Union Citizenship
Union Citizenship
1. Interpreting economic freedoms as citizens’ rights
The [[fundamental freedoms of the [[Treaty on the Functioning of the European Union (TFEU), in particular those with a personal content, have been broadly interpreted in the early case law of the ECJ as also applying to economically non-active citizens. This has happened via a broad understanding of the prohibition on [[discrimination based on nationality according to Art 18 TFEU/12 EC. A similar tendency can be seen in extending economic freedoms to include recipient rights (so-called ‘passive freedoms’) which can also be invoked by private persons. Thus the scope of application of EU law has been greatly widened and transformed into ‘citizens’ rights beyond the market’. Some examples from the ECJ case law demonstrate this tendency:
EU tourists’ right to non-discriminatory access of museums (Case C-45/93 – Commission v Spain [1994] ECR I-911); the prohibition of restrictive entry conditions or additional enrolment fees for EU students in institutions of higher education and professional training (Case 293/83 – Gravier [1985] ECR 593; Case 24/86 – Blaizot [1988] ECR 379), excluding, however, a right to equal treatment with regard to stipends and other support payments (Case 197/86 – Brown v Secretary of State for Scotland [1988] ECR 3205; Case 39/86 Lair v University of Hannover [1988] ECR3161); the prohibition of discrimination in victim compensation (Case 186/87 – Cowan [1989] ECR 195); the freedom to go to another Member State to obtain services (including health care) without restrictions in relation to payment (joined Cases 286/82 and 26/83 – Louisi & Carbone [1984] ECR 377).
Directives 90/365, 90/364 and 93/96 codified these rights to some extent for retired persons, all other citizens and students, but they are primarily directed against the state or state institutions such as universities, social security bodies and municipalities. The directives do not have specific private law content.
A certain exception with regard to the state-directed content of non-discrimination rules can be seen in the provisions on names, which usually belong to private law and are coordinated between different jurisdictions by rules on [[private international law (PIL). The case of Konstandinis (ECJ Case C-168/91 [1993] ECR I-1191) concerned the spelling of the name of a Greek citizen who was doing business in Germany. The competent German authority required a Latin transcription which would have distorted the name as used in public. Whereas AG Francis Jacobs, in his opinion of 9 December 1992 (para 40), argued in favour of an EU citizen’s broad fundamental right to one’s own name ([[law of names), the Court somewhat fictitiously referred to the [[freedom of establishment and a self-employed person’s right to be free from rules on transcription which could result in a distortion of his name and confusion in contacts with potential clients.
2. ‘Union citizenship’ as a fundamental right of economically inactive EU citizens
A certain generalization and extension followed the Community acquis with regard to the establishment of a Union citizenship in Art 8 EC (1992) in its Maastricht version. In its original version it read: ‘Citizenship of the Union is hereby established. Every person holding the nationality of a Member State shall be a citizen of the Union. Citizenship of the Union shall complement and not replace national citizenship’. Article 20 TFEU/17 EC in the Amsterdam version added para 2 which reads: ‘Citizens of the Union shall enjoy the rights conferred by this Treaty and shall be subject to the duties imposed thereby’. Article 20 TFEU/17 EC as revised (OJ C 290 of 30 November 2009) provides: ‘Citizenship of the Union shall be additional to and not replace national citizenship’.
Art 21 TFEU/18 EC guarantees a right to free movement ‘subject to the limitations and conditions laid down in this Treaty and by the measures adopted to give it effect’. Article 22 TFEU/19 EC concerns the right to vote and stand as a candidate in municipal and EU elections, Art 23 TFEU/20 EC the right to diplomatic protection, Art 24 TFEU/21 EC the right to petition the European Parliament which is extended to all residents in Art 227 TFEU/194 EC.
As the citizen concept did not limit the Member State competence to determine nationality, the ‘fathers’ of the Maastricht Treaty and most legal authors did not realize its importance in implying a mutual recognition of multiple citizenship by all Member States (ECJ Case C-369/90 – Micheletti [1992] ECR I-4239; see however ECJ Case C-135/08 Rottmann (not yet reported) concerning limitations on a Member State’s right to withdraw citizenship in light of the principle of proportionality). It seemed obvious at this time that the citizenship concept only expressed a very obvious idea without imposing additional rights or duties. There was agreement that citizenship did not have any relevance in the sector of private law.
