It is a special pleasure to welcome the 23rd book in the series The Common Core of European Private Law. This book is edited by two scholars, who together represent two different legal cultures: the Dutch and the Scottish. Their works are already renowned and appreciated well beyond the ‘Common Core’ circles.

The Common Core project was launched in 1993 at the University of Trento under the auspices of the late Professor Rudolf B. Schlesinger. The methodology used in the Common Core project, then novel, is now a classic. By making use of case studies, it goes beyond mere description to detailed inquiry into how most European Union legal systems resolve specific legal questions in practice, and to thorough comparisons between those systems. It is our hope that these volumes will provide scholars with a valuable tool for research in comparative law and in their own national legal systems. The collection of materials that the Common Core project is offering to the scholarly community is already quite extensive and will become even more so as more volumes are published. The availability of materials attempting a genuine analysis of how things seem to be is, in our opinion, a prerequisite for an intelligent and critical discussion on how they should be. Perhaps in the future European private law will be authoritatively restated or even codified. As of today, the Common Core project is the longest-running scholarly enterprise in the field.

INTRODUCTION

The third party is omnipresent, yet hard to define in law. There is one foundational principle which has set the stage throughout legal history: alteri stipulari nemo potest – no-one may stipulate for another. Third persons find themselves, thereby, principally placed outside another's obligation – this vinculum iuris (chain of law) which binds debtor to creditor. Justinian's metaphor characterises the obligation between the parties, and also signifies its exclusionary force towards third parties. It is not just a principle from civil law, but is similarly strongly present in common law traditions of privity of contract:

Yet contracts and obligations not only appear in juridicial vitro – in the books – but also in vivo – in practice. Hence, third parties have quite commonly appeared in the actual world of transactional practice throughout history.

The third party found its bond as a debtor or creditor only with difficulty, established in the variety of legal formants over time, whereby schools of legal thought, sources of law, means of reasoning, as well as substantive concepts provided the building blocks making or breaking the third parties’ position. The factual variety in social reality adds to the picture.

CASE

Mr Kane, a real estate investor, acquires real property in order to rent it out to companies. Mr Kane has hired a real estate agent, Waltmann & Co., to rent out his properties. Waltmann sign the rental contracts for the account of Kane, but in their own name; the rental contracts are concluded between Waltmann and the tenants. Waltmann carry out a number of administrative obligations, including giving the keys to the tenant at the start of the rental period and inspecting the properties after the end of the rental period. Waltmann also send invoices, collect the rent, deduct a fee, and then pay the remainder to Kane. Kane never comes into contact with the tenants, and most tenants have no particular knowledge of Kane being the owner of the property, although they could find out through the land registry, or by inquiring with Waltmann. One of the tenants, MyPad Inc., have damaged the property it has rented.

Questions

1. Can Waltmann sue MyPad for compensation for the damage caused to the property?

2. If Waltmann become insolvent after concluding a new rental contract with Nickel & Dime Ltd, what remedies do Nickel & Dime and Kane have against each other to safeguard their respective interests under this contract (access to and use of the building, and payment of the rent, respectively)?

DISCUSSIONS

BELGIUM

Siel Demeyere and Vincent Sagaert

I. Operative Rules

1. Waltmann can sue MyPad.

2. Nickel & Dime would be able to use the building. Kane would be able to seek payment of the rent.

CASE

Xervix Inc. sells and acquires paintings and real estate for wealthy private clients who wish to remain anonymous. Xervix enters into contracts with the sellers and buyers of the valuable items, and receives the money in the event of a sale, and the paintings or real estate in the event of a purchase, each time in its own name for the benefit of its private clients.

In particular, the money is wired to one of Xervix's bank accounts, paintings are handed over to Xervix and stored on Xervix's premises, and deeds of transfer for disposal of real property are signed by Xervix, with the keys of real property acquired being handed over to Xervix. The parties dealing with Xervix know that Xervix acts as an intermediary.

