CHAPTER 2: Issues Arising in Cross-Border
The reach of the law of succession
19. The law of succession is complex, particularly
because it concerns the transfer of property rights. Property
rights are complex when compared, for example, to contractual
rights. Property rights frequently involve third parties and consequently
states run systems for the registration of such rights in order
to give them publicity. The property rights, especially those
attaching to land, found in different legal systems are extraordinarily
different. The property law of the UK tends to be more complex
than in most other Member States. It often concerns a bundle of
rights or interests in property as arises, for example, when property
is held by trustees for a beneficiary with a life interest. In
most other Member States there is more commonly absolute ownership
of property. Land and succession rules tell an immense amount
about the society in which they are found and in many ways constitute
the most distinguishing feature of any given legal system. This
inherent complexity makes establishing common rules across the
Member States in the area of succession very difficult, and changing
the law of succession might have unforeseen side effects.
20. The law of succession also interacts with
other aspects of domestic law. The transfer of property on death
gives rise to liability to pay tax and the collection of tax arising
from the death is linked to the administration of the succession.
In the UK, for example, payment of Inheritance Tax is the responsibility
of the personal representatives,
who have to satisfy HM Revenue and Customs that it has been paid
or accounted for before they are appointed to administer the succession.
The administration of a succession also involves dealing with
creditors, which can involve the law of insolvency if the deceased
was insolvent at the time of death.
The applicable law
21. Within this context of complexity a fundamental
issue is the determination of which law applies to a cross-border
succession. Determination of the applicable law can make a crucial
difference, not only to how the succession must be administered
but even to such basic questions as what constitutes the estate
of the deceased and who is entitled to get what. This is the case
whether or not the deceased made a will. Box 1 compares three
broad principles of the French law of succession and that of the
separate UK jurisdictions
in order to illustrate the fundamental differences that can arise.
The contrast of succession law in France
and the UK
(a) The heirs inherit their share of the property
of the deceased directly on death and assume responsibility for
the debts of the deceased and the tax on inheritance.
(b) The value of the estate to be taken into
account is not just the property owned by the deceased at the
time of death but also gifts made during his or her lifetime.
(c) A fixed proportion of the estate (of at least
one half) is inherited by the child or children of the deceased,
irrespective of any wishes of the testator as expressed in a will.
This is known as a "forced inheritance".
(a) The property of the deceased passes initially
to personal representatives who administer the estate by collecting
it in, paying creditors and taxes and then passing the balance
to the heirs.
(b) The estate available for distribution to
heirs comprises only property owned by the deceased at the time
(c) After payment of creditors and taxes the
estate is distributed in accordance with the wishes of the deceased
as expressed in a will, or according to set statutory rules if
there is not one. In Scotland a surviving spouse or child can
choose to inherit a fixed proportion of at least one third of
the moveable property
(divided equally if there are two or more children) in place of
their entitlement under a will.
22. The legal systems of Member States all lay
down tests to determine which law is to be applied to a cross-border
succession. They involve establishing a connection ensuring that
the law to be applied is relevant either to the property involved
or the people interested in the succession. Member States use
different connecting factors which can sometimes result in a conflict
as to which law should be applied.
23. There are four main connecting factors currently
in use: the nationality, habitual residence and domicile of the
deceased, and the location of the deceased's property. For example,
German courts apply the law of the nationality of the deceased
to deal with a succession. French courts apply, in respect of
moveable property, the law of the state where the deceased was
habitually resident at the time of death. For immoveable property
(essentially land) they apply the law of the place where the property
is situated. The courts of the United Kingdom apply the law of
England and Wales, Scotland or Northern Ireland, as the case may
be, to the moveable property of those dying domiciled (as opposed
to habitually resident) in these jurisdictions. Like France, immoveable
property is governed by the law of the place where it is situated.