3. Union law guarantees of Union citizenship
Only the ECJ case law after ‘Maastricht’ conferred the status of a fundamental right on Union citizenship. The Grzelczyk judgment of 20 September 2001 (ECJ Case C-184/99 [2001] ECR I-6193) stated that: ‘Union citizenship is destined to be the fundamental status of nationals of the Member States, enabling those who find themselves in the same situation to enjoy the same treatment in law irrespective of their nationality, subject to such exceptions as are expressly provided for’ (para 31). This general prohibition of discrimination could be invoked by a French student who had received certain social benefits in Belgium (minimex) to finish his studies there, the benefits originally being limited to Belgian citizens. The Belgian state could therefore not require repayment as ‘unjustified enrichment’. The Court did not say anything regarding the effects of its judgment on private law relations, similar to later judgments which usually were concerned with litigation about residence rights, tax and social benefits. Its later Baumbast judgment (ECJ Case C-413/99 [2002] ECR I-7091, para 84) held that the rules on citizenship enjoy direct effect, which shows their importance in the rhetoric of EU law as Union citizenship consequently enjoys the same status as the other free movement rights.
An indirect importance for private law can be shown in the area of name rights, similar to the situation before the introduction of the citizenship concept itself. The case García Avello (ECJ Case C-148/02 [2003] ECR I-11613) concerned a name change for a child with dual Belgian and Spanish citizenship. Belgian law required either the name of the father or the mother; unlike Spanish law it did not allow for using both names. The Court found a non-justified discrimination because children with dual nationality suffered a disadvantage which could not objectively be justified. As a result, persons with dual nationality have a right to choose between two jurisdictions concerning their name; thereby the respective aims of the otherwise non-harmonized national PIL rules on names are rendered obsolete.
A more recent case, Grunkin and Paul (ECJ Case C-353/06 [2008] ECR I-7639), concerns the conflict between the Danish PIL rules on names based on ius soli and the German ones based on ius sanguinis. The child of German parents was born in Denmark where he could use the names of both parents. This was rejected when he returned to live in Germany because German PIL requires German citizens to take either the name of the father or of the mother; double names for children should be avoided because of the resulting confusion of the public. Although both AG F Jacobs in the first reference proceeding (ECJ Case C-94/04 – Standesamt Niebüll [2006] ECR I-3561) and AG Sharpston in the final case, with reference to Konstantinidis and García Avello, wanted to avoid a general conflict with German PIL rules, they argued for an opening of the strict German rules prohibiting double names of children. It is, in their opinion, not so much a problem of non-discrimination according to Art 18 TFEU/12 EC, but relates more to a ‘general principle of equal treatment’ and to free movement under Art 21 TFEU/18 EC ([[general principles of law). The ECJ followed this argument by saying: ‘None of the grounds put forward in support of the connecting factor of nationality for determination of a person’s surname, however legitimate those grounds may be in themselves, warrants having such importance attached to it as to justify, in circumstances such as those of the case in the main proceedings, a refusal by the competent authorities of a Member State to recognise the surname of a child as already determined and registered in another Member State in which that child was born and has been resident since birth’ (para 31).
It remains to be seen whether this broad definition of the free movement principle has importance beyond the specific cases on the PIL of Member States in general. The tendency of the ECJ seems to be to avoid strict rules on mandatory connecting factors in cross-border situations and to substitute them with a more flexible rule allowing a broader choice of the persons protected by EU law (for a more narrow reading see however case C-391/09 Malgozatza Runevic-Vardyn and others v Vilniaus miesto savivaldybes administracia (not yet reported) concerning the transcription of foreign names).
4. ‘Horizontal direct effect’ of Union citizenship?
It is a debated question whether Union citizenship takes ‘horizontal direct effect’ in private law relations, but this has not yet been expressly decided by the ECJ. The above-mentioned cases (which have not been analysed in their totality) only apply to the relations between the citizen and a Member State, either concerning restrictions on free movement, access to benefits, or restrictive public law rules on names as determined by PIL. As fundamental rights, they are applicable not only in favour of ‘foreign’ but also of ‘home’ EU nationals if they are in a situation covered by EU law like in the case Grunkin and Paul.
