Opinion of Mr Advocate General Léger delivered on 13 July 2000. - Westdeutsche Landesbank Girozentrale v Friedrich Stefan and Republik Österreich. - Reference for a preliminary ruling: Landesgericht für Zivilrechtssachen Wien - Austria. - National rules prohibiting the registration of mortgages in foreign currencies - Breach of that prohibition before Community law entered into force in Austria - Interpretation of Article 73b of the EC Treaty (now Article 56 EC) - Whether Community law can operate to remedy the registration. - Case C-464/98.



European Court reports 2001 Page I-00173



Opinion of the Advocate-General

1. In the case before the Landesgericht für Zivilrechtssachen (Regional Civil Court), Vienna, Austria, redress is sought from Mr Stefan, an Austrian notary public, for registering a charge denominated in German marks in favour of a German bank, the Westdeutsche Landesbank Girozentrale, when at the date of that act Austrian law prohibited registration of mortgages or charges in a foreign currency.

2. The charge in question was over two properties situated in Austria, to secure a loan in German marks granted by the plaintiff in the main proceedings to Grundstücks- und Bauprojektentwicklungs GmbH. Insolvency proceedings relating to this company having been commenced, the validity of the charge was examined not only under national law but also under Community law. Article 73b of the EC Treaty (now Article 56 EC) precludes rules which require a charge guaranteeing a debt payable in the currency of another Member State to be registered in the national currency.

3. The Republic of Austria was not yet a member of the European Communities at the date of registration of the charge. On the other hand, it was a member by the time of commencement of the insolvency proceedings relating to the debtor.

4. The Austrian court consequently found it necessary to ascertain the temporal scope of application of Article 73b of the Treaty, as interpreted by the Court of Justice in the judgment in Trummer and Mayer. In the Court's ruling, the national court seeks the criteria that will allow it to determine the validity of its national rules, on which the validity of the charge in question and the liability of Mr Stefan depend.

I The relevant rules

A Community law

5. Articles 67 to 73 of the EEC Treaty, which provided for a gradual liberalisation of capital movements, were replaced, as from 1 January 1994, by Articles 73b of the Treaty, 73c and 73d of the EC Treaty (now Articles 57 and 58 EC), 73e of the EC Treaty (repealed by the Treaty of Amsterdam), and Articles 73f and 73g of the EC Treaty (now Articles 59 and 60 EC).

6. Article 73b of the Treaty provides as follows:

1. Within the framework of the provisions set out in this Chapter, all restrictions on the movement of capital between Member States and between Member States and third countries shall be prohibited.

2. Within the framework of the provisions set out in this Chapter, all restrictions on payments between Member States and between Member States and third countries shall be prohibited.

7. In the absence of transitional measures provided for in the Treaty of Accession or in the Act relating to the conditions of accession of the Republic of Austria, the Republic of Finland and the Kingdom of Sweden and the amendments to the Treaties on which the European Union is founded (hereinafter the Act of Accession), Article 73b of the Treaty and the following articles came into force in Austria from 1 January 1995, the date of Austria's accession.

B Austrian law

8. Paragraph 3(1) of the Verordnung über wertbeständige Rechte (Decree on fixed-value rights) of 16 November 1940, as amended by Paragraph 4 of the Schillinggesetz (Law on the Austrian schilling), provides as follows:

Within the scope of application of the Grundbuchsgesetz (Land Register Law), charges on real property may, following the entry into force of this Decree, be created in currencies other than schillings only if the amount of money to be paid for the immoveable property is determined by reference to the price of fine gold.

II The facts and the main proceedings

9. The loan granted on 16 December 1991 by the Westdeutsche Landesbank Girozentrale to Grundstücks- und Bauprojektentwicklungs GmbH amounted to DEM 20 million. Mr Stefan registered the charge in question, in the same currency in an enforceable notarised deed, over the two properties, both situated at Vienna, and the property of the debtor.

