учебный год 2023 / A Comparison of German Moveable Property Law and English Personal Property Law

proceeds of sale.360

The complicated legal technique regarding the proceeds of sale in German law, which seeks to give the owner-pledgor a proprietary right to the proceeds of sale to the extent to which they are not covered by the debt that they are supposed to discharge, contains elements of the idea of tracing of property into its representing substitutes following a breach of trust in English law.361 It is also functionally not too dissimilar to the overreaching of an equitable interest behind a trust of land in English land law, whereby the interest attaches to the proceeds of sale instead of the sold property,362 which enables the buyer to acquire unencumbered ownership. But one should be cautious with such an analogy. German property law does not recognise a division into legal and equitable ownership,363 and therefore does not have the concept of a trust which confers proprietary rights (in equity) and goes beyond that of a mere fiducia364 (based on personal rights only). When determining the entitlement of the owner-pledgor to the proceeds of sale, German law resorts to an exceptional technique which seeks to emulate in effect a mechanism that is a very familiar part of English law: an imposition of a trust on the pledgee-creditor with the owner as beneficiary whose pledged res is substituted by the proceeds of sale and subject to the owner-pledgor-beneficiary's right to trace. Indeed, English law regards the relationship between pledgor and pledgee as a fiduciary one,365 under which the pledgee has to pay the surplus from the

sale. If he does not do so, he must pay interest in equity to the pledgor.366 This reference to equity is

remarkable because the pledge originates in common law367 and the pledgee's duty of care is

considered as deriving from common law without (much) intervention from equity.368 This is probably the reason why the relationship between pledgor and pledgee is seen as fiduciary, and not openly termed as one of trust, the most eminent creature of equity (although a trustee is invariably also a fiduciary 369). These subtleties that are characteristic of English law make no sense to the German lawyer, but if they are blanked out in a functional approach of comparison, one obtains a false picture. Otherwise, the process of the sale of a pledged res in English law is not significantly different from German law in its principles. The pledgee has an implied power of sale at common law which becomes exercisable when the debt is due and the debtor defaults. The sale does not have to be at an auction, but the pledgee must take care to ensure that the sale is carried out reasonably to obtain a fair market price.370

b) Transfer of ownership in a moveable for security purposes

The strict requirement for the validity of a pledge, to grant the creditor possession, prevents the debtor from using the pledged property and from obtaining a profit out of which he can pay his debts, and it also publicises the fact of pledging, which allows adverse inferences as to the debtor's creditworthiness.371 Attempts to avoid these undesired effects have led to other methods for the creation of security rights over moveables. In Germany, the need for new forms of security has been greater than in England, because the delivery of possession rule has to be adhered to more strictly.

In Germany, such forms of security were developed fairly soon after the enactment of the BGB, and outside its legal framework, but they were relatively quickly endorsed by the courts, which ensured their enforceability.372 One type of these security rights not based on the system of the pledge is the transfer of ownership in a moveable thing to the creditor for the security of a debt that is owed to him by the owner of the transferred res, or by another debtor (Sicherungsübereignung).373 (For the sake of convenience, in the following the identity of the debtor and owner of the transferred res will be assumed.) In business reality, it is this method, not the pledge, which is the usual way of granting security rights over moveables.374 The owner-debtor conveys ownership in the res to the creditor

typically by way of constitutum possessorium (§ 930 BGB),375 which enables the creditor to acquire

ownership while the debtor retains possession and use of the thing.376 The conveyance is conditional on the full satisfaction of the debt; thus once the debt is extinguished, ownership of the res is either automatically re-transferred (condition subsequent), or the creditor is under an obligation to re-transfer, depending on the stipulations in the security contract of the parties. This security contract (Sicherungsvertrag), which is independent of any contract out of which the secured debt arises (e.g. a loan), may oblige the debtor (i.e. previous owner) to refrain from wasteful treatment of the res and to insure it, and it obliges the creditor (new owner) to re-convey ownership on satisfaction of the debt, to sell it according to certain stipulations on default of payment etc.377

As full ownership is transferred, this type of security is not a restricted real right, depending on the existence of the secured debt. If the debt does not arise, or is extinguished, prima facie the security

right remains in existence, and is subject to the contractual stipulations of the security contract (e.g. re-transfer of ownership based on an express obligation to that effect, or on a condition subsequent, which will not be implied if it has not been stipulated 378).

