Succession Law (International)

From Max-EuP 2012

by Anatol Dutta

1. Sources of law; activities of the European legislature

Private international law in the area of succession upon death and wills is, so far, dominated by national law. Notably, European private international law consistently neglects cross-border successions. Since the 1968 Brussels Convention, matters of succession law have been excluded by most European instruments (see eg Art 1(2)(c) Rome I Regulation 593/2008 contractual obligations (PIL)). Successions are, however, not explicitly excluded by the Insolvency Regulation (Reg 1346/2000 insolvency (cross-border)), the Evidence Regulation (Reg 1206/2001 evidence (international)), the Legal Aid Directive (Dir 2003/8 legal aid), the Service Regulation (Reg 1393/2007 service of documents) and the Maintenance Regulation (Reg 4/2009 family law (international), European family law (PIL)).

The dominance of divergent national law in cross-border successions is surprising bearing in mind the constant activities of the Hague Conference in that field (Hague Conference on PIL). Apart from a single exception, international Conventions on cross-border succession have not been very successful. The comprehensive 1989 Hague Succession Convention (Convention on the Law Applicable to Succession to the Estates of Deceased Persons) was only adopted unilaterally by the Netherlands; the Convention inspired, though, some of the recent private international law codifications, eg in Finland. Other conventions deal only with some aspects of cross-border successions and were likewise accepted only reluctantly by the international community. The 1973 Hague Convention on the International Administration of the Estates of Deceased Persons which established a certificate for personal representatives, eg testamentary executors (testamentary execution), has entered into force only for a small number of Member States. Exerting some influence on cross-border successions for some Member States are the 1985 Hague Trust Conventions, which are also applicable to testamentary trusts, and the 1978 Hague Matrimonial Property Convention. Furthermore, a small number of Member States has adopted the 1973 UNIDROIT Convention which provides for uniform formal requirements of an international will. Moreover, only in some Member States is the 1972 Basle Convention on the Establishment of a Scheme of Registration of Wills in force. A great success, though, was the 1961 Hague Convention on the form of testamentary dispositions which was ratified by the majority of the Member States (see 2. d) below).

The differences in the national laws regarding cross-border successions are not justifiable, especially not within the European Union. Already in 1966 Konrad Zweigert had noted that divergent conflict rules for successions within the Union could, in the long term, have disintegrative effects. Notably, the lack of harmony within Europe makes estate planning in cross-border cases a challenging task if the potentially competent courts have to apply, according to their conflict rules (see 2. below), different—and in the worst case irreconcilable—laws to the same case of succession. Furthermore, divergent jurisdictional rules applied in the various states invite parties to forum shop (see 3. below).

Thus, by taking advantage of the Union’s legislative competences in the area of freedom, security and justice, the Council (Council and the European Council) and the European Commission, not very surprisingly, promised in the Vienna Action Plan to ‘examine the possibility of drawing up a legal instrument on international jurisdiction, applicable law, recognition and enforcement of judgments […] relating to succession’. Based on a comprehensive comparative study prepared on behalf of the Commission by the German Notary Institute in collaboration with Heinrich Dörner and Paul Lagarde, the Commission in 2005 published a green paper on succession and wills (COM (2005) 65 final) identifying ‘a clear need for the adoption of harmonised European rules’. After further consultations and negotiations, the Commission submitted, in October 2009, a formal Proposal for a Succession Regulation (COM (2009) 154 final). The Proposal reveals ambitious legislative plans. The rules proposed by the European Commission go far beyond the classic areas of private international law, ie choice of law (Art 16 ff of the Proposal), jurisdiction (Art 3 ff of the Proposal) and recognition and enforcement of foreign decisions (Art 29 ff of the Proposal). The Succession Proposal also aims to improve the cross-border administration and devolution of estates. For example, the Succession Proposal contains rules on the recognition of succession-related authentic instruments, see Art 34 of the Proposal. Furthermore, the Commission in Art 36 ff introduces the idea of a European Certificate of Succession facilitating evidence of status as an heir with uniform effects in all Member States. It is currently unclear whether and when a Succession Regulation will be adopted by the European Parliament and the Council.

