FREE CHAPTER from ‘A Practical Guide to the EU Succession Regulation’ by Richard Frimston

CHAPTER ONE – INTRODUCTION

Originally there were six members of European Economic Community (“EEC”) which expanded and later became the European Community (“EC”).

Since, the accession of Croatia in 2013, and the secession of the United Kingdom on January 31, 2020, there are now 27 Member States (“MS”) of the European Union (“EU”) in an area of Freedom, Security and Justice with rights of free movement of people, capital, goods and services – the Single Market – with a population of a little under 450 million.


EU institutions

The European Commission is the civil service of the EU that proposes legislation. The Council of the European Union represents the individual member states. The European Union Parliament has members directly elected by citizens in individual constituencies.

Some legislation requires unanimity from the Council of Ministers with no input from the European Parliament, whilst other legislation under what is known as the ordinary legislative procedure requires a majority from the Council of Ministers and a majority from the European Union Parliament.

European Union governments recognised that judicial co-operation was important. Back in 1968, the original six Member States agreed on common rules on jurisdiction and enforcement of judgments in civil and commercial matters now known as the Brussels I Regulation, but this always excluded succession issues. In 1993, the Maastricht Treaty identified judicial co-operation in civil matters as an area of common interest for EU Member States. The Treaty of Amsterdam made judicial co-operation in civil matters a European Community policy linked to the free circulation of people.

The Lisbon Treaty came into force on December 1, 2009 and set out the current basis for European Union law making. A working knowledge of the structure of the consolidated versions of the EU Treaties is helpful when trying to understand the European Union law making process. The Rome Treaty Establishing the European Community and the Maastricht Treaty on the European Union, have been replaced by the Treaty on the European Union (“TEU”) and the Treaty on the Functioning of the European Union (“TFEU”).

Title V of Part Three of TFEU deals with what is now known as the Area of Freedom, Security and Justice. Chapter 3 of Title V of Part Three of TFEU deals with judicial co-operation in civil matters, including succession and the Regulation. It is under this chapter that succession matters have been addressed.

What was the problem?

Different EU Member States had completely different private international law rules for succession. For example, some used “domicile” but with a different definition from the common law one. The private international law of the majority of EU member states previously ruled that succession law was governed by the law of an individual’s nationality and that the entire estate both movable and immovable was governed by that law. Whether “law” meant that state’s internal law or included its private international law, i.e. whether renvoi was accepted, and whether directly forwards or backwards or also indirectly, varied from state to state. Renvoi is complex and is looked at in detail in Chapter 22.

There was no agreement between legal systems as to which was the applicable law. A court decision or inheritance certificate in one member state was not recognised, accepted or enforced in another. The conflicts involved were often irreconcilable and certainly added expense and time in the administration of estates with cross border elements.

There are terminology problems around the world and particularly across the Atlantic. Private international law as known in Europe is usually known as conflicts rules or conflicts of laws in the Americas. Applicable Law is often known in the Americas as the choice of law. In the EU, “choice of law” is often used for a professio juris or the ability for an individual to make a choice as to the succession law that is to apply. These issues are considered in chapter 2.

The European Union and the Single Market

The harmonisation of private international law for succession was first declared a priority in 1998. The Dörner and Lagarde Report was published in 2002 and the Commission Green Paper on Wills and Succession in 2005. The draft of a Succession Regulation was then published in October 2009.

The Regulation had to be agreed by both the EU Parliament and the Council of Ministers and was subject to qualified majority voting (under the old rules, the new Lisbon qualified majority voting rules not coming into effect until 2014).

The most detailed analysis and critique of the draft Succession Regulation was probably provided by the Max Planck Institute of Hamburg published in Rabels Zeitschrift 74 (2010) issue 3 but available via the EU Parliament website.1

The Max Planck Institute proposals did not suggest any changes in relation to the definition of habitual residence but did suggest some limits to clawback and various other additional suggestions including:

  • choice of jurisdiction

  • further elements as to choice of applicable law

  • provisions for harmonisation as to formal validity of Wills

The Report is a useful summary of many issues and repays study.

