Leasing in the Western Balkans and the Fall of the Austrian Hypo-Alpe-Adria Bank

Pravni Zapisi, vol. VIII, No. 2 (2017), pp. 155-221.

67 Pages Posted: 19 Mar 2018

See all articles by Tibor Tajti (Thaythy)

Tibor Tajti (Thaythy)

Central European University-Private University, Vienna, Austria

Date Written: March 2, 2018

Abstract

The hybrid contract known in the much of Continental Europe as leasing has arrived to the Balkans and other post-socialist countries of Europe from the United States yet with the intermediation of various western European jurisdictions that have reshaped the contours of the newcomer transaction to fit the context. Western European banks expanding to the region then brought with them their home country perceptions. This resulted in significantly differing leasing laws in the region. Although the process began already before the 1980s, one could speak of real expansion only from the 1990s on. By now leasing has become an important part of most jurisdictions of the region.

Notwithstanding the organic growth, the article posits, leasing is still not properly understood, the regulations suffer from gaps and are inappropriate to boost the local leasing industries. This is readily proved with most recent reports of some international organizations. Especially small and mid-scale enterprises suffer as equipment leasing remains underdeveloped, what is a major systemic defect as bank credit is (as well) unavailable to them.

The article aims to identify and comment those common deficiencies of the leasing laws of this niche of Europe that have so far been neglected yet the tackling of which is inevitable to boost the local industries. This is done, first, by sketching the experiences with and the judicial responses to a few unreported first generation leasing cases from Voivodina (Serbia) from the end of the 1980s to determine what main problems the lessor faced in implementing their leasing construction. It is claimed that some of the key problems have not been eliminated from the legal system ever since, in particular the problems with repossession upon default. Secondly, comparative law is as well resorted to yet contrary to European approaches with more insight into the solutions of the United States as the jurisdiction where from leasing originates.

The final part then comments those key problems and dilemmas that still hinder the proper development of the local leasing industries yet which have been largely bypassed. These are the 1/ problems caused by uncritically taken over solutions and definitions, 2/ the lack of legal tools for prompt repossession of the object of leasing, 3/ the conceptual confusion related to what in common law is known as the ‘election of remedies doctrine’, as well as 4/ the incomprehension of the importance of the policy choices justifying the recognition and judicial support for the so-called hell-or-high-water clauses.

The article additionally posits that the very same reasons might have generated the problematic leasing portfolios of the Austrian Hypo-Alpe-Adria Bank and therefore might have also contributed to the eventual fall of the Bank. In the lack of empirical evidences and other firm evidences, however, this position should not be taken to be more than a question to be answered in the future, if for nothing else, then for having some satisfactory answers for the fall of the Bank and for the sake of better understanding leasing.

Keywords: equipment leasing, law reforms, transplantation, legal engineering, self-help repossession, hell-and-high water clauses

JEL Classification: K22

Suggested Citation

Tajti (Thaythy), Tibor, Leasing in the Western Balkans and the Fall of the Austrian Hypo-Alpe-Adria Bank (March 2, 2018). Pravni Zapisi, vol. VIII, No. 2 (2017), pp. 155-221., Available at SSRN: https://ssrn.com/abstract=3133159

Tibor Tajti (Thaythy) (Contact Author)

Central European University-Private University, Vienna, Austria ( email )

Quellenstrasse 51
Vienna, Hungary 1100
Hungary
302440707 (Phone)
2330 (Fax)

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