Special Issue NIPR Cross-Border Insolvency

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The latest issue (2022/2) of the Dutch/English journal  Nederlands Internationaal Privaatrecht is dedicated to cross-border involvency.

Editorial: P.M. Veder, De Wet internationaal insolventierecht / p. 203-207

Articles

Welling-Steffens, Hoofdlijnen voor een wettelijke regeling van het commune internationaal insolventierecht. Bevoegdheid inzake, toepasselijk recht op, en erkenning van ‘derde-lands’ insolventieprocedures en aanverwante vorderingen / p. 208-226

Abstract

This article outlines a proposal on principles for future Dutch legislation on international insolvency law in relation to foreign insolvency proceedings held in so-called third countries (i.e. non-EU states). Itcommences with an overview of the current status of the Dutch national private international law rulesin respect of jurisdiction in, the applicable law to and the recognition of foreign insolvency proceedings and related actions held in third countries. Other than three scant provisions in the Dutch Bankruptcy Act, there is no legislation in relation to international insolvency law regarding foreign non-EU insolvency proceedings and the current rules are all based on case law, culminating in the Yukos case decided by the Dutch Supreme Court. Subsequently, the author, inspired by such Dutch case law, previous proposals on international insolvency law in the Netherlands like the 2007 legislative pre-proposal of the Kortmann Committee on insolvency, the UNCITRAL Model Laws and the various proposals put forward in Dutch legal literature, outlines a proposal on principles for legislative rules on (indirect) jurisdiction in, the applicable law to and the recognition of foreign (non-EU) insolvency proceedings.

Madaus, The German law on the recognition of foreign insolvency and restructuring proceedings / p. 227-240

Abstract

The recognition of third country insolvency proceedings in Germany does not follow the mechanisms of the EIR but falls within the scope of the respective national frameworks of international insolvency law. While Germany did not adopt the UNCITRAL Model Law on Cross-Border Insolvency, §§ 335-359 InsO provide rules that in many respects even resemble those of the EIR 2000. The framework is more recognition-friendly than the Model Law and is accompanied by rules for the recognition of foreign judgments in civil and commercial matters as well as Private International Law rules on the recognition of any modification of substantive rights by foreign law. Non-EU main restructuring and insolvency proceedings including their plans – in particular US Chapter 11 plans – are thereby routinely recognized in Germany without any need for court involvement. The recognition of scheme-type procedures would be available under these frameworks, but probably not under the cross-border insolvency framework.

Garcimartín & N. Bermejo, Spanish national rules on cross-border insolvency proceedings: a symmetrical approach / p. 241-251

Abstract

This paper examines the Spanish national rules on cross-border insolvency proceedings applicable vis-à-vis non-EU countries (including Denmark) laid down in Book III of the Spanish Insolvency Act. These rules aim to extend unilaterally the model of mitigated universalism enshrined in the EU Regulation outside its scope of application. According to those rules, the main insolvency proceedings will be opened in Spain if the debtor has its centre of main interests (COMI) here in Spain and, as a result, their opening, as well as their effects, conduct and closure, will be regulated by the Spanish Insolvency Act (lex fori concursus), with certain exceptions. Likewise, territorial proceedings may be opened in Spain if the debtor’s COMI is located in a third country, but it has an establishment here. Likewise, the paper studies the specific rules for the recognition in Spain of insolvency proceedings opened in foreign (non-EU) countries (including Denmark) and the rules on coordination and cooperation between proceedings. In addition, it describes the rules on the publicity of insolvency proceedings, information for foreign creditors and the submission of their claims. Finally, it analyses the rule of negative reciprocity, which constitutes a general safeguard in the event of a lack of reciprocal cooperation by the corresponding third country.

