Books PhD Theses Scholarship

Third-Party Relationships and the Protection of Third Parties in the EU Regulations on the Property Regimes of Couples

The number of transnational couples continuously increases within the European Union. At the same time, there are still large differences between the national rules on matrimonial property regimes and on the property consequences of registered partnerships. These disparities do not only affect the property relations among such couples themselves, but also – and even more – third parties contracting with transnational couples.

Some jurisdictions provide, for instance, that contracts between one spouse and a third party are not legally effective without the consent of the other spouse, especially in case of real estate transactions. One example of such a rule is the notorious Article 215(3) of the French Code Civil.

Third parties can be surprised by such limitations because they may not be aware that the law of another jurisdiction applies. In many cases, third parties may not even know at all that their business partner belongs to a couple with a transnational background. There is thus a strong need for third party protection not only on the national level, but also in private international law.

In the future, these conflict-of-laws problems must be solved on the basis of the new Council Regulations (EU) 1103/2016 and 1104/2016, which became applicable in their entirety on 29 January 2019. The scope of the Regulations explicitly includes third-party relations. However, the Regulations only provide fragmentary rules on third party protection. A new book analyses these provisions, identifies open questions and submits proposals how the gaps in the Regulations could be filled (Stephan Gräf, Drittbeziehungen und Drittschutz in den Europäischen Güterrechtsverordnungen, Mohr Siebeck 2019).

As the title indicates, the book is written in German. It starts with a comparative analysis of the differences between the national rules on matrimonial property regimes focussing on third party effects. In a subsequent chapter, the author outlines the conflict of law rules of the Regulations and points out that the applicable law can hardly be foreseen by third parties.

On this basis, Stephan Gräf analyses the core provision of third-party protection in both Regulations, namely their respective Article 28 (protection of the good faith of third parties). Although the provision appears to be quite detailed, it is in fact merely fragmentary and partially inconsistent. For example, it does not mention the exact subject of the required good faith of the third party (the applicable law, the particular matrimonial regime within the applicable law or the particular legal effect of the applicable law?). The provision also does not clarify that it is restricted to contractual transactions.

The Regulations furthermore contain provisions for the protection of third-party rights in case of a change of the applicable law with retroactive effect. The wording of the provisions, however, is extremely short. Many questions are left to the interpretation by the courts. Stephan Gräf analyses the scope and the legal consequences of these provisions. He shows, for instance, that they also apply when the applicable law changes only with effect for the future.

The book furthermore deals with the highly controversial coordination between international property law (lex rei sitae rule) on the one hand and the international matrimonial law on the other hand. This matter also affects third parties contracting with married persons. The author argues for the primacy of the lex rei sitae in so far as immovable property is concerned. On this point, he disagrees with the Kubicka decision of the European Court of Justice, which deals with the relationship between the EU Succession Regulation and the lex rei sitae rule.

Additionally, the book addresses the Regulations’ rules on jurisdiction (Articles 4 et seq.). It focuses on the question whether these rules apply in disputes between married persons and third parties. Despite its relevance this question has rarely been discussed so far. The Regulations lack explicit provisions on this matter. Relying on the ECJ’s approach on Article 27 of the Brussels I Regulation (recast: Article 29), Stephan Gräf argues that Articles 4 et seq. of the Regulations govern where matrimonial property law is the “heart of the action”. In disputes with third parties, this is rarely the case, as matrimonial property law typically only becomes relevant on the level of preliminary questions.

Overall, this new book provides valuable insights on the relation of Regulations on matrimonial property regimes and on the property consequences of registered partnerships with the rights and obligations of third parties. Interestingly, the author not only addresses the protection of spouses, but also that of third parties that do not know about the family relation. The Regulations are still young, and is to be expected that this book will influence their interpretation and application in practice.