to fall considerably during this period and the other party explicitly warns the administrator in bankruptcy of that fact. 4. The reservation of title clause in contracts of sale of a determined thing, when the buyer is the insolvent, is only enforceable against the insolvency estate if it has been stipulated in writing by the time of delivery of the thing. 5. The effects of the refusal to comply by the administrator, when possible, are provided for in article 102 (3) thereof, it being understood that the right enshrined in point c) is the payment, considered as credit against the insolvency, of the difference, if positive, between the amount of rent or planned until the end of the contract, updated to the date of the declaration of insolvency by application of the rules established in article 91 (2) thereof, and the value of the thing on the date of refusal, if the other party is the seller or lessor, or the difference, if positive, between the latter value and that amount if he or she is the buyer or lessee.

Furthermore the rules about the good faith confusio, commixtio, and specificatio and acquisitive prescription are applicable in situations when reservation of title exists. In such a case, the reservation of title will no longer be effective.184

184

Menezes Leitão, Obrigações III4, p. 55, with reference to STJ 31 January 1996, BolMinJus 453 (1996) 46-57. Both this decision and the previous report of the Public Ministery (BolMinJus 453 [1996] 22-30) state that the reservation of title terminates when elevators are build into a house. The beneficiary of the original acquisition has therefore the duty of compensation, see Vieira, Direitos Reais, p. 709, 711.

16. Abandonment

16.

703

Abandonment

The owner of a movable can abandon it, subject to any consequences imposed by law, especially environmental rules.

17.

Co-ownership

Co-ownership is fully recognised under Portuguese law. Art. 1403 CC (above) defines it as the situation where two or more persons own the property right over the same thing. The co-owner owns an undivided share of the property right and not an identified part of it. Shares are freely transferable but the co-owners have pre-emption rights arts. 1408 and 1409 CC: Art. 1408 (Transfer and pledging of shares) 1. The co-owner can transfer his or her entire share or part of it, but can not, without consent of the other co-owners, burden specified parts of a common thing. 2. The transfer or burden of a specified part of the common asset without the consent of the co-owners is considered a transfer or burden of someone else’s asset. 3. The transfer of shares is subject to the formality required for the transfer of the thing. Art. 1409 (Right of pre-emption) 1. The co-owner has pre-emptive first place as between legal pre-emptors in case of sale or transfer of the share of any other co-owner to any third party. 2. The rules of articles 416 to 418 are applicable to the pre-emption of the coowner, with the necessary amendments. 3. If there are two or more pre-emptors, the share being transferred is divided in proportion to the shares.

Co-ownership can terminate in two different ways: by the reunion of all shares of the right with the same owner or by division of the thing. The division of the thing is regulated in art. 1412 CC and there are two situations when it is not possible: by physical (art. 209 CC, a contrario) or legal impossibility185 or because the co-owners agreed that division would be prohibited. Art. 1412 (Right to require the division) 1. No co-owners is obliged to remain in common ownership, unless it is agreed that the thing is to stay indivisible.

185

For example, art. 1376 (1) CC as to agricultural plots.

Portugal

704

2. The delay agreed upon for remaining undivided shall not exceed five years, but it is lawful to agree upon a renewal, one or more times, of this delay. 3. The clause requiring a period during which there is no division is opposable against third parties, but must be registered for this purpose, if the thing is subject to registration. Art. 209 (Divisible things) Divisible things are ones that can be split without changing their substance, reducing their value or damaging the use for which they are intended.

18.

Further rules applying to unspecified goods?

There are no special rules comparable to the English approach of acquisition of co-ownership in goods forming part of an identified bulk. The main reason is that the Portuguese concept of co-ownership requires its object to be the right and not the thing itself that is shared.186

19.

Consequences of restitution of the movable to the owner

19.1.

Entitlement to benefits (“fruits”) resulting from the movable

19.1.1. Distinction between categories of fruits Fruits in the legal sense consist of everything, which is periodically produced by a thing (coisa) without detriment to its subsistence (art. 212 (1) CC). This provision applies to all categories of things, movable and immovable. Portuguese law distinguishes between natural and civil fruits. Natural fruits (frutos naturais) are those that originate directly from the movable, while civil fruits (frutos civis) consist of the revenue or value generated by the movable as a consequence of a legal relationship or transaction (art. 212 (2) CC).

