Article: A NUMERUS QUASI-CLAUSUS OF PROPERTY RIGHTS AS A CONSTITUTIVE ELEMENT OF A FUTURE EUROPEAN PROPERTY LAW?, vol. 7.2
Vol. 7.2 June 2003
A NUMERUS QUASI-CLAUSUS OF PROPERTY RIGHTS AS A CONSTITUTIVE ELEMENT OF A
FUTURE EUROPEAN PROPERTY LAW?(1)
Sjef van Erp (Maastricht University)
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Contents
I Introductory remarks
II The feudal system, the French Revolution and numerus clausus
III The role of the numerus clausus doctrine
IV Towards a numerus quasi-clausus or standardisation of property
rights?
Notes
I Introductory remarks
In his Hamlyn lecture 'Pragmatism and Theory in English Law',(2) Patrick
Atiyah observes four basic distinctions or contrasts between civil law and
common law: the logic and experience distinction, the rights and remedies
contrast, the principle and precedent contrast and, finally, the academic
and practical contrast. As such, these four contrasts do not describe the
differences between civil law and common law inaccurately, but only if it
is taken into consideration that the level of discussion is rather
abstract and not based upon historical-comparative analysis. The four
contrasts are the result of the historical development of the law and the
prevailing legal culture. They should not be seen as a static description
of the differences but only as still existing, yet changing,
characteristics. Is it still true today that English (or Scottish, Irish,
American) lawyers are less inclined to reason logically, only think in
terms of remedies and precedent and ignore academic writings? Are civil
lawyers (from France, Germany, the Scandinavian countries, Central and
Eastern Europe, Turkey and Japan) not interested in experience, but only
in rights, principles and academic legal literature? The answer can only
be negative. Atiyah certainly recognises this.(3) An English lawyer knows
very well how to build a solid argument based upon logical reasoning and a
civil lawyer is very much aware of the fact that although his client may
invoke an abstract right, this certainly does not always mean victory in a
concrete case. Furthermore, in the area of property law it becomes
abundantly clear that English lawyers have developed an ability to
construct abstract and complex legal systems of thought out of an enormous
amount of cases and special statutes; as abstract and complex, I might
add, as can be found in nineteenth-century German Pandectist legal
thinking.
It is often said that comparative law and legal history are two sides of
the same coin: comparison. Comparative law is interested in comparison on
a horizontal level, legal history on a vertical (diachronic) level.
Especially in the area of property law, a historical-comparative analysis
very often proves to be revealing.(4) Not only does this approach explain
the existing law from two perspectives, it can also give indications as to
the direction in which the law is developing.
In this paper, based on the historical-comparative method, I would like to
focus on a central concept of civil property law: the numerus clausus of
absolute rights. According to the numerus clausus doctrine, the number of
absolute rights and their content is closed. Is this rigid doctrine really
necessary? Could (and should) it be less rigorous and more open to
innovation? A more open approach, towards a numerus quasi-clausus, might
be the way towards a well-reasoned and gradual acceptance of common law
institutions and concepts, such as the trust, in the civil law. The civil
law will be compared with the common law approach and it will be attempted
to find common ground between (civil law) theory and (common law)
pragmatism.
II The feudal system, the French Revolution and numerus clausus
For a better understanding of the importance of numerus clausus in civil
law systems, some historical remarks are necessary. These will concern the
role of the feudal system with respect to property relations and the
abolition of the feudal system on the continent of Europe as a result of
the French Revolution. Consequently, the principles and rules of property
law had to be reformulated on the continent. In England, however, the
feudal system was not abolished and remained the - legal-technical - basis
of property law. The same applies to countries which derive their property
law system from English law, such as Ireland.(5)
The feudal system came to England from Normandy as a result of the Norman
Conquest after the Battle of Hastings in 1066. It was, both on the
continent of Europe and in England, not only a legal system; it was first
of all a political and social framework.(6) The feudal system created a
bond between the king and a tenant-in-chief, between the latter and a
mesne lord or between a mesne lord and a vassal. Rights to land were
granted in return for services. Gradually, the feudal system developed
into a system of land law.(7) In English law, the historical roots of
property law can be seen in the continued use of the concepts ' tenure'
and 'estate'. Land is 'held' (not 'owned' in the civil law sense) and the
tenant is entitled to an 'estate'. Various types of estates can be
distinguished, but an essential characteristic of each estate is time. The
two major types are the freehold (unlimited duration) and the leasehold
(limited duration). Under English law this system of landholding became
even more complex and intricate because of the development of a duplex
ordo: common law and equity. It made thinking about property rights even
less absolute than it already was and it also created an atmosphere in
which legal thinking could be infused with economic notions.(8) If A holds
a common law estate in land (e.g. A is a freeholder), but his spouse B
spends money from which both A and B profit, B can be given equitable
rights in the land: A then becomes trustee for himself and B as
beneficiaries of a trust.
