Tijdschrift voor Privaatrecht

The law of torts and human rights have traditionally belonged to two different spheres of the law, the former being traditionally part of the private law and the latter belonging to the public law. In view of the deep divide between the public and the private law which prevailed in the past, these two legal areas interacted not at all or very seldom with each other. However, this has changed. Over the past few decades, it has become increasingly clear that the decisions of the Constitutional Court and the European Court of Human Rights have influenced the private law, and therefore also the law of torts. It is in this context, that this contribution examines how the equality principle as enshrined in Articles 10 and 11 of the Constitution, Article 14 of the European Convention on Human Rights (ECHR) and Article 1 of the twelfth protocol to the ECHR affects the distinctness of special liability regimes. The author also examines the influence produced by the right of access to justice as enshrined in article 6 ECHR, and analyses the case law of the French Conseil Constitutionnel with regard to Article 4 of the Déclaration des droits de l’homme.

The basic assumption of this article is that liability regimes can currently be assessed by the principle of equality as to their distinctness and their relationship with the general law of civil liability. Indeed, where two different liability regimes apply to similar situations, that amounts to a potential infringement of the equality principle. It might be interesting in this context to consider a situation whereby someone can only receive partial compensation for his loss, whereas another person can receive full compensation in a similar situation because two different liability regimes were applied to their situations. Those who believe that they have suffered discrimination for this reason could consider invoking the equality principle. By so doing, they are in a position to challenge the existence of and the boundaries between the different liability regimes. The author accordingly examines the criteria that apply in this context.

In the first section, the contribution examines the case law of the French Conseil Constitutionnel according to which Article 4 of the Déclaration des droits de l’homme is violated where the possibility to receive compensation for a loss, whether general or specific, is excluded.

The second section examines the case law of the Constitutional Court in which it applies the principle of equality to special liability regimes. In so doing, the author discusses the various aspects of the equality test: comparability of the situations in question, legitimate purpose and the proportionality test. As regards the comparability aspect, it is argued that the Constitutional Court takes into account the similarity of the risks under these situations. To assess whether a different treatment seeks to serve a legitimate aim, the Constitutional Court establishes whether there is a special risk involved. In the majority of cases, the Court finds that there is a special risk that the lawmaker could legitimately try to address by applying a special liability regime. Ultimately, the Constitutional Court will check whether the unequal treatment is proportionate to the legitimate purpose pursued. The author argues that there are four criteria that are decisive when applying the proportionality test. These are: the impossibility of receiving compensation for loss, whether general or specific; the presence of a serious or intentional fault, the opportunity to choose freely the use of a specific statute; and the socio-economic position of the parties involved. Apart from these criteria, the article investigates whether a special liability regime can be validated by applying the lex specialis derogat lex generalis rule at a constitutional level.

The third and last section examines the case law of the European Court of Human Rights. Here, the article examines not only the case law relating to the principle of equality, but also that on the right of access to justice. In this section, the author demonstrates that this right can be used in a way that is very similar to the approach taken by the case law of the French Conseil Constitutionnel, but that the scope of Article 6 ECHR is more limited than the case law of the Conseil Constitutionnel. With regard to the equality principle, the author argues that there are reasons to believe that, like the Constitutional Court, the European Court of Human Rights applies the test that it is impossible to receive compensation for loss incurred, whether general or specific, and the criterion that a serious or intentional fault was involved.

In this paper, the authors conduct a thorough examination of the changes which the new Law on Pledges will, as from its entry into effect, bring about in the rules on retention of title.

The new Law provides a general set of rules in this field by transferring the provision governing retention of title from the Law on Bankruptcy to the Civil Code. Henceforth the security provided can be relied upon in all cases of concurrence. In addition, the new Law expressly stipulates that retention of title can be exercised regardless of the nature of the agreement, which means that also be included in building contracts. In functional terms, the new Law has equated the exercising of retention of title with that of a pledge. One exception to this is that retention of title has not yet been made compulsorily subject to disclosure.

