NEWSLETTER INTERNATIONAL PRIVATE CLIENT COMMITTEE (IPCC)

DECEMBER NOTE FROM THE CO-CHAIRS

Caroline Abela & Eric Kuhn
2018
Hello to our international colleagues and friends from the ABA-SIL,
International Private Client Committee (IPCC). In this winter’s newsletter,
we bring you articles from the spring conference in New York City on the
topic of Intergenerational Transfers: Lessons to be learned from Family
Owned Enterprises in Transition and on the topic of The Private Art Market
and Public Oversight: Can Creativity, Beauty and Passion be Regulated?
Both of the panels were very successful and well attended presentations
sponsored by the IPCC. In addition, we are pleased to publish an article
by Agnes Proton, our senior advisor to the committee, on the topic of The
European Regulations No. 2016/1103 on Matrimonial Property Regimes and WeirFoulds LLP
No. 2016/1104 on Registered Partnerships, which are to be effective as of cabela@weirfoulds.com
January 29, 2019. + 416 947 5068
weirfoulds.com
We encourage everyone to attend our monthly conference calls that are held
the last Friday of every month at 9:30 a.m. ET. Please emails us if you plan
on attending. We really would like to hear more from you on our calls.

In addition, we will be distributing a survey on the IPCC. Please do your best

to fill it out and tell us what you would like to see more of.
Service Hotline
+ 800 285 2221 Don’t forget about our upcoming Spring conference in Washington. The ABA
+ 312 988 5000 –SIL is welcoming proposals until December 10, 2018. If you are interested
Monday-Friday in taking charge of a proposal, please contact one of the chairs.
9:00 AM - 6:00 PM ET
We look forward to seeing you next year and hearing from you on the next
Chicago Headquarters call. Enjoy! Becker, Glynn LLP
321 North Clark Street ekuhn@beckerglynn.com
+ 212 888 3033
Chicago, IL 60654
Caroline Abela and Eric Kuhn, Co-Chairs of the IPCC beckerglynn.com
+ 312 988 5000

Washington DC Office
1050 Connecticut Ave. N.W.
Suite 400
Washington, D.C. 20036
+ 202 662 1000
 PRIVATE ART MARKET AND PUBLIC OVERSIGHT: CAN CREATIVITY,
BEAUTY AND PASSION BE REGULATED?
Panel Chair & Moderator
Birgit Kurtz, Gibbons P.C., New York, NY

Speakers
Sandra L. Cobden, Christie’s, New York, NY
Sunita D. Doobay, TaxChambers LLP, Toronto, Canada
Gibbons P.C. Roelof van Holthe tot Echten, Oostwaard Hilversum, The Netherlands
bkurtz@gibbonslaw.com
+ 212-613-2009
Ms. Kurtz opened the panel by quoting the following statement Professor Nouriel Roubini (NYU Stern) made at
site.com
the 2015 World Economic Forum in Davos:

Regulation is needed in the art market because it is vulnerable to money laundering, tax evasion, trading on
inside information and price manipulation.

This Statement raises a number of questions:

First: Is the art market vulnerable to the listed crimes? Is it more vulnerable than other markets?

Second: Does the art market in fact need regulation? What would those regulations look like? Which
regulatory authority would issue these regulations? Who would enforce them?

In order to determine whether “the art market” is in fact “vulnerable” to the listed crimes (i) per se and/or
Christie’s
(ii) compared to other markets, Ms. Kurtz analyzed nine factors commonly viewed as characteristic of the
+ 212 909 6593
christies.com international art market. She concluded that the art market is not necessarily more “vulnerable” than other
markets, but it may well be more attractive to certain criminals than other markets may be.

For the second set of questions raised by Prof. Roubini’s provocative statement, the speakers based their
remarks on their diverse professional backgrounds in art law.

Ms. Doobay, a tax lawyer qualified in Canada and the U.S., presented three case studies on “art and tax
evasion.” In one case, the defendant was convicted of fraud and tax evasion after importing a work of art into
the U.S. that was worth $8 million, but which he had declared as valued at only $100! In the other two cases,
New York art collectors tried to evade New York State sales taxes by having newly acquired art works shipped
out of state.