As I already mentioned above, on the continent of Europe the feudal system
was abolished as a result of the French Revolution. Also, fundamental
human rights were formulated and it was the person of the citoyen
(citizen) who became the focus of political and legal thinking.(9) The
citoyen as a free and equal person, bound by the duties of brotherhood and
entitled to fundamental rights, came first, not a person's status based
upon class distinctions or so-called 'seignorial rights'. Legal thinking
was transformed, a change prepared by academic scholars and political
philosophers. Legal scholars were greatly influenced by the study of Roman
law, from which a development towards scholarly, highly abstract and
systematic, legal thinking had resulted. Without this, codes could not
have been enacted, as the essence of a code is that it lays down rules in
a systematic and precise manner. The codes were also the expression of the
ideals of equality and freedom. This can be seen clearly in the area of
contract law (freedom of contract). In the area of property law, this is
somewhat different. Of course, property law too applies to all citizens
and to all objects, and is thus the expression of the ideal of equality.
But the ideal of freedom could not be applied here to the same degree as
in contract law. The old order of the feudal system had to be and remain
abolished. Property law is, generally speaking, of a mandatory nature,
limiting the freedom of parties to create rights against the world.
This process of change after 1789 - the year in which the French National
Assembly abolished the feudal system, but did not replace it with new
rules - led to a completely different system of property law. It was (and
still is) unitary in nature: the basic principles of property law apply to
all objects (real and personal property). As already remarked above,
property rules are mandatory law, unless certain, albeit limited, freedom
is given to the parties. Ownership - the most complete absolute right, in
respect to both content and duration, that a subject can have in regard to
an object - can only exist in the form a non-fragmented unitary right.(10)
All other absolute rights are 'limited' real rights. Third parties must be
informed about absolute rights, as they are bound by those rights without
their consent. As to movables, the publicity which is necessary to justify
that third parties have to accept the existence of absolute rights is
closely linked with possession. Regarding immovables, third parties are
informed through registration systems. Finally, the number, content,
creation, transfer and extinction of absolute rights is regulated by the
law. This is what civil lawyers call the numerus clausus of absolute
rights. This numerus clausus cannot be isolated from the other basic
aspects of civil property law that I mentioned.
In the area of property law, the ideals of the French Revolution have
resulted in a simple, universal scheme, which is aimed at reaching legal
certainty, predictability and transparency. In the following pages, I will
elaborate on the role and function of the numerus clausus doctrine in
civil law systems and defend the idea that standardisation of 'rights
against the world'(11) is certainly useful and desirable, but should not
be as strict as it is in some civil law countries. I will defend that,
without endangering the enormous advantages that the French Revolution
brought to property law, some openness will prove beneficial: instead of a
numerus clausus a numerus quasi-clausus should be adopted.
III The role of the numerus clausus doctrine
Before I discuss the role of the numerus clausus doctrine in more detail,
it may be useful to reflect briefly upon the distinction between the
object of a property right and the legal relation constituting the
rights/duties between subjects in regard to such an object. These two
aspects of property entitlements should be distinguished clearly. In what
follows, I will focus on the right of ownership, not on other absolute
rights. It should be borne in mind, however, that what applies to the
right of ownership mutatis mutandis also applies to limited real rights.
The object of a right of ownership (very often simply called 'ownership')
can be a corporeal thing (movable or immovable) as well as a right.(12) To
give an example of the latter: a contractual right, although personal in
nature and which only binds the parties to a contract, is, nevertheless,
part of a person's patrimony and can, as such, be the object of a right of
ownership. The effect is that it can be transferred to someone else.