Since the creditor becomes owner of the res, subject to merely contractual obligations which restrict his power to dispose of the res to the event of default, the creditor assumes the position of a fiduciary. Thus, even if in breach of the security agreement with the debtor-beneficiary (because the debt has not matured or has been paid in full), he can validly transfer ownership in the res to a third party. Unlike an English trust, where the debtor-beneficiary obtains an equitable, that is proprietary, interest, which is enforceable against third parties and traceable (with restrictions 379), the German trust relationship is a

merely fiduciary one (Treuhand),380 and a personal right is given to the debtor enforceable in

contract381 (damages for breach of contract etc.). This trust relationship is recognised in the event of the creditor's insolvency. Provided the debtor has satisfied the secured debt (by paying the liquidator of the insolvent estate if necessary), the debtor can assert ownership over the res conveyed for security purposes against the third-party creditors of the insolvent estate and claim it back.382

The purpose of a security by outright transfer of ownership is that, unlike in the case of a pledge, the creditor obtains a "secret" security, which does not become apparent, when the security is granted (no change of possession), but which shall come into effect when the debtor is in default, and which shall give the creditor an advantage over other creditors of the debtor, particularly when the debtor becomes insolvent. The creditor and recipient of the security cannot seize the res given as a security, as one would normally expect, given that he is technically its owner, because the insolvency laws take account of the fiduciary nature of this conveyance. However, after the realisation of the res by the liquidator, the secured creditor has a right to obtain payment from the proceeds of the sale ahead of other (unsecured) creditors of the insolvent estate,383 similar to a pledgee. The secured creditor can no

longer effect the sale of the res himself,384 this must be done by the liquidator.385

The device of the transfer of ownership for security purposes is an example of the fact that comparative lawyers will sometimes fail in finding an equivalent of a certain legal institution in another jurisdiction. There is no need for such a security mechanism in English law. First, the English pledge, despite its requirement to deliver possession, permits changes of possession in forms comparable to the constitutum possessorium in German law, thus allowing no change of factual possession, and the pledge interest does not depend on continued possession by the pledgee.386 English law also recognises the non-possessory (legal or equitable) chattel mortgage which allows the debtor to continue using the res, but actually transfers ownership to the creditor by way of security.387 (The outright transfer of

ownership is not available for mortgages over land.388 ) Although looking similar in respect of their non-possessory nature, it is not the same as the German security right. The English chattel mortgage does not have the specific fiduciary relationship that the German Treuhand at the centre of the Sicherungsübereignung has. Conversely, the German mortgage or Hypothek is a non-possessory subordinate real right which does not confer outright ownership and is only available for land.389 A trust relationship for security purposes can be established in English law: this creates a beneficial interest which survives the trustee's-creditor's insolvency. One common example is the Quistclose trust,390 a device whereby (usually) loan money advanced to a company in financial difficulties is ring-fenced against the company's possible insolvency by giving the loan on the condition that it be used for a specified purpose only. The money is held on trust for the lender until the purpose has been carried out. If the purpose cannot be achieved, the recipient of the loan (or his liquidator) must return the funds in specie.391 In such an arrangement, there is no need that additionally a chattel (as a quasi-pledge) is

transferred to the creditor as a security for the debt.392 Furthermore, English law also has the

non-possessory institution of the equitable charge as a security interest. The equitable charge,393 which can be a fixed or floating charge, does not confer possession or ownership, but entitles the chargee to have specified property of the debtor applied to the discharge of the debt.394 All these security interests are familiar to the English reader and need not be discussed further. However, this case shows that it can be highly misleading if elements of conceptually and contextually very different and unrelated legal devices in one jurisdiction are arranged in accordance with the comprehensive legal institution of another jurisdiction in order to seek a kind of "common core" which yields similar economic outcomes.

c) Assignment of a debt for security purposes

The assignment of a debt for security purposes also shows that German law was prompted to find

methods to secure obligations which permitted a greater elasticity than pledges. In the discussion of the German law of pledges,395 it was mentioned that rights arising from a contract can be pledged, but that matter was not dealt with further because in practice, the pledge of rights has almost totally been replaced by the assignment of debts for security purposes (Sicherungsabtretung, Sicherungszession).396 Although rights are not things in the system of the BGB (§ 90 BGB), German academic doctrine discusses this legal institution within the law of property for practical reasons, especially as it usually forms part of the transfer of moveables for security purposes and of retention of title stipulations.

The assignment of a debt as a security resembles closely the transfer of a moveable res as a security; the difference is only that in the present case the security given is a debt, of which the debtor is creditor vis-à-vis a third party. The parties involved are, the creditor C in relation to a secured debt (x) (recipient of another debt (y) given as a security), the debtor D (debtor of (x) assigning the debt (y), of which he is the creditor), and the third-party debtor DD (debtor of D in relation to the debt (y)). The principal debtor D assigns his right (y) against DD to C to secure his debt (x). As with the transfer of ownership in moveable things, the creditor C can validly claim payment397 from DD, although that may be in breach of the security agreement with D, which governs the contractual relationship between C and D and sets out C's powers and their limits. In case of default, C is normally entitled to choose which debt he wants obtain payment from, either the secured debt (x), or the securing debt (y): there is no obligation to try to get paid through the secured debt first, unless the security agreement stipulates this.398 In case of satisfaction of the secured debt (x), the debt (y) is re-assigned automatically due to a condition subsequent, or there is an obligation to re-assign (either based on contract, i.e. the security agreement, or on unjustified enrichment).399

It is typical of this means of security that the secrecy of the actual act of granting the security can be maintained. Therefore, the debtor DD is frequently not informed of the assignment, and C permits D to accept payment on his behalf from DD when the debt matures. Following the general assignment rules (§§ 398-413 BGB), DD is protected by § 407 BGB, in that he can validly pay to the previous creditor D and so satisfy his debt, until he is informed of the assignment. This protection of the uninformed DD applies, regardless of whether or not C has authorised the previous creditor D to accept payment on C's behalf. The fact that DD can validly perform and thus extinguish the debt, although D is not (no longer) creditor at the time of payment to him, is not easily explicable, especially in the context of unjust enrichment.400 It is also possible to assign future debts for security purposes,401 provided that the debt

to be assigned is certain or at least ascertainable402 at the time of the assignment. This often occurs in connection with retention of title/ownership agreements.