Negotiations at the Council of Ministers level were confidential to a degree. An interim document was published on 6 June 2011.2 A final version (18475/11 ADD 1 JUSTCIV 356 CODEC 2397 – “JUSTCIV 356”)3 was published on 15 December 2011, subject to further discussions and agreement on the issues of administration and clawback.

Political agreement was finally reached in March 2012 and the final Succession Regulation (EU) No.650/2012 entered into force on 17 August 2012. However, most of the Regulation did not apply until 17 August 2015.

Opt ins

Although approval of the Regulation was subject to qualified majority voting, Ireland (and the UK whilst it was a Member State) has an individual continuing opt-in choice in relation to matters within Title V Area of Freedom, Security and Justice under Protocol 21 annexed to TEU and to TFEU. Title V Regulations did not apply to Ireland (or to the UK) unless within three months of the proposal being made, Ireland (or the UK) decided to opt in under art.3 of Protocol 21. Under the Irish constitution, such decision has to be ratified by the Irish Parliament.

The UK and Ireland separately decided not to opt in to the Regulation. The UK and Ireland took full part in the negotiations on the detail of the Regulation, but not having opted in, could not take part in the qualified majority voting. However, Ireland can, under art.4 of Protocol 21, still opt in at a later stage, if it wishes.

Denmark is also not bound by Title V matters by virtue of Protocol 22. However, Denmark has no ability to opt in, unless it agrees to the revocation of Protocol 22 and to be bound by all Title V matters as a whole. In 2015, by referendum Denmark decided to retain its Protocol 22 opt out.

No other Member State has any such opt-in rights, and the Regulation, in the same manner as other EU regulations (other than those under enhanced co-operation), but unlike EU Directives, apply directly without any further local legislation. The Regulation once fully effective therefore automatically became the binding law within the SR Zone and overrode conflicting provisions in local member state civil codes or legislation.

Notwithstanding the fact that Denmark and Ireland (and the UK whilst it was a Member State) are not bound by or affected by the Regulation, it is still part of the overall EU legislation or Acquis and may therefore be the subject of overriding treaty obligations between all Member States and its operation within the 25 Member States bound by it acknowledged by these other two non-participating Member States.

Following the 2016 Referendum in the UK, notice was served by it in March 2017 under art.50 TEU with a view to the UK leaving the EU by April 2019, subsequently extended by agreement to 31 January 2020. Under the Withdrawal Agreement, the UK will continue to be treated within the EU as if it were still a Member State until 31 December 2020. However, since the UK is not currently bound by the Regulation, the fact that the UK will no longer be an EU Member State generally, will not have any direct effect on the working of the Regulation, other than to clarify for the purposes of art.34 and renvoi that it definitely is not a Member State (see chapter 22).

Nevertheless, from the perspective of a third State, the Regulation still applies to assets situated in the 25 Member States that are participating, to which the Regulation applies (all EU Member States other than Denmark and Ireland – “the SR Zone”), to the succession of persons dying habitually resident there or to nationals of such states who make a valid professio juris, a valid choice of such states’ law. It is important to understand that the Regulation will govern the private international law for succession in the SR Zone, not only between participating Member States but also between both participating Member States and the non-participating member states, Denmark and Ireland, and also between participating Member States and third States outside the EU.

The Regulation may also apply when the private international law of Denmark or Ireland or of a third State directs the applicable law to be one within the SR Zone and does not accept any renvoi. The provisions of the Regulation are thus very important for all practitioners outside as well as inside the SR Zone to understand in any event.

The Need for Regulation

The Commission in the European Judicial Network website in 2012 stated that the Succession Regulation “should considerably simplify the rules on successions with an international dimension in the European Union. The aim is to make life easier for citizens by laying down common rules enabling the competent authority and law applicable to the body of assets making up a succession, wherever they may be, to be easily identified. In addition to providing more effective guarantees for the rights of heirs, legatees and other interested parties, the proposed Regulation will take some of the stress out of succession planning by enabling people to choose the law that will govern the transmission of all their assets. The European Commission is also proposing the creation of a European Certificate of Succession enabling heirs or the administrators of a succession to prove their capacity easily throughout the EU.” There is much debate as to whether the Regulation has considerably simplified the rules in all cases. Probably for simpler cases, it has.