Whether you limit the 'right of ownership' to rights regarding corporeal
things (as is done in the new Dutch Civil Code) or not is a matter of
legal terminology, closely related to the legal terminology and the
structure of the legal system in which this particular term is used. A
good example of a very broad definition of the term can be found in
Article 1 of Protocol 1 of the European Convention on Human Rights:
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.(13)
Legal theorists have examined at great length what the object of ownership
(and, consequently, the object of rights derived from ownership, such as
security interests) can be.(14) This has led, e.g., Charles Reich to
express the view that 'new property' should be recognised as a legal
category. In his own words: 'New property represents a relationship
between an organization and the holder, the organization being the "the
source" of the interest, the holder being the beneficial owner.'(15)
Examples of this 'new property', which he also describes as 'the
development of economically valuable interests that are of vital
importance to the holders of those interests', are job security and the
right to be in a national park or forest.(16)
What can be the object of a right of ownership or other absolute right is
a different problem area compared to the question whether only those
rights can be recognised as absolute (i.e. as rights against the world)
which are mentioned in a mandatory catalogue or whether freedom exists to
create 'new' absolute rights. This latter question does not deal with the
object of, e.g., ownership or security interests, but with the type and
content of the right which is claimed to be absolute in regard to a
particular object. Of course, the two questions interrelate. If - to give
an example - it would be accepted that a right for every citizen exists to
walk in a national park, the question arises what the nature of this right
is. Is it a public law or a private law right? Assuming that it could be a
private law right, would it be a personal or an absolute right? If it is
accepted as an absolute right according to private law, what does this
mean in the light of the existing numerus clausus? Here we touch the
immensely complicated borderline both between public law and private law
and between the law of obligations and the law of property.(17) Let me
give another example, to show how difficult it already is to draw a clear
line only between contract and property. Sometimes contractual rights can
become 'commodities' and are treated as objects of property law. An
illustration are swaps: contracts aimed at taking over - but only between
the two parties among themselves - the other party's position in regard to
a loan agreement which that party concluded with, e.g., a bank. As a
result of the swap, interest rates, currencies or both can be 'exchanged':
the two parties who conclude a swap will each behave as if he were the
other party. If party A pays a fixed interest rate and party B a floating
rate, after the swap A will pay B the floating rate and B will pay A the
fixed rate.(18) A swap is, as such, a derivative, like futures and
options. It derives its own value from the underlying value, in this case
the existing loan contracts with the agreed interest rates and
currencies.(19) It is generally assumed that swaps and derivatives are to
be considered as 'contracts'. However, once these contracts have been
standardised and in this form are traded in an exchange, they may also be
considered to be commodities and, hence, goods.(20) If this qualification
is correct, it would mean that relationships which start as being
contractual in nature may go through a metamorphosis and end up being, at
least in part, proprietary in nature.(21) The very moment, however, the
swap has to be executed (e.g. through netting), it would, in this respect,
still be a contract. The result of the metamorphosis would then be a legal
relationship of a hybrid nature.(22) I will not go any further into this;
I would only like to point out that if this really would be the case, for
reasons of clarity and certainty a formal line should be drawn between the
contractual side and the commodities side of a derivative. A suggestion
for the drawing of this formal line may be that a derivative becomes (at
least in part) a commodity once it has been standardised and for that
reason can be traded almost anonymously at an exchange. An advantage of
this formal approach is that the proprietary side of the derivative will
be clearly separated from its contractual side. The proprietary side
could, to offer an illustration, only be reflected in the formalities
required for the transfer of the derivative - the acceptance of screen
trading as a new form of (instantaneous) transfer next to, e.g.,
assignment and the handing over of a bearer document - without influencing
matters like netting. It will be obvious that such questions, as I can
only outline here, are of a perplexingly complicated nature. In the
following pages I will only focus on the numerus clausus as such and not
on the object of absolute rights, including the borderline between
contract and property.
For civil lawyers, the numerus clausus doctrine is a basic element of
property law.(23) For a better understanding of what follows, it may be
useful to reiterate what the numerus clausus doctrine is, in the light of
other basic elements of civil property law, before we contrast civil law
with common law. According to the numerus clausus doctrine the number of
absolute rights is limited, their content is restricted and it is laid
down in mandatory rules how absolute rights can be created, transferred
and extinguished.(24) The Dutch Civil Code recognises the following
absolute rights: ownership, servitudes, emphyteusis, superficies, right of
apartment (condominium), pledge and mortgage.(25) Generally speaking,
these rights can also be found in other civil law systems. In the civil
law, ownership is the most absolute right and it cannot be fragmented:
only one person can be the owner, no distinction between legal and
economic ownership is accepted. In order to justify the binding nature of
absolute rights against third parties, these parties must be informed
about those rights. With regard to movables, information is provided by
possession. She who possesses an object is at an advantage when she claims
to be the owner, as her right of ownership will be presumed. Information
can also be given through registration. An important example is the land
registry.