T.H.D. Struycken, Grensoverschrijdende insolventieprocedures en rechten op goederen in andere landen / p. 251-276

Abstract

Article 8 of the EU Insolvency Regulation (2015 recast) dominates the current thinking on insolvency proceedings in relation to rights in rem in assets situated in other jurisdictions. Implicit in the rule is the assumption that recognition of foreign security interests is too complicated. Hence, rights in assets in other EU Member States are de facto excluded from the insolvency proceedings. This article analyses the justification for the rule in Article 8, and rejects it. Recognition of foreign rights in rem is, and should be, the basic principle in the Netherlands, both outside and inside cross-border insolvency proceedings. The author proposes not to mirror Article 8 when codifying the PIL rules for cross-border insolvency proceedings outside the scope of the EU Insolvency Regulation, and formulates a first draft for a possible statutory rule.

P.M. Veder, Verrekening in de Wet internationaal insolventierecht / p. 277-287

Abstract

The Dutch government has announced that it will prepare draft legislation to address the cross-border aspects of insolvency proceedings that fall outside the scope of the EU Insolvency Regulation. This article examines which rules should be included in such draft legislation concerning set-off. It critically analyzes the approach to set-off in the European Insolvency Regulation and looks at the current state of play at UNCITRAL. The conclusion is that, even though the approach to set-off in Article 9(1) EIR is not convincing – there is no sound justification for offering protection to a creditor on the basis of the law applicable to the insolvent debtor’s claim – the Dutch legislator would nevertheless be well advised to follow the rules in the EIR concerning the applicable law, including Article 9(1) EIR, as much as possible. By following the rules in the EIR on the applicable law, insolvency proceedings and their effects are governed by the same law, regardless of whether the EU Insolvency Regulation applies or not. This promotes legal certainty and the practical applicability of a statutory regulation of cross-border insolvency proceedings in Dutch customary private international law.

C.G. van der Plas, Informatievergaring door buitenlandse curatoren in Nederland – heden en toekomst / p. 288-302

Abstract

It is not uncommon for foreign bankruptcy trustees to encounter Dutch entities or Dutch bank accounts when settling the bankruptcy. Think, for example, of a foreign bankruptcy in which the bankrupt entity has siphoned off assets through a web of entities in various jurisdictions. In order to be able to follow the bankrupt’s trail across the border, the bankruptcy trustee needs information about those entities. This article examines the means of discovery available to a bankruptcy trustee in a foreign (non-EU) bankruptcy in the Netherlands. After identifying the problems that a foreign bankruptcy trustee may be confronted with under the current Dutch system, the possibilities offered by the UNCITRAL Model Law on Cross-Border Insolvency will be examined. The article concludes with a recommendation for a future amendment to the Dutch Bankruptcy Act.

Pepels, Het Nederlandse internationaal groepsinsolventierecht – cause for concern? / p. 303-318

Abstract

Following the drafting of the Dutch Bankruptcy Act in the 1890s, the manner in which large enterprises are legally organized has undergone significant changes. Multinational groups of companies have become an important driving force behind the Dutch and the European economies. Dutch domestic international insolvency law, however, does not address the issues that are specific to cross-border group insolvencies. In this article, the author sets out to analyze whether there is any need for a Dutch domestic law on cross-border group insolvencies and, if so, what the contours thereof should be. In doing so, the article discusses the provisions on cross-border group insolvency as introduced by the 2017 EU Insolvency Regulation (recast) and UNCITRAL’s 2019 Model Law on Enterprise Group Insolvency. As the Dutch legislator is currently evaluating the options to revise the Dutch Bankruptcy Act on the topic of domestic cross-border insolvency law, the article concludes with various recommendations on group insolvencies that could align the legal treatment of insolvent multinational groups of companies more with the economic reality.

Now Reviewed: New Book on Indian Private International Law by Bloomsbury Publications

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written by Abhishek Trivedi, Institute of Legal Studies and Research, GLA University, Mathura, India

(Publication of this book was announced earlier over here. 

Written by Dr Abhishek Trivedi, the book review of Indian Private International Law has been published in the Asian Journal of International Law, Volume 12, Issue 2 in its July 2022 issue.

