Conference Presentation
Reference
The New European Regulation on Successions and Its Ramifications on the Swiss-European Estates
ROMANO, Gian Paolo
ROMANO, Gian Paolo. The New European Regulation on Successions and Its Ramifications on the Swiss-European Estates. In: STEP Geneva 2015 Annual Conference on “A New Era : Coping with the Maze of Global Regulations”, Geneva (President Wilson Hotel), 27 April 2015, Geneva, 27 April 2015, 2015
Available at:
http://archive-ouverte.unige.ch/unige:135137
Disclaimer: layout of this document may differ from the published version.
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“The New European Regulation on Successions and Its Ramifications on the Swiss-European Estates”
speech delivered by
Gian Paolo Romano
Professor at the University of Geneva
At the STEP Geneva 2015 Annual Conference on
“A New Era : Coping with the Maze of Global Regulations”
Geneva (President Wilson Hotel), 27 April 2015
Ladies and Gentlemen, Let me first thank the organisers for their generous invitation.
Let me also apologise for having been the last to send in my slides. But I am glad to see that this hasn’t prevented those nice folders that lie on your lap from being assembled and distributed on time.
As President Obama in his Selma speech recently noted, “it is a rare honor in this life to follow one of your heros”. Professor Bonomi is one my heros, and it’s an honor to speak right after him…, as well as after all other distinguished co-panelists
My focus today will be on the impact that the Regulation is likely to have on the successions that present contacts with Switzerland and one or more Member States, those contacts typically being through nationality, domicile, habitual residence or place of assets.
By the term “Member State”, I will be referring to “the Member States bound by the Regulation”, which, as has been repeatedly said, does not include UK, Ireland and Da- nemark.
But before turning to those “Swiss/EU successions”, I want to spend some time on the progress that the Regulation is expected to bring within the EU: progress in terms of enhanced justice and increased opportunites for the EU citizens and residents and in terms of shared prosperity for their nations.
And I hope this helps us assess whether Switzerland may not be well-served in con- sidering taking advantage of that greater prosperity, perhaps by entering into some form of agreement with the EU on this matter.
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To assess all this – I know it’s ambitious – let me being by telling you three stories.
The first story is about the grand-mother of a good friend. She is an elegant German lady in her late seventies who’s been living in Strasbourg, France, since the early ni- neties. She owns bank assets in both Germany and France.
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A couple of years ago, she approached her grandson, who’s a lawyer, saying: “I want to start getting my affairs in order for the time I will no longer be of this world. Can you help me? What law am I supposed to abide by? What law may I rely on?”.
Germany and France have almost always disagreed about what “private international law justice” requires when it comes to international successions. According to the French view, the most appropriate connecting factor is the decendent’s domicile.
According to the German view, it’s his or her nationality.
As a consequence, my friend’s grandmother is a victim of a French-German conflict of legal systems. France wants to apply French law to all of her assets, including German assets. Germany wants to apply German law, including to the French assets.
When she wonders whether she is allowed to make a Erbvertrag as German law per- mits, when she wonders whether she has the ability to make a donation-partage based on French law, the answer is… there is no answer.
There’s no way for her to know ante mortem how the conflict of laws that strikes her succession will be settled.
To have some chances of knowing which law she can rely on when shaping her last will, she has first to die.
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Some years ago, I was in a meeting with a German Member of the European Par- liament. The works for the Succession Regulation were not yet under way.
We came to discuss about the state of private relationships in Europe. I asked him:
“Do you know that your fellow citizens who are domiciled in France are bound to die without knowing what law governs their succession?”.
He was not a lawyer and it took him some time to grasp the point. Once he fully understood it, he could not hide his indignation: “Wie kann es in unserer Europa noch möglich sein?”
And when a 6.6-feet tall German is getting angry close by, and you feel partly responsible for this sudden outburst of wrath, you start feeling a little bit uneasy.