186

Pires de Lima and Antunes Varela, Código Civil Anotado III2, notes under art. 1403, p. 343 ff. Cf. about the similar reasoning for the Código de Seabra, in: Rodrigues, A Posse, 304.

19. Consequences of restitution of the movable to the owner

705

19.1.2. Relevant criteria as to the entitlement to benefits (a)

Good faith and bad faith

The good faith possessor is entitled to the natural and civil fruits that the movable generated while good faith lasted (art. 1270 CC). The main reason given by the commentators of the Civil Code is that: “The good faith possessor acted in the conviction of being the holder of a right in the movable, and as such it would be unfair that he or she would be obliged to return the harvested fruits, as he or she was expecting them and organised his or her activity based on that expectation”.187 The bad faith possessor must return all fruits produced or potentially produced by the movable during the (bad faith) possession (art. 1271 CC).

(b)

Time

Time has some relevance to the fructification regime. First of all, the moment that triggers the entitlement of the good faith possessor to the fruits is the time of harvest. Secondly, good faith or bad faith is ascertained at the moment of the harvest (art. 1270 CC).

19.1.3. Reimbursement for fructification expenses Regarding pending fruits at the time that the good faith ended (the possessor gained knowledge that he or she was breaching another person’s right), that possessor is entitled to reimbursement for the fructification expenses, insofar as they do not exceed the value of the fruits (art. 1270 (2) CC).188 If the possessor has sold or otherwise disposed of the future fruits before harvest, and good faith ended, the transmission of property rights in the fruits is valid, but the profit generated is returned to the owner, with deduction of the fructification expenses (art. 1270 (3) CC). The Civil Code is silent about the reimbursement of the bad faith possessor, as was the old Código de Seabra. However, it is considered that he or she should be entitled to reimbursement.189 In light of the Civil Code 187 188 189

Pires de Lima and Antunes Varela, Código Civil Anotado III2, note 2 under art. 1270, p. 37. Pires de Lima and Antunes Varela, Código Civil Anotado III2, note 4 under art. 1270, p. 37 f. The doctrine refers to the general principle of prevention of unjust enrichment (principio do não locupletamento à custa alheia), which was developed by case law under the old CC of 1867. See for all Rodrigues, A Posse, 308 and Pereira Coelho, Enriquecimento e dano, p. 14.

Portugal

706

in force, Pires de Lima and Antunes Varela present two arguments on behalf of this interpretation: (1) though bad faith possession should be rebuked by the law, the owner would obtain an unjustified benefit to the detriment of the bad faith possessor, and (2) had the owner been in possession of the movable, he or she would have incurred the same expenses.190 These provisions apply only to full possession. Specific rules apply to mere detention, according to the appropriate contractual/factual framework: bailment (art. 1132 CC, the bailee is only entitled to fruits if that was agreed in the contract); pledge (art. 671 CC, the pledgee can deduct the value of the fruits from, according to the following order: (1) the expenses with conservation of the pledged movable; (2) the interest due and (3) the capital owed).

19.1.4. Fruits that the movable could have potentially generated Only the bad faith possessor is obliged to compensate the owner for the value of the fruits that the movable could have potentially generated if administered with the standard of care of a “diligent owner” (art. 1271 CC).191 The rule is that the bad faith possessor should be responsible vis-àvis the owner for all avoidable damage and detriment caused by his or her bad faith possession.192

19.2.

Loss and deterioration of the movable

The main criterion for attributing liability for the loss or deterioration of the movable is the good or bad faith of the possessor, and the rule applies to all envisaged situations: the good faith possessor will be liable only for the loss or damage if he or she acted negligently, whereas the bad faith possessor will, a contrario, be liable in all cases, art. 1269 CC: Art. 1269 (Loss or deterioration of the thing) If the possessor is in good faith, he or she is only liable for the loss or deterioration of the thing insofar as he or she was at fault.

