Select Committee on European Union Minutes of Evidence

Examination of Witnesses (Questions 20-39)

Professor Jonathan Harris and Mr Paul Hughes

10 OCTOBER 2007

  Q20  Lord Burnett: What did come second then?

  Professor Harris: I am not so sure that I would rate the issue of ability to choose beneficiaries so highly. Under the existing system we would apply the law of domicile at death to movables. If that law has rules of compulsory heirship we would be willing to give effect to them. Scotland has such rules in any event. I personally do not think that is an overriding objection.

  Q21  Lord Burnett: It would be an objection in this country if it were foisted upon us.

  Mr Hughes: If that were to come within the scope of private international law instruments, it would have very strong objections.

  Q22  Lord Burnett: I would hope so too.

  Mr Hughes: Freedom of testamentary disposition is not to be interfered with by the instrument.

  Q23  Lord Burnett: How strong is that? Has the Government laid that down in other countries and made it absolutely clear?

  Mr Hughes: It has said any European instrument must not limit the operation of the principle of the freedom of testamentary disposition. That was the line that we put in our response to the Green Paper.

  Q24  Lord Burnett: How likely are we to be able to preserve that position?

  Mr Hughes: I would not expect us not to be able to preserve it.

  Professor Harris: I quite agree with what Mr Hughes says but I think it would be most surprising and most unacceptable if the proposal were to deal with what essentially would be harmonising a matter of uniform law as to whether substantive law allowed one to leave one's estate to whomsoever one chose. I do not think it would be at all appropriate or within the scope of jurisdictional competence to harmonise the uniform substantive law of different legal systems but I think if the choice of law rules of this regulation point to French law, say, and French substantive law happens to say that you have to leave a fixed percentage to your spouse, I personally (a) do not think there is an overriding objection and (b), if we do have an overriding objection, we have no possibility of reaching common ground with other Member States, almost all of which, including—though not a Member State—the Scottish legal system, have some form of compulsory heirship.

  Q25  Chairman: I see. So we must continue to have freedom of testamentary disposition. We can leave property to whom we wish but we would recognize other EU jurisdictions which limit that freedom?

  Professor Harris: What I am saying is yes, if the governing law according to the choice of law rules in this regulation points to English law, then English succession law must be completely unaffected; the freedom that we have to leave to whomsoever we choose must be unaltered; but if according to these choice of law rules we end up applying French succession law, then subject to any overriding public policy concerns—and I imagine there would be a public policy derogation in the regulation—I think we would be expected to give effect to that law.

Lord Bowness: Just to clarify, taking this very firm stance that we must have our right to leave everything, for the record, we are only talking about movables, are we not? Immovables we do not have the right to leave to whomsoever we choose. That is why we have to advise people to make wills in Spain. You cannot leave your French house to whom you choose, or your Belgian house.

Lord Burnett: You can certainly do so with your English house.

  Q26  Lord Bowness: Precisely, but my point is that the advantage of preserving sanctity and doing everything the way we always do it is not necessarily to everybody's advantage. There could in certain circumstances—I am not saying there should—be benefit to a British citizen who may wish to leave his house in France or Belgium or Spain to somebody other than where French, Belgian or Spanish law would otherwise take it. So we do not have a totally free choice. What I was seeking to establish was that we are only talking about movables; we are not talking about immovables when we talk about a complete freedom of testamentary choice. If I am wrong, please say so.

  Professor Harris: My Lord Chairman, there are two issues we need to distinguish. One is the question of which choice of law rules we should go for, to which legal system the rules of the regulation should point; and the other question is, having identified the particular legal system, whether this regulation should override it with any rules of uniform law. The question you have asked me has choice of law implications. Certainly under the current system that we have, it would be almost inconceivable to avoid the law of the place where the immovable property is situated; but one advantage of moving to a unitary choice of law rule, if that turns out to be the law of the residence of the testator and it is an English resident, is that now one will be able to apply English law even to those foreign immovables and leave it to whomsoever one wishes. The role of English Law will be enhanced. What is totally unacceptable is, once we have identified what our choice of law rules are, and when they point to English Law, I think that the regulation must absolutely not overlay rules of uniform law which say that you cannot now leave your property to whomsoever you choose.

  Q27  Lord Jay of Ewelme: Can you see circumstances in which the French would accept that a British citizen with a property in France could leave it to somebody other than the nearest relative?

  Professor Harris: My Lord Chairman, I find that very difficult to answer. One of the problems with this regulation is that England—and I would not even say the UK—but England on the one hand and other Member States and Scotland on the other do have a different view about freedom of testamentary disposition. If we cannot reconcile that by at least saying we will accept each other's laws when the choice of law rules points to them, then the regulation has no chance.