He was firm in his conclusion: “This has got to change”.
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Coming back to our German lady, my friend regrettably told her that I might be the right person to assist her.
And she did give me a call.
My only advice to her was: “Tenez le coup. Don’t die now. Because there will soon be a Regulation that will do you justice by solving the conflict between German and French laws in a way that allows you to fashion your affairs accordingly”.
She didn’t seem prepared to wait though. I guess she was impatient to go to heaven.
“What – she asked – if I move my residence back to Germany? Would I benefit from greater certainty?”.
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I said yes. For France will then accept that German law applies to all your movables, including the French ones.
So, to receive a little illumination about the law applying to her, she has to give up the cross-border element which forms part of her identity, she has to play domestic.
Now the European Union is about the freedom to establish yourself in other Member States, to buy or move assets across intra-community borders.
But if the consequence of you taking advantage of those freedoms is that you are losing control of what will happen to your estate after your death, that your estate will slip into a kind of a legal no-man’s land, you may think twice before taking actual advantage of those freedoms. They become ineffective.
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My second story is about the succession of Italians who die with their domicile in France.
Let’s take an Italian lady who lives in Paris and, contrary to our German lady, dies without thinking about the way her wealth will pass after her death. So she dies intes- tate. Her next-of-kin are her second husband, a Frenchman, and two Italian children from a first marriage.
After mourning her, the surviving spouse and the children wonder what their respective claims to her estate are. That’s a legitimate question. They want to know what their rights are in order to enforce those rights.
As often happens in those situations, they are on no friendly terms. But they both would rather have a clear answer than to embark in a long litigation that will eat up part of the estate funds.
The trouble is that there is no prelitigation answer. For, much like in the French- German story, French law should apply according to France while Italian law should apply according to Italy.
Which is why the surviving spouse may be tempted to rush to the Italian courts and have them declare that Italian law, which entitles him to 2/3 of the estate, is controlling. While the children may be encouraged to seize French courts that will rule based on French law, which turns out to be more favourable to them.
This state of affairs is contrary to the shared interests of the two countries involved.
The first purpose of their law is to avert conflicts between human beings, to reduce liti- gation, not to provide an incentive for it.
What is more unsettling is that this dispute may never be settled legally to the extent the French-Italian conflict of laws may lead to a French-Italian conflict between judges and their decisions. The Italian judge may rule that the assets in dispute belong to the French widower. The French judge may rule that those assets belong to the children.
The conflicting decisions annihilate each other. Legally, it’s a standstill.
Who’s going to inherit may then depend on a kind of law-of-the-jungle behaviour. The individual who’s faster in securing possession of the assets and in transferring them to the most favourable forum, the one who shouts louder, the most robust – physically, psychologically – may prevail.
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France and Italy fail in their core mission to protect their citizens, to provide them with a legal order. They are instead creating a legal mess. And they risk squandering tax- payers money for conflicting proceedings that may turn out to be largely ineffective, rather than spending that money to build schools, and bridges, and clean energy facilities.
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Now, as President Obama said (I hope you won’t mind me quoting him again), as he said with respect to the U.S. policy towards Cuba, “when something hasn’t worked for 50 years, you don’t just keep doing it, you try something new”.
And the Member States are trying something new.
They have decided to transfer the power to settle the conflict between their views on private international law justice to a higher entity, the European Union. Each Member State had the opportunity to state its views in the legislative process that has resulted in a common view.
Thanks to the Regulation, tens of thousands of EU citizens and residents who, as we speak, wonder hopelessly about the law they are entitled to rely on when thinking about their succession, will have most of the time a reasonable clarity. They can arrange their earthly affairs and prepare in peace for their heavenly return.
Tens of thousands who are now stripped off their right to know what their claims in a opened succession are, who are forced to race to the courthouse while they are still mourning their loved ones (and the one who mourns longer is penalised), those people will, after 17 August, in a significant amount of cases, be able to exercise their rights and perform their obligations without having to spend huge amounts of money in mul- tiple proceedings.