The rules about the standard of good faith and burden of proof are the same ones as explained above (13.2.). 190

191

192

Pires de Lima and Antunes Varela, Código Civil Anotado III2, note 2 under art. 1271, p. 39. STJ 21 January 1972, BolMinJus 213 (1972) 231; Pires de Lima and Antunes Varela, Código Civil Anotado III2, note 3 under art. 1271, p. 39. Rodrigues, A Posse, p. 314.

19. Consequences of restitution of the movable to the owner

19.3.

707

Reimbursement for improvements and expenses incurred during the possession of the movable

The main criterion as to improvements and expenses is the nature of the expense; good or bad faith plays a minor role in these situations. Portuguese law recognises three different categories of expenses: necessary, useful and sumptuary (art. 216 CC). The first category includes expenses that are necessary to prevent the loss, destruction or deterioration of the thing, the second are those expenses that do not qualify as necessary, but increase the value of the thing (and thus qualify as improvements), and sumptuary are those not qualifying as necessary or useful but rather only for the pleasure of the author. Both the good and the bad faith possessor have the right to compensation for necessary expenses and the right to remove any useful additions or improvements that may be removed, or their reimbursement, if the removal is not possible without damaging the thing materially, art. 1273 CC above. The rules for calculating the reimbursement in all cases are the ones for unjustified enrichment established in art. 479 CC, and the burden of proof for the prejudice to the thing upon removal belongs to the possessor.193 Art. 479 (Object of the obligation of restitution) 1. The obligation of restitution based on unjustified enrichment includes all that has been achieved at the expense of the impoverished party, or if restitution in kind is not possible, the corresponding value. 2. The obligation of restitution may not exceed the extent of the enrichment at the date of verification of some of the facts mentioned in article 480 [good faith].

As to the sumptuary expenses, art. 1275 CC above, determines different rules for the good or bad faith possessor. The good faith possessor is entitled to remove the improvement if it can be done without prejudice to the thing; if such prejudice unavoidable, then the good faith possessor has neither the right to remove nor the right to compensation. The bad faith possessor has no rights at all. The provisions on reimbursement for improvements and expenses are systemically set forth under the provisions of Book III on Property Rights, but most of these dispositions refer to the law of unjustified enrichment in Book II on Obligations (as arts. 1273 (2), 1334 (2), 1341 and 1538 (2) CC). The Portuguese Civil Code has thus a technique of references, while the Portuguese doctrine has been developing, under the influence of Ger-

193

Pires de Lima and Antunes Varela, Código Civil Anotado III2, note 4 under art. 1273, p. 42 f.

Portugal

708

man law, the so-called enriquecimento por despesas efectuadas por outrem, corresponding to Aufwendungskondiktion.194

19.4.

Possessor’s right to retain the movable

The possessor may, under certain circumstances, retain the movable. Art. 754 CC establishes the retention right and defines it as the right the debtor has to retain the thing to guaranty the payment of any credit he or she may have against the other party for expenses originated by or because of the thing to be returned. This right requires that the possessor or holder of the asset obtained the detention or possession of the movable in a lawful way or, that at least, at the time of acquiring detention or possession he or she was unaware of the unlawfulness of the acquisition and he or she is in good faith. The standard of good faith is the one included in art. 1260 CC explained above. Art. 754 (When the retention right takes place) The debtor has the right to retain the thing to guaranty the payment of any credit he or she may have against the other party for expenses originated by or because of the thing to be returned. Art. 756 (Exclusion of the retention right) There is no retention right: a) For the benefit of those who illegally obtained the thing to be delivered, provided that at the time of acquisition, they knew the unlawfulness of this; b) For the benefit of those expenses produced in bad faith; c) In relation to things that cannot be subject to seizure; d) When the other party provides sufficient security.

The retention right is considered a right in rem,195 and it seems there is some willingness to review its content, as it is sometimes considered to be an unjustified super security.196

194

195 196

See Menezes Leitão, Enriquecimento sem causa2, p. 791 ff. See for this PEL / von Bar / Swann, Unj. Enr., Chapter 4, Article 4:101, Notes, IV, 35. See for all Oliveira Ascensão, Direito Civil – Reais5, p. 546 ff. See Ministério da Justiça, Reforma do Direito Civil, p. 69, no. 7.