10. On 7 June 1995, insolvency proceedings were commenced relating to the debtor. The plaintiff in the main proceedings attempted to exercise its charge right, initiating a procedure to realise the value of the security. The administrator, representing the debtor, challenged the effectiveness of the charge before the Oberster Gerichtshof (Supreme Court) by relying on the illegal nature of the registration in the land register of a charge denominated in a foreign currency. The plaintiff in the main proceedings concurred in this view and agreed that the charge should be struck off the register.

11. The plaintiff then lodged an application before the Landesgericht für Zivilrechtssachen (Regional Civil Court), Vienna, seeking compensation from the defendant in the main proceedings. The plaintiff in the main proceedings submits that the defendant did not inform it of the ineffectiveness of the charge, in breach of the obligations incumbent on him in the formation of a contract. The plaintiff states that it would have agreed to registration of the charge in Austrian schillings.

12. The defendant in the main proceedings disputes the invalid nature of the charge, deriving argument from Article 73b of the Treaty.

13. The national court explains that, before the accession of the Republic of Austria to the European Union, it was held on several occasions that Paragraph 3 of the Verordnung über wertbeständige Rechte of 16 November 1940 precluded registration of a mortgage or charge denominated in a foreign currency. Registrations made in breach of this rule would be irreparably devoid of effectiveness and of all legal effect. Under Austrian law, they had to be struck off the register automatically.

14. According to the national court, the repeal of the Verordnung über wertbeständige Rechte of 16 November 1940 did not alter legal relationships formed up to 31 December 1998.

15. Since the Austrian legal system does not provide for the retroactive rectification of void legal acts, except by express legal provision, the inapplicable nature of the Verordnung über wertbeständige Rechte of 16 November 1940 could only be inferred from the prohibition on restrictions on movement of capital and payments set out in Article 73b of the Treaty. In accordance with the primacy of Community law over the law of the Member States, this principle had to be applied as a matter of priority over the Austrian law then in force.

16. The national court proceeds from the assumption that Article 73b of the Treaty would prohibit obstacles to the creation of a mortgage or charge in a foreign currency.

In its opinion, if this provision should apply retroactively from the date of accession of the Republic of Austria to the European Union to a mortgage or charge which is void under national law, although still registered in the land register at this date, the charge in question would be effective and, consequently would be a valid security for the plaintiff in the main proceedings.

On the contrary, if no retroactive effect could be attributed to Article 73b of the Treaty, registration of the charge in the land register, which would be incurably void, would not be a valid security under Paragraph 3 of the Verordnung über wertbeständige Rechte of 16 November 1940.

III The national court's questions

17. Accordingly, the Landesgericht für Zivilrechtssachen, Vienna, has referred the following questions to the Court of Justice for a preliminary ruling:

(1) Does a refusal to allow a charge to be created to cover an existing debt denominated in a foreign currency (in this case in German marks (DEM)) constitute a restriction on the movement of capital and payments compatible with Article 73b of the EC Treaty?

(2) Does Article 73b of the EC Treaty apply retroactively to charges which were registered in German marks before the accession of Austria to the European Community, and thus incurably void at the time of registration, in such a way as to cure them?

or

Have the Community rules relating to the free movement of capital, and in particular Article 73b of the EC Treaty, had the effect, by virtue of the accession application made by Austria on 17 July 1989 and the Opinion of 31 July 1991, of rendering the registration of a charge denominated in a foreign currency in Austria on 16 December 1991 permissible?

IV The interpretation of Article 73b of the Treaty [question from the national court under (1)]

18. By this question, the national court asks whether Article 73b of the Treaty precludes national rules requiring a charge securing a debt payable in the currency of another Member State to be registered in the national currency.

19. In its recent judgment in Trummer and Mayer, the Court clearly replied to this question in the affirmative. As in the present case, that case related to a mortgage that the competent Austrian authorities had refused to register in the land register on the ground that it was denominated in German marks.