The numerus clausus doctrine is characteristic of the post-feudal civil
law systems. However, the feudal system still is the basis for property
law in England and countries with property law systems which are
historically based on English law such as the United States.(26) It will,
for that reason, come as no surprise that the numerus clausus doctrine,
even the concept of numerus clausus as such, was hardly ever discussed in
English and American legal literature. This seems to be changing. In 1993
Gordley pointed out that, at least from an American perspective, the
conceptual differences between civil and common property law are no longer
fundamental.(27) In a very interesting, recent, exchange of views,
Hansmann and Kraakman(28) have debated with Merrill and Smith(29) whether
the numerus clausus doctrine also exists, albeit perhaps implicitly, in
American property law. They all seem to agree that in American common law
standardisation has taken place, which in its final result comes close to
the civil law numerus clausus. Merrill and Smith distinguish the following
categories of common law property rights.(30) In regard to estates in
land, they distinguish the following five possessory interests: fee simple
absolute, defeasible fee simple, fee tail, life estate and lease. Also
with respect to land, they distinguish the following five concurrent
interests: tenancy in common, joint tenancy, marital property, trusts and
condominiums, cooperatives and time-shares. Concerning land, finally, the
next four basic forms of non-possessory interests are distinguished:
easements, real covenants, equitable servitudes and profits. With respect
to personal property the available forms of property rights are more
limited, given the nature of movables and accounts receivable.
Merrill and Smith argue that the numerus clausus is the expression of an
'optimal standardization' of property rights. The economic benefits of a
new property right must outweigh the costs for third parties to become
informed about this new right.(31) In their view, the customising of
property rights should, for several reasons, be done by the legislature
and not by courts. The legislature may give rules which can be clear,
universally applicable, comprehensive, stable, prospective and it may take
into account whether and, if so, how implicit compensation should be given
to those affected by changes in property rules.(32)
Hansmann and Kraakman disagree with the analysis offered by Merrill and
Smith.(33) They argue that property rights are characterised not, as
Merrill and Smith argue, by being good against the whole world, but by
being enforceable against subsequent transferees of other rights in an
'asset'. Furthermore, they argue that the numerus clausus doctrine as it,
in their view, exists in the common law is not about standardisation, but
about 'regulation of the types and degree of notice required to establish
different types of property rights'.(34) The purpose of regulation is not
that third parties are given information, but to enable third parties to
verify ownership of the rights offered for conveyance. In this
verification process, property law assumes that 'all property rights in a
given asset are held by a single owner, subject to the exception that a
partitioning of property rights across more than one owner is enforceable
if there has been adequate notice of that partitioning to persons whom it
might affect.'(35) The cost-benefit analysis, as defended by Hansmann and
Kraakman, is aimed at weighing the utility of the partitioning and the
costs of giving notice.(36)
IV Towards a numerus quasi-clausus or standardisation of property rights?
It seems to me that the approach taken by Merrill and Smith, more than the
analysis offered by Hansmann and Kraakman, comes very close to how a civil
property lawyer looks at the content, historical background and
justification of the numerus clausus doctrine. Hansmann and Kraakman seem
to suggest that they do not accept a strict distinction between rights in
personam - which only exist between two or more specific parties - and
rights which are good against the world. In their view, a right can also
be absolute if it is not binding against the world, but merely between a
person and a certain category of other persons. This latter approach is
more of a common law than of a civil law nature. In the words of Lawson
and Rudden:
. . . English lawyers have always been accustomed to classifying
interests in land in terms of the time for which they could endure.
Leases were easily fitted into this perception, although they grew up
outside the feudal system. Furthermore, the co-existence of these
estates was common.(37)
This is different in the area of personal property law, but even there
property rights are not completely absolute in the civil law sense. This
is caused, in part, by the distinction between common law and equity, but
also by the 'relativity of ownership' . What matters is priority of
entitlement, not absolute entitlement.(38) See, e.g., what Bridge writes
in his Personal Property Law where he defines rights in property:
We can start by saying that the question deals with the relationship
between an individual and a thing, and the effect of that relationship
on the world at large. Property rights come in various shapes and sizes.
. . . There exists also a range of equitable rights over personalty. The
touchstone of a property right is its universality: it can be asserted
against the world at large and not, for example, only against another
individual such as a contracting partner. This is not to say, however,
that universal rights are invincible: common law property rights may in
certain instances be overridden, and equitable rights, for example the
interest of a trust beneficiary in the trust assets, are always
vulnerable to the bona fide purchaser for value without notice of the
legal estate.(39)
But even though Merrill and Smith come nearer to the civil law
understanding of the numerus clausus doctrine than Hansmann and Kraakman,
nevertheless - in essence - their analysis too is that of a common lawyer
looking at the civil law. The number of property rights they have found in
American property law, also in the light of the duplex ordo of common law
and equity, still is so open that what they have found should not be
qualified as a 'numerus clausus', but as 'standardisation'.
