|Land Burdens - A Fragmented or a Uniform Approach: When Will the Civil Law Debate Start?|
On 11 October of this year, the European Commission published its second communication on European contract law entitled 'European Contract Law and the Revision of the Acquis: The Way Forward' (COM (2004) 651 final; both this document and all other EU documents mentioned in this editorial can be found through http://europa.eu.int/comm/consumers/index_en.htm, go to 'Search', then to 'Safeguarding Consumers' Interests', 'Ensuring Safe Shopping', 'European Contract Law').With regard to the question whether contract law in Europe can be harmonised without also harmonising property law or parts thereof, the Commission made the following statement (p. 11 of the Communication):
The study mentioned here is a study on the borderline area of contract, tort and property law, written by U. Drobnig and C. von Bahr. It is a fascinating study. The comparative analysis shows relevant problem areas and provides directions for possible solutions.
Of course, this borderline is immensely complex to analyse. With regard to property law, various diverging - and sometimes widely diverging - approaches can be found. First of all, a clear gap exists between, on the one hand, (English and Irish) common law and, on the other hand, continental civil law with its different French, German and Scandinavian traditions. Furthermore, mixed jurisdictions (Scotland, Malta) can be found. In Middle and Eastern Europe, some countries are still to a larger or smaller degree legal systems in transition. It should not be forgotten either that Europe contains various smaller (non-EU) jurisdictions with their own characteristics, such as the Channel Islands. All these systems show particular characteristics, which often can only be understood from the perspective of legal history. Property law is clearly an area where the legal-historical comparative method is a conditio sine qua non to gain an understanding of the existing differences.
In order to analyse the borderline area of contract, tort and property law in-depth, it must be looked at from the intersection of this borderline field with the various property law traditions. This is not easy. It goes for the more traditional questions, such as what the property effects of a contract are, but especially for recently raised questions, such as whether information can be categorised as a new form of 'property'. In this issue of the EJCL, this exciting question is raised by Corien Prins, in her article entitled 'The Propertization of Personal Data and Identities'.
To return to more traditional questions which touch contract, tort and property law, the legal area of land burdens can be mentioned. But even here new approaches are advocated, which provoke a fundamental debate about the role of party autonomy and mandatory rules in property law. Let me take the new Dutch Civil Code as an example. According to Dutch law, land can be burdened in several ways. First of all, by creating a limited real right, such as a servitude. A limited real right is a right 'against the world' and it is binding against new owners. Secondly, by including in, e.g., a contract of sale a so-called 'chain clause' (also called a 'perpetual clause'): a contractual clause that binds the parties to the contract, under which the present buyer's freedom to act as the owner of the land is limited and he is obliged to include the same clause in a contract with a future buyer. Thirdly, the new Civil Code recognises an intermediate approach, the so-called 'qualitative duties': contractual clauses which, provided that certain conditions are fulfilled, bind successive owners in their capacity ('quality') as owner by force of law.
As to servitudes and qualitative duties, the Civil Code provides a strict definition in mandatory format. This is the expression of the numerus clausus doctrine. Under this doctrine, the number and substance of rights against the world - or 'absolute' rights - are limited and the parties' freedom to shape these rights according to their wishes is severely curtailed. Absolute rights can only be created, transferred and abolished by following a particular mandatory procedure. The policy behind the numerus clausus principle, with respect to both its substantive and its procedural aspect, in the legal area of land burdens is that land should be as freely alienable and hence marketable as possible. Furthermore, burdens limiting the owner's freedom of disposal should be as transparent as possible, preferably through public registration. Only then can land burdens affect third parties by force of law. If a 'chain clause' is used, the numerus clausus doctrine does not apply and freedom of contract governs. But this freedom comes at a price. The new owner is, from the perspective of contract law, a third party to the original agreement, limiting the rights of the previous owner. The new owner will have to accept the obligation created earlier by explicitly agreeing to this in his contract with the previous owner. For this reason, even when the contractual land burden has been strengthened by a chain clause, the third-party effect will only be limited. If a chain clause is broken, the party in whose favour this clause is made may claim in tort against the new owner and sue for damages. The argument for such a claim would be that the new owner benefits from the contractual non-performance of the previous owner. However, such a claim is only allowed under very strict conditions. Next to the different degrees to which third parties are bound by existing land burdens, another fundamental distinction between absolute land burdens, such as servitudes, and relative land burdens, such as chain clauses, can be found. Generally speaking, land burdens that are real rights are negative in nature, i.e. they can only compel passive behaviour (a duty to tolerate). Land burdens that are contractual in nature can also be positive, i.e. they can compel active behaviour. Clearly, a connection exists between the content of the burden and its real or personal nature. The underlying legal policy here thus seems to be that, if a burden is passed by force of law, its substance is to be more restricted than if the burden is accepted by voluntary agreement.
