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The rule that the owner carries the risk arising out of unauthorised transfers, even if she has not caused the bearer instrument to pass out of her immediate control, is explained by the fact that bearer securities are issued for the purpose of circulating in the market. The law recognises this purpose by adopting a rule that protects transferees against adverse claims in circumstances where the transferee of goods does not enjoy protection.10 German law has taken a policy decision that the interest of the transferee in good faith and for value prevails over the interest of the owner of the securities. The fact that German law imposes the risk of unauthorised transfers on the owners of bearer securities causes owners to ensure that the securities are kept out of circulation. This need for the safekeeping of bearer securities caused the German and the Austrian market infrastructure to develop along a particular path.

10.2.3 Austrian law

The Austrian provisions protecting purchasers against adverse claims are similar to the German rules. Unauthorised transfers of bearer securities are subject to two provisions in the ABGB and to one provision in the Austrian Commercial Code. These provisions will be analysed in turn in this subsection.

The ABGB states in s. 371 that the owner of bearer securities loses the ability to enforce her ownership rights against a third party if the third party acquired the bearer securities in good faith.11 The provision applies irrespective of whether the transferee acquired the securities for value.12 It is, however, limited to fungible bearer securities.13 Good faith is defined in ABGB, ss. 326 and 328. A purchaser does not

10Wolfgang Wiegand, in Karl Heinz Gursky (ed.), J von Staudingers Kommentar zum Bu¨rgerlichen Gesetzbuch Drittes Buch Sachenrecht (Berlin: Sellier–de Gruyter, 2004) s. 935, para. 23.

11The ABGB does not use the term ‘bearer securities’ (Inhaberpapiere) but the term ‘letters

¨

of debt issued to the bearer’ (auf den Uberbringer lautende Schuldbriefe). The modern view is that the two are equivalent (Eva Micheler, Wertpapierrecht zwischen Schuldund Sachenrecht: Zu einer kapitalmarktrechtlichen Theorie des Wertpapierrechts, (Wien: Springer, 2004 53).

12Koziol and Welser, Grundriss des bu¨rgerlichen Rechts, vol. I, 13th edn. (Wien: Manz, 2006) 336; Thomas Klicka, in Michael Schwimann (ed.), Praxiskommentar edn. zum ABGB, vol. II, 3rd edn. (Wien: Orac, 2004), s. 371, para. 4; Adolf Ehrenzweig, in Armin Ehrenzweig (ed.), System des o¨sterreichischen allgemeinen Privatrechts, vol. I/2, 2nd edn. (Wien: Manz, 1957) 190; Micheler, Wertpapierrecht 55.

13Micheler, Wertpapierrecht 54.

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act in good faith if she knew – or, as a result of her negligence did not know – that the seller was not the owner. Any degree of negligence will suffice to cause the transferee to lose protection under the provision.

ABGB, s. 367 governs unauthorised transfers of tangible movables including bearer securities.14 Other than ABGB, s. 371, the provision applies to infungible as well as fungible bearer securities. The transferee is, however, protected according to ABGB, s. 367 only if she acquires bearer securities for value. Moreover, ABGB, s. 367 applies only if the transferee purchased the bearer securities at a public auction, from a licensed tradesman, or from a person with whom the owner entrusted the bearer securities. Finally, the transferee acquires ownership only if she acts in good faith. As with ABGB, s. 317, any degree of negligence on the part of the transferee will cause her to fall foul of the requirement for good faith.

The Austrian Commercial Code also contains a rule protecting transferees against adverse claims. HGB, ss. 366–367 apply to transfers of goods and bearer securities which are explicitly referred to in HGB ss. 366 (5) and 367 effected by merchants. The rule governs tangible assets that are sold or pledged by a merchant; it does not apply to gifts. Other than ABGB, s. 371, HGB, s. 366 is not limited in its application to fungible securities. It applies to both fungible and non-fungible bearer securities. The provisions, moreover, require a standard of care more favourable to the transferee when determining whether she acted in good faith. The transferee does not act if good faith if she knows – or, as a result of her gross negligence did not know – that the transferor is not the owner or is not authorised by the owner. The transferee is therefore protected if she does not know as a result of negligence less severe than gross negligence that the transferor is not the owner or is not authorised by the owner. The rule, however, applies only if the securities were transferred by a merchant; it does not govern transactions between non-merchants.

Transfers from merchants are subject to the same rules in both Austrian and German law. The reason for this is that Austria adopted the HGB but not the BGB when the country was incorporated by Adolf Hitler into the German Reich in 1938. After the Second World War, Austria continued to apply the HGB alongside the ABGB.

14 Koziol and Welser, Bu¨rgerliches Recht, vol. I, 332–333.