Abstract
A key law of the European Union countries concerning inheritance issues is the EU Reg. 650/2012, which came into force on the 17th of August 2015. The European principles in succession matters are regulated by the recital No. 20 et seq. of the same Regulation.
The purpose of these brief notes is to provide some guidelines that European practitioners in law should keep in mind when approaching cross-border successions.
- Cue for reflection.
The starting point for this reflection was the ruling of the Federal Justice Court of Germany (Bundesgerichtshof – BGH) by decision of 29 June 2022 in Case IV ZR 110/2021*.
In this case the Court established that English law regarding the compulsory portion is not applicable due to a violation of German public policy if a UK national (with the closest connection to England) with habitual residence in Germany elects British law to govern “succession as a whole” pursuant to Art. 22 of the European Succession Regulation (Reg. UE 650/2012).
The testator, who had English citizenship and had lived in Germany for over 50 years, had elected English law to govern succession as a whole. The plaintiff, who was adopted by the testator and excluded from the succession by the will claimed the compulsory portion. - The Decision.
Federal Court of Justice confirmed that, pursuant to Art. 22 (1), 83 (4) of the European Succession Regulation (also referred to as Brussels IV) a British citizen may elect UK law to govern succession. It then analysed the question whether the application of English violates the German law in the specific case and thus inapplicable.
Contrary to the view of the revision, the application of English law is, at least in the case at issue here, obviously incompatible with the German public order. This is because English law is in such serious contradiction to the constitutionally guaranteed distribution of the estate under German law that its application in the case here is unacceptable. This has the consequence that it does not apply here. […]
As an institutional guarantee, the right to a compulsory portion is part of the existence of German ordre public. In its landmark decision of April 19, 2005, the Federal Constitutional Court clarified that the right of the testator’s children to a compulsory portion is protected by reference to the guarantee of the right to inherit under Article 14.1 sentence 1 in conjunction with Article 6.1 of the Basic Law. Article 6 (1) of the Basic Law, the right of the testator’s children to a compulsory portion has the character of a fundamental right in the sense of a minimum economic share in the testator’s estate which is in principle irrevocable and independent of need. This follows from family solidarity and the family-protecting function of the right to a compulsory portion derived from this (see BVerf GE loc. cit. [juris para. 64 ff.]). Article 6.1 of the Basic Law protects the relationship between the testator and his or her children as a lifelong community within which parents and children are not only entitled but also obliged to assume responsibility for one another both materially and personally.
According to the Federal Court of Justice, a corresponding guarantee does not exist in the English law. The relevant provisions of the Inheritance Act 1975 do not contain a claim to a compulsory portion comparable to the German law.
In fact, reading the Inheritance Act of 1975, there is no protection of the rights of legitimates, but the right to apply to the court for an order to make […] reasonable financial provision for the applicant**.
- European Normative Context.
Since 17 August 2015, except for Ireland and Denmark (obviously also Great Britain, which had not ratified the rule and now even more so after Brexit), for EU member states, the law applicable to the deceased’s succession finds its regulation in the EU Reg. 650/2012.
The main criterion for establishing the law applicable to the succession is habitual residence or, in any case, the country with which the closest links can be found (Art. 21). This may be waived in favor of the law of the country of the person’s citizenship, with a choice to be made in a will (Art. 22).
Recital 50 of the Regulation, however, states the law which, under this Regulation, will govern the admissibility and substantive validity of a disposition of property upon death and, as regards agreements as to succession, the binding effects of such an agreement as between the parties, should be without prejudice to the rights of any person who, under the law applicable to the succession, has a right to a reserved share or another right of which he cannot be deprived by the person whose estate is involved. - Conclusions.
The decision of the German Courts concerns the protection of a right guaranteed under the German law, which is not protected under the law chosen by the testator, the English one.
The ratio decidendi is in line with the prevailing interpretation of the EU Regulation. Similar conclusions are also found in the Italian and French Supreme Court decisions.
Nunzio A.A.M. Distefano
Lawyer
*The full German content of this decision can be found here.
** The content of the act is available in English here.