So in this respect, the Regulation will contribute to a more just, more peaceful and more prosperous Europe.
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My third story is about British citizens owning immovable property in Spain and having retired there.
No less than two hundred thousands British retirees have taken up a permanent re- sidence in Spain to enjoy the sun, the Spanish tapas, for those who are still fit the Spa- nish fiesta, and, for the lazy ones, the Spanish siesta.
Our Brits do care about the law governing their succession. This matters to them. For English substantive law and Spanish substantive law arguably differ even more widely than German and French laws.
To name but a well-known example, there’s no forced heirship under English law while the Spanish Civil Code protects the closest next-of-kin by reserving a portion of the estate for their benefit. Spanish common law in turn provides for some dispositions upon death that English law ignores, like the fideicommissus.
Now, those Brits are faced with a conflict of legal systems that takes an even more paradoxical form.
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Essentially, UK says to Spain: “Your law (Spanish law) applies to those people based on domicile or situs”. Spain says to the UK: “No, your law (English or Scottish) ap- plies based on nationality”.
That’s the renvoi problem.
Which reminds me of Alphonse & Gaston. I guess you have never heard of them. They were two gentlemen of French origin who were the protagonists of an American comic strip of the early twentieth century. Gaston was tall and grotesque. Alphonse was short and grotesque. And they were extremely polite. So much so that every time they stood before a door, they were constantly deferring to each other.
“After you, Alphonse! No, you first, my dear Gaston”.
And none of them went through the door.
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Now, the UK decided to stay aside of the Regulation. I feel that, by doing so, it might be causing some prejudice to its own citizens.
Take a Brit who’s still domiciled in the UK but owns an immovable in Spain. He wants to leave it to a charity institution along with all his estate. And he has an adult child.
So, who will inherit the Spanish property?
According to Spanish substantive law, it’s probably the child as forced heir. According to English law, it would be the charity.
Is English law or Spanish law controlling?
Our man wants to know.
The Regulation designates English law as the law of habitual residence. English private international law designates Spanish law as the law of location.
But the Regulation seems to require Spain to « accept renvoi » and regard Spanish substantive law as ultimately applicable. And if you read the Dicey, Morris & Collins and other standard works on English conflict of laws, you may reach the conclusion that English substantive law is controlling because of the Spanish conflict rule referring back to the UK.
In which case, the negative conflict of laws has turned into a positive conflict.
I think our Englishman would be happier if he could rely on the Regulation rather than have to try and adjust to two conflicting systems and rather than to hear from his advisors: “To be on the safe side, sell your Spanish property and buy another one on the English riviera”.
His succession would, based on the Regulation, be governed by English law as the law of habitual residence. He would be able to let the Spanish asset pass to the charity without fearing Spanish law might interfere.
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Let me now turn to Swiss-EU successions.
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The first thing to mention – as has indeed been mentioned – is that the Regulation leaves unaffected the bilateral treaties.
Let me take an example that is close to our hearts: the succession of Professor Bonomi – who’s Italian and lives in Switzerland – is still covered by the Swiss-Italian Treaty of 1868.
Which is kind of surprising if you think about all heroic efforts Andrea has made to modernise Swiss, Italian and European private international law. His own succession still falls under the grip of a Matusalem treaty of the nineteenth century!
Let’s imagine that, like most socialite, Andrea owns an apartment in Venice.
Let’s further imagine that he wants to make a pacte successoral – something which is permissible under Swiss law but prohibited under Italian law – and to contractually un- dertake to bequeath his flat to… me, to show his gratitude because I once publicly said he was my hero at a STEP conference.
He might then wonder whether he is allowed to choose Swiss law. The Italian Act, the Swiss Act and the Regulation would essentially allow him to do so. But the Treaty provides for applicability of Italian law based on nationality, without contemplating the possibility of a choice in favour of Swiss law of domicile.
