Successions in Europe. The Spanish perspective

Regulation 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.

The legal basis for this regulation was article 81 (2) of the Treaty on the Functioning of the European Union, on judicial cooperation in civil matters having cross-border implications, in particular where necessary for the proper functioning of the internal market. On the basis of the said article 81 (2), the European Union must adopt measures to ensure the compatibility of the rules applicable in the Member States regarding conflicts of laws and competition.

All EU Member States participate in this Regulation, with the exception of the United Kingdom, Ireland and Denmark.

This article focuses on the application of this Regulation by the courts, notaries, lawyers and authorities in Spain. However, the dynamics of the points of connection of this Regulation for the purposes of determining the jurisdiction and the law applicable to a succession taking place within the European Union is common for all participating countries. Therefore, knowledge of the provisions of this Regulation will be useful for the purposes of planning the succession of an American residing or having interests in Spain, France, Italy, Portugal, Greece, etc.

1. SCOPE AND DEFINITIONS

Succession: succession by cause of death, both testamentary and “ab intestato”.

Agreement as to succession: any agreement granting, modifying or revoking rights relating to the succession of one or more persons who are parties to that agreement. Agreements as to succession are not valid according to the rules of the Spanish Civil Code or common law. However, they are valid in the following Provincial Civil Laws: Catalonia; Ibiza and Formentera; Galicia and Aragon.

Spain is not a federal country, but rather it has different laws in matters of family and successions that have their origin in the different kingdoms into which the Iberian Peninsula was divided in medieval times. For this reason, a distinction is made between common law (the centre and south of Spain, which corresponds to the Kingdom of Castile and Leon) and Provincial Law: Law of Galicia; Law of the Basque Country; Law of Navarre; Law of Aragon, Law of Catalonia; Law of the Balearic Islands.

Joint will: a will made in a sole instrument by two or more persons. This is the most common way to make a will between spouses in Germany and is known as a “Berliner Testament”. It is not recognized in the Spanish Civil Code or common law but it is valid in the following Provincial Civil Laws: Aragon, Galicia, Navarre and the Basque Country.

Disposition of property upon death: This term includes a will, a joint will or an agreement as to succession.

Judicial body in a broad sense, not only judges or courts, but also the authorities and legal professionals (such as notaries) who in some member states exercise judicial powers by delegation. Article 3.2. requires guarantees of impartiality, the right of all parties to be heard and that their decisions may be appealed or reviewed before the judicial authority and that they have force and effects similar to those of a judicial authority regarding the same matter. Spanish notaries fall within the concept of a judicial body since the falsity or nullity of the instrument is subject to appeal to the judicial authority and their deeds are an enforceable title. In any case, it is advisable for each party to attend the notary accompanied by their respective legal counsel and that this fact be recorded in the corresponding deed, in order to prove the independence and the right of the parties to be heard.

This Regulation shall not affect the jurisdiction of the Member States in matters of succession.

This Regulation applies to successions to the estate of a deceased person. However, Member States shall determine, in accordance with their national law, whether the succession is subject to tax and the procedures for calculating and paying taxes and other liabilities of a public-law nature.

This Regulation does not apply to matters already regulated in previous Regulations:

• Property rights, interests and assets created or transferred inter vivos, for instance by way of gifts. However, it should be the law specified by this Regulation as the law applicable to the succession which determines whether the acquisition of a right in rem prior to death must be restored or taken into account for the purposes of determining the shares of the inheritance or the portions of the descendants. Cross-border gifts under Spanish Private International Law are subject to Regulation No. 1215/2012 “Brussels I” as regards international jurisdiction and Regulation (EC) No. 593/2008 “Rome I” as regards applicable law.
• Maintenance and compensatory pension obligations, other than those caused by death, Regulation (EC) No. 4/2009.
• Matrimonial and unmarried couples property regime, Regulation (EU) No. 1103/2016 and Regulation (EU) No. 1104/2017, respectively.

