Party Autonomy in International Property Law - Peace Palace Library

A. General Aspects of Party Autonomy
policy intention lies behind them. The publicity of security rights, which is
taken very seriously in many countries 75 , is singled out here as an example.
Is this publicity a reason for generally rejecting freedom of choice of law
for security rights (even extending beyond enforcement and insolvency
law!) or in any case placing limits on it in the form of ‘overriding mandatory
provisions’ or as part of the forum state’s public policy (ordre public)?
This question is addressed here using Austria as an example. In Austria,
transfer of possession is required by the Civil Code (ABGB) for the creation
of a pledge (§ 452 ABGB). This requirement has been extended by
case law and doctrine to any kind of security by movable assets. It may not
be circumvented by a transfer of ownership (which, other than pledging,
could be effected through constructive possession, in other words, by mere
agreement, § 428 ABGB). If a transfer of ownership is actually intended by
the parties to serve as a credit security, the asset must therefore be handed
over physically (as with a pledge) or another means of publicity must be
used that is expressly permitted by statute. 76 For conflict of laws, this publicity
requirement is strengthened, but also limited, by § 31 of the International
Private Law Act (IPRG), which provides for application of the
law where the asset is located to the property law transaction. The strict
publicity requirement therefore applies to the creation of security rights in
any tangible assets situated in Austria, but not for property located abroad.
In neither case does it matter where the parties to the credit transaction
are resident and active (whether that location is in Austria or abroad, in
the same country or in different countries), where the credit transaction is
concluded, where and in which currency the credit amount is paid out, received
and paid back, or by which law the credit agreement is governed.
For the credit agreement, the parties have a free choice of law (Article 3 of
Rome I) with which they can take account of such circumstances. In the
case of credit against security, selecting the security instrument is at the
heart of the contractual agreement. The parties will therefore also be interested
in choosing the law for this part of their transaction, rather than
being legally fixed to the location of the asset – which at the time of the
agreement may be quite insignificant to them under the circumstances.
75
In detail: von Wilmowsky, Europäisches Kreditsicherungsrecht 153 et seq.;
Kieninger, Mobiliarsicherheiten 23 et seq.; Kieninger (ed.), Security Rights;
Sigman / ​Kieninger (eds.), Cross-Border Security.
76
Eccher in Koziol / ​Bydlinski / ​Bollenberger (KBB), Kurzkommentar zum ABGB
(2005) § 359 nr. 5; Koch in KBB 2d ed. (2007) § 451 nr. 2.
36
Axel Flessner
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