A horizontal direct effect in a situation similar to Union citizenship has been accepted by the ECJ in the case Phil Collins (ECJ Joined Cases C-92 and 326/92 [1993] ECR I-5145). It concerned a discrimination against art performers with regard to their protection in the marketing of copyrighted music. The ECJ directly applied the prohibition against discrimination of then Art 7 EEC, which is now Art 18 TFEU/12 EC. It wrote: ‘The Court has consistently held that the right to equal treatment ... is conferred directly by Community law ... That right may, therefore, be relied upon before a national court as the basis for a request that it disapply the discriminatory provisions of a national law which denies to nationals of other member States the protection which they accord to nationals of the State concerned’ (para 34).
It is a disputed question in legal writing whether this ruling can be generalized or is only applicable for the exercise of intellectual property rights. This author proposes a ‘compromise’ solution. A horizontal direct effect can be seen as existing in similar situations as has already been recognized for the fundamental freedoms. This concept corresponds to the equal status of economic freedoms and citizens’ rights ([[European internal market). The recent case law of the ECJ recognizes horizontal direct effect of the [[fundamental freedoms when they originate from a ‘collective regulation’ where freedom of contact does not exist (ECJ Case C-438/05 – ITWF and others v Viking Line [2007] ECR I-10779, paras 56–66) or from employment relations (ECJ Case C-94/07 – Raccanelli v Max Planck-Gesellschaft [2008] ECR I-5939, para 43). It is not yet clear whether this case law also applies to areas beyond an economic objective, for instance to by-laws of amateur sport organizations limiting access of EU-citizens in a discriminatory manner, provisions restricting the freedom of members of non-professional associations and unjustified social action with harmful consequences for third parties. Details of such a broad concept and its justifications under EU law still have to be determined. The main idea behind this extension of the effects of the citizenship concept to relations governed by private law is a functional one: restrictions on free movement rights can originate not only from the state, but also from private associations if they act in a collective manner. This is also justified by the different rules of Member States in distinguishing between public and private law, a function which cannot be simply taken over by EU law; an autonomous link has to be found which relates to power structures imposed on EU citizens.
With regard to Union citizenship, this implies that collective restrictions or discrimination against Union citizens fall under the scope of application of the TFEU and have to be evaluated under Arts 18, 20, 21 TFEU/12, 17, 18 EC; they must be justified in order to be compatible with EU law. The following are examples of non-justified discrimination: (i) as in professional sports, unreasonable selection rules of associations concerning participation in sport matches by ‘semi professionals’ or amateurs (ECJ Joined Cases C-51/96 and 191/97 – Deliège and others v ASBL [2000] ECR I-2549); (ii) discriminatory entrance rules for private higher education institutions which have been accredited by public bodies; and (iii) clauses in [[standard contract terms putting EU nationals at a disadvantageous position, like higher tariffs for foreigners in insurance cover or higher costs for cross-border banking services as opposed to national transactions).
5. No direct horizontal effect of Directive 2004/38
Directive 2004/38 of 20 April 2004 on the free movement and residence of EU citizens consolidates and codifies the free movement rights of EU citizens and their family members, but from its wording it has only a ‘vertical direct effect’ against the state, not a horizontal direct effect against restrictions instituted by private law relations. The general prohibition on discrimination in Art 24 of Dir 2004/38 has been shaped similarly to primary law and has a similar effect. There are however four possible cases for a horizontal direct effect:
(i) The concept of ‘family member’ is defined in Art 2(2) and includes the marriage of a Union citizen with a third country national seeking asylum in a Member State, even if the latter did not have a residence right (ECJ Case C-127/08 – Blaise Baheteb Metock [2008] ECR I-6241).
(ii) The notion of ‘family member’ includes partnership relations under the dual condition that they are registered in the state of origin and put on an equal standing with a marriage in the state of residence. This is important with regard to the prohibition of discrimination with regard to sexual orientation, encompassed by Dir 2000/78 (see ECJ Case C-267/06 – Tadao Maruko [2008] ECR I-1757). Recital 31 refers to Art 21 of the Charter on Fundamental Rights which does not require dual recognition of same sex partnerships.