This general examination of the law on retention of title is followed by a comparative analysis of the legal relationship between retention of title and immobilisation by incorporation. The first issue dealt with is the implications of immobilisation for retention of title. The new Law on Pledges stipulates that, in such cases, retention of title continues to apply, but fails to clarify how this continued applicability is to be interpreted. The authors examine the position of the retention of title holder, and reach the conclusion that the most desirable interpretation is that actual reliance on retention of title is allowed where possible. Under this interpretation, Belgian law provides the party that stipulated the retention of title with greater protection than does the law of the Netherlands. This interpretation is also close to the position under French law, a minor difference being that in France, the risk inherent in immobilisation is smaller because the criteria for immobilisation are stricter. The second issue concerns the implications of a retention of title for the immobilisation of an item. Having drawn attention to the position of the South African courts, under which retention of title can prevent the immobilisation of an item, the author points out that this is not possible in either Belgium, the Netherlands or France, in spite of the fact that, in recent years, broader and more subjective criteria for immobilisation have been applied in Belgium and the Netherlands. This confirms that the provision in the Law on Pledges under which retention of title continues to apply after the incorporation of the pledged object is a rational one. What is important here is that there should be disclosure of the ownership of that object. Since the entry into effect of the new Law on Pledges, retention of title remains free from a general duty to disclose – there is, however, an opportunity to have the retention of title registered in the new Register of Pledges. This opportunity is keenly recommended if the adverse effects of incorporation are to be avoided.

Post-contractual obligations are contractual obligations which become or remain effective after the end of the economic operation of the contract. The principles of termination seem to imply that these post-contractual obligations disappear after termination of the contract from which they originate. Their disappearance, however, would mostly result in a suboptimal situation. In this contribution, we have searched for a foundation for the survival of post-contractual obligations after termination.

Firstly, the survival (as well as the disappearance) of post-contractual obligations can result from a statutory provision.

If the fate of the post-contractual obligation after termination is not dealt with in statutory law, it is possible to base its survival on the material partial termination (and not on the temporal partial termination). An analysis of the material scope of termination shows that it only affects the obligation which has been poorly performed, the obligation to provide the counterpart for the obligation which has been poorly performed and all other obligations which, as a result, lose their economic usefulness. The application of this criterion of economic usefulness requires to first determine whether the parties have expressed their view on the economic usefulness of an obligation after termination (subjective application). If not, one should look at what a normal and reasonable party would consider to be economically useful (objective application). The objective application causes the disappearance of all obligations which contribute to the economic operation of the contract, as well as the disappearance of all obligations which lose their economic usefulness because of restitution caused by termination.

Thus, post-contractual obligations can survive after termination if they remain economically useful after termination and restitution caused by termination. The parties can express their view on that matter, for example by inserting express clauses about the fate of their post-contractual obligations after termination, by inserting (in)divisibility clauses, by inserting clauses about partial termination, ... If the actual view of the parties cannot be determined, one should assume that postcontractual obligations remain economically useful after termination, since, by definition, they do not contribute to the economic operation of the contract. Some post-contractual obligations, however, lose their economic usefulness because of restitution caused by termination. This is the case for obligations which aim at the return or the destruction of goods which already return to the other party by way of restitution caused by termination. In principle, such post-contractual obligations do not survive after termination. By contrast, post-contractual obligations which aim at the return of goods which do not return to the other party by way of restitution caused by termination, as well as post-contractual obligations which have nothing to do with the return of goods whatsoever, remain economically useful and should survive.

Belgian and French law thus allow for a material partial termination. The expression is, however, deceptive, since it seems to imply that material partial termination is an exception to the normal application of termination. In reality, the survival of post-contractual obligations is precisely due to the normal material scope of termination.