But the good news is, according to a recent interpretation by the Federal Tribunal – whose reasoning is in my opinion rather ambiguous – he should be able to choose Swiss law.
So, Andrea, we can go ahead with the pacte…
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Let’s now, more seriously, focus on the situations that, under the perspective of the Member States, are caught by the Regulation and, under the Swiss perspective, fall within the Swiss Private International Law Act of 1987.
The question is: How well the two regimes are likely to get along with each other? To which extent will they harmonise and to which extent they will collide, producing inconsistency and uncertainties for the men and women involved?
As a general comment, the Regulation should generate « positive externalities » for both estate planning and estate distribution purposes with respect to those successions.
For at least three reasons.
First, Switzerland – its citizens and residents and their advisors – will no longer have to seek coordination with each domestic system of the Member States, which sometimes is just “mission impossible”, but with one system only.
Second, and more importantly, the Regulation and the Swiss Act share a common vi- sion. In other words, European law on this point, in terms of its general inspiration and the individual solutions that it embraces, is much more Swiss than it is German or Spa- nish or Greek…
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Third, the working together of European and Swiss regimes awards greater op- portunities for those who engage in estate planning. And this is largely because of the choice-of-law options that they jointly offer.
Professor Bonomi spoke extensively about this last point. Which makes my task easier.
I will address four points. And I will try to focus on the most problematic ones.
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As we already know, the main connecting factor the Regulation is based on is habitual residence.
The Swiss Act is instead centered around domicile.
Now, to which extent are those two concepts consistent with each other?
The first example that is on my mind is about my neighbour. He is Hungarian. He’s working under a 2-year contract with the Hungarian Permanent Mission. His wife and children live in Budapest, where he flies back three times a month.
As Recital 24 of the Regulation suggests, we need to figure out where the « center of interests of his family and his social life » is located. This is probably Hungary. For my neighbour has no family in Geneva and little social life here apart from occasional beers with some of his colleagues and myself.
But where is he domiciled for Switzerland?
Article 20 of the Swiss Act defines domicile as a combination of two elements.
The “intention to settle indefinitely” in Geneva is lacking. Based on Article 20 par. 2, we are then referred to his “habitual residence”.
Now, such residence is, for the purposes of the Swiss Act, in the « country where the person lives during a certain time (certaine durée), even if such time is limited ».
I feel that the habitual residence so defined of our man is rather in Switzerland because this is where he’s currently physically present most of the time.
If my understanding is correct, we are then faced with a conflict of habitual re- sidences. Our Hungarian is resident in Geneva for Switzerland and in Budapest for Hungary.
Another category that may raise challenges are the retirees that live permanently in Switzerland – some of them benefitting from tax advantages – who may be nonetheless regarded as « objectively more connected » with their national countries for the purposes of the Regulation.
So situations of dual domicile/residence may occur. Which brings me to the following point.
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It’s with regard to jurisdiction that the interaction between our two instruments promises to be the least satisfactory.
Let me first note that the term “court” within the Regulation covers not only the judicial authorities that have the power to settle disputes but also the authorities,
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including notary public, that have the ability to conduct non-contentious operations, such as opening last will, inventory of the assets, and so on.
Now, after 17 August 2015, the situations where there might be concurrent, parallel jurisdiction of the Swiss and Member States authorities are bound to increase.
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Let’s take the hypothetical of a Frenchman who’s domiciled in Geneva and owns assets both here and in France, including an apartment in Paris or Megève.
When the habitual residence is in a third country, the Regulation adopts several alternative heads of jurisdiction. The jurisdictional claim made by the EU goes really far, more than under most of the current domestic rules.
The nationality of the deceased coupled with the location of part of his estate is one of those alternative grounds.
So, French authorities are empowered by the Regulation to deal with his succession.
And this power also extends over Swiss assets, including immovables, as a consequence of the principle of universality that the Regulation embraces.