Ms. Doobay also discussed international efforts of government cooperation and enhanced information
sharing to combat tax evasion (including through the OECD), as well as the history of “Freeports” and recent
developments involving their use in Europe and Asia to evade taxes. “Freeports” are places that allow property
to be brought into that place with a minimal amount of taxation and regulation.

Mr. Holthe, a European art lawyer in private practice, discussed a number of cases involving private art sales,
including sales on consignment. Problems in consignment sales can arise when:

1. the fee structures are unclear;

2. the identities of the parties are hidden (even though confidentiality can be a legitimate concern in many
cases); and/or
3. there is confusion as to whether the agent represents the buyer or the seller (or both???), leading to
questions about the definition/scope of the agent’s fiduciary duties and the potential for serious conflicts
of interest.
 Mr. Holt, he argued that, because legislation is not helpful, litigation is too expensive, and extensive contracts
are not welcome in the art world, certain industry bodies have in recent years successfully promoted a number
of mechanisms in order to prevent and resolve these types of issues, including internal company Codes of
Ethics and alternative dispute settlement methods.

Ms. Cobden, Senior Vice President and General Counsel, Dispute Resolution & Legal Public Affairs at Christie’s,
described the Auction House’s approach to compliance with laws and regulations. She discussed Christie’s
internal procedures designed to address laws and regulations that currently apply – directly or indirectly – to
Christie’s in the U.S., Europe and other jurisdictions, as well as regulations that may/will apply to art market
participants in the future, as for example, the Fifth EU Anti Money Laundering Directive (5AMLD), which was
TaxChambers LLP adopted by the EU Parliament during the week of the ABA Conference.
sunita.doobay@taxchambers.ca
+ 416 847 7300 Examples of Christie’s robust and balanced compliance program are:
taxchambers.ca
• regular cooperation with law enforcement authorities in various jurisdictions;
• voluntary compliance with “Best Practices” going above and beyond what is required by applicable law;
• founding member of “The Responsible Art Market Initiative” (RAM), a non-profit, cross-market initiative,
which has issued Guidelines that present a practical risk-based approach to real-life problems faced by
art market participants, see responsibleartmarket.org

The presentations were followed by a discussion of the panel members on, among other things, standards/
duties in the art market and the need for proportionality to account for smaller players and to avoid barriers to
entry. An audience Q&A session concluded the program.

Oostwaard Hilversum
holthe@oostwaard.com
+ 035 629 98 76
oostwaard.com

YEAR IN REVIEW: A SUMMARY OF RELEVANT PRIVATE CLIENT

PROVISIONS UNDER THE TAX CUTS AND JOBS ACT
Frederick K. Schoenbrodt, II, Principal
BRESSLER, AMERY & ROSS, P.C.

2018 saw important and substantial changes in the law governing the taxation of wealth transfer in the
United States. Most notably, under the Tax Cuts and Jobs Act of 2017 (“TCJA”) the federal estate and gift
tax exemption increased in 2018 to $11,180,000 per person, indexed for inflation. This is the amount that an
individual can pass to beneficiaries other than a spouse (for whom the unlimited estate tax marital deduction
will ordinarily apply) or charity (for which the estate tax charitable deduction may apply) without generating
BRESSLER, AMERY & ROSS, P.C. a federal estate or gift tax equal to 40% of the amount over the exemption. This increase effectively doubled
fschoenbrodt@bressler.com
the prior federal exemption or $5,490,000 in 2017. Through a feature of the federal estate tax law known as
+ 973 245 0682
“portability” of the estate tax exemption, a married couple effectively has a combined exemption in 2018 of
bressler.com
more than $22,000,000. For clients interested in multi-generational wealth transfer planning, the TCJA also
increased the generation-skipping transfer tax exemption, or GST exemption, to $11,180,000. All three if these
federal exemptions- estate, gift, and GST- match and are set to increase through inflation indexing over time.
Note, however, that the GST exemption is not portable between spouses, so a couple that wishes to maximize
the use of their GST exemptions will need to engage in planning at the first spouse’s death to ensure that both
exemptions are fully utilized, or at least utilized to the maximum extent possible. The individual reforms of the
TCJA, including the increases in the estate, gift and GST exemptions, are currently set to sunset on December
31, 2025. If that occurs, those exemptions will revert to pre-TCJA levels. Very wealthy clients may consider
 using their increased exemptions through the funding of lifetime trusts to avoid the loss of this unprecedented
planning opportunity if sunset occurs.