List of excluded matters:

• Tax, customs and administrative matters.
• Marital status of natural persons.
• The legal capacity of natural persons, which does not refer to the capacity to inherit.
• Matters relating to the disappearance, absence or presumption of death of a natural person.
• The formal validity of dispositions of property upon death made orally.
•  The matters governed by the regulations applicable to companies, associations and other legal persons, which determine what will happen to company shares upon the death of the members.
• Dissolution, termination and merger of companies, associations and other legal persons.
• Creation, administration and dissolution of trusts. However, this is not a general exclusion of trusts. In the event of a trust being created by a will or by law in relation to an intestate succession, the law applicable to the succession under this Regulation will govern the transfer of the assets and the determination of the beneficiaries. This distinction must be taken into account in cases where the law applicable to the succession is in the Anglo-Saxon domain, where the creation of trusts by the parties or the courts to deal with property matters is common.
• Nature of the rights in rem on property, classification of assets and rights or determination of the prerogatives of the holder of the said rights.
• Requirements for registration in the property registry and effects of registration or non-registration in the said registry.

2. JURISDICTION

The general rules on jurisdiction of Regulation (EU) No. 650/2012 stipulate that the relevant judicial bodies are those corresponding to the place where the deceased had his habitual residence at the time of death.

Preamble (23) and (24) of this Regulation clarifies that in order to determine the habitual residence of the deceased at the time of death, the circumstances of the life of the deceased during the years preceding his death and at the time thereof must be assessed, taking into consideration all relevant facts, and in particular the duration and regularity of the presence of the deceased in the State concerned, as well as the conditions and reasons for such presence. The habitual residence thus determined should reveal a close and stable link with the State in question.

If the deceased has chosen that his succession be governed by his national law (that of a member state), the interested parties may agree that the courts of that member state have exclusive jurisdiction to conduct that succession.

In this case, if a British, Irish or Danish national has chosen that his succession be governed by his national law and his heirs agree, the succession could be handled by the courts of the United Kingdom, Ireland or Denmark, and of course by those of any other Member State. In this article I consider the United Kingdom to still be a Member State of the European Union, until the full details of “Brexit” are known.

This Regulation aims to ensure that the authority which conducts the succession applies its own law in most cases. Articles 5, 6, 7, 8 and 10 of the Regulation.

However, if the law chosen by the deceased is that of a third-party country (e.g. Switzerland, Norway, Russia, USA, etc.), the Courts of the State in which the deceased had his habitual residence at the time of death will have to apply foreign law.

In Spain the application of foreign law is subject to proof as regards the content and validity thereof according to article 281 of the Law on Civil Procedure. The Supreme

Court usually also requires the opinion of two expert jurists of the country whose law is to be proven as regards the application and interpretation of that foreign law in respect of the specific matter subject to the lawsuit or an opinion of an Academy of Law of recognized standing, e.g. Max Planc Institut in Germany, etc.

Law 29/2015 on International Legal Cooperation provides that Spanish law shall be applied on a subsidiary basis if the Court believes that the foreign law has not been sufficiently proven.

Council Regulation (EC) No. 1206/2001, of 28 May 2001, on cooperation between the courts of the Member States in the taking of evidence in civil or commercial matters, could also apply to the production of evidence under foreign law between Member States.

European Convention of London of 1968 on information on foreign law and the Inter- American Convention of Montevideo of 1979 on proof of and information on foreign law. Both instruments function through cooperation between Central Authorities, which in Spain is the General Sub-Directorate of International Legal Cooperation of the Ministry of Justice, located at Calle San Bernardo, No. 62 in Madrid.

Jurisdiction in other cases (article 10)

If the deceased does not have his habitual residence at the time of death in any Member State, the courts of the Member State in which the estate is located shall have jurisdiction to rule on the entire succession whenever:

1. a) The deceased held the nationality of that Member State at the time of his death

or, failing that, b) The deceased had previously been habitually resident in that Member State and

no more than 5 years have elapsed since the change of habitual residence.

If no Member State is competent to rule on the succession as a whole in accordance with sub-paragraphs (a) and (b) above, the Member State in which the assets of the estate are located shall have jurisdiction to rule on those assets.

