New EU Succession Rules enter into force

On 17 August, after years of negotiations, followed by years of preparations, Regulation 650/2012 of the European Parliament and of the Council of 4 July 2012 on jurisdiction, applicable law, recognition and enforcement of decisions and acceptance and enforcement of authentic instruments in matters of succession and on the creation of a European Certificate of Succession (the ‘Regulation’) enters into force. Although toned down from its original proposed version, the Regulation brings a ‘revolution’ in private international law and substantive succession and property law.

Until now each legal system deals with its own succession cases based on the lex rei sitae principle: the law of the place where the object is situated, decides on the applicable succession law and jurisdiction of the court. Until 16 August 2015, international succession cases – i.e. situations in which there is either a person with multiple nationalities, or property, in whatever form, in different countries. The Regulation brings revolution to this by creating a uniform regime that applies to an entire succession.

This uniform regime brings change to all systems in respect to the already mentioned lex rei sitae, but for some countries also in relation to the same regime for movable and immovable property. In any case all legal systems will soon have to apply foreign succession law. Like any part of private law, succession law is not completely isolated. It leans on property law to work. For example, in many legal systems the right of usufruct is an important tool to manage an estate, or in English law, trust law is used to deal with the way in which property rights pass on to the heirs. (Although the Regulation does not apply to the United Kingdom, that has not decided to opt-in, UK citizens will still be able to bring English & Welsh, Scots or Northern-Irish law into continental European legal systems that do apply the Regulation).

The two large exemptions are tax law, which is a real missed opportunity, and the large part of regular property law (‘the nature of property rights’, in the language of the Regulation). However, it will be precisely in respect to these two parts of private law, where problems will immediately arise. Legal specialists dealing with an cross-border inheritance will have to figure out the fiscal consequences of a single legal system applying in multiple jurisdictions. Moreover, the applicable law will bring with it special aspects of property law that are ‘imported’ into succession law. Hence a last will can easily contain a right of usufruct or any other special property right that must be dealt with in another legal system. The Regulation prescribes adaptation or transformation of foreign property rights into national equivalents, but this is deemed to lead to major issues. For example, it is unclear who actually should carry out the adaptation, and who will control whether adaptation is successful. Although legal systems have been adapting foreign property rights into national equivalents for centuries, this is now no longer a national competence. Instead, this is now an EU competence to be interpreted by the Court of Justice of the European Union (CJEU).

Legal professionals, judges, notaries and land registrars, have been working hard to prepare themselves. Reality, as I have tried to indicate here, will present problems very complex and perhaps even thus far unforeseen. Academics should closely follow these developments, analyse and present solutions in publications. It is very likely that soon cases will be brought to the CJEU, for example on the scope of the Regulation and on the questions of adaptations (competence and relevant authortities), and much more.

After two years of preparation, this is therefore only the beginning. More to follow from M-EPLI soon!

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