A recent case heard by Italy’s Supreme Court of Cassation provides a window into the complicated nature of cross-border successions. The case involves a deceased citizen of the UK who lived in Italy and was married to an Italian citizen. His will, however, had been made in the UK two years before moving to Italy, and this is where the dispute begins.
The Italian wife, to whom the testator had only left £50,000, sued the deceased’s children from the first marriage, claiming that the will had been automatically annulled due to the (subsequent) marriage, as is required by UK law.
UK law stipulates that real estate assets are subject to the succession laws of the place where the property is located. Therefore, as these assets are in Italy, the wife, by law, would automatically receive 1/3 of them.
The wife’s claim was eventually upheld and 1/3 of the Italian-held assets were awarded to her. At this point, the case was brought before the Court of Cassation.
The court, after addressing several of the legal questions involved, turned the more complicated questions over to Court’s united sections (a group comprising six different sections of Court that typically handles unresolved disputes).
The overriding question they dealt with was how to adjudicate such a cross-border inheritance case, as a succession in its entirety or one aspect at a time. They also speculated on the circular nature of a scenario in which Italian law defers to a foreign system which in turns defers back to the Italian law.
The ruling from the united sections cannot be considered current, in any case, due to its reliance on the Italian private international law of 1995. Legal disputes like this will need to be resolved through the European regulation (EUSR, which came in to force in 2015) on succession, whose application raises many questions of which–to date–there is no precedent in the Court of Cassation to provide guidance.
The timetable is unclear, but until the Court rules on the application of EUSR, many of the issues regarding cross-border succession will remain unresolved.
The ordinance in question admits this in no uncertain terms: the highest level of civil judges, at the end of a dozen pages spent examining the complex legal aspects of an Italian-UK succession, explicitly state that they cannot provide an unequivocal answer “since this Court has no precedents, nor are there uniform doctrinal indications, on these questions of the utmost importance, it is considered appropriate to refer the documents to the President of the Court of Cassation for any remission to the united sections”(1).
(1) The united sections of the Court of Cassation is a group of nine judges that operates within the Court itself, which is called upon to rule in cases where the same question has been judged by different ordinary sections (six in total) in different ways, in some cases with judgments that are in opposition to each other. The united sections, chaired by the First President of the Court of Cassation,also make declarations on the most pressing legal issues of the moment (Article 374 of the Italian Code of Civil Procedure). Also read our post about the difference between the US Supreme Court and the Italian Supreme Court of Cassation.
The case in question concerns the succession of a UK citizen, who was domiciled in his country of origin, but who also lived in Italy. The testator made a will in the UK in 1997, (re)married in Italy (1999) and died there two months later.
The Italian wife, to whom the testator had only left £50,000, sued the deceased’s children from the first marriage, claiming that the will made in 1997 had been automatically annulled due to the (subsequent) marriage, as is required by UK law.
As a consequence, this was a registered succession and under UK law all real estate assets are subject to the succession laws of the state in which they are located (2): therefore, Italian substantive law had to be applied to all assets in Italy,meaning that in cases involving several children,1/3 of the assets go to the wife (3).
(2) The principle, typical of common law systems, dictates that the law of domicile for personal property (in civil law”movable” property) and the law of the state in which real property is located (in civil law “immovable” property) apply. The latter application is also referred to as lex rei sitae.
(3) See Article 581 of the Italian civil code. From the text of the ordinance, it can be deduced that the value of the property was nearly seven million euro.
The presiding judge for the case deemed the will to be valid, and the wife asked that Italian rules of forced heirship (link) be applied.Consequently, her share of 1/4 of the estate was reinstated (4).
(4) See Article 542, par. 2 of the Italian civil code for the shares reserved for”necessary heirs”.
The court of first instance accepted the request of the Italian wife and according to the Italian intestate succession law(link) assigned her a share of 1/3 of the assets in Italy, ruling the will annulled according to UK law. The ruling was challenged by the children, but the appellate judges confirmed it, believing that: (a) UK law should be applied to the will; (b) the (second) marriage of 1999 resulted in the automatic annulment of the 1997 will; (c) the succession was registered; (d) the UK Private International Law refers to the substantive discipline of the lex rei sitae; (e) therefore the Italian substantive law relating to the registered succession was applied (5).
(5) See Articles 565 to 586 of the Italian civil code.
The children next turned to the Court of Cassation maintaining the will was not invalid, claiming the second wife was only entitled to the legacy of £50,000 left to her by the testator; alternately, if the Italian forced inheritance law were considered applicable, the second wife would receive 1/4 of all assets (including the value of the legacy).
The judges of the higher Court, after rendering several decisions on issues related to the case with which they had no doubt (6), laid out four legal issues for which they requested the help of the united sections.