Standardisation means that a limited number of categories is used for
practical reasons, but it does not imply that this number is completely
closed. Courts may still decide that certain rights, created by two
parties and not to be found in the existing categories, bind certain or
even all third parties. Standardisation also does not mean that the
contents of the various categories is as fixed as it is in the civil law
by mandatory rules.
I certainly do not want to argue that the analysis offered by Merrill and
Smith and by Hansmann and Kraakman is meaningless for a civil lawyer. On
the contrary, it makes clear what the functional and economic backgrounds
of the numerus clausus doctrine are. It sheds light on the advantages and
disadvantages, the economic benefits and costs, of the civil law numerus
clausus doctrine. This doctrine, if strictly applied, creates the risk
that innovation takes too much time, which might hamper the further
development of new categories of property rights that are being developed
in legal practice. Two obvious examples are the trust and time-share
arrangements. I agree with Merrill and Smith that courts should be
extremely careful when they decide to create new property rights.(40) The
Dutch experience under the old Civil Code is a good example. The Hoge Raad
(Netherlands Supreme Court) in 1929 accepted that movables and claims
could be transferred to a bank for security purposes.(41) In fact, the
Supreme Court decided that a non-possessory pledge could be created (or,
in other words, a right of mortgage could also rest on movables and
claims) in clear violation of the old Civil Code. Problems concerning this
transfer for security purposes kept arising and each time had to be
resolved by the courts. When the new Civil Code no longer allowed the
transfer for security purposes and introduced the non-possessory pledge,
the transitory law converted existing transfers for security purposes into
this new type of pledge. Courts would never have been able (and competent)
to make such a fundamental change in property law; it could therefore only
be done by the legislature.(42)
The legislature should be aware of the leading role it plays in the
structuring of property law and the adaptation of property law to new
needs. So far, the Dutch legislature - as well as other legislatures in
civil law countries - does not seem to realise this. This may change if
there is economic pressure to accept new absolute rights. In the
Netherlands Antilles, e.g., with its large offshore business it is now
being considered to introduce the trust even though the new Dutch Civil
Code - albeit it in the area of property law with important exceptions -
now also applies on these islands.(43) If the need for change becomes
really pressing, courts may have no alternative than to fill the vacuum
which the legislature leaves, but this should be done with the utmost
care. What Merrill and Smith as well as Hansmann and Kraakman have made
abundantly clear to civil lawyers is that the numerus clausus doctrine
also serves an economic purpose and that this purpose should always be
borne in mind. For that reason, I would argue that the strict civil law
numerus clausus doctrine should not be applied as strictly as it is done
in, e.g., the Netherlands. It should develop towards a numerus
quasi-clausus: some flexibility is needed to regulate new forms of rights
in property, such as the trust and time-share arrangements. If the
legislature does not act, courts should, but with extreme care.
What civil law could learn here from common law is flexibility, which
enables property law to be more responsive to economic developments in the
law. What the common law could learn from civil law is that closing legal
categories creates more legal security and reduces information costs. The
question remains what our starting point should be: common law pragmatism
or civil law theory? In my view, neither should be the starting point.
Historical-comparative analysis, taking into account socio-economic
factors, should lead the way towards the most workable approach.
Notes
1. This is a slightly adapted version of an essay published in a
Festschrift for Ewoud Hondius on the occasion of his 60th birthday,
offered to him by (former) members of the Board of the Netherlands
Comparative Law Association: K. Boele-Woelki, C.H. Brants and G.J.W.
Steenhoff (eds.), Het plezier van de rechtsvergelijking. Opstellen over
unificatie en harmonisatie van het recht in Europa aangeboden aan prof.
mr. E.H. Hondius (Deventer: Kluwer, 2003).
2. P. Atiyah, Pragmatism and Theory in English Law (London: Stevens &
Sons, 1987), pp. 6 ff.
