6 SUCCESSION AND WILLS
(31015)
14722/09
+ ADDs 1-2
COM(09) 154
| Draft Regulation on Jurisdiction, Applicable Law, Recognition and Enforcement
of Decisions and Authentic Instruments of Succession and the Creation of a
European Certificate of Succession
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| Legal base |
Articles 65 and 67(5) EC Treaty; QMV; co-decision.
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| Document originated | 14 October 2009
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| Deposited in Parliament |
21 October 2009 |
| Department | Ministry of Justice
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| Basis of consideration |
EM of 2 November 2009 |
| Previous Committee Report |
None |
| To be discussed in Council
| No date fixed |
| Committee's assessment | Legally and politically important
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| Committee's decision | Not cleared; further information requested.
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Background
6.1 Article 65 EC Treaty provides for the adoption
of measures in the field of judicial cooperation with cross-border
implications, which expressly include measures "improving
and simplifying the recognition and enforcement of decisions in
civil and commercial matters, including decisions in extrajudicial
cases" and "promoting the compatibility of the rules
applicable in the Member States concerning the conflict of law
and of jurisdiction." The numerous instruments which have
already been adopted on this basis, in particular Regulation (EC)
No. 44/2001 ("the Brussels Regulation"), exclude succession
from their scope.
The Document
6.2 The proposal seeks to address this lacuna and
establish common rules in the area of wills and succession. There
are three main areas for which it proposes uniform rules.
Jurisdiction
6.3 Articles 3 to 15 deal with jurisdiction, i.e.,
which court should deal with a succession. Courts are defined
widely to include public authorities dealing with succession.
As a basic rule the proposal envisages that the Member State
where the deceased was habitually resident at the time of death
should have jurisdiction. (Article 4). If the deceased chose
the application of the law of another Member State, limited provision
is made for the case to be transferred to the courts of that Member
(Article 5). Rules of 'residual jurisdiction' address situations
where a deceased was not habitually resident in any Member State
at the time of their death (Article 6). In addition, the Regulation
contains various supplementary jurisdictional provisions, for
example provisions relating to concurrent and related proceedings
(Articles 13 and 14) and the taking of supplementary provisional
and protective measures (Article 15).
Applicable Law
6.4 As a general rule the proposal envisages that
the law applicable to the succession should be that of the state
where the deceased was habitually resident at the time of death
(Article 16), whatever court or authority would have jurisdiction
and even if this results in applying the law of a third country.
The 'habitual residence' rule would also work as a default provision.
In addition and as an exception to the general rule, a testator
would be able to choose the law of his or her nationality to apply
to the succession (Article 17).
6.5 The scope of the applicable rules in the Regulation
is defined in broad terms (Article 19) and would cover, for example,
the validity and interpretation of any will, the capacity to inherit,
the rules on the transfer of the property, responsibility for
paying the debts of the estate, the rules on compulsory inheritance
(i.e. rules for the benefit of relatives that cannot be changed
by a will). Notably the choice of law rules would extend to "any
obligation to restore or account for gifts and the taking of them
into account when determining the shares of heirs", i.e.
the claw back of lifetime gifts. The Regulation would expressly
permit the preservation of regimes of the Member States where
there are "special succession regimes" applying to immovable
property, enterprises or other "special categories of property"
on account of their economic, family or social aims (Article 22).
Finally, the applicable law rules of the proposal may not be applied
if the determining court considers that it is incompatible with
the public policy of its Member State (Article 27).
Recognition and enforcement
6.6 Article 29 of the proposal provides for automatic
recognition of any decision of a court of another Member State
except in the very limited circumstances set out in Article 30.
Article 31 excludes the possibility of review by an EU court
of the substance of a decision by a competent court in another
Member State. Authentic instruments shall, as a general rule,
be recognised and enforced irrespective of country of origin provided
there are no public policy objections in the Member State
where recognition or enforcement is sought (Articles 34 and 35).
Finally, provision is made for the creation, recognition and enforcement
of a new "European Certificate of Succession" (Articles
36 to 44). Its use would not be obligatory and it would not replace
existing procedures for other enforceable documents.
The Government's view
6.7 In his Explanatory Memorandum of 2 November 2009
the Parliamentary Under Secretary of State at the Ministry of
Justice (Lord Bach) summarises the Government's position as follows:
"The Government recognises the potential
value of a satisfactory Regulation in this field. This reflects
the increasing number of people who own assets in more than one
Member State. Good uniform rules of private international law
on succession would enhance legal certainty for these individuals
and their heirs by replacing the current complex plethora of diverse
national rules in the Member States.
"The detailed policy implications of the
draft Regulation are currently being consulted on by the Government.
Accordingly the implications set out below are preliminary in
nature and are subject to the results of that consultation.