The aforementioned article 10 of the Regulation is clearly protectionist in favor of the jurisdiction of the courts of the Member States, to the detriment of the jurisdiction of third-party States.

Thus if a Spaniard who has been seconded by his company to Switzerland and establishes his habitual residence in Geneva dies in this country, since he has the majority of his property in Spain, the Spanish Courts would have jurisdiction to hear the entire inheritance, including any Bank accounts he may have in Switzerland.

If a Norwegian (Norway is not a Member State) with habitual residence in Norway dies in his country, and owns a holiday home in Alfaz del Pí, province of Alicante, Spain, it would be the Courts of this province that would have jurisdiction to conduct his succession in respect of the property located in Alfaz del Pí.

Article 12 of the Regulation allows the parties to ask any judicial body that hears a succession comprising property in a third-party state, not to dispose of the said property when it is possible that its decision in respect of such property will not be recognized or executed in such third-party state. The parties may also limit the scope of the proceedings under the procedural laws of the relevant jurisdiction.

Initiation of proceedings

It shall be deemed that proceedings before a court have been initiated:

1. From the time the claim or equivalent document is filed b. From the time it is received by the authority responsible for notifying

it before its submission to the judicial body c. If the Court acts ex officio, from the time of the initiation of the

proceedings.

Verification of jurisdiction

In all cases a judicial body shall declare itself not to have jurisdiction if, in accordance with the provisions of this Regulation, the court of another Member State has jurisdiction.

Verification of admissibility and location

In order to safeguard the respondent’s right to a defense, this article obliges the courts of a Member State to suspend the proceedings until it is established that the respondent has received the statement of claim or has been summoned in good form and with sufficient notice to defend himself.

Article 19 of Regulation (EC) No. 1393/2007 of the European Parliament and of the Council, of 13 November 2007, on the service in the Member States of judicial and extrajudicial documents in civil or commercial matters, is applicable.

If the claim is to be notified to a non-member State, Article 15 of the Hague Convention of 15 November 1965 on the service abroad of judicial and extrajudicial documents shall apply.

Interim and precautionary measures

According to Article 19 of the Regulation, interim and precautionary measures may be ordered under the law of a Member State even if, under the Regulation, a judicial body of another Member State has jurisdiction to hear the merits of the case.

These interim measures can give rise to detrimental situations for any respondent in involuntary absentia who is not able to appear before the court or adequately defend himself and could be prolonged in time depending on the time it took to resolve the main matter. This is because under the civil procedure in Spain they are not subject to appeal, but rather will be substituted for the definitive measures handed down in the judgment that ends the proceedings.

3. APPLICABLE LAW

The law that is determined to be applicable under the Regulation will be applicable even if it is not that of a Member State and will apply to the entire succession.

General rule (Article 21): The law applicable to the entire succession shall be that of the State in which the deceased had his habitual residence at the time of death. Exceptionally, a law other than that stated in the previous paragraph will apply if, as a result of all the circumstances, it is clearly determined that the deceased maintained a close relationship with another State (Article 21 (2)).

It is very important to be aware of the scope of this general rule: if a Swiss citizen (Switzerland is not a Member State) with habitual residence in Spain dies without having made a will or without having designated a law applicable to his succession, Spanish law will apply to the entire succession, including the movable property and real estate that he may have in Switzerland, since this country does not apply lex rei sitae for its properties.

Choice of applicable law: Any person may designate the law of the State whose nationality he holds at the time of the choice or at the time of death. The choice must be made expressly or it must be the result of the terms of a provision of this type.

Scope of applicable law (article 27)

.- the causes, the time and the place of the commencement of the succession .- the determination of the beneficiaries, their aliquots and any obligations that may have been imposed on them by the deceased, including the successor rights of the surviving spouse.

Article 9.8 in fine of the Civil Code provides that the inheritance rights of the surviving spouse shall be governed by the same law that regulates the effects of the marriage, while always respecting the portions of the descendants.

