Applicable law under the EU’s Succession Regulation with respect to Polish reprivatisation cases | In Principle

The EU’s Succession Regulation (650/2012), which went in force on 17 August 2015, permits a choice of the law that will govern inheritance from a decedent. In the context of Polish reprivatisation cases, the best choice is Polish law.

The free flow of persons is one of the fundamental freedoms of the European Union. The great initiative of EU lawmakers in this area is making it easier and easier for EU citizens to move the centre of their life activities around within Europe. With this dynamic growth in mobility, they can change their place of work, residence, temporary stay, and so on, on an unprecedented scale. And in every location they accumulate assets which must somehow be distributed after their death.

Until now, in the case of cross-border estates, where assets are located in different countries and subject to different jurisdiction, or where the beneficiaries of the estate live in different countries than the one where the estate is located, conducting effective inheritance proceedings presented numerous problems. These difficulties were of a legal nature, because separate inheritance proceedings had to be conducted in each country where assets of the estate were located, and of a practical nature, as the heirs had to take various actions in different countries, requiring travel and so on.

Given the increased mobility of EU citizens, the European Parliament and the Council adopted the Succession Regulation, as it is known, on 4 July 2012 (Regulation (EU) No. 650/2012 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 regulation generally applies to inheritance proceedings for persons who die after 16 August 2015. The regulation introduces a number of new solutions for inheritance proceedings in the EU (apart from the United Kingdom, Ireland and Denmark). The new regulation will therefore affect reprivatisation cases conducted in Poland, where it is particularly important to determine the correct legal succession from the former owners of expropriated assets. If the decedent’s estate contains reprivatisation rights and claims, it should be considered which law governs inheritance from the decedent so that the reprivatisation proceedings conducted in Poland can continue without significant difficulty.

Applicable law

The Succession Regulation introduces major rules on the law governing inheritance matters. Previously, inheritance cases were typically resolved in accordance with the law of the country of which the decedent was a citizen or where the decedent’s assets were located. But Art. 21 of the regulation introduces the new general rule that “the law applicable to the succession as a whole shall be the law of the State in which the deceased had his habitual residence at the time of death”, even if some assets of the estate are located in another member state. The regulation provides for numerous exceptions from this general rule, but generally the law of the place of residence at the time of death will apply.

Beyond this, the possibility of choosing the law governing the inheritance, set forth in Art. 22, should be considered. Pursuant to Art. 22(1), “A person may choose as the law to govern his succession as a whole the law of the State whose nationality he possesses at the time of making the choice or at the time of death.” Under Art. 22(2), “The choice shall be made expressly in a declaration in the form of a disposition of property upon death or shall be demonstrated by the terms of such a disposition.” This means that typically the choice of law will be included in the decedent’s will.

Under Art. 4, the courts of the member state in which the deceased had his habitual residence at the time of death have general jurisdiction over succession. However, if the decedent made a choice of law under Art. 22, the court with general jurisdiction “may, at the request of one of the parties to the proceedings, decline jurisdiction if it considers that the courts of the Member State of the chosen law are better placed to rule on the succession, taking into account the practical circumstances of the succession, such as the habitual residence of the parties and the location of the assets” (Art. 6). Then the inheritance will be considered not only under the law chosen by the decedent, but also by the courts of the member state whose law was chosen.

Choice of law in relation to Polish reprivatisation cases

These rules may have a significant impact on the course and length of reprivatisation proceedings in Poland. In such cases, the administrative authorities and courts examine closely the legal succession from the former owners of expropriated property to verify the standing of the persons commencing the proceedings, and later to determine the shares in the ownership of returned property or the relevant amount of compensation awarded. Therefore foreign rulings on inheritance that are obscure and do not correspond to Polish inheritance rules can greatly hinder and prolong Polish reprivatisation cases. After all, in Continental Europe alone, which shares the same legal tradition, there are many different inheritance models in place (as we discussed before on the portal, here).

Among the problems that can arise, there may be different methods of calculating the shares in the estate, different categories of beneficiaries, and different forms of protection for family members not adequately provided for by the will. When confronted with such issues, it may be difficult for Polish administrative authorities or courts to continue reprivatisation cases, and often they will have to stay the proceedings until an opinion on foreign law is obtained from the Minister of Justice in order to conform the foreign inheritance ruling to Polish inheritance rules. In the worst-case scenario, pending reprivatisation cases may effectively be permanently blocked.

To avoid difficulties and prolonged proceedings, persons living abroad but possessing Polish citizenship and holding reprivatisation rights or claims should consider making a choice of law indicating Polish law as the law governing all inheritance matters. This will enable the person’s estate to be handled in accordance with Polish inheritance rules and, where possible, by the competent Polish authorities. This allows the Polish administrative and judicial system to continue reprivatisation proceedings without great difficulty following the death of a party. Therefore such persons should choose Polish law in their will or other disposition upon death. Those who have already made a will may make a codicil providing for the choice of Polish law.

Summary

There is no doubt that the solutions adopted in the Succession Regulation will make inheritance procedures across the European Union easier. Nonetheless, the general rule of governing law under Art. 21 of the regulation may generate numerous difficulties in reprivatisation proceedings conducted in Poland.

Therefore Polish citizens residing abroad whose assets include privatisation rights and claims should exercise the right to elect the applicable law under Art. 22 of the regulation and indicate Polish law. To this end they should include appropriate provisions in their will or make a relevant codicil to their existing will.

Radosław Wiśniewski, Reprivatisation Practice, Wardyński & Partners