(6) The judges specified that the conflict-of-law rules (choiceoflaw) that emerged are those contained in the Italian Private International Law (hereinafter I-PIL), mainly contained in the Statute Law no. 218 of 1995. While the European Regulation did not apply no. 650 of 2012, which entered into force in August 2015. This was because the succession opened in 1999. Secondly, contrary to what the children of the testator claimed –their argument being that since the father had gone to the UK to make a will, he was in essence choosing UK law as the applicable law — the choice of law must be put in writing (see article 46 par. 2 of the Statute Law no. 218 of 1995) and cannot be derived from facts surrounding the case. Therefore, since there is no testator’s (voluntary) choiceoflaw, the choiceoflaw (by statute) required by I-PIL must apply. Read more our post about “Choice of Law in Italian-American Cross-Border Successions”. (link)
The first of the questions in doubt for the judges of the Second Section concerns the temporal order of the decision-making process.That is, whether the different legal aspects involved in the succession must be separated first (for example, validity and effectiveness of the will, settlor’s ability, matrimonial regime, etc.), qualified one at a time and then researched so as to find the applicable substantive discipline among the multiple choice-of-law options in Italian Private International Law (hereinafter I-PIL); or, conversely, first consider the issue as a whole (in the case of succession), then find the choice of law in I-PIL (7).
(7) The difference would be significant in terms of results. In fact, the trial judges had considered the matterin its entirety(as a succession) and thus found the suitable choiceoflaw (Article 46 I-PIL: citizenship law). After which they qualified the individual aspects andapplied UK law to the matrimonial question (domicile law), deeming the will annulled under this substantive law. If, instead, they had first qualified the various aspects involved in the succession in question, they would have isolated the single matrimonial question and would have applied to it the specific choice of law imposed for marriage (Article 29 of I-PIL: law of spousal common citizenship or, failing that, the law that gives priority to the place where the spouses mainly lived). So it would have ended up applying the Italian substantive law (and not the UK one), with the consequence that the will was not to be considered annulled, at least regarding the assets in Italy,which would only entitle the wife to her forced heirship right of 1/4 of the assets.
The second question involves the very essence of succession within the framework of civil and common law systems; the former tending to consider succession a unique event that involves all assets (assets, rights and obligations) of the deceased, with the latter tending to split succession, both temporally (executor phase and distribution phase) and legally (with the possibility of considering multiple successions if there are assets located abroad).
In the ordinance, the judges wondered about instances where the I-PIL choice of law defers to another system (example: the citizenship of the deceased in a registered succession) and this choice of law defers in turn (a so-called “backward referral”) to the applicable Italian law (8), not for the entire succession issue, but only part of it (example: UK law which refers to the lex rei site for the law applicable to succession of real estate only, not to personal assets), and if in those instances the choice of law still works or if it must be considered invalid (9),thus making “universality of rights” the main driver of succession (10).
(8) I-PIL contains a specific rule (article 13) which establishes that when I-PIL indicates a foreign legal system, the PIL of that system, for the most part, takes precedence. This approach, however, does not seem to be followed by common law countries, where the applicable legislation of that statehas priority over the foreign country’s PIL.
(9) In the ordinance it is not clear what would cause the failure of the “backward referral” from the foreign legal system to the Italian one (in the presence of division of succession), because, strictly speaking,UK law should apply (but it is not clear how). The judges referred to some Spanish and French judgments in the ordinance, but in hindsight, some of these judgments resolved the question by applying only foreign law, in others only lex rei sitae (the Spanish substantive law–although the deceased was from the UK).
(10) The judges specify in the ordinance that the principle of succession understood as universumiuris does not seem to be of a mandatory nature, let alone that of a public order (the judges argued various points on this matter and cite some judgments that suggest a negative interpretation of it). Therefore, they would seem to favor the “backward referral”, even in the event of a division of inheritance.
The third question presupposes an affirmative answer to the second question, in the sense that the “backward referral” must be considered applicable even if the succession is divided up by a foreign legal system. The judge’s uncertainty came down to the reference to lex rei sitae and whether that implies the entirety of succession (starting from the validity and strength of claim) or only certain aspects of succession (11).
(11) The appellate judges adopted the second option, taking UK law into account even in an Italian succession, supposing the will annulled and rendering it only necessary to define the other aspects of the succession (identification of assets in Italy, of heirs, of inherited shares, etc.). The judges of the Superior Court, however, were not convinced of this, believing that anopposing position could be just as valid, i.e. if a foreign legal system completely ignored the fate of assets abroad and asked the state to deal with the entirety of succession (validity and strength of claim, identification of assets, successors, shares, etc.).
The last question also presupposes an affirmative answer to the second question (12).
(12) In other words, when I-PIL points to a foreign legal system, the PIL of that statemust be taken into consideration, even if this divides up succession and refers at least part of it back to the Italian substantive law.
In fact, in the ordinance the judges wondered whether returning to the substantive Italian law on succession as indicated by the PIL of a third state does not refer to something even less substantial than the hypothesis put forward in the third question, or else refers merely to the purchase methods of hereditary asset, itself a rather insubstantial bit of bureaucracy.
We should therefore wait for the decision of the united sections to know how to approach these problems, which, in truth, may also involve successions subject to European regulation (EUSR).
Therefore, we await the Supreme Court of Cassation’s decision on the methods of application of the European regulation.This, however, may present even greater complications, as EUSR explicitly leaves many of those aspects of succession dealt with in I-PIL up to the management of the individual Member States (13).
(13) For a list of these excluded aspects see the post A mock case to explain the complexity of cross-border successions between Italy and the United States.