From a comparative and policy-oriented viewpoint, various questions can be asked. (1) What are the benefits of a fragmented system of land burdens? (2) What are the negative effects? (3) Should, e.g., servitudes be limited - as a matter of principle - to negative duties? (4) If not, how much freedom should be given to the parties to create positive duties with binding effect vis-à-vis third parties? Reference can be made here to several authors who discussed possible answers: B. Depoorter and F. Parisi, 'Fragmentation of Property Rights: A Functional Interpretation of the Law of Servitudes', Global Jurist Frontiers, Vol. 3, No. 1, Article 2 (2003) (http://www.bepress.com/gj/, also to be found at the web site of the Social Science Research Network (SSRN): http://ssrn.com/abstract=409380), J.R. Gordley, 'Servitudes', Global Jurist Frontiers Vol. 3, No. 1, Article 3 (2003) (http://www.bepress.com/gj/) and J. Weiser, 'The Real Estate Covenant as Commons: Incomplete Contract Remedies over Time' (http://ssrn.com/abstract=441680).
Although the Netherlands Civil Code still is fairly new, it seems that it is nevertheless based on the rather conservative viewpoint that what has worked for so long is not in need of change: what is unbroken needs no mending. The fact, however, that a legal system seems to function well in legal practice does not prevent the question whether it might function better. Why not streamline the law of real burdens, make it more simple and accessible by abandoning fragmentism as well as all the technical niceties which only seem to interest property lawyers? Comparative analysis may lead the way here. In Scotland, the Title Conditions (Scotland) Act 2003 introduces a broad concept of 'real burdens'. The Act can be found through http://www.scotland-legislation.hmso.gov.uk/legislation/scotland/ssi2003/20030453.htm.
In the U.S., the Restatement of Property 3rd, Servitudes, introduces an even broader concept of land burdens; see the Restatement of the Law, Property 3rd (Servitudes), Volumes 1 and 2 (St. Paul, Minn.: American Law Institute, 2000). Specifically U.S. law takes a uniform approach with open-ended concepts under judicial control, facilitating parties' wishes as much as possible without jeopardising the interest of third parties. A comparison between, on the one hand, Scots and U.S. law and, on the other hand, traditional civil law approaches as can be found in, e.g., the Dutch new Civil Code, will clarify the different approaches and - even more important from the viewpoint of the development of European private law - underlying policies. The Dutch traditionalist civilian approach can be qualified as curbing the parties' freedom to bind third parties and as aimed at the creation of 'ex ante' security. The modern functionalist U.S. approach is aimed at creating as much freedom for the parties as possible and 'ex post' security. The Scottish approach seems to be more in the middle. I refer to the article and further references by Andrew Steven, 'Revolution in Scottish Land Law', which is published in this issue of the EJCL.
