The EU's Regulation on Succession
CHAPTER 1: Introduction
1. When a person dies their property has to be
accounted for, creditors and taxes paid, and the property duly
passed on to those who should inherit it. This process is known
as succession. The expansion of the EU, and increasing mobility
within it, have led to more and more people moving from one Member
State to another to work or to retire, and owning property in
another Member State. The laws of the Member States governing
who is entitled to what of the deceased's property and how that
estate is to be administered differ fundamentally. This makes
dealing with a succession with cross-border implications potentially
very complex. When a person dies resident in Member State A as
a national of Member State B, or owning property in both Member
States A and B, it is necessary to determine whether it is the
law of Member State A or B which governs the succession. Even
once that has been resolved it can be difficult to ascertain just
how the law of succession of one Member State applies to property
located in another.
2. The complexity of cross-border succession
makes it difficult and expensive for individuals affected to plan
what should happen to their estate when they die and for creditors
and heirs to ascertain and vindicate their rights. This situation
is exacerbated by the fact that the period surrounding the death
is emotionally charged.
3. The same issues arise when the cross-border
element involves an EU Member State and a third country.
4. Simplification of the law applying to cross-border
succession has been sought for some considerable time, but without
success. At the broader international level a number of Conventions
have been negotiated within the framework of the Hague Conference
on Private International Law.[1]
Legislative action by the EU in this area has been envisaged for
almost a decade in successive programmes relating to the Area
of Freedom, Security and Justice.[2]
5. Legislation by the EU can fully address the
problems that arise when the cross-border elements of a succession
are confined to Member States. Where those cross-border elements
involve third countries EU legislation can only regulate how that
succession is to be dealt with as between Member States insofar
as it involves more than one Member State. A further international
agreement would be necessary in order to achieve with a third
country the same full degree of regulation that EU legislation
can bring to Member States.
6. In March 2005 the Commission issued a Green
Paper[3] seeking views
on what action might be taken at the level of the European Union
in relation to the law governing wills and succession. This was
the subject of a report by this Committee[4]
and correspondence with the Minister. We recognised the real practical
benefits that could be derived from suitable European legislation.
We also highlighted the difficulty in finding common workable
rules in this area and set out some "red lines" which
European legislation should not cross if it was to be acceptable
to the UK.[5]
7. On 14 October 2009 the Commission brought
forward their proposal[6]
for a Regulation to simplify the rules on cross-border succession.
The ordinary legislative procedure[7]
applies to the proposal. It is currently under detailed negotiation
in the Council. The European Parliament has yet to give it a first
reading.
8. Sub-Committee E, a list of whose members is
at Appendix 1, has conducted an inquiry into this proposal. The
call for evidence is reproduced at Appendix 2. Those who have
submitted written or oral evidence are listed at Appendix 3. We
are grateful to all those who submitted evidence, particularly
for their elucidation of a highly technical subject.
9. The Protocol on the position of the United
Kingdom and Ireland in respect of the area of freedom, security
and justice gives the UK an opt-in to the formal negotiations
and adoption of this proposal. If the UK does not opt in, it will
not be bound by the Regulation that is adopted. The opt-in to
the formal negotiations of the proposal needed to be exercised
by 22 January 2010.
10. In the course of this inquiry the Committee
formed a preliminary view on whether the UK should opt in to the
proposal. We took the view that the opt-in should not be exercised
at that stage. In his written statement to the House on 16 December
2009[8] the Minister indicated
that the Government had decided not to opt in, but intended to
engage informally in the forthcoming negotiations between Member
States with a view to improving the proposal. If those negotiations
resulted in sufficient improvement, the UK would still have another
opportunity to opt in to the Regulation after its adoption by
the other Member States.
11. In deciding whether the UK should opt in,
the Ministry of Justice undertook a consultation, on the basis
of a paper which provided background information.[9]
Those of our witnesses whose evidence was also submitted in response
to this consultation are identified in Appendix 3.
12. The Commission's proposal was chosen by the
Conference of Community and European Affairs Committees of Parliaments
of the European Union (COSAC) for a pilot exercise on the operation
of the new arrangements under the Lisbon Treaty for national parliaments
to raise subsidiarity issues in accordance with the Subsidiarity
Protocol. The arrangements did not formally apply to this proposal
since it was presented by the Commission before the coming into
force of the Lisbon Treaty. As part of this pilot exercise we
formed a preliminary view that the proposal complies with the
principle of subsidiarity.
13. The correspondence with the Minister on the
opt-in, and our response to the COSAC secretariat on subsidiarity,
are at Appendix 4.
14. In this report we outline the major problems
arising in cross-border successions and their impact; we consider
the major issues of principle in the Commission's proposal to
address these problems; and we address the specific issues of
subsidiarity and the opt-in. We focus on cross-border successions
within the EU, addressing, where it is relevant, the effect of
the proposal on successions with a wider international dimension.
In our conclusions we highlight where we consider changes to the
proposal need to be made.
15. The subject matter of this proposal is highly
technical and the original Commission proposal is likely to evolve
in the course of the legislative procedure. This may well stretch
into 2011. The Committee will consider the more detailed technical
and drafting points, as they evolve in the course of that legislative
procedure, as part of its ongoing scrutiny of the proposal.
16. A glossary of the terms used in this report
is at Appendix 5.
17. The proposal is subject to the scrutiny reserve
according to which the Government may not give their agreement
to the proposal in the Council until the Committee has finished
its consideration and cleared it from scrutiny. As the proposal
is likely to evolve in the course of negotiations and the Government
intend to continue to negotiate informally, we have decided
to retain it under scrutiny despite the fact that the UK has
not opted in to the proposal at this stage.
18. We make this report to the House for information.
1 As at February 2010, the Convention of 5 October
1961 on the Conflict of Laws relating to the Form of Testamentary
Dispositions has been ratified by 16 Member States; the Convention
of 2 October 1973 Concerning the International Administration
of the Estates of Deceased Persons has been ratified by three;
and the Convention of 1 August 1989 on the Law Applicable to Succession
to the Estates of Deceased Persons has been ratified only by the
Netherlands. Back
2
The Tampere Programme (OJ C 12, 15.1.2001, p.1), the Hague Programme
(OJ C 53, 3.3.2005, p.1), and more recently paragraph 3.1.2 of
the Stockholm Programme adopted by the Council and approved by
the European Council at its meeting of 10-11 December 2009, available
at http://www.se2009.eu/polopoly_fs/1.26419!menu/standard/file/Klar_Stockholmsprogram.pdf Back
3
7027/05, COM (2005) 65. Back
4
EU Select Committee, 2nd Report (2007-2008): Green
Paper on Succession and Wills (HL Paper 12). Back
5
The red lines were: the EU measure should not in any way call
into question the validity of otherwise valid inter vivos
gifts, and it should not deal with the administration of estates,
the validity and operation of testamentary trusts, matrimonial
property law and interests terminating on death such as joint
tenancies. Back
6
14722/09, COM (2009) 154. Back
7
The ordinary legislative procedure corresponds to the pre-Lisbon
co-decision procedure, under which the Council acts by qualified
majority and the measure can only be adopted if the Council and
the European Parliament agree. Back
8
HL 16 December 2009 WS 274. Back
9
http://www.justice.gov.uk/consultations/ec-succession-wills.htm Back
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