Select Committee on European Union Minutes of Evidence

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.


  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, 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.


  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.


  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.


  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.


  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.


  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.


  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.


  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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