The (Dutch) rule of good faith and fair dealing (redelijkheid en billijkheid) and the (Belgian) objective notion of bona fides are “open” or “vague” standards. There are certain differences between these two notions – yet they largely succeed in achieving their objective. They are capable of supplementing, restricting and interpreting legal transactions. The effect of both these notions depends on the concrete circumstances of the case. The influence exerted by these circumstances enables a just solution to be achieved in concrete situations where the strict application of the generally applicable law would fail to produce satisfactory results. However, the influence of these circumstances also presents a disadvantage, in that it causes legal uncertainty.

Legal certainty can be enhanced by achieving clarity as to the circumstances that influence the effect of the open standards. As a result, an adequate comparison between these open standards requires more than merely comparing their possible legal implications –they require a comparison between the circumstances that influence these open notions. This paper is focused on the circumstances affecting the effects of good faith and fair dealing. The author examines whether these circumstances are also a factor in the relevant Belgian statutes. He also examines the extent to which this factor can be compared to the effect produced by the circumstances of the case under Dutch law.

The author shows that every factor that influences the effects of the good faith and fair dealing also plays a part in at least one of the effects of the Belgian bona fides rule or any other legal area in the Netherlands which is governed by the rule of reason and fair dealing. The Belgian statures, legal literature and case law provide examples of the influence exerted by every factor that informs the effects of good faith and fair dealing.

The circumstances of the case have a similar part to play in both legal systems. These circumstances can be approached in various ways. Accordingly, there are cases in which the law, legal literature and case law of the Netherlands and Belgium adopt different approaches. However, when we take a closer look at these factors we can see that in many cases their influence is more or less the same. In both legal systems the circumstances of the case tend to produce similar or comparable effects. This should not give rise to any surprise – both the Netherlands and Belgium are two developed Western nations united by a common legal culture, and there are many points of convergence between the two countries Thus it is reasonable to assume that the legal systems in both countries will be largely in agreement on the notions of justice and fairness. The divergences between the Dutch and Belgian systems of law have – even in this area of “open standards” – increased with the introduction of the new Netherlands Civil Code in 1992. However, this paper purports to show that there exists a great deal of consensus as regards the circumstances that influence these standards.

Private law is not lacking any challenges. The accelerating pace of Europeanisation and globalisation, advances in technology, and a growing awareness that the law should increasingly set its sights on the long term, all raise the question as to what will be the face of the private law of the future. This paper, being the printed version of an address given on the occasion of the author’s acceptance of the 2014 TPR Visiting Chair, attempts to anticipate what the future might bring in this regard. It examines the way in which the part played by the various actors involved in creating the law (legislators, judges, legal scholars and private actors) could change as a result of the internationalisation process. The author also asks the question as to whether the position occupied by the private law itself is being influenced by this internationalisation process and will cause other mechanisms will take over from the law as a regulatory force.

When it comes to the changing role played by the legal actors, the part played by legislators will probably be subject to even greater change as a result of internationalisation. Affected as they have been by the ever-decreasing enthusiasm for the Europeanisation process, EU lawmakers will probably have less and less scope for issuing internal market legislation, whereas at the national level the legislators’ role will be usurped to an even greater extent by the courts. The foregoing does not diminish the case for a fundamental debate on what represents the best possible level of regulation. The question as to “who does what” can only become a more pressing one during the years to come.

The role played by the private law as a regulatory instrument is also bound to change in years to come. The growing gap between the demands of globally-trading business people and the ability – or perhaps inability – on the part of politicians to lay down satisfactory legal rules, has driven traders to resort to alternative means of establishing trust. As a result, there are clear indications that the internationalisation of trade drives traders no longer to place a posteriori reliance on the law should matters go wrong, but are attempting ex ante to avoid the necessity of going to law in the first place. This they do through a process of “self-enforcement” and by acting on the basis of the future partner’s reputation, which has become increasingly available from online sources of information. All this justifies the conclusion that the role of the law in regulating private relations is bound to decrease.

This contribution examines the future direction which the European harmonisation programme should take in the field of company law. The reason for this is that this programme is due for reassessment in the light of recent case law of the Court of Justice, which is giving the member states less and less scope for imposing their company law on foreign companies. Taking into account the competitive dynamics to which this case law is giving rise (the “European company law market”), the author essentially formulates two proposals.

