Carmelo Gafà Daniele Gafà The merits or otherwise of the selection of ‘the last Habitual Residence of the Deceased’ as the principal connecting factor in the EU Succession Regulation - No. 650/2012 Dr Carmel Gafa’ (Doctor of Laws (Melit.), Notary Public of Malta, Diploma Business Law and Accountancy) graduated from the University of Malta in 1990 with a Doctor of Laws (LL.D) and a Diploma in Business Law and Accountancy. Dr Gafa’ subsequently obtained his warrant as a Notary Public and Commissioner of Oaths and is nowadays a highly respected member of the Maltese Notarial College. With over 30 years of experience in the field, Notary Dr Carmel Gafa’ LL.D nowadays manages Gafa’ Notaries and Associates, operating from offices located in the North and South of Malta, in Mosta and Paola respectively. Comprising a fullyfledged notarial firm, Gafa’ Notaries and Associates offers a multitude of notarial services, ranging from property transfers, wills and contracts to company incorporation, estate planning and matrimonial agreements. Dr Daniele Gafa’ (Master of Notarial Studies (Melit.), Bachelor of Laws (Hons.)) graduated from the University of Malta with a Master of Notarial Studies with merit, as well as a second-class upper Bachelor of Laws (Hons) degree. Having aspired to follow in his father’s footsteps, Dr Daniele Gafa nowadays practices as an Associate Notary at Gafa’ Notaries and Associates, under the tutelage of his father. Given their vast clientele, the firm employs several legal interns and secretaries, while also working with a multitude of professional entities, including banks, audit firms, architects and lawyers, ensuring that their clients are provided with the complete, professional service they so desire. Dr Daniele Gafa’ is certainly no stranger to the Malta Law Students’ Society (GħSL). Serving as Academic Officer during the 2016/17 term of office, while being elected President in the following year, Dr Gafa presently occupies a more supervisory role in the organisation, sitting on the Supervisory Board.
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1. Introduction Around twelve point three million (12,300,000) Europeans live in another European Union country and there are around four hundred and fifty thousand (450,000) international successions each year, valued at more than one hundred and twenty billion euros (€120,000,000,000). Currently different rules on jurisdiction and applicable law in the twenty-seven (27) European Union Member States are creating legal headaches for already grieving families… Today’s endorsement by the Council of new European Union rules will bring legal certainty to the thousands of families confronted with international successions. – European Union Justice Commissioner and Commission Vice President, Viviane Reding1
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eing a by-product of globalisation, particularly within the ambit of a modern European Union which has nowadays fully embraced the notion of freedom of movement, the issue of cross-border succession within the European Union may no longer be disregarded as a frivolous matter. The sheer monetary value of this phenomenon alone necessitates legislative attention, albeit the issue per se falling outside the European Union’s legislative competence. Intriguingly, the approach taken by the European Union in addressing the issue was similar to that adopted in other spheres of law wherein the European Union lacks the necessary competence to legislate. Rather than focusing on the virtually unattainable (not to mention, not necessarily desirable) task of homogenising substantive succession laws throughout the Union, EU legislators directed their attention rather to the unification (or the so-called ‘europeanisation’) of conflict of law rules in matters of succession.2 To this effect, on the fourth (4th) of July of the year two thousand and twelve (2012), the European Union took a giant’s step forward by adopting 1 ‘European Commission plans to ease legal burden for cross-border successions to become law’ European Commission (7 June 2012) <http://europa.eu/rapid/press-release_IP-12576_en.htm>. 2 A. Verbeke, Y.H. Leleu, ‘Harmonisation of the Law of Succession in Europe’ (2011) 472; K. Joamets, T. Kerikmäe, (2013), ‘The New Developments in the EU family law—Green Paper “Less Bureaucracy for Citizens: Promoting Free Movement of Public Documents and Recognition of the Effect of Civil Status Records”. Its Applicability in Marriage on the Example of Estonia’ 39.