19. Consequences of restitution of the movable to the owner

19.5.

709

Who bears the expenses of the restitution of the movable to the owner?

19.5.1. Restitution of the movable in case of transfer based on a void or avoided contract or invalid right to use There is no specific rule under Portuguese law for such situations and thus the solution is to be found in general dispositions, as in art. 289 ff CC about the consequences of invalidity. Also the legal principle of venire contra factum proprio can support the argument that, if the contract’s defect is caused by one of parties to the contract, or attributed by law to a party who benefits over the other, the party acting with culpa must bear the expenses.

19.5.2. Restitution of the movable in case a right to use the movable has ended (e.g. after expiration of a leasing contract) The restitution of the movable is an obligation of the lessee and consequently the expenses associated with it are his or her responsibility, art. 1038 CC; the same applies to usufruct, art. 1483 CC, and to the right to use and inhabit, art. 1483 ex vi art. 1490 CC.

19.5.3. Restitution of the movable in case of theft or similar cases The expenses associated with the restitution are to be borne by the thief or similar person, art. 1284 CC, above.

19.5.4. Restitution of a movable acquired from a non-owner or in case of a right to use granted by a non-owner The expenses associated with the restitution are to be borne by the dispossessor, art. 1284 CC, above.

19.5.5. “Garage cases” Where a garage-owner entered into a contract to repair the movable (e.g. a car) and the other contracting party was not the owner (but, e.g. a thief, a buyer under retention of title, or a lessee), and this other party does not pay the garage-owner, and the owner demands restitution of the movable

710

Portugal

from the garage-owner, the question seems to be whether the garage owner enjoys a retention right or not. The contract to repair was concluded between the garage owner and the non-owner and consequently the owner is not obliged: the garage credit is against the person who ordered the repair, art. 406 CC. In such case, the garage owner does not enjoy the retention right against the owner.

Systematic of the Portuguese Civil Code Systematic of the Portuguese Civil Code The structure of the 1966 Portuguese Civil Code is as follows:197 Civil Code Book I: General Part Title 1: Laws, their interpretation and enforcement Title 2: Legal relationships Sub-title 1: Persons Sub-title 2: Things Sub-title 3: Legal facts Sub-title 4: The exercise and defense of rights Book II: Law of Obligations Title 1: Obligations in general Chapter 1: General provisions Chapter 2: Sources of obligations Section 1: Contracts Section 2: Unilateral declarations Section 3: Negotiorum gestio Section 4: Unjustified enrichment Section 5: (Non-contractual) civil liability Chapter 3: Species of obligations Chapter 4: Transfer of credits and debts Chapter 5: General securities of the obligations Chapter 6: Special securities of the obligations Chapter 7: Performance and non-performance of the obligations Chapter 8: Causes of extinction of obligations other than performance Title 2: Contracts in special Chapter 1: Sales contract Section 1: General provisions Section 2: Sales contract effects Section 3: Sales of things subject of counting, weighting or measuring 197

The structure we present extends only to the third level when relevant for this report.

Portugal

712

Section 4: Sales of third party assets Section 5: Sales of defective goods Section 6: Sales on client satisfaction and sales conditioned to testing Section 7: Reversible sales Section 8: Sales over documents Section 9: Other onerous contracts Chapter 2: Donation Chapter 3: Society Chapter 4: Lease Section 1: General Provisions Section 2: Owner obligations Section 3: Lessee obligations Section 4: Termination of contract Section 5: Lease transfer Section 6: Sub-lease Section 7: Agricultural lease Section 8: Other lease contracts Chapter 5: Cattle partnership Chapter 6: Free lending Chapter 7: Onerous lending Chapter 8: Labour contract Chapter 9: Services Chapter 10: Mandate Chapter 11: Deposit Chapter 12: Building and other works contract Chapter 13: Perpetual rent Chapter 14: Life time rent Chapter 15: Games and bets Chapter 16: Transaction Book III: Law of Things Title 1: Possession Chapter 1: General provisions Chapter 2: Possession characteristics Chapter 3: Acquisition and lose of possession Chapter 4: Effects of possession Chapter 5: Defence of possession Chapter 6: Prescriptive acquisition Section 1: General provisions Section 2: Prescriptive acquisition of immovable Section 3: Prescriptive acquisition of movable

