How to deal with cross-border succession in Europe ?
In the context of the increasing mobility of EU citizens and of their family members, the legal difficulties that arise with regard to succession when a death sadly occurs are a harsh reality to be addressed.
A French citizen whose last habitual residence was in Germany dies, leaving movable property both in Germany and in France. Member States have varying provisions to determine the competent Court and the law applicable to international succession: which national authority would be competent to rule on the succession in this case? Which law would apply? This is just one of the many examples of the complicated questions the EU citizen is faced with in such circumstances. The newly approved Regulation on jurisdiction, applicable law, recognition and enforcement of decisions and acceptance and enforcement of authentic instruments in matters of succession and on the creation of a European Certificate of Succession is intended to provide the necessary answers to such situations. On account of its highly technical nature, it does not allow for too many simplifications or to dwelling on every detail, but the impact it will have for years to come is self-evident. Moreover, the Regulation will apply from August 2015, which will provide all concerned with enough time not to have any excuse for being taken by surprise.
The scope of application
The Regulation applies to succession to the estates of deceased persons having cross-border implications. Its scope includes all civil-law aspects of such succession, meaning all forms of transfer of assets, rights and obligations by reason of death (whether by voluntary transfer under a disposition of property upon death or transfer through intestate succession). Some aspects are explicitly excluded: the status of natural persons, as well as family relationships and relationships deemed by the law applicable to such relationships to have comparable effects; and questions relating to matrimonial property regimes and property regimes of relationships deemed by the law applicable to such relationships to have comparable effects to marriage, have particular relevance. It is worth mentioning the area of revenue matters, to which the Regulation does not apply. It will be up to national law to determine how the relevant taxes are calculated and paid, whether these be taxes payable by the deceased at the time of death or any type of succession-related tax to be paid by the estate or the beneficiaries, and whether the release of succession property to beneficiaries under the Regulation or the registration of succession property should be subject to taxation.
Habitual residence as the key factor
The Regulation tries to answer two important questions: which Court would have jurisdiction to rule on a succession as a whole and which law applies to it. In this regard, the text identifies the general ‘connecting factor’ as the habitual residence of the deceased at the time of his/her death (see respectively Articles 4 and 21). All relevant factual elements have to be weighed up for the purpose of determining habitual residence; and in particular the duration and regularity of the deceased’s presence in the State concerned and the conditions and reasons for that presence.
Jurisdiction: additional elements
Having noted the general rule on jurisdiction, it should not be forgotten that the solution can also follow from the choice of applicable law made by the deceased, if the parties concerned agree to it in writing (see Article 5, § 1). Article 10 also provides detailed indications as to the ‘subsidiary’ determination of jurisdiction for cases in which a person is not habitually resident in a Member State at the time of death but assets of the estate are located in that Member State. A provision concerns the so-called ‘forum necessitatis’ (Article 11), with the aim of avoiding denial of justice: according to this rule the Court of a Member State can decide on the matter despite the fact that the succession is closely connected with a third State. This can happen only on an exceptional basis and where proceedings cannot reasonably be brought or conducted or would be impossible in that third State; in any case, a ‘sufficient connection’ with the Member State at issue is required.
Which law applies and what it covers
For the law applicable to the succession as a whole, as already discussed, the criterion of the ‘habitual residence at the time of death’ is also the general rule (Article 21, § 1). Paragraph 2 of Article 21 refers to an exception for cases in which there are clear elements, deriving from all the circumstances of the case, for considering that the closest connection manifestly exists with a State that is different from the one identified by means of the above-noted rule. However, the text underlines that this solution cannot be used every time there are difficulties in determining the habitual residence, as a sort of ‘subsidiary short cut’. Limited possibilities for choosing the applicable law are contemplated: the Regulation refers to the possible choice of the law of the State of which the person in question had nationality at the time of choosing or time of death (Article 22).