2. Choice of law

There are many differences between the Member States’ conflict rules in the area of succession and wills.

a) Monist versus dualist approach

A first fundamental difference concerns the question whether the law applicable to succession is determined for the whole estate (monist approach) or whether, for choice of law purposes, movables and immovables belonging to the same estate shall be treated differently (dualist approach). The majority of the Member States (eg Austria, Czech Republic, Estonia, Finland, Germany, Greece, Hungary, Italy, Poland, Portugal, Slovakia, Spain and Sweden) follow a monist approach by employing a single connecting factor—be it nationality, last habitual residence or domicile of the deceased—for the succession in the whole of the estate wherever it is situated. Other European countries (eg Belgium, Bulgaria, England and Wales, France, Lithuania, Luxemburg and Romania) adhere to a dualist conflict rule and differentiate between movables and immovables. The succession in movables is governed by a law which is connected to the deceased (eg the law of his nationality or habitual residence), whereas the succession in immovables is subject to the lex rei sitae.

The dualist approach entails numerous difficulties. First, the scission of the estate by the dualists—and the potential application of different laws to a single case of succession—increases the legal costs, especially of estate planning and the administration of the estate. Under a dualist system, the future deceased has to adjust his arrangements potentially to several legal systems, succession-related legal acts have to be completed for each separate part of the estate and the estate has to be administered under different systems. Most notably, however, the dualist approach causes serious practical problems of coordinating the different applicable laws. Nowadays most substantive succession laws will regard the estate as a unity, even if it consists of movables and immovables; special regimes for the succession in immovables have been abandoned in most legal systems. Hence, the substantive laws involved will assume their applicability to the whole of the estate. That assumption can be problematic, especially with regard to the distribution of the estate and forced heirship, if more than one law applies to the same estate.

It is, therefore, not surprising that the problems of a dualist approach have triggered open criticism by courts and commentators in dualist countries (see eg for England and Wales In Re Collens [1986] Ch 505, 512 ff) and that both the Hague Succession Convention (Art 7(1)) and the Commission Proposal (Art 16 and Art 19(1); recitals 10, 22) follow a monist approach. However, it should not be overlooked that even a strict monist approach cannot avoid a scission of the estate in every case, eg in case of a partial renvoi (if accepted), a partial choice of law by the testator (if admitted), overriding mandatory provisions for the succession in certain assets or the factual enforcement of a foreign lex rei sitae by a foreign court following a dualist approach.

b) Nationality versus residence principle

Almost all monist systems—and, as far as movables are concerned, the dualist systems as well—refer for succession to a personal criterion of the deceased: the law of his (or her) nationality, his last habitual residence or his domicile applies to his succession upon death. The only exception appears to be Latvia which for successions in general points to the lex rei sitae of the property to be inherited. The deceased-centred approach complies with the lifetime interests of the deceased. A succession law to which the deceased is closely connected will probably be influenced, to a greater or lesser extent, by cultural and social values the deceased might have shared and, thus, will probably reflect his personal beliefs of a fair and just succession. Furthermore, the future deceased will normally assume the applicability of a succession law to whose country he is most closely linked; he will, thus, intentionally or unintentionally gear his behaviour to that law or the perceptions he might have from that law. With regard to succession, meeting the expectations of the deceased as to the governing law is particularly important in order to ensure that the freedom to testate may be rightfully exercised—a freedom, which is constitutionally guaranteed at the Union level by the European Charter of Fundamental Rights (Art 17(1)1).

Although the central role of the deceased in the choice-of-law process is recognized throughout Europe, there is disagreement on how the law most closely connected to the deceased has to be determined. Again two antagonist approaches square off: the nationality principle and the residence principle. Some Member States (eg Austria, the Czech Republic, Germany, Greece, Hungary, Italy, Poland, Portugal, Romania, Slovakia, Slovenia, Spain and Sweden) apply the law of the home country of the deceased by using nationality as a legal connecting factor. Other Member States (eg Belgium, Bulgaria, England and Wales, Estonia, France, Lithuania and Luxembourg) refer to the last residence of the deceased by using habitual residence or domicile as the primary factual connecting factors—although it should not be overlooked that, in detail, the factors of the residence principle vary considerably, especially due to the legal artificialities of the common-law domicile concept and its stressing of the place of birth.

The Hague Succession Convention—mainly followed by Finland and the Netherlands—tries to strike a balance between the nationality and the residence principle, by adhering to the nationality principle within the first five years of residence in a foreign country and afterwards swapping to the residence principle—both, however, balanced by escape clauses. According to Art 3(1) of the Convention, the succession law of the last habitual residence of the deceased applies if habitual residence and nationality coincide. If, however, habitual residence and nationality diverge, Art 3(2) privileges the habitual residence if the deceased was resident in the state of his habitual residence at least five years prior to his death and if he was not manifestly more closely connected with the state of his nationality. Otherwise Art 3(3) refers to the law of the state of nationality unless the deceased was more closely connected with another state.