3. Atiyah, Pragmatism and Theory, pp. 143 ff.
4. See also my inaugural lecture, held at Maastricht University, Europees
Privaatrecht: Postmoderne dilemma's en keuzen. Naar een methode van
adequate rechtsvergelijking (Deventer: Kluwer, 1998), also published as
European Private Law: Postmodern Dilemmas and Choices. Towards a Method of
Adequate Comparative Legal Analysis, vol 3.1 ELECTRONIC JOURNAL OF
COMPARATIVE LAW, (August 1999),
.
5. J.C.W. Wylie and J. Kenny, Irish Land Law (Dublin: Butterworths, 1997),
pp. 8 ff.
6. Cf. R.C. van Caenegem, An Historical Introduction to Private Law
(Cambridge: Cambridge University Press, 1992), p. 20. See also the
definition in Black's Law Dictionary (St. Paul, Minn.: West Publishing
Co., 1990) sub voce 'feudal system': '. . . A political and social system
which prevailed throughout Europe during the eleventh, twelfth and
thirteenth centuries, and is supposed to have grown out of the peculiar
usages and policy of the Teutonic nations who overran the continent after
the fall of the Western Roman Empire, as developed by the exigencies of
their military domination, and possibly furthered by notions taken from
the Roman jurisprudence. . . .'. Cf. the definition in David M. Walker,
The Oxford Companion to Law (Oxford: Clarendon Press, 1980) sub voce
'Feudalism': '. . . Feudalism thus came to be recognized over much of
western Europe as a system of administration, jurisdiction, military
service, and land tenure. . . .'. See also J.H.M. van Erp, 'Via open
normen naar Europees goederenrecht', in S.E. Bartels and J.M. Milo (eds.),
Open normen in het goederenrecht (The Hague: Boom Juridische Uitgevers,
2000), pp. 61 ff., especially pp. 67 ff.
7. See, e.g., A.W.B. Simpson, A History of the Land Law (Oxford: Clarendon
Press, 1986), pp. 1 ff.; S.H. Goo, Sourcebook on Land Law (London/Sydney:
Cavendish Publishing, 2002), pp. 1 ff.; see also J.-A. MacKenzie and M.
Philips, Textbook on Land Law (Oxford: Oxford University Press, 2002), pp.
3 ff.
8. It is, therefore, no coincidence that the economic analysis of the law
was developed and first applied by American and English lawyers. It will
also come as no surprise that law and economics scholars frequently
conclude that the common law (almost by nature) inclines towards reaching
efficient results. But this conclusion is also, at least partially, caused
by the self-perception of the common lawyer. You recognise what you were
trained to observe and were taught to regard as an important value.
The feudal concepts of 'tenure' and 'estate' underwent a process of
transformation and as a result have become formats at common law and in
equity that enable maximum economic use of land and buildings. Legal
thinking and economic analysis show close links in this area of the law.
See F.H. Lawson and B. Rudden, The Law of Property (Oxford: Oxford
University Press, 2002), pp. 169 ff.
9. See, from a historian's viewpoint, S. Schama, Citizens: A Chronicle of
the French Revolution (London: Penguin Books, 1989), pp. 428 ff. The
ideology underlying legal thinking during and after the French Revolution
still is of considerable influence today. Not surprisingly, the new Dutch
Civil Code begins with rules regarding the subjects of private law
(natural and legal persons) in Books One and Two, followed by rules that
govern the interactions between these subjects and the various rights
these persons can have in regard to (physical and non-physical) objects.
Of course, exceptions exist. Matrimonial property law can be found in Book
One.
10. Cf. Article 17 of the Déclaration des Droits de l'Homme et du Citoyen
(Declaration of the French National Assembly of 26 August 1789): '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.'
(Since property is an inviolable and sacred right, no one shall be
deprived thereof except where public necessity, legally determined, shall
clearly demand it, and then only on condition that the owner shall have
been previously and equitably indemnified.)
11. The expression 'rights against the world' can be compared with
absolute rights in the civil law sense. It should be borne in mind,
however, that rights against the world (absolute rights) sometimes only
apply to most, but not all, or even only a limited category of third
parties. An example of such a limitation is the protection of a bona fide
third party acquirer against the original owner who, e.g., avoided a sales
contract with his purchaser, in a situation where the purchaser in his
turn had sold and transferred the object. Under Dutch law, the causal
system of transfer applies, but still - of course under certain conditions
- the bona fide third party will not lose his right of ownership. Cf.
Articles 3:86 (movables) and 3:88 (registered property, such as land) new
Dutch Civil Code.