Systematic of the Portuguese Civil Code

Title 2: Property right Chapter 1: Property in general Section 1: General provisions Section 2: Defence of property Chapter 2: Acquisition of property Section 1: General provisions Section 2: Occupation Section 3: Accession Sub-section 1: General provisions Sub-section 2: Natural accession Sub-section 3: Movable industrial accession Sub-section 4: Immovable industrial accession Chapter 3: Immovable property Chapter 4: Property of waters Chapter 5: Co-ownership Section 1: General provisions Section 2: Rights and obligations of the co-owner Chapter 6: Horizontal property Title 3: Usufruct, Right to use and inhabit Chapter 1: General provisions Chapter 2: Rights of the beneficiary of usufruct Chapter 3: Obligations of the beneficiary of usufruct Chapter 4: Extinction of usufruct Chapter 5: Right to use and inhabit Title 4: Emphyteusis Title 5: Surface right Title 6: Easements Book IV: Family law Book V: Succession law

713

Table of Literature Almeida Costa, Mário Júlio de. História do Direito Português (3rd ed. 1996, reprint Coimbra 2000) Almeida Costa, Mário Júlio de. Direito das Obrigações (11th ed., Coimbra 2008) Almeida Ribeiro, Gonçalo. A propriedade de Antonio Luiz de Seabra: enquadramento geral e análise crítica (working paper FDUNL 01 / 03), available under http: // www.fd.unl.pt / Anexos / Downloads / 242.pdf Antunes Varela, João de Matos. Das Obrigações em geral, vol. I (10th ed., Coimbra 2000) von Bar, Christian and Clive, Eric (eds.), Principles, Definitions and Model Rules of European Private Law. Draft Common Frame of Reference (DCFR) Full Edition (Munich 2009 / Oxford 2010) v. Bar, Christian / Clive, Eric / Schulte-Nölke, Hans et al. (eds.), Principles, Definitions and Model Rules of European Private Law. Draft Common Frame of Reference (DCFR) Outline Edition (Munich 2009) v. Bar, Christian. The Common European Law of Torts vol. I – The core areas of tort law, its approximation in Europe and its accommodation in the legal system (Oxford 1998) v. Bar, Christian (ed.) / Seabra, Maria Margarida R. A. C. de / Xavier, Yanko Marcius de Alencar. Sachenrecht in Europa – Systematische Einführung und Gesetzestexte; vol. 3 inter alia Portugal, p. 339-454 (Osnabrück 1999) v. Bar, Christian and Drobnig, Ulrich. The interaction of contract law and tort and property law in Europe; with contributions to Portuguese law by José Carlos de Medeiros Nóbrega (Munich 2004), also available as “Study on property law and non-contractual liability as they relate to contract law, submitted to the European Commission” under http: // ec.europa.eu / consumers / cons_int / safe_ shop / fair_bus_pract / cont_law / study.pdf Bártolo, Diogo. Venda de bens alheios, in: Menezes Cordeiro / Menezes Leitão / Costa Gomes (eds.), Estudos em homenagem ao Prof. Doutor Inocêncio Galvão Telles, vol. IV – Novos Estudos de Direito Privado (Coimbra 2003), p. 383-436. Calvão da Silva, João. Bicentenário do Code Civil (o Código Civil e a Europa: influências e modernidade), in: RLJ 134 (2001-02), p. 267-275. Capelo de Sousa, Rabindranath and França Pitão, José António de. Código Civil e legislação complementar, vol. I: arts. 1-1250 (1st ed., Coimbra 1978), vol. 2: arts. 1251-2334 (Coimbra 1979)