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Regulation (EU) Number 650/2012 on jurisdiction, 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; more commonly known and hereinafter referred to as the ‘Succession Regulation’. Binding on all twenty-eight European Union Member States bar three (namely Denmark, The Republic of Ireland and the United Kingdom), the Succession Regulation became applicable on the seventeenth (17th) of August of the year two thousand and fifteen (2015), effectively governing the ‘succession of persons who die on or after’ this cutoff date.3 From the very outset, even upon prima facie inspection, it becomes immediately evident that the Succession Regulation envisages an exhaustive, far-reaching and holistic upheaval of a previously unaddressed issue under European Union law. Its scope, in fact, was not limited to the conventional private international law elements of jurisdiction, choice of applicable law and recognition and enforcement of foreign judgements which have customarily manifested themselves in similar European Union legislative instruments. On the contrary, the Succession Regulation goes a step further than the traditional approach by addressing concerns which are specifically characteristic to succession disputes in particular. The conception of a European Certificate of Succession for instance demonstrates but one of a series of practical measures intended to eradicate existing administrative barriers.
2. Interpreting the term ‘Last Habitual Residence of the Deceased’ The notion of habitual residence is no newcomer to the field of private international law. First introduced in the year nineteen fifty-five (1955) by The Hague Conference on Private International Law, the connecting factor was subsequently incorporated into European Union legislation, firstly with regard to social security and labour law and later on in the sphere of judicial cooperation in civil matters. Perhaps lamentably so however, neither The 3 Regulation (EU) No 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, article 83(1). (emphasis added)
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Hague Conference nor the aforementioned European Union Regulations which preceded the Succession Regulation laid down any precise definition or guidelines whatsoever as to the correct interpretation of the concept of ‘habitual residence’. This common thread is one which also persists to some extent in the Succession Regulation which similarly shies away from concisely defining the enigmatic notion. Some scholars have suggested that legislators’ persistence at leaving the connecting factor undefined might perhaps stem from the reasoning that as a factual criterion, a designation of habitual residence necessarily requires a close inspection of the contextual circumstances surrounding each situation. Contrary to connecting factors such as ‘domicile’ or ‘nationality’, ‘habitual residence’ is not a legal conception capable of being generically, accurately and succinctly defined, but rather, it is a factual one which necessitates a case-by-case approach. Jurisprudence of the Court of Justice of the European Union does offer some guidance in this respect, albeit in relation to the ‘Council Regulation (EC) No 2201/2003 of the 27th of November, 2003 concerning jurisdiction and the recognition and enforcement of judgments in matrimonial matters and the matters of parental responsibility’ in particular, hereinafter referred to as the Brussels II Bis Regulation. In its response to the landmark preliminary reference brought by Finnish Courts (Korkein hallinto-oikeus) in Case C-523/07 A4, the Court of Justice of the European Union reiterated that the connecting factors contemplated under European Union Regulations are to be given autonomous interpretations. Adhering to the same line of argumentation, this time in response to the preliminary reference brought by German Courts, in Case C-29/76,5 the Court of Justice of the European Union confirmed that such connecting factors are to be understood in the light of the objectives and spirit of the European Union legislative instrument in question, in a manner entirely distinct from any municipal Member State law definitions. With regard to the definition itself, the Court held that mere physical presence in a particular State in and of itself does not suffice for the determination of habitual residence, but rather, an analysis of all factual circumstances specific to each case must be taken into account. In so doing, the Court of Justice of the European Union went on to lay down a vast array of criteria which should be considered in establishing the habitual residence 4 Judgement of the Court of Justice of 2 April 2009. A. C-523/07. 5 Judgement of the Court of Justice of 14 October 1976. LTU Lufttransportunternehmen GmbH & Co. KG v. Eurocontrol. Case 29/76.