(iii) Directive 2004/38 does not recognize a right of access to or a supply of goods and services available to the public by Union citizens who reside legally in another Member State. This is quite different from Art 11(1)(f) of the Third Country National Residence Directive 2003/109. Since it cannot be imputed that the EU legislature wanted to put Union citizens in a less favourable position than third country nationals, Art 11 can be applied by analogy in favour of Union citizens as well.
(iv) Art 35 transforms the prohibition of the abuse of rights, as known to private law, also into the sphere of residence rights, particularly in cases of marriages of convenience, thus following the case law of the ECJ (Case C-109/01 – Akrich ECR [2003] I-9607, para 57). Recital 28 defines ‘marriage of convenience’ as ‘relationships contracted for the sole purpose of enjoying the right of free movement and residence’. It is an open question whether this broad power of Member States corresponds to the guarantee of marriage and family as fundamental rights under Arts 7/9 of the Charter ([[human rights and fundamental rights (ChFR and ECHR).
Literature. Torsten Körber, Grundfreiheiten und Privatrecht (2004); Grainne de Búrca (ed), The EU and the Welfare State—In Search of Solidarity (2005); Nicola Rogers and Rick Scannell, Free Movement of Persons in an Enlarged Union (2005); Ferdinand Wollenschläger, Grundfreiheit ohne Markt (2006); Matthew J Elsmore and Peter Starup, ‘Union Citizenship’ (2007) 26 Yearbook of European Law 57; Francis Jacobs, ‘Citizenship of the EU—A Legal Analysis’ (2007) 13 ELJ 591; Dagmar Schiek, Lisa Waddington and Mark Bell, Non-Discrimination Law (2007); Norbert Reich, ‘Free Movement v Social Rights in an Enlarged Union—the Laval and Viking Cases before the ECJ’ (2008) 9 German Law Journal 125; Jürgen Basedow, ‘Der Grundsatz der Nichtdiskriminierung im europäischen Privatrecht’ (2008) 16 ZEuP 230; Eleanor Spaventa, ‘Seeing the Wood Despite the Trees? On the Scope of Union Citizenship and its Constitutional Effects (2008) 45 CMLR 13; Juri Borgmann-Prebil, ‘The Rule of Reason in European Citizenship’ (2008) 14 ELJ 328; Norbert Reich, ‘The Interrelation between Rights and Duties? Reflections on the state of liability law in the multilevel governance system of the Union: Is there a need for a more coherent approach?’ (2010) 29 Yearbook of European Law 112; Norbert Reich, ‘The Public/Private Divide in EC Law’ in Hans-W Micklitz and Fabrizio Cafaggi (eds), European Private Law After the Common Frame of Reference (2010).
= Unjustified Enrichment
1. Basic principles
‘It is a fundamental principle of natural justice that no one ought unjustly to enrich himself at the expense of another.’ This statement, attributed to the Roman jurist Pomponius (D. 12,6,14 and D. 50,17,206), is universally acknowledged throughout Europe. Indeed, every jurisdiction has legal remedies for correcting receipts of benefits not approved of by the law. Nonetheless, so far there has been no consensus as to the meaning of Pomponius’ statement. Is it a mere maxim of equity, or is it a substantial (and therefore directly applicable) rule of law? There has always been the fear of boundless sway of natural justice. But, on the other hand, there have always been endeavours to systematize the existing claims for the surrender of benefits received, and to coordinate their requirements and characteristics. Nowadays, Pomponius’ expression is recognized as either a legal rule or at least as a legal principle that underlies the existing claims for restitution of benefits and can also be used to justify newly created claims for restitution.
2. Ius commune foundations
The European ius commune did not have a general unjustified enrichment action. There were, however, specific actions directed at the surrender of a benefit the defendant had obtained in some way, at the expense of the claimant, which were associated with Pomponius’ unjust enrichment principle by the ius commune scholars.
Undue or failed transfers could be reclaimed by way of the condictio indebiti or other condictiones ([[restitution in case of undue transfer). However, some condictiones, eg the condictio sine causa or the condictio ex iniusta causa, also covered cases in which the defendant had received the claimant’s property not by transfer, but in some other way, such as an act of God or of a third party, and where there was no legal basis for retaining the benefit received. The condictio furtiva could be brought against thieves and their heirs and was directed at restitution of stolen objects or their value.