The TCJA made other substantial changes to the tax law, including reducing both individual and corporate
tax rates and limiting certain long-standing income tax deductions, including limiting the deduction for state
and local taxes (the so-called “SALT deduction”) to $10,000 and capping new deductible mortgage interest
on home loans of up to $750,000 deduction. On the other hand, the TCJA increased the standard deduction
to $12,000 for an individual and $24,000 for a couple. This higher standard deduction, coupled with the
limitations on the SALT and mortgage deductions, may make the standard deduction more beneficial than
itemized deductions. The resulting shift away from the use of itemized deductions may eliminate the benefit
of the charitable deduction for many. For clients who wish to use their charitable deductions, bunching future
contributions into one larger current year contribution to a family donor-advised fund at a public charity that
will (when taken in conjunction with other itemized deductions) exceed the standard deduction will allow them
to wring out a tax benefit from their charitable contributions.

Further, under the TCJA, clients may consider restructuring certain business and investment structures to
take advantage of new provisions in the tax code. Notably, for qualifying small business owners who operate
using certain pass-through entities like partnerships, LLCs, and S corporations, a new deduction under
Section 199A of the Internal Revenue Code for up to 20% of the owner’s qualified business income may be
available. Also, the corporate tax rate applicable to C corporations was “permanently” reduced to 21%, which
may lead to certain businesses to evaluate possible reorganization as a C corporation. Finally, the tax law
established the Qualified Opportunity Zone program which provides a potential vehicle for owners to defer, or
potentially eliminate, the recognition of capital gain on qualifying investments in certain distressed areas. This
development is being widely discussed among US private client investors.

In summary, the year brought substantial and important changes to the law applicable to the estate, tax and
financial planning of many of private clients. The dominant theme in trusts and estates over the past decade
or so has been uncertainty in the rules that will govern an individual’s estate at the time of his death. Given the
increased exemptions and sunset provisions under the new law, it seems likely that this theme will continue
into 2019 and beyond.

BOOK REVIEW BY JIM LYNCH

Jim Lynch Sobel & Co., LLC
Director-Tax

A Japanese-language book on International Estate Planning in Japan was published by our colleague Tomoko
Nakada, an attorney-at-law admitted in Japan and New York. The book was co-authored by Withers Japan
and Withersworldwide.

The book provides practical tips for non-Japanese citizens who have assets in Japan. It also discusses
Japanese laws which may affect the transfer of assets at death such as the forced heirship rule and Japanese
Sobel & Co., LLC taxes.
jim.lynch@sobelcollc.com
+ 973 994 9494 ext.160
Tomoko uses the expertise of our colleagues, Agnès Proton (on the French notary system) and Jean-Louis
sobelcollc.com
Collart (on the Swiss matrimonial regime liquidation before succession and on the history of the forced
heirship codified by Napoleon). The article by James I. Dougherty et al. on Brussels IV is also cited.

Joining IPCC and participating in the monthly conference call enabled Tomoko to connect with other attorneys
in the world and to complete this book.
 MINORITY SHAREHOLDER’S RIGHTS AND OPPRESSION CLAIMS IN THE
CONTEXT OF INTERGENERATIONAL TRANSFERS
By Caroline E. Abela & Mike McDonald, WeirFoulds LLP1

In Canada, federal and provincial corporate statutes seek to protect minority shareholders by providing them
with several rights and remedies against the corporations in which they hold shares. When a corporation acts
unfairly and/or prejudicial towards the reasonable expectations and interests of its minority shareholders,
a broad range of relief options are available in the form of the oppression remedy. In the context of a family
business, there is ample opportunity for minority shareholder rights to be ignored and infringed when control
WeirFoulds LLP
of the company is passed down through the family. It is therefore critical for family business owners, both
cabela@weirfoulds.com before and after intergenerational transfers, to be aware of the rights and remedies that minority shareholders
+ 416 947 5068 can exercise.
weirfoulds.com
1. Shareholder Rights
In Canada, the federal Canada Business Corporations Act 2 (“CBCA”) and provincial corporate statutes
like Ontario’s Business Corporations Act 3 (“OBCA”) set out the basic rights of shareholders. Subject to
modifications by shareholders’ agreements, shareholder rights include: (i) the right to vote on matters to be
decided by the shareholders as members of the corporation; (ii) the right to participate in the profits of the
corporation when distributions are made; and, (iii) the right to participate in the distribution of assets of the
corporation when the corporation is wound up.

