Case law Developments in PIL

Joint Wills under the Succession Regulation – Insights from Germany

It is well-known that the Succession Regulation contains specific rules relating to succession agreements in its Article 25. Inter alia, it allows the parties to select the law applicable to such agreements, offering the choice between the law of the parties’ last habitual residence or nationality (Article 25(3)). But when can such a choice be assumed, and under which rules? This is the subject of a recent decision by the German Federal Supreme Court.

Facts

An Austrian and a German national were married and lived together in Germany. In 1996, they appointed each other in a “Gemeinschaftliches Testament”, literally a “common will”, as sole heirs and determined who should succeed the surviving spouse. The will was made in two separate deeds and was therefore technically an “agreement as to succession” in the sense of Article 3(1)(b) of the Succession Regulation, and not a “joint will”, which the Regulation defines as a will drawn up in one document by two or more persons, see its Article 3(1)(c). The parties excluded any unilateral modification of the agreement during their lifetimes and after the death of one spouse.

This agreement was binding on the surviving spouse under German law, but not under Austrian law due to the lack of the notarial form.

After the death of her husband, the wife wrote a new will. When she died, its validity was challenged in a German court by the heirs designated in the agreement from 1996.

Legal Issue

To solve this case, the German Federal Court had to characterise the agreement under the provisions of the Succession Regulation and to determine whether it was governed by German or Austrian law.

The Succession Regulation was applicable as the second spouse had deceased after its entry into force on 17 August 2015 (Article 83(1)). The Regulation’s rules on dispositions after death, which include agreements as to succession, apply in addition to the law of habitual residence and nationality of the deceased, in line with the principle of favor validatis (Article 83(3) Succession Regulation).

The Federal Court considered whether the parties had chosen German law for their agreement in line with Article 25(3) Succession Regulation. But under which rules should the court determine whether such a choice is made? Is this issue governed by EU law or by the chosen national law?

Holding

The German Federal Court opted for the application of EU rules to determine whether a choice of law exists. The autonomous determination was important because the conditions for a choice under German law were not fulfilled in the case.

The court based the need for an EU autonomous interpretation on several arguments. It cited Article 22(2) of the Succession Regulation and Recitals 39 and 40, which show that the Regulation lays downs requirements for the choice of law. The German Federal Court did not see Article 22(3) Succession Regulation as contrary to this view since this provision would concern the validity of a choice, not the existence of a choice itself.

In the opinion of the German judges, Article 22 Succession Regulation permits an implicit choice of law. The Court in this regard distinguished Article 3(1) Rome I Regulation, which does not allow such implicit choice. The Federal Court explained this divergence by reference to the fact that, in case of contractual obligations, the parties typically have opposing interests, which calls for an unambiguous determination of the applicable law. The situation in succession would be different as there are no conflicting interests to be taken into account, only the will of the de cujus.

The Federal Court furthermore considered it unnecessary to submit these questions to the CJEU, as the answers would result with sufficient clarity from the text of the Succession Regulation and the previous case law of the European court (“acte claire” doctrine).

Result

The German Federal Court concluded that from an autonomous European point of view the spouses had implicitly chosen German law to govern their succession agreement. It deduced this from the use of legal terms typical for German law, such as “Schlusserbe” (final heir), which cannot be found in Austrian legislation. Moreover, the Court emphasised the parties’ intention for the agreement to be binding, which was possible only under German but not under Austrian law.

Assessment

The result reached by the German Federal Court has to be applauded. The spouses had drawn up two wills which they wanted to be mutually binding. This intention was best served by assuming the applicability of German law. Yet this result could also have been achieved by an application of Article 25(2) subpara. 2 of the Succession Regulation, as the agreement was most closely connected to Germany, given that both decedents had their habitual residence there and one of them was a German national at the time the deeds were drawn up.

Be that as it may, the clarifications of the Federal Court with regard Article 25(3) of the Regulation are to be welcomed. The judgment draws a distinction between the existence of a choice, which shall be governed by EU law, and its substantive validity, which would be determined by the chosen national law. Admittedly, this is a fine line, yet it is a necessary one. In the case at hand, it was not easy to say which law the parties had chosen in the first place. This question cannot be answered by the hypothetically chosen law.

However, the Federal Court’s distinction between the Succession Regulation and the Rome I Regulation fits unilateral wills only. It is not equally persuasive for agreements as to succession and joint wills, which are much more akin to a contract and where the parties do not necessarily pursue the same interests.

The answers to the questions raised by the case are far from obvious. It is therefore regrettable that the German Federal Court did not submit a reference for a preliminary ruling to the CJEU. This omission demonstrates once again the importance of providing English summaries of national decisions, as is done in this blog.

— Many thanks to Verena Wodniansky-Wildenfeld and Felix Krysa for their contribution to this post.

3 comments on “Joint Wills under the Succession Regulation – Insights from Germany

  1. Anna Wysocka-Bar

    Dear Matthias,
    Thank you for informing us about this very interesting case! Do I understand correctly that the problematic issues here were both admissibility of an agreement as to succession and its form (due to lack of notarial deed required by Austrian law)?
    Regards,
    Anna

    • Matthias Lehmann

      Yes, Anna, German and Austrian law diverge as to the effects and the form of the agreement. The issue was whether German law had been selected under Art. 22(3) Succession Regulation, and which law decided on the existence of the choice of law. The German Federal Court ruled that this was to be decided under autonomous European standards that follow from the Regulation itself.

  2. Marta Requejo Isidro

    Thanks, Matthias. I agree with your assertion regarding summaries of national decisions in English (as a language many know, and not for any other reason).
    The CJEU keeps on getting requests related to Regulation 650/2012. On agreements mortis causa, there is this one from the Oberster Gerichtshof Austria, C 277/20. The issue at stake is very different form the one you have reported, but worth a look into it:

    “Is Article 3(1)(b) of 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 1 to be interpreted as meaning that a contract of donation mortis causa entered into between two German nationals habitually resident in Germany in respect of real estate located in Austria, granting the donee a right having the character of an obligation against the estate to registration of his title after the donor’s death pursuant to that contract and the donor’s death certificate, that is without the intervention of the probate court, is an agreement as to succession within the meaning of that provision? ”

    Looking forward the answer to Anna’s comment, too.

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