716

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Caramelo-Gomes, José L. Good faith acquisition – why at all?, in: Faber, Wolfgang and Lurger, Brigitta (eds.), Rules for the transfer of movables – a candidate for European harmonisation or national reforms? (Munich 2008), p. 155-160. Caramelo-Gomes, José L. Unification in The Field of Property Law From The Perspective of European Law, in: Faber, Wolfgang and Lurger, Brigitta (eds.), Rules for the transfer of movables – a candidate for European harmonisation or national reforms? (Munich 2008), p. 239-248 Caramelo-Gomes, José L. The Law of Real Property In The European Community – A Comparative Study (Salford 2002) Carvalho Fernandes, Luís A. Lições de direitos reais (2nd ed., Lisbon 1997) Um Código Civil para a Europa. A Civil Code for Europe. Un Code Civil pour l’Europe. Boletim da Faculdade de Direito da Universidade de Coimbra, Studia Iuridica 64 (Coimbra 2002) Código Civil Português – Evolução e perspectivas atuais, in: Revista da Faculdade de Direito da Universidade Nova de Lisboa (Themis 2008) – Edição especial (Coimbra 2008) Cristas, Assunção and Gouveia, Mariana França. Transmissão de propriedade de coisas móveis e contrato de compra e venda – Estudo de direito comparado dos direitos português, espanhol e inglês, in: Cristas / Gouveia / Neves, Transmissão da propriedade e contrato (Coimbra 2001), p. 15-137. Cristas, Assunção. Portuguese Contract Law: the search for regimes unification?, in: ERCL 5 (2009) 3, p. 357-367. Cristas, Assunção. É necessário ou conveniente reformar o direito civil português? Primeiros subsídios para a reforma do direito civil, in: Ministério da Justiça, Reforma do Direito Civil (Coimbra 2005), p. 5-8. Cristas, Assunção. O Código Civil no contexto do direito privado (forthcoming as a publication of the Deutsch-Lusitanische Juristenvereinigung; lecture held in Lisbon 2007) Cristas, Assunção. Transmissão contratual do direito de crédito – do caráter real do direito de crédito (Coimbra 2005) DCFR – see v. Bar, Christian et al. Dias Pereira, André Gonçalo. Introduction to Portuguese private law / Transfer of title in Portuguese law, in: Rainer, Johannes Michael and Filip-Fröschl, Johanna (eds.), Transfer of title concerning movables – Part I (Frankfurt am Main 2006), p. 129-153. Drobnig, Ulrich. Property Law in a future European Civil Code, in: Código Civil para a Europa (Coimbra 2002), p. 103-155. Drobnig, Ulrich. Transfer of property, in: Hartkamp / Hesselink / Hondius et al (eds.), Towards a European Civil Code (Nijmegen 2004), p. 725-740. Duarte Manso, Luís and Teodósio Oliveira, Nuno. Direitos reais & registo e notariado. Casos práticos resolvidos (3rd. ed. Lisbon 2008)