24. There is a further layer of complexity and
academic debate. This is the doctrine of renvoi. This arises
when the law of state A indicates that the law of state B should
apply. The question then is whether it is simply the internal
substantive domestic law of state B which should apply,
or also that part of the law of state B which concerns the resolution
of cases which engage conflicting laws of two or more states (known
as "private international law"). If the private international
law of state B applies, the result could be different from that
if only the substantive internal domestic law applies, because
the private international law of state B could effectively send
the matter back to the law of state A.
25. The complexity arising from the application
of different connecting factors by different legal systems is
compounded by the fact that those connecting factors can themselves
be uncertain. Nationality is reasonably certain, although not
entirely so as some people have dual nationality, and some Member
States, such as the United Kingdom, have more than one system
of law. However, a national of one Member State may have been
settled for many years with a family, and own most, or even all,
of their property in another Member State. In such circumstances,
the test of nationality may lead to the application of a law which
is neither convenient nor appropriate.
26. The concepts of habitual residence and domicile
are less certain than nationality but impose a more consistent
connection between the succession and the law to be applied to
it. They are not only different from each other but can have a
different meaning depending on the jurisdiction in which they
are being used. In broad terms habitual residence connotes the
place, based on past experience, where an individual usually resides.
Domicile is a more stringent test and takes into account, to a
greater extent than the test of habitual residence, the intention
of the person concerned as to his or her permanent home. The concept
of domicile as it applies in England and Wales is outlined in
Box 2. The distinction can become critical where a person is seconded
to another Member State to work. In those circumstances the domicile
is more likely to remain that of the home Member State whilst
the habitual residence is more likely to be that of the Member
State of secondment.
Domicile under the law of England and
Ordinarily, a person's domicile is the place where
they have their permanent home to which, if absent, they intend
to return. Such absence may be long term. This is known as the
domicile of choice.
Every person acquires at birth a domicile of origin
which is generally the domicile of their father. This can revive
if a domicile of choice is abandoned without a new one being acquired.
A dependant generally has the same domicile as the
person on whom they are dependent.
27. It is, of course, possible to determine with
the greatest degree of certainty the jurisdiction in which land
is situated. But an estate normally comprises both land and other
property, in which case another connecting factor will need to
be applied to the other property, raising the prospect of one
law applying to the land and another applying to that other property.
28. Box 3 illustrates how even a simple cross-border
succession can give rise to results that may come as a surprise
to the layman.
A simple cross-border succession
A British national dies domiciled in France, owning
a house in France, a house in England and other assets in both
countries. As the test of domicile applied by English law is more
stringent that the test of habitual residence applied by French
law the net effect would be the same under the law of France and
the law of England and Wales. The house in France and all the
moveable assets (both in France and England) would be governed
by the French law of succession; the house in England by that
of England and Wales.
In such circumstances the testator is likely to be
advised to make separate wills under the law of each jurisdiction.
The property governed by French law would be subject to the French
forced inheritance rules.
29. There was general agreement among our witnesses
that the complexity of cross-border successions does give rise,
in practice, to difficulties. The complex and sometimes even conflicting
legal rules make it more difficult and expensive to plan a succession,
to administer it or resolve any dispute. A cross-border succession,
even one that is not contentious, is likely to require the involvement
of specialist lawyers from more than one Member State. A person
may not appreciate which law is going to apply to their succession.
Anyone domiciled in the UK who owns land in another Member State
needs to know the law of that Member State governing the succession
of that land.
30. Furthermore the complexity and uncertainty
of cross-border succession make it more likely that disputes will
arise in the first place dragging those concerned into expensive
31. Richard Frimston, a solicitor practising
in the field, a member of the Law Society's International Committee,
gave an example from his own experience how even a relatively
simple cross-border succession could give rise to added expense
(QQ 53 and 87). This is outlined in Box 4.
An example of the additional expense involved
in a cross-border succession
A UK citizen died living in Germany but owning a
UK building society account. Under English law he was domiciled
in Germany and therefore German law applied. Although the basic
rule of German law was that English law should apply, the doctrine
of renvoi allowed the German authorities to apply German
law. A conflict of applicable law was therefore avoided. The German
authorities, applying German laws, issued a certificate that the
UK citizen "died a British citizen under British law"
and named the heir. But this certificate was not acceptable to
the building society to unlock the account and expert legal services
in the United Kingdom were needed to obtain authority from the
English court for the account to be released, despite the fact
that the German certificate contained all the necessary information.