Other incidental rights include the right to: (i) access and inspect corporate books, to have books audited and
to have an auditor’s report created and, (ii) access articles, by-laws, unanimous shareholder agreements,
minutes of shareholder meetings and shareholder resolutions.

WeirFoulds LLP
2. The Oppression Remedy
mmcdonald@weirfoulds.com
+ 416 619 6293 The oppression remedy can provide relief to minority shareholders when they feel that a corporation is not
weirfoulds.com allowing them to exercise their rights or is not acting in accordance with their reasonable expectations and
interests. This can be difficult for corporations to navigate because what may be good for the shareholders
may not be good for the corporation. The CBCA and provincial statutes like the OBCA codify the oppression
remedy by making it available to complainant shareholders on application.4

The remedy casts a wide net that is focused on protecting the reasonable expectations and interests of the
minority shareholders.

The Test
In 2008, the Supreme Court of Canada set out the oppression test in BCE Inc, Re.5 Courts will first consider
whether the evidence supports the “reasonable expectation(s)” asserted by the shareholder(s). Second, a
court will then determine whether the evidence establishes that the reasonable expectation was violated by
conduct falling within the terms “oppression”, “unfair prejudice” or “unfair disregard” of a relevant interest.
Actual oppression is the most serious wrong in an action within the scope of the remedy as it suggests bad
faith, abusive power and coercive conduct. “Unfair prejudice” and “unfair disregard” are typically considered
to be less severe actions that impact a shareholder’s interests, but usually do not imply bad faith on the part of
the company and its directors.

The range of remedies for oppression is also broad and can include orders such as: restraining the conduct
complained of, appointing a receiver or receiver-manager to the company, removing directors, redeeming the
complainant’s shares at fair value and, in extreme cases, the liquidation and dissolving of the corporation and
punitive damages.6
1 Caroline is a partner at WeirFoulds LLP practicing estate and commercial litigation and Mike is an associate at Weirfoulds LLP.
2 RSC, 1985, c C-44, s 241 [CBCA].
3 RSC 1990, c B 16 [OBCA].
4 CBCA, supra note 2, s 241; OBCA, supra note 3, s 248.
5 2008 SCC 69.
6 CBCA, supra note 2, s 241 (3); OBCA, supra note 3, s 248 (3).
3. The Oppression Remedy and Intergenerational Transfers
It is common to see shareholder disputes arising out of family businesses because families often take a
relaxed approach to shareholder rights, failing to recognize the corporation’s legal obligations. When parents
and their children are involved, there can be disputes over the control of corporations based on misleading
expectations that the children will automatically receive control over the company through an inheritance.

“Reasonable Expectations” are to be Considered in Light of the Family Relationship

A classic example of the oppression remedy in the context of an intergenerational transfer was considered
in Naneff v Con-Crete Holdings Ltd.7The father named his sons as officers of the family concrete business
and gave each equal ownership of all the common shares, while still reserving control for himself until his
death. Personal issues began to rise between the plaintiff son and the family, culminating in a massive fight
and the son was thrown out of the family house. The plaintiff was subsequently removed as an officer and
was excluded from participation in the family business practices. The trial judge found that oppression had
occurred and ordered, under the OBCA, that the business was to be sold publicly, with each or a combination
of the father and/or either of the sons being able to purchase the company.

The Ontario Court of Appeal affirmed the trial judge’s finding that corporate law does not permit ignoring
the duties and obligations owed to shareholders arising out of personal family disputes. However, the Court
disagreed with the remedy as it did more than rectify the oppression by giving the plaintiff an opportunity to
obtain full control of the family business while out of his father’s favour. The Court explained that, in a family
business, the family context of a dispute has to be considered when assessing the “reasonable expectations”
of a claimant. The plaintiff could not have reasonably expected to have control of the company when his father
was still active and alive based on their agreement. The plaintiff knew that the purpose behind the gifting
one-half of the equity in the family business was for the father and his sons to all work together. The Court
altered the trial judge’s remedy and ordered the plaintiff’s shares to be purchased by the father and brother at
fair market value. The remedy protected the plaintiff’s interest as a shareholder and rectified the oppression,
as it represented the compensation he would have reasonably expected to receive for his equity in the
business and contributions as an officer.