Preview: This timely required up-to-date book provides a systematic detailed study about all-encompassing Private International Law (PIL) issues concerning jurisdiction, choice of law, and recognition and enforcement of foreign judgments/decrees/arbitral awards in India. Considering the new developments in the field of technology and the internet, the book seems to be useful, and thus, can be relied upon by judiciary and policy and lawmakers in India and South Asian countries in order to develop a coherent and robust jurisprudence on PIL. It will consequently help enhance transparency, foster predictability, and harmonise the rules/principles of PIL in India.

A detailed review of the book may be found here.

 

Just released: Lenka Válková on ‘Choice-of-Court Agreements under the EU Regulations in Family and Succession Matters’

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A comprehensive and detailed volume by Dr. Lenka Válková was just released providing a dedicated analysis of the private international law framework as it applies to jurisdiction agreements in the framework of the EU Regulations in family and succession matters.

The blurb reads:

Party autonomy has been traditionally considered as one of the leading principles used in cross-border trade law. In fact, choice-of-court agreements have been embedded into the majority of EU Regulations governing civil and commercial matters. On the other hand, mandatory approach to family and succession law slowed down the progress of recognition of party autonomy in these fields. Only in recent years, the trend towards acknowledging choice-of-court agreements has spread into almost all areas of international family and succession law. This publication follows this development: firstly, it analyses the reasons and concerns of the recognition of choice-of-court agreements in civil and commercial matters, whereby it is questioned whether the considerations established in relation to commercial contracts may apply also for personal relationships. Consequently, different treatment of choice-of-court agreements family and succession law, where the freedom to choose the competent court is far from being unlimited, is examined. Accordingly, the attention must be paid to functions of choice-of-court agreements in family law. The second chapter subsequently investigates the position of parties in personal law relations and their protection. In particular, partial and full exclusion of party autonomy, formal and substantive validity, time limits, substantive review and public policy and overriding mandatory rules are considered as tools for protection of vulnerable parties in family and succession law relations when entering into choice-of-court agreements. Finally, last chapter provides for in-depth analysis of rules on choice-of-court agreements under different EU Regulations (the Brussels IIa and Brussels IIter Regulations, Maintenance Regulation, Regulations on Property Regimes and Succession Regulation), where the strengths and gaps of the rules are highlighted. This analysis includes also an attempt to clarify the problem of derogation from jurisdiction in favour of Third States in presence of choice-of-court agreements. Lastly, effectiveness of the rule on lis pendens in stress-tested.

Overall, in her manuscript Dr. Válková successfully combines complex theoretical analysis with concrete propositions in a multifaceted and developing area of the law. Notably, Dr. Válková exemplifies the contribution of party autonomy in private international law in addressing the challenges arising in the context of family relations in the cross-border context: in doing so, she illustrates the complex status quo of party autonomy in this area of the law, its limitations, and how policies may be promoted via private international law. As such, her book is a highly recommended source for academics, notaries, and legal practitioners.

Lenka VÁLKOVÁ, Choice-of-Court Agreements under the EU Regulations in Family and Succession Matters (Wolters Kluwer / CEDAM, 2022), 548 pp., available for purchase here.

This volume is a welcome addition to Wolter Kluwer / CEDAM’s already thriving ‘Studi e pubblicazioni della Rivista di diritto internazionale privato e processuale’ series.

Brussels IIa, habitual residence and forum necessitatis

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Even after Brussels IIb‘s coming into force (that we reported on last week), the Court of Justice of the EU issued its judgment in case C-501/20. The case remains relevant, also under the new Regulation. The Court had the opportunity to not only add to its case law on habitual residence, but also to clarify three other matters: first, the Regulation’s and the Maintenance Regulation‘s relation to the Vienna Convention on the Law of Treaties, specifically with regard to diplomatic immunity; second, the Brussels IIa‘s relation to domestic bases of jurisdiction; and third (and related to the second point), the forum necessitatis.