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of a child, for instance: the degree of integration in social and family environment, duration, regularity, conditions and reasons for stay in the territory of a Member State, child’s nationality, place and conditions of school attendance, linguistic knowledge, family and social relationships.6 Though the Court’s interpretation of the notion is specifically restricted in application to the Brussels II Bis Regulation, it does serve as a guideline in the absence of any further legislative clarification. Inspired by the findings of the Court of Justice of the European Union, by means of Recital twenty-three (23), the ground-breaking Succession Regulation became the first European Union legislative instrument to expressly, albeit not concisely, lay down a series of factual criteria to be taken into account in designating the final habitual residence of the deceased: … the authority dealing with the succession should make an overall assessment of the circumstances of the life of the deceased during the years preceding his death and at the time of his death, taking account of all relevant factual elements, in particular the duration and regularity of the deceased’s presence in the State concerned and the conditions and reasons for that presence. The habitual residence thus determined should reveal a close and stable connection with the State concerned taking into account the specific aims of this Regulation.7 Expounding upon the criteria stipulated in the preceding recital, Recital twenty-four (24) of the Succession Regulation goes on to explain that: In certain cases, determining the deceased’s habitual residence may prove complex. Such a case may arise, in particular, where the deceased for professional or economic reasons had gone 6 Rohova, I., Drlickova, K., ‘Habitual residence as a single connecting factor under the succession regulation’ [2015] SCIJLP 371. 7 Regulation (EU) No 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, Recital 23.
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3. Choice of connecting factor Notwithstanding its comprehensive nature, the Succession Regulation has been subject to multiple criticisms, one of which revolves around a point of contention specifically idiosyncratic to conflict of law treaties: the question of connecting factors. By employing the notion of the last habitual residence of the deceased as its principal connecting factor (both with regard to the determination of jurisdiction9 as well as the applicable law10) applicable to the succession as a whole, the Regulation sets out with the ambitious objective of overcoming any residual obstacles to the free movement of persons by simplifying and homogenising the settlement of cross-border successions throughout the European Union.11 Nonetheless, legal scholars have once 8 9 10 11
ibid, Recital 24. ibid, Article 4. ibid, Article 21(1). Proposal for Regulation of the European Parliament and of the Council on Jurisdiction,
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again re-opened the self-perpetuating discussion concerning the suitability of this criterion relative to its alternatives, with a vast spectrum of schools of thought existing in this respect. Setting off the debate with a chronological analysis of the selection process itself, by examining the travaux-préparatoires underlying and preceding the Succession Regulation’s promulgation, we may delve into the minds of European Union legislators, Member State opinions and scholarly reactions which ultimately galvanised this choice of connecting factor. For starters, in matters of family and succession law, the notions of habitual residence and nationality clearly lead the way with regard to widespread international acceptance12, so much so that the Green Paper on Succession and Wills suggested both notions as potential connecting factors.13 In their reply to the Green Paper however, several Member States and International Organisations endorsed the adoption of habitual residence over the use of nationality.14 As per the Explanatory Memorandum, in fact, consensus was reached that the concept of last habitual residence of the deceased at the time of death is not only the most widely entrusted connecting factor in municipal Member State private international law and international conventions alike15, but also better: …coincides with the centre of interests of the deceased and often with the place where most of his property is located, since it reflects the increasing mobility of citizens within the EU. Such a connection is more favourable to integration into the Member States of habitual residence and avoids any discrimination applicable Law, recognition and enforcement of decisions and authentic instruments in matters of succession and the creation of a European Certificate of Succession, COM (2009) 154 final, 14 October 2009. 12 Boele-Woelki, K. ‘International Private Law in China and Europe: A Comparison of Conflict-of-Law Rules Regarding Family and Succession Law’, in Basedow, J., Pissler, K., Private International Law in Mainland China, Taiwan and Europe (Mohr Siebeck Tübingen 2014) 313. 13 Green Paper Succession and wills, COM (2005) 65 final, 1 March 2005, EU Publications Office (further cited as “Green Paper”), point 1 Introduction. 14 Max Planck Institute for Comparative and International Private Law. Comments on the European Commission’s Proposal for a Regulation of the European Parliament and of the Council on jurisdiction, applicable law, recognition and enforcement of decisions and authentic instruments in matters of succession and the creation of a European Certificate of Succession. RabelsZ, 2010, Vol. 74, p. 604. 15 Proposal for Regulation of the European Parliament and of the Council on Jurisdiction, applicable Law, recognition and enforcement of decisions and authentic instruments in matters of succession and the creation of a European Certificate of Succession, COM (2009) 154 final, 14 October 2009, point 4.3.
