учебный год 2023 / (Encyclopedia of Law and Economics 5) Boudewijn Bouckaert-Property Law and Economics -Edward Elgar Publishing (2010)

Property rights: a comparative view 45

right to enforce it, the practical effect can be the imposition of a positive duty. This can be done by formulating the contract in such a way that the right of servitude will only be exercised when the holder of the servient land, on which an actual petrol station exists, stops buying a specific brand of petrol from the holder of the dominant land, i.e. in this case the petrol company. In the latter situation, the petrol company can demand removal of the petrol station. The final outcome in practice is a positive duty for the owner of the petrol station to buy his petrol from that specific petrol company, secured by a right of servitude. These servitudes are therefore known as security servitudes (Füller 2006, 505–506).

A second example of how parties by making autonomous choices can use property law to attain results which may not have been envisaged by the drafters of, e.g., civil codes can be found when looking at the ‘stacking’ of property rights. The use of stacking is controversial (Struycken 2007, 368–378). An example of this is a municipality that does not want to transfer ownership of the land it is selling to, e.g., a developer, because it wants to control land use also in its capacity as private law owner. Instead of transferring the right of ownership, the municipality will use a long lease or right of emphyteusis, that will grant the holder of the right control over the land, but not the primary property law entitlement. However, in order to obtain finance it might be necessary for the holder of the right of emphyteusis to have ownership of the buildings that are to be constructed on the land. To attain this purpose a right of superficies can be created on the right of emphyteusis. Further, when the building that is constructed is an apartment building the right of ownership that is created by the right of superficies on the right of emphyteusis will be separated into rights of apartment, which can each, in their turn, be subject to a right of hypothec to finance the acquisition of the apartment right on the right of superficies on the right of emphyteusis on the right of ownership of the municipality.

3.4Flexibilisation of the specificity principle

The principle of specificity prescribes that each object of property law must be identifiable. In the classical model of property law an unidentified object leads to the impossibility to hold a property right on such an object. This fundamental starting point of a legal system originates from a time where land was the most valuable and important object of property law. However, with the changes in objects of property law and the movement towards the recognition of immaterial objects, in particular claims, as subject matter of property law, the principle of specificity has come under pressure (Van Erp 2006a, 14–16).

First of all, claims are a-typical objects of property law. They are fundamentally different from tangible objects, as they exist for a short duration

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of time only and cannot as easily as physical objects, i.e. by handing over factual control, be transferred to another person. Nevertheless, claims are the primary source of business finance today. The principle of specificity determines that for each object of property law a separate property right must exist. When a trader has several thousands of claims he wishes to provide as security for the payment of a loan, according to the specificity principle each claim would need to be identified as well as to be described individually ex ante in order to create a valid right of pledge. A steady pressure from legal practice has led to a relaxation of the principle of specificity in respect to security rights on claims. It is generally considered sufficient that the claims can be described ex post, in other words at the moment of enforcement of the security right. It is now in several legal systems possible to transfer claims, especially for security purposes, by making use of a list, in which these claims are described in generic terms. In French law this is known as a cession Dailly after the name of the law that introduced this possibility (Crocq 1995, 27; Legeais 2006, 377). In the Netherlands a further flexibilisation occurred through the recognition of valid rights of pledge on claims that have been ‘specified’ by a general reference to the administration of the debtor/security provider.

Another development that affects the specificity principle is related to how the transfer of large quantities of bulk objects, such as grain, takes place. In these situations it can be difficult to identify the object and it is unclear what exactly belongs to a certain bulk. To solve this problem it is made possible to transfer a quantity of goods by identifying the bulk, rather than the individual parts the bulk comprises (Van Vliet 2000, 93).

As a consequence – next to what can be seen with regard to the principle of numerus clausus – also the principle of specificity is no longer applied rigorously. A strict identification in case of security rights on multiple and shifting claims is not necessary and in case of a transfer of quantities of the same material that cannot be easily separated from each other (transfer of goods ex bulk) a meticulous identification of the goods is also not required. Instead, one single transaction suffices to create or transfer rights in respect to these objects.

3.5Flexibilisation of the publicity principle

The principle of publicity, which demands that a property right is visible to third parties, fulfils a very important function in the law of property: it offers justification for the third party effect. Therefore in the classical model of property law all property rights are subject to publicity. When movable objects are involved, publicity is achieved by factual control. The owner of an object is also the person in factual control. When, for some

Property rights: a comparative view 47

reason, the factual control has been handed over to someone else, this is a sign of changed property relations; either a transfer of ownership or the creation of, for instance, a right of pledge. In respect to immovables there is land registration. In the classical model the creation, existence and termination of property rights in respect to land are to be registered so that third parties may inform themselves before acquiring a property right in a piece of land.

However, especially in the area of property security rights developments have taken place that have resulted in a less strict application of the publicity principle and the development of alternative techniques, other than transfer of factual control and registration, to inform third parties. This development was caused, among others, by the rise of a transfer of ownership of movables and claims for security purposes, whereby factual control remains with the debtor, rather than with the creditor/securityowner. To the outside world the debtor, although no longer owner, still seems owner. This is known as reputed ownership and requires protection by third parties in good faith, wishing to acquire property rights in these movables or claims. It may also require new techniques to inform third parties, such as a duty to provide information by the transferor of a property right to the transferee. The same applies to the creation of nonpossessory property security rights such as the non-possessory pledge and charges. Also there, the impression remains that the owner of the object is in full, i.e. unburdened or unlimited, control and the other party will need to be informed otherwise.

