JURIDICA INTERNATIONAL 22/2014
University of Salzburg
Proprietary Security Rights
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