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regarding persons who are resident there without possessing the relevant nationality.16
4. Comparison vis-à-vis alternative connecting factors Ranging from conceptually tedious notions such as ‘domicile’, to legally straightforward ones such as ‘nationality’, the connecting factor selection process tends to result in a tug-of-war of sorts between the need for practicality, ease of determination and legal certainty on the one hand, and on the other, the essential prerequisite that the criterion be in and of itself ‘connecting’, i.e. establishing as genuine, well-founded and legitimate a connection with the State in question as possible.17 Of course intertwined in the latter requirement is the element of flexibility i.e. ascertaining that the selected concept is not so excessively fluid that the designated State of connection may alter from one moment to the next, yet not so undesirably rigid that a person may end up being associated with a State with which little or no connection persists. Focusing on the Succession Regulation in particular, this selection was indisputably fundamental to its success or otherwise since the legislative instrument envisaged a principal connecting factor which applied to successions in their entirety, both with regard to jurisdiction, as well as the applicable law. In fact, one of the central motives behind the endorsement of last habitual residence was that it was deemed to establish the most fitting connection vis-à-vis both movable and immovable property existing within the deceased’s estate. By focusing upon the aspect of ‘residence’, the Succession Regulation inherently promotes the principle of nondiscrimination, empowering EU citizens to take full advantage of their rights to free movement. Moreover, according to some authors, the stress on ‘factual circumstances’ (which is made demonstrably clear in Recitals 23 and 24) renders habitual residence far simpler to determine than, say, the notion of ‘domicile’, and consequently also far less prone to litigation. Regardless of its widespread approval, some schools of thought advocate 16 ibid. 17 Siehr, K., ‘General problems of private international law in modern codifications: De Lege Lata and De Lege Europea Ferenda,’ in P. Šarčević, P. Volken, A. Bonomi, Yearbook of Private International Law, (Sellier. European Law Publishers & Swiss Institute of Comparative Law, vol. 7, 2005) 32.
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in favour of the use of alternative connecting factors, identifying several shortcomings in the legally undefined conception of last habitual residence under the Succession Regulation. Angelique Devaux18, for instance, argues that a gap exists between theory and practice: by leaving the connecting factor so loosely defined, the Succession Regulation adopted an unstable connecting factor which is incompatible with the fundamental principle of legal certainty, hence precluding EU citizens from fully embracing their rights to free movement.19 Though the underlying purpose for leaving the term so vaguely defined was to ascertain its fluidity, requiring courts to decide upon the factual circumstances of each case individually, perhaps flexibility should not have been prioritised at the expense of legal certainty as this characteristic exposes the connecting factor to potential disputes. In agreement with this line of thought is Professor David Hayton20, who opines that homogenous interpretation necessitates an autonomous, express and concise definition under the Succession Regulation, in lieu of which interpretation of the notion becomes ‘indefinitely arbitrary’. This in turn renders uniform application across the 25 Signatory States virtually impossible. Moreover, Carruthers and Crawford suggest that as demonstrated by caselaw, the possibility of natural persons having multiple habitual residences, or none at all, contributes to the fragile, uncertain nature of this criterion.21 An especially prevalent connecting factor in Common Law jurisdictions is that of lex domicilii. The crippling issue with domicile is that its definition varies significantly from one state to the next, not to mention the dichotomy in its interpretation between Common and Civil Law traditions.22 In fact, albeit being utilized under the Brussels I Bis Regulation, the international popularity of lex domicilii has dwindled notably as the notion’s ambiguous nature precludes it from being applied harmoniously in intra-State legislative instruments. Moreover, contrary to habitual residence which is based almost exclusively on factual circumstances, central to any determination of 18 Devaux, A., ‘The European Regulations on Succession of July 2012: A Path Towards the End of the Succession Conflicts of Law in Europe, or Not?’ (2013) 232-233. 19 Ramaekers, E., ‘Cross-border Successions. The New Commission Proposal: Contents and Way Forward. A Report on the Academy of European Law Conference of 18 and 19 February 2010, Trier,’ (2011) 1–6. 20 Hayton, D. (2004), ‘Determination of the Objectively Applicable Law Governing Succession to Deceaseds’ Estates’ (2004) 365. 21 Crawford, E. & Carruthers, J., ‘Written Evidence—Letter from Professor Elizabeth Crawford, Professor of International Private Law, and Dr. Janeen Carruthers, Reader in Conflict of Laws, University of Glasgow,’ in: The EU’s Regulation on Succession: House of Lords, European Union Committee, 6th Report of Session 2009–10, (TSO 2010) 62–66. 22 O’Brien, J. Conflict of Laws. (2nd edn, Cavendish Publishing Limited 1999) 65 - 66.