The decision between the nationality and the residence principle is not easy and is one of the classic general disputes of private international law. In the area of wills and succession, a decision cannot be based on the lifetime interests of the deceased. The dilemma is mainly rooted in the psyche of the deceased. Whether the deceased, who resided outside his home state, was personally more closely connected to his home state or to his residence state—or even to a third state—depends on his internal orientation and particularly on the fact whether his interest in stability with his home state or his interest in integration in his residence state prevailed. On a general level, it is impossible to establish whether stability or integration interests dominated. A general decision would necessitate the collection of empirical data, which is, so far, lacking, at least for the whole Union.

Nor can a choice-of-law rule for successions distinguish—eg as done partly by the Hague Succession Convention through escape clauses—in each individual case whether the stability or integration interests of the deceased prevailed. An escape clause requires the court to adjudicate an internal orientation of the deceased at a point in time where the court—due to the death of the deceased—can only base its decision on assumptions or, potentially conflicting, information from close dependants, necessitating already comprehensive inquiries at the choice-of-law level. A clear preference of either interest can be exclusively established by a choice of law made by the future deceased (see 2. c) below) but not by an objective connecting factor.

However, a tendency in favour of the residence principle has already appeared on the international and European horizon. The use of habitual residence as a connecting factor follows, on the one hand, an international trend, especially set by the Hague Conventions where nationality has been more and more frequently ousted by habitual residence. On the other hand, with regard to choice of law and jurisdiction, habitual residence has also become a prominent connecting factor in European private international law. Additionally, the emerging international and European trend in favour of the residence principle corresponds to an integrative policy of the European Union striving for an integration of persons residing outside their home states which can be traced in Art 18 TFEU/ 12 EC and the aim of a common immigration policy within a single area of freedom, security and justice. An application of the succession law at the place of the last habitual residence could be regarded as a further step towards the legal integration of persons living outside their home countries, especially if one stresses the cultural conditionality of succession law. It is, therefore, of no surprise that the Commission Proposal in Art 16 subjects succession to the last habitual residence of the deceased.

c) Freedom of choice of law

Most conflict laws in Europe do not grant the testator the freedom to determine the governing succession law; rather, in those countries a choice of law by the testator can only have the effects of a substantive-law reference: the foreign law is incorporated as a testamentary disposition within the limits set by internal mandatory provisions of the governing succession law. Only a few Member States (eg Belgium, Bulgaria, Estonia, Finland, Germany, Italy, Poland) allow a choice of law limited to some laws which are connected to the deceased or the estate. The Hague Succession Convention in its Art 5 enables the deceased to choose the law of his habitual residence or nationality at the time of the designation or at the time of his death. Some party autonomy is also envisaged in the Commission Proposal: Art 17(1) proposes a freedom of choice of the deceased in favour of the law of nationality.

Modern conflict rules for succession should, at a minimum, accept a limited freedom of choice of the deceased. A freedom of choice would certainly best serve the interests of the deceased, especially if following the residence principle: due to the uncertainties of the habitual-residence concept, a decision for the residence principle (see 2. b) above) does not only somewhat neglect the deceased’s interest in the predictability of the applicable law—an interest which would be preserved by a freedom to choose the applicable succession law. Its use as the objective connecting factor, more significantly, ignores the stability interests of the deceased. The residence principle is based on the assumption that the deceased is most closely connected to his last residence state. Yet this assumption is, in particular, flawed if stability interests of the deceased to his home state or another state, eg a former residence state, prevail.

Stability interests would, however, be restored by a freedom of the deceased to choose the governing succession law because the deceased could then fix the applicable law regardless of a future change of his habitual residence. It should be noted in this context that Union law does not only protect integration interests of the deceased (see 2. b) above); the Union also particularly strives for a protection of stability interests in the conflict of laws. The protection of stability interests is particularly important for the realization of the European internal market and, notably, the freedom of movement and residence granted by Art 21 TFEU/18 EC. The fundamental freedoms can only be ensured if the exercise of those freedoms is not connected with the loss of legal positions already acquired. Similar considerations can be found with regard to the country of origin principle, the freedom of establishment of companies (see company law (international)) and the principle of mutual recognition (see eg law of names).