"The Government considers that there could
be two potential benefits of the draft Regulation. The first concerns
the proposed choice of law rules which would apply to all types
of property and would thereby provide greater simplicity than
the current rules in the UK which distinguish between moveable
and immoveable property and apply different choice of law rules
in relation to each type of property. The second potential benefit
concerns the proposed provision for individuals to choose the
law applicable to the succession to their estates. There is no
such provision under current law in the UK. This innovation could
assist with estate planning and appears to be consistent with
the tradition of freedom of testamentary disposition in the UK.
"The Government has identified two issues
with the potential to cause significant problems. The first concerns
the proposed application in the UK of provisions, which exist
under the laws of many other Member States, the effect of which
would be to reopen certain lifetime transactions entered in to
by the deceased during his or her lifetime. Such provisions, known
as 'claw back', are intended to support the mandatory provision
for family heirs created under those laws. Their application in
the UK would be contrary to our tradition of freedom of disposition
of property and have the potential to cause significant legal
uncertainty. The second concerns the proposed connecting factor
of habitual residence which would play a central role under the
Regulation in relation to both jurisdiction and choice of law.
This factor is left undefined in any way and this could create
significant legal uncertainty and, in some cases, lead to inappropriate
results, particularly in cases where the deceased had been on
a short term employment secondment to a Member State. This connecting
factor would replace the connecting factor of 'domicile' which
currently operates within the UK.
"The Government has also identified various
other potentially unsatisfactory provisions in the draft Regulation.
These include the following: the restrictive nature of the transfer
provision (Article 5); the broad residual basis of jurisdiction
(Article 6); the piecemeal approach to issues of capacity
(Articles 1(3)(b) and 19(2)(c)); the broad and uncertain exclusion
from the choice of law regime of certain special succession regimes
(Article 22); the limitation on the application of the public
policy principle as a ground for resisting recognition to default
judgments (Article 30); and the perhaps overly broad provision
for the recognition of the European Certificate of Inheritance
(Chapter VI).
"The Government is consulting widely with
those individuals and organisations most likely to be affected
by this proposal, in particular the judiciary, practitioners,
academics, charities and representatives of the trust industry.
This consultation will relate both to the UK's opt-in decision
and thereafter throughout the negotiations on the proposed measure."[16]
6.8 The Government expects that the current Swedish
Presidency will arrange meetings of the Council Working Group
before the end of 2009 to start negotiations on this proposal,
and that the Spanish Presidency will take forward the negotiations
through the Working Group as a matter of priority in the first
half of 2010. The proposal is not expected to be agreed before
2011.
Conclusion
6.9 We thank the Minister for his helpful comments
and his indication of the Government's view of the proposal. We
broadly share the Government's basic position in relation to the
potential benefits of Community rules in a field of growing cross-border
significance.
6.10 This proposal has been subject to a final
COSAC subsidiarity early warning simulation exercise. We do not
consider that the proposed measure raises significant subsidiarity
issues.
6.11 At the same time we share the Government's
concerns about the incompatibility of the possible or implied
claw back provisions of the proposal with the established succession
regime in the United Kingdom. We are also concerned about the
administrative burdens imposed by rules allowing for the recovery
of inter vivos gifts. We therefore ask the Government to
indicate if it will only 'opt in' to the proposal if appropriate
amendments can be obtained to exclude the claw back of lifetime
gifts. We ask the Minister to send us word of any 'opt in' decision
as soon as the Government's thinking may have crystallised.
6.12 To a lesser extent we also share the Government's
preference for a definition of 'habitual residence.' We ask the
Minister why the lack of definition is likely to be of particular
importance in relation to this proposal when the same criterion
was used in several other recent civil judicial cooperation measures
at EU level. In addition, we ask the Minister to provide us with
a summary of the responses to the Government's consultation exercise.
6.13 Finally, we ask the Minister to explain the
Government's position with regard to the tax neutrality of the
measure and, in particular, whether the current wording of Article
21 of the proposed text is sufficient to ensure this objective.
We ask the Minister to assure us that the proposal will be without
effect with regard to the existing regime governing inheritance
tax payable on assets held in one Member State but bequeathed
to a beneficiary in another Member State according the law of
another State. We ask the Minister to assure us that in such cases
inheritance tax will remain payable on any assets within the
jurisdiction on exactly the same terms as if the deceased and
his beneficiary were residents and the succession governed by
domestic law, even if there is and has been no further connection
between the State imposing the tax and the deceased or the beneficiary
and even if the tax were chargeable at such rate as to necessitate
the liquidation of the assets at below market value.
6.14 We shall hold the document under scrutiny
at least until we have received the Minister's reply.
16 The Government's consultation document can be found
at http://www.justice.gov.uk/consultations/ec-succession-wills.htm Back
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