Testator's choice of applicable
32. One possible way of alleviating the complexity
and expense concerning the law that applies to a cross-border
succession is to allow a person to choose which law should be
applied to his or her succession. At present this possibility
is very restricted. Choice is not permitted under the law of most
Member States, including all the jurisdictions of the UK. One
reason to limit the choice of applicable law is to ensure an appropriate
connection between the succession and the law to be applied to
it, albeit that different Member States take different views as
to what is the most appropriate connecting factor. For those Member
States which, like France, impose a forced inheritance, there
is another reason to restrict this choice. This is to prevent
a testator evading the forced inheritance rules by choosing a
law, such as that of England and Wales, which does not include
33. Cross-border succession also gives rise to
the problem of deciding which courts or other authorities should
have the power to deal with the succession. In every Member State
succession is subject to the oversight of a public authority.
In the UK jurisdictions this is done by the court (whether or
not there is any dispute over the succession). In the majority
of other Member States this function is mostly carried out by
a notary whose decisions are recorded in formal documents having
the status of authentic instruments, with courts only becoming
involved if it is necessary to resolve a dispute.
34. The question of jurisdiction is separate
from the issue of the applicable law. It is possible, for example,
for a UK court to deal with a disputed succession by applying
French law. In cases where a court of one Member State applies
the law of another to determine a dispute there is inevitably
the added expense and inconvenience of establishing, normally
by expert evidence, the substantive content of the law to be applied.
It is also inevitably the case that courts and other authorities
are more efficient and effective when applying law with which
they are familiar.
35. The laws of the Member States each include
tests for deciding whether their courts and authorities should
assume jurisdiction, seeking the appropriate connection between
the succession and their courts or authorities dealing with it.
Like the connecting factors in respect of the applicable law,
the connecting factors used to determine jurisdiction in the various
Member States differ and can conflict, with the result that more
than one Member State may have jurisdiction to deal with the matter
by its own law. A party to a dispute may perceive an advantage
in using the court or authority of a particular Member State and
try to steer the dispute to that jurisdiction even if it is not,
objectively, the most suitable.
Recognition and enforcement
36. There is yet a further issue. A decision
of a court or other authority made in one Member State in the
field of succession is not, in general, automatically recognised
and enforced by the courts of another. The difference between
recognition and enforcement is outlined in Box 5.
Recognition and enforcement
Enforcement of a judgment entails taking steps against
a person in order to give the judgment effect, for example by
the recovery of money from that person in satisfaction of a judgment.
Recognition of a judgment happens when a court of
one Member State takes a judgment of another into account in reaching
a decision on a matter before it. For example a defendant in a
dispute in Member State A may want to resist a claim on the grounds
that judgment in the same dispute has been given in Member State
B in their favour. This can only succeed if the court in Member
State A recognises the judgment of the court of Member State B.
37. Recognition and enforcement of decisions
are easier to achieve where there is trust, on the part of the
court or other authority in the Member State where the recognition
or enforcement is sought, in the procedures and decisions of the
courts or authorities where the decision is originally taken.
Making recognition and enforcement of decisions given in other
Member States easier reduces the expense involved in dealing with
cross-border successions but may call for safeguards to prevent
The scale of the problems associated
with cross-border successions
38. Statistics which illustrate the scale of
the problem are difficult to obtain. The Commission has attempted
to provide some in its impact assessment
although we did not find them particularly helpful. This impact
assessment indicates that an estimated 29 million EU citizens
are currently living outside the borders of the EU. This is about
6% of the 2006 EU population. About the same number of EU Member
State inhabitants are non-nationals, of which the majority are
citizens of another Member State. The Commission expects there
to be an upward trend in mobility as more and more EU citizens
take advantage of the internal market and the mobility it affords,
although it accepts that many citizens who work or live in another
state do so only temporarily and return to their state of origin.
