The European Union (EU) regulation No 650/2012 of the European Parliament and the Council regarding the succession upon death entered into force as of August 17, 2015, according to Article 83 Section 1 and Article 84. The regulation contains provisions which regard the jurisdictional competence (Article 4 and the following), but also provisions about the applicable law (Articles 21 and 22), the appointment and powers of an administrator of the estate (Article 29 and the following), and the recognition and execution of foreign court decisions and authentic documents regarding issues of law of inheritance (Article 39 and the following).
The regulation also introduced a European Certificate of Succession (Article 62 and the following) through which every claimer at the succession can prove their entitlement in a Member State of the EU without further formalities. The aim of the ordinance is to create a unity between the applicable law and the jurisdictional competence. Therefore, the inheritance proceedings should fall under the jurisdiction of a single court which applies (if possible) the law of its state. Furthermore, foreign court decisions and authentic documents regarding issues of law of inheritance should be recognized automatically to avoid an unnecessary delay of the proceedings and execution. Due to the large range of the regulation, this article will only analyze the applicable law according to the regulation.
1. Application field
1.1 Universal application
The regulation is applicable in all Member States of the EU with the exception of Denmark. The United Kingdom and Ireland are not bound by the regulation, but do not reject the possibility of its acceptance in the near future (Frodl). All those states can make use of the regulation through opting in (a legal process through which a regulation or a part of it is being applied on a certain case due to the decision of the court or of the parties, even though the case is not being covered by the statutory regulation). In Croatia the regulation applies because the state is bound by acquis communautaire (Rudolf), which is a basic principle of the EU-law. It covers all treaties, EU legislation, international agreements, court verdicts, fundamental rights provisions, and horizontal principles in the treaties such as equality and non-discrimination.
The referred jurisdiction is to be applied even if it is not the jurisdiction of a Member State. This may be the case if, for example, the testator has his habitual residence in Serbia, a non-Member State of the EU. According to Article 21 Section 1, Serbian law is to be applied on the succession as a whole (under the condition that Article 21 Section 2 does not apply, as it will be later explained).
1.2 Temporal application
The ordinance is to be applied, according to the provisions of the regulation (Article 83), if the testator’s death occurs on or after August 17, 2015.
2. Material scope
The law which is to be applied according to the regulation regulates the succession as a whole: for instance the causes, time and place for the opening of the succession, the capacity to inherit, the particular causes of the incapacity to inherit or receive, disinheritance and debarment from the succession etc. (Article 23 Section 1 Letters a to j). However, it leaves certain issues unregulated (see Article 1 Section 2 Letters a to l). This may be a problem for the clarification of preliminary issues. Before referring to the applicable law of a certain state there can be other question which would need to be cleared. For instance, in Austrian law, an adopted person can only inherit, if the adoption is valid, in case of a legal (and not arbitrational) heritable succession. This validity of the adoption is not cleared by the regulation, which means it is preliminary. The issue must be cleared either by the referred law or by the law of the State, whose court has been called to solve the matter of inheritance. The prevailing opinion pronounces itself for the second view.
3. Applicable law
The subject of the regulation is the conflict-of-laws. The references of the regulation are in most cases comprehensive (Article 34). This means that if the regulation refers to the law of a Member or Non-Member State, it refers not only to its domestic but also to its Private International Law. Therefore, the ordinance allows ‘the renvoi’, which means that the referred law can either refer to the one of another state or back to the referring one. The exceptions to the rule are Article 21 Section 2 (appliance of the law of the state with which the testator had the closest connection), Article 22 (appliance of the chosen law), Article 27 (the law which is to be applied on the formal validity of dispositions of property upon death made in writing), Article 28 Letter B (the law which is to be applied on validity as to form of a declaration concerning acceptance or waiver) and Article 30 (appliance of mandatory rules). These are transmission provisions, which means that they refer directly to the domestic law of a specific state, excluding its Private International Law.
No matter which law applies on the inheritance matter, the mandatory rules of law shall always have priority, according to Article 30. Those are the provisions which regulate a special succession, due to familiar, economic, or social reasons. An example could be § 14 WEG in Austrian law, which contains special rules for the succession in case of the death of a co-owner of a residential property. The mandatory rules apply only if the objects of succession are immobile assets (for instance, an enterprise) or special categories of objects, located in the state whose courts are called upon to give a decision on the inheritance issue. This state may apply its mandatory rules along the referred law.
3.2. Succession upon death of the testator
Article 21 Section 1 provides that, regarding the succession, the law of the state in which the testator had his ordinary residence must be applied. If it is clear from all the circumstances of the case that, at the time of death, the deceased was manifestly more closely connected with a State other than the State whose law would be applicable under paragraph 1, the law applicable shall be the law of that other State (Article 21 Section 2). For example, if the deceased had his habitual residence in Germany, but he had Austrian citizenship and his family lived in Austria, Austrian Law is to be applied. In practice, the so called escape clause may lead to legal uncertainty, as it is very difficult to prove closer connection with another state. The regulation does not provide for concrete criteria in this regard.
The deceased can also make a choice of law and clear all uncertainties (Article 22). He may choose only the law of the State whose nationality he possesses at the time of making the choice or at the time of death. In case the testator has multiple nationalities he may choose the law of any of the States whose nationality he possesses at the time of making the choice or at the time of death. Article 22 is an expression of private autonomy. Its limitation aims to avoid attempts of evasion from the jurisdiction of a state. If for example the testator has his ordinary residence in Austria as well as Austrian citizenship he may attempt to bypass the relative strict Austrian forced heirship (Rabl) by choosing English law, which does not provide for it. Such a result is highly undesirable. On the other hand, such attempts may also be undertaken by successors. Article 21 Section 2 gives them the possibility to choose the jurisdiction which is to be applied on the succession as a whole by determining his ordinary residence (in circumstances in which the testator is not in possession of mental health). The relatives get to choose through this method, the law of a state which provides for example forced heirship (Scheuba).
