25 Succession and wills
| (26423)
7027/05
COM(05) 65
| Commission Green Paper on succession and wills
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| Legal base | — |
| Department | Constitutional Affairs
|
| Basis of consideration | Minister's letter of 4 September 2006
|
| Previous Committee Report | HC 38-xv (2004-05), para 2 (6 April 2005)
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| To be discussed in Council | No date set
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| Committee's assessment | Legally and politically important
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| Committee's decision | Cleared
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Background
25.1 The Brussels European Council of November 2004 invited the
Commission to submit a Green Paper on the conflict of laws in
matters of succession. The scope of the paper was to include jurisdiction,
mutual recognition and enforcement, a "European certificate
of inheritance" and the registration of wills.
25.2 The previous Committee considered the Commission
Green Paper on 6 April 2005. It welcomed the view expressed by
the Commission that "full harmonisation" of the rules
of substantive law in the Member States was "inconceivable"
and noted the emphasis of the Green Paper on rules on the conflict
of laws. In this regard, the Committee noted that the Green Paper
raised a number of preliminary issues, such as the scope of any
such rules (e.g. whether these should apply to the validity of
wills, the status of heirs, the existence of any reserved portion,
and the administration and distribution of the estate) and the
question of the connecting factor (i.e. the factor which links
an estate with a particular system of law).
25.3 The Committee also noted a number of substantive
questions posed in the Green Paper on such matters as the law
which should apply to testamentary capacity and the form and substance
of wills, whether the testator should be allowed to choose the
system of law applying to the succession, whether the principle
that a proportion of the estate should be reserved for near relatives
should still apply where a system of law has been chosen which
does not recognise such a reserved proportion, and whether conflict
rules should be devised for trusts. Other questions noted by the
Committee were those relating to jurisdiction over the estate
and the transfer of immovable property, the recognition and enforcement
of judgments and other formal acts relating to the estate and
a possible European certificate of inheritance to allow heirs
to assert their rights in other jurisdictions and the need for
a centralised register of wills.
25.4 The previous Committee believed that, given
the substantial personal links which many in the United Kingdom
have with Commonwealth countries and other English-speaking non-EU
countries such as the United States, the Minister was right to
be concerned about the possibly universal[68]
nature of any rules adopted under the EC Treaty. The Committee
also noted the Minister's view that national registries of wills
and a central European Union registry might bring some benefits
to legal practitioners and beneficiaries but that any such registry
of wills should be voluntary. The previous Committee held the
document under scrutiny pending further information from the Minister
on the Government's reply to the Green Paper.
The Minister's letter
25.5 In her letter of 4 September 2006 the Parliamentary
Under-Secretary of State at the Department for Constitutional
Affairs (Baroness Ashton of Upholland) supplies us with a copy
of the Government's response to the Green Paper, which has been
agreed with the Scottish Executive and submitted to the Commission.
25.6 The Government's reply notes that there are
differences between the laws of England and Wales and Northern
Ireland on the one hand and those of Scotland on the other, and
that the Government is accordingly familiar with the practical
issues arising from succession and wills involving these jurisdictions.
The Government refers to the wide- ranging nature of the Green
Paper and the difficult and controversial issues which it raises,
and makes the following general statement:
"The UK Government agrees with the Commission
that the diversity of the laws of succession in operation across
Member States makes full harmonisation of these laws inconceivable.
The Government considers that such harmonisation would be a fundamental
interference in the domestic affairs of Member States, which could
have unpredictable social and cultural outcomes. It would be undesirable
and unnecessary.
"It is the UK Government's view that the diversity
of legal traditions in Member States must be fully respected.
This is essential because the differences in the approaches taken
by Member States to the transfer of property on death are fundamental.
Some Member States, such as the UK, favour freedom of testamentary
disposition, whilst others provide for reserved heirship. Some
allow property to pass direct to the heirs, but the UK and others
operate a court based system, which, on the death of the deceased,
gives ownership of the deceased's property to a third party. This
third party is entrusted with the administration of the estate
of the deceased and its distribution to his or her beneficiaries.