  Q28  Lord Mance: That, I thought, was the great advantage that you were identifying in paragraph 43, that English law would be recognized in precisely that situation. Can I come to a different point in paragraph 33, application of the regulation to non-Member States? Can you just explain how you contemplate a regulation might operate which purports to have worldwide effect? If one takes the example of someone domiciled and resident within a country of the European Community who has immovable property in Colombia or the United States, this regulation apparently says that the United States property must be distributed in a court in Europe in accordance with the law of, say, the domicile or habitual residence or whatever the test adopted is, yet Colombian law may say something completely different and the parties involved may achieve in litigation completely opposite results. It just seems to me that, if it is really suggested that the regulation is going to apply to non-Member States, as you appear to be accepting, it will not just be very difficult to enforce; there will be an intolerable system of potentially completely different legal results in different jurisdictions.

  Professor Harris: I essentially agree with the point that Lord Mance makes.

  The Committee suspended from 5.02 pm to 5.12 pm for a division in the House

  Q29Chairman: Professor Harris, you were part-way through your response to Lord Mance's question on the possibility of universal application of this proposed new instrument.

  Professor Harris: I do think the issue here is not straightforward. In part, it is bound up with which choice of law rule one goes for. If one keeps the scission system and has the law of the place of the property for immovables, that removes one of the objections to Lord Mance's point because we would be applying the same law as the Colombian court or whatever court it might be. If one has a unitary system and it is the law of residence, I absolutely accept that, whatever an English court does, there may be real difficulties of enforcement in a non-Member State if we are not applying the law of the situs of the property. However, I reached the conclusion that firstly, the regulation is concerned with what we in the United Kingdom are going to do with these particular situations rather than purporting to affect the law of any other jurisdiction and it is very much consistent with other regulations—Rome I and Rome II, for example—that their scope in an English court or for English practitioners is universal. The reason for that is that one of the fundamental points of having this regulation is to try and ease the position for English residents, to make it easier to advise them as to the devolution of their estate. I think we will end up with something that is probably more complicated than we started with if we try to have one regime under a regulation for devolution of property, immovables, located within Member States and one for property outside those states. I am not sure that will actually improve the position for English residents. So on balance I took the view that it would be better to have a universal scope. If one looks in a book like Dicey, Morris and Collins, although normally English courts do not assert jurisdiction over foreign immovables, there are recognized exceptions, such as the possibility of in personam orders directing a party to transfer land in a foreign state, which are already recognized. I took the view that there is no straightforward solution but that it would be too convoluted and would not improve the internal market to have two different regimes.

  Q30  Lord Mance: That was exactly the sort of thought I had in mind, but if you really do contemplate an English court issuing an in personam order, an injunction or something that is enforceable by contempt and a Colombian authority taking the exact opposite view as to entitlement, we have a very odd situation.

  Professor Harris: Indeed. Another possibility if one went for a unitary choice of law rule is to recognize it for property within Member States but to have a derogation in relation to immovable property in non-Member States so that the law of the situs will nonetheless still apply to immovables in non-Member States. Personally, I think that is preferable to being left with two different legal regimes, the regulation and common law principles.

  Q31  Chairman: Do think that is a feasible solution to all this? Get rid of scission and have a unitary scheme with an exception for immovable foreign property?

  Professor Harris: It is a feasible solution for immovable property in non-Member States. Indeed, I think it is. Even within Member States, if the United Kingdom could not accept a unitary system in its entirety, what one might consider is some sort of hybrid between a unitary system and scission which looked something along the lines of all succession to movables and immovables being governed by the law of residence at death but with some sort of mandatory rule provision allowing the overriding mandatory rules of the situs nonetheless to be applied. That might be a compromise solution. It may, however, not be as simple as either a unitary approach or a scission system.

  Mr Hughes: Something along those lines is referred to in the summary of responses to the Green Paper, so the Commission is considering that kind of derogation.

  Q32  Lord Burnett: Could I go back to this choice of law business or settlor or testator autonomy, as you have called it? If the testator has a connection with two countries, for example, a Frenchman who comes to live in England, should there therefore be an opportunity for that testator, that Frenchman, when he dies in the United Kingdom to opt for French law rather than British in the administration of his estate? Do you think there is any compelling ground against advancing that thesis for movables and immovables?