Regulation (EU) No. 1103/2016 on the matrimonial property regime refers to this Regulation and provides that the law applicable to the succession also governs the succession rights of the surviving spouse.

I understand that Article 9.8 of the Civil Code will have to be amended to adapt it to European regulations.

.- the capacity to inherit. .- disinheritance .- the powers of the heirs and executors of the will. In Anglo-Saxon jurisdictions, an “executor” of the inheritance other than the heirs is always appointed. .- liability for the debts and encumbrances of the inheritance. .- the freely disposable portion, the portion of the descendants and other restrictions on the freedom to make a will.

This is one of the decisive points when choosing the law to govern the succession, which impinges on such matters as the freedom to make a will in England and Wales,

the right of claim that an heir may voluntarily exercise against the assets of the inheritance under German law, the 2/3 portion of the descendants under Spanish Common Law, and the 3/4 portion under the Swiss Civil Code, etc.

.- the obligation to restore or include gifts in the calculation of the shares of the inheritance. .- the distribution of the inheritance

Article 27 of the Regulation provides that the formal validity of dispositions of property upon death made in writing shall be determined in accordance with the rules contained in the Hague Convention of 5 October 1961, on the conflicts of laws relating to the form of testamentary dispositions.

Article 30 provides that the special national rules which, for economic, family or social reasons, affect or impose restrictions on the succession of certain immovable property, undertakings, etc., which are located in that State, shall be taken into account irrespective of the law governing the succession.

Adaptation of rights in rem (Article 29)

When a person invokes a right in rem which he holds under the law applicable to the succession and the law of the Member State in which the right is invoked does not recognize the right in rem in question, that right must be adapted to the closest law to the Law of that State.

“The European Union has done little to bring about harmonization in the realm of rights in rem. It continues to respect the specific laws of each Member State in this respect. This explains the need for adaptation, which will not be an easy task for either notaries or judges. In particular, in legal settlements where each party will try to seek the adaptation that best suits them, the notary (or judge) must remain alert. Some lawyers, who are not willing to compromise with one another in this matter, will take advantage of the opportunity to dispute the adaptation. The notary (or the judge) will be forced to settle the matter, as the case may be” vid. The adaptation of rights in rem, Luc Weyts.

In the case of order of death, article 32 provides that no deceased person shall have any right in the succession of the other(s) if his succession is governed by different laws and it is not possible to determine the order of death.

Referral under article 34.1: The designation of the law of a third-party State, according to this Regulation, also includes its rules of private international law, and the referral to the Law of a Member State or to the substantive law of another third-party State will be accepted.

However, article 34 (2) excludes referral with respect to the laws mentioned in Article 21 (2); article 22 (choice of applicable law); article 27 (b); article 28 and article 30.

In England and Wales and other common law countries the principle that a single law governs the entire succession irrespective of where the property of the estate is located does not exist, but rather for real estate the “lex rei sitae” is applicable, which would

entail the referral to a Spanish law if the deceased had real estate in Spain and had not made a choice of English law before passing away. It should be recalled that the Spanish authorities do not usually accept such referral because to do so clashes with the principle under Spanish law that a single law governs the entire succession, and in order to avoid applying the system of portions of the descendants, which is non-existent in England and Wales, although some exceptions to this general rule can be found in the case law of our Supreme Court, particularly when all the assets of the inheritance estate are located in Spain, vid. Judgment of the Supreme Court, Civil Chamber, 1st Sec. no. 422/2015, of 12 January 2015, appeal no. 1957/2012.

As I have already pointed out, the referral would not be admissible when the “professio iuris” of article 22 has been carried out or when there is a clearer link to a State other than that of the habitual residence of the deceased at the time of his death (article 21, 2).

In this sense, if for example an English national has made the choice of the law of his country to govern his succession and there is real estate located in Spain (or in another participating member country under this Regulation), the referral to the lex rei sitae of English Law would not be accepted, by virtue of the exception of article 34 (2) of the Regulation. The succession of such real estate that is not located in a participating state under this Regulation will be conducted according to English Law. This reinforces the general principle under this Regulation as regards the universality of the law applicable to the entire succession. In this sense, see Decision No. 7026/2016, of 15 June 2016, and Decision No. 7817/2016, of 4 July 2016, both issued by the Spanish General Directorate of Registries and Notaries.

