Supplementary letter from Lord Grenfell,
Chairman of the European Union Committee, to Bridget Prentice
MP, Parliamentary Under Secretary of State, Ministry of Justice
You will recall that in March 2005 the Commission
published a Green Paper seeking views from interested parties
on what action might be taken at Union level in relation to the
law governing wills and succession, including intestate succession.
The Green Paper acknowledged that it would be "inconceivable"
to harmonise substantive rules relating to wills and succession
and accordingly restricted itself to posing questions relating
to private international law (jurisdiction, applicable law and
recognition) issues. The Green Paper also considered ways of removing
certain administrative and practical obstacles facing individuals
wishing to have their status as "heir" recognised abroad.
The idea of establishing a "European Certificate of Inheritance"
was mooted.
10 OCTOBER 2007
We understand that the Commission is hoping
to bring forward legislation on wills and succession, in the second
half of 2008. We also understand that you and your officials are
considering what the UK's reaction to such a proposal might be.
The Government made clear their position in their Response to
the Green Paper, a copy of which was helpfully provided to the
Committee by your predecessor. Discussions are taking place with
interested parties within the UK and to aid that process the Government
have retained Professor Jonathan Harris, University of Birmingham.
SCRUTINY HISTORY
As you will be aware from earlier correspondence
the Committee has expressed a number of concerns relating to the
possibility of EU action in this field. Prompted by an invitation
from the Law Society and the Society of Trust and Estate Practitioners
to revisit the Green Paper, on 10 October the Committee met Professor
Harris and your official, Mr Paul Hughes. This provided the opportunity
for the Committee to examine, with their assistance, the question
of the harmonisation of private international law rules relating
to wills and succession and, in particular, to seek to identify
those areas where action at Union level would be helpful and how
UK citizens might secure worthwhile practical benefit from such
action.
TWO PRELIMINARY
POINTS
Two preliminary points, we believe, deserve
emphasis. The first is that, although the Commission may not have
made out the most convincing case for action at Union level, there
are an increasing number of people holding assets in more than
one Member State. The growth in the number of UK citizens having
second homes, working in or retiring in another Member State points
to a need for simplification and greater legal certainty in this
area. Second, there are substantial differences in the substantive
rules and procedures relating to succession, testate and intestate,
across the Union. While the extent of these differences, the Commission's
Green Paper accepts, rules out harmonisation of substantive succession
law, there is, we believe, scope for common conflicts rules. Accordingly
we very much welcome and support, in principle, the present exercise
being undertaken by the Government. It is important to ensure
that an EU instrument, suitably qualified or flexible in its provisions,
would provide real practical benefits to UK citizens.
NEED FOR
REALISM
Our reconsideration of the Green Paper reinforces
our view that the Commission's plans are highly ambitious. We
recall that attempts in the past to produce international regimes
for wills and succession matters have not been very successful.
As we said in our earlier letter (13 June 2005) the absence of
a positive response from States to the Hague Convention on the
international administration of the States and on the law applicable
to succession show the difficulty of finding common workable rules
in this area. Why should the Commission be any more successful?
With Professor Harris's assistance, we have
sought to identify the priorities for the UK in its approach to
any Union initiative on wills and succession. We start from the
position that the UK should be positive in the search for a Union
measure which could bring benefits to its citizens and the citizens
of other Member States. But we agree with Professor Harris that
this may mean that it will be necessary to curb some of the Commission's
ambitions.
RED LINES
It is at this time fashionable to talk in terms
of "red lines". We agree that the first, if not the
most important, red line in the present context relates to the
issue of so-called clawback. The Union measure should not in any
way call into question the validity of otherwise valid inter
vivos dispositions. Second, it would be necessary to limit
the scope of application to "succession" issues. As
Professor Harris indicated, the easier way to do this might be
to make clear to what matters any harmonisation or common rules
did not apply, in particular to exclude matters such as administration
of estates and questions relating to the validity and operation
of testamentary trusts, matrimonial property law, and interests
terminating on death such as joint tenancies.
UNIVERSAL APPLICATION
A separate issue of scope is the extent to which
any EU instrument should apply to non-Member States; for example,
to determine the governing law where the testator died habitually
resident in the UK but having a house in Florida. We discussed
the pros and cons with Professor Harris. A key consideration,
in our view, would be whether the Community had competence to
prescribe a rule having extra-Union consequences. It will not
surprise you that the Committee takes a strict view of the scope
of Article 65 TEC and we note that the new Article 69d proposed
by the Reform Treaty refers to "civil matters having cross-border
implications". The instrument would therefore not apply on
the facts posited above to property outside the Union.
SCISSION V
UNITARY APPROACH
We believe the focus of the Commission's work
should be on identifying an appropriate choice of law rule. We
acknowledge that there are differing views as to what that rule
might be and strong competition between a scission based
approach and a unitary approach. Where, for example, an individual
dies domiciled and resident outside the UK and leaves immovable
property in the UK, we can understand that many here might baulk
at applying the law of habitual residence of the deceased rather
than the law of the relevant law district of the UK as the lex
situs. But in the converse case, namely where an individual
is domiciled and resident in the UK leaving immovable property
abroad, there would seem advantage in a UK court being able to
apply domestic law in such circumstances, thus giving effect to
the testator's intentions (a principle which we think should be
respected where possible). For this reason we believe that a unitary
scheme, based on the law of the domicile/habitual residence of
the deceased, is potentially an attractive one and we would encourage
the Government to give it further consideration. If, however,
that were to prove impossible, we would request that further consideration
be given to the possibility of parties being free to choose the
applicable law, subject to there being an appropriate connection
between the testator and that law.
MUTUAL RECOGNITION
We note that in the Government's Response to
the Green Paper, whilst supporting in principle mutual recognition,
it was considered that differences in legal systems across Member
States in matters of succession give rise to significant obstacles
to the creation of mutual recognition and enforcement measures
in this area. We would urge the Government to give favourable
consideration to mutual recognition of personal representatives,
an issue we believe of ever increasing importance in practice.
REGISTRATION OF
WILLS
We were interested to learn the results of consultation
on this aspect of the Green Paper. We would not oppose a scheme
for the lifetime registering of wills in Member States provided
that registration was not mandatory.
EUROPEAN CERTIFICATE
OF INHERITANCE
Finally, we believe that further consideration
should be given to the question of the European Certificate of
Inheritance (ECI). We do not see any objection to this being applied
to heirs (in the civil law sense) but see a danger if it were
in some way to be sought to be extended to deal with executors
(in the common law sense). We doubt the wisdom of trying to bridge
the two systems. We do not see why an ECI should not be created
by an EU instrument. But as the law of wills and successions is
one where a "one size fits all" solution would almost
certainly be destined to fail, we suggest that any instrument
at European level should provide the framework for the creation
and recognition of ECIs into which Member States could opt if
their domestic laws fitted. Jurisdictions with similar rules on
`heirship' should not be denied a system of mutual recognition.
We hope the above comments will be of assistance
to the Government and would be grateful if you would keep us informed
of developments and in any event let us know how matters stand
by the end of March 2008.
25 October 2007
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