Legal Basis

One of the arcane issues of any EU legislation is its legal basis. All EU legislation must be based on an article of the TFEU. Thus, article 81 TFEU deals with ‘judicial co-operation in civil matters having cross border implications, based on the principle of mutual recognition of judgments.’ Article 81(2) sets out some of the general aims, but article 81(3) makes it clear that any such matters relating to family law must be passed unanimously (under special legislative procedure) rather than by majority voting. Article 114, by contrast, deals with the ‘approximation of laws’. The precise legal basis for EU legislation has sometimes become a political football. Under protocol 21, the Ireland has (and the UK had) an opt-in arrangement for any Title V, Part III TFEU measures. Therefore, whether or not a measure is based on an article within that Part affects the right of Ireland to decide whether to opt-in or not.

The Regulation on Public Documents (EU) 2016/1191 was based on article114 TFEU rather than article 81 TFEU; it did not give the UK any rights not to opt-in under protocol 21. The UK sometimes unsuccessfully attempted to argue that protocol 21 should apply whenever legislation touched upon Title V Part III matters, even if not so based.

The EU Parliament produced a helpful working document on this issue in December 2015. It reminded that the Court of Justice of the European Union (CJEU) guidance states that civil procedure should be dealt with under article 81 TFEU, while article 114 TFEU should deal with the internal market.

The relevance of this is that the mechanisms by which legislation is produced has a direct bearing on its shape. Whether legislation requires all member states or only a majority of states to agree, creates a very different political landscape. Whether a single member state has a veto or not, can produce very different results.

The Commission’s Explanatory Report4 referred to this issue in some detail at para.3.1:

Article 67(5) of the Treaty stipulates that the Council may take the measures provided for in Article 65 using the co-decision procedure laid down in Article 251 of the Treaty, except with regard to “aspects relating to family law”.

It should first be emphasized that the vast majority of Member States, with the exception of the Nordic countries, classify the law of succession as a matter distinct from family law on account of the fact that it mainly covers property. Even at the level of substantive law, there are significant differences between the two matters. The main aim of the law of succession is to define the rules for passing on the inheritance and for regulating the transfer of the inheritance itself. Unlike inheritance law, the objective of family law is to govern above all the legal relationships linked to marriage and partnerships, filiation and the civil status of persons. Its basic social function is to protect family ties. Moreover, in contrast to family law, where the wishes of individuals play a very minor role and the vast majority of ties are governed by public policy, the law of succession remains a matter where the wishes of the entitled party play an important role.

There is therefore sufficient autonomy within these two branches of civil law for these matters to be treated separately from each other. Furthermore, as this is an exception, Article 67(5), second indent, of the Treaty must continue to be interpreted and applied strictly by the institutions. The exception is therefore not applicable to this Regulation as far as succession is concerned.”

Sweden, as one of the Nordic countries, attempted to argue, but failed in its attempt, that the Regulation was a matter of family law requiring unanimity. It did not require unanimity, and passed on the basis of majority voting.

In the UK all matters relating to divorce tend to be lumped together. A court will take jurisdiction and apply its own law to matters of divorce, parental responsibility, matrimonial property and maintenance obligations. UK family practitioners as a result very rarely, if ever, consider matters of foreign law.

Succession issues, by contrast, in the UK are divided between matters of formal and substantive validity of testamentary dispositions, administration of estates and the material applicable succession law. UK private client practitioners are therefore very used to applying different laws to various aspects of a succession.

Because of the differences under articles 81(2) and (3) TFEU, we have seen a salami slicing approach which deals with separate slices of the issues under separate regulations affecting private international law and divorce (in the broadest sense) but a contrasting kitchen sink approach or everything thrown in together for succession.