On the Swiss side, Swiss authorities are also entitled to rule on the succession based on last domicile. With an important caveat though. For Art. 86(2) requires the Swiss authorities to defer to the “exclusive jurisdiction” claimed by the State of the immovable.
And France does indeed claim today exclusive control on the French immovables.
France basically says: “Everybody hands off! That’s my territory”.
But what will happen after 17 August?
The notion of “exclusivity” suggests we project ourselves to the stage of recognition.
The Regulation has not attempted to unify the recognition law in the Member States when it comes to third State decisions.
As a result, the recognition of a Swiss decision in France will continue to be governed by French recognition law.
But because of the change in the direct jurisdiction rules, I think that France will be prepared to give effect to a Swiss decision ruling on French immovables rendered by the courts of the last residence.
That’s my prophecy.
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So, if my analysis is correct, a French-Swiss jurisdictional contest affects this suc- cession. Authorities at either side of the border are prepared to rule on the distribution of all assets, regardless of where they are located.
And this is true of the succession of any EU nationals domiciled here: Germans, Portuguese, Swedes, Poles…
So, it might be a good idea to prevent the jurisdictional contest from transforming into a jurisdictional conflict, which might lead to a decisional conflict, which is contrary to the well-understood interests of all.
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Let me go through three ways in which such a coordination may be attempted.
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The first is, choice of court by the parties.
Which leads us to ask: “Who are the parties”?
The de cujus comes obviously first to mind. I’d rather talk about the de cujus rather than the « deceased », because the deceased cannot really choose. In a way, he has been chosen.
Here’s the question: Is it justified to allow a person to try and avoid parallel procee- dings that are likely to cause difficulties, delays, unnecessary costs and confusion, when it comes to the post-mortem administration and distribution of his or her assets?
Allowing a person to unilaterally designate the forum that will deal with his or her suc- cession, this has caused some conceptual difficulties to some. When the question of the forum actually arises, this person will no longer be with us.
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Interestingly, the Brussels/Lugano system offers an example of one-sided designation of a forum, an example of choice-of-court that is not the product of an agreement.
It’s about trust law. I feel I have to mention trust once at a STEP conference.
It’s in Article 23 Lugano Convention. The settlor has the ability to select the forum where all litigation relating to trust law issues is to be brought, including – I guess – after his death. Article 149e of the Swiss Act also allows the settlor to authorise somebody else – typically the trustee – to select the trust forum.
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Now, let’s assume that our Frenchman has designated the French authorities as exclusively competent to deal with both contentious and non-contentious issues arising out of his succession.
Article 5 of the Swiss Act, if you read it in conjunction with Article 87(2) – which permits Swiss people living abroad to designate the Swiss forum: I will come to that – is likely to lead to this unilateral choice being upheld on the Swiss side.
Which means that if one of the parties raises the existence of choice of French forum by the deceased, Swiss authorities may be willing to defer to this choice and decline jurisdiction in favour of their French counterparts.
This is my guess but, to the best of my knowledge, there is no direct precedent by the Federal Tribunal so far.
What if our Frenchman selects the Swiss forum of his or her own domicile coupled with a choice of Swiss law?
Professor Bonomi has already shown how closely those two questions – and those two levels of analysis – may be related.
But the French courts are under no obligation to defer to such a designation. The Regulation provisions that may allow the taking into into account of such a choice of
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forum – I think of Article 5 and 6 – do in fact restrict such a possibility to situations where the designated forum is that of a Member State.
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To ensure that his wish to avoid French authorities being involved in his succession is met, our testator might try a different a path and include in his last will a provision along those lines:
“All disputes relating to my succession shall be brought before the Swiss courts. Who- ever, in breach of this will of mine, seizes the courts of another country will lose any and all rights that I have conferred upon him or her through the present will”.
Would such a testamentary clause be enforceable?
