The Causal, Abstract And Mixed
The causal, abstract and mixed transfer systems of France, Germany and the Netherlands:
A starting point for possible future unification and codification of European Property law?
European Property law
Joris van der Werve
1.0 Systems of transferring ownership 4
1.1 The causal system 4
1.2 The abstract system 6
1.3 The mixed system 7
1.3.1 Causal aspects of the mixed system 7
1.3.2 Abstract aspects of the mixed systems 7
2.0 European starting point? 8
2.1 DCFR 9
3.0 Conclusion 10
When one asks me the question: “But what are you actually studying then?” I try, time after time, to explain what the underlying concepts, complications and implications of Property Law are and how the things a non-law student has never thought about before are the basis of society as we know it nowadays. One cannot escape the extent or grasp of how Property Law affects the world we live in. Finding easier and more comprehensible ways to explain that initial question, I started researching the underlying concepts of Property law itself.
Principles like numerus clausus; principle of transparency (splitting off into principles of publicity and specificity) and the principle of hierarchy (that the oldest right has priority over the youngest). But even prior to taking into account these principles, there is the underlying concept of ownership and the basic intent to provide another with that ownership requires a way of transferring that ownership of a specific thing. In order to be able to transfer ownership the laws of the European countries provide abstract, causal and mixed systems. Combining intent, delivery and with the result of that, the desired transfer of ownership.
Doing the research in the early days of this project I encountered, as throughout my bachelor in which I took a similar course (Comparative European Property Law), many noticeable and noteworthy articles and interesting doctrines. At first I wanted to explore the implications and complications of cases of insolvency in respect to the consequences for individuals in causal or abstract transfer systems. However, after finding out that France as a causal system; Germany as an abstract system and the Netherlands with its mixed system differentiate in its way of transferring ownership I became intrigued. How, within the civil law traditions, did things develop in such a way that three different countries that are so close to each other came to adopt three different approaches to this aspect of Property Law? Especially when the French Civil Code became applicable in the Netherlands when it was occupied by the French. Even after the French left then Dutch implemented a Civil Code much like the French Civil Code. Napoleon biographer Johan op de Beck wrote the following on the influence of the French Civil Code on the Dutch Civil Code.
These developments spiked my interest in how these systems independently came into being in such a close proximity of each other and having different results in the three countries for certain situations. One can for example agree to sell an expensive television. The buyer tells the seller that he will come pick up the television at the end of the week. The buyer pays up in advance. However, when the buyer arrives at the electronics store it appears that the business went bankrupt the day after payment. The question then is to who, at that moment, owns the television? The answer lies within which transfer system then will be applied. Two systems may give opposite answers to that question.
Since the Schuman Doctrine Member States have been increasingly harmonising and codifying the law. States are however holding back on unifying/harmonising the Law of Property. But if it ever comes to that. Might there be an answer, or rather an idea for a starting point to the question which system for the transfer of movable should be adopted in a possible future codification of Property Law in Europe? More specifically, the focus will be on the question whether, an abstract, mixed or causal system is to be preferred. Or even a more pragmatic approach?
I’ll try to answer that question with the following hypothesis:
‘’The causal, abstract and mixed transfer systems of France, Germany and the Netherlands: A starting point for possible future unification and codification of European Property law?’’
1.0 Systems of transferring ownership
The system of transfer has two sorts of dividing lines. First, the tradition system and the consensual system. In regard to the requirements for the transfer of ownership there is a fundamental difference between the systems of law of continental Europe. Most systems of law require a separate act of delivery to complete the transfer of ownership (tradition system). Whereas according to French law the contract itself (the contract of sale) also transfers the ownership itself (consensualism). Second, the abstract and causal transfer systems. One usually differentiates between to how one transfers real rights from one person to another, the causal and abstract systems. Both the causal and the abstract way of transferring ownership have its own inherent historical background. The question remains however how the doctrine of the titulus dominie transferendi, which is the foundation of the causal system and the Abstraktionsprinzip of the abstract system could have evolved into two different systems out of the same Roman tradition ruled by Roman law.
