The European Succession Regulation and the Arbitration of Trust Disputes

• Author: S.I. Strong
• Position: D.Phil., University of Oxford (U.K.)
• Pages: 2205-2228

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The European Succession Regulation and

the Arbitration of Trust Disputes

S.I. Strong*

ABSTRACT: Over the last few decades, U.S. citizens have becom e

increasingly mobile, with signific ant numbers of individuals living, working,

and investing abroad. Estate pl anning has become equally internatio nal,

generating ever-larger numbers of cross-bo rder succession cases. While these

sorts of developments are welcome, they require lawyers to appreciate and

anticipate the various ways that the law s of different jurisdictions can

interact.

One of the most important recent developmen ts in international succession

law comes out of the European Union. While the Europea n Succession

Regulation may initially appear app licable only to nationals of E.U. Member

States, U.S. citizens can also be affected by its provisions. This Article analyzes

the interaction between the Regula tion and trust arbitration, which ha s

become increasingly popular in various U.S. a nd foreign jurisdictions. In so

doing, the Article discusses how tru st arbitration furthers the goal s of the

Regulation and how individual prov isions in the Regulation may support or

restrict the possibility of arbitration o f trust-related disputes.

I. INTRODUCTION ......................................................................... 2206

II. TRUST ARBITRATION AROUND THE WORLD .............................. 2207

III. THE REGULATION ..................................................................... 2210

A. THE REGULATION AND PRIVATE INTERNATIONAL LAW ........... 2210

B. JURISDICTION ...................................................................... 2211

C. SCOPE ................................................................................. 2212

D. APPLICABLE LAW ................................................................. 2214

* D.Phil., University of Oxfor d (U.K.); PhD. (law), University o f Cambridge (U.K.);

J.D., Duke University; M.P.W., Universi ty of Southern California; B.A., University o f California,

Davis. The author is the Manley O. Hudson Professor of Law at the University of Missouri and is

qualified as a lawyer in New York, Illinois, and Missouri as well as a solicitor in Ireland and in

England and Wales. The author would like to acknowledge financial and other support from the

Max Planck Institute for Comparative and International Private Law in Hamburg, Germany,

during the drafting of this Arti cle. All errors of course remain with the author.

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E. CHOICE OF FORUM ............................................................... 2215

F. RECOGNITION ..................................................................... 2223

G. PUBLIC POLICY .................................................................... 2224

IV. CONCLUSION ............................................................................ 2227

I. INTRODUCTION

Over the last few years, trust arbitration has gained a significant foothold,

both domestically and internationally.1 Not only have an increasing number

of jurisdictions adopted legislation explicitly permitting the arbitration of

trust disputes, but case law and commentary have demonstrated how trust

arbitration can proceed even in the absence of statutory authorization.2 Many

of these developments can be traced to the increased appreciation by judges,

lawyers, and others in the trust industry of (1) the differences between trust

arbitration and the more problematic forms of arbitration (most notably

consumer arbitration); and (2) the benefits of arbitration in matters involving

internal trust disputes, meaning disputes between beneficiaries or between

beneficiaries and the trustee.3

As encouraging as these developments may be, some issues remain

unclear. Perhaps the most important matter to consider involves the

applicability of European Union (“E.U.”) Regulation 650/2012 on

Jurisdiction, Applicable Law, Recogniti on 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

(“Regulation”) to efforts to arbitrate disputes involving trusts.4 As a matter of

European law, the Regulation is binding on most E.U. Member States in its

existing form, without any need for domestic implementation. 5

Because the Regulation is meant to harmonize the rising incidence of

cross-border successions within the E.U., the Regulation may at first glance

1. See generally ARBITRATION OF TRUST DISPUTES: ISSUES IN NATIONAL AND INTERNATIONAL

LAW (S.I. Strong ed., 2016) (discussing various issues involving arbitration of trust disputes);

Grant Jones & Peter Pexto n, ADR AND TRUSTS: AN INTERNATIONAL GUIDE TO ARBITRATION AND

MEDIATION OF TRUST DISPUTES (2015) (same).

2. See ARBITRATION OF TRUST DISPUTES: ISSUE S IN NATIONAL AND INTERNATIONAL LAW,

supra n ote 1, at 143–432 (discussing trust arbitration as a matter of national l aw); S.I. Strong,

Arbitration of Trust Disputes: Two Bodies of Law Collide, 45 VAND. J. TRANSNAT’L L. 1157, 1195–1245

(2012) (outlining theoretical ob stacles to trust arbitration).

3. See Strong, supra note 2, at 1161–64, 1181–87; S.I. Strong, The Future of Trust Arbitration:

Quo Vadis?, in ARBITRATION OF TRUST DISPUTES: ISSUES IN NATIONAL AND INTERNATIONAL LAW,

supra note 1, at 531, 543 n.60; see also infra notes 92–94 and accompanying text (describing the

benefits of arbitration in the trust context).

4. See Council Regulation 650/2012, 2012 O.J. (L 201) 107.

5. See Consolidated Version of the Treaty on the Functioning of the European Union, art.

288, 2012 O.J. (C 326) 47, 171–72.