English law does not have a specifically hallmarked equivalent to this type of security right in German law, because other arrangements are available which effectively give a similar security interest. These are essentially the same devices already discussed in connection with the transfer of ownership of a moveable for security purposes under German law, especially the English mortgage and the charge. Depending on the type of the charge,403 or the type of debt404 assigned for security purposes in case of

a mortgage,405 formality requirements may have to be observed. In case of an assignment of a debt under a legal mortgage, the assignment to the mortgagee must be in writing and the third party debtor must be notified,406 in case of an equitable mortgage and informal assignment or agreement for the

same407 suffices. As the common law does not recognise future property,408 only the equitable

mortgage is available for mortgaging future debts, including book debts.409 It is also possible that the

debtor D directs his debtor DD to hold the debt on trust for the creditor C.410 Where these devices

involve the transfer of an equitable interest, matters can become quite complicated,411 and at this stage English law departs completely from German law.

d) Retention of ownership or title

This area of the law is extremely important to trade and commerce but will only be discussed here to give an overview of the German law and to illustrate the difference of the conceptual framework of the English and German property laws.412 The retention of title or ownership, as another means of granting security without possession, will be dealt with in relation to the issues of property law that arise from it. In English law, retention of title is only one available security measure (and strictly speaking not security as a matter of law 413); the charge in particular,414 which is not available to German law, may achieve similar results. The reservation of the right to transfer ownership is a topic which can be

discussed in a fairly isolated and "free-standing" way in English law, while in German law this matter is interconnected with practically all areas of German property law (and contract law) and cannot meaningfully be discussed before having obtained a good understanding of all other important areas of property law: possession and possession transfer, ownership and its derivative and original acquisition, the law of pledges and the limitations in its application.

The basic rules of the retention of title agreement can be stated for both English and German law:415 it is in principle an arrangement whereby the seller and owner of the property transfers ownership in a moveable res to a buyer, subject to the condition of the full payment of the purchase price. The seller parts possession with the res (what a pledge would not permit), and nonetheless retains a security for the outstanding sum through the transferred thing he continues to own, unless and until the buyer's debt is fully paid, thus extinguished. The buyer obtains possession and use of the res as if he were already the owner, thus the institution of retention of title is, again, a security method which can be concealed from the outside world. Depending on the overall arrangement, the purchase price may be paid by the buyer, or by a third party, acting as a payer vis-à-vis the seller and as a lender in relation to the buyer. Typically, the lender obtains security for his loan, either by way of the transfer of ownership (but not possession) in the sold moveable res to the lender for security,416 or by way of an assignment to him as a security of the future rights that the buyer obtains through the re-sale of the moveable to a third party, or through other arrangements.417 English law recognises retention of title clauses, or

Romalpa clauses418 as they are named after the leading case,419 which are based on s. 19 of the Sale

of Goods Act 1979.420

The German BGB recognises retention of title stipulations in § 449, which states a presumption regarding ownership in the absence of an express agreement: in a retention of title agreement (Eigentumsvorbehalt), ownership is presumed to be transferred on the condition precedent of the full payment of the purchase price. While the seller retains ownership until the entire payment, the buyer acquires a beneficial right (Anwartschaftsrecht, "ownership in waiting"), which is a real right421 giving him a position of an owner in waiting that becomes economically more valuable with each further instalment paid. By virtue of this position, the buyer can obtain damages if the seller negligently thwarts the occurrence of the event422 (especially full payment) which is the subject-matter of the condition. In addition, he is entitled to an action of delivery (§ 985 BGB), and damages (§ 823 BGB), similar to an outright owner. As a lawful possessor, the buyer is protected against dispossession and self-help (§ 858 BGB),423 and also has a defence in an action of delivery against him by virtue of his

title to possession (§ 986 BGB).424 The seller remains owner with respect to third parties, and enjoys all rights flowing from his ownership. He can also destroy the buyer's beneficial right as an owner in waiting by rescinding the contract425 because of the buyer's delayed payment of the purchase price (or

one of the instalments), and he can then claim the transferred res to be returned.426 In the event of insolvency of the buyer, the seller can claim the transferred res from the insolvent estate, similar to the transferor's rights after a transfer of ownership in a moveable for security purposes.427 This ownership in waiting resembles somewhat an equitable interest in English law, but they should not be confused with one another. In English law, the primary candidate for an equitable interest would not be the buyer but the seller. Furthermore, the law relating to the sale of goods, to which the retention of title device belongs,428 is within the domain of the common law, and interventions by equity in this area are generally unusual. This is for instance shown by the fact that under a retention of title clause the right to trace has been given to the legal (not equitable/beneficial) owner429 if the buyer has a fiduciary duty