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domicile is the question of ‘intention’; an intangible and elusive factor, often tedious to verify unless expressly communicated by the deceased prior to his demise. Moving on to lex patriae, though the legal conception of nationality varies from state to state, it leads the way with regard to practicality and ease of determination. Once the set of explicit criteria laid down under national law are satisfied, a person qualifies for citizenship which may be efficiently authenticated and verified by means of official documentation.23 Compellingly, the criterion of lex patriae traditionally constitutes the principal connecting factor in German conflict of law legislation in matters of succession, with the absence of any discretionary interpretation perhaps being the key impetus behind this selection.24 Regardless of its merits, Helin identifies several flaws inherent to this connecting factor. To begin with, part and parcel with the process of globalisation is an upsurge in individuals having multiple nationalities, a reality which would require supplementary regulation.25 Additionally, adopting lex patriae as a principal connecting factor would necessitate the approval of each Member State’s criteria for citizenship: an exercise undoubtedly bound for failure, especially when taking into consideration, for instance, certain alternative criteria for Maltese citizenship which caused such an uproar throughout the Union just a few years back. A third criticism which may be made in this regard is that the notion of nationality at times fails to reflect any genuine connection to the State in question. With the very essence of connecting factors being their ability to ‘connect’, would for instance a so-called ‘purchased’ nationality26 demonstrate so legitimate a connection between the deceased and his State of nationality, such as to entrust its Courts with administering succession?
23 Helin, M., Suomen kansainvälinen perhe ja perintöoikeus, (Talentum Media 2013) 57. 24 Traisci, F.P. Which Future for the European Law of Successions? In: Moccia, L. (ed.) The Making of European Private Law: Why, How, What and Who? (Munich: Sellier European Law Publishers, 2013), 166. 25 Helin, M., Suomen kansainvälinen perhe ja perintöoikeus, (Talentum Media 2013) 57-58. 26 Wolf Richer, Wolf Street, ‘These are the countries you can ‘buy’ citizenship to – and three are in the EU’ (Insider Inc, 18 March 2017) <https://www.businessinsider.com/buy-citizenship-to-these-countries-2017-3>.
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5. Conclusion In conclusion, notwithstanding its countless criticisms, by striking perhaps the most ideal balance between the element of ‘connection’ and the indispensable prerequisites of practicality, fluidity and ease of determination, the criterion of habitual residence has nowadays achieved widespread international acceptance, both within the European Union and beyond. On the one hand, the adjective ‘habitual’ inherently necessitates a certain degree of consistency, stability and durability to the residence, ascertaining that a genuine, well-founded and bona fide connection exists between the deceased and his Member State of residence. On the other, with more and more EU citizens opting to live outside their Member State of nationality, the fluid criterion of habitual residence fully embraces the socioeconomic realities of a modernised European Union. It lays down a factual, flexible and objective criterion which is more efficiently discernible than the conceptually tedious notion of domicile. Moreover, in an effort to eliminate any further possibility of forum-shopping (albeit admittedly a far-fetched one), the Succession Regulation also contemplates an escape mechanism of sorts under Article twenty-one, sub-article two (21(2)) and Recital twentyfive (25), thereby countering any risk of a purpose-built selection of habitual residence. Nonetheless, by leaving the notion so loosely defined, EU legislators seem to have opted for conceptual mobility at the expense of legal certainty: a choice which renders the Succession Regulation partially incompatible with the fundamental freedom of movement, particularly in the ambit of a Union encompassing some twenty-eight Member States. Though the criterion of last habitual residence constitutes the preferred connecting factor to serve the targets and aspirations of the European Union in settling cross-border successions, perhaps a legally-defined version of the concept would have better guaranteed its harmonious application and consistent interpretation throughout the Union.
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