The Court of Justice of the European Union issued an important judgement concerning international inheritance matters. It opens the road for effective transfer to heirs of the ownership title to assets located abroad, through the application of the legatio vindicatio principle.
A matter ended with the judgement of 12 October 2017 (file ref. no. C-218/16) was based on the provisions of the 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 in matters of succession in the Member States of the EU (“the Regulation”).
Polish testament, German assets
The matter concerned a Polish citizen residing in Germany who wanted to draw-up her testament before a notary in Poland. According to Art. 22 of the Regulation, he was entitled to select the law of the state whose citizen she is as the law which would govern all of the affairs concerning her estate. In her testament, she wanted to place legatio vindicatio which would enable her husband to acquire a share in the real estate located in the territory of Germany after her death.
Legatio vindicatio (Art. 9811 of the Civil Code) allows the testator to dispose of specific assets of the estate in such a manner that the beneficiary of legatio vindicatio becomes, upon the death of the testator, directly authorized to an asset component constituting the subject matter of such legatio vindicatio. If no legatio vindicatio provision is made, if there is more than one heir, it is necessary to previously conduct the division of the estate. It is only then that the ownership title to a given asset is transferred to the exclusive property of the heir.
In the matter which formed the subject of the proceedings was the fact that the real estate, which was an object of the legatio vindicatio, was located in Germany. Meanwhile, the institution of legatio vindicatio is not known to the German law. In Germany, there is only the institution of the so-called “legatio damnatio” which, after the death of the testator, gives rise to an obligation relationship only for the beneficiary. But there is no effect of direct acquisition of the ownership title. In other words, similarly to the Polish “ordinary bequest”, the beneficiary is only entitled to claim from the heirs the transfer of the subject matter of the bequest. Therefore, the Polish notary servicing the aforementioned Polish citizen refused to perform the notarial service. She considered that, if the institution of legatio vindicatio does no exist in the German law, the testament she draws up would be in contradiction with the law. A complaint was lodged against the notary, and then the matter was lodged to the Circuit Court in Gorzów Wielkopolski which submitted a request for a preliminary ruling to the Court of Justice of the EU.
Request for a preliminary ruling submitted to ECJ
The Polish court, in its request for the preliminary ruling, referred to three provisions from the Regulation which, in its opinion, could be of importance in the present matter.
The first concerned the exemption from the application of the Regulation of the character of the substantive rights. There is a rule that each state is entitled to independently establish a catalogue of its substantive rights in its own legal system and no other countries may interfere with such catalogue. The Court of Justice considered, however, that both the legatio vindicatio in Poland and the legatio damnatio in Germany are only methods of transfer of the ownership title. The mere law on ownership is known in both countries and we may not say that recognition of the legatio vindicatio in Germany would thus infringe the provisions of the Regulation.
The second provision stipulated the exemption from the application of the Regulation of the issues of entries in the register of rights to real estate. The Court of Justice determined that the essence of the present matter concerned the acquisition of rights and not the issue of registration of rights. As regards the acquisition of a right, an entry is merely a secondary activity. Prerequisites for acquisition of rights do not fall within the catalogue of issues exempted from the scope of application of the Regulation.
The third provision concerned a situation in which a given person relies on the substantive law according to the law governing succession, which is not known in another Member State. According to the Regulation, such law is subject to harmonization with the substantive law of that state which corresponds to it to the greatest possible extent. However, the Court of Justice noted again that this provision does not apply to the case under consideration. Legatio vindicatio is just a method of transferring the ownership title and the law on ownership is known both in Poland and in Germany. At the same time, the Court of Justice emphasized that an important rule in the context of these considerations is the rule of uniformity of the inheritance law which sets the purpose thereof, namely the sense of legal certainty and avoidance of fragmentation of the law on succession. The law on succession should govern all the matters concerning the inheritance, i.e. all the assets covered by the estate.
To sum up, the Court of Justice ruled that the provisions referred to in the request for the preliminary ruling do not constitute an obstacle for recognition by a state authority of the member state of substantive consequences known to the law governing succession, selected by the testator. This means that in the present matter the Polish notary should not have refused to prepare a notarial deed and the legatio vindicatio will be effective for the real estate in Germany.
Consequences of the ruling
The ruling referred to above is an example of further harmonization of the laws of member states and elimination of barriers between them. It is true that initially we may have doubts whether expecting the recognition by a foreign state of substantive consequences of l a provision such as legatio vindicatio unknown in its legal system does not constitute excessive interference. However, the adoption of such interpretation of the Court of Justice opens up an option to citizens to freely dispose of their assets in the event of death. This is important from the point of view of Polish citizens in view of the scale of migration of people and assets in Europe and more and more frequent application of the institution of legatio vindicatio whose operation is not a rule in the European Union. It also opens a road to interesting reverse situations. For example, in Poland we may come across the transfer of the ownership title to assets covered by the estate on the basis of institutions unknown to the Polish law (in particular from the states governed by the common law systems, such as Ireland or Cyprus).
The author of the article is Tomasz Krzywański, attorney-at-law at GWW. The article was prepared in co-operation with Mikołaj Kiełpsz, a fourth-year law student.