Firstly, he advocates the adoption of the Fourteenth Company Law Directive, under which the registered office is the exclusive basis for determining which company law regime would apply, and which provides companies with the opportunity to convert to a type of company as regulated by another member state, without loss of legal personality. When issuing this directive, it is essential that the EU lawmakers should have adequate regard for the legal position of the various interested parties who could be affected by such a conversion. This could involve providing dissenting minority shareholders with a right to leave the company, and introducing a right to require security on the part of the creditors.

The second proposal is to abandon the Centre of Main Interest (COMI) principle in the European Insolvency Regulation. Combined with the Fourteenth Company Law Directive, as advocated in this paper, this would ensure that the applicable company law (lex societatis) and the applicable insolvency law (lex concursus) be at all times that of one and the same member state, i.e. that in which the company has its registered office.

These two proposals should remedy various shortcomings in the current system, and create the conditions in which the member states could compete effectively with each other in the field of company law. Thus a way could be found of overcoming the absence of political consensus between the EU member states in relation to the company law harmonisation programme, without harming the legal position of the various company stakeholders.

1. The central question underlying this contribution is the manner in which compensation for loss resulting from disasters is regulated in Belgium and in The Netherlands. A distinction is drawn between so-called technological disasters, i.e. those marked by human involvement, on the one hand, and natural disasters on the other hand. From a theoretical perspective, the author asks the question as to how any loss resulting from disasters should be compensated in an ideal world. In so doing, he considers not only what should be the optimal level of compensation awarded to victims, but also the question as to how the various compensation mechanisms could provide potential victims with the best possible incentives for preventing such loss. As far as technological disasters are concerned, the author gives pride of place to solutions provided under the law of torts, for the simple reason that such disasters will frequently produce a perpetrator who can also be held liable. As for natural disasters, on the other hand, appropriate solutions should clearly be sought outside the law of torts, precisely because the chances of holding the only possible perpetrator, i.e. the public authorities, liable will frequently be much thinner.

2. As regards technological disasters, the author highlights three aspects which will be crucial in order to guarantee optimal levels of compensation and prevention. Firstly, technological disasters constitute a type of accident for which strict liability appears to be the most appropriate legal remedy. Both for the purpose of guaranteeing compensation for the victims and in order to create incentives for prevention, such strict liability should be combined with a system that guarantees solvency in such a way that the victim will also be able to claim from the perpetrator’s liability insurer. The problem here is that where the claim is brought using the ordinary civil proceedings, it can frequently take a very long time – years in some cases – before the tortfeasor can be definitively found to be liable for compensation. This mere circumstance can cause the loss to increase. This is why a strong case can be made, particularly when it comes to disasters, for introducing accelerated proceedings which will attend to the most urgent needs in order to prevent increasing the loss incurred.

3. As for natural disasters, a solution should be sought which is centred around the victim, more particularly through the mechanism of the so-called first-party disaster insurance – such as the insurance which house owners take out against the risk of flooding. Although this type of insurance presents many advantages, being capable of yielding both compensation and incentives for prevention, it nevertheless presents some problems. On the demand side, the problem is that demand for insurance is frequently too low, so that where serious disasters occur, it transpires that only a restricted number of victims had actually taken out insurance. One possible solution could be the introduction of compulsory insurance. On the supply side, the problem is that the losses resulting from disasters can be quite sizeable. This can result in disasters causing losses which are no longer insurable on the ordinary commercial insurance market, and cannot be covered by re-insurance either. This would appear to make out a case for intervention by the public thorities, the latter presenting themselves as the re-insurer of last resort. This type of public intervention is strongly to be preferred to ex-post compensation, under which certain victims are awarded compensation from public funds. Such an approach is inadequate in terms of generating incentives for prevention and serves to restrict demand for insurance. Against this theoretical background, the author considers, first, compensation of loss caused by technological disasters in Belgium and The Netherlands, and, subsequently, compensation of loss caused by natural disasters in Belgium and in the Netherlands.