In other circumstances, the actio negotiorum gestorum was applied by analogy: if, in a case of an unauthorized [[management of another’s affairs (negotiorum gestio), the manager’s claim for reimbursement of his expenses failed because he had managed the principal’s affair for his own benefit, he could at least bring a claim against the principal insofar as the latter was enriched by the manager’s actions. This claim could be used to help those who had made improvements, whether in good or bad faith, to another’s property. Conversely, where A had, in good faith, disposed of B’s property in favour of C, the principal’s claim against the manager for handing over everything received in course of the management could be used, by way of analogy, to grant B a claim against A for the surrender of the price received from C.
Finally, there was the actio de in rem verso. Initially, it was applied in cases where persons in power (slaves, sons and daughters) contracted with third parties. As [[representation was not recognized in Roman law, the third party had no contractual claim against the principal (owner/ father). But if and insofar as the third party’s contractual performance had enhanced the principal’s patrimony, the principal could be forced to give up the benefits by the actio de in rem verso. Later, the action was extended to cases where a free person contracted on behalf of another: if A granted a loan to B, who was secretly acting for C, A could claim repayment from C to the extent that C had received the money from B. This actio de in rem verso utilis, directed towards the enrichment received, was extended to two-party cases in the 18th century, for instance where a contractual performance was made in favour of a minor and the contract was void for lack of the guardian’s consent. As the condictio, leading to strict liability, could not be brought against a minor ([[restitution in case of undue transfer), there remained the actio de in rem verso utilis, forcing the minor to give up his enrichment. The actio de in rem verso of the usus modernus generally covered cases where the defendant’s patrimony had been enriched, whether directly or indirectly, by the claimant. Thus, it became the basis for a general action of unjustified enrichment in many legal sys tems.
The late scholastics of 16th century Spain were the first who put all these scattered remedies together in order to form a general action of unjustified enrichment. Regarding non-contractual liability, they made a distinction between claims to compensate a loss on the one hand and claims for giving up an enrichment received on the other hand. This idea was taken up and refined by the school of [[natural law.
3. Unjustified enrichment in the European codifications
The basis of a codified general claim concerning unjustified enrichment was often the actio de in rem verso, as in the Prussian codification ([[Allgemeines Landrecht für die Preußischen Staaten) and in the Austrian Civil Code ([[Allgemeines Bürgerliches Gesetzbuch). The French legislature, however, rejected its inclusion into the [[Code civil, believing that the condictio indebiti and the analogous application of the negotiorum gestio claims were sufficient to redress unjustified enrichment. However, a general action in unjust enrichment, called actio de in rem verso, was introduced by the judiciary in the famous Boudier case of 1892 (Cass. req., 15.6.1892, D.P. 1892.1.596). Legal systems which follow the tradition of the actio de in rem verso (apart from those mentioned above, also Spain, Italy and the Netherlands) still distinguish between the condictio indebiti or sine causa as a claim for restitution of undue transfers on the one hand, and a general claim of unjustified enrichment on the other. The latter usually requires the enrichment of the defendant, a corresponding impoverish-ment of the claimant, a causal link, and the lack of a legal basis. It is also usually subsidiary to any other possible claims. The general claim is, in principle, aimed at the surrender of the enrichment, although in the Netherlands it takes the shape of a claim for compensation and is merely limited by the defendant’s enrichment. There is no unanimity whether restitution in cases of undue transfers (the old condictio indebiti) is a wholly different remedy or (as it is increasingly seen) a special case of unjustified enrichment.
The German solution is based on the rejection of the actio de in rem verso by the pandectists and on Savigny’s teachings of the condictio sine causa generalis as a general action encompassing all cases in which a defendant has been unjustifiably enriched at the claimant’s expense. The German Civil Code ([[Bürgerliches Gesetzbuch) therefore contains a unitary claim of unjustified enrichment for cases where someone has received something without legal basis, either by the claimant’s performance or otherwise at his expense. A similar general claim of unjustified enrichment, including the condictio indebiti, can be found in Swiss, Portuguese and Greek law. In Germany, it has been the source of innumerable controversies: does the general claim of unjustified enrichment have to be restricted in order to be manageable and, if so, in what manner? Is it actually a unitary claim or a collection of different actions with different characteristics? Eventually, the ‘doctrine of separation’ (Trennungslehre) developed by Walter Wilburg and Ernst von Caemmerer became widely accepted. It distinguishes between cases of undue or failed transfers (Leistungskondiktion), infringement of the claimant’s rights by the defendant (Eingriffskondiktion), expenditure made on another’s property (Verwendungskondiktion) and payment of another’s debt (Rückgriffskondiktion). In every category, the requirements ‘at the expense of’ and ‘without legal basis’ have to be determined in a different manner.
