Party Autonomy in International Property Law - Peace Palace Library

C. Developments and Prospects in Europe and in European Law Projects
8.3.3. Non-recognition in other Member States
a) Austria
Since Austrian legislation does not provide for any legal instrument allowing
the creation of non-possessory security rights in movable assets,
the courts originally used the same instrument as German court practice:
namely, the security transfer of ownership without transfer of possession to
the secured creditor. 49 However, later court practice in Austria retracted
from this position and now also requires transfer of possession to the creditor.
One consequence of this departure from the German model is regrettable.
A security transfer of ownership of assets validly effected in Germany according
to German law is not recognized in Austria if the ‘encumbered’
asset later passes to Austria. 50
In one recent case, a German bank had accepted a security transfer of
ownership in a lorry from the debtor living in Germany, who later moved
to Austria, also moving the lorry there. When the debtor stopped payments,
an insolvency proceeding was opened in Austria. The German
bank attempted in vain to satisfy its claims involving the lorry. The Austrian
debtor brought a claim for damages against the German bank, based
upon the cost of proceedings and expenses spent on enforcing his rights
in the car. The Austrian Supreme Court held the German bank liable in
damages, since the bank had insisted on its ownership rather than seeking
legal advice on Austrian law, and had thereby caused considerable
expense to its Austrian customer. If the bank had investigated whether
it was still security owner of the lorry under Austrian law, it would have
learned its legal position and avoided considerable expenses involving
competing Austrian creditors. The German bank was held liable for a
high amount of damages. 51
49
Cf. supra 8.3.2 b).
50
S.Ct. 14 December 1983, J.Bl. 1984, 550; First Inst. Appellate Court (LG)
Linz 27 May 1986, IPRE 2 (1983-1987) no. 115.
51
S.Ct. 28 March 2002, ÖBA 2002, 937 (approving note Koziol).
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Ulrich Drobnig
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