On Wednesday 22 February 2017, Xervix sells two Mesdag paintings to Mr Ross for €180,000, for the benefit of Mrs Brown. Mr Ross has not yet paid. Xervix acquires a Van Dyck painting worth €3 million, for the benefit of Mr Landwell. The painting is handed over to an employee of Xervix. Xervix also acquires an apartment for Mr and Mrs Astor.

Assume that Xervix have not yet taken any action by Thursday 23 February 2017.

Questions

• 1. On that date, who are the owners of the Van Dyck painting and the apartment?

• 2. Assuming Xervix are the owners of the Van Dyck painting and the apartment, if Xervix become insolvent do Mr Landwell and Mr and Mrs Astor have any rights in relation to those assets in preference to Xervix's general creditors?

CASE

Cloud Investments Ltd delivers IT services. On 1 January 2016, Cloud Investments enter into a loan agreement with Santa Bank for the amount of €10 million. The loan is due to be repaid to Santa Bank by 1 January 2020, with an interest rate of 2 per cent per annum.

The contract contains a clause which allows Santa Bank to raise the interest rate to 5 per cent. In security of repayment of the loan, Cloud Investments has granted a mortgage on its real property in favour of Santa Bank. The contract also allows Santa Bank to terminate the loan agreement and immediately demand payment of all outstanding amounts of principal and interest, if Cloud Investments default on the loan.

By 1 January 2017, Cloud Investments have provided several IT services to Santa Bank, worth €2 million, which have not yet been paid for.

On 31 January 2017, Santa Bank, as assignor, assigns the right to be repaid under the loan agreement to Rangifer Tarandus Bank (‘RT Bank’), as assignee. The assignment is intimated to Cloud Investments.

Questions

• 1. Which rights remain with Santa Bank as assignor, and which rights pass to RT Bank as assignee?

• 2. Can Cloud Investments set off their claim of €2 million against the claim of €10 million assigned to RT Bank?

INTRODUCTION

As noted in the Introduction to this volume, the topic of ‘contracts and third parties’ is extensive. Different jurisdictions deal with a variety of different legal situations within that broad umbrella term. The topic is not necessarily one that sits within one area of the law of obligations. As Professor Martín-Casals’ chapter amply demonstrates, some legal systems use contract law, and others tort law, to deal with the protection of third parties. It is, therefore, hoped that this work will be of interest to scholars and students of contract and tort law alike.

The apparent lack of uniformity within European legal systems on ‘contracts and third parties’ was what prompted the idea for this work in the first place. Its aim is to provide some clarity on the approaches of the various legal systems considered in this work. While the case studies in this volume deal with a variety of situations where a contract between two parties impacts on a third party, there are some themes to be taken from the analysis of those situations. As discussed in the Introduction, these themes can be broken down into four main categories: (A) defining a third party's rights and obligations in a contract between two contractual parties (including exclusion or limitation of liability); and, related to this, (B) the actio Pauliana; (C) acquisition of contractual rights in the case of the transfer of property and assignment; and (D) relationships of principal and agent in the conclusion and performance of contracts.

CASE

Tasman Ltd have entered into a contract to lease machines to Vinci Company. The lease contract states that Vinci have to pay a monthly rent of €2,000 for the machines. In reality, Vinci and Tasman have agreed that Vinci only have to pay €1,500. Tasman sell their assets, including the machines and the lease contract with Vinci, to Kepsky & Co. The lease is validly assigned. While neither Tasman nor Vinci make any inaccurate statements to Kepsky, neither of them inform Kepsky of the lower monthly rent. Based on the rent set out in the lease, Kepsky thinks it is worth buying the lease from Tasman. When Kepsky send out the first monthly invoice for €2,000 to Vinci after the sale, Vinci reply that they only have to pay €1,500.

Question

What do Vinci have to pay Kepsky?

DISCUSSIONS

BELGIUM

Siel Demeyere and Vincent Sagaert

I. Operative Rules

Vinci would likely have to pay €2,000 to Kepsky.