(which is actually a prerequisite for tracing in equity430 ) to the seller, and that is considered as being uncommon. To obtain a traceable equitable interest - and that would be one of the seller - which is particularly important if the buyer is permitted to sell on,432 seller and buyer have to be given the role

as bailor and bailee/seller's agent, preferably by express stipulation in the contract of sale,433 so that a

fiduciary relationship arises which is required for equitable tracing.434 An actual equitable interest, thus a proprietary right, could arise, not by virtue of the retention of title clause alone and the payment of instalments in connection under the contract of sale, but either through the creation of an outright trust with the seller as beneficiary (especially also in relation to the buyer's re-sale proceeds 435), or through the seller's transfer of legal ownership but reservation of the equitable ownership. In the latter case, if the equitable ownership is to extend to any products manufactured out of the material delivered by the seller and to the buyer's proceeds of sale from selling on, this would be interpreted as an equitable charge which requires compliance with the formality (registration) rules for its validity.436 Thus the slight resemblance between the German buyer's right of ownership in waiting and an English equitable

interest falls apart after some examination of the matter, particularly when one looks at the commercially common situation of the buyer's ability to re-sell the bought goods before he has paid all instalments and therefore obtained ownership (seller's extended reservation of title 437).

The matter of the right to re-sell and the preservation of the seller's security in this situation is also complex in German law. The verlängerter Eigentumsvorbehalt ("prolonged reserved ownership") - that is, to what extent a buyer can transfer his right of ownership in waiting to third parties and to what extent a seller can preserve his retention of title rights and the security therein in case of such a transfer - deserves separate treatment and can only be outlined here.438 If the res is used as material for the making of a new thing, the general accession rule of § 950 BGB provides that the maker of the new thing becomes owner of the res, so the seller would lose his retained ownership. Whether the parties can contract out of this rule, is controversial.439 The seller may also obtain security through an

assignment to him of the rights the buyer anticipates to acquire when selling on the res440 (assignment

of future rights for security purposes441 ). The buyer can transfer his right as owner in waiting in a sale

to a third party buyer, particularly, if the first seller permits this,442 but also if he does not.443 In such a situation of an extended retention of title stipulation (verlängerter Eigentumsvorbehalt), there is always the danger for the seller that the buyer, who sells on, pretends to be outright owner. If the buyer purports to transfer ownership, thus the full and unconditional right, and if the bona fide third person believes that the buyer is owner, then the third person acquires ownership according to the rules on bona fide acquisition of ownership from a transferor without title (§ 932 BGB).444 If the buyer attempts

to transfer his right as owner in waiting, but this right, for some reason,445 does not exist, a bona fide

third person cannot acquire ownership in good faith and § 932 BGB does not apply.446 The reason given for this discrepancy between good faith regarding ownership (where acquisition of ownership is successful) and good faith as to ownership in waiting (where it is not), is that in the latter case the bona fide party believed in a conditional ownership right where it turns out that the conditional event can never occur, and full ownership can never come into being.447

In English law, the seller can obtain protection in these situations mainly by resorting to well-drafted reservation of title clauses in the contract which the courts have subsequently enforced.448 The principal problems are the same. The seller, who may lose ownership by virtue of the accession rules in the course of his material being manufactured to new goods449 or because the buyer may re-sell the goods under the reserved title (whether with or without authority), may, for example, seek to stipulate that the buyer has to hold on trust for the seller all proceeds from the re-sale of the manufactured product,450 or, at least, that the seller has an entitlement to resale proceeds (effected by the seller's

equitable tracing right) which is termed a "proceeds of sale" or "tracing" clause.451 A bona fide third person will be able to acquire ownership in re-sold property from an unauthorised buyer under one of the exceptions to the nemo dat rule provided in s. 25 of the Sale of Goods Act,452 thus attempts in "extended reservation of title clauses" to retain ownership in the goods beyond the buyer against sub-buyers are usually453 ineffective.454 English law gives sellers more opportunities than German law to create retention of title provisions which they can construct from a combination of different building blocks available in the law.

2. User rights: ususfructus

User rights, ususfructus (Nießbrauch), are a type of personal servitude. They are defined as the (usually inalienable) real right to use a thing and reap the benefit from its use. They have very little importance in moveable property law.455 The BGB and German legal textbooks characteristically refer to them for

the sake of completeness, English textbooks on personal property law characteristically do not.456 English legal doctrine discusses servitudes practically only in the context of land law, where this problem is indeed relevant.457

German law provides for the user right in moveable things in § 1032 BGB. As the user right is a real right which is split off from the more extensive real right of ownership; its creation follows the general principles of transfer of ownership (§ 929 BGB), in a similar way as the creation of a pledge (§ 1032 referring to § 929 BGB). The user has a right to possession of the moveable res (§ 1036 BGB), and is entitled to the (natural and civil) fruits. He has no right to dispose of the moveable res, such as its alienation or the creation of a pledge.458 However, if the use is granted in respect of a res for consumption (§ 92 BGB), the law interprets the user right as ownership, and this provision is mandatory. In that case, the user can dispose of the thing but has to replace its value on termination of

his user right (§ 1067 BGB).