4. In relation to technological disasters, the author notes that, in Belgium, the required strict liability mechanisms are available in principle. However, the problem here is that they frequently present an ad hoc character, and that they cannot in truth be described as a systematically considered introduction of a strict liability régime. One positive aspect of the Belgian system, however, is that in many cases it imposes an obligation to take out solvency cover – which invariably involves compulsory liability insurance. In addition, the Belgian Law of 13/11/2011 has created a specific set of rules aimed at providing compensation for the victims of technological accidents. Although some details of this law are open to criticism, it presents the all-important characteristics of having in essence created a mechanism which enables compensation to be awarded rapidly on the basis of the law of torts.

5. The law of The Netherlands also provides a number of strict liability systems. However, the “Enschede” and “Volendam” cases show that, where the disasters assume this kind of dimension, it is not so much the liable party who caused the loss who is required to pay the lion’s share of the compensation, but that the largest part of the damages awarded to the victims will be paid from public funds. Even the legislation which was specifically created in order to deal with disasters occurring in The Netherlands, to wit the Law on accommodating Losses resulting from Disasters and Serious Accidents (WTS), has proved unequal to the challenge of generating adequate levels of compensation for major disasters such as Enschede and Volendam. What these cases show in particular is that, in the absence of a system of compulsory insurance, only a very low amount of money was available for compensation from the contracted insurance. It was precisely for this reason that the public authorities provided the lion’s share of the compensation awarded to the victims. In fact, this situation, which shields the private sector from the cost and risk created by its activity, is regarded as undesirable in the Netherlands also, as can be seen from the reports emanating from various committees. Although a number of interesting options have been ventilated by way of solutions, this has yet to result in actual changes in the relevant law.

6. Until 2003, compensation of the loss caused by natural disasters in Belgium was characterised by a patchwork of rules, in which the Disaster Fund (Rampenfonds) played the leading part. In 2003, Belgium introduced compulsory cover for damage caused by flooding which was combined with fire insurance for low-level risks. However, this cover was only intended to apply to properties located in specifically designated flooding areas – and no such designation ever took place. Instead, a new Law of 17/9/2005 was adopted under which, following the French example, additional cover for loss from disasters was made available on (voluntary) fire insurance. This means that Belgium has to a large extent conformed to the system which appears to be the most appropriate from a theoretical viewpoint also, which is to create a system of first party disaster insurance. Thus it is that the part played by the public authorities, via the Disaster Fund, has become extremely marginal.

7. In the Netherlands, no insurance against earthquakes and flooding was, until recently, possible as a result of two binding decisions made by the insurers, and which had come into being in the 1950s. Under this arrangement, the insurers had agreed no longer to cover flooding or earthquakes. Following the floods which occurred in 1992 and 1993, these agreements between the insurers were withdrawn, under pressure from the politicians and from the competition authorities. Since then, a lengthy process of negotiation has taken place between the insurers and the public authorities in the Netherlands, with a view to putting into place a structured set or rules. In so doing, the parties involved have considered both the Belgian and French systems. In spite of the various reports, studies and discussions on the subject, no general flooding insurance has as yet been made available in the Netherlands. Accordingly, whenever the Netherlands suffer flooding, either the WTS will be held to be applicable, or, as is often the case with technological disasters, the public authorities may make available compensation on an ad hoc basis.

8. When comparing the relevant systems in both countries, one notices particularly that, to a certain extent, the Belgian legislation comes closer to the theoretical model than is the case with the Dutch model. Obviously this does not mean that the Belgian lawmakers have systematically sought to achieve a properly structured set of rules on the subject. As far as technological disasters are concerned, the Belgian model, although obviously capable of improvement at all times, presents the advantage of (a) making available a large number of strict liability systems, even though the latter have frequently been introduced on an ad hoc basis, and (b) being combined with compulsory solvency guarantees. The 2011 Law has also added an interesting novel element to the Belgian compensation model by creating a specific accelerated procedure. Obviously it remains to be seen whether this legislation is also capable of living up to its promise in practical terms.