1.1 The causal system
The causal system of the transfer of ownership how we know it nowadays, finds its roots in the doctrine off titulus dominii transferendi (a title for transferring of ownership). This doctrine finds its origins from the school of the Glossators around 1120 until mid-13th century. Academic legal scholars of that time studied, interpreted and taught the Corpus Iuris Civilis. The doctrine of titulus dominii transferendi is codified in the standard glosses on the Corpus Iuris from Accursius (1182-ca. 1263) who was, at that time a leading legal scholar. In his doctrine he used iusta causa as a requirement for the transfer of ownership. With that he follows the line of reasoning of predecessors. Glossators wanted to deem the Corpus Iuris Civilis as the source of applicable law that therefore needed to be consistent for legal certainty. This explains the efforts taken to eliminate as much as contradictions as possible within the Corpus Iuris and the Digest.
Accursius noted that in compliance with his predecessors, the general rule would be that: An alleged iusta causa is sufficient to transfer ownership. He argues that the title over the condition indebiti thanks its existence on the fact that for delivery based on that iusta causa, ownership transfers. The glosses of Accursius therefore stayed close to the Corpus Iuris itself. Meaning that the title of the titulus dominii transferendi is still causal in the way that an iusta causa is required in order to transfer ownership. However, according to the glosses the iusta causa does not always have to be objectively valid, as long as the trade presupposes that the required causa exists. In addition there must be the intention to transfer the ownership to the recipient.
France is commonly used as example for the modern causal system. Whether the French transfer system is causal, abstract or mixed is however not explicitly codified in the Code Civil. However, with a simple analysis it is quickly clear that France has a causal system. The French view the contract on its own as the transfer of ownership. Meaning that a valid contract is required to transfer ownership as with that same reverted logic, a void contract can therefore not transfer ownership. When a contract is avoided or is void ex ante, it is deemed that the contract has never existed to begin with (avoidance has retroactive effect). Meaning that when the contract is avoided, void or rescinded, the ownership automatically reverts back to the seller.
In a system like the one of France, real rights are transferred by conclusion of the obligatory agreement. In the causal system, a separate delivery is no requirement to transfer those rights but a mere action to provide the buyer with the control over what is contracted about and that he can exercise the powers that belong to the owner. Intention in relation to the delivery is irrelevant, only the intention of the parties at the moment of concluding the contract is relevant. That a meeting of the minds took place. This meeting of the minds to transfer and to receive the rights are already contained in the obligatory agreement. Therefore unlike the abstract system in which there is a separate real agreement which finds no right of existence in a causal system. Real rights are simply transferred as a result of consensus between the parties (consensualism).
So according to French law for the transfer of ownership, there is no act of transfer required to constitute the change of ownership. Because of the consensual system the agreement itself passes the ownership, a consensus suffices. Meaning that ownership passes on the moment of concluding the agreement. This implicates that a consensual system is therefore utilising a causal system of transferring ownership. Implicating thus that in order to pass ownership the underlying agreement must therefore be valid.
There is however one important exception. The French do allow transfer of ownership of generic goods. This complicates thing as the principle of specificity determines that the transfer of ownership of generic goods can only pass after the goods are separated from the bulk and specified to be delivered to the buyer.
The French consensual system gradually evolved into this system due to the frequent use of the constitutum possessorium and other similar ways of delivery for immovable goods. Meaning that with the sale of the immovable good the transfer of ownership practically transferred on the moment of concluding the agreement. As the notaries incorporated a clause in the contract of sale of the immovable that ownership was passed through constitutum possessorium or a similar way of delivery, the practical value of the requirement of the delivery of the product for transfer of ownership was bypassed. Eventually the passing of ownership on the moment of concluding the contract was adopted in the Civil Code for not only immovable but also for movables.