4. Development in England
For a long time, the principle of unjustified enrichment was viewed with suspicion in England, as there seemed to be the danger of a vague jurisprudence of natural justice and equity. Restitutionary claims based on failed transfers were labelled ‘quasi-contract’ in the 19th century and thus formed an appendix to the law of contract. Claims for the surrender of benefits gained by way of infringement of another’s property operated under the name ‘waiver of tort’. In addition, restitutionary claims were also part of the law of equity, eg claims for the surrender of gains made in breach of a fiduciary duty, or claims against third parties who had received trust property. It was not until the second half of the 20th century that scholars, inspired by the American [[restatements and the work of Robert Goff and Gareth Jones, began to collect the various different cases under the name ‘restitution’ or ‘unjust enrichment’ and to organize them systematically. In 1991, the House of Lords finally recognized the existence of a separate law of unjust enrichment (Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548).
Regarding taxonomy, English scholars went their own way. According to the teachings of Peter Birks, a claim in restitution/unjust enrichment requires a so-called ‘unjust factor’, which is used to identify the receipt of a benefit at another’s expense as unjust. These unjust factors usually refer to the transferor’s will, which may have been vitiated (due to mistake, duress, compulsion, undue influence or minority) or qualified (where counter-performance or another event forming the basis of the transfer—as in fact known by the transferee—did not occur). Other unjust-factors refer to the transferee’s behaviour (free acceptance) or to particular policy reasons. Whether there is a legal basis for the enrichment is irrelevant. The fact that the claimant, by his performance, discharged an existing liability towards the defendant is, at most, the basis for a defence against a restitutionary claim. Because the purpose of the transfer is not taken into account, a claim in restitution for mistake is available regardless of whether the claimant intended to discharge an obligation that did not actually exist, made a gift for erroneous reasons, or improved another’s property in the mistaken belief of being the owner. Problems in identifying the correct unjust factor, in particular in cases involving payments on void contracts, caused Birks to abandon his teachings in 2003 and, following the continental tradition, to base claims of unjust enrichment on an ‘absence of basis’.
5. Common structures and problems
The majority of European legal systems have a claim of unjust(ified) enrichment which is composed of three elements: (1) the defendant must have received a benefit (2) at the expense of the claimant and (3) without justification, ie without a legal basis or in some other ‘unjust’ way. There is no unified approach to interpreting the criteria ‘at the expense of’ and ‘without justification’ in detail, in particular as to whether the claim of unjustified enrichment requires the claimant to have suffered a loss. Some legal systems also have further requirements, such as correspondence between the defendant’s gain and the loss suffered by the claimant, immediacy of the shift of wealth between claimant and defendant, or a general subsidiarity of unjustified enrichment claims. The law of unjustified enrichment is generally considered a counterpart to the law of [[contract and the [[law of torts/delict. However, the questions of its ratio, its scope of application and, in particular, whether there should be an independent law of unjustified enrichment at all have consistently provoked considerable controversy and discussion. Are claims for restitution in case of undue transfers, the surrender of profits arising from an infringement of other’s rights, claims for reimbursement of expenses by someone helping in an emergency, or the apportionment between solidary debtors (→ solidary obligations) part of the law of unjustified enrichment, or are they separate institutions? Is the law of unjustified enrichment, more than other areas of law, characterized by equitable considerations? Does it constitute an independent branch of law, or does it exist merely to close gaps in other branches? Should, perhaps, the unity of the law of unjustified enrichment be abandoned and the individual claims integrated into the branches of law (contract, discharge of obligations, fiduciary obligations, law of wrongs, negotiorum gestio) that they relate to?