The case concerned the divorce and related disputes between a Spanish national and a Portuguese national. The couple had two children, who had dual Spanish-Portuguese nationality. The family lived first in Guinea-Bissau and later in Togo. The parents were posted at these places as EU delegates of the European Commission. They separated factually while still living in Togo. The mother then brought divorce proceedings, including the issues of parental responsibility and maintenance, in Spain. This court had to decide on its jurisdiction, which raised various issues.

Concerning the habitual residence, which is the first stop to determine jurisdiction (Art. 3 and 8 of Brussels IIa and Art. 3 of the Maintenance Regulation), the Court reiterated the two main factors to determine the habitual residence of adults: “first, the intention of the person concerned to establish the habitual centre of his or her interests in a particular place and, second, a presence which is sufficiently stable in the Member State concerned” (para 44, referring to its case C-289/20 interpreting the Rome III Regulation on the law applicable to divorce proceedings). The Court added that the definition of habitual residence in the Brussels IIa and Maintenance Regulations should be “guided by the same principles and characterised by the same elements” (para 53). (The Court here did not refer to Rome III, but the same is true as we know from previous case law.) Both factors of habitual residence were absent in this case. First, there was no intention to move back to Spain. Second, the parents were physically absent from Spain for this period (except for the birth of the children and periods of leave). Therefore, they could not have been habitually resident in this Member State.

Concerning the habitual residence of the children, the Court referred to the factors in its previous case law, including the duration, regularity, conditions and reasons for the child’s stay, the child’s nationality, school and family and social relationships (para 73). To establish a habitual residence, it is essential that the child is physically present in this Member State (para 75). The mother’s nationality and the pace where she lived prior to her marriage (and prior to the child’s birth) are not relevant (para 76). The child’s nationality and the place where they are born, are relevant but not decisive (para 77).

Any diplomatic immunity cannot change this conclusion, as the Spanish court does not have jurisdiction (paras 61 and following). Even though Recital 14 states that “[t]his Regulation should have effect without prejudice to the application of public international law concerning diplomatic immunities,” this refers to a situation where a court in a EU Member State would have jurisdiction but cannot exercise it due to diplomatic immunity. In short, the existence of diplomatic immunity cannot grant jurisdiction.

The residual jurisdiction under Arts 6 and 7 of Brussels IIa, and specifically the situation that factual scenario that arose in this case, have long caused confusion. The legislator attempted to rectify this in Brussels IIb (Art. 6). The problem was that Art. 6 stated that if a spouse who is habitually resident in or a national of a Member State, may only be sued on the bases of jurisdiction in the Regulation, while Art. 7 referred to domestic bases of jurisdiction where no court in an EU Member State has jurisdiction. So, what is to be done where a spouse is a national of an EU Member State (Portugal in this instance) but there are no available bases of jurisdiction in the Regulation (as neither of the spouses are habitually resident in the EU and they do not have a common EU nationality)? Which provision should prevail? The Court found that Art. 7, and thus domestic bases of jurisdiction, cannot be used in this case; only the residual bases of jurisdiction of the Member State of the defendant’s nationality can come into play (Portugal in this instance). See also the Opinion of Advocate-General Szpunar.

The same contradiction does not exist in the case of jurisdiction over children: Art. 14 simply states that where no court in a Member State has jurisdiction on the basis of the Regulation, domestic jurisdiction rules apply. Thus, Spanish residual bases of jurisdiction could be used concerning the parental responsibility.