Table of Literature

717

Faber, Wolfgang and Lurger, Brigitta (eds.), Preface, in: National Reports on the Transfer of Movables in Europe I (Munich 2008) Ferreira de Almeida, Carlos / Cristas, Assunção / Piçarra, Nuno (eds.), Portuguese law: an overview (Coimbra 2007) Ferreira de Almeida, Carlos. Transmissão contratual da propriedade – entre o mito da consensualidade e a realidade de múltiplos regimes, Themis VI (2005) p. 5-17. Godinho, Jorge A. F. The Macau Civil Code – An English partial translation (2009), available under http: // ssrn.com / abstract=1280595 Gomes, Júlio M. Vieira. O conceito de enriquecimento, o enriquecimento forçado e os vários paradigmas do enriquecimento sem causa (Coimbra 1998) Gouveia Andrade, Maria Paula. Prática de direitos reais – Questões teóricas e hipóteses resolvidas (Lisbon 2009) Hartkamp / Hesselink / Hondius et al. (eds.), Towards a European Civil Code (3rd ed., Nijmegen 2004) Jayme, Erik. Das Recht der lusophonen Länder (Baden-Baden 2000) Jayme, Erik and Schindler, Christian (eds.), Portugiesisch – Weltsprache des Rechts: Studien, Referate, Gutachten zu den Rechtssystemen von Angola, Brasilien, Osttimor und Portugal (Aachen 2004) Kieninger, Eva-Maria; with contribution by Luís M. T. de Menezes Leitão. Security rights in movable property in European Private Law / The Common Core of European Private Law (Cambridge 2004) Leite de Campos, Diogo and Martins, Ives Gandra da Silva (eds.), O Direito Contemporâneo em Portugal e no Brasil (Coimbra / São Paulo 2004) Lopes, Manuel Baptista. Do contrato de compra e venda no direito civil, comercial e fiscal (Coimbra 1971) Menezes Cordeiro, António. Da boa fé no direito civil, 2 vols. (Coimbra 1984, reprint 2007) Menezes Cordeiro, António. Direitos reais (Lisbon 1979, reprint 1993) Menezes Cordeiro, António. Manual de direito comercial vol. I (Coimbra 2001) Menezes Cordeiro, António. Da modernização do direito civil, vol. I – Aspectos gerais (Coimbra 2004) Menezes Cordeiro, António. Tratado de Direito Civil Português, vol. I: Parte Geral, tomo I: Introdução, Doutrina geral, Negócio jurídico (Coimbra 1999) Menezes Cordeiro, António. Tratado de Direito Civil Português, vol. I: Parte Geral, tomo II: Coisas (2nd ed. Coimbra 2002)

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Table of Abbreviations art.

article

BFD

Boletim da Faculdade de Direito da Universidade de Coimbra (Coimbra 1.1914; cited by volume, year and page; also cited as Studia Juridica) Boletim do Ministério da Justiça (Bulletin of the Ministry of Justice, Portugal; Lisboa 1.1940 / 41-7.1947 = nos. 1-40 published as Boletim Oficial do Ministério da Justiça; N.S. 1.1947; 2.1947-499.2000 published as Boletim do Ministério da Justiça; cited by volume, year and page)

BolMinJus

CA CC CCP CCR CDP cfr. / cf. CJ CJ(ST) CPLP CRMG

DCFR DG DGPJ DL DR

Court of Appeal (e.g. CA Lisbon: Tribunal da Relação de Lisboa) Civil Code; Código Civil Code of Civil Procedure; Código de Processo Civil Code of Commercial Register; Código do Registo Comercial Cadernos de Direito Privado (Braga 1. 2003 ff; cited by year, number and page) confer Colectânea de Jurisprudência (Coimbra 1.1976 ff; cited by year, volume and page) Colectânea de Jurisprudência. Acórdãos do Supremo Tribunal de Justiça (Coimbra 1.1993 ff; cited by volume, year and page) Community of Portuguese Speaking Countries; Comunidade dos Países de Língua Portuguesa Code of Register of Moveable Goods; Código do Registo de Bens Móveis Draft Common Frame of Reference Diário do Governo (Government Gazette, Portugal; Lisboa 1.1869 ff), substituted by Diário da República Direcção-Geral da Política de Justiça (Ministério da Justiça – Portugal) Decree Law; Decreto-Lei Diário da República (Government Gazette, Portugal; Lisboa 1.1976 ff; cited by number, year, series and part), substituted Diário do Governo [DG]

Table of Abbreviations ed. ERCL ERPL

723

edition; editor European Review of Contract Law (Berlin 1.2005 ff; cited by volume, year, number and page) European Review of Private Law (Deventer 1.1994 ff; cited by volume, year and page)

FDUNL FS

Faculdade de Direito da Universidade Nova de Lisboa Festschrift / Commemorative Publication / Essays in honour of sb. / Estudos em homenagem

GPR

Zeitschrift für Gemeinschaftsprivatrecht / European Community Private Law Review / Revue de droit privé communautaire (Munich 1.2003; cited by volume, year and page)

ICRC

Insolvency and Corporate Recovery Code; Código da Insolvência e da Recuperação de Empresas

OJ EC

op. cit.