The evidence of the scale of citizens buying property in a Member
State other than that of their nationality is thin.
39. The Commission's impact assessment also seeks
to quantify the added cost of cross-border successions.
It estimates that 4.5 million people die each year in the EU and
that 1 in 10 of the consequent successions involves an international
dimension. It attributes an average value of 274,000 to
cross-border estates, giving rise to average legal costs of 3%
of the value of the estates. This results in an estimate of the
costs concerned of 3.699 billion, to which it adds further
costs of the same order of magnitude on account of the extra delay
in dealing with international successions. As legal professionals
estimate that the costs of dealing with cross-border cases are
twice or three times as high as in national cases the Commission
puts forward the estimate of 4 billion as the extra legal
costs resulting from the international dimension of such successions.
The Commission does not appear to distinguish between cross-border
successions confined to the EU and those involving a third country.
40. Jonathan Faull, Director-General, DG Justice,
Freedom and Security, provided an estimate of 8 million Europeans
living in a Member State other than the one in which they were
born (QQ 97-98). This appears to be a conservative estimate
compared with that found in the Commission's impact assessment.
However he accepted that it was difficult to find precise data
in this field and that the Commission had only provided its best
41. The Government, in their partial impact assessment
published as part of the consultation document,
indicate that the quantification of numbers, costs and benefits
has not been possible. They do, however, indicate that there are
2.2 million UK nationals living in other Member States.
42. Professor Matthews, a solicitor practising
in the field and Visiting Professor of Law at King's College
London, did not accept the Commission's estimate, on the basis
that it assumed that a certain number of cross-border successions
would cause a problem when there is no empirical evidence that
this is the right number (Q 11). Although very little was
known about the statistics in this area because they were not
collected, it was the case that cross-border succession did give
rise to greater complexity (Q 1). He specifically warned
of the danger that changing the law in a general way could have
the effect of pushing the costs of solving the problems of cross- border
successions onto the general population whose successions do not,
as in the majority of cases, involve cross-border elements. He
also warned of substituting one set of complications for an existing
set (Q 39, p 5).
43. Richard Frimston pointed to his own experience
showing that cross-border succession arose in a significant number
of cases. In general terms he considered that the Commission's
proposal would make a significant impact in addressing the problems
of cross-border successions, particularly the severe problems
that arise when assets in a succession are governed by two sets
of law or by none (QQ 47-50). He saw the proposal as providing
a rough and ready solution for those he termed "ordinary
folk" without very valuable estates (Q 53). The experience
of Andrew Francis, a barrister practising in this field and author
on the law of succession, was also that there were a number of
estates containing assets outside of the UK. He welcomed the prospect
of simplification of the law of cross-border succession (p 67).
44. The law of succession involves dealing
with complex property rights that vary considerably between Member
States. Where there is a cross-border element in the succession,
and in particular where the deceased owned property in more than
one country, that law becomes even more complex with the inevitable
consequence that those involved with cross-border successions
are encumbered with greater expense and inconvenience.
45. Whilst simplification of the law on cross-border
successions, if it could be achieved, would be likely to bring
real practical benefits, there is a lack of evidence of the number
of cross-border successions and also the extent to which the complexity
and expense of dealing with the issues actually impairs mobility
and the exercise of free movement rights within the EU. This suggests
that the EU should be cautious in seeking to legislate in this
complex area. Particular care is needed to ensure that any legislation
intended to simplify the law does not have the unintended consequence
in practice of replacing one type of complexity with another.
10 A personal representative is a person appointed
to administer a succession. In Scotland the equivalent to personal
representatives are called executors-nominative or executors-dative.
In this report references to UK personal representatives include
such executors. Back
England and Wales, Scotland, and Northern Ireland have separate
laws of succession. Back
Essentially all property other than land. Back
In the case of succession that would be matters such as the administration
of the estate and who is entitled to what property. Back
See the example found in Box 4. The Commission proposes that the
doctrine of renvoi should not apply. Back
SEC (2009) 411. Back
On the basis of an external study commissioned by it from EPEC. Back