However, it should not be overlooked that the freedom of the testator to determine the succession in his estate is restricted under most substantive laws, on the one hand, by private interests of family members which are protected by compulsory portion provisions or equivalent institutions and, on the other hand, by state interests, especially in the enforcement of local public policy. Yet those interests are not specifically endangered by vesting party autonomy in the deceased. The use of a personal criterion of the deceased as the objective connecting factor—his residence or his nationality—is already of questionable suitability for protecting those interests internationally. Furthermore, the interests of family members and the state are protected sufficiently in cross-border cases. Forced heirship provisions or equivalent institutions exist in most legal systems and public policy can be enforced by overriding mandatory provisions or the ordre public (public policy). Against this background, the testator should be able to choose at least between the law of his nationality and his habitual residence, but also the law governing his matrimonial property regime and, as far as the succession in immovables is concerned, the law of the country where immovables belonging to the estate are situated.

d) Special issues, especially testamentary dispositions

The general conflict rule for succession covers all issues which arise in connection with the death of a person and its consequences for the property of the deceased. Some issues covered by the general conflict rules, however, deserve special treatment. This especially concerns testamentary dispositions. If the general conflict rules for successions were to be applied to testamentary dispositions—as is the case in some Member States—stability interests of the testator could be frustrated because the testator does not necessarily know where his habitual residence will ultimately lie and, hence, which law will judge his disposition. This danger of a change of the governing law is certainly mitigated by a freedom of the testator to choose the governing succession law, but it should be generally solved by special conflict rules.

The conflict rules addressing the formal validity of wills have been harmonized for the majority of the Member States by the 1961 Hague Convention on the form of testamentary dispositions encompassing joint wills but not succession agreements, see Art 4. According to Art 1 of the Convention, the formal validity of a disposition is favoured by referring alternatively to different laws. A will is formally valid if its form complies with: (a) the law of the place where the testator made it; or (b) the law of a nationality possessed by the testator, either at the time when he made the disposition, or at the time of his death; or (c) the law of a place in which the testator had his domicile either at the time when he made the disposition, or at the time of his death; or (d) the law of the place in which the testator had his habitual residence either at the time when he made the disposition, or at the time of his death; or (e) as far as immovables are concerned, the law of the place where the immovables are situated.

The lack of stability as to the existence, material validity, effects and interpretation of a testamentary disposition is best balanced by applying to those issues the law which would hypothetically govern the succession at the time the disposition was made. A similar rule shifting the decisive point of time for certain aspects of testamentary dispositions can be found in some Member State laws (see the situation in Austria, the Czech Republic, England and Wales, Germany, Portugal, Slovakia, Slovenia, Spain and Poland) and—albeit surprisingly confined to succession agreements—in Art 9(1) of the Hague Succession Convention and Art 18(1)1 of the Commission Proposal. However, this special rule should be supplemented in cases where the testamentary disposition is not valid under the hypothetically governing succession law. In that case the disposition should nonetheless be valid if it is so under the law ultimately governing the succession, which might be a different law if the testator has changed his habitual residence or has, in the meantime, chosen a different law. Hence, the actually applicable succession law should cure any defects of the disposition under the hypothetically governing succession law, in which case, though, the effects and the interpretation of the disposition should also be governed by the actually applicable succession law. This ‘curing’ rule—which can be found in some Member State conflict laws (eg Austria) and, again for succession agreements, in Art 9(2) of the Hague Succession Convention and Art 18(1)2 of the Commission Proposal—would be another expression of the favor-negotii principle which strives to validate the exercise of the freedom to testate.

e) Scope of the applicable law; administration

It is debated whether the general conflict rules for succession should also determine the law governing the administration of the estate including the liability and settlement of debts of the deceased. The idea of a special conflict rule for the administration of the estate might surprise lawyers in most Member States whose laws regard administration and succession as a unity, subject to the same conflict rule. A special conflict rule is, however, readily comprehensible against the background of legal systems such as England and Wales and Austria which distinguish between administration and succession. According to English law, an estate situated in England can only be rightfully collected by a personal representative designated by the testator or the court. Also, in Austria, the administration of the estate requires an administration procedure; the estate is assigned to the heirs by a court decision (Einantwortung). Irrespective of the governing succession law, these special procedures are conducted under the lex fori. As far as such procedure is compulsory, administration should be subject to the lex rei sitae of the assets belonging to the estate in order to preserve those special procedures—a conflict rule which can also be traced in Art 21(2)(a) of the Commission Proposal.

