Opinion of the Advocate General — ECLI:EU:C:1998:460
Date: 1998-10-06
Language of the case: German
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Free movement of capital
Procedure: Reference for a preliminary ruling
Origin: Austria

Summary of the Judgment 
1. Free movement of capital — Movements of capital within the meaning of Article 73b of the 
Treaty — Definition — Creation of a mortgage — Included 
(EC Treaty, Art. 73b; Coitncil Directive 88/361) 
2. Free movement of capital — Restrictiotts — Prohibition by a Member State of registration of 
a mortgage in the currency of another Member State — Not permissible — Justification — 
None 
(EC Treaty, Art. 73b) 
I-1661 
SUMMARY — CASE C-222/97 
1. It is apparent from the nomenclature in 
respect of movements of capital annexed 
to Directive 88/361 for the implementa­
tion of Article 67 of the Treaty — which, 
despite the fact that the directive was 
adopted on the basis of Articles 69 and 
70(1) of the EEC Treaty, still has the same 
indicative value as it did before Articles 67 
to 73 of the EEC Treaty were replaced by 
Article 73b et seq. of the EC Treaty — 
that both the liquidation of an investment 
in real property (Point II of the nomen­
clature) and the grant of sureties, other 
guarantees and rights of pledge (Point IX 
of the nomenclature) constitute move­
ments of capital within the meaning of 
Article 73 b. Since a mortgage is inextri­
cably linked to the liquidation of an invest­
ment in real property, and since, as the 
classic method of securing a loan linked to 
a sale of real property, it constitutes an 
'other guarantee', it is covered by Article 
73b of the Treaty, prohibiting restrictions 
on the movement of capital between 
Member States and between Member States 
and third countries. 
2. Article 73b of the Treaty precludes the 
application of national rules requiring a 
mortgage securing a debt payable in the 
currency of another Member State to be 
registered in the national currency, since it 
cannot be registered for an amount greater 
than the corresponding value of that debt 
in the national currency as at the date of 
the application for registration. 
Such rules must be regarded as a restric­
tion on the movement of capital, since 
their effect is to weaken the link between 
the debt to be secured, payable in the cur­
rency of another Member State, and the 
mortgage, whose value may, as a result of 
subsequent currency exchange fluctua­
tions, come to be lower than that of the 
debt to be secured. This can only reduce 
the effectiveness of such a security, and 
thus its attractiveness. Consequently, those 
rules are liable to dissuade the parties con­
cerned from denominating a debt in the 
currency of another Member State, thus 
depriving them of a right which consti­
tutes a component element of the free 
movement of capital and payments. 
Moreover, the obligation imposed by the 
rules at issue, requiring recourse to the 
national currency for the purposes of cre­
ating a mortgage, cannot be justified by 
any overriding factor designed, in the 
public interest, to ensure the foreseeability 
and transparency of the mortgage system. 
Although a Member State is entitled in 
that connection to take the necessary mea­
sures to ensure that the mortgage system 
clearly and transparently prescribes the 
respective rights of mortgagees inter se, as 
well as the rights of mortgagees as a whole 
vis-à-vis other creditors, the rules at issue 
enable lower-ranking creditors to establish 
the precise amount of prior-ranking debts, 
and thus to assess the value of the security 
offered to them, only at the price of a lack 
of security for creditors whose debts are 
denominated in foreign currencies. 
I - 1662