The Concept Of “Beneficial Ownership” In Anglo-American Law and The Concept Of “Economic Ownership” In the Civil Law Systems of Continental Countries

Аннотация

The concept of “beneficial ownership” developed within the framework of equity law as a result of the evolution of trust-based legal relationships. It is a product of the “split” ownership model. The division of ownership into legal title (under common law) and beneficial title (under equity law) is rooted in the unique historical development of Anglo-American law. Within the trust framework, in accordance with the rules of equity, a beneficial owner acquires not only a personal (in personam) right against the trustee, but also a proprietary (in rem) right enforceable against third parties. In contrast to Anglo-American jurisdictions, countries belonging to the continental (civil law) system recognize the absolute nature of ownership and define the derived limited real rights at the level of national civil legislation. In the civil law of these countries, the concept of “economic ownership” exists, which refers to the owner granting another person the right to use the property and to derive income from it. Keywords: Beneficial ownership, beneficial ownership, economic ownership, common law, split ownership. Introduction: The concept of “beneficial ownership” Although some civil law countries' civil codes (e.g., the developed within the framework of equity law as a Hungarian Civil Code adopted in 2013) include the term result of the evolution of trust-based legal “beneficial ownership,” its meaning is equated with the relationships. It is a product of the “split” ownership limited real right of usufruct, and thus it does not fully model. The division of ownership into legal title (under correspond to the notion of beneficial ownership as common law) and beneficial title (under equity law) is understood in common law. rooted in the unique historical development of Anglo- In order to understand the essence of beneficial American law. Within the trust framework, in ownership, it is important to explore the etymology accordance with the rules of equity, a beneficial owner and historical origin of the term “beneficial owner.” The acquires not only a personal (in personam) right against word “beneficial” derives from the Latin word the trustee, but also a proprietary (in rem) right beneficialis, which in turn comes from bene (meaning enforceable against third parties. “good” or “well”) and facere (meaning “to make” or “to In contrast to Anglo-American jurisdictions, countries do”). Therefore, the literal meaning of “beneficial” is belonging to the continental (civil law) system “one who receives a benefit” or “a privileged person.” recognize the absolute nature of ownership and define Although the exact historical origin of the trust is the derived limited real rights at the level of national unknown, it is established that trusts were widely civil legislation. In the civil law of these countries, the practiced during the 12th century, particularly in the concept of “economic ownership” exists, which refers era of the Crusades. Knights who departed England for to the owner granting another person the right to use long military expeditions to conquer distant lands the property and to derive income from it. International Journal of Law And Criminology 94 https://theusajournals.com/index.php/ijlc International Journal of Law And Criminology (ISSN: 2771-2214) entrusted their estates to reliable individuals for property, distinct from legal ownership. This concept is temporary management. These individuals, acting as closely tied to trust law, as it serves to limit the powers trustees, held full legal ownership over the knights’ of a trustee by ensuring they are exercised in the land plots, including the authority to grant use of the interest of those who hold the beneficial interest. land to others and to collect income from it. However, Within the trust structure created under the principles the knights intended to retain their ownership rights of equity, property is divided into two parts and vested (i.e., the title to the estate), since under English law at in two different persons: legal ownership belongs to the time, the ultimate owner of the land was the trustee, while beneficial ownership belongs to the considered to be the Crown. cestui que trust (i.e., the beneficiary). Thus, the concept of “split ownership” emerged: courts The notion of beneficial ownership has been of equity recognized the knights as the true (beneficial) elaborated in several precedent-setting judicial owners of the land, while common-law courts decisions. Indeed, in the case of Ayerst (Inspector of considered the individuals who exercised control and Taxes) v. C&K (Construction) Ltd, Lord Diplock ownership powers in the knights’ absence as the legal emphasized that the fact that a person holding legal owners. title to property may not have the right to use or It should be noted that knights typically transferred dispose of its income dates back to the era of the Court their estates for the benefit of their family members. of Chancery. The