Some, including the UK, define the estate as the property of the
deceased at the date of death, others include gifts made by the
deceased during his or her life. This diversity is entirely legitimate.
It reflects the differing approaches adopted by different societies
within the European Union to questions about the nature of ownership
and about family obligations. It limits the extent to which any
harmonisation proposed in a European instrument could be acceptable.
However, although the UK Government would, in principle, be able
to support measures of limited harmonisation that would bring
real benefits to citizens, it considers that there is very little
scope for creating them in the field of succession.
"The UK Government strongly believes that any
European legislation on cross-border succession cases must not
adversely affect the working of important aspects of the domestic
succession laws of the UK. Therefore, any European instrument
must not:
- limit the operation of the
principle of freedom of testamentary disposition or affect the
operation of the rules of intestacy;
- change the court based system of probate and
the associated office of executor;
- interfere with the use of trusts, joint tenancies
or life policies; or
- adversely affect the working of the national
land registration or tax law systems."
25.7 The Government's reply also notes that differences
between Member States are not limited to matters of substantive
succession law, but that there are also fundamental differences
between rules of private international law in relation to succession.
It notes three matters of particular interest to the UK, namely,
the principle that the law of the country where the immovable
property is situated is also the law applicable to the succession
to the immovable property, the distinction between matters of
succession (determining who gets what) and matters of the administration
and distribution of the estate (determining what is the net estate
and the procedures and formalities for collecting in and then
distributing the net estate to those entitled under the law of
the succession) and the basic principle that the law of succession
applies only to property comprised in the deceased's estate at
death, with property effectively given away by the deceased in
his or her lifetime not being part of the estate. The Government
warns that any proposal to change these rules would require "strong
justification" and that it is not aware that any such justification
exists.
25.8 Subject to these significant concerns, the Government
indicates that it supports, in principle, the concept of attempting
to develop proposals to improve the administration of the estates
of deceased persons with a cross-border element, in so far as
the diversity of laws and practice creates real problems in the
field of succession. Such proposals should be based on the mutual
recognition and enforcement of judgments, judicial co-operation
and the harmonisation of conflict of laws rules and should be
restricted to cases with a cross-border element and be demonstrably
necessary for the proper functioning of the internal market.
25.9 The Government adds that it is strongly of the
view that the first stage in the development of any proposals
should be a thorough analysis of problems with current law and
practice and that any proposals for action at European level must
be justified by clear evidence that the measures proposed offer
proportionate solutions to real problems, which could not adequately
be addressed at national level. The Government notes that the
Green Paper does not contain any such evidence and observes that
the assertion that European action is essential because there
appear to be around 50,000 transnational succession cases each
year among Member States is not an adequate evidence base to justify
legislation. Accordingly, the Government does not accept the Commission's
view that there is an established need for reform.
25.10 The Government's reply then deals with the
specific questions asked in the Green Paper.
As for the assertion in the Green Paper that
the universal nature of future rules "should not be in dispute",
the Government considers this to be premature and points to the
practical importance of the United Kingdom's strong relationships
with the Commonwealth and the USA which will cause the Government
to give careful consideration to the impact of any proposals arising
from the Green Paper on dealings with non-EU countries.
25.11 On the question of the proper scope of the
law applicable to the succession, the reply states that the applicable
law should not extend to matters of the administration and distribution
of the estate, or to the definition of the property comprised
in the estate, so as to prevent disruption of well functioning
national administrative systems, such as the probate and land
registries, and interference with the operation of national property
law by incompatible rules of another Member State as to reserved
heirship or freedom of testamentary disposition. The Government
considers it would be "totally unacceptable" if the
law applicable to the succession undermined perfectly valid lifetime
gifts, including trusts, or interfered with the operation of testamentary
trusts.
