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After years of discussion the Council of the European Union and the European Parliament have finally reached agreement on the reform of the Evidence and the Service Regulation. The new rules aim to improve the cross-border taking of evidence as well as the cross-border service of documents in particular through an enhanced use of information technology (notably electronic communication and videoconferencing).

The European Parliament’s official press release is available here. For a more detailed coverage see the contributions on the International Litigation Blog and the EAPIL Blog. 

Written by Vito Bumbaca, University of Geneva

On 16 July the CJEU issued its preliminary ruling in case E.E. & K.-D. E. (CJEU, C-80/19, ECLI:EU:C:2020:569, not yet available in English). The case concerned, inter alia, the assessment of the deceased’s habitual residence under the EU Succession Regulation No. 650/2012. Given the novelty of the ruling, which represents the very first CJEU assessment of the deceased’s habitual residence under the EU Succession Regulation, we will focus on this particular aspect only.

Facts:

A Lithuanian mother and her son moved to Germany to live with the mother’s husband. Prior to her death in Germany, she drew up a testament in Lithuania, naming her son as her sole heir. The mother owned an apartment in Lithuania and when she died (in Germany), her son approached a notary in Lithuania concerning the apartment and in order to obtain a Certificate of Succession. This notary refused both requests based on their interpretation of the EU Succession Regulation according to which the deceased’s last habitual residence was in Germany at the time of death. The deceased’s son appealed against such a decision; subsequently the proceedings reached the Lithuanian Supreme Court (Lietuvos Aukš?iausiasis Teismas), which decided to stay proceedings and ask the preliminary ruling of the CJEU. The CJEU found that a person can have only one habitual residence.

Relevance:

This is the first CJEU ruling on the determination of the deceased’s habitual residence under the EU Succession Regulation.

It is  welcomed to the extent that it provides a guiding assessment of the hierarchical order and practical implementation of recitals 23, 24 and 25. These are considered as explanatory rules for the determination of international competence and applicable law in matters of EU 25 cross-border succession based on habitual residence as a primary connecting factor.

Specifically, the Court clarifies which key factors should be assessed in the determination of the deceased’s habitual residence by virtue of the above-mentioned recitals and in line with the objectives followed by the EU Succession Regulation. Furthermore, it confirms that, when assessing the deceased’s habitual residence at the time of death, a lengthy determination of the deceased’s life circumstances preceding his/her death should be made. Lastly, it leaves unresolved the factual assessment of the manifestly closest connection criterion applicable on an exceptional basis.

Brief analysis:

According to the Court, the deceased cannot simultaneously have more than one habitual residence at the time of death (§ 41). This however does not exclude the possibility of acquiring an alternative and consecutive habitual residence at different points in time during the deceased’s life. The Court indicated that by virtue of recital 23 the main element in determining the deceased’s habitual residence is the stability of his/ her stay, and therefore of his/ her physical presence, at the time of death (§ 38). In the absence of stability, therefore on a subsidiary basis (§ 39), recital 24 advises national authorities, in some circumstances including notaries (§ 46), to refer to the deceased’s nationality (personal factor) and/ or assets (economic factor). Finally, the criterion relating to the “manifestly closest connection” in relation to the determination of applicable law will have to be applied in a strict manner and not subsidiary to the complex determination of habitual residence, in accordance with the principles of predictability and legal certainty as provided for by the EU Regulation (§ 37). The exceptional use of the “manifestly closest connection” criterion, however, is left to the judicial discretion of the first seised national courts (§ 45).

Ultimately, according to the Court’s reasoning, which follows the Advocate General’s Opinion of 26 March 2020 (§ 52), the element of stability relating to the deceased’s physical presence at the time of death must be sought in the reasons (subjective element) and the conditions (objective element) of his/ her stay showing a close and stable link between the succession and the given State, in line with the objectives of the EU Succession Regulation (§ 37). The assessment of both objective and subjective elements, and generally of habitual residence, should consider the deceased’s life circumstances at the time of death and the years preceding his/ her death (§ 23). Such a “lengthy” determination of the deceased’s life assessment leaves the debate open as to its pertinence in an increasingly globalised society within which cross-border settlements regularly occur, in particular when involving expats holding multiple nationalities and various assets in different countries.