Unfortunately, we have no time to think about the answer because we’ve got to move to the possibility for the other “parties concerned” to make a choice-of-court, which would then be a proper choice-of-court agreement.
Let’s imagine that, after the death of our Frenchman, his prospective heirs-in-law and legatees agree to have inheritance disputes, should they arise, settled by the Swiss authorities (or the French authorities). Would such an agreement be binding on those people?
On the Swiss side, there shouldn’t be any problem.
Our Supreme Court specified that a postmortem agreement between the parties is enforceable on the ground that inheritance disputes are “patrimonial in character”
within the meaning of Article 5 of Swiss Act.
On the French front, the Regulation lays down in Articles 5 through 7 a whole bunch of provisions on choice-of-court agreements. But here again the validity of those agreements is conditional upon them pointing to the courts of a Member State, not that of a third country.
So, if the parties agree on Swiss authorities, and one of them has second thoughts and brings dispute to the French authorities, those French authorities are likely to disregard the agreement and affirm jurisdiction.
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The second mechanism which may be resorted to in order to achieve coordination is lis pendens.
The Federal Tribunal has been faced with several recent cases – a Swiss-Greek case, a Swiss-Italian case – where a motion for lis pendens was at the core of the Swiss proceedings.
In one of them a proprietary action (“pétition d’hérédité”) had been filed in Italy first.
The defendant in Italy strikes back in Switzerland. He requests the Geneva Tribunal to state and declare that a prior settlement covering the assets claimed by his opponent is valid and enforceable.
Our Supreme Court said the test to determine whether the two actions are “identical”
rests in assessing whether “Italian and Swiss decisions will be incompatible”, re-
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gardless of whether the two parallel claims are one preliminary to the other, or one of them has been made as a principal claim or as an alternative or subsidiary claim.
So large, comprehensive notion of identity of actions, which draws some inspiration from the one developed by the European Court of Justice.
But is the identity of actions before Swiss and French courts sufficient in our hypothetical to trigger the stay of the second-in-time proceedings?
Article 9 of the Swiss Act requires the Swiss court to assess the prospects of the fo- reign decision being recognised in Switzerland.
This leads us to ask: Is the French decision likely to be recognised?
Decedent’s nationality, even if it’s coupled with the place of part of the estate, is not included in the list of the acceptable jurisdictional bases of Article 96. Unless the de cujus has designated French law as applicable law.
What if the French court is seised second?
Article 17 of the Regulation only applies to intra-European lis pendens. Which means that the French domestic principles on lis pendens, whatever they are, still apply, which principles are often less liberal and, more uncertain, than the uniform ones.
The bottomonline is the French lis pendens is not likely to be observed by the Swiss court and it is not certain whether French courts will be prepared to defer to Swiss authorities if seized earlier.
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This leads us to the third way to coordinate jurisdiction. Which is reminiscent of forum non conveniens.
Article 12 of the Regulation provides that, when the estate includes assets in third countries, the court of the Member State may refrain from ruling on them “if – I quote – it may expected that its decision in respect of those assets will not be recognised and, where applicable, declared enforceable in that third State”.
So the French judge, if it is satisfied that chances that French adjudication will be recognized in Switzerland are low, has discretion to leave the Swiss part of the estate out of his reach and decision.
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As is apparent from our analysis, the clash between two inconsistent claims at univer- sality result in the jurisdictional “fragmentation” of the estate. Which result is incon- sistent with the common inspiration of the two regimes and generate some well-known difficulties.
A difficulty that has received limited attention is how to identify the location of the assets for jurisdictional purposes.
First, what is the relevant time? The time when the succession is opened or when the court is seized or when the court rules on its jurisdiction?
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Second, where are assets located? For immovables, it’s easy. For claims (créances), it’s less. The Insolvency Regulation may provide some guidance.
I bought last August some shares in a German Kommanditgesellschaft, which buys and sells immovables in Germany. This small investment has been done via my Swiss bank. I received the certificate of shareholding and put it in the safe of my bank.