The Maintenance Regulation does not have such reference to domestic bases of jurisdiction, but contains a complete harmonisation of jurisdiction, for all situations. It is in this context that there is also a forum necessitatis: if no court in a Member State has jurisdiction and it would be impossible or cannot reasonably expected of the parties to bring the proceedings in the third State to which the dispute is connected, a court in a Member State may, on an exceptional basis, hear the case (Art. 7). The Court explained that this can only come into play if no court in a Member State has jurisdiction, also not on the basis of the link of the case to the status or parental responsibility, and also not on the basis of the choice of the parties (para 101 and following). If this is the case, it is not required that the parties first attempt to institute proceedings in the third State, but the court “cannot rely solely on general circumstances relating to deficiencies in the judicial system of the third State, without analysing the consequences that those circumstances might have for the individual case” (para 112).

Greek court recognizes UK custody order to the non-biological parent in the context of a married same-sex couple

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Greece still forms part of the EU Member States group not recognizing same-sex marriage. Same-sex couples do enjoy however some rights. The latest challenging issue concerned custody rights of a same-sex couple married abroad. The Thessaloniki Court of Appeal reversed the first instance ruling, and recognized an English custody order [Thessaloniki CoA, decision published on January 24, 2022, unreported].

FACTS: The appellant (Parent A) is a woman of Greek and American nationality. Her partner was a woman of American national (Parent B). They registered their partnership in the UK on 20 August 2013. Nearly a month later, Parent B gave birth to a child. The partners married in January 2015. Parent A. filed an application for child custody and parenting arrangements order in the UK. The court granted the application, and ordered that the child stays with the psychological (non-biological) mother on the basis of previous decisions concerning parental responsibility rights issued in the same country. In addition, the court ordered that the child reside with Parent A., and it issued an order to remove the child permanently to Greece. Finally, the same court arranged the contact rights of the biological mother. The UK order was issued by the High Court – Family Division in Chelmsford, and it was final. Parent A. filed an application for the recognition and enforcement of the UK order before the Court of First Instance in Thessaloniki.

The Court refused recognition. It entered into an analysis of the public policy defense, culminating in the conclusion, that the forum judge is obliged to defend national public policy, while at the same time demonstrating respect towards the state’s international obligations. To that end, a proportionality test of the domestic public policy with Article 8 ECHR standards is imperative. Following the above introduction, the court declared that same-sex marriage, and any subsequent relations emanating thereof are not allowed in Greece. A detailed presentation of the first instance court reasoning may be found here.

Parent A appealed.

THE DECISION: Unlike the lower instance court, the Thessaloniki CoA primarily underlined the European context of the dispute, citing Articles 21 et seq of the Brussels II bis Regulation. It then referred to a significant number of pertinent provisions, such as: Articles 8, 12 and 14 of the European Convention of Human Rights; articles 23 and 26 of the International Covenant on Civil and Political Rights (ICCPR); articles 7 and 9 of the Charter of Fundamental Rights; the Council Directive 2000/78/EC of 27 November 2000 establishing a general framework for equal treatment in employment and occupation; Greek Civil Union law nr. 4356/2015; article 21 of the Greek Constitution, on the protection of family; directive 2004/38/EC of the European Parliament and of the Council of 29 April 2004 on the right of citizens of the Union and their family members to move and reside freely within the territory of the Member States; and finally, articles 2 and 3 of the United Nations Convention on the Rights of the Child (UNCRC), ratified in Greece by law nr. 2101/1992.

On the grounds of the above references, the CoA found no violation of the Greek public policy, and reversed the ruling of the first instance court. In particular, the CoA emphasized two points:

  • The diversity of views, i.e., the non-recognition of same sex marriage in Greece may not result to the infringement of the child’s best interests, reflected in the UK court findings.
  • The ruling of the first instance court results to the discrimination of children on the grounds of their parents’ sexual orientation.

The battle for full equality is not yet won. A couple of days after the decision of the Thessaloniki CoA was published, the Athens CoA refused recognition to a South African adoption decree issued upon the application of a same-sex (male) couple. Yet again, public policy was the defense hindering recognition. To sum up: Same sex couples may not marry or adopt children in Greece; they may however be appointed as foster parents, and exercise custody rights. Hence, equality evolves in a piecemeal fashion. And last but not least, let us not forget: the Supreme Court has the final word.

