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Clearer property rights for Europe's 16 million international couples - guide

16 March 2011
by eub2 -- last modified 16 March 2011

What happens to your house if you get divorced and your spouse is of another nationality? What happens to a joint bank account if the spouse dies? What happens in such cases if you and your spouse have the same nationality, but you have property or a bank account abroad? In Europe, there are around 16 million international couples, and at least 650,000 of them face these questions every year when their marriage or partnership comes to an end. Citizens lose time and money figuring out which law applies to their case and which court is competent to help them. Legal divergences between the 27 EU Member States create an incentive for "forum shopping" or a "rush to the court." This happens when one spouse – usually the wealthier one – rushes to a court where he/she thinks the outcome will be the most beneficial. The European Commission is therefore proposing EU-wide rules to bring legal clarity to the property rights for married international couples and for registered partnerships with an international dimension. The two proposed Regulations would help identify which law applies to a couple's property rights and the responsible court. The Regulations also provide for rules for recognising and enforcing court judgments on a couple's property in all EU Member States through a single procedure. The proposals are the first deliverable of the Commission's October 2010 Citizenship Report, which outlined 25 major practical obstacles that Europeans still face in their daily lives. Today's proposals are the logical next step following the swift agreement last year on EU legislation to determine which country's rules apply in cross-border divorce cases.


What is the problem?

With more and more Europeans living in another EU country, the number of international couples (both spouses and registered partners) is on the rise.

There are today around 16 million international couples in the European Union. In 2007 out of the 2.4 million new marriages, 13% (310,000) had an international element. Similarly, 41,000 of 211,000 registered partnerships in the EU today have an international dimension.

These couples often come from different Member States, or they have assets – such as property or a bank account – in more than one country. The new rules proposed today are equally relevant for any couple living at home that owns property abroad.

There has been a steady increase in the number of international couples dealing with property issues because of divorce, legal separation or death, since 2000. In these situations, international couples face uncertainties and extra costs when dividing their property. The different national laws lead sometimes to complex and even conflicting situations.

An example of a conflict of laws:

A Hungarian man and his Greek wife got married in Greece and lived there for three years after the wedding, then moved to Hungary where the marriage failed after a further two years. In this case, it is not clear whether Greek or Hungarian laws would cover the division of the couple's property. The liquidation of the matrimonial regime was governed by Greek substantive law under the Greek conflict of law rule (common habitual residence of the spouses at the time of marriage), whereas it is governed by Hungarian substantive law under the Hungarian conflict of law rule (common habitual residence of the spouses at the time of divorce).

An example of twenty years of legal proceedings:

A Spanish citizen married a man with double nationality: Dutch and German. The couple got married in Düsseldorf (Germany) in 1965. Their matrimonial property was (automatically) governed by a community regime; both spouses were aware of this. For cultural and practical purposes, the Spanish wife changed her nationality, after marriage, from Spanish to Dutch and the couple moved to the Netherlands. They owned property both in Germany and in Spain.

At the time of the divorce, both parties had their habitual residence in the Netherlands and were of Dutch nationality, and therefore the proceedings took place in the Netherlands. During the divorce proceedings, the parties agreed that the husband would keep the property in Germany whilst the wife would keep the property in Spain, an agreement that was formalised by a letter signed by the husband confirming that he passed on the ownership rights of the Spanish property to his ex-wife. However, before the conclusion of the divorce the wife had to move back to Spain for health reasons and established her habitual residence there. This had unintended consequences when she decided, a year after the divorce, to name their children as the legal owners of the property in Spain. As she started the procedures for the transfer of the property rights, she discovered that she needed her ex-husband's consent to do so because she had been married under the community of property regime and the letter drafted by her ex-husband (which would have been sufficient to transfer property under Dutch law) was not recognised in Spain. The case came to an end after twenty years of legal proceedings and fees after her ex-husband agreed to sign before a notary a document transferring the property ownership rights to the children.

How many people are affected?

In 2007, 13% of all 2.4 million new marriages in the EU were international (307,158), and in the same year about 637,000 international marriages were dissolved through divorce or death. There were also 41,000 international registered partnerships (the possibility exists in 14 Member States (Austria, Belgium, the Czech Republic, Denmark, Germany, Finland, France, Hungary, Ireland, Luxembourg, Netherlands, Slovenia, Sweden and the United Kingdom) that resulted in 9,766 partnerships being dissolved because of death or separation.

What are "international couples," "international marriages" and registered partnerships?

International couples could include spouses who live outside of their home Member State, come from different countries, or have assets in a number of Member States. International marriages and registered partnerships are considered international couples.

International marriages include marriages between:

* two EU nationals from different EU countries or two nationals from the same or different third countries
* one EU national from an EU Member State and one national from a third country
* two EU nationals living in a third country
* two EU nationals having assets in a third country
* couples which acquire or are owners of a property in a Member State other than their country of origin

International registered partnerships include registered partnership between:

* one national of the country and one national of (i) another EU country or (ii) a third country
* two EU nationals from other EU countries or two nationals from third countries
* one EU national from another Member State and a third country national

Will the rules change the status of registered partnerships or marriage in the Member States?