20. The Court so ruled after having found that A mortgage of the kind at issue in the main proceedings is inextricably linked to a capital movement in the present case, the liquidation of an investment in real property. In addition, it is included within point IX of the nomenclature of capital movements annexed to Directive 88/361. Consequently it is covered by Article 73b of the Treaty.

21. The court relied on two principal grounds in its decision to treat the prohibition of registration of a charge in the currency of another Member State as a restriction on the movement of capital.

22. First, the Court held that The effect of national rules such as those at issue in the main proceedings is to weaken the link between the debt to be secured, payable in the currency of another Member State, and the mortgage, whose value may, as a result of subsequent currency exchange fluctuations, come to be lower than that of the debt to be secured. This can only reduce the effectiveness of such a charge, and thus its attractiveness. According to the Court, Consequently, those rules are liable to dissuade the parties concerned from denominating a debt in the currency of another Member State, and may thus deprive them of a right which constitutes a component element of the free movement of capital and payments.

23. Secondly, the Court added that the rules at issue might well cause the contracting parties to incur additional costs, by requiring them, purely for the purposes of registering the mortgage, to value the debt in the national currency and, as the case may be, formally to record that currency conversion.

24. Amongst the parties making representations, only the plaintiff in the main proceedings submitted arguments to persuade the Court to reverse the substance of that judgment.

25. It submits that the Court founds its judgment on an incorrect premiss.

26. Having considered the national rules in the light of Article 73b of the Treaty, the Court acknowledged that Member States are entitled to take the necessary measures 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.

Nonetheless, the Court observed that the national rules contain an element of uncertainty which may compromise the attainment of [this] objective. Reference was also made to the right reserved by the law for the value of the mortgage to be expressed by reference to the price of fine gold, the price of which is currently subject to fluctuations in the same way as the value of a foreign currency.

27. The plaintiff contends that registration of charges in the land register by reference to the price of fine gold was not possible at the time of registration of the charge in the present case.

28. Further, it should be pointed out that the Landesgericht für Zivilrechtssachen (Regional Civil Court), Vienna, cited Paragraph 3(1) of the Verordnung über wertbeständige Rechte of 16 November 1940, without stating that the right to specify the price of a property by reference to the price of fine gold had disappeared from the Austrian legal system at the time of registration of the charge in question.

29. In addition, in the absence of indisputable information on the applicability of this provision, the ruling in Trummer and Mayer should be adhered to. The Court stated that, even if the Commission had declared at the hearing that, according to the information available to it, this provision of the rules had fallen into disuse, it had not been formally withdrawn.

30. The plaintiff in the main proceedings adds that the retention of current case-law would imply that all foreign currencies should be authorised and that national legislation currently in force in the majority of Member States, which only authorises mortgages and charges denominated in certain foreign currencies, would also infringe the EC Treaty.

Nonetheless, the plaintiff does not explain the reasons why this finding would justify a challenge to the substance of the Court's previous ruling. Moreover, it is accepted that the Court's ruling affects all national rules having the same characteristics as those at issue before the court in Trummer and Mayer.

31. Finally, the plaintiff in the main proceedings puts forward the fact that authorisation of registration of a charge in any foreign currency could cause an unacceptable lack of openness in the land register: lower-ranking creditors who find that a registration of a charge in a foreign currency takes precedence over their securities are exposed to a risk of fluctuation in the foreign currency that they cannot guard against. This risk results in a diminution in the value of the security in relation to that of the property mortgaged.

32. The answer given by the Court in its judgment in Trummer and Mayer, in response to an argument relating to the lack of openness resulting from a creditor's right to have a charge registered in a foreign currency is quite transposable to the present case.

33. The Court found that the rules at issue put lower-ranking creditors in a position to establish the precise amount of prior-ranking debts and to assess the value of the charge offered to them only at a cost of insecurity for creditors whose debts were denominated in a foreign currency. That also applies to the objective attributed to rules such as those at issue in the main proceedings, which, according to the plaintiff, are directed at protecting lower-ranking creditors from the risks of monetary fluctuations.