ICCS plurilingual forms present and future of international cooperation in civil status matters: Conference on 21 September 2022

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The International Commission on Civil Status (ICCS / CIEC in French) is organising a conference on 21 September 2022 entitled: ICCS plurilingual forms Present and future of international cooperation in civil status matters.

This event is being held on the occasion of the entry into force of the Convention (n°34) relative à la délivrance d’extraits et de certificats plurilingues et codés d’actes de l’état civil for the following States: Belgium, Germany and Switzerland (as of 1 July 2022).

Speeches and discussions will be in French or English with simultaneous interpretation.

The venue of the conference is Château de Pourtalès, 161, rue Mélanie, 67000 STRASBOURG – France.

Registration is free of charge but mandatory. Interested persons should send a message to:

ciec-sg@ciec1.org

Below is the agenda (see also here Conference program):

8.30 am : Welcome speech

Jeannine Dennewald, President of the ICCS

8.40 am : Opening speech

Hans van Loon, former Secretary General of the Hague Conference on Private International Law

Morning session : 9.00 – 12.15 am : Improving plurilingual forms

Chair : Paul Lagarde, Emeritus professor, University Paris I, former secretary general of the ICCS

9.00 – 10.30 am : workshop n°1 : Plurilingual forms and sex of persons: same-sex couples, neutral sex and third sex

Speaker : Patrick Wautelet, Professor, University of Liège

Discussion : Dr Bojana Zadravec, President of the Slovenian Association of Administrative Staff, EVS (European Association of Registars)

10.30 – 10.45 am : break

10.45 am – 12.15 pm : workshop n°2 : Plurilingual forms and filiation: the relevance of adapting to diversity

Speaker : Olivier Guillod, Professor, University of Neuchâtel

Discussion : Hague Conference representative

12.15 – 12.30 pm : The ICCS: dynamic transition to the future

Nicolas Nord, Secretary General of the ICCS

Afternoon session : 2.00 – 6.00 pm : Optimizing the circulation of plurilingual forms

Chair : Anatol Dutta, Professor, University of Munich

2.00 – 2.30 pm : workshop n°3 : Plurilingual forms and European rights: from the public documents regulation to the recognition of situations

Speaker : Camille Reitzer, Deputy Secretary General of the ICCS

Discussion : Marie Vautravers, European Commission

3.30 – 4.00 pm : break

4.00 – 5.30 pm : workshop n°4 : Plurilingual forms, digitization and data protection: the need for a specific regime

Speaker : Guillermo Palao Moreno, Professor, University of Valencia

Discussion : ANUSCA representative – Alexander Schuster, University of Graz

5.30 – 6.00 pm : General conclusion

Andreas Bucher, Emeritus Professor, University of Geneva

 

Long Live the Regulation? Brussels II ter Regulation becomes fully applicable

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(by Krzysztof Pacula and Thalia Kruger)

Starting from 1 August 2022, the Regulation (EU) 2019/1111 of 29 June 2019 on jurisdiction, the recognition and enforcement of decisions in matrimonial matters and the matters of parental responsibility, and on international child abduction (recast) became fully applicable, replacing the Brussels II Regulation. This Regulation is called Brussels IIter by some; Brussels IIb by others, Brussels IIbis (recast) by yet others, or simply Regulation 2019/1111 (thanks to its easy number). Brussels IIb will probably prevail, as this is the name that the Commission seems to be opting for.

Read more

“To trust or not to trust – this is the question of private international law”. M. Weller on Mutual Trust, Recueil des Cours, vol. 423 (2022)

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A. Introduction

During the Summer of 2019, I attended one of the two flagship courses organised by the Hague Academy of International Law – the annual Summer Courses on Private International Law.

I quite vividly recall that, during the opening lectures, one of the Professors welcomed the participants at the premises of the Academy, a few steps from the Peace Palace itself, and made an observation that, at that time, seemed as captivating as remote.