Most user rights are granted for the purpose of securing someone's livelihood and maintenance (similar to a life tenancy)459 or for the purpose of securing a debt (often combined with a security right).460 Such user rights are almost exclusively granted in relation to immoveable property, and the relevance of the ususfructus rules for moveable things is virtually always confined to accessories in connection with land.

G. CONCLUSION

Even from this succinct account of German moveable property law and its comparison with English law one can gather that the differences between German law and English personal property law are substantial. Both systems rest on quite different epistemic frameworks, despite the functional similarities of their legal institutions in many cases. Nevertheless, within the general movement of European legal integration, there seems to be the belief that the differences should not be overestimated and can eventually be overcome for a Europe-wide harmonisation of private laws.461 A unification of the property laws in Europe would probably not be able to avoid the destruction of the core principles of each system. But attempts have been made to create EU-wide property rights, mainly security rights, for example a unified mortgage law with regard to land. However, plans for a "eurohypothec" have proved too complicated and been abandoned. A unification of the laws would put an end to an enriching legal plurality and abolish a functioning competition between the jurisdictions for the better legal solution in a given case.462

The seemingly perceived, but in reality created, if not imposed, "principal sameness" of different jurisdictions requires a considerable amount of "re-education" of the actors of the individual legal cultures for its success. A German lawyer would have to give up the idea of a vindication right as the most central remedy for the protection of ownership and get used to a set of quite ancient property torts, which in turn, even more surprisingly to him, become increasingly replaced in practice by the tort of negligence. An English lawyer would have difficulties to understand why, especially in the case of chattels, possession should not be the central basis for the protection of ownership, and why ownership, in contrast to possession, should be an absolute, rather than relative, right. From a practical point of view, which is usually at the heart of English law, there is not that often the need to re-deliver the actual chattel, the thing in specie, which is typically a replaceable thing that can be bought again with the damages awarded. Where that is not the case, the court may have a statutory discretion. This is somewhat similar to contractual claims, where equity may step in, by way of specific performance. But it takes a while to explain to a German lawyer what equity is, what it does, and why it exists in the way it does. An English lawyer may find the Roman concept of property rather crude in comparison with the adaptable, versatile and mercurial system of English property rights as it emerges particularly in the context of a trust. These fundamental principles obviously pervade the details of the different legal institutions. German lawyers may have to get used to the floating charge, and English lawyers have to get to grips with the quite complicated German regulation of the sale of a pledged thing and the proceeds arising from it which could probably more easily be dealt with through the device of the trust. English lawyers may find the overarching concepts and abstract principles of German law in a comprehensive codified form difficult to understand. However, they will also need to realise that, as an exception, the commercially really important German security rights were developed outside the Civil Code, by commercial practice which court decisions and doctrine subsequently recognised, because the BGB provides a type of pledge which follows Roman law and the ius commune, and that has proved to be too inflexible. Even a "common core" fanatic must acknowledge that the way in which English law and German law deal with the exceptions to the nemo dat rule have as much in common as a cat has with a tortoise. Admittedly, they are both animals and both breathe. Similarly, both German law and English law have exceptions to the nemo dat rule since they are confronted with the same problem of resolving a title conflict between two blameless parties. But the fundamental differences of these two legal cultures should have become particularly apparent in such issues of personal property law.

There is an understandable fear that especially certain security rights may not always be enforceable in foreign jurisdictions, even within the EU, but in view of applicable conflict of law rules and, potentially, EU directives (rather than regulations) one need not overemphasise this danger.463 All legal systems recognise possible functional/commercial similarities of an alien legal institution and try to emulate the desired results by translating them into their own, and often very different, legal techniques. It is a well-known theme in comparative law that functionally private laws are often quite similar, but not their

legal methods and techniques. A comparative lawyer seeks to familiarise a legal community with a foreign legal system for the purpose of mutual understanding and trade, and may also try to develop a reference system against which different legal institutions can be compared. However, legal practitioners and jurists of doctrinal law do not only deal with the question of "what", the social and legal purpose, but also, and mainly so, with the question of "how", the legal method, and that should not be explained away in an oversimplifying manner. If a Pole, a German, a Frenchman, an Englishman and a Scotsman are shown a table, the Pole will refer to it as "stó "Tisch", the Frenchman and the Englishman as "table", but with a very different pronunciation, and the Scotsman will also refer to it as "table", with a pronunciation slightly different from the Englishman's. And although they all refer to the same object, it also matters in which way they refer to it. Or, in terms of property law: functionally, they all talk about the same object, but it matters how objects are defined as "things" for the purpose of the law in question, and how legal relations to these "things" are created to achieve similar economic objectives. Within the system of the Polish language it makes perfect sense to refer to a table as "stó?", but not in German. Thus if a foreign lawyer regards the Law of Property Act 1925 as a "perfectly closed book",464 then he does not know the system of English property law well enough. Some scholars may therefore seek refuge in a "unification" of the laws in order to understand, but in fact damage, them. Individual jurisdictions should not be forced to give up their cultural identities by replacing their legal institutions with a "Euro-Thing Law" as an artificial and remote compromise of existing property laws.

