Regulation (EU) No 650/2012 of the European Parliament and of the Council 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 (hereinafter “the Regulation”) aims to simplify and clarify the rules governing cross-border succession proceedings within the European Union and to prevent the fragmentation of estates that occurred prior to the entry into force of the Regulation. The decisive factor in determining whether the Regulation applies is the habitual residence of the deceased at the time of death. In this way, the Regulation helps to reduce the significance of national borders in succession law and to minimise the specific features of succession proceedings in individual Member States.
First and foremost, the Regulation governs jurisdiction for decisions on succession as a whole. However, the question arises as to what extent the administration of the estate, and in particular the duties of the estate administrator, are also covered by these provisions. Is jurisdiction over proceedings concerning a breach of the estate administrator’s duties also governed by the rules on international jurisdiction contained in the Regulation, or is this a separate dispute that should be dealt with separately? This article demonstrates that disputes concerning breaches of the estate administrator’s duties must be classified as part of the determination of succession as a whole within the meaning of the Regulation, and therefore such disputes should be governed by the rules on international jurisdiction contained in the Regulation.
General remarks on the Regulation
The Regulation applies in all Member States of the European Union with the exception of Denmark and Ireland. The Regulation applies to all succession proceedings in which the death of the deceased occurred after the Regulation entered into force, and in particular those with an international element. An international element is present, for example, if a German national has their habitual residence in the Czech Republic or if they hold assets in both Germany and the Czech Republic. In such cases, it is necessary to determine both which law is applicable and which court has jurisdiction to conduct the succession proceedings.
Under Article 21 of the Regulation, the applicable law is determined by the deceased’s last habitual residence. If the deceased’s last habitual residence was abroad, the law of that state applies to the entire succession proceedings, regardless of where the estate is located. The court with jurisdiction is that of the deceased’s last habitual residence. This provision facilitates the handling of cross-border successions and reduces the risk of conflicting decisions. For this reason, the question arises as to whether the rules on jurisdiction for succession proceedings also cover jurisdiction for proceedings concerning the administration of the estate and disputes over breaches of the estate administrator’s duties.
Administration of the estate
The administration of an estate involves the organisation and management of the estate by a specific individual or company until the estate is distributed amongst the heirs. Its primary purpose is to safeguard the rights of creditors and to preserve the estate.
Under German law, the rights and obligations of the estate administrator are set out in Sections 1975–1992 of the Civil Code (BGB). The administrator’s duties and obligations arise primarily from Section 1985 BGB. Under this provision, the estate administrator is to administer the estate, satisfy creditors and inform the heirs of the state of the estate. Pursuant to Section 1981 of the BGB, the administrator is appointed by the court if the heirs or creditors of the deceased so request.
In the Czech Republic, the estate administrator is appointed by the testator. If the testator has not appointed an administrator, the heirs administer the estate. The court may appoint an administrator where there are serious grounds for doing so (Section 157 of Act No. 292/2013 Coll., on Special Judicial Proceedings). The estate administrator performs simple administration (Section 1405 et seq. of Act No. 89/2012 Coll., the Civil Code), i.e. carries out all acts necessary to preserve the estate, exercises all rights in respect of the administered property and manages it properly.
If the estate administrator fails to fulfil their duties, they are liable to the heirs. In cross-border cases, the question therefore arises as to whether the rules on jurisdiction under Article 4 of the Regulation also apply to breaches of the estate administrator’s duties.
Breach of the estate administrator’s duties as part of the succession as a whole
It will be discussed below that a breach of the estate administrator’s duties can be regarded as part of the administration of the estate as a whole and that any disputes will therefore be governed by the jurisdiction rules under Article 4 of the Regulation.
Point 9 of the preamble to the Regulation already suggests that the administration of an estate and any breaches of the duties of an estate administrator should be classified as decisions in matters of succession. The preamble clearly states that the scope of the Regulation covers all civil law aspects of the succession to the deceased’s estate. This includes the transfer of assets, rights and obligations upon death, regardless of whether the succession takes place by will or by law. To ensure and carry out this transfer, the role of the estate administrator has been introduced into many legal systems, whose task is to administer the estate until the transfer to the heirs. If the Regulation covers the transfer of assets, rights and obligations, the instruments for settling that transfer must also be included. The activities of the estate administrator are therefore directly linked to the conduct of the probate proceedings. Breaches of duty in the course of such administration therefore affect the settlement of the estate itself and suggest that the relevant disputes should be brought within the scope of the Regulation. Excluding the liability of the estate administrator would undermine the Regulation’s aim of harmonising jurisdiction for all matters of succession.
The inclusion of these disputes within the scope of the Regulation is also consistent with Article 29 of the Regulation. That provision governs the appointment and powers of estate administrators in cases where the applicable law is a foreign law. It thereby emphasises that the activities of estate administrators are also an integral part of the administration of the estate, which is governed by the Regulation. Article 29 of the Regulation allows the courts having jurisdiction under Article 4 et seq. of the Regulation to appoint estate administrators in accordance with their own law and, at least in addition, to regulate their powers in accordance with the lex fori. This creates a close functional link between international jurisdiction, the applicable law and the administration of the estate. This interconnection between jurisdiction and the applicable law suggests that the administration of the estate should be understood not as an external institution, but as a procedurally anchored part of the settlement of the succession as a whole. This follows more clearly from the fact that Article 29 of the Regulation concentrates judicial supervision of the appointment, tasks and powers of the estate administrator directly within the succession proceedings, thereby seeking to prevent a split in the applicable law for succession proceedings and the administration of the estate. If the court conducting the probate proceedings has jurisdiction over the appointment of the administrator and the allocation of their powers, it follows a fortiori that that court also has jurisdiction to assess the administrators’ liability arising from such activities, in order to ensure the internally consistent administration of the estate.
