Recently our office has represented US clients whose German father had passed away in South Korea without any will. At the time of passing, the deceased was domiciled in Korea and remarried to a Korean wife. The Korean wife contacted the US family out of blue to discuss how to distribute the estate in Korea. The US clients were the children from the deceased’s previous marriage in the US. They contacted our office for the legal advice and representation.
One of the issues was which country’s inheritance law shall be applicable, i.e. the Korean inheritance law or the German inheritance law. This was because the deceased had a foreign nationality, while his estate and residence at the time of passing were all in Korea. Practically, when the Korean law is applied, the US children shall be entitled to the larger shares than those granted under the German law.
In Korea, Article 49 of the Korean Act on Private International Law(“APIL”) is the starting point to determine which country’s law shall be the governing law in case of an international inheritance case. It provides that the law applicable to an inheritance is the law of the deceased person’s nationality.
Based on this rule, the Korean wife’s counsels argued that the German law shall be applied and, thus, the estate will be distributed pursuant to the shares prescribed in the German law.
Our team, however, further reviewed the choice of law rules of both countries and concluded that the Korean law shall become the governing law. That was because the choice of law rule of Korea recognizes a Renvoi. The Renvoi is a subset of choice of law rules and its concept is prescribed in the Article 9 of the APIL as follows:
APIL Article 9 (Renvoi in Case of Designation of Applicable Law) In case a foreign law is designated as an applicable law under this Act, when the law of South Korea shall be applied under the law of that foreign country, the law of South Korea (except the provisions of the law to designate the applicable law) shall govern.
In short, even though the Korean choice of law rules appoint the German law as the governing law, if the German choice of law rules kick it back to the law of Korea, then the Korean law shall become the governing law. This doctrine of Renvoi is being accepted in many states in order to ensure the international consistency in applying the laws of each state.
In our case, the other counsels’ argument is true in that, according to the Article 49 of the APIL it looks like the law of German is designated as the governing law because the deceased had a German nationality. When, however, we look further into the German law, their choice of law rules, which is Regulation (EU) No 650/2012, designate the law of the country where the decease had a habitual residence at the time of death shall be the applicable law.
Regulation (EU) No 650/2012 Article 21, 1. Unless otherwise provided for in this Regulation, the law applicable to the succession as a whole shall be the law of the State in which the deceased had his habitual residence at the time of death.
Our team presented the relevant rules and precedents to the opposing counsels and they agreed as well. With this, our clients can benefit more inheritance shares than what they had been proposed. This case shows how complicated an international inheritance case is and how much a competent legal counsel and a thorough legal review are needed to protect your legal rights.
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