Where is this portion of my estate located? Am I co-owner of the immovables in Germany?
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Let me briefly turn to the case of a Swiss who’s domiciled in a Member State. It’s in a way the reverse scenario. I think for example of those Swiss men and women who mo- ve to Spain to live closer to the true beaches.
Spanish authorities of habitual residence do have jurisdiction under Article 3 of the Regulation. Their jurisdiction in principle extends over Swiss assets, real property in- cluded.
This means that there’s no need for the Swiss authorities to engage in lengthy enquiries to make sure the foreign courts of the last domicile do deal with Swiss part of the estate within the meaning of Article 87.
So no Swiss-Spanish jurisdictional contest here. That’s good news.
This is true, however, only as long as our Swiss citizen does not make a choice of the Swiss forum. Article 87(2) of the Swiss Act offers such an option while specifying that designation of Swiss law also entails designation of a Swiss court.
In which case, the Swiss jurisdiction not only exists, at least with respect to the Swiss assets, but will likely be exclusive over the Swiss assets.
The Spanish courts will have then discretion to refrain from ruling on those assets.
And this will ultimately lead to a jurisdictional fractionation of the estate.
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I have so far referred to a litigational perspective.
The truth is though that, when she starts thinking about her succession, a person of good faith doesn’t want significant part of her estate being squandered in costly and long disputes among her successors.
She wants to work on the orderly and efficient “dis-integration of her estate” to avoid the “dis-integration” of her family. The “after me, the storm” perspective is generally not appealing to her.
And so, if a conflict arises between those who are supposed to continue her persona- lity, things have not really gone quite the way she wanted.
Now, facilitating the orderly, expeditious, non-contentious distribution of estate, that’s one of the underlying objectives of the Regulation.
And such an objective is favoured by the coming together of the Regulation and the Swiss Act. Because, when it comes to applicable law, they promise to coexist rather harmoniously.
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For they share common guiding principles. Let me briefly recall them.
Number 1. The connecting factor they both embrace is a domiciliary nexus (domicile and habitual residence). Whereas Germany, Sweden, Spain, Austria currently prefer nationality.
Number 2. This domicilary nexus also extends to immovables. While for example our French neighbours tend to subject immovables to the law of situation.
Number 3. As has been said, the right for the de cujus to choose the applicable law is ignored by the majority of the Member States.
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Let me give you an example of how the Regulation will improve the Swiss/EU relationships. It’s about a Swedish national domiciled in Switzerland. Like Ingvar Kamprad.
Let’s suppose that our Swede dies intestate.
Sweden thinks today that Swedish law should apply to all his movable assets based on nationality. Switzerland takes a different view. Switzerland thinks that Swiss law should apply to all movable assets (including the Swedish ones) based on domicile.
A Swedish decision is unlikely to be recognized in Switzerland based on Article 96.
Therefore, Swedish lis pendens has little chance of being observed by the Swiss autho- rities.
Now, Swedish substantive law turns out to be more favourable to the surviving spouse.
Swiss substantive law is more favourable to the child.
So, the conflict between Sweden and Switzerland on who should inherit and for which part may encourage disputes between the spouse and the child (much like in our Italian-French case study). The spouse may be tempted to get hold of everything she can – valuable paintings that adorn the matrimonial home, jewels, everything her husband kept in the safe box – and bring them to Sweden.
Allow me to insist on this point.
This conflict between Swedish and Swiss legal systems is contrary to the well- understood Swiss interests as much as to the well-understood Swedish interests. Both countries have the primary, joint responsibility to ensure the protection of their citizens and residents and to make them benefit from law and justice. Both countries are failing in this core mission by causing disorder and injustice and encouraging disputes and law-of-the-jungle conducts between the members of their communities. It’s a joint, bilateral failure.