12. A notorious problem is whether goodwill can be an object of property
law. This question was only recently decided by the Hoge Raad (Netherlands
Supreme Court) in its decision of 31 May 2002, Rechtspraak van de Week
2002, 89, also to be found on the web site of the Dutch Judiciary:
. Incorporated goodwill (the surplus value of
all the property in an enterprise) can be 'property' as such - and thus an
object of property law - in the sense of Article 3:1 Dutch Civil Code.
Non-incorporated goodwill is not property. (Article 3:1 reads as follows:
'Property is comprised of all things and of all patrimonial rights.')
13. See E.A. Halkema, 'The Concept of Property - in Particular in the
European Convention on Human Rights', in J.P. Loof, H. Ploeger and A. van
der Steur (eds.), The Right to Property: The Influence of Article 1
Protocol No. 1 ECHR on Several Fields of Domestic Law (Maastricht: Shaker
Publishing, 2000), pp. 17 ff. For a summary of case law, see B. Mensah,
European Human Rights Case Summaries 1960-2000 (London/Sydney: Cavendish
Publishing, 2002), p. 1176.
14. See, among many others, M.J. Horwitz, The Transformation of American
Law 1780-1860 (Cambridge, Mass./London: Harvard University Press, 1977),
pp. 31 ff.; idem, The Transformation of American Law 1870-1960: The Crisis
of Legal Orthodoxy (New York/Oxford: Oxford University Press, 1992), pp.
145 ff.; K.J. Vandevelde, 'The New Property of the Nineteenth Century: The
Development of the Modern Concept of Property', 29 Buffalo Law Review
(1980), 325 ff..
15. C.A. Reich, 'The New Property after 25 Years', 24 University of San
Francisco Law Review (1990), 223 ff., at p. 225.
16. Reich, 'New Property after 25 Years', p. 226.
17. G. Samuel, 'Property Notions in the Law of Obligations', 53 Cambridge
Law Journal (1994), 524 ff.; G.L. Gretton, 'Owning Rights and Things',
Stellenbosse Regstydskrif/Stellenbosh Law Review (1997), 176 ff.; K. Reid,
'Obligations and Property: Exploring the Border', Acta Juridica (1997),
225 ff.
18. This implies, of course, an element of speculation. In the future, A
hopes to be better off by paying the floating rate (when the floating rate
gets lower than the fixed rate) and B hopes the same by paying the fixed
rate (when the floating rate gets higher). Only one of them can be right.
19. See C.F. Leeger, Swaps onder ISDA-documentatie, Serie Contracteren in
de internationale praktijk (Deventer: Kluwer, 2002), p. 1.
20. Ph.R. Wood, Title Finance, Derivatives, Securitisations, Set-off and
Netting, Series Law and Practice of International Finance (London: Sweet &
Maxwell, 1995), pp. 215 ff. , where he discusses derivatives markets,
including exchange-traded derivatives.
21. Cf. K. Medjaoui, Les marchés à terme dérivés et organisés
d'instruments financiers. Étude juridique (Paris: L.G.D.J, 1996), pp. 261
ff., where a discussion can be found about the (my translation)
'definition of and distinction between a futures "contract" and a
negotiable option: the products'. On p. 268, Medjaoui makes the following
remarks, which show how troublesome the qualification 'contract' or
'commodity' proves to be:
Ainsi, pour une même valeur, plusieurs options et contrats,
d'identification équivalente dans leur qualité, quantité, échéances,
vont être créés et admis à la négociation.
Il s'agit de produits fongibles, dans leurs caractéristiques
qualitatives et quantitatives intrinsèques; soit une caractéristique
commune aux valeurs mobilières, mais le rapprochement s'arrête là.
He adds (p. 283):
Ces produits à terme ne sont pas des valeurs mobilières, bien que
certains emploient, à tort, l'expression d'émission', pour qualifier
leur création. Cette vision est fausse et risque d'entretenir des
confusions, non seulement par rapport à la procédure de création de ces
produits d'une part, mais aussi quant à leur contenu juridique,
confronté à celui d'une valeur mobilière, principalement une action,
d'autre part.
22. See, for a comparable problem area (immobilisation of securities), R.
Goode, 'The Nature and Transfer of Rights in Dematerialised and
Immobilised Securities', Butterworths Journal of International Banking and
Financial Law (1996), 167 ff. Particularly interesting is the analysis of
possible characterisations of entitlements which a depositor of securities
might have towards the institution which holds the securities, e.g. a bank
(Goode, loc. cit., pp. 170 ff.).