States with different legal systems

Spain has different interregional laws in matters of succession with very different regulations, which is why it is important to determine correctly which provincial law or common law rules are applicable.

Thus in the center and south of Spain the Civil Code is applied.

Catalonia, Aragon, the Balearic Islands, Navarre and the Basque Country apply the various Provincial Civil Laws of each Autonomous Community, whose rules are quite different from those of Common Law.

Thus the proportion between the portions of the surviving spouse and of the descendants in Spanish interregional law varies from 2/3 under the Civil Code for children, 1⁄4 in Galicia and Catalonia, 4/5 in some localities of the Basque Country, it is freely disposable in Navarre and Alava (Basque Country), etc., with many other differences regarding the portion of the surviving spouse.

According to articles 36, 37 and 38 of the Regulation, it shall be the internal rules on conflicts of laws of a State with several territorial units each with their own rules on succession which determine the territorial unit whose legal regulations will be applicable.

In Spain, this would entail a referral to article 16, 1 and 2 of the Civil Code, which provides that the law of regional citizenship will apply, according to the connection points of article 9, 8 of the Civil Code.

In this sense, very interesting is recent Judgment No. 161/2016, of 16 March 2016, issued by Section 1, Civil Chamber of the Spanish Supreme Court, on the interpretation of Article 9.8 in fine of the Civil Code in the scope of Spanish interregional law.

According to article 14, 5 -2nd of the Civil Code, regional citizenship is acquired by continuous residence of ten years, without a declaration to the contrary during that term. Thus, a German who has resided for more than ten years in Mallorca acquires the regional citizenship of Mallorca and the provincial rules of Mallorca and Menorca would be applied to his succession, which are different from those of Ibiza and Formentera, and of course different from the common law rules of the Civil Code.

The European Union regulations require the same treatment by the laws of the Member States for all citizens of the European Union. Therefore, as I have explained, a German citizen could acquire the regional citizenship of Mallorca. The issue regarding which there is still no agreement in Spain is whether the rules of conflicts of laws under Spanish interregional law apply to, for example, a US national. Following the previous example: if the US national has lived for more than 10 years in Mallorca, does he acquire the regional citizenship of Mallorca and is the Provincial Law of Mallorca applied to his succession? Or is it considered that these rules apply only to nationals of Spain and, in accordance with the principle of non-discrimination, also to nationals of other Member States, but not to nationals of third-party countries?

4. RECOGNITION, ENFORCEABILITY AND ENFORCEMENT OF DECISIONS

Recognition:

According to Article 39, judgments issued in one Member State will be recognized in the other Member States without the need to follow any procedure.

Grounds for the refusal of recognition are laid down in Article 40:

• Recognition contrary to public policy in the Member State in which it is sought.
• Decision rendered in absentia of the respondent and he had not been notified of the claim with sufficient notice to defend himself, unless the respondent had not appealed against that decision when he could have done so.
• Decision that is irreconcilable with a decision rendered in proceedings between the same parties in the Member State in which recognition is sought.
• Decision that is irreconcilable with another decision rendered previously in a dispute in another Member State or third-party State, for the same purpose and the same parties.

The jurisdiction of the courts of the Member State of origin shall not be subject to control and may not under any circumstances be reviewed as regards the merits.

Enforcement:

The application for a declaration of enforceability shall be submitted to the judicial body of the Member State whose information has been communicated to the Commission.

Territorial jurisdiction is determined based on the domicile of the party against whom enforcement is sought or the place of enforcement.

The proceedings shall be governed by the law of the Member State of the enforcement. The application must be accompanied by an authentic copy of the judgment and the certification issued by the judicial body of origin using the form provided. Once these formalities have been completed, the enforceability of the resolution shall be declared immediately.