3. Jurisdiction, recognition and enforcement of foreign decisions

The differences in the legal systems of the Member States not only relate to choice of law, but also to jurisdiction and recognition and enforcement of foreign decisions in matters relating to succession. According to some laws the courts at the last habitual residence of the deceased or the courts of his nationality are vested with jurisdiction for succession matters. Partly, the courts where the estate is situated are competent. Other systems refer the parties to the courts of their nationality or domicile. In some Member States, jurisdiction agreements (choice of court agreements) are recognized. Rather remarkable was a German doctrine according to which jurisdiction of the German courts for the administration of estates was only assumed if German law was applicable (see BayObLG, NJW 1987, 1148). Yet that Gleichlauftheorie, potentially leading to a denial of justice, has recently been abandoned by the German legislature (see § 105 FamFG).

The picture of the different jurisdictional approaches is further blurred by the fact that some of the systems within Europe distinguish in succession matters between contentious litigation and non-contentious administration. The future European jurisdiction rules will face the same problem: contentious civil and commercial matters which are only succession-related (as claims of the heir against third parties based on the inheritance) are already subject to the general European jurisdiction rules of the Brussels I Regulation (Reg 44/2001). Notably, jurisdiction for the administration of the estate (eg the appointment of an administrator, issue of certificates) should be concentrated at the court of the last habitual residence of the deceased, as it is proposed by Art 4 of the Commission Proposal. Additionally, there must be a residual jurisdiction for cases in which the deceased, at the time of death, was not habitually resident in a Member State but parts of the estate are situated in the Union (Art 6 of the Commission Proposal). For continental systems, rather new is the proposal of the Commission to codify the forum non conveniens doctrine and to allow in certain circumstances the competent court to refer the case to a court better situated to hear the case (Art 5 of the Commission Proposal; see also Art 15 Brussels IIbis Regulation child law (international)).

Also in the area of recognition and enforcement of foreign decisions in succession matters, the Member State laws vary considerably. The Commission proposes to introduce common rules which are oriented at the pertinent provisions of the Brussels I Regulation (see Arts 29 ff of the Proposal).

Literature

Konrad Zweigert, ‘Einige Auswirkungen des Gemeinsamen Marktes auf das Internationale Privatrecht der Mitgliedstaaten’ in Ernst von Caemmerer and others (eds), Probleme des europäischen Rechts, Festschrift Walter Hallstein (1966) 555; Deutsches Notarinstitut (ed), Conflict of Law of Succession in the European Union (2004) inter alia, with contributions of Ena-Marlis Bajons, Angelo Daví, David Hayton and Tomasz Pajor; Jonathan Harris, ‘The Proposed EU Regulation on Succession and Wills: Prospects and Challenges’ [2008] Trust Law International 181; Pia Lokin, ‘De unificatie van het conflictenrecht in de toekomstige Verordening inzake erfrecht’ [2009] Weekblad voor privaatrecht, notariaat en registratie (WPNR) 54; Anatol Dutta, ‘Succession and Wills in the Conflict of Laws on the Eve of Europeanisation’ (2009) 73 RabelsZ 547; Eva Lein, ‘A further Step towards a European Code of Private International Law’ (2009) 11 Yearbook of Private International Law 107; Max Planck Institute, ‘Comments on the European Commission’s Proposal for a Regulation of the European Parliament and of the Council on jurisdiction, applicable law, recognition and enforcement of decisions and authentic instruments in matters of succession and the creation of a European Certificate of Succession’ (2010) 74 RabelsZ 522; Andrea Bonomi ‘Choice-of-law Aspects of the Future EC Regulation in Matters of Succession—A First Glance at the Commission’s Proposal’ in Katharina Boele-Woelki and others (eds), Convergence and Divergence in Private International Law, Liber Amicorum Kurt Siehr (2010) 157; Peter Kindler ‘From Nationality to Habitual Residence: Some brief remarks on the future EU Regulation on International Successions and Wills’ in Katharina Boele-Woelki and others (eds), Convergence and Divergence in Private International Law, Liber Amicorum Kurt Siehr (2010) 251.

Retrieved from Succession Law (International) – Max-EuP 2012 on 05 December 2022.

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