6. Enrichment caused by an act of the claimant
If the defendant’s enrichment is due to an act done by the claimant, the continental legal systems ask whether the claimant consciously benefited the defendant with respect to a particular purpose such as discharging a contractual or other obligation, ie whether he acted with regard to a specific legal basis between him and the defendant. If this is the case, and the legal basis is lacking, his remedy is [[restitution in case of undue transfer (condictio indebiti/sine causa, Leistungskondiktion), a remedy to be found separate from, or within, the general law of unjustified enrichment.
However, the act by the claimant enriching the defendant can be made for reasons other than a legal basis towards the defendant. Improvements of another’s property and payment of another’s debt are cases where most legal systems, at least to a certain extent, grant claims of unjustified enrichment. Following the tradition of the ius commune, the continental laws have special rules for improvements by possessors which differ from the unjustified enrichment rules, thus causing problems of coordination ([[improvement of another’s property). In case of payment of another’s debts, recourse against the debtor may be based not only on unjustified enrichment but also on [[management of another’s affairs without a mandate (negotiorum gestio) or on [[subrogation. The fundamental question in both situations is whether a claim in unjustified enrichment should be available only in particular types of cases (eg where the claimant made expenditure on property he believed to be his) or should be granted freely, even in cases where the claimant benefited the defendant without any mistake or compulsion. The benefit may, furthermore, be of no value to the defendant, eg if the claimant built a house on land the defendant wanted to use for agriculture, or if the discharge of the debt was made shortly before the debt would have become statute-barred. English law takes a hostile view to uninvited intermeddling with another’s affairs. Any claim in unjust enrichment is therefore dependent on the existence of a specific reason, such as mistake or duress. The continental legal systems, on the other hand, often do not restrict the claims of unjustified enrichment but rather protect the defendant by using an extremely subjective test of enrichment when the benefit was forced upon him.
In some cases the defendant’s gain is merely an indirect consequence of the claimant’s act, eg where he constructed a dam which also protects neighbouring properties. All legal systems tend to exclude claims of unjustified enrichment in these cases. To this end, some laws work with a requirement of an immediate shift of wealth, some with a restrictive interpretation of the criterion ‘at the expense of’, while yet others exclude claims of unjust enrichment where the claimant acted out of self-interest.
7. Enrichment by infringement of another’s right
Where someone obtains a benefit through unlawful use, disposal or consumption of another’s property, European laws usually give the holder of that property a claim against the infringer for the surrender of the benefit. However, this claim is not universally considered a claim in unjustified enrichment. In France and Italy, due to the subsidiary nature of unjustified enrichment, a claim of damages in delict has precedence, while in the Netherlands claims in unjustified enrichment often fail because they require a loss suffered by the claimant. Nonetheless, most laws do not allow a defence based on the assertion that the rights holder could not or would not have achieved the gain in question since the claimant having suffered loss or damage is either not a requirement of a claim of unjustified enrichment or is already seen to lie in the fact that his property was used without his consent. The claim is usually for the objective value of the benefit, ie the price the infringer would have had to pay if he had used the right lawfully. A claim directed at the profits achieved by the infringer will only be allowed in special cases, notably in cases of intentional infringement ([[disgorgement of profits).
The restitutionary claim can be explained in two different ways. Under English law, restitution is traditionally seen as a possible remedy, in addition to damages, in case of a wrong such as a tort or a breach of fiduciary duty. Restitution rests on the wrong as such. There is no consensus as to whether restitution for wrongs is part of the law of unjust enrichment at all or whether it rather belongs to the law of torts or the law of trusts. In opposition to that, there is the theory of attribution (Zuweisungsgehalt), to be found mainly in Germany. Here, the claim is not based on an unlawful act as such, but on the fact that a legal position has been infringed that is attributed (or: assigned) by the law to the claimant for his exclusive use and benefit. A claim in unjustified enrichment by the victim of an infringement will only fail if the gain is legally unattributable to him, for instance if it was achieved through the sale of degrading photographs of the victim, or if it is a reward paid by a third party to the defendant for causing bodily harm to the victim. In order to give the victim a claim for the profits in such circumstances, one often finds a combined solution, as in Dutch law and in the Draft Common Frame of Reference (Art 6:104[[Burgerlijk Wetboek (BW), Art VI.-6:101(4) DCFR), which allows for gains made by an infringement to be surrendered both through the law of unjustified enrichment and through the law of delict.