  Professor Harris: My Lord Chairman, I do not think there is any compelling ground. I am anxious to ensure that freedom to choose the governing law is not taken to its extremes. I do not think that would be acceptable to other Member States precisely because they do have rules of compulsory heirship and they will not want their testators to be able to evade it by choosing English law. It might be good for us that they continually choose English law but I do not think it will be politically realistic. I am anxious to ensure that the law that is identified on basic choice of law principles means that the testator could be said to have some significant connection with that country and its legal system either at the time of making the will or at the time of death. If that means a choice between two countries with which he has a close connection, it seems to me that that would be an entirely reasonable situation where choice would be entirely legitimate.

  Q33  Lord Burnett: With respect to both movable and immovable property?

  Professor Harris: I think so, if one accepts a unitary system.

  Q34  Lord Burnett: The election would be made in a will or in a letter.

  Professor Harris: Yes, I think the election would have to be made in a will.

  Q35  Chairman: Professor Harris, one has the impression that the one thing you are not in any sense set upon is our own last domicile aspect of the scission approach and you would settle for habitual residence pretty readily. Is that right?

  Professor Harris: Yes, in part because I do not think domicile always leads to a particularly good result. There are many cases one can study in the textbooks of those whose domicile revives in odd circumstances or domicile which one never loses. One wonders why one's estate should be devolved according to that law. I think there is much more of a likelihood of a material connection with a system where one dies resident, where one's estate is probably going to be administered, where one's assets and one's heirs may well be; but I also think in part it is a pragmatic view that it is very unlikely we will get anything close to domicile in the English sense of the word, and it seems to me there is not any overriding objection to residence. The challenge will be to try and get some kind of definition of residence, otherwise we are in a more uncertain situation than ever. At least an advantage of the law of situs is that everybody knows what it is. There is no point in moving to a test of residence to improve certainty and then find each Member State disagreeing about what residence is. That is the challenge.

  Q36  Chairman: Do think there is room between the red lines of all the various states and schemes involved to actually hatch out a satisfactory Brussels IV regulation?

  Professor Harris: As to the whole regulation?

  Q37  Chairman: Yes.

  Professor Harris: My sense on that is that we start from extremely different legal traditions. The phenomenon of clawback seems to be as important in most Member States as it is important to us not to have widespread clawback. The freedom to leave to whoever one chooses within very broad scope in England seems to be as important to us as it is to almost every other place, including Scotland, that there be some form of compulsory heirship. If one tries to get into the panoply of property rights that might arise on death—trust, tontine, usufruct—I think it is an exceedingly audacious project. I think it is unrealistic and also unjustified to create a difference in regime between lifetime and testamentary transfers. That is why I have reached the conclusion that subject matter scope is absolutely crucial, and that does mean excluding administration of estates, it does mean excluding trust and property rights and recognizing the very distinction that the Hague Succession Convention and the Hague Trust Convention draw between succession on the one hand and what happens afterwards, so that the raw question we are really each asking under the regulation is who is entitled to this estate, A or B, and the particular rights that arise are not harmonised under this regulation. The scope must be kept narrow, and I think the best way to deal with succession is not to define it positively, which I think will be politically difficult, but to push for a list of exclusions from the regulation, and that list might include administration of estates, trusts and other property rights arising on death. If one pushes for a list that looks like that and if one pushes for a statement that nothing in this regulation shall affect the validity of dispositions disposed of inter vivos by their governing law or permit compensation claims in relation to that disposition, then I think you have the basis for a workable regulation. That is why I said at the start that I was very clear that subject matter scope is crucial because I do not think the Commission has been clear enough on what succession is and what it is not. The proposals suggest succession is something very much broader than I have in mind.

  Q38  Chairman: So if it is not over-ambitious, it could actually be useful.

  Professor Harris: Indeed.

  Q39  Lord Bowness: Professor Harris, you have listed the exclusions. I was going to ask you, rather than red lines and exclusions, what would be your order of priorities to put into the regulation if you were going to adopt a step-by-step approach? You have answered it to some extent in the negative.

  Professor Harris: I would answer it in the negative because I think pushing for exclusion of anything other than pure succession law is absolutely critical. Politically, one is more likely to get that agreement about what it is not than trying to define it positively. If one can get a very tightly construed regulation that really answers the bald question of who is the heir according to the governing law, is it X or Y, I think I would be less concerned about the range of the regulation in terms of the private international law issues it might cover. I think it would be desirable to lay down a choice of law rule. I personally think that, within those narrow bounds, a unitary choice of law rule would be perfectly acceptable and actually would be quite advantageous in advising English residents and would improve legal certainty for them. I think some rules on jurisdiction would be advantageous and I think some form of limited recognition of each others' judgments would be advantageous once one has limited the subject matter and excluded, for example, administration of estates. What I think will be more difficult is European certificates of inheritance or a compulsory system of registration of wills. Even if we get a narrow subject matter scope, that might be too much too soon.

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