As my precise recollection of his words may be far less accurate than the memory of the impression they made on me, I paraphrase: when it comes to education in general, in years to come – he noted – it will be a privilege to be able to benefit from a physical presence of a teacher or professor, being there, in front of you, within the reach of your hand and of your questions.

At that time, just a few months prior to the beginning of the worldwide spread pandemics, even the Professor himself most likely did not realize the extent to which his words would soon prove prophetic.

That was, however, not the sole lecture that I recall vividly.

Among others, Professor Matthias Weller (University of Bonn, one of two general editors of CoL.net) presented his course titled ‘Mutual Trust’: A Suitable Foundation for Private International Law in Regional Integration Communities and Beyond?

Read more

The ninth EFFORTS Newsletter is here!

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EFFORTS (Towards more EFfective enFORcemenT of claimS in civil and commercial matters within the EU) is an EU-funded Project conducted by the University of Milan (coord.), the Max Planck Institute Luxembourg for Procedural Law, the University of Heidelberg, the Free University of Brussels, the University of Zagreb, and the University of Vilnius.

The ninth EFFORTS Newsletter has just been released, giving access to up-to-date information about the Project, save-the-dates on forthcoming events, conferences and webinars, and news from the area of international and comparative civil procedural law.

For information, in particular, on the EFFORTS Final Conference (30 September 2022, University of Milan), see also our previous post here.

Finally, regular updates are available via the Project website and the Project’s LinkedIn and Facebook pages.

Project JUST-JCOO-AG-2019-881802
With financial support from the Civil Justice Programme of the European Union

Opinion by AG Maciej Szpunar of 14 July 2022 in C- 354/21 – R.J.R., Intervener Registru centras, on the interpretation of the European Succession Regulation: “Extended substitution” in light of mutual trust?

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The deceased, living in Germany, leaving as her sole heir her son, who also lives in Germany, owned immovable property in Germany and Lithuania. Her son obtained a European Certificate of Succession from the German authorities, naming him as the sole heir of the deceased’s entire estate. He presented the certificate to the Lithuanian authorities and applied for the immovable property to be recorded in the Real Property Register. They refused to do so on the grounds that the certificate was incomplete, as the European Certificate of Succession submitted did not contain the information required under the Lithuanian Law on the Real Property Register to identify the immovable property by documents to be submitted, in that it did not list the property inherited by the applicant. The heir sought legal redress against this rejection with the Lithuanian courts. Against this background the referring court asked:

Must point (l) of Article 1(2) and Article 69(5) [of Regulation No 650/2012] be interpreted as not precluding legal rules of the Member State in which the immovable property is situated under which the rights of ownership can be recorded in the Real Property Register on the basis of a European Certificate of Succession only in the case where all of the details necessary for registration are set out in that European Certificate of Succession?

AG Szpunar first of all referred to the overall objective of the ESR as spelled out in recital 7 to facilitate the proper functioning of the internal market by removing the obstacles to the free movement of persons who want to assert their rights arising from a cross-border succession (para. 39). In doing so, the Regulation does not harmonise substantive law but has opted for harmonising private international law, choice of law in particular (para. 40) but also provides for the European Certificate of Inheritance, subject to an autonomous legal regime, established by the provisions of Chapter VI (Art. 62 et seq.) of the Regulation.

Article 68 lists the information required in a European Certificate of Succession “to the extent required for the purpose for which it is issued” and this includes “the share for each heir and, if applicable, the list of rights and/or assets for any given heir” (italic emphasis added).