In relation to divorce we have seen the Brussels II Regulation (EC) No 2201/2003 (Brussels II bis) that deals with jurisdiction, recognition and enforcement for divorce and parental responsibility and Rome III as the enhanced co-operation measure (since it was not possible to obtain unanimity for a regulation) dealing with applicable law on divorce. The Maintenance Obligations Regulation (EC) No 4/2009 deals with jurisdiction, recognition and enforcement for maintenance obligations and the 2007 Hague Protocol deals with applicable law of maintenance obligations. The Enhanced co-operation Regulations on Matrimonial Property Regimes (EU) No 2016/1103 and on the Property Effects of Registered Partnerships (EU) No 2016/1104 have been effective with transitional provisions in 18 member states since January 2019 and are referred to in chapter 13. Rome III, another enhanced co-operation Regulation, does not apply in Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, Ireland, Netherlands, Poland, Slovakia, Sweden and UK. The 2007 Hague Protocol does apply in all EU member states including Ireland, but not in Denmark and the UK. It is the legislative straitjacket that compels the EU Commission to obtain unanimity among member states in relation to family-law matters that has produced this very confusing mess5.

It was inevitable when the EU Commission turned to matters of succession and in legislating outside the confines of article 82(3) that it was bound to go overboard and throw in the kitchen sink. The Regulation was the most ambitious (and some would argue, imperialistic) piece of EU legislation to date. Not only does it include issues of jurisdiction; recognition and enforcement and applicable law, often on a worldwide basis, in relation to every conceivable aspect of succession including administration; but also formal and substantive validity not just of testamentary dispositions, but also succession agreements. It also includes the new European Certificate of Succession and the acceptance and enforcement of notarial and other instruments.

It is important to remember that the Regulation applies to matters that in the UK and other third States may not be classified as succession. Succession under the Regulation includes not only inheritance but also administration and the validity of written dispositions of property upon death. The particular complexities of clawback and the uncertainties and extent to which it is actually a matter within succession is considered in chapter 18.

In third States, the different connecting factors of the different areas within the Regulation’s definition of succession must be kept firmly in mind.

It is perhaps the over-ambitious scope of the Regulation that brings with it so much complexity and uncertainty. If it had been less ambitious, it is more likely that the UK and Ireland might have opted in.


Language and Constructive Ambiguity

The difficulties of agreeing EU wide legislation across differing legal systems and in 24 languages is formidable. Draft Regulations are often first prepared in French and then subsequently translated. Differing threads of translation can produce subtle changes and yet each language version is to have equal weight.

Constructive ambiguity as a term and the uncertainties that it brings are much discredited. However, each piece of European Union legislation is a pragmatic compromise. In order for a regulation to be agreed and to work, an element of uncertainty is inevitable if it is to be broad enough to apply across all of the EU different legal systems and languages. Such ambiguities are only resolved as and when they reach the CJEU. However, many of the particular ambiguities within the Regulation are still appearing out of the woodwork.

Comitology

Comitology is a form of delegated legislation similar to a Statutory Instrument in the UK. A Regulation can give the Commission implementing powers and can also stipulate that the Commission is to be assisted by a committee when drafting the resulting implementing regulation. Some implementing regulations, if uncontroversial, can be adopted by the Commission, otherwise, they must be approved by a qualified majority.

The Court of Justice of the European Union (CJEU)

The CJEU is divided into two courts, the Court of Justice that deals with requests for preliminary rulings from national courts, certain actions for annulment and appeals and the General Court that rules on actions for annulment brought by individuals, companies and, in some cases, EU governments. In practice, this means that the General Court deals mainly with competition law, State aid and the like. The judges and advocates general are appointed jointly by national governments. In each Court, the judges select their President.

In the Court of Justice, each case is assigned a judge-rapporteur, and one advocate general. In the General Court the procedure is similar, save that most cases are heard by three judges and there are no advocates general. Cases in both courts usually proceed with an initial written stage and then an oral stage.

The parties give written statements to the Court. Observations can also be submitted by national authorities, EU institutions and sometimes private individuals. All of this is summarised by the judge-rapporteur and then discussed at the Court’s general meeting, which decides whether a public hearing needs to be held, whether an official opinion from the advocate general is necessary, and how many judges will deal with the case, depending on the importance and complexity of the case.