Official Journal of the European Communities (Brussels 1.1958 ff; from 11.1968 ff: issue C [Communication]: Information and Notice; Issue L [Législation]: Legislation; cited by issue, number, date and page) opera citato (work already cited)

PECL PEL

Principles of European Contract Law Principles of European Law

RLJ

Revista de Legislação e Jurisprudência (Coimbra 1.1868 / 69 ff; cited by volume, year and page) Revista da Ordem dos Advogados (Lisbon 1.1941 ff; cited by year, volume and page; also online)

ROA

STJ

Supremo Tribunal de Justiça (Supreme Court of Portugal)

vol.

volume

ZfIR

Zeitschrift für Immobilienrecht (Cologne 1.1997; cited by year and page)

Schriften zur Europäischen Rechtswissenschaft / European Legal Studies / Etudes juridiques européenes

Band / Volume 1: Andreas Fötschl, Hilfeleistungsabreden und contrat d‘assistance. Eine rechtsvergleichende Untersuchung zum französischen, deutschen, österreichischen und englischen Recht. 2005. ISBN 978-3-935808-56-9 Band / Volume 2: Hanna Sivesand, The Buyer‘s Remedies For Non-Conforming Goods. Should there be Free Choice or are Restrictions Necessary? 2005. ISBN 978-3-935808-75-0 Band / Volume 3: Christoph Jeloschek, Examination and Notification Duties in Consumer Sales Law. How far should we go in protecting the consumer? 2006. ISBN 978-3-935808-88-0 Band / Volume 4: Matthias Ruffert, The Transformation of Administrative Law in Europe – La mutation du droit administratif en Europe. 2007. ISBN 978-3-935808-91-0 Band / Volume 5: Olha Cherednychenko, Fundamental Rights, Contract Law and the Protection of the Weaker Party. 2007. ISBN 978-3-86653-043-0 Band / Volume 6: Wolfgang Faber / Brigitta Lurger (Eds.), Rules for the Transfer of Movables. A Candidate for European Harmonisation or National Reforms? 2008. ISBN 978-3-86653-060-7 Band / Volume 7: Wolfgang Faber / Brigitta Lurger (Eds.), National Reports on the Transfer of Movables in Europe. Volume 1: Austria, Estonia, Italy, Slovenia. 2008. ISBN 978-3-86653-073-7 Band / Volume 8: Odavia Bueno Díaz, Franchising in European Contract Law. 2008. ISBN 978-3-86653-075-1

Band / Volume 9: Paraskevi Paparseniou, Griechisches Verbrauchervertragsrecht. Eine Untersuchung vor dem Hintergrund des Gemeinschaftsprivatrechts. 2008. ISBN 978-3-86653-049-2 Band / Volume 10: Carsten Stölting, Vertragsergänzung und implied terms. Eine rechtsvergleichende Untersuchung des deutschen und englischen Rechts. 2009. ISBN 978-3-86653-093-5 Band / Volume 11: Wolfgang Faber / Brigitta Lurger (Eds.), National Reports on the Transfer of Movables in Europe. Volume 2: England and Wales, Ireland, Scotland, Cyprus. 2009. ISBN 978-3-86653-096-6 Band / Volume 12: Wolfgang Faber / Brigitta Lurger (Eds.), National Reports on the Transfer of Movables in Europe. Volume 3: Germany, Greece, Lithuania, Hungary. 2011. ISBN 978-3-86653-101-7 Band / Volume 13: Wolfgang Faber / Brigitta Lurger (Eds.), National Reports on the Transfer of Movables in Europe. Volume 4: France, Belgium, Bulgaria, Poland, Portugal. 2011. ISBN 978-3-86653-118-5 Band / Volume 14: Wolfgang Faber / Brigitta Lurger (Eds.), National Reports on the Transfer of Movables in Europe. Volume 5: Sweden, Norway and Denmark, Finland, Spain. 2011. ISBN 978-3-86653-136-9 Band / Volume 15: Wolfgang Faber / Brigitta Lurger (Eds.), National Reports on the Transfer of Movables in Europe. Volume 6: The Netherlands, Switzerland, Czech Republic, Slovakia, Malta, Latvia. 2011. ISBN 978-3-86653-137-6