Article 1183 is commonly considered as the article in which the consensual rule is laid down. It states:
‘’the obligation to transfer a thing is performed by the sole consensus between the contracting parties. It makes its creditor owner and places the thing at the latter’s risk the moment it ought to have been transferred, even if a transfer of possession has not yet taken place…’’
Implicating the immediate transfer of ownership upon concluding of the agreement and the inability of ownership to have been passed in case of an invalid contract. With rescinding the contract ownership therefore immediately reverts back to the original owner.
1.2 The abstract system
The abstract transfer of ownership finds its roots in the so called Abstraktionsprinzip invented by Savigny. He noted that delivery for performance of the contract of sale or another contract aimed at transferring ownership of a good is on itself an agreement (Der dingliche Vertrag). Savigny said that the transfer of ownership is a kind of agreement in which all aspects of an agreement can be traced back. It contains a declaration of intent of both parties that is aimed at the immediate transfer of possession and ownership and with that the new legal status of the acting parties. That this intention on itself is insufficient for the complete/valid transfer of ownership, the acquiring of the asset, that an external action is required does not diminish the essence of the agreement underlying that specific agreement.
The validity and the consequences of this Der dingliche Vertrag are being separated by Savigny from the validity of the underlying agreement. Meaning that when a party nullifies a contract the thing and the ownership is nonetheless transferred and will not automatically revert back to the original seller. As long as there is a consensus about transferring the ownership. Not being the contractual or obligatory intent aimed at creating an agreement but the Der dingliche Vertrag aimed at the transfer of the ownership. The iusta causa that can justify the transfer of ownership is in that system not a constitutive requirement for the transfer of ownership even though it could still serve the purpose as evidence that parties indeed had the intention to transfer the ownership. Savigny deducted this theory from old Roman law. With roots in D. 41,1,9,3 and Inst. 2,1,40 as these texts stated that only the intention of the seller was mentioned in order to transfer ownership. In the Abstraktionsprinzip intention is separated from the contractual intention of the parties. The validity and the consequences of this Der dingliche Vertrag were separated from the underlying agreement. The Abstraktionsprinzip was widely accepted and used by scholars and was adopted in the BGB in 1900. De correct legal basis, the title requirement, for the transfer of ownership was no longer in the BGB leading to the abstract system.
So in the abstract German system they differentiate the agreement that obliges the transfer and the agreement to transfer itself. The transfer of ownership can therefore, even if its void or avoidable with retroactive effect, still be perfectly valid. A void or voidable contract does therefore not make the ownership automatically revert back to the original seller. This protects third-parties to flaws in the previous transfer of ownership. One can however deviate from the abstract system by contract by incorporating a condition that, if not fulfilled, can result into de rescission of the contract. By that restoring the position they were in before they entered into a contract, the status qua ante. For example that in case the underlying agreement is void or voidable the rescinding clause will kick in and will then terminate both agreements in which the ownership will nonetheless revert back to the original seller.
1.3 The mixed system
Then, to conclude with the third type of transferring ownership there’s the Dutch system. The characteristics of the abstract and the causal systems were explained earlier but from system to system there are slight variations between the causal and abstract systems as both systems may display elements of both systems. The effects or application between either the causal or abstract system can differ depending on the circumstances of the case. In this the Netherlands is a perfect example as it display both characteristics of a causal and an abstract system.
1.3.1 Causal aspects of the mixed system
The Dutch system of transferring ownership displays characteristics of a causal system. The causal system requires for the transfer of real rights that there’s an underlying valid obligatory agreement which means that if that underlying agreement is avoidable or void that the ownership has never passed in the first place. This differentiates from the abstract system in that if the underlying contract is avoidable or void that the transfer of ownership itself can still be valid. Although the separate requirement for the transfer of real rights is a real agreement that is limited by that it has to be valid to start with. Meaning that when the obligatory agreement appears to be avoidable or void, real rights cannot be transferred irrespective of the intentions of the parties or the existence of the real agreement. The validity of the real agreement is therefore only important if the obligatory agreement is valid.