Besides forming a restriction on the free movement of capital, the application of such rules to creditors whose securities are denominated in a foreign currency would expose the creditors to the same risks of fluctuation in currencies, although the rules would prevail over other securities which would not themselves be exposed to those risks.

34. The arguments advanced by the plaintiff in the main proceedings do not therefore appear to be such as to call in question the case-law of the Court.

V The temporal scope of Article 73b of the Treaty [questions under (2)]

35. By these questions, the national court asks whether Article 73b of the Treaty applies to a charge that, although registered at a date before the accession of the Republic of Austria to the European Union, was still registered at the time of this accession.

36. The second question under (2) is directed at assessing whether Article 73b of the Treaty could apply in Austria even before the latter's accession to the European Union, in particular at the date at which its application for accession had been submitted or the date at which the Commission had issued a favourable opinion.

37. The first question under (2) concerns rectification of the charge in question after registration.

38. I will consider these two points in turn.

A The applicability of Article 73b of the Treaty before the accession of the Republic of Austria to the European Union [second question under (2)]

39. Even accepting that Community law is applicable before the accession of a State to the European Union, in order for the Community provision relied on to apply, the provision must also exist and have actually entered into force at the date at which the dispute in question is assumed to be subject to it.

40. As the Commission pointed out, the charge in question was registered on 16 December 1991, whilst Article 73b of the Treaty came into force only on 1 January 1994, in accordance with Article 73a of the EC Treaty (repealed by the Treaty of Amsterdam).

41. In other words, even if the EEC Treaty was prematurely applicable to the Republic of Austria, namely from the end of 1991, that is to say almost three years before the accession of Austria, the national court would still not be able to draw the appropriate conclusions from the Treaty to resolve the case as Article 73b of the Treaty had still not been adopted at the time.

42. Therefore the question raised calls for a negative response.

B Rectification of the charge in question after its registration [first question under (2)]

43. A subsequent rectification may take two different forms. Either it operates by way of retroactivity, which assumes that Article 73b of the Treaty affects the charge in question, although at the date of registration this provision did not exist. Alternatively, rectification is the result of immediate application of Article 73b of the Treaty, that is to say it is brought about by the entry into force of the provision during the existence of the security.

1. Retroactivity of Article 73b of the Treaty

44. It is hard to see how the Treaty could give rise to the same rights and obligations as those of Member States in relation to a non-member country, if it were a candidate for accession to the European Union, before that country's accession. In my opinion, this is particularly true where the provision relied on does not exist at the time of the legal act under consideration. It is no different where the legal situations in question are in existence at a time when the new legal system is put in place. In this case, it is difficult to imagine that the law which was initially applicable might be modified in a retroactive manner by the effect of accession.

45. The process followed by a State joining the European Union is formalised by the conclusion of a treaty between the Member States and the States which are candidates, by which the latter become members of the European Union and Parties to the Treaties on which the Union is founded as amended or supplemented. Consequently, for the most recent Member States, there are new rights and obligations from the entry into force of the Treaty, namely from 1 January 1995.

46. Under Article 2 of the Act of Accession included in the Treaty of Accession, the provisions of which form an integral part of the latter, From the date of accession, the provisions of the original Treaties and the acts adopted by the institutions before accession shall be binding on the new Member States and shall apply in those States under the conditions laid down in those Treaties and in this Act.

47. Therefore, a treaty of accession creates obligations binding new Member States only from the date of its entry into force, save in the case of specific conditions provided for in the act of accession.

48. The settled case law of the Court confirms this. Community rules of substantive law must be interpreted, in order to ensure respect for the principles of legal certainty and legitimate expectations, as applying to situations existing before their entry into force only insofar as it is clearly apparent from their terms, objectives or general scheme that such an effect must be given them.

49. In the absence of specific conditions of application for Article 73b of the Treaty, such as to affect situations arising before the accession of the Republic of Austria, the article is not capable of affecting the validity or otherwise of the charge under national law, at the date of its registration in the land register.