9. In the Netherlands, the victims of technological disasters are – at the risk of exaggeration – dependent on their finding a solvent perpetrator and, in the absence thereof, on any ad hoc funds made available by the public authorities. The Enschede and Volendam disasters have demonstrated that the Dutch model presents the problem that those causing the loss are only exposed to tort liability to a very limited extent, and that the public authorities (and therefore the taxpayer) pay the lion’s share of the bill. In the light of the notion, inspired by legal economics, that those causing loss should be exposed to the social costs caused by their activity, this is not a desirable outcome.

10. As regards the compensation payable for loss caused by natural disasters, the Belgian model also comes closer to the theoretical model than does its Dutch counterpart. In Belgium, the relevant legislation has conformed to the theoretical model by reducing the call on public intervention by phasing out the role of the Disaster Fund and introducing compulsory disaster cover as an addition to the fire insurance policy. It is true that in the Netherlands there is legislation available in the shape of the WTS; however, the latter is seldom applied, which is related to the circumstance that losses which are insurable under normal circumstances are not eligible for compensation under the WTS. The Netherlands still have no proper system of flooding insurance. This is why the victims of major natural disasters continue to be dependent on the (political) willingness on the part of the public authorities to contribute from public funds. Although there are certain aspects of the Belgian system which are open to criticism, the Belgian model is, all in all, that which comes closest to the theoretical model as regards compensation for both technological and natural disasters.

Companies and financial institutions are constantly searching for alternatives to traditional (re)insurance in order to mitigate risks that are very hard or even impossible to insure, such as extreme weather, natural disasters or terrorism. One of those alternatives is the transfer of this risk to capital markets through the creation of securities linked to those risks, such as CAT bonds (CATs).

These CATs are modelled on asset-backed securities – here, risks are pooled in a special purpose vehicle (SPV) by the party who wishes to cover the risk (the sponsor). This SPV finances itself through the issuing of bonds. Normally, an interest rate is agreed upon, and at maturity, investors may redeem their investment. Where, however, a certain event (i.e. the ‘trigger’) occurs, investors will be repaid either not at all or only in part, and the SPV will be used to finance the consequences of the disaster. Such triggers can be linked to the magnitude of the actual loss of the sponsor (indemnity triggers) or to an index related to the loss incurred by the sponsor (index triggers). There are also hybrid forms whereby multiple triggers are combined in one bond (hybrid triggers). Because the bonds are sold, the non-redeemable funds are immediately available to the sponsor.

However, the question arises as to the extent to which those CATs are financial products or insurance transactions. This question is highly relevant – for various reasons the party in question may, or may not, want his/her transaction to be qualified as one of either of these products. However, before formulating any rules on this, analyse the nature of CAT-transactions as a financial product, or insurance product, should be analysed.

Up to this point, this debate has been mainly conducted on the basis of a holistic approach, characterized by a transparent SPV, rather than by regarding the SPV as a separate entity – viewing the transaction as a whole. Under such an approach, the main characteristics that are considered to distinguish insurance products from financial products (such as the insurable interest principle, the indemnity principle, the mutualisation of risks, the valuation of the instrument and the risk allocation) are used as criteria. In most cases, such an analysis seems to exclude qualification as an insurance product. However, in most cases there are several counter-arguments possible, and the arguments in favour are, to say the least, far from solid. In some cases the arguments in favour give themselves rise to other problems.

A basic CAT is structured in a triangular relationship, in which the sponsor and the investors have no direct obligations towards each other because of the SPV that ‘separates’ them. The three parties are the person transferring the risk (sponsor), the SPV (issuer) and the investors. By controlling the shares in the SPV through a trust, they are protected in the event of the sponsor’s insolvency, which guarantees a strict separation between the sponsor and issuer. For this reason it is impossible to have a transparent insight into the SPV, and to regard the issuance of CAT-bonds as a single transaction. If, however, there were a desire to do so by regulation, the SPV articles would need to be taken strongly into consideration in so doing.