Comparative analysis thus leads to further issues to be discussed: (1) What are the benefits of extending the freedom of the parties with regard to land burdens? (2) What are the negative effects of extending this freedom? (3) Can these negative effects be counterbalanced effectively by judicial control? (4 ) Which system is more efficient? The impact of the possible answers to these questions is not only relevant for, particularly, the development of national legal systems of land burdens, but also, more generally, European property law. The European internal market of financial services demands a certain uniformity of property law, to avoid uncertainty of cross-border credit-securing arrangements. Every burden restricts marketability and, thus, may limit the effectiveness of real security. These restrictions should not only be clear from a national, but also from a common market perspective. Fragmented national rules can hamper cross-border financing, as they may limit the required clarity. In fact, fragmented national rules create an exponential fragmentation at the European level, as the fragmentation differs from country to country.
Fascinating initiatives regarding the interconnection of European land registration systems alleviate the negative consequences of this fragmentation, but only to some degree; see the web site of the Permanent Committee on Cadastre in the European Union, http://www.eurocadastre.org/eng/documentseng.html, and the web site of the European Land Information Service, http://www.eulis.org/. Information alone, however, is not enough to establish efficient rules at the national or the European level. Making the law technically accessible through information technology is highly important, but making it more efficient from a substantive viewpoint is of even greater relevance. The question should be asked whether fragmentation or uniformity of this legal area should be preferred. If fragmentation is preferred at the national level, it may still be argued that this fragmentation should at least be within harmonised limits set by the European Union. At the national level in England and Ireland, the debate on land burdens has only started, so it seems; see the reports of the Law Commission for England and Wales, 'Transfer of Land: The Law of Positive and Restrictive Covenants' (LC No. 127, 1984) and 'Privity of Contract: Contracts for the Benefit of Third Parties' (LC No. 242, 1996), to be found through http://www.lawcom.gov.uk/index.html, and the reports of the Law Reform Commission Ireland, 'Report on the Acquisition of Easements and Profits à Prendre by Prescription' (LRC 66-2002), and 'Report on Land Law and Conveyancing Law: (7) Positive Covenants over Freehold Land and other proposals (LRC 70-2003), both to be found through http://www.lawreform.ie/. From 28 November of this year - the 'appointed day' at which the Scottish feudal system of landholding will be abolished - the debate in Scotland seems to be over; see the reports of the Scottish Law Commission, 'Real Burdens' (Discussion Paper No. 106, 1998) and 'Report on Real Burdens' (Scot Law Com No. 181, 2000), both to be found through http://www.scotlawcom.gov.uk/.
Remarkably enough, in civil law systems such as Dutch law the U.S., Scottish, English and Irish land burdens debate does not seem to be an issue. However, comparative lessons may be learned here, and the outcome of the debates in the U.S., Scotland, England and Ireland may provide inspiration for the development of a European law of land burdens. At the European level, the legal expert group, which will start working on the European 'Common Frame of Reference' may also be inspired by the work done by, among others, the American Law Institute (ALI). It may even take the ALI as a model for the organisation of the group's research and debates. More information on the work of the American Law Institute can be found at http://www.ali.org; for the work on the Common Frame of Reference see http://europa.eu.int/comm/consumers/index_en.htm (click on 'European Contract Law').
As mentioned above, in this issue we publish two articles that focus on comparative property law: 'The Propertization of Personal Data and Identities' by Corien Prins and 'Revolution in Scottish Land Law' by Andrew Steven. Continuing our articles on European family law, there is also an article by Dieter Martiny, entitled 'Ehescheidung und nachehelicher Unterhalt in Europa'. Finally, the issue contains an article by Elspeth Reid entitled 'The Doctrine of Abuse of Rights: Perspective from a Mixed Jurisdiction' and the inaugural lecture of Gerard-René de Groot, 'Towards a European Nationality Law'.
Sjef van Erp,
Cite as: S. van Erp, Editorial: Land Burdens - A Fragmented or a Uniform Approach: When Will the Civil Law Debate Start?, vol 8.3 ELECTRONIC JOURNAL OF COMPARATIVE LAW, (October 2004), <http://www.ejcl.org/83/editor83.html>
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