8. Indirect enrichment
Indirect enrichment cases cause particular problems. A benefit may pass from the claimant to a third party and then to the defendant; or the claimant may perform an obligation towards a third party and, in so doing, benefit the defendant. At least where the third party is insolvent, there is the desire to give the claimant a direct claim against the defendant who, after all, is undoubtedly enriched. On the other hand, there is the need to protect the privity of commercial relations and the security of receipts: the defendant should only be exposed to claims by the person who was his contract partner and from whom he received the benefit. He should not be concerned with problems within the relationship between the claimant and the third party.
A direct claim against the defendant is generally permitted where the claimant had a proprietary interest in the object received by the defendant (and a vindication or a proprietary remedy is no longer possible because the claimant has meanwhile lost his title or because the defendant disposed of the property). The claimant’s proprietary interest in the object received by the defendant, making a direct claim possible, can be particularly far-reaching under English law, which acknowledges not only property at law, but also property in equity. In cases of failed transactions, equitable title often remains with the transferor. Moreover, ownership in equity extends to money and to substitutes for the original property. However, all legal systems protect defendants from restitutionary claims when they have acquired the property in good faith and for value.
Where a claimant had no proprietary title in respect of the object received by the defendant, any claim of unjustified enrichment is dependent on the extent to which a legal system allows the actio de in rem verso or, in English terms, ‘leapfrogging’. French law is particularly far-reaching as it allows even benefits transferred under a valid contract with the third party to be reclaimed from the defendant, as long as a legal basis is absent in the defendant’s relationship with the now-insolvent third party. Conversely, English law seems not to allow restitution of benefits transferred under a valid obligation towards a third party. German law is even more restrictive, refusing a direct claim against the defendant also in the case where the contract between the claimant and the third party is invalid, as long as the claimant intended to perform in favour of the third party. However, most laws allow an exception to the restrictions of restitution claims in indirect enrichment cases, where the defendant received the benefit gratuitously.
9. Unification projects
Book VII of the DCFR contains extensive model rules for the law of unjustified enrichment, which follow an approach independent of the existing European laws. The basic rule in Art VII.-2:101 is that enrichment is unjustified unless either the defendant had a right to it on the basis of a contract, other juridical act, a court order or a rule of law, or the claimant freely and without error consented to the enriching transaction. Leaving aside the unusual relation of rule and exception, this design is remarkably similar to the unjust factor theory of English law. In addition, there are special rules for disgorgement of profits in delict and against trustees (Arts VI.-6:101(4), X.-7:203). Article 10 of the Rome II Regulation (Reg 864/2007) contains a conflicts of law rule on obligations arising from unjust enrichment.
Literature. Eltjo Schrage (ed), Unjust Enrichment—The Comparative Legal History of the Law of Restitution (1995); Tony Weir (tr), Konrad Zweigert and Hein Kötz, Introduction to Comparative Law (3rd edn, 1998) 537 ff; Peter Schlechtriem, Restitution und Bereicherungsausgleich in Europa—Eine rechtsvergleichende Darstellung, vols 1–2 (2000 and 2001); Frank L Schäfer, Das Bereicherungsrecht in Europa—Einheits- und Trennungslehren im gemeinen, deutschen und englischen Recht (2001); David Johnston and Reinhard Zimmermann (eds), Unjustified Enrichment—Key Issues in Comparative Perspective (2002); Jack Beatson and Eltjo Schrage (eds), Cases, Materials and Texts on Unjustified Enrichment (2003); Reinhard Zimmermann (ed), Grundstrukturen eines Europäischen Bereicherungsrechts (2005); Sonja Meier, ‘No Basis: A Comparative View’ in Andrew Burrows and Lord Rodger of Earlsferry (eds), Mapping the Law—Essays in Memory of Peter Birks (2006) 343; Ernst von Caemmerer and Peter Schlechtriem (eds), Restitution/Unjust Enrichment and Negotiorum Gestio in IECL X (2007); Daniel Visser, ‘Unjustified Enrichment in Comparative Perspective’ in Mathias Reimann and Reinhard Zimmermann (eds), The Oxford Handbook of Comparative Law (2008), 969.