In contrast to this holistic analysis, an analysis of the triangular relationship does yield a clear result. In the sponsor/SPV relationship, we have an insurance transaction in the legal, but not in the financial/functional, sense. However, if instead of an SPV one were to use an MPV, this would constitute an insurance transaction in the financial sense. Under the SPV/investors relationship, the object of the agreement would seem to be a financial operation – qualification as a financial instrument appears to be recommended here. Between the sponsor and the investors, there is – from a legal point of view – no contact whatsoever.

This, however, is a very general answer to a question that is highly ad-hoc, given that most CATs are designed on an ad hoc basis as a function of the sponsor’s and the investors’ requirements. This analysis must, therefore be used with care.

Apart from the economic consequences of the 2008 credit crisis, the prevailing viewpoints regarding the way in which some financial instruments (that might have contributed to the crisis) were traded in unregulated markets have come to realise that greater control, regulation and transparency in trading instruments such as credit default swaps may benefit the market. Some of these elements are referred to in this article, but this is not its main focus, seeking as it does to analyse the nature of credit default swaps against existing and proven legal constructs, as well as their rules and requirements.

A credit default swap, in its simplest form, can be explained as follows. A is the holder of a government bond to the value of €10,000 issued by the Republic of Transylvania and maturing in five years’ time. Until the bond matures, A has to hope and pray that Transylvania will be able to repay the main debt and the relevant interest. As the creditor, A would like to secure his debt and minimise his risks. A credit default swap allows the creditor to do just that – the latter approaches a security provider (normally a financial institution) to provide security against the possible default on the debtor’s part when the debt matures. If the debtor defaults, the risk against which the creditor took out the security has materialised and he is entitled to payment.

The credit default swap thus clearly has similarities with insurance, as well as with aleatory agreements (contracts of chance such as gambling and wagering). This particular aspect is also examined in the light of so-called “contracts of difference”, and even though credit default swaps and other similar financial instruments are now treated as lawful as a result of legislative change, the author finds substantive similarities between contracts of chance, insurance and credit default swaps.

Credit default swaps can also be bought where there is no connection between the purchaser of the swap and the obligation secured by the swap. The credit default swap is thus totally independent of the relevant agreement. This is similar to the position as regards guarantees and standby letters of credit, both being legal constructs meeting the same (or similar) economic objective as a credit default swap.

The use of personal security is characteristic of numerous international transactions. The issuing of a guarantee, standby letter of credit, indemnity, and performance bond are all examples of personal security used to secure performance of a particular transaction – indeed, the same purpose as met by a credit default swap in its classic format.

As regards naked credit default swaps, the object here is not the creation of security, but merely speculation. They have become lawful following changes in legislation, and it is only in such cases that the use of personal security would not have sufficed. When faced with a classic credit default swap, on the other hand, one is for all practical purposes dealing with personal security. The author also draws a comparison between suretyship and a credit default swap, and establishes that even the classic terms of a suretyship agreement, i.e. the beneficium excussionis and the beneficium cedendarum actionum, can in some or other form be found in the credit default swap – the only difference being that the surety is not paid a single penny for undertaking the risk.

The different perspective used in this contribution has highlighted that the purpose for which the credit default swap was initially created could easily have been met using the existing legal notions covering the provision of credit security - personal security in particular would have provided legal certainty. The new legal notion that has been created and is primarily used for the purpose of speculation (credit default swap), is nothing but an aleatory agreement, and the fact that it is now accepted as a valid agreement is merely an attempt by the authorities to bring some order to this notion and is not necessarily consistent with public policy, which has been a shifting concept down the years.