25.12 In relation to the connecting factors for determining
the applicable law, the Government agrees that there are advantages
and disadvantages to each of the likely connecting factors, but
is not convinced that one solution is as yet demonstrably superior
to the others. The reply notes that the Government does not have
a finally concluded view on permitting a testator to be able to
choose an applicable law.
25.13 In relation to jurisdiction, the Government
considers that a single exclusive jurisdiction would have considerable
disadvantages and would be undesirable. It might, for example,
require a foreign court to exercise a discretion under English
law, which a foreign court might find impossible due to its lack
of familiarity with common law concepts involved, such as proprietary
estoppel[69] or
the exercise of discretion under the Inheritance (Provision for
Family and Dependants) Act 1975. The Government also considers
that the courts of the territory in which immovable property is
situated should have jurisdiction over that property and is not
aware that the present systems in operation in the UK create any
significant problems for nationals of other Member States or that
UK nationals, properly advised, have to make disproportionately
burdensome arrangements in relation to property in other Member
States in relation to succession.
25.14 The reply adds that the proposals in the Green
Paper that non-judicial authorities of one Member State might
have jurisdiction instead of the court designated under a choice
of court rule are "fraught with difficulties" and "very
unlikely to be acceptable".
25.15 The Government's reply notes that issues of
mutual recognition and enforcement are dealt with on the unnecessary
and premature assumption that harmonised choice of law and choice
of court rules have already been established. Although the Government
supports mutual recognition and enforcement measures as effective
and efficient ways to make procedures in cross-border cases simpler,
cheaper and more certain, it notes that the differences in legal
systems across Member States in matters of succession create significant
obstacles. These are particularly acute in relation to the suggestion
that judgments from one Member State should automatically form
the basis for an amendment of land registers in another. The Government
states that it has "strong reservations" about the proposals
that the same status should be given to succession related deeds
as to judgments, as this would present problems in jurisdictions
which do not use notaries to the same extent as civil law countries.
25.16 The reply states that the Government has "no
overriding conceptual objection" to the creation of a European
Certificate of Inheritance, but points out that the certificate
would have to be compatible with fundamentally different systems
of administration and distribution of estates. The reply notes
that a certificate designating an heir (in the civil law sense)
would not be effective to entitle that person to possession of
property in UK jurisdictions where a grant of representation,
or equivalent, in favour of an executor, is required so that the
executor can administer and distribute the estate. The reply observes
that unless a means can be found to overcome the differences,
the certificate would have to perform different functions in different
systems which might make it "confusing and cumbersome".
25.17 The reply indicates that the Government has
no overriding objection in principle to the creation of a scheme
for registering wills in all Member States, including a central
European register, but that any registration of wills should be
voluntary and should not preclude informal and deathbed wills,
both of which are regularly made in UK jurisdictions.
25.18 In conclusion, the Government considers that
the Commission would be "unwise" to attempt to carry
forward an immense single project covering the whole of the subject
matter of the Green Paper in a single stage and recommends that
the Commission should divide the work into separate and manageable
areas, giving priority to those parts that are likely to be achievable
and to bring demonstrable benefits to citizens. The Government
also recommends that serious consideration be given to exploring
the need for, and the possibility of achieving, an instrument
harmonising choice of law rules in matters of succession (excluding
administration and distribution of estates) and that if progress
could be made in that area, it might be possible to build on that
achievement in other areas covered by the Green Paper.
Conclusion
25.19 We are grateful to the Minister for supplying
us with a copy of the Government's reply to the Green Paper, the
salient parts of which we refer to in this report. It is evident
that this is the product of a great deal of careful consideration
and consultation in each of the three jurisdictions of the United
Kingdom. We agree with the points which have been made and we
trust that the Commission will now take careful note of them.
25.20 Since the Green Paper is now effectively
spent, we are content to clear it from scrutiny.
68 i.e. rules which would apply even where third countries
are involved. Back
69
The equitable doctrine which prevents a person from going back
on an assurance given to another and on which the latter has relied
to his or her detriment. Such instances may arise, for example,
between co-habitees. Back
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