In respect to property security rights in respect to land, registration already offers a solution for non-possessory security rights, such as the rights of hypothec and mortgage. However, the flexibilisation of the law on hypothecs, for instance the recognition of a rechargeable hypothec, also leads to a different approach whereby a right of hypothec may still be in the register although it is completely repaid, waiting for another creditor on whose behalf the right may be recharged (Grimaldi 2005, 33–36).

3.6Less importance of the accessority principle in the law on security rights

Another important development concerns the principle of accessority. Accessority means that a link exists between a property security right and the underlying (secured) claim. A repayment of the claim will lead to a loss of the security right. This principle protects the debtor from undesired use of the security right by the creditor. Recent developments in Germany with non-accessory property security rights have shown how dangerous the lack of accessority can be (Clemens 2007, 737). There, non-accessory property security rights on land, rights of Grundschuld, had fallen into the

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hands of companies that were not bound by the corresponding underlying contractual relationship due to a lack of accessority. As a result the rights of Grundschuld were sometimes realised in a situation where the debtor had paid off his debt. Legislation to remedy this is now being considered, now that it became clear that contractualisation of property law also has its negative side effects.

Interestingly enough, this non-accessory property security right has, for many years, been envisaged by the European Commission as a model for a Euro-mortgage, a pan-European property security right in respect to land (Stöcker 1992). Whether, after these developments the emphasis on the need for a non-accessory security right remains, is to be seen. In the meantime, the principle of accessority remains strong in most legal systems.

Many legal systems nevertheless relax the principle of accessority to make it possible that a property security right can be created in order to secure the performance of a future claim. This is particularly useful when credit is given, which can fluctuate. In such a situation a credit facility may be opened which, at the moment of its creation, is not used instantly. In other words, at the moment of creation, the claim which the security right seeks to secure does not yet exist, but will come into existence once money is actually borrowed. The principle of accessority does, as a matter of principle, forbid the immediate creation of a property security right under these circumstances, but the principle is more and more relaxed in the interest of commerce to allow the creation of a valid security right at the moment of the opening of the credit facility. Examples are the legal systems of the Netherlands and, since 2006, of France.

3.7Growing acceptance of general and fluid security rights

A final development in the law of property concerns the acceptance of general security rights. In the classical model of property law there is only room for a single set of property rights per object. However, there is a growing need in legal practice to be able to use one and the same property right on a set of objects (a changing ‘fund’ of assets), rather than having to use one property right per object. The principle of specificity does not allow this. Moreover, creditors are treated equally, the paritas creditorum, unless the law explicitly gives a creditor priority. This priority is limited to a specific asset or group of assets of the debtor’s patrimony. An example of priority is a creditor secured by a security property right. The limitation of the priority is, again, an expression of the specificity principle, which in this case protects ordinary, i.e. unsecured, creditors against creditors who may be over-secured. Recognising a general security right would violate the specificity principle, as this would hardly leave any other objects for the other creditors in, e.g., an insolvency procedure.

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1981). The great debate had much more than academic importance, as major political struggles continued throughout the nineteenth century over the status of the many remaining forms of common property on the European continent. A legal and political belief system that saw the origin of property itself in the efforts of individual proprietors to occupy land gave the landed proprietor a special role in society. These beliefs helped to justify the passage of legislation to eliminate collective landholding rights and to authorize enclosures and the takeover of communal properties by individual proprietors.

The meaning of private property in comparison to common property remains a contested issue in modern legal scholarship. Ellickson, Rose, and Ackerman (1995), for example, start their textbook on property law with a first chapter devoted to ‘The Debate over Private Property’. The second chapter addresses ‘The Problem of the Commons’. In the latter chapter, they include parts of the famous article by Hardin (1968) on ‘The Tragedy of the Commons’, but then ask students the following questions: ‘Private property is often said to avert the tragedy of the commons. But does it? Who enforces property limitations? Does another kind of “commons” problem lurk in the organization and maintenance of a property regime?’ (Ellickson, Rose, and Ackerman 1995, p. 141). In an earlier volume, Rose (1994, p. 37) points to the ‘kicker’ in a sharp distinction between private and common property when she stresses that a private-property regime as a system ‘has the same structure as a common property’ (see also Epstein 1979, 1994, 2002).

3.The economic debate over private vs. common property

Economists tend to view common-property institutions as having a longer history than private-property institutions and to explain the growth of modern, Western societies in part as the result of changing from common property to private property (North and Thomas 1976; North, Anderson, and Hill 1983). Private property is considered by most economists to be an essential ingredient in economic development due to the incentives associated with diverse kinds of property relationships (see, for example, Welch 1983). A farmer who owns his own labor, land and other factor inputs, for example, is likely to see a direct relationship between investments and the level of benefit achieved over the long term. A farmer who belongs to an agricultural production cooperative, on the other hand, may see only a loose connection between personal contributions and benefits. The more individuals in a society whose work is only loosely connected to their benefits, the more pervasive an attitude of free riding can become. If everyone tends to free ride on the work of others, overall economic productivity will be low.