II. Descriptive Formants

Tasman and Vinci have agreed a different rent to that mentioned in their contract. This situation is addressed in Belgian law as a situation of veinzing/simulation (simulation). Simulation can relate to the existence of the agreement (e.g. sale where there is none), the sort of agreement (e.g. sale instead of gift), the identity of the contracting parties (in the case of naamlening/prête-nom (name lending)) or the content of the agreement.

CASE

Mr Joyce, a real estate investor, decides to sell one of his buildings. Prior to the sale, Joyce had concluded a rental contract for a period of two years with Adams Corp. In addition, Joyce had entered into an insurance contract with an insurance company, in relation to the property. Furthermore, the building has recently been undergoing renovation, for which Joyce entered into a contract for works with Schwarzmann. Although the contract price has been paid, the renovation is not yet finished. Schwarzmann has promised to finish the renovation in a couple of months. In the meantime, Joyce sells and transfers ownership of the building to Mr Watts.

Question

Do any of the rights and obligations under the contracts between Joyce and third parties transfer to Watts? If so, on what basis do they transfer?

DISCUSSIONS

BELGIUM

Siel Demeyere and Vincent Sagaert

I. Operative Rules

The rights and obligations under the lease may transfer to Watts. The rights and obligations under the insurance contract do transfer (for a three-month period). The rights under the construction contract may transfer. No obligations under that contract (if there are any) will transfer.

II. Descriptive Formants

Tenants are protected against a sale of the let premises, under condition that the lease contract has a vaste datum/date certaine (fixed date),1 obtained, for instance, through registration at the tax office.2 This entails that the new owner must respect and further perform the lease contract. In the case of a commercial lease, the tenant is also protected against termination of the lease by the new owner where the lease does not have a fixed date, if the tenant has used the premises for at least six months before the sale.

CASE

One evening, Bernardo drinks too much at a party, drives back home, and crashes his car, damaging Carlos’ house. Part of the house has to be rebuilt at significant cost. Bernardo is uninsured. He refuses to pay any compensation to Carlos. Carlos intends to sue Bernardo for damages. When Bernardo hears of this, he donates his house, which is worth a lot of money, to his niece, Maria. By doing so, Bernardo hopes that Carlos will see that it is not worth suing him, as he no longer has assets of value. Maria rents the house for free to Bernardo, helping him out.

Question

Assuming that Carlos is successful in his court case against Bernando, can Carlos take any action to ensure that Bernando's house is available as an asset against which he has recourse for his claim? If so, what action can be taken?

DISCUSSIONS

BELGIUM

Siel Demeyere and Vincent Sagaert

I. Operative Rules

Carlos can take action. He can raise an actio Pauliana.

II. Descriptive Formants

Where a debtor fraudulently organises their own insolvency, the creditor can raise a pauliaanse vordering/action paulienne (Paulian action or revocatory action), the effect of which is that the fraudulent act is not effective against the creditor (but remains valid as between the parties). This means that the creditor can ignore that such an act has taken place, and thus act as if the transferred property is still in the debtor's patrimony. A successful actio Pauliana would, in this case, have the effect that Carlos can act as though Bernardo still owns his house, and can possibly also seize the house.

CASE

Alpha Inc. enter into a contract with Beta plc for significant works to be carried out to their head office premises. When the works are complete, Alpha resume full operations from the refurbished premises. Two years later, Alpha decide to sell the premises, and enter into a contract of sale with Delta GmbH.

In terms of the contract between Alpha and Delta, Delta must satisfy themselves on the quality of the premises. Alpha will not provide any warranties to Delta in relation to the premises or their condition. Delta buy the premises from Alpha for their full market value of €5 million. This price is based on the premises being in good condition, with no major works being required.

A year after Delta move into the premises, cracks start to appear in some of the walls. Investigations show that the cracks are due to work having been carried out defectively by Beta, in breach of their contractual obligations to Alpha. Further investigations determine that it will cost €1.5 million for the problem to be repaired. The nature of the problem means that Delta could not have found out about it before the sale.