50. It remains to consider the legal relationship arising from registration in regard to Community law as it came into force in the course of its existence, namely at the time when the Republic of Austria became a member of the European Union and, as such, responsible for fulfilling the obligations imposed by Article 73b of the Treaty.

2. The immediate application of Article 73b of the Treaty

51. According to the national court, the charge was registered in breach of the Austrian law then applicable. Nonetheless, its existence was not formally challenged until its removal from the register after commencement of insolvency proceedings relating to the debtor in 1995. So, the charge coexisted for a time with Article 73b of the Treaty, which came into force in Austria concomitantly with the latter's accession.

52. It is therefore appropriate to consider the applicability of this provision to the charge in question, in order to contribute to resolution of the main proceedings.

53. However, one preliminary point must be raised, which is that this question is relevant only if the charge has not been rendered definitively void under Austrian law. National law determines whether continued registration at the time of accession of the Republic of Austria, in the absence of any effect resulting in unquestionable legal validity of the charge, leaves open at least the possibility of rectification. My earlier arguments on the non-retroactivity of Article 73b of the Treaty, making national law the only point of reference before the accession of the Republic of Austria, support this view.

54. In this connection, the Commission observes that the first question under 2), relative to rectification of the charge, is formulated in a way that could be seen to be contradictory.

By mentioning in its order for reference, that the entry in the land register, contrary to [Paragraph 3 of the Verordnung über wertbeständige Rechte of 16 November 1940], of a foreign-currency mortgage is irremediably invalid and has no effect in law, the Landesgericht für Zivilrechtssachen discloses the ambiguous nature of its question since, under Austrian law then applicable, a registration of that nature would be wholly void from the outset. Such a registration could not therefore be subject to subsequent rectification, such as would follow from, for example, the entry into force of Article 73b of the Treaty.

So the question asked by the national court irreconcilably associates the incurable nature of the nullity affecting the charge in question with the possibility of its subsequent rectification.

55. As the Commission states, the contradiction is only obvious if the Austrian court considers that rectification of the defect affecting the disputed registration is possible, as is apparent from the order for reference. The fact that the Austrian court seeks guidance on the capacity of Article 73b of the Treaty to apply to the charge in question confirms, however, that the nullity affecting it under national law might not be definitive.

56. The question asked is not therefore clearly devoid of relevance for the purpose of resolution of the main proceedings and must be declared admissible.

57. Assuming that the registration of the charge denominated in a foreign currency was invalid in 1991, it was still in existence at the date of entry into force in Austria of Article 73b of the Treaty, which justifies consideration of the effects of this connecting factor with Community law. In any event, the response I suggest be given to the Austrian court is based on the assumption that the disputed security was still in existence at the time of accession of the Republic of Austria to the European Union.

58. Not having been subject to Article 73b of the Treaty from the outset, the security, one can assume, benefited from the effects of this provision, in the short interval between the accession of the Republic of Austria and the deletion of the charge from the register, owing to the primacy of Community law over national law following accession.

59. The Court has already ruled on the question of the scope of temporal application of certain provisions of a treaty following the accession of a Member State.

60. In Saldanha and MTS v Hiross, the issue was to establish whether the first subparagraph of Article 6 of the EC Treaty (now, as amended, the first subparagraph of Article 12 EC), relating to the prohibition of discrimination on the ground of nationality, was of immediate application.

61. That case involved Austrian legislation obliging foreign nationals acting as plaintiffs in proceedings brought before the Austrian courts to deposit, at the request of the defendant, a sum intended to guarantee the legal costs (security for the costs of proceedings).

62. Having established that the Act of Accession does not lay down specific conditions relating to the application of Article 6 of the Treaty, the Court held that the latter provision must be regarded as being immediately applicable and binding on the Republic of Austria from the date of its accession, with the result that it applies to the future effects of situations arising prior to that new Member State's accession to the Communities.

63. It is important to establish to what extent the rule laid down by the Court in Saldanha and MTS v Hiross may be used in order to respond to the question now under consideration.