Corporate Control is Not to be Used to Fuel Personal Vendettas Arising from Family Breakdowns
Owners and directors of corporations cannot use their power and control to attack minority shareholders,
especially in light of a family breakdown. In Ferguson v Imax Systems Corp8, the president and director of
IMAX put pressure on the board of directors to squeeze out his ex-wife, the appellant, who was an officer and
minority shareholder in the company. The president held the majority of the common shares in the company,
while his wife had class B nonredeemable shares (non-voting). When the couple divorced, the plaintiff wife
was discharged from the company and was asked to sell or transfer her shares. The president used his
influence to ensure that the company did not declare dividends because he did not want to share equally
with his ex-wife in the corporation’s distributions. The appellant then received notice of a special meeting
of shareholders to amend the company’s articles of incorporation and convert the class B non-redeemable
shares into redeemable shares, which would be immediately redeemed. This would have effectively forced the
president’s ex-wife out of the company. The appellant brought an oppression claim to restrain the company
from holding a special meeting.

Like the Ontario Superior Court in Naneff, the Court of Appeal emphasized the need to look at the personal
relationships in a closely held corporation. Courts are to consider the bona fides of the corporate transaction
in question in order to assess whether or not conduct rises to the level of oppression or unfair prejudice. The
Court of Appeal determined that the company was not acting bona fides in exercising its powers to amend its
articles. The targeting of the president’s ex-wife was oppressive and unfairly prejudicial to her in accordance
with the CBCA. As relief, the Court ordered the proposed resolution to convert the class B shares be prohibited
forever.

7 (1995), 23 OR (3d) 481 (ONCA).

8 43 OR (2d) 128 (ONCA).
 The Oppression Remedy is Not Limitless
While the oppression remedy is broad in its application with respect to the reasonable expectations of
shareholders, it is not intended to provide relief to those who simply do not get what they want. In the recent
Ontario Superior Court decision in Wilfred v Dare9, the siblings owned 100% of Dare Foods through holding
companies by way of an inheritance from their father. The siblings’ shareholder agreements provided that they
would have a right of first offer if one of the other siblings wanted to sell their shares. If the right of first offer
was not taken, the shareholder could sell the shares to a third party, but only at a value the same or more than
what was offered to the other sibling shareholders.

The dispute arose when the sister wanted to sell her shares because she was in need of money. The sister
was unable to reach an agreement with her brothers to buyout her shares and she was unable to find any
prospective third-party buyers. The sister commenced an oppression action, alleging that her brothers
engaged in oppressive conduct in refusing to purchase her shares. The court found that the plaintiff had no
“reasonable expectation” for her shares to be liquidated at her request. There was nothing in the shareholder
agreement, nor any precedent that would require a corporation to buy back shares on command. This decision
in currently under appeal.

4. Conclusion
Shareholder disputes can be complicated and disruptive to business operations, causing serious financial
harm and significant strain on family relationships. When an intergenerational transfer occurs, all parties
involved must keep the expectations and interests of all minority shareholders in mind. The more prepared
and adaptable to shareholders’ interests that a corporation can be, the less exposed it will be to potential legal
action by minority shareholders.

9 2017 ONSC 1633.

THE EUROPEAN REGULATIONS NO. 2016/1103 ON MATRIMONIAL

PROPERTY REGIMES AND NO. 2016/1104 ON REGISTERED
PARTNERSHIPS (Effective as of January 29, 2019) 1

Agnès Proton, Attorney at Law in Cannes (France)

Member of the Grasse Bar Association
ABA-SIL Immediate Past Co-Chair of the International Private Client Committee (2015 – 2018)

We are well aware by now of the new privacy obligations bearing upon all professionals under the EU General
Data Protection Regulation (GDPR), which came into effect on May 25, 2018.
Cabinet d’Avocats
aproton@ap-avocats.fr Together, the broad scope of this GDPR and its large media diffusion have, one more time, highlighted the
+ 33 (0) 4 93 99 27 72 extensive involvement of European Law into the EU States’ internal legal systems.
www.ap-avocats.fr
The variety of the targeted legal fields is again verified through the adoption of two new EU Regulations in
Family and Patrimonial Law:

• the EU Council Regulation 2016/1103 of June 24, 2016 (“Matrimonial Property Regime Regulation”)
implementing enhanced cooperation in the area of jurisdiction, applicable law and the recognition and
enforcement of decisions in matters of matrimonial property regimes,
• and the EU Council Regulation 2016/1104 of June 24, 2016 (“Registered Partnership Regulation”)
implementing enhanced cooperation in the area of jurisdiction, applicable law and the recognition and
enforcement of decisions in matters of the property consequences of registered partnerships.