There is no breach of contract by Alpha that would allow Delta to raise proceedings against Alpha. Alpha refuse to transfer their rights under the works contract with Beta to Delta. Having received full market value for the premises, Alpha have suffered no loss as a result of Beta's breach of contract.

THE ISSUE OF MARITIME BOUNDARY DELIMITATION BETWEEN TURKEY AND GREECE: INTRODUCTORY REMARKS

The maritime dynamics between Turkey and Greece have a long history. Throughout the ages, the relationship between the two communities settled in Greece or Turkey has frequently shifted from a state of tumult and often brutal violence to one of prosperity and close proximity, only to revert back again in time. Despite both Greece and Turkey being NATO allies, their interactions have always alternated between alarming and mutually nourishing. Moreover only Greece is an EU member State, as is, notably, the Republic of Cyprus.

Trade and imaginaries across the Mediterranean, the Dardanelles and the Black Sea have had a significant impact on international relations throughout history. Sovereignty over the Eastern Mediterranean, the Aegean islands – even rocks – and maritime zones has been continually jeopardized by strategic goals and later on by the need to overcome risks of geopolitical and technological failings.

In the light of this situation, Turkey did not sign the 1982 United Nations Convention on the Law of the Sea (UNCLOS). The reason for this is allegedly its sovereignty claims regarding the delimitation of the continental shelf and exclusive economic zone (EEZ) in the Eastern Mediterranean and some Greek islands in the Aegean.

In this context, it is open to interpretation whether current technological-political and strictly strategic maritime primacy has become as dangerous for peace and balanced neighbourly relations between Turkey, the European Union and their respective allies as the regional ancestral instincts of the coastal States that are involved in some way, such as Greece, the Balkan States, Russia and North Africa, to assert sovereignty over what is emotionally perceived, and (depending on the circumstances) legally or politically claimed, to be homeland.

THE EXISTENCE OF AN EU SANCTIONS POLICY

Even though not listed among the 37 EU policies recognized by the European Commission, it is undisputed that the capacity of the European Union (EU) to impose sanctions against third States, non-State entities and individuals today represents a veritable policy of the organization. With the over 40 sanctions regimes the Union has been developing since the 1980s, there is no question that sanctions constitute one of the most important instruments the EU is able to rely on to shape its international relations.

As is well known, the Union's sanctions may be adopted on different legal bases. Sanctions imposed for political non-commercial purposes are mainly conceived as instruments promoting the objectives of the Common Foreign Security Policy (CFSP), as set out in Art. 21 of the Treaty on European Union (TEU). Based upon Art. 29 TEU, they are also called, according to the supranational jargon, ‘restrictive measures’. While some of the EU restrictive measures regimes implement UN resolutions adopted by the Security Council acting under Chapter VII of the United Nations Charter (e.g. the ISIL/Da’esh and Al Qaida sanctions regimes), others are adopted autonomously by the Union outside the UN legal framework (e.g. the EU's sanctions in response to Russia's invasion of Ukraine). Also importantly, the Union's restrictive measures may be geographically directed at individual countries or targeted against individuals and specific entities (Art. 215 Treaty on the Functioning of the European Union (TFEU))

INTRODUCTION

In the law and practice of the relationship between international organizations (IOs) and their members, the question of sanctions has been mainly considered in relation to measures taken by IOs against their member States. Less attention has been paid to the inverse cases where member States react against unwelcome or allegedly wrongful conduct of IOs. In recent years, however, the so-called ‘backlash’ against multilateralism has brought to the fore a wide spectrum of conduct and measures that States have taken towards several contested IOs operating in very diverse fields. These measures include many forms of non-cooperation with IOs, such as the withholding of financial contributions, non-compliance with IOs’ binding decisions and general boycotting, up to the threat of and actual exit from IOs.