64. The facts of Saldanha and MTS v Hiross are not analogous to those of the case in the main proceedings. The national legal rule at issue was of a procedural nature, while in the present case, the national rule at issue is a substantive one governing situations of a contractual nature.

65. A mortgage or charge is a guarantee that a debtor obtains for his creditor by subjecting an immoveable property to enforcement of an obligation. Besides the fact that this security is ancillary to a principal contract, it must be considered that the choice of this guarantee, like that of the property which is its subject, is the result of an agreement between the parties. Its contractual nature is therefore beyond doubt.

66. Consequently, amendments to the applicable legislation are liable to disrupt predefined contractual relationships. In my opinion, the consequences which follow for the contracting parties must be scrupulously examined in order to avoid threatening the legal certainty to which they are entitled. These consequences are determined on the basis of a certain state of positive law, so that the application of a new legal regime to the contract would in effect alter the basis on which the parties have built their agreement.

67. This argument cannot be transposed to situations governed by procedural provisions such as those at issue in Saldanha and MTS v Hiross. The parties' position, as governed by the relevant legislation, was not predetermined by an agreement. The formal rules that the parties had to comply with, without having chosen them, may be amended at will by the legislature, for the sake of the good administration of justice, which explains why amendments are immediately allowed.

68. In addition, the immediate application of a procedural rule or a substantive rule in an extra-contractual matter does not necessarily bring about the same effects as immediate application of a substantive rule to contracts.

In the context of procedure, in particular, a new rule does not actually apply to the facts and documents, which are the subject of the proceedings, but to the proceedings themselves and only governs future procedural steps without, in principle, adversely affecting procedure already completed and a fortiori judgments already delivered on the substance.

In the context of contract, some of the reasons for which the contract could have been concluded are challenged, at a stage where the contract has become binding and should therefore no longer be amended either generally or specifically, except with the agreement of the parties. The immediate application of a new law amounts in a sense to making its effects retroactive.

69. For those reasons, substantive rules in contractual matters cannot be subject to the same regime of temporal application as that governing other rules.

70. The Court itself made a distinction similar in part to the subject of questions relating to the temporal application of Community acts of secondary legislation.

71. As we have seen, neither Article 73b of the Treaty nor the detailed rules of application of the act of accession contain anything to suggest that the legal regime of this article applies to situations prior to the accession of the Republic of Austria. Nor do the provisions state whether Article 73b of the Treaty must be accepted as being capable of amending the future effects of contracts in the course of being performed at the date of its entry into force.

72. The judgment in Tögel v Niederösterreichische Gebietskrankenkasse, a public procurement case, provides guidance in answering the question whether Community law applies to such contracts.

73. An Austrian social charge institution had concluded with various entities framework contracts for the transport of sick persons. A third party, not having been authorised to carry out this activity according to the conditions set out in the framework contracts, applied to the competent Austrian court for a finding that the contract in question should have been subject to a public tender procedure.

74. One of the questions asked by the national court related to the issue whether Community law requires an awarding authority in a Member State to intervene at the request of an individual, in existing legal situations, which have been established for an indefinite period or for several years inconsistently with the directive applicable.

75. In other words, the Austrian court asked the Court of Justice if the public authority which used the services of the carriers under the framework contracts was required to reconsider their terms on account of the adoption of a new rule of Community law.

76. The Court found that the framework contracts at issue in the main proceedings [had been] entered into in 1984, that is to say even before adoption of the directive. The Court then ruled that Community law did not require an alteration to existing legal situations, where those situations [had come] into being before expiry of the period for transposition of the directive.

77. The judgment in Tögel v Niederösterreichische Gebietskrankenkasse tells us that the legal regime applicable to contracts, where there is a change in the rules, is that which is in force at the time of their conclusion. The Court here appears to confirm the existence of a boundary between new rules capable of amending contracts during their performance and those which take effect in contexts where the requirements of preservation of legal certainty and legitimate expectations are less threatened, such as that of procedural rules.