No. The new rules will apply merely to matrimonial property regimes or property aspects of a registered partnership with international dimensions. The proposed Regulations will not harmonise national rules on marriage, registered partnerships, succession or divorce. They also will not result in any changes to national rules on taxation of property or assets. They will simply assist international couples in managing their property rights in the event of divorce, separation, or death of a spouse or partner.

What are the extra costs involved for international couples?

The costs are estimated at €1.1 billion a year. These are mostly made up of additional lawyers' fees because of inadequate information, parallel legal proceedings in different countries, legal complexity of cases and lengthy proceedings. In one case proceedings were so complex that it took 20 years to resolve the matter.

Couples could save an estimated average of €2,000 to €3,000 per case, depending on its complexity.

Why is the European Commission taking action?

The EU has already made it easier for international couples to identify which rules would apply in case they divorce. Now the Commission is proposing to address the related issue of how they deal with common assets after their divorce.

Likewise, the Commission has already proposed similar rules for dealing with wills and successions. Today's new proposals on property aspects will compliment these rules.

This initiative is also part of the EU's action to tackle the remaining obstacles in the daily lives of people living, working, studying and travelling in other European countries. The Commission's October 2010 Citizenship Report outlines concrete solutions for overcoming 25 major obstacles that Europeans still face when they move from their home country. Uncertainty surrounding the property rights of international couples is one of the obstacles when Europeans exercise their free movement rights. The Commission said in the Citizenship Report that it will adopt a legislative proposal in 2011 to make it easier for international couples (either married or registered partners) to know which court has jurisdiction and which law applies to their property rights. The Commission is now delivering on this promise.

What will the rules do?

Rules for married couples

The competent court in case of death of one of the spouses is the court where the remaining spouse has taken legal action in view of succession. The competent court in case of divorce is, if the couple agrees, the court where one of the spouses filed for divorce. In case the couple cannot agree, judges have a common formula for deciding which country's law applies. The proposed criteria include – in descending order – the habitual residence of the spouses, their last habitual residence if one of them still resides there or the habitual residence of the defendant. These widely used criteria frequently coincide with the location of the spouses' property.

Like the recent EU rules to determine which law applies to divorce, the proposed Regulation on matrimonial property regimes lets spouses decide which law should apply to their joint property and assets. By providing for a choice of law, the Regulation will increase flexibility and autonomy of the spouses. It will also prevent a possible 'rush to the court' by one of the parties. If the couple does not agree, the Regulation on matrimonial property regimes provides for a set of criteria to determine the applicable law on the basis of the following connecting factors:

* the matrimonial property regime shall be primarily subject to the law of the spouses' first common habitual residence after their marriage;
* Failing that, the law of the country of the spouses' common nationality at the time of the marriage;
* Failing that, the law of the country with which the spouses jointly have the closest links, taking into account all the circumstances (such as the place where the marriage was celebrated)

A couple will not be able to choose a law having no relation to their real situation or past history.

Rules for registered partnerships

The proposed Regulation on property aspects of registered partnerships determines that the law of the state where the partnership was registered should apply to property issues, in order to provide predictability.

If the partners agree, the competent court for a separation is the court where one of the partners has filed a claim for dissolution or annulment of the partnership. If the parties disagree, the courts of the country to which the parties have the closest connection will be competent. The list of connecting factors include – in descending order – the common habitual residence of the partners, their last common habitual residence (if one of them still resides there) or the habitual residence of the defendant.

The competent court in case of death of one of the partners is defined as the court where one of the partners has taken legal action with regard to the question of succession.

The courts of a Member State where domestic law does not provide for the institution of registered partnerships will always be able to refuse jurisdiction. In that case the EU rules help establishing another Member State's court to deal with the case.

Why are there two separate regulations?

Marriage and registered partnership are different legal institutes in the national law of the Member States.

Marriage is a legal institution recognised in all 27 EU Member States, and in five of them, it is open both for opposite sex and same sex couples (the Netherlands: since 2001; Belgium: since 2003; Spain: since 2005; Sweden; since 2009; Portugal since 2010). Registered partnerships are a more recent legal institutions which are recognised in 14 EU Member States (Austria, Belgium, the Czech Republic, Denmark, Germany, Finland, France, Hungary, Ireland, Luxembourg, Netherlands, Slovenia, Sweden1 and the United Kingdom); while in Belgium, France, Luxembourg and the Netherlands, registered partnerships can be used both by same sex and opposite sex couples, in the other countries, they are only open for same sex couples.


1 : When Sweden opened marriage for same-sex partners in May 2009, registered partnerships were abolished; they continue to exist if concluded before May 2009.

Source: European Commission

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