Servitudes must benefit the dominant estate. If there is no benefit, there can be no servitude. This rule applies under Belgian law, but also under French, German and Dutch law. In other words, all these legal systems make the existence of servitudes subject to a utitlity requirement. This, however, is not a purely European phenomenon, since the US law of easements lays down a similar requirement, to wit the “touch and concern” requirement. That requirement does not only display interesting similarities with the European utility requirement in terms of its content and functional application, but has also evolved along surprisingly similar lines. It is these similarities, as well as the differences, between these two requirements that this paper examines in some depth.

Prior to this, however, the author pauses to examine the exact content and meaning of both these requirements. What exactly amounts to a benefit for the dominant estate? And at what point does a covenant “touch and concern” an estate? As regards the benefit requirement, the author considers not only the Belgian law, but also French, German and Dutch law. From this analysis, it emerges that the benefit requirement is interpreted sufficiently flexibly, and that it has even been – at least formally– abolished in the Netherlands.

The author then proceeds to consider extensively the similarities between the utility requirement and the “touch and concern” requirement, examining successively (a) the important part played by both requirements where the relevant covenants are enhanced by means of a droit de suite; (b) their role in protecting the potential acquirers of the estate in question, the actual acquirers of such an estate and society in general, (c) the interaction with the intention requirement displayed by both requirements, and (d) the similarity with which the two requirements have evolved over the years. As regards (d), both the benefit and the “touch and concern” requirements have clearly evolved towards a more flexible interpretation, a phenomenon which the author illustrates by reference to the non-competition clause.

In addition to the similarities, there are also a number of differences between the utility requirement and the “touch and concern” requirement. In the first instance, the requirements in question do not relate to exactly the same types of right, since European servitudes are not identical to American real covenants. Other differences relate to (a) one of the requirements being one-dimensional as to its contents, the other two-dimensional; (b) the precise consequences of the requirements being no longer fulfilled, and (c) the point at which the fulfilment of the requirements is to be assessed.

Having applied both requirements to a number of “problematic” obligations, i.e. the non-competition clause, the developer transfer fee covenant and the covenant not to sue, the author ends this contribution by reflecting on the impact which the abolition of the requirements in question would have on the law of property, and more particularly on the numerus clausus principle. His conclusion is that such abolition would result in the erosion of the numerus clausus principle.

The Cour de Cassation, being the Belgian supreme court, has two functions. On the one hand, it supervises and fuels the development of the law by the courts and ensures consistent application of the law; on the other hand it secures legal protection. Especially as regards the first-named function, the Court has a unique role in the Belgian legal system. The Cour de Cassation is also unique in that, in contrast to the other courts, it is guided by the public interest in its application of the law. In order to fulfill its task, the Court is dependent on the private initiative taken by the parties involved in the dispute to bring an appeal before it. Whereas the divergence between the public and the private interests may have caused fewer problems in earlier times, when fewer appeals were lodged with the Court, currently it is generally accepted that the Court is increasingly less able to fulfill its public interest mission. The increase in its workload and in the length of time for processing cases highlight a need for reform.

To that effect, I would propose the adoption of a new case selection mechanism, as a first step towards a major reform of the Cour. Article 1105bis of the Belgian Judicial Code allows the Court to differentiate as regards the human resources allocated to cases, depending on the potential they have for fulfilling the Court’s public interest mission. This would enhance the ability which the Court already has to handle straightforward cases with three, rather than the standard five, judges. Following the example provided by the Court’s French and Dutch counterparts, I would also advocate the introduction of a system which allows the Court to respond to statements of appeal with a standard ground of judgment, where such statements are incapable of causing the appealed decision to be reviewed and do not involve an important point of law. This system could reduce the judges’ workload and highlight the importance of the Court’s public interest mission, without intruding in any significant way on deep-seated considerations of legal protection and access to justice. Together with the introduction of a preliminary jurisdiction to rule on new and important questions of law raised before lower courts, and a renewed interest in the existing cassation procedure in the general interest of the law, the Court’s role in protecting the public interest could be enhanced, without detracting its duty to ensure legal protection in individual cases.