It is important to note that the law applicable on the basis of the Regulation governs the succession ‘as a whole’, embracing all of the property forming part of the estate, independently from the nature of the assets and regardless of whether they are located in another Member State or in a third State (Recital 37). The applicable law governs all the aspects listed in detail in Article 23 (one important example being the determination of the beneficiaries, of their respective shares and of the obligations which may be imposed on them by the deceased, and the determination of other succession rights, including the succession rights of the surviving spouse or partner). Finally, the applicable law governs the succession from its initiation to the transfer of ownership of the assets forming part of the estate to the beneficiaries as determined by that law (Recital 42).
The role of public policy (ordre public)
An important and recurring element in the Regulation concerns the role to be played by public policy (ordre public) in the context of its application. This is an aspect that has to be taken into due account, so as to ensure a well-calibrated impact on national systems. In this sense, Recital 58 is particularly relevant: it foresees that ‘considerations of public interest’ should allow the Courts (and other competent authorities) of a Member State to disregard, in exceptional circumstances, foreign law when in a specific case its application would give rise to a manifest incompatibility with the public policy of that Member State. Despite the rather restrictive formulation, the provision would in principle provide certain guarantees. However, its potential effect is somehow called into question by the subsequent reference to the exclusion of the possibility of applying the ‘public-policy exception’ if this is contrary to the Charter of Fundamental Rights of the EU and especially to its Article 21 (prohibition of discrimination on a number of grounds). The full implications of the provision remain to be unravelled, partly because of its broad formulation, but it could have (too) far-reaching ramifications. The provision will have a limiting impact on the various clauses of the Regulation that refer to the concept of public policy: Member States can refer to manifest contrariety to its public policy in order to refuse the application of the law specified by the Regulation or the recognition of decisions issued in another Member State (which according to the text are to be recognised without any special procedure); as well as to refuse the acceptance of authentic instruments issued in another Member State or to refuse or revoke a declaration of enforceability with regard to an authentic instrument or to a Court settlement.
A new European Certificate of Succession
The Regulation also introduces a new uniform ‘European Certificate’ (Articles 62-73), which can be used by heirs, legatees having direct rights in the succession and executors of wills or administrators of the estate to facilitate their efforts when they need to demonstrate in another Member State their status and/or rights and powers. This instrument can prove useful, for example, in a Member State in which succession property is located. The European Certificate will be valid in requesting the recording of succession property in the register of another Member State, even though, inter alia, it will still be possible for the Member States to request further information/documents required by their law for this purpose. The European Certificate will have its effect in all Member States, without any special procedure. The recourse to the European Certificate is however not mandatory; it is issued merely upon request by one of the subjects mentioned above and it does not replace internal documents used for similar purposes in the Member States, so as to ensure respect for the principle of subsidiarity.
Big, boring but with high impact
At first glance, the Regulation appears to be affected by an unfortunately excessive level of detail. The heaviness of the Regulation brings about, again, the question of whether the word ‘simplification’ - particularly cherished at EU level at the moment - does not remain, at least in some cases, as little more than a catchword. Furthermore, citizens, rightly or wrongly, demand simple answers to complex problems. Concerning the substance of the text, the controversial possibility of being able to choose the applicable law is opportunely limited, preserving a connection between the deceased and the law chosen and avoiding abuses towards persons entitled to a reserved share. The above-described attempt to marginalise the exceptions related to public policy (especially considering the sensitive matters covered by the Regulation) is a little puzzling, even though the text leaves reasonable scope for the actions of the national authorities. As for the European Certificate, considering the rather tentative way in which the instrument is being introduced, it will be interesting to see what sort of impact and circulation it will have. Certainly, from the few (non-exhaustive) elements highlighted, it is clear that the EU Regulation strives to take into account the possible technical difficulties that can emerge and to facilitate solutions to the problems that citizens may be confronted with in circumstances which are in most cases already painful and stressful. In general, the way the national authorities will approach this very detailed piece of legislation stimulates curiosity. In the light of all this, Member States and citizens alike are invited to get acquainted with the text. Both expectations and needs will hopefully be met!