At the public hearing, lawyers from both sides put their case to and are questioned by the judges and the advocate general. If the Court has decided an Opinion of the advocate general is necessary, this is given some weeks after the hearing. The judges then deliberate and give their verdict.

CJEU decisions coming from a civil law tradition are unanimous and are therefore always concise. There is no scope for dissenting opinions or obiter dicta. This can puzzle and annoy common law practitioners. However, what is not stated is often as important as what is.

CURIA6 is the home website for the CJEU where further details of the courts, copies of judgments and advocate general opinions and details of forthcoming cases can be found.

Other Institutions

The Hague Conference (HccH)

The Hague Conference on Private International Law (HccH) is an inter-governmental organisation currently with 84 individual state members. The European Union is also a member as a Regional Economic Integration Organisation.

The statutory mission of HccH is to work for the progressive unification of PIL rules. It attempts to find internationally agreed approaches to the PIL concepts of jurisdiction, applicable law, and the recognition and enforcement of judgments in areas ranging from commercial law, banking law and international civil procedure, to child protection, marriage and personal status. It generally meets every four years in plenary session to negotiate and adopt conventions and to decide upon future work. The conventions are prepared by special commissions or working groups held several times a year, usually at The Hague. The HccH working language was originally only French, but since 1960 has been both English and French.

The most widely ratified conventions deal with a broad range of topics: the abolition of legalisation – Apostille [HccH 12], service of proceedings [HccH 14], the taking of evidence abroad [HccH 20], access to justice [HccH 29], international child abduction [HccH28], cross border adoption [HccH 33], formal validity of wills and testaments [HccH 11], maintenance obligations [HccH 23, HccH 24 and HccH 39] and recognition of divorce [HccH 18].

In addition to HccH 11, the Conventions that are of particular relevance to the Regulation are:

  • The Convention of 5 October 1961 Abolishing the Requirement of Legalisation for Foreign Public Documents7 (‘HccH 12’) ratified by all EU Member States, other than Bulgaria, Italy, Latvia, Lithuania, Portugal and Romania;

  • The Convention of 2 October 1973 Concerning the International Administration of the Estates of Deceased Persons8 (‘HccH 21’) ratified by Czechia, Portugal and Slovakia;

  • The Convention of 1 August 1989 on the Law Applicable to Succession to the Estates of Deceased Persons9 (‘HccH 32’) that had been ratified by the Netherlands but because of the implementation of the Regulation, HccH 32 was denounced by the Netherlands with effect from 1 April 2015;

  • The Convention of 19 October 1996 on Jurisdiction, Applicable Law, Recognition, Enforcement and Co-operation in Respect of Parental Responsibility and Measures for the Protection of Children10 (‘HccH 34’) ratified by all EU Member States and also Norway, Switzerland and the UK.

Ratification creates the legal obligation for the ratifying state to apply the convention. The HccH website, www.hcch.net, is a very useful resource that sets out updated information on the Hague Conventions, the texts of the various Conventions, status reports as to those States that have signed, ratified or acceded, bibliographies, information regarding the central authorities and explanatory reports.

ICC/CIEC

The International Commission on Civil Status (ICCS)/(CIEC) Commission Internationale de l’Etat Civil11 is an intergovernmental organisation whose aim is to facilitate international co-operation in civil status matters and to improve the operation of national civil status departments. To this end, it keeps up to date documentation on legislation and case law setting out the law of the member States, provides those States with information and expertise, carries out legal and technical studies, prepares publications and drafts Conventions and Recommendations.

Whilst the United Kingdom was a member it did not ratify any of the ICCS conventions. The guide to civil status in the UK is however of value.12 ICCS has however become less significant since it has now lost most of its European Members. Its current members are now only Belgium, Greece, Luxembourg, Spain, Switzerland and Turkey.

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5 Not helped in the UK by the application of the Maintenance Obligations Regulation internally, but not Brussels II bis, Villiers v Villiers [2020] UKSC 30