* Mag. iur. et phil., Dr. iur. (Vienna), LL.M. (London), Solicitor (England & Wales). Senior Lecturer in Law, University of Glasgow, UK. This article first appeared in 2008 Journal of Comparative Law, Vol. 3 (1), 197-248 and is reproduced with kind permission of Wildy, Simmonds & Hill Publishing.

1 On the presumptio similitudinis, see Zweigert, K and Kötz, H (1998) An Introduction to Comparative Law (tr T Weir) (3rd ed) Clarendon Press, Oxford University Press 35, 40. On convergence theories, see De Cruz, P (1999) Comparative Law in a Changing World (2nd ed), Cavendish Publishing 481-494.

2 Explanation of a "legal culture" and examples in Legrand, P (1996) 'How to compare now' (16) Legal Studies 232, 236. Indications of an awareness of the conceptual difference of legal systems/cultures in David, R and Brierley (1985) Major Legal Systems in the World Today (3rd ed) Stevens & Sons 19.

3 This presumption is, admittedly, somewhat bold, compare Worthington, S (2000) Personal Property Law Hart Publishing at v (preface): "… personal property law is one of the most neglected and least understood aspects of English law." Similarly Pretto-Sakmann, A (2005) Boundaries of Personal Property Hart Publishing 15-17.

4 On these two points see e.g. Rahmatian, A (2004) 'Codification of Private Law in Scotland: Observations by a Civil Lawyer'

(8) Edinburgh Law Review 31, 50-53.

5 Compare discussion by Legrand, P (1996) 'European Legal Systems are not Converging' (45) International and Comparative Law Quarterly 52, 60.

6 One example of a representation of a legal system in the structural framework of another is the discussion of English property law in the conceptual framework of essentially German law by Middleton, S 'England' in Ch v Bar (ed) (2000) Sachenrecht in Europa, Vol. I Rasch 101-208. This account renders English property law virtually unrecognisable, not because it is incorrect in any way, but because it represents the essence of the law in a completely different cultural context, and that is accentuated by the use of a different language (German). I say that advisedly, having originally trained in a Civil law system close to German law and having been teaching English property law in England for some time.

7 On the movement of "new ius commune seekers" see the helpful overview by Örücü, E 'Unde Venit, Quo Tendit Comparative Law?' in Harding, A and Örücü, E (eds) (2002) Comparative Law in the 21st Century Kluwer Academic 1, 3, 6-11.

8 See the overview of this particular interpretation of ius commune by one of its prominent representatives, Zimmermann, R 'Ius Commune and the Principles of European Contract Law: Contemporary Renewal of an Old Idea' in MacQueen, H L and Zimmermann, R (eds) (2006) European Contract Law: Scots and South African Perspectives Edinburgh University Press 1, 8-24, 33-42, and about its curious results for the scholarship of comparative law briefly in A Rahmatian's review of this book in (2006) 11 Scots Law Times 59-60. On the 'neo-pandectistic' ius commune interpretation see also Rahmatian, A (2007) 'Friedrich Carl v. Savigny's "Beruf" and "Volksgeistlehre"' (28) The Journal of Legal History 1, 18-23.

9 This is also a reason why in the following account reference is predominantly made to leading German textbooks, rather than German court cases which tend to be absorbed into German legal doctrine to a much greater extent than in English law.

10 They are really important in the law of security rights, see Goode, R (2004) Commercial Law (3rd ed) Penguin 625 (in the following: 'Goode').

11 Below under E. 1. and 2.

12 Below under F. 1.

13 Below under D. 1. a).

14 Below under D. 1. b) and E. 1.

15 This is the case with the Sicherungsübereignung, the Sicherungszession and the Eigentumsvorbehalt, see below under F.1.b)-d). See also Drobnig, U 'Is Article 9 of the Uniform Commercial Code exportable? A German View' in Ziegel J S and Foster W F (eds) (1969) Aspects of Comparative Commercial Law: Sales, Consumer Credit, and Secured Transactions McGill University, Montreal. Oceana Publications 369.

16 See Legrand, P 'How to compare now' supra note 2 at 234.

17 E.g. Penner, J E (1997) The Idea of Property in Law Clarendon Press, Oxford University Press 68, 105.

18 Thus the subject-matter of property can in principle be a tangible in the material world, an intangible (e.g. air), or a pure intangible, that is a legal concept, e.g. a debt, intellectual property right. The actual situation depends on the jurisdiction in question, see below.