Characterizing such measures in international legal terms is not an easy task. When it comes to the question of measures taken by member States against IOs, the term ‘sanction’ – which features the title of this book – appears misplaced, especially if one gives this term an ‘institutional’ connotation. Yet it is also hard to find other working alternative terms for the characterization of these measures, considering that even the attempt to conceptualize them as ‘countermeasures’ is subject to constant challenge by commentators, as will be shown below. While in recent times political science and international relations studies have analysed and conceptualized the causes and consequences of resistance against IOs, legal scholars still strive to provide a comprehensive account of this kind of conduct from an international legal perspective.

This book has explored the diversified and fragmented practice of sanctions by and against international organizations, using the word ‘sanctions’ in an a-technical sense. The practice of sanctions, including sanctions by and against international organizations, is burgeoning. Unsurprisingly so. Being a means to confront another party and to oppose a certain course of action or a specific state of affairs, sanctions are ubiquitous in the geopolitical autumn that has set in for contemporary international affairs, a season full of tempest. Sanctions are expressions of contestation and discontent, and often, though not always, they are reactions to illegal acts and behaviour.

With an impaired system of collective security, sanctions adopted outside of that setting are on the rise. Most sanctions are imposed on an inter-State basis, but tensions and frictions between international organizations and States are also increasing. Sanctions adopted outside the system of collective security can be portrayed as forms of decentralized enforcement of international law, as an exercise of private justice, or even as hegemonic instruments or as a form of financial imperialism. The precise classification largely depends on the context and form of the sanctions but also on the characterizer's overall worldview and appreciation of sanctions pursuant to that perspective. Sanctions are highly contested. On the one hand, there is fierce disapproval of sanctions. This is expressed in global fora, and also by a multitude of scholars. It must be noted though that this criticism mostly regards the broad economic sanctions.

INTRODUCTION

In order to frame the object of the present chapter, two of the guidelines set forth by the editors of this book must be recalled. The first relates to the stated purpose to try and systematize the varied and fragmented practice of ‘sanctions’ by and against international organizations under the law of international responsibility. In this respect, a prominent role would obviously be played by the key document drawn up by the International Law Commission (ILC) on the matter, namely the Articles on the Responsibility of International Organizations (ARIO) adopted in 2011.1 The second guideline relates to the fact that the term ‘sanction’ should be used in the context of the present research in a rather a-technical sense, i.e. as a term of art intended to cover the vast array of reactions and measures occurring in times of confrontation between States and international organizations. Both of these guidelines need some qualification at this preliminary stage, in order to better define the scope of the analysis that will follow, as well as to justify the title chosen for this contribution.

A first (and perhaps rather trivial) general qualification pertains to the fact that, in looking at the output of the work of the ILC on the responsibility of international organizations, one cannot consider it separately from the text previously adopted by the ILC in 2001, namely the Draft Articles on the Responsibility of States for Internationally Wrongful Acts (ARSIWA).

INTRODUCTION

EU restrictive measures rely on a decentralized enforcement system, where member States are primarily responsible for ensuring compliance with EU provisions within their domestic jurisdictions. National authorities shall, indeed, monitor, investigate and ultimately impose penalties for infringements of restrictive measures, including for activities which have the aim, or result, of circumventing those measures.

Pursuant to Art. 24(3) of the Treaty on European Union (TEU), member States ‘shall support the Union's external and security policy actively and unreservedly in a spirit of loyalty and mutual solidarity and shall comply with the Union's action in this area’. This is a more specific obligation stemming from the principle of sincere cooperation, as enshrined in Art. 4(3) TEU, which requires member States to take ‘any appropriate measure’ to ensure the fulfilment of the obligations resulting from the acts of EU institutions. Arts 24(3) and 4(3) TEU operate as constitutional safeguards for the decentralized enforcement of Common Foreign and Security Policy (CFSP) decisions, including Council decisions instituting restrictive measures.

If, on the one hand, it is mostly up to the member States to give concrete application to EU restrictive measures, on the other hand, the principle of sincere cooperation requires them to ensure the effectiveness of these measures at the national level. In particular, it requires member States to enforce EU sanctions within their domestic legal orders by taking ‘any appropriate measure’ to effectively respond to violations, including uncovering and punishing circumvention activities.