The result is that contracts are immune to subsequent legal changes where these neither explicitly nor unequivocally provide for their immediate application to current contracts so that legal certainty is ensured for the parties concerned and their legitimate expectations preserved.

78. At this stage, I am not sure whether the boundary is unquestionable.

79. In order for it to be so, it must be shown that the grounds prompting the new rules are not such as would justify calling in question private interests relations which they aim to govern, mainly on account of the underlying Community interest.

80. It must also be accepted that the legal certainty and legitimate expectations of any party to a contract during its performance are automatically threatened by every new legal rule potentially applicable to the legal relationship binding them.

81. Nonetheless, this is not always the case. The level of Community interest in question, prompting new rules, can sometimes justify immediate application. Moreover, these rules may well be of no consequence for the legal certainty and legitimate expectations of the contracting parties.

82. As for the Community interest in question, it need merely be pointed out that the free movement of capital is a central principle of Community law. As such, it is binding on Member States, owing to the primacy of Community law over national law, and particularly on new Member States from their accession. It would not be acceptable for freedom of contract to contribute to the perpetuation of legal situations which are inequitable or maladjusted to the development of the law and legal thinking where, in the case of contracts of indefinite duration, that freedom produces definitive effects. That would form a rigidity of existing law and delay the reforming effects of Community law.

83. Such disadvantages can only be justified by the imperative requirements of legal certainty and legitimate expectations. In my opinion, the date of entry into force of a new Community rule must be adapted to take into consideration respect for these other principles of Community law.

84. Since it has been shown that the application of Article 73b of the Treaty to future effects of a contract in the course of being performed is not capable of prejudicing it, there is plainly no reason to preclude its immediate entry into force.

85. In the present case, the consequences that would be caused by application of the provision to contracts in the course of being performed and subject to rules such as those in question here do not appear to be liable to call into question the principles of legal certainty and legitimate expectations.

86. The legal regime following from Article 73b of the Treaty does not dictate the use of any specified currency, since it presupposes freedom of choice on this matter. Consequently, whether the security is registered in the national currency, in accordance with the national rules applicable before the accession of the State in question, or whether it is denominated in a foreign currency, in breach of those rules, the security in question is valid under Community law. The application of Article 73b of the Treaty during the existence of the charge may not at any time therefore call in question its validity on the ground that one currency should have been preferred to another.

87. Accordingly, in the main proceedings, the charge denominated in German marks should acquire new validity, at least from the time of accession of the Republic of Austria to the European Union.

88. After all, the initial intention of the parties was to constitute an effective security, capable of fulfilling its function as a guarantee without risk of invalidity.

89. Nor does it appear that third parties had any interest in the striking off of the security from the register for reasons of breach of national law, which tends to confirm the fact that the only challenge to the security in question would appear to come from one of the contracting parties.

90. The entry into force of Article 73b of the Treaty, in place of national rules such as those at issue in the main proceedings, does not therefore appear liable to prejudice the principles of legal certainty and legitimate expectations here.

91. Consequently, Article 73b of the Treaty is to be interpreted as being of immediate application to a situation such as that at issue in the main proceedings, where a charge, although registered before the accession of the Republic of Austria to the European Union, has been subject to a redemption procedure after that date, without prejudice to the principles of legal certainty and legitimate expectations.

Conclusion

In the light of those considerations, I propose that the Court answer the questions referred by the Landesgericht für Zivilrechtssachen, Vienna as follows:

(1) Article 73b of the Treaty (now Article 56 EC) precludes national rules such as those at issue in the main proceedings which require a charge securing a loan payable in the currency of another Member State to be registered in the national currency.

(2) Article 73b of the Treaty is to be interpreted as meaning that it is not applicable to a charge registered in Austria, in the currency of another Member State, before the accession of Austria to the European Union.

Article 73b of the Treaty is to be interpreted as being of immediate application in a situation such as that at issue in the main proceedings, where a charge, although registered before the accession of the Republic of Austria to the European Union, has been subject to a redemption procedure after that date, without prejudice to the principles of legal certainty and legitimate expectations.