I. Initial Situation
The structuring of inheritance law in cross-border cases, particularly in scenarios where the testator either simultaneously owns estate abroad or relocates his habitual residence to a foreign country, especially a non-European state like the United Arab Emirates, has always posed complex questions or difficulties in planning. In particular, last wills as well as the settlement and enforcement of such estates often present challenges to the testator and heirs prior and after the death of the testator.
A key aspect of international inheritance law is the European Succession Regulation (the Regulation), which has been in force since August 17, 2015. This regulation brings about a significant change regarding the main criterion for determining the applicable law. According to this, only the last habitual residence is relevant, not, as previously, the nationality of the testator. The regulation aims to establish uniform rules for jurisdiction and applicable law, so that the courts of a single member state take precedence. The regulation also applies to citizens of third countries, provided they have their habitual residence in an EU member state.
II. Determination of the law of succession
According to Art. 21 (1) of Regulation (EU) No. 650/2012 (the Regulation), the entire succession is governed by the law of the state in which the deceased had their last habitual residence at the time of death. Determining the habitual residence requires an overall assessment of the deceased’s personal circumstances. Key criteria include, among others, the duration and regularity of the stay at a specific location, as well as familial and social ties.
Furthermore, the regulation allows the option of choosing the law of the home state. The testator can stipulate in their will that the law of their home state should apply to the administration of their estate. This can be particularly useful if the testator owns assets in several countries and a unified estate regulation is desired, differing from the law of their habitual residence.
As a general principle, the law of the country where the deceased had their habitual residence applies to the entire succession (Art. 21 (1) the Regulation). This determination requires a comprehensive assessment of the testator’s life circumstances, considering factors such as the duration, regularity, and familial and social circumstances. Additionally, the testator is free to choose the law of their home country, especially if the estate is spread across multiple countries.
III. German citizen residing in the United Arab Emirates
As an example, consider the case of a German citizen who was living in Dubai before his death, where Dubai would be regarded as their habitual residence. The deceased leaves behind a property in Germany and a movable property in the UAE. The question arises whether German or Emirati law applies to this inheritance case.
Considering the the Regulation and the above-mentioned principles, the law of the state of the last habitual residence would generally apply to the succession. Accordingly, in this case, the law of the United Arab Emirates would apply, unless the will includes a choice-of-law clause not breaching the local laws in the UAE.
1. Legal Framework
The legal system in the United Arab Emirates is in itself not insignificantly influenced by Sharia law, which can pose relevant problems not only in the practical handling of an inheritance case with assets located in the UAE, but also in particular in the (un)intended succession of the testator according to these principles. Therefore, in addition to the already existing possibility of registering a will by non-Muslim testators, the United Arab Emirates implemented legal regulations in 2022 with Federal Decree-Law No. 41/2022 on Civil Personal Status (hereinafter referred to as the Personal Status Law), which provides a safe legal basis for non-Muslim`s inheritance while averting the principles of Sharia law. Together with the existing Federal Law No. 5/1985 On the Civil Transactions Law (hereinafter referred to as the Civil Code), this now determines the legal framework for non-Muslim inheritance matters in the UAE.
2. Legal intestacy in the UAE
a. According to Art. 1 No. 1 Personal Status Law, the regulations apply to non-Muslim citizens and residents of the United Arab Emirates, unless the application of other law is insisted upon. This alone shows that the heirs may seek application of the law of the deceased’s home country, which can play a significant role, especially in the case of a will in accordance with the legal provisions of the home country.
Art. 11 No. 2 of the Personal Status Law stipulates the statutory succession like Western standards. Accordingly, in the absence of a will, the inheritance is divided equally between the spouse and the remaining children as descendants. If the unmarried deceased has no children as descendants, the inheritance is divided equally between the parents of the testator or, if only one parent survives, half goes to the surviving spouse, with the other half going to the siblings in equal shares. Otherwise, the entire estate passes to the deceased’s siblings in equal shares. It is conspicuous that there is no longer any distinction between male and female heirs within the legal succession, compared to the previously applicable Sharia law. In addition, there is no mandatory compulsory share within the personal status, which would have to be considered when drafting a will.
b. In the specific case, Emirati law therefore applies initially, and, in the absence of a last will and testament, the statutory succession applies to the locally located estate, unless the heirs request German law.