19 E.g. Schwab, K H and Prütting, H (2003) H Sachenrecht (31st ed) C H Beck, § 1, n 1, § 2, n 14 (in the following: 'Schwab/Prütting, [§ x n x]'); Bridge, M (2002) Personal Property Law (3rd ed) Clarendon Law Series, Oxford University Press 1-2, 12, 14 (in the following: 'Bridge').

20 See Kahn-Freund, O 'Introduction' Renner, K (1949) The Institutions of Private Law and their Social Functions Routledge 20.

21 On that point, see already Lord Kames (Henry Home) (1792) Historical Law-Tracts (4th ed) ('III. On Property') Cadell et al, 88 note (1). See also Rahmatian, A (2006) 'The Property Theory of Lord Kames (Henry Home)' (2 (2)) International Journal of Law in Context 177, 180-186. Today, see e.g. Lawson, F H and Rudden, B (2002) The Law of Property (3rd ed) Clarendon Law Series, Oxford University Press 9 (in the following: 'Lawson and Rudden').

22 In addition, "property" sometimes also denotes ownership (Eigentumsrecht), the most extensive property right.

23 Animals are not things in German law (§ 90a BGB), but they are also subject to the law that applies to things, unless there is a provision to the contrary (and there is virtually none, apart from § 251 (2) BGB: the defendant who has caused damage to an animal also has to pay the costs for its treatment which exceed the animal's value).

24 Baur, J F and Stürner, R (1999) Sachenrecht (17th ed) C H Beck, § 3 n 2. (in the following: 'Baur/Stürner [§ x n x]').

25 Reid K G C et al (1996) The Law of Property in Scotland Butterworths, para 11. (in the following: 'Reid, [para]').

26 The 18th century liberal tradition of freedom of the person and of property has influenced Zeiller, the draftsman of the ABGB, see Mayer-Maly, Th 'Zeiller, das ABGB und wir', in Selb, W and Hofmeister, H (eds) (1980) Forschungsband Franz von Zeiller Böhlau 4.

27 Gaius, Institutes, Book II, 12-14.

28 Except in the context of conflict of laws, see Bridge, 10.

29 Crossley Vaines, J (1962) Personal Property (3rd ed) Butterworths 3, 5, 8-9.

30 Lawson and Rudden, 19 et seq., Bridge, 3-8.

31 See the intellectual property statutes, for example regarding copyright: Copyright, Designs and Patents Act 1988, ss. 1, 90, patents: Patents Act 1977, s. 30, trade marks: Trade Marks Act 1994, s. 22.

32 These rights are called "Immaterialgüterrechte" in German and Austrian law. Such rights have a proprietary quality, but their strong personal aspect is acknowledged in that they are not considered as purely property rights. This is particularly true of copyright (author's right) with its typically strong moral rights element. See e.g. Rahmatian, A (2000) 'Non-assignability of Authors' Rights in Austria and Germany and its Relation to the Concept of Creativity in Civil Law Jurisdictions generally: A Comparison with UK Copyright Law' Entertainment Law Review 95 with further references.

33 Rudden, B 'Economic Theory v. Property Law: The Numerus Clausus Problem' in Eekelaar, J and Bell, J (eds) (1987) Oxford Essays in Jurisprudence (3rd series) Oxford University Press 239, 243.

34 Westermann, H P in Westermann, H (1998) Sachenrecht (7th ed) Müller § 1 I. 2 (in the following: 'Westermann/[chapter author]', e.g. 'Westermann/Gursky [section]').

35 Baur/Stürner, § 1 nn 7-8.

36 Baur/Stürner, § 2 n 2.

37 See e.g. Bydlinski, F (1996) System und Prinzipien des Privatrechts Springer 318-321.

38 On the absence of notice and consent in property law, see Rudden, B 'Economic Theory v. Property Law' supra note 33 at 246-247.

39 However, contract law provides sets of rules which were developed for typical contracts, like the sale, barter, loan, lease etc.

40 Rudden, B 'Economic Theory v. Property Law' supra note 33 at 244.

41 Baur/Stürner, § 3 nn 24-46; Schwab/Prütting, § 3 n 14; § 3 n 18.

42 See also below, D. 1. a).

43 Compare Honoré, A M 'Ownership', in Guest, A G (ed) (1961), Oxford Essays in Jurisprudence Oxford University Press 105, 126.

44 This is the term in English law in a sale of goods context, see Bridge, 30, but it is not exactly the same as "beschränkte dingliche Rechte" or "restricted real rights".

45 This is the term in Scots property law, see Reid, para 6.

46 See below, F.1.d).

47 Overview e.g. in Schwab/Prütting, § 53 n 616, § 54, § 66, § 67.

48 It has some similarity with the old (obsolete) pecuniary real burden in Scots law, see Reid, para 383.

49 Kahn-Freund, 'Introduction' supra note 20 at 16, 24.

50 See below under D. 1. and 2.

51 Goode, 42.

52 Bridge, 29.

53 Bridge, 17, 28.

54 Goode, 31.

55 Murphy, T et al (2004) Understanding Property Law (4th ed) Sweet and Maxwell 60.

56 See below under D. 2.

57 See below under D. 1. c).

58 Bridge, 48, 52.

59 See below D. 2. d).

60 Goode, 34, 39; Bridge, 11, 31.

61 Goode, 34.

62 Goode, 35, 41, 627.

63 See below under F. 1. a).

64 Goode, 587; Bridge, 182, 188.

65 Other hindrances are the German principle of speciality of the security right, and the requirement of physical possession to obtain a pledge, see below under F. 1 a). For a non-possessory security, German law has to resort to outright ownership transfer to the creditor as a fiduciary, see below under F. 1. b).