This conclusion reinforces the significance of the EU rules on jurisdiction under the Regulation, with implications for international jurisdiction. The starting point is the general jurisdiction under Article 4 of the Regulation. According to this, the courts of the Member State in which the deceased had their habitual residence at the time of death have, in principle, jurisdiction to rule on the succession as a whole, as already mentioned.
The term ‘estate as a whole’ is not legally defined in the Regulation and must therefore be interpreted autonomously and in accordance with EU law. The decisive factor is whether the subject matter of the dispute falls within the material scope of Article 1 of the Regulation. According to Article 1(1) of the Regulation, the Regulation applies to the succession of deceased persons. Only tax, customs and administrative matters are excluded. Claims arising from a breach of the duties of an estate administrator may be classified as relating to the succession of deceased persons’ estates if they are closely linked to the administration and settlement of the estate. The administration of the estate serves to safeguard the estate and ensure its proper distribution and is therefore part of the succession. Disputes concerning breaches of the estate administrator’s duties therefore do not relate solely to the isolated issue of liability, but also to the proper settlement of the estate. The list set out in Article 1(2) of the Regulation does not expressly exclude the administration of the estate and its tasks from the scope of the Regulation.
The Court of Justice of the European Union has emphasised in several judgments that the concept of ‘matters relating to succession’ must be interpreted teleologically. What is decisive is not the legal classification of a claim under national law, but its substantive connection to the estate and its administration. Even claims which are of a civil law nature under national law may therefore be classified as matters of succession if they directly concern the administration or distribution of the estate.
Based on an interpretation of the meaning and purpose, there are many reasons why a breach of the estate administrator’s duties should also be classified as a matter of succession. The activities of the estate administrator serve directly to administer, safeguard and, ultimately, distribute the estate. His rights and obligations arise exclusively in connection with the settlement of the estate and relate directly to the estate itself.
According to the case law of the Court of Justice, the decisive factor is whether the subject matter of the dispute concerns the organisational or legal settlement of the estate. Claims arising from a breach of the estate administrator’s duties are directly linked to his activities in the administration of the estate and thus concern the proper execution of the estate settlement. They are not based on a contractual relationship independent of the succession proceedings, but on the administrator’s status, which derives from those proceedings. There is therefore a sufficiently close factual link between the subject matter of the dispute and the administration and settlement of the estate; consequently, disputes concerning breaches of the estate administrator’s duties must also be classified as matters of succession within the meaning of EU law. This interpretation is further supported by recital 42 of the Regulation. According to this, the law applicable to succession proceedings is intended to govern the proceedings from the outset until the distribution of the estate amongst the heirs. The preamble expressly states that this should also include matters relating to the administration of the estate and liability for debts attached to the estate.
The classification of breaches of duty by the administrator of the estate as matters relating to succession is also consistent with the systematic approach of the Regulation in the area of applicable law, as reflected in particular in Articles 21 and 23 of the Regulation.
According to Article 21 of the Regulation, the law applicable to the succession as a whole is the law of the State in which the deceased had their habitual residence at the time of death. This provision reflects the principle of the unity of succession proceedings and definitively determines the applicable law. This unified succession regime also encompasses the administration of the estate, including the associated rights and obligations of the administrator. Claims arising from a breach of the estate administrator’s duties form part of the settlement of the estate and serve to protect the estate and the rights of the heirs. If such claims were excluded from the scope of the Regulation, this would be contrary to the principle enshrined in Article 21 of the Regulation and to the Regulation’s objective of establishing a uniform law applicable to the entire estate. Such an exclusion would lead to a fragmentation of the legal regime applicable to the administration of the estate and thereby undermine the reciprocity of the system established by the Regulation.
Article 23 of the Regulation also specifies the scope of the applicable law. The provision covers, in particular, the transfer of all assets, rights and obligations in the estate to the heirs and, where applicable, to legatees. It is not only the existence of a right to inherit that is decisive, but also its actual transfer to the entitled persons. The scope of application also includes the conditions for accepting or renouncing an inheritance. A breach of the duties of the administrator of the estate may directly affect this transfer.
In conjunction with Article 21 of the Regulation, this concerns the transfer of assets to the heirs. Claims arising from a breach of the estate administrator’s duties are therefore attributable to the settlement of the estate and fall within the scope of the Regulation.
This systematic classification is also confirmed by Article 63 of the Regulation. The provision concerns the European Certificate of Succession and expressly provides that, in addition to heirs and legatees, executors of wills or estate administrators may also be involved in the process of settling the estate. The Certificate serves primarily to prove their status and authority to act. This demonstrates that the activities of an estate administrator are understood as part of the civil law settlement of the estate. Breaches of the estate administrator’s duties are therefore closely linked to the settlement of the estate, which is governed by the Regulation.
Conclusion
In summary, the above suggests that disputes concerning breaches of the estate administrator’s duties should also fall within the scope of the Regulation. Excluding such disputes would be inconsistent with the systematic integration of estate administration within the framework of the Regulation.
Although the arguments set out above suggest that the courts with jurisdiction to rule on the estate as a whole might also rule on proceedings concerning breaches of duty by the administrator of the estate, it cannot be ruled out that the administration of the estate may fall outside the scope of the Regulation. If that were the case, the question arises as to which provision determines jurisdiction for such disputes. In the absence of any other specific provision, jurisdiction could be governed by Article 4 of Regulation (EU) No 1215/2012 of the European Parliament and of the Council (the Brussels I bis Regulation).
Nevertheless, there are strong arguments in favour of bringing breaches of the estate administrator’s duties within the scope of the Regulation. The question is currently before the Court of Justice of the European Union for a preliminary ruling. The decision is therefore awaited with great interest.