Economic Analysis of the Foundations of the Numerus Clausus of Property Rights Principle

دانشنامه حقوق اقتصادی

Volume 27, Issue 18, June 2021, Pages 81-102   

Document Type: Scientific research

DOI: 10.22067/lowecon.2021.39389

Authors

Hassan Badini^{* 1}; Farnaz Forouzan Boroojeni²

¹Associate Professor, Faculty of Law and Political Science, University of Tehran

²PhD in Private Law, University of Tehran (Kish International Campus)

Abstract

 
Extended Abstract
Introduction
According to studies in the field of development, in the process of achieving economic development, "Law" should also be called for. Therefore, lawyers have a prominent role to play along this path. One of the most important legal institutions in question is the evaluation of the two areas: property law and contract law. In this, the institution of property is at the forefront and the entry of the institution of property is also the principle of "Numerus Clausus of Property Rights". Thus, in the process of extracting the underlying principles of the legal institution of property, "Numerus Clausus of Property Rights" is considered as the first fundamental principle. According to the mentioned principle, the choice of individuals to own property is possible only in the "limited number" and also in the "specific contents" identified by the legal system. In the meantime, understanding the economic foundations of this principle is important because of its role in the path of economic growth and development.
 
Theoretical frame work
Given that fundamental analysis and interdisciplinary studies lead to the development of a legal perspective, the extraction and analysis of the foundations of effective legal institutions in the process of economic development is important. One of the effective approaches in legal research is economic analysis, which along with legal analysis helps to reform and develop legal principles.
This article seeks to analyze the principle of "Numerus Clausus of Property Rights"; what is crystallized in Article 29 of the Civil Code of Iran. In the meantime, its economic analysis is considered as an introduction to understanding the participation of law in the call for economic development. In this way, it is written in two parts: The first part describes the "Numerus Clausus of Property Rights" and its elements. The second part presents the legal and economic analysis of the mentioned principle. In this regard, economic analysis has been proposed with the aim of "efficiency" and "reducing transaction costs".
 
Methodology
This study attempts to answer the main questions of this research based on the descriptive-analytical method by analyzing various theories presented in the field of law and economics. In describing and analyzing the mentioned principle, examples of the Iranian legal system have been used.
 
Results & Discussion
The entrance gate of the property institution is dedicated to the Numerus Clausus of Property Rights Principle. As a result, a person cannot acquire whatever he wants in any way. Rather, he is required to proceed in accordance with the discretion of the legal system (statue and precedent) and to choose between "limited numbers" and "specific provisions".
In the Iranian legal system, Article 29 of the Civil Code of Iran is one of the most important examples of the Numerus Clausus of Property Rights Principle. The analysis of this principle shows that the application of "Numerus Clausus principle" in a flexible format can bring order and predictability to motivate market participants in carrying out economic activities.
 
Conclusions & Suggestions
This article concludes that it is necessary to application of the "Numerus Clausus Principle" in the property institution. Because this principle contributes to the prosperity of the market and creates a favorable environment for economic growth and development. Of course, it should be noted that the application of this principle must have the capacity to adapt to market needs. So, it must have a flexible position. For example, we can point to develop examples of security of property, including debt and intellectual property; which helps to increase investment and increase business transactions. In this regard, the question that has been answered is why it is necessary to apply this principle? Lawyers believe that this principle provides legal certainty that is effective in promoting freedom of ownership and the free movement of goods. Legal certainty indicates what property rights can be owned and which of them can be traded in the market. In this way, the market actors can understand a kind of predictability and expectability; this leads to an increase in the motivation of economic actors to participate in the market. As a result, with more actors and more transactions, the market thrives and ultimately economic growth and development is achieved.
The issue was also analyzed from the perspective of economic law and it aims to "efficiency" and "reduction of transaction costs": The first analysis based on "preventing a reduction in efficiency", calls for a "ban on the extreme fragmentation of property rights." The second analysis based on "prevention of externalities", emphasizes the issue of "reducing measurement costs". In the end, the third analysis based on "prevention of mistakes and opportunistic behaviors", describes the concept of "common understanding" of individuals in relation to their property rights. Thus, all three analyzes emphasize on the necessity to identify the types of property rights and their contents by legal system.
Finally, it is recommended for the Iranian legal system, while maintaining the "Numerus Clausus Principle" in the property institution, to take a more flexible approach in responding to market needs and identifying new property, including in the field of identifying the subject of mortgage contract.
 

Keywords

Numerus Clausus of Property Rights; Property Institution; Legal Certainty; Efficiency; Transaction Cost

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