66 German law: Schwab/Prütting § 6 n 43; English law: Bell, A P (1989) Modern Law of Personal Property in England and Ireland Butterworths 33: 'possession … not in itself an interest but rather a state of affairs.' (in the following: 'Bell').

67 Bell tends to see possession as a mere fact, at 33, Goode sees it as a right, 41. Bridge: "largely a matter of fact", at 17.

68 Possessory title as being a standing to sue under a contract conferring/relating to possession (rather than immediate possession) or as a right to possession in the form of a property right, see Palmer, N 'Possessory Title' in Palmer, N and McKendrick, E (eds) (1998) Interests in Goods (2nd ed) LLP Reference Publishing 63-64 on the definition of possessory title in The Aliakmon [1986] 1 AC 785, 809, per Lord Brandon.

69 Bridge, 17, 28-29, Bell, 76.

70 Goode, 31, Bell, 51.

71 Bridge, 47.

72 Goode, 31 (ownership), 42 (possession); Worthington, S Personal Property Law supra note 3 at 39 (ownership), 51 (possession).

73 Lawson and Rudden, 115, Bell, 33.

74 United States of America v. Dollfus Mieg et Cie SA [1952] AC 582 at 605, per Viscount Jowitt. Goode, 42. Harris, D H 'The concept of possession in English law' in Guest, A G (ed) (1961) Oxford Essays in Jurisprudence Oxford University Press 69.

75 Paulus D 41, 2, 3, 1. See also Nicholas, B (1975) An Introduction to Roman Law Clarendon Law Series, Oxford University Press 112-113.

76 But not entirely: vestiges of the old Germanic "Gewere", which was a possession right, found their way into the BGB, see, with further references, Mitteis, H and Lieberich, H (1978) Deutsches Privatrecht (8th ed) C H Beck 86, 89.

77 Schwab/Prütting, § 6 n 49; Westermann/Gursky, § 8 n 4.

78 This term has been used, following Roman law to some extent, because the largely equivalent term "civil possession" which is used in Scots law today, for example, is rather confusing in that it conflates somewhat the separate categories of Eigenbesitz and mittelbarer Besitz, compare Carey Miller, D L and Irvine, D (2005) Corporeal Moveables in Scots Law (2nd ed) Thomson/W Green 25-26. Also the term "constructive possession" in English law obscures rather than clarifies matters, see Goode, 43.

79 This account is quite short, see for more details on unmittelbarer Besitz - mittelbarer Besitz, Eigenbesitz - Fremdbesitz, Baur/Stürner, § 7 nn 1-3; Westermann/Gursky, §§ 9, 12, 17.

80 Baur/Stürner, § 7 nn 30-35.

81 Some jurisdictions also use the term "detentor" in this context (such as Scots and Austrian laws with slightly different meanings, compare the use of the term "detention" in Scots law in Reid, para 121. See the Austrian ABGB, § 318, which avoids this term and uses "Inhaber" instead of "Detentor"). "Detentor" is ambiguous because it can mean (natural)

"possessor" (who possesses for someone else) or "holder" ("Inhaber") who has merely factual control over the thing, but no intention to possess.

82 German law distinguishes between those persons on the one hand, and employees, domestic servants and other persons subordinate to the possessor on the other, who are not given possession on behalf of the possessor (their employer etc.) but are placed in a separate category of "servants as to possession" ("Besitzdiener"), § 855 BGB. The law denies them the quality of being a possessor to avoid arising any rights a direct possessor could otherwise have against the indirect possessor, such as a pledgee's right to direct possession against the pledgor for the time period of the pledge. See for more details, Baur/Stürner, § 7 nn 61 et seq; Westermann/Gursky, § 10.

83 See this example in Schwab/Prütting, § 9 n 62.

84 Bell, 35, 36.

85 Bridge, 17.

86 Bell, 34.

87 Bell, 35.

88 Bell, 53.

89 Bailment means that the bailee is willingly and with authority in possession of goods to which the bailor retains a better title, see Bell, 86-87.

90 Bell, 53. In German law, the bailor would be indirect possessor suo nomine (mittelbarer Eigenbesitzer), and the bailee direct possessor alieno nomine (unmittelbarer Fremdbesitzer).

91 Bell, 53.

92 Bridge, 19.

93 Goode, 43.

94 Goode, 44.

95 Goode, 43.

96 Bridge, 20, Bell, 61. This is similar to the German concept of the employee as "Besitzdiener" under § 855 BGB.