1 Both Regulation are published in the Official Journal of the European Union, on line at: https://eur-lex.europa.eu/legal-content/
EN/TXT/?uri=CELEX%3A32016R1103 (Matrimonial Property Regime Regulation) and https://eur-lex.europa.eu/legal-content/EN/
TXT/?uri=CELEX%3A32016R1104 (Registered Partnership regulation).
These are following, in this area of Patrimonial Family Law, the previously enacted European Regulation
650/2012 provisions related to International Succession (“Succession Regulation”), effective since August 17,
2015.2

Indeed, those two last Regulations have been implemented since July 29, 2016 in the 18 European States
acting within this “enhanced cooperation”, in which the new related provisions are directly and mandatorily
enforceable. Those cooperating States are: Austria, Belgium, Bulgaria, Croatia, the Czech Republic, Cyprus,
Finland, France, Germany, Greece, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovenia, Spain and
Sweden.

Those provisions will then be applicable and enforceable as of January 29, 20193 , although few technical
exceptions are provided for under articles 70 (“Entry into force”) of both Regulations, which refer to:
• articles 63 (“Information made available to the public” ) and 64 (“Information on contact details and
procedures” ), which apply since April 29, 2018;
• and articles 65 (“Establishment and subsequent amendment of the list containing the information referred
to in Article 3 (2 ), 66 (“Establishment and subsequent amendment of the attestations and forms referred
to in point (b) of Article 45 (3), and Articles 58, 59 and 60”), and 67 (“Committee procedure”), which
apply since July 29, 2016.

These new provisions relate to civil patrimonial law only, and more precisely to the patrimonial relationships
between spouses or partners, as well as to their patrimonial relationships with third parties that are the
consequences of the marriage or the partnership and their termination.4

Therefore, are here excluded issues related to spouses/partners’ civil capacity, issues dealing with social
security regimes, retirement or disability pensions benefits, alimony, validity of the marriage/partnership,
spouses/partners’ successions, etc.

These provisions do not encompass issues related to tax, customs or administrative issues either.5

Within their assigned scope, they are operating a unification of the applicable law, which is to cover all
spouses/partner’s assets, no matter where those assets are located.6

These provisions are also of “universal application”: as a consequence, the designated law resulting from
them will be applicable even if it is not the law of a Member State.7

More specifically, as to the Matrimonial Property Regimes, the EU Regulation 2016/1103 supersedes the
Hague Convention of March 14th, 1978 relating to the law applicable to Matrimonial Property regimes.8

As a result, spouses will no longer be authorized to choose the lex rei sitae (law of the State where the asset
is situated) for their immovable property, as it was originally possible under this Convention. Unification of the
applicable law prevails upon this former option to “split” the matrimonial property regime according to the
nature of the assets.

Now, back to a broader overview, how will this unified applicable law be determined in the first place?
Both for the Matrimonial Property Regimes and the Partnership, the applicable law will depend either upon the
consequences of the parties’ choice, or on the Regulations suppletive (ie subsidiary) provisions:

2 See on this topic Mrs Agnès Proton’s article : « The European Regulation No. 650/2012 Related to International Successions
(Effective as of August 17, 2015)” on line at: https://apps.americanbar.org/dch/more.cfm?com=IC840000&mod=11
3 See Articles 69 of both Regulations: « Transitional provisions ».
4 See definitions provided for under Articles 3 § 1 of both Regulations.
5 See again both Articles 1 § 1: « Scope ».
6 See both Articles 21: « Unity of the applicable law ».
7 See both Articles 20: « Universal application ».
8 Available on line at: https://assets.hcch.net/docs/3fccda38-481c-4bf1-b41b-b07fc5346654.pdf; as a reminder, up to now, this
Convention have been applying in France to all marriages celebrated since September 1st, 1992 (ie since it came into force in this
country).
1. The Optio Juris: the choice of the applicable law

Both regulations provide that the spouses/partners are allowed, under option, to submit their initial or
thereafter voluntarily modified matrimonial property regime/partnership to:

• the law of the State where the parties, or at least one of them, is habitually resident when entering in this
marriage /partnership9 ,
• or the law of either parties’ nationality10,
• or, for the partners only, the law of the State where the registered partnership was created.11

Under both Regulations, it is worth pointing out that all changes as to the Matrimonial Property Regime/
Partnership applicable law will be effective for the future only, except if provided otherwise by the spouses/
partners.

