Droit De Prélèvement Compensatoire (“DPC” – Article 913 Of The French Civil Code) – An Unsatisfactory Update From The European Commission

As many in the cross-border world will know, the update to Article 913 of the French Civil code with the addition of the DPC which came into force from November 2021 caused major issues with estates where a foreign law applied which did not have an equivalent to French forced heirship provisions.

For families with EU nationality or EU residence, in particular our British clients with dual Irish nationality, or resident in France, the DPC greatly limits the effectiveness of opting for the law of England & Wales to apply to their worldwide estate to avoid the application of restrictive French forced heirship, as the DPC reintroduced a right for the children to be compensated for the loss of their rights. With little practical guidance available to families and practitioners alike, the introduction of the DPC caused a great amount of distress, which led to a number of complaints being raised all the way to the European Commission, who made formal enquiries with the French government.

Having received the French government’s reply recently, the Commission published their formal conclusion to the complaints last week : Notice on multiple complaint CPLT(2022)03325 – European Commission

It appears to us that whilst the Commission has no choice but to draw a line under this set of complaints, the reply from the French government appears entirely unsatisfactory and will not assist in avoiding difficult situations. Even worse, the reply could result in a feeling of false security, with families relying on the reply of the French government to plan their affairs, or deal with the administration of the French estate. In particular for our clients affected by the DPC, any English lawyer dealing with contested estates can state with a degree of certainty that it is not correct that the Family Provisions that exist in the law of England & Wales are equivalent to the French forced heirship. The latter is an automatic entitlement for children with a fixed calculation method, the other requires specific criteria to be met for a claim to get off the ground, with the level of financial compensation being at the discretion of the Court.

It should be made clear that the Commission’s investigation was only an investigation, and whilst formal, does not have binding power on the Courts. The opinion of the French government is also only this, an opinion. And whilst the reply from the French government does appear to endorse the Inheritance (Provision for Family and Dependants) Act 1975 as being sufficient to avoid the DPC being triggered, because none of this complaint and investigation process is binding on the Courts, It would be in our professional opinion very risky to conclude from this latest development that the DPC can simply be ignored in Franco-British estates because of the 1975 Act. We will keep advising our clients to take the DPC into consideration when planning their cross-border estate, and will liaise with our network of French professionals to ensure that at no point the administration of the estates we are engaged in can at a later point be contested in front of the French Courts due to a hasty reading of the Commission’s investigation conclusions. It appears to us that until DPC Court Proceedings go all the way to the European Court of Justice, there will not be a definitive answer to the validity of the DPC, and families and legal practitioners alike should still thread with caution.

A disappointed end to a process in which many of us had placed our hopes after witnessing firsthand the distress caused to our clients by the DPC.

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