Under a succession law like the German that does not provide for succession other than universal succession it is clear that the estate as a whole, rather than particular assets, is transferred as a totality. AG Szpunar concludes: “That being so, it is not necessary to include an inventory of the estate in the European Certificate of Succession, inasmuch as the situation referred to in point (l) of Article 68 of Regulation No 650/2012 by the phrase ‘if applicable’, the need for a list of assets for any given heir, does not arise” (para. 55). Thus, the phrase “if applicable” is not to be understood solely as a reflection of the wishes of the person applying for a European Certificate of Succession (para. 57). Even though the applicant is required to inform the authority issuing the certificate of its purpose, it is for that authority to decide, based on that information, whether or not an asset should be specified. The Commission Implementing Regulation No 1329/2014 (point 9 of Annex IV to Form V) does not have a bearing on this decision as it can only implement but not modify the Regulation (para. 73).

However, where the situation does not depend upon a national right of succession governed by the principle of universal succession and where the purpose of the certificate can only be achieved by indicating the share of the inheritance for the person in question, “it is most likely that the asset in question should be specified” (para 62). And even if there is no need to list assets (such as under German law), “it should be noted in that regard that, if a European Certificate of Succession is to produce its full effects, a degree of cooperation and mutual trust between the national authorities is required. That may imply that the issuing authority is required, in a spirit of sincere cooperation with the authorities of other Member States, to take account of the requirements of the law governing the register of another Member State, especially if that authority holds relevant information and elements” (para. 65).

Of course, Point (l) of Article 1(2) of the ESR states that “any recording in a register of rights in immovable or movable property, including the legal requirements for such recording, and the effects of recording or failing to record such rights in a register” is excluded from the scope of the regulation. By its judgment in Kubicka, AG Spzunar explained, “the Court found that points (k) and (l) of Article 1(2) and Article 31 of that regulation must be interpreted as precluding refusal, by an authority of a Member State, to recognise the material effects of a legacy ‘by vindication’, provided for by the law governing succession chosen by the testator in accordance with Article 22(1) of that regulation, where that refusal is based on the ground that the legacy concerns the right of ownership of immovable property located in that Member State, whose law does not provide for legacies with direct material effect when succession takes place. As a consequence of that judgment in Kubicka, the German law disputed in the main proceedings was not applied to the transfer of ownership. However, it did not concern real property registration rules. The national property law of a Member State may therefore impose additional procedural requirements, but only inasmuch as any such additional requirements do not concern the status attested by the European Certificate of Succession.” (paras. 77 et seq).

As Advocate General Bot noted in his Opinion in Kubicka, in practice, other documents or information may be required in addition to the European Certificate of Succession where, for example, the information in the certificate is not specific enough to identify the asset the ownership of which must be registered as having been transferred. In the present case, however, AG Szpunar rightly observed, “the Lithuanian authorities have all the information needed for the purpose of making an entry in the Real Property Register: they are able to identify the person to whom the asset in question belongs or belonged and to ascertain, from the European Certificate of Succession, the status of heir of the applicant in the main proceedings”. Thus “the effet utile of the European Certificate of Succession would be undermined if Lithuanian property law were able to impose additional requirements on the applicant” (para. 81).

In other words, even though the contents of a European Certificate of Succession, due to the underlying lex successsionis, may not exactly represent what is required for documentation by the lex registrii of the requested Member State, the overarching principle of the EU’s efforts for integration, namely mutual trust, and, more concretely, the effet utile of the ESR create the obligation of the requested Member State to substitute required documents under its lex registrii as much as functionally possible – a methodical tool that may perhaps be abstractly framed as “extended substitution” and may well develop to a powerful concept for the European Succession Certificate.

Be that as it may, limited to the constellation in question, AG Szpunar concluded:

“Point (l) of Article 1(2), point (l) of Article 68 and Article 69(5) of 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 and acceptance and enforcement of authentic instruments in matters of succession and on the creation of a European Certificate of Succession preclude the application of provisions of national law pursuant to which an immovable property acquired by a sole heir pursuant to a right of succession governed by the principle of universal succession can only be recorded in the Real Property Register of the Member State in whose territory that asset is located on the basis of a European Certificate of Succession if all the data required under the national law of that Member State to identify the immovable property are included in the certificate.”

The full text of the Opinion is here.