3. Testamentary disposition
a. In addition to distribution in accordance with legal intestacy, local law also recognizes a testamentary disposition in the form of a will. In addition to Art. 17 No. 3 – 5 of the Civil Code, this arises in particular from Art. 11 No. 2 of the Personal Status Law, which expressly states that intestate succession only applies if the testator has not made a will.
According to Art. 17 No. 3 Civil Code, the testator may select the application of law within the will, so that the will must be drafted in accordance with the selected law within the choice of law clause. However, in case of the absence of the choice of law clause within the will, the law of the country to which the testator belonged at the time of death applies.
b. Art. 17 No. 5 of the Civil Code is a special provision which, however, is likely to be relevant in case of foreign nationals owning real estate located abroad. Accordingly, as described above, the regulations do not allow to determine foreign law is the governing law if the estate relates to immovable property. In this case, the application of the law of the United Arab Emirates is mandatory.
c. In fact, there are currently three different options for drafting and registering a local will in the United Arab Emirates: the Dubai Probate Court (Dubai Courts), the Dubai International Financial Centre (DIFC) and the Abu Dhabi Judicial Department (ADJD).
In practice, registration of the will with the Dubai International Financial Centre has emerged as the preferred and most legally secure approach. The reasons for this are far-reaching. The main reason is that the DIFC, within the scope of its legislative competence as an autonomous free zone, has implemented the DIFC Wills and Probate Registry Rules, which contain far-reaching standards and regulations that concretize the (inheritance) federal laws. In comparison to the responsibilities mentioned in addition to the DIFC, extensive regulations provide the greatest possible legal certainty with regard to the form, registration procedure or actual settlement in the event of succession. In this case, it is ensured that the probate is issued promptly, as the DIFC has an independent jurisdiction with the DIFC Courts, which acts as the actual authority issuing the probate once the succession has occurred, the probate has been applied for and the registered will has been verified.
d. Referring to the case described at the beginning, it should first be noted that the testator only had moveable properties, but no immovable assets in the UAE. In this respect, local or, for example, German law can be applied within a testamentary disposition by means of a choice of law clause. If the testator had registered a will with the Dubai International Financial Centre, which is probably the most frequently used variant, this provides for a mandatory and unavoidable choice of law clause for the DIFC Wills and Probate Registry Rules anyway.
Assuming the testator would have owned real estate located in the UAE as part of the estate, the application of German law would be excluded from the outset, even if there were a choice of law clause to the contrary.
4. Applicability of foreign law
Although the applicability of foreign law is not always advantageous for the heirs, especially in the practical settlement of an inheritance case, such a possibility is also consistent within the Emirati legal framework.
As a basic principle, it can be stated that according to Art. 17 No. 1 of the Civil Code, the law of the deceased’s nationality applies in the first instance, unless a will has been drafted and registered. Nevertheless, this same law can, under certain circumstances, open the application of, for example, the law of habitual residence and therefore, in turn, Emirati inheritance law.
Moreover, Art. 1 No. Personal Status Law contradicts this provision of the Civil Code, at least for non-Muslim citizens and residents – therefore excluding, for example, owners of a property in the UAE without a residence permit and habitual residence.
In addition, Art. 11 of the Personal Status Law, which came into force significantly after the Civil Code in terms of time, contains a statutory succession that was previously lacking within the Emirati legal framework, so that this, as well as any other provisions of the Personal Status Law, are to be regarded as overriding and concretizing the Civil Code in the absence of a will. Ultimately, this also arises from the fact that the heirs can apply for the application of foreign law in accordance with the provisions of the Civil Code pursuant to 11 No. 3 of the Personal Status Law, provided there is no conflicting will. In this respect, foreign law is no longer necessarily applicable, but in the absence of a will, there is a not insignificant risk – possibly contrary to the will of the testator – that this will be the case.
In practice, this is not the only reason why it is advisable to draft a local will. Experience has shown that the need for any legalized documents, foreign legal opinions and the resulting time-consuming procedure for opening a will and issuing a certificate of inheritance once again demonstrate the practical necessity of a locally drawn up and deposited will.
Overall, inheritance matters with a foreign connection raises many legal questions and requires careful planning. By obtaining advice at an early stage, potential cross-border conflicts can be avoided, and a smooth settlement of the estate can be ensured.