All kinds of factors can in the end result in that the circumstances have changed and that one no longer intents to transfer the rights or that one in no longer entitled to dispose of the object. Resulting to that the real rights do not transfer because of the absence of a valid real agreement. The real agreement is required for the delivery being a separate requirement for the transfer of rights.
The Dutch system therefore also has causal aspects since the validity of the obligatory agreement is a requirement for the ability to transfer real rights.
1.3.2 Abstract aspects of the mixed systems
According to old Roman law real rights cannot be transferred just by agreement, a separate act of delivery is required. This concept is still being applied in the Netherlands nowadays. Just like in Germany as an abstract system there is also the differentiation between a preceding obligation which obliges the seller to deliver, on the one hand (the title), and delivery on the other as being two separate legal acts. In addition, the obligatory agreement that arises does not constitute real rights but mere rights and obligations. The then required act of delivery to complete the transfer of ownership aims at complying with the obligation which arises from the agreement and from ending the obligation. The system in the Netherlands therefore differs from the French causal system in that the ownership is not transferred on the moment of conclusion of the obligatory agreement but requires a separate act of delivery in order to completely pass ownership.
That separate act of delivery (tradiditio) is in the abstract system deemed as a separate judicial act that leads to a mutual intention of transferring and receiving rights in a separate legal act. Even though the Dutch do now require a real agreement to transfer real rights it still fulfills an important function. In this respect the Dutch system is abstract. It differs here from a causal system in that where the intention of transferring and receiving real rights does inherently exist in that agreement. The causal system does not accept the intention of transferring and the receiving of the rights as two separate acts.
It is not uncommon for authors to state that the Netherlands is a causal system but it should be noted now that this statement is only partly correct and therefore inherently not completely true either. Authors state that on the basis that a valid obligatory agreement is required for the transfer of real rights without realizing that the Dutch system require an additional act of delivery and that a real agreement, which is a part of the act of delivery, is a requirement for the transfer of real rights. It appears to be causal but the underlying layers prove otherwise.
2.0 European starting point?
Every legal tradition was subject to some kind of its own developments throughout the centuries resulting to three different ways of dealing with transfers of ownership. Under Savigny in Germany and as a result of customs two different ideas were materialized based on the Roman concepts. When there are two opposing systems, usually a third system mixing both ideas to a different extent pops up and so the system of the Netherlands came up. Ever since the Schuman doctrine European Member States have, together with the institutions governing the European Union, started harmonizing, codifying and unifying Property Law. However, with the implementation of Article 345 TFEU harmonizing the Law of Property on a European level seemed to get out of reach as that article states that: “The Treaties shall in no way prejudice the rules in Member States governing the system of property ownership.’’ The question now remains, for the purpose of this research on the question, if from the causal, abstract and mixed transfer system there would be a starting point for possible future unification and codification of European Property law?
In choosing an approach to solving unification and codification of European Property Law one has to compare the solutions of systems in regard to different issues. It cannot be ignored that inherent to unification and harmonization that there will be countries that have to accept the chose code/system. And given that nobody can be satisfied in such a situation countries will be (un)happy with the result in some extent. Question need to be raised like what is a pragmatic solution? What solution will be accepted by all (some more than others)? While taking into account that there are European Directives and Regulations.
After the failed attempt at a European civil code (ECC) with its aim the harmonization of private law across the European Union, the European Commission initiated a plan what is nowadays known as the Common Frame of Reference. It’s intended to provide a structure and guidelines for the development and initiation of harmonizing European contract and property law.
The ultimate aim is to deal in a comprehensive way with the core areas and ideas of contract and property law. In book VIII the theme of transfer of ownership is introduced. The drafters created a model very similar to the Dutch mixed system of transfer of ownership. In the DCFR the transfer of movables is subject to a causal system by stating that: ‘Where the underlying contract or other juridical act is invalid from the beginning, a transfer of ownership does not take place.’ Next to that underlying contract or other judicial act there is conform 2:201 sub 1e DCFR an (equivalent) act of delivery required. The act of delivery requires, similarly to the Dutch system, the actual acquisition of possession. The concept of the ‘real agreement ’is however not adopted from the Dutch modal as the drafters deemed it impractical and unnecessary.