3.3. Dispositions on property upon death other than agreements as to succession
Dispositions upon death are for example the testamentary dispositions which the testator makes before his death and which are revocable. An agreement as to succession is being concluded between two living persons. Through it, one person will be appointed irrevocably as heir. Agreements as to succession have priority in front of disposition upon death, which means the entitled person may exercise her rights against the other heirs. Agreements as to succession are being concluded between spouses and laps in case of divorce. (This description applies on the agreement as to succession from the perspective of Austrian law.)
The presented rules apply also on the admissibility and the modification or revocation of a disposition on property upon death other than agreements as to succession (Article 24). The term ‘substantive validity’ regards questions which concern the conditions under which the disposition upon death is valid. For example, in Austrian law, a person has the capacity to make a disposition upon death only if she reached the age of eighteen and is mentally healthy. Persons who have reached the age of sixteen or who are mentally ill may dispose only in front of a notary or before the court. The disposition is valid if the person in cause had the cognitive faculty required by the disposition upon death (§§ 569, 568, 566 ABGB). Among those there are certain other requirements which have to be fulfilled like, for instance, the will to make such a disposal (animus testandi), which is not existent if the disposition is, for example, only a draft.
3.4. Agreements as to succession
If the agreement to succession regards the succession of only one person (for instance A appoints B as an heir through the agreement in question), the same rules are to be applied on its admissibility, its substantive validity, and its binding effects between the parties, including the conditions for its dissolution (Article 26).
The admission of an agreement as to succession regarding the succession of several persons succession (for example, A and B mutually appoint each other as heir through the agreement) is subject to the law which applies on the succession as a whole of all the parties involved (see 3.2.). If one party has his ordinary residence in Germany and the other in France, both French and German law could be applied on the admission. According to the law, the agreement must be admissible according to both statutes. If the agreement is admissible, then the law which applies on its substantive validity, its binding effect, and the conditions for its dissolution is the one which governs the succession of a single party (French or German law). The jurisdiction to which the agreement as to succession has the closest connection prevails (Article 25 Section 2).
3.5. Formal validity of dispositions of property upon death made in writing
The form of a disposition of property upon death must correspond to one of the laws listed in Article 27. The relevant law concerning the form is the one of the State in which the disposition was made or the agreement as to succession concluded. Another source of relevant law is that of a State whose citizenship the deceased or at least one of the persons whose succession is concerned by an agreement as to succession possessed or in which those persons had their domicile, either at the time of the disposition or of the agreement’s conclusions, or at the time of death.
The law of the state in which the persons in question have their ordinary residence is also relevant. The time which is to be considered in this case is the same. In so far as immovable property is concerned, the applicable law is also the one of the State in which that property is located.
The Austrian citizen A made a disposition upon death in England, where he was on a business trip. His domicile was in France, his ordinary residence in Germany where he had some businesses. The form of the disposal is valid if it corresponds to Austrian, English, French or German Law. The object of the disposition was a house located in Spain. Spanish Law is therefore to be applied on the formal validity.
The same rule applies to the form of modification or revocation of dispositions of property upon death (Article 27).
3.6. Validity as to form of a declaration concerning acceptance or waiver
The relevant laws for this issue are the ones which apply to the succession upon death (Articles 21 and 22, as previously explained). A declaration concerning acceptance is a declaration of the heir through which he agrees to take possession of the real estate. A waiver is the exact opposite.
3.7. Adaption of in rem rights
If a person invokes an in rem right, to which he/she is entitled under the law applicable according to the regulation, and the law of the Member State in which the right is being invoked does not know the in rem right, then it is to be adapted according the law of the Member State (Article 31). In rem rights are those which grant the entitled person a direct ownership over an item, are noticeable on the outside (for example through possession) and have absolute protection by law (the infringement of an absolute right is – according to Austrian Law - always illicit, the one of a relative right only under certain circumstances). In rem rights are for example: property law, the pledge, the easement etc. Some jurisdictions do not know the difference between absolute and relative rights which implies structural adjustment.
3.8. The ‘Commorientes’
If two or more persons die in circumstances in which the order of their deaths is uncertain, they have no rights on the succession against each other (the so-called ‘Commorientes’ according to Article 32). A and B made an agreement as to succession through which they mutually appointed each other as heirs. A and B die in a car accident, but the order of their death cannot be established. The heirs of A cannot make any claim against the heirs of B. The same rule is to be applied reversely.
The Regulation is an expected result of the increasing need for clarity in cross-border inheritance cases. It is true that it does not cover all the legal issues, like legal capacity or capacity to contract, but it has contributed to the elimination of the complicated process of reference through the Private International Law of different states. This purpose was achieved through the limitations of the comprehensive reference. Due to the alignment of forum and law, which determines that the inheritance issue has to fall solely under the jurisdiction of the courts of a single state, in which the courts apply the law of their state, the problem of separation of the estate has been solved. Separation of the estate means that on different parts of the estate, different jurisdictions are to be applied because of the different provisions of the Private International Law of the states in which those parts where located. The Regulation provides for a unified criterion for the reference, which is the ordinary residence, the state with the closest connection with the testator or the choice of law.