Lastly, the Court has made clear that the habitual residence assessment must be twofold in matters of competence and threefold in relation to applicable law. With regard to competence, according to the Advocate General, the Court first seised will have to look primarily at the duration and regularity of the deceased’s settlement and subsidiarily at his/ her nationality and/ or assets. In relation to the deceased’s settlement, the Advocate General clarified that duration (time factor) cannot be considered, in itself, a decisive element and that it should be accompanied by other relevant factors such as the deceased’s family and social integration, or his/ her proximity to the State in question (Advocate General’s Opinion, § 54). Furthermore, the Advocate General confirmed that, in line with recital 24, the contexts typically falling under the subsidiary assessment of the deceased’s nationality and/ or assets are: (i) the scenario involving expats; and (ii) that involving a “peripatetic” cross-border movement and life not allowing the establishing of stable connection (Advocate General’s Opinion, § 55-57).

In relation to applicable law, the Court first seised should consider, as a last resort when none of the above elements can be traced, specific factors indicating a situation falling under “manifestly closest connection”. According to the EU Succession Regulation, and confirmed by the Advocate General (§ 25 of the Opinion), a typical situation falling under “manifestly closest connection” is when the deceased moved to his/ her new habitual residence fairly recently before his/ her death. Nonetheless, the Court has not yet identified any specific elements for the determination of the exceptional “manifestly closest connection” criterion (§ 59).

The number of transnational couples continuously increases within the European Union. At the same time, there are still large differences between the national rules on matrimonial property regimes and on the property consequences of registered partnerships. These disparities do not only affect the property relations among such couples themselves, but also – and even more – third parties contracting with transnational couples.

Some jurisdictions provide, for instance, that contracts between one spouse and a third party are not legally effective without the consent of the other spouse, especially in case of real estate transactions. One example of such a rule is the notorious Article 215(3) of the French Code Civil.

Third parties can be surprised by such limitations because they may not be aware that the law of another jurisdiction applies. In many cases, third parties may not even know at all that their business partner belongs to a couple with a transnational background. There is thus a strong need for third party protection not only on the national level, but also in private international law.

In the future, these conflict-of-laws problems must be solved on the basis of the new Council Regulations (EU) 1103/2016 and 1104/2016, which became applicable in their entirety on 29 January 2019. The scope of the Regulations explicitly includes third-party relations. However, the Regulations only provide fragmentary rules on third party protection. A new book analyses these provisions, identifies open questions and submits proposals how the gaps in the Regulations could be filled (Stephan Gräf, Drittbeziehungen und Drittschutz in den Europäischen Güterrechtsverordnungen, Mohr Siebeck 2019).

As the title indicates, the book is written in German. It starts with a comparative analysis of the differences between the national rules on matrimonial property regimes focussing on third party effects. In a subsequent chapter, the author outlines the conflict of law rules of the Regulations and points out that the applicable law can hardly be foreseen by third parties.

On this basis, Stephan Gräf analyses the core provision of third-party protection in both Regulations, namely their respective Article 28 (protection of the good faith of third parties). Although the provision appears to be quite detailed, it is in fact merely fragmentary and partially inconsistent. For example, it does not mention the exact subject of the required good faith of the third party (the applicable law, the particular matrimonial regime within the applicable law or the particular legal effect of the applicable law?). The provision also does not clarify that it is restricted to contractual transactions.

The Regulations furthermore contain provisions for the protection of third-party rights in case of a change of the applicable law with retroactive effect. The wording of the provisions, however, is extremely short. Many questions are left to the interpretation by the courts. Stephan Gräf analyses the scope and the legal consequences of these provisions. He shows, for instance, that they also apply when the applicable law changes only with effect for the future.

The book furthermore deals with the highly controversial coordination between international property law (lex rei sitae rule) on the one hand and the international matrimonial law on the other hand. This matter also affects third parties contracting with married persons. The author argues for the primacy of the lex rei sitae in so far as immovable property is concerned. On this point, he disagrees with the Kubicka decision of the European Court of Justice, which deals with the relationship between the EU Succession Regulation and the lex rei sitae rule.

Additionally, the book addresses the Regulations’ rules on jurisdiction (Articles 4 et seq.). It focuses on the question whether these rules apply in disputes between married persons and third parties. Despite its relevance this question has rarely been discussed so far. The Regulations lack explicit provisions on this matter. Relying on the ECJ’s approach on Article 27 of the Brussels I Regulation (recast: Article 29), Stephan Gräf argues that Articles 4 et seq. of the Regulations govern where matrimonial property law is the “heart of the action”. In disputes with third parties, this is rarely the case, as matrimonial property law typically only becomes relevant on the level of preliminary questions.