Once the Regulation will be in force, Sweden and Switzerland will agree on Swiss law of habitual residence and domicile applying to the distribution of those assets. A law of the jungle conduct would no longer be profitable. It would be discouraged and perhaps sanctioned.
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The bottomline is that harmony between two countries and legal systems concerned will favour harmonious and constructive dealings and intercourse between the individuals concerned.
Everything I said about the Swedes domiciled here holds true for Germans domiciled here. And the German community is obviously larger.
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Speaking about applicable law, some minor differences between the two regimes exist.
Arguably the main one is about “dispositions of property upon death”.
According to the Regulation, law of habitual residence at the time when the disposition is made – and not at the time of death – governs admissibility and substantive validity.
For the Swiss Act, the law of domicile at the time of death controls (save for pactes successoraux).
To understand what this means, let’s assume a Portuguese that lives in Spain and makes a fideicommissus relying on Spanish law. He then moves to Switzerland without changing his last will. He dies domiciled and resident here. He hasn’t made a professio iuris in favour of Spanish law nor could he have done so under the Swiss Act. For Article 90 refers either to Swiss law as that of his last domicile or to Portuguese law of his nationality.
Based on the Swiss Act, this fideicommissus is not enforceable because Swiss law ap- plies to it. Based on the Regulation, that will be operating in Spain and Portugal, Spanish law of habitual residence at the time when the disposition was made applies, which Spanish law upholds the testamentary clause in question.
So, with respect to the issue raised by this Swiss/Spanish/Portuguese succession, this
“tri-national succession” – is this fideicommissus that comports with Spanish law enforceable? –, Switzerland says “no” and Spain and Portugal say “yes”.
The Swiss and European regimes conflict on this point. Which is obviously a bad thing for the individuals involved as well as, for the reasons stated, for the three countries involved.
The substantive solution followed by the Regulation seems to be more appropriate, and more fair. A similar solution is by the way adopted by the Swiss Act when it comes to pactes successoraux at Article 95.
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Let me say a few words about the European Certificate of Succession.
The idea is to make it cheaper and more expeditious for legitimate heirs and legatees to claim delivery of assets from the banks and other third parties who possess them.
The question as to which documents allow their holder to claim delivery is a relevant one. Banks want to avoid engaging their liability. That’s why they are often asking:
“Do we have to rely on this foreign document?”.
So all Member States have committed to introduce a certificate in their national legal system. The European Certificate seems to be inherently more reliable than nearly all
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similar documents that are out there, in view of the enquiries that need to be completed and detailed information included in it.
The European Certificate “is delivered with a view to being used in another Member State”.
But once the certificate delivered, nothing seems to prevent the beneficiary to present it to entites and authorities in Switzerland. It’s up to Switzerland to determine the effects that it is willing to award to it.
The certificate ranks among the documents established abroad for the purposes of Article 96. None of the European heads of subsidiary jurisdiction is likely to be reco- gnised in Switzerland except in case of professio iuris. Which restriction is quite un- comfortable.
Another difficulty lies in the fact that the certificate may be subject to « review » in the country of origin. And, for a foreign act to be recognized, the exhaustion of all means of review is generally required by Swiss recognition law.
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Let me state some conclusions.
Estate planning and distribution are facilitated because of the striking similarities bet- ween the European and the Swiss regime.
The major weak point affects jurisdiction and recognition. Such weakness may make things more complex with no discernible benefit for anybody except perhaps those who are accustomed to reap short-run gains out of the complexities and shortcomings of the system.
That’s why I think we should carefully assess whether Switzerland may not be better off entering into an agreement with the Member States. Such an agreement may take various alternative forms.
But there’s no apparent reason to think that the Lugano Convention may not represent in this domain too a workable model.
In trying out this path, to quote Martin Luther King (he’s too one of my heros), we would be fulfilling “the glorious task that we are given, to continually try to improve this great Continent of ours”.
Thank you all very much.