23. The following can only be a very general and superficial overview of
some basic aspects of civil property law. Of course, differences exist
between the various civil law systems. I need only refer to the acceptance
of so-called 'Anwartschaftsrechte' under German law, which are seen as
quasi-real rights. ('Anwartschaftsrechte' are, literally translated,
expectation rights, such as the right of the buyer under a retention of
title clause; a buyer expects to become owner after payment of the
purchase price.)
24. See, for Dutch law, Asser-Mijnssen-De Haan, Goederenrecht. Algemeen
Goederenrecht (Deventer: W.E.J. Tjeenk Willink, 2001), nos. 31, 39 and 241
f. Of course, borderline cases exist. Lease, e.g., although a contract,
has certain features which make it a quasi-absolute right for civil
lawyers. The lessee is protected in her lease rights and bound by her
duties arising from the lease against a transferee of the lessor.
25. Absolute rights are also recognised outside the Civil Code. An example
are intellectual property rights.
26. It is remarkable that Th.W. Merrill and H.E. Smith in their article
'Optimal Standardization in the Law of Property: The Numerus Clausus
Principle', 110 Yale Law Journal (2000), 1 ff., at p. 6, include American
property law among the 'postfeudal' legal systems. If they mean that the
feudal system as a system of government does not apply in the United
States, they - obviously - are correct. English feudal concepts are,
however, still the roots of American property law.
27. J. Gordley, 'Common law und civil law. Eine überholte Unterscheidung',
3 Zeitschrift für Europäisches Privatrecht (1993), 498 ff., especially pp.
510 ff.; idem, 'The Common Law in the Twentieth Century: Some Unfinished
Business', 88 California Law Review (2000), 1817 ff., esp. pp. 1859 ff.
28. H. Hansmann and R. Kraakman, Property, Contract and Verification: The
Numerus Clausus Problem and the Divisibility of Rights, to be found at
(search term: numerus clausus); the
paper is forthcoming in a special issue of the Journal of Legal Studies on
property rights.
29. Merrill and Smith, 'Optimal Standardization', 110 Yale Law Journal
(2000), 1 ff..
30. Ibid., pp. 12 ff.
31. Ibid., pp. 38 ff.
32. Ibid., pp. 58 ff.
33. They conveniently summarise the position of Merrill and Smith and
contrast it with their own approach in the first pages of their paper.
34. Hansmann and Kraakman, 'Property, Contract and Verification', p. 1.
35. Ibid., pp. 1 f.
36. Ibid., pp. 21 ff.
37. Lawson and Rudden, Law of Property, p. 79.
38. M. Bridge, Personal Property Law (Oxford: Oxford University Press,
2002), pp. 28 ff.
39. Bridge, Personal Property Law, p. 12. See also Wylie and Kenny, Irish
Land Law, pp.177 f. ('Modern commercial practice has done much in recent
decades to break down the concept of absolute ownership of chattels.
Indeed, commercial law has adopted many of the concepts originally derived
from land law in this respect, so that the leasing and mortgaging of
valuable chattels like ships and aircraft is quite common.')
40. I refer to what I wrote about a possible introduction of the Treuhand
(a trust account under German law) in the Netherlands through case law in
my contribution 'De kwaliteitsrekening als “Treuhand”figuur', in E. Dirix
and R.D. Vriesendorp, Inzake kwaliteit. De kwaliteits- of derdenrekening
naar Belgisch en Nederlands recht (Deventer: Kluwer, 1998), pp. 211 ff.,
esp. pp. 226 ff.
41. Hoge Raad 25 January 1929, Nederlandse Jurisprudentie 1929, 616
(Brewery case) and Hoge Raad 21 June 1929, Nederlandse Jurisprudentie
1929, 1096 (Car case). See Asser-Mijnssen-De Haan, Goederenrecht, nos. 468
ff.
42. Cf. Article 3:84 (3) Civil Code (the so-called 'fiducia ban') and
Article 86 Overgangswet Nieuw Burgerlijk Wetboek (Transitory Law New Civil
Code).
43. This will be a civil law trust, where the trustee will be the sole
owner of the trust property and the beneficiary does not have any property
entitlements. Cf. for the law of Scotland E. Reid, 'Scotland (Report 1)',
in V.V. Palmer (ed.), Mixed Jurisdictions Worldwide: The Third Legal
Family (Cambridge: Cambridge University Press, 2001), p. 234, and for the
law of South Africa C.G. van der Merwe, J.E. du Plessis and M.J. de Waal,
'The Republic of South Africa (Report 2)', in Palmer, Mixed Jurisdictions,
pp. 194 ff.