The DCFR was in the end not adopted. However, as the DCFR is an impressive piece of work in which enormous amounts of thought and work has gone into its provisions. It became an optional instrument in which courts are influenced by the DCFR and will in some cases be reviewed for inspiration in cases pending the courts of the Member States.
However, just like the DCFR, the harmonization and codification of European Property law by negative or positive integration requires a legal basis to be dealt with on a European level. The drafters of the DCFR do not elaborate on the legislative authority of the European Union as to be introduced as a regulation or being an optional instrument. The question therefore is whether the TFEU or the TEU has a sufficient legal base on which the authority of the EU can be justified. It is deemed however, that this sufficient legal base for the authority of the EU is lacking for European Private Law. Article 114 TFEU allows measures for the approximation of the provisions laid down by law, regulation or administrative action in Member States but as this would be an optional instrument besides national law, this does not apply. This could be bypassed by Article 352 TFEU as if the treaties have not provided the necessary powers, the Council, acting unanimously on a proposal from the Commission and after obtaining the consent of the European Parliament, shall adopt the appropriate measures. However, as codification and harmonization implies that some lose out more than others to their own national codes it is highly unlikely that a system with such grave implications will be passed unanimously. These difficulties with the DCFR would be similar to the codification and harmonization on a transfer of ownership of movables. In addition it is expected that the big businesses will prefer the higher legal certainty of the tested national legal systems. As the introduction of the DCFR clearly notes that whatever effect the DFRC may have it will nonetheless be of academic value.
After examining the three systems there might be an answer, or rather an idea for a starting point to the question which of the three systems should be adopted in a possible future codification of Property Law. More specific on the question whether an abstract, causal or mixed system is to be preferred.
It seems that, when having compared the causal, abstract or mixed system there is no wrong system. All systems aim to protect different interests. Therefore it is possible to have a unified system as those interests can be protected by other means than the transfer of ownership. There is a possibility to bridge the differences and create one system that would govern the transfer of movables within the European Union.
Regardless of whether I would advocate such a codification or not, there is currently no demand/necessity for European legislation that would impose rules of a uniform system on all jurisdictions of the Member States. However, the question does remain relevant as, being optimistic of the faith of the European Union, at some point one will start looking again at integration of property law for the transfer of ownership. Even though the question is posed today, and the answer might prove to be irrelevant for progressive steps now, it cannot be ruled out that in the quest for European harmonization the answer might become relevant in a decade (or two). The DCFR was, in my opinion, a very impressive piece of work that was definitely not made over night but shows, in the difficulties of its application and its legal basis, that harmonization and codification is still a long term project.
In choosing an approach to solving the unification and codification of European property law one has to compare solutions of different legal systems. In the end every country has to accept the code/system. However, given the economic developments and what we see in the data economy, how should we react? What is in this scenario a pragmatic solution? What solution will be accepted by all? European property law is developing side by side with national law and therefore requires a comparative analysis of national legal systems, EU and global law, regional and global economic integration, climate change, mass-movement of people, digitalisation and the internet of things. Only to realise that thinking that there is a simple solution would be cutting major corners. More research is required before one can initiate a plan that reforms hundreds of years of the development of the legal systems of each Member State stemming from the roots of its civilisation. Especially in the current political climate.
However, if some kind of codification would, in the near future, happen. A result-based system would be the most pragmatic solution. It is not overly important how the system might be qualified, besides for dogmatic reasons. More important is that in a possible conflict of interest on some matters the result would be similar. In the current political climate, harmonization like that of the DCFR is highly unlikely. For the sake of short term results a result based pragmatic approach is more desirable. So if now, one asks me the question: “But what are you actually studying then?’’ I’ll just ask them to buckle down as there is no simple or short version of an answer to that question.
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