Proprietary Security Rights in Movables?European Developments: A Spotlight Approach to Book IX DCFR

• Author: Wolfgang Faber
• Pages: 27-36

27

JURIDICA INTERNATIONAL 22/2014

Wolfgang Faber

Associate Professor

University of Salzburg

Proprietary Security Rights

in Movables—European

Developments:

A Spotlight Approach to Book IX DCFR

1. Introduction: Some problems and developments

Proprietary security rights in movable assets are an issue of signif‌i cant practical importance in all European

countries. Accordingly, it may be appropriate to start this article with a statement of reassurance: If you are

a practitioner—an attorney, a judge or notary, or a lawyer in the banking business—you have no need to be

afraid. There is no forthcoming European legislation turning your well-known national system upside down

within the next couple of years. In fact, for the time being, there is no European legislation in sight in this

area at all.

However, if you are a practitioner, you may wish certain issues to be resolved in a suitable and eff‌i cient

way, within a framework providing legal certainty. Depending on the jurisdiction you practise in, the partic-

ular problems in that respect may differ. I may start a short list of examples by referring to my own country,

Austria. Under the Austrian regime for proprietary security rights, many goods are, from a practical point

of view, completely precluded from being used as collateral for credit. Because of a strict understanding

of the principle of publicity, which applies both to pledge rights and to transfers of ownership for security

purposes, the security provider must actually be dispossessed of the encumbered assets.*1 Consequently, it

will not be possible to use the encumbered asset (machine, motor vehicle, or other asset) for the debtor’s

business. A narrow exception, allowing ‘symbolic’ delivery, applies in cases where handing over the collat-

eral goods would, on account of their physical character, be ‘impossible or unreasonable’;*2 but th e scope of

this rule is very uncertain in practice (which, for example, makes it extremely diff‌i cult to pledge inventory).

Matters are certainly easier under German and Estonian law, wherein a transfer of ownership for secu-

rity purposes is possible by way of constitutum possessorium—i.e., on the basis of a mere agreement, with-

out physical delivery.*3 However, such a security interest is generally lost once the encumbered asset (e.g.,

1 §451 of the Austrian Civil Code.

2 §452 in conjunction with §427 of the Austrian Civil Code. For an account on the latter provision in the English language,

see W. Faber. National report on the transfer of movables in Austria. – W. Faber, B. Lurger (eds.). National Reports on the

Transfer of Movables in Europe, Volume 1: Austria, Estonia, Italy, Slovenia. Munich: Sellier European Law Publishers

2008, pp. 1–218, on p. 88 ff. – DOI: http://dx.doi.org/10.1515/9783866537019.

3 See M.-R. McGuire. National report on the transfer of movables in Germany. – W. Faber, B. Lurger (eds.). National Reports

on the Transfer of Movables in Europe, Volume 3: Germany, Greece, Lithuania, Hungary. Munich: Sellier European Law

http://dx.doi.org/10.12697/JI.2014.22.03