Overall, this new book provides valuable insights on the relation of Regulations on matrimonial property regimes and on the property consequences of registered partnerships with the rights and obligations of third parties. Interestingly, the author not only addresses the protection of spouses, but also that of third parties that do not know about the family relation. The Regulations are still young, and is to be expected that this book will influence their interpretation and application in practice.

In January 2018, we reported on the Recognition and Enforcement of Foreign Judgments in Asia, a publication by the Asian Business Law Institute (ABLI).

The sequel to this publication, the Asian Principles for the Recognition and Enforcement of Foreign Judgments, will shortly be released by ABLI. This is a more ambitious piece of work which seeks to set out the principles which are common to the countries within the scope of the ABLI Foreign Judgments Project (namely the 10 ASEAN Member States and Australia, China, India, Japan and South Korea). There are 13 principles in total and each principle is accompanied by a commentary which fleshes out how the various countries apply each principle.  Among other things, the principles cover the rules on international (or ‘indirect’) jurisdiction, reciprocity, the enforcement of non-money judgments, public policy, due process and inconsistent judgments. A detailed write-up on the project and principles can be found at Adeline Chong, ‘Moving towards harmonisation in the recognition and enforcement of foreign judgment rules in Asia’ (2020) 16 Journal of Private International Law 31-68 (https://doi.org/10.1080/17441048.2020.1744256).

ABLI has kindly offered to ‘soft-release’ the 13 principles which form the subject-matter of the 13 chapters of the Asian Principles to readers of conflictsoflaws.net. The 13 principles are set out below.

The Asian Principles will be released in eBook and hardcopy formats. Further details are available here.

Asian Principles for the Recognition and Enforcement of Foreign Judgments

Principle 1

As a general proposition and subject to these Principles, a foreign judgment in a commercial matter is entitled to recognition and enforcement.

Principle 2

A foreign judgment is eligible for recognition and enforcement if the court of origin has international jurisdiction to render that judgment.

The typical grounds on which a court is considered to have international jurisdiction include:

(a) where the judgment debtor was present, resident or domiciled in the country of the court of origin;

(b) where the judgment debtor, being a corporation, had its principal place of business in the country of the court of origin;

(c) where the judgment debtor submitted to the jurisdiction of the court of origin by invoking its jurisdiction or by arguing the merits of the case against it; and

(d) where the judgment debtor submitted to the jurisdiction of the court of origin by way of a choice of court agreement for the court of origin.

Principle 3

A foreign judgment is eligible for recognition and enforcement if it is final.

Principle 4

The court addressed must not review the merits of a foreign judgment, except to the extent necessary for the application of these Principles.

A foreign judgment may not normally be challenged on the ground that it contains an error of fact or law, or both.

Principle 5

A foreign judgment is eligible for recognition and enforcement if there is reciprocity between the country of the court addressed and the country of the court of origin.

Principle 6

Monetary judgments that are not for a sum payable in respect of a foreign penal, revenue or other public law are enforceable.

Principle 7

Non-monetary judgments that are not preliminary or provisional in nature may be enforced.

Principle 8

Recognition and enforcement of a foreign judgment may be refused if the judgment was obtained by fraud.

Principle 9

Recognition and enforcement of a foreign judgment may be refused if to do so would be manifestly incompatible with the public policy of the country of the court addressed.

Principle 10

Recognition and enforcement of a foreign judgment may be refused if there was a lack of due process in the proceedings before the court of origin.

Principle 11

Recognition and enforcement of a foreign judgment may be refused if it is inconsistent with a judgment in a dispute between the same parties that is given by the court addressed.

Recognition and enforcement of a foreign judgment may be refused if it is inconsistent with an earlier judgment given by a court of another country between the same parties and on the same subject matter, provided the earlier judgment fulfils the requirements for recognition.

Recognition and enforcement of a foreign judgment may be refused on the ground that proceedings between the same parties and on the same subject matter are pending before the court addressed if the court addressed was seized of the matter before the court of origin.

Principle 12

A foreign judgment that has as its object a right in rem in immovable or movable property is eligible for recognition and enforcement.

Principle 13

A foreign judgment that is objectionable in part may be severed and the unobjectionable part recognised and enforced.