Understanding Shari’a law and how it affects will drafting and estate planning. Part 1/3

In the first of a series of articles, our Shari’a law expert, Jo Summers, a published author on this topic, discuses when Shari’a law applies, with several key considerations to take into account.

In Arabic, Sharia literally means “the clear, well-trodden path to water”.

Sharia acts as a code for living that all Muslims should adhere to, from prayers and fasting, to making a will. It aims to help Muslims understand how they should lead every aspect of their lives according to God’s wishes.

It is important for private client lawyers to understand how Shari’a law affects things like the drafting of wills and estate planning because, sometimes, there can be conflict of law rules which apply, where the laws of more than one jurisdiction are involved.

For ease, this article refers to ‘UK domicile’ although strictly there is no such thing: a client must be domiciled in one of three jurisdictions: England & Wales, Northern Ireland or Scotland.

When does Shari’a law apply?

Private client practitioners need to be aware of the conflict of law rules, as these can determine which of two or more conflicting laws take priority.

The conflict rules in relation to wills and estates are extremely complex and would merit an article of their own! But for now, let’s explore some examples based on previous cases.

The concept of ‘renvoi’

The concept of ‘renvoi’ (from the French, meaning ‘to send back’ or ‘return unopened’) is used when there is a conflict of laws, to determine which laws apply to an individual’s estate.

When there is more than one jurisdiction involved, each has to decide whether to apply its own laws to the succession or the laws of the deceased’s domicile (where this is different).

In England & Wales, the courts will apply the law of the deceased’s domicile in relation to certain assets, even if located here.

Therefore, an English law will may not be entirely valid where it is written for a non-UK domiciled individual, as these cases demonstrate.

The importance of UK domicile

The cases of Cyganik v. Agulian [2006] EWCA Civ 129 and Holliday v Musa [2010] EWCA Civ 335, demonstrate that foreign clients can live here for many years, indeed decades, without becoming UK domiciled for succession purposes.

Both cases related to claims under the Inheritance (Family and Dependants) Act 1975 (“the 1975 Act”) and both claims failed because the deceased had not acquired a domicile of choice in the UK.

The court has no jurisdiction to hear a 1975 Act claim against the estate of a foreign domiciled person.

In Cyganik, the deceased had lived and worked in the UK for 43 years without losing his Cypriot domicile of origin. In the Holliday case, the deceased had maintained his domicile of origin, also Cyprus, despite moving to the UK in 1958.

Following Re Fuld (No. 3) [1968] P 675, the courts will now look at all the circumstances of a person’s life, to determine if a person has become UK domiciled at any time prior to their death.

The court will weigh the strength of the individual’s links with his home jurisdiction against the strength of his ties to the UK.

To determine if there has been a change of domicile, it is important to look at the whole picture. Here are just some of the key considerations to take into account.

What to consider in relation to domicile

There are three points worthy of mention here.

1. There is an ‘adhesive’ quality to a client’s original domicile

What do I mean by this? Well, Longmore LJ observed in the Cyganik case that, “it is easier to show a change from one domicile of choice to another domicile of choice, than it is to show a change to a domicile of choice from a domicile of origin.”

2. The burden of proof usually falls on the person who alleges the change of domicile

This means that, in succession cases like Cyganik and Holliday, the person bringing a claim under the 1975 Act must prove that the foreign domiciled deceased had acquired a UK domicile of choice, prior to death.

3. Even clients who have been born in the UK may have a foreign domicile of origin

If a child was born to a foreign domiciled father (or mother if the parents weren’t married), then the child inherits that foreign domicile, despite being born here (and possibly also having British nationality and a British passport).

This may mean that Shari’a laws are relevant, if these apply in the country of domicile.

What happens after domicile is determined?

Having determined the domicile of the deceased, the next question to consider is which laws apply to his estate.

This, in turn, depends significantly on the type of assets.

Distinction between ‘moveable’ and ‘immoveable’ assets is key

The key is the distinction between ‘immoveable’ assets, such as real estate, and ‘moveable’ assets like cash and shares.

In England, if the testator is foreign domiciled at the date of death, then English law will only apply to the disposition of any English real estate the deceased may have owned.

This is because the law of the situs of the asset (lex situs), governs the validity of dispositions of immoveable assets.

On the other hand, the laws of the jurisdiction in which the testator was domiciled at the date of death, govern moveable assets such as cash, chattels and investments – even if those assets are physically situated in England & Wales. This is known as lex domicilii.

This means an English law will may only be valid in respect of the foreign domiciled client’s immoveable assets situated here.

An English court will recognise that Shari’a law applies to all moveable assets in the estate, due to the deceased’s domicile, even if those assets are located here.

The personal representatives will have to administer at least part of the estate according to Shari’a rules. The laws of the testator’s domicile will prevail, notwithstanding that there might be a valid English will that attempts to distribute the assets in a different manner.

It may be sensible, therefore, for an individual who is not domiciled in England to limit their English law will to the immoveable assets situated here. If the English law will purports to govern all assets here, it may not be valid in respect of the moveable assets, to the extent it conflicts with the laws of the testator’s domicile.

It is also advisable to discuss the nature of the client’s assets. This distinction between ‘moveable’ and ‘immoveable’ assets is key.

It can mean that different succession laws apply to the house than to its contents. This could cause difficulties if the testator wants to give the house, including contents, to the same person, rather than having the contents split between the Shari’a heirs.

This should be possible if the will is drafted correctly to take advantage of the ‘freely disposable third’ of the estate, which we will go on to discuss in our next blog.

It’s also vital to look at the property ownership structure. Holding the property via a company means the client owns moveable property (the shares) instead of immoveable property (the house).

If practitioners are in any doubt around which conflicting law takes priority, they should seek specialist Shari’a law advice.

Photo by Rachid Oucharia on Unsplash