The decision on the application for declaration of enforceability may be appealed by either party. The said appeal shall be lodged within a period of 30 days from the date of its notification. If the party against whom enforcement is sought is domiciled in a Member State other than that in which the declaration of enforceability has been issued, the period shall be 60 days.

Article 54 of the Regulation allows for the adoption of precautionary measures in accordance with the law of the Member State of the enforcement, together with the application for enforcement. The declaration of enforceability shall entail, by operation of law, the authorization to adopt precautionary measures. In the event of an appeal against the declaration of enforceability and until such time a it is resolved, precautionary measures may only be taken against the property of the party against whom enforcement was sought.

This procedure has been transposed into the procedural legislation by the Twenty-sixth Final Provision of the Law on Civil Procedure 1/2000, of 7 January.

5. PUBLIC DOCUMENTS AND TRANSACTIONS

Public documents shall have the same evidential force as regards the content of the instrument and the facts contained therein and the same presumption of authenticity and enforceability as in their countries of origin.

The party wishing to appeal against the authenticity of a public document shall do so before the courts of the Member State of origin and it shall be decided in accordance with its law.

Any appeal relating to legal instruments or legal relationships entered in a public document shall be brought before the competent judicial bodies under this Regulation and shall be settled according to the applicable law pursuant to this Regulation.

Article 60 provides that, at the request of either party, judicial transactions which have enforceability in the Member State of origin shall be declared enforceable in another

Member State, by following the same procedure as provided for in the Regulation on judicial decisions.

6. EUROPEAN CERTIFICATE OF SUCCESSION

This Regulation has created the European Certificate of Succession, known as the “certificate”.

Its use is not mandatory and does not replace the internal documents used in the Member States for similar purposes.

Its aim is to serve as proof of:

• The quality and/or rights of each heir or legatee and their respective shares of the inheritance;
• The attribution of one or several specific assets to the heir(s) and or legatee(s);
• The powers of the person mentioned in the certificate to execute the will or administer the inheritance.

The issuing of the European Certificate of Succession by a judicial body has been transposed into national procedural law in section 11 of the Twenty-sixth Final Provision of the Law on Civil Procedure 1/2000, dated 7 January.

The issuing of the European Certificate of Succession by a notary has been transposed into national procedural law in section 14 of the Twenty-sixth Final Provision of the Law on Civil Procedure 1/2000, dated 7 January.

Reform of article 14 of the Spanish Mortgage Law by Law 29/2015, for the purposes of including the European Certificate of Succession among the titles of hereditary succession to have access to the Property Registry.

7. RELATIONSHIPS WITH INTERNATIONAL CONVENTIONS IN FORCE AND ENTRY INTO FORCE

No legalization or similar formality shall be required for documents issued in a Member State under this Regulation.

The Hague Convention of 5 October 1961 on Conflicts of Laws relating to the Form of Testamentary Dispositions applies between Member States in place of article 27 of this Regulation in relation to validity of the form of wills.

Previously, a harmonization of private international law on inheritance matters existed between the Scandinavian countries in the form of the Convention of 19 November 1934 (revised on 1 June 2012), which is still in force between Denmark, Finland, Iceland, Norway and Sweden.

This Regulation does not affect the application of Regulation (EC) No. 1346/2000 on insolvency proceedings.

This Regulation applies to the succession of persons deceased after 17 August 2015.

By virtue of Article 80 of this Regulation, on 9 December 2014 the European Commission adopted Implementing Regulation (EU) No. 1329/2014 laying down the forms referred to in Articles 46, 59, 60, 61, 65 and 67 of this Regulation.

Pursuant to article 83, paragraphs 2 and 3 of this Regulation, the professio iuris on the law applicable to successions or to dispositions of property upon death made before 17 August 2015 will also be effective if they meet the conditions of Chapter III of this Regulation or if they meet the conditions of admissibility and validity as regards substance and form under the rules of private international law in force at the time of the choice in the State in which the deceased resided or which nationality he held.

AMPARO ARBAIZAR SPANISH LAWYER