But still, no retroactive changes in the applicable law will be allowed if those changes could be impairing on
third parties’ rights under such initial law.12

As to formal requirements, the choice of the applicable law to the matrimonial property regime/partnership
must be executed in writing, dated and signed by both parties. The Regulations provide also that “Any
communication by electronic means which provides a durable record of the agreement shall be deemed
equivalent to writing”.13

2. In the absence of Optio Juris: the objective connection

When the parties have not expressly executed their choice-of-law agreement according to the above
mentioned conditions, which would have allowed a subjective connection to the chosen applicable law, both
Regulations provide for the following suppletive connections:

• As to matrimonial property regime, in principle three possible connections are successively available, ie to
the law of the State:
• ...of the spouses’ first common habitual residence after their marriage, or, if such requirement is not
met,
• ...of the spouses’ common nationality at the time of the marriage, or, if still not met,
• ...with which the spouses jointly have the closest connection at the time of the marriage.14

• As to partnership, in principle, only one connection is made available here: it is to the law of the State
where the registered partnership was created.15

However, it can be derogated to those connecting principles; to that effect exceptions are set under both
Regulations when parties are placed in a judiciary context.16

More generally, it must be highlighted that both Regulations have provided for two of the traditional safeguards
encountered in Private International Law, which are the mechanisms of Overriding Mandatory Provisions on
the one hand, and Public Policy (“Ordre Public”) on the other.17

As a consequence, it will always be possible to set aside a provision of the otherwise applicable law, if said

9 See both Regulations Articles 22 1 (a).

10  See both Regulations Articles 22 1 (b).
11  See EU Partnership Regulation 2016/1104, Article 22 1 (c).
12  See both Articles 22 2 & 3.
13  See both Articles 23 4.
14  See EU Matrimonial Property Regime Regulation 2016/1103, Article 26 1 & 2.
15  See EU Partnership Regulation 2016/1104, Article 26 1.
16  See EU Matrimonial Property Regime Regulation 2016/1103, Article 26 § 3 and EU Partnership Regulation 2016/1104,
Article 26 § 2.
17  See both Regulations Articles 30 & 31.
law should obviously be incompatible with the Public Policy of the State, or restrict the application of the
overriding mandatory provisions of the same.

Nonetheless, both Regulations have expressly excluded the possibility of “Renvoi” , another international
private law traditional mechanism, although it had been previously maintained in the EU Succession
Regulation.18

Last and regarding the Jurisdiction rules, they are governed in both Regulations under similar provisions.19

Briefly, the accessory jurisdictions provided under articles 4 and 5 refer to the above mentioned EU Succession
Regulation and to the Brussels II bis Regulation20 for all issues relating to:
• mortis causa termination of the matrimonial property regime or the partnership (by death of one party),
• and/or inter vivos termination of the like (by divorce of the spouses, or dissolution of the partnership).

Apart from those cases, both Regulations set forth traditional successive connections21 and other traditional
EU regulation jurisdiction rules, to wit: choice of Court, jurisdiction based on the voluntary appearance of the
defendant, alternative jurisdiction, subsidiary jurisdiction, and Forum necessitatis.22

As we may foresee and once again, when faced to such significant regulation changes, parties (and their
advisors!) should better remain vigilant…

18  See both Regulations Articles 32.

19  See both Regulations Articles 4 to 19.
20  See the Council Regulation (EC) No 2201/2003 of 27 November 2003 concerning jurisdiction and the recognition and enforcement
of judgments in matrimonial matters and the matters of parental responsibility, repealing Regulation (EC) No 1347/2000, on line at
https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32003R2201:EN:HTML
21  See both Regulations Articles 6.
22  See both Regulations Articles 7 to 11.

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