COMMISSION EUROPÉENNE General Direction Justice and Home Affaires Unit A3 Judicial Cooperation in civil matters JAI/A3/2001/03

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1 CONSORTIUM ASSER - UCL Association momentanée R.C. Schimmelpennincklaan, JN DEN HAAG Nederland Collège Thomas More Place Montesquieu, 2, box 5 B LOUVAIN-LA NEUVE Belgique COMMISSION EUROPÉENNE General Direction Justice and Home Affaires Unit A3 Judicial Cooperation in civil matters JAI/A3/2001/03 STUDY ON MATRIMONIAL PROPERTY REGIMES AND THE PROPERTY OF UNMARRIED COUPLES IN PRIVATE INTERNATIONAL LAW AND INTERNAL LAW NATIONAL REPORT FINLAND Eva GOTTBBERG University of Turku TMC Asser Instituut Département de droit international UCL Tel (0) Tél (0) Fax (0) Fax (0)

2 TABLE OF CONTENTS Table of Contents...2 Introduction...4 Chapter Matrimonial Property. Internal law Sources Historic development Primary regime Secondary regimes Types of regimes Comments as to the primary regime Matrimonial property regime provided by law Marital settlements Change of Matrimonial Property Regimes Principles Modalities for change Publication of the regime Principles Modalities for publication Administration of Estates Administration under the regime provided by law (statutory regime) Administration under marital settlements ( contractual regime) Contracts between spouses during marriage Dissolution, Liquidation and Distribution of the Matrimonial Property Regime Following dissolution of the marital bond Following the death of one of the spouses...18 Chapter Matrimonial Property. Private International Law General remarks Sources Historic development General notions of private international law General problems of the private international law International Jurisdiction over matrimonial Property Issues General rules on international jurisdiction as applied to matrimonial property regimes Rules of international jurisdiction p articular to matrimonial property issues Law Applicable to the matrimonial Property regime Determination of the law applicable to the matrimonial property regime Scope of the law applicable to the matrimonial property regime Law applicable in case of changes in the matrimonial property regime Law applicable to the publication of the matrimonial property regime Recognition and Enforcement of Foreign Court Decisions and Public Acts in repsect of Matrimonial Property Regimes The general rules on the effectiveness of foreign public and private acts and court decisions specific to the area of matrimonial property regimes Rules on the effectiveness of foreign public and private acts and court decisions Practical significance of the rules in Chapter Unmarried Couples. Internal Law Sources of the law of Unmarried Couples Descirption of the general legislative sources Description of pricipal sources in court decisions and the customary law Description of any reforms of the law carried out in your country Historic development of the law on Unmarried couples The Legal Character of relations other than traditional marriage Concept of legal marriage Marriage of fact or cohabitation...39 T.M.C. Asser Instituut/UCL Matrim.Prop Finland 2

3 3.3.3 Partnership registration Contract to cohabitate Any other type of relation accepted by the internal legal systrem Property in relation to other than traditional marriage Registered partnerships Unmarried cohabiting couples of man and woman Unregistered cohabitants of same sex Property Issues in case of Separation of Unmarried Couples Separation of the couple Effects of separation upon the property of the members Effects of the separation with regard to third parties In relation to the surviving member In relation to third parties...42 Chapter Unmarried Couples. Private International Law General Issues Public policy and characterization Recognition of the relation between an unmarried couple Admissibility of the celebration of a same sex registration International Jurisdiction Separation of unmarried couples Property aspects of the separation Relation between and Applicable Law Determination of the law applicable to the property regime Scope of the applicable law Applicable law and changes of the property regime Law applicable to publication of the property regime of an unmarried couple Recognition and Enforcement of Foreign Public Acts and Court decisions as applied in the Area of property of Unmarried Couples General rules on the effectiveness of foreign public acts and decisions Rules on the effectiveness of foreign public and private acts and court decisions specific to the area of property of unmarried or unregistered couples Practical significance of the rules set out under Annexes to the Report...52 Abbreviations...52 Bibliography...52 T.M.C. Asser Instituut/UCL Matrim.Prop Finland 3

4 INTRODUCTION Under the last decades, Finland has become internationalised in many ways. The increasing number of foreigners that permanently reside in Finland and Finnish citizens residing abroad, as well as the membership in the European Union, have brought along many challenges to the Finnish legislation also in the area of family law that long remained untouched as regards choice of law rules and other international aspects. This report is made with the aim to lay out the general structure of the Finnish legislation concerning marriage and other kind of partnerships relevant from the point of view of law and legal institutions. The method used is the classical method of jurisprudence: an analysis based on legal norms, law literature, and case law of the Supreme Court. The questionnaire has been followed as closely as possible, thus aiming to facilitate the demanding task of an union-wide comparison of the topic. As to the recent Finnish law amendments of private international regulation, there are no literature sources or case law to refer to. Thus the report is made on the basis of the laws as such and the Government Bills to the Parliament. T.M.C. Asser Instituut/UCL Matrim.Prop Finland 4

5 CHAPTER 1 MATRIMONIAL PROPERTY. INTERNAL LAW 1.1 GENERAL ISSUES Sources The legislative main sources regulating the property regulations between married spouses are the Marriage Act (1929/234), the law of entry into force of the Marriage Act (1929/235) and the Government Decree (1887/820), all with later amendments. In some cases it is still necessary to turn to the Law on the Property and Debts of Married Spouses (1889/17). If not otherwise mentioned, the references in the text below will be to the paragraphs of the Marriage Act 1929 in its present form. The principal sources in court decisions consist of the practice of the Supreme Court of Finland (Korkein oikeus; KKO); below referred to with the year and the publication number of the case provided in the Yearbooks of the Supreme Court). However, the law and the decree are primary sources; the decisions of KKO only providing guidelines for further practice in cases open to various interpretations and thus contributing to the uniformity of court practise in lower courts. Owing to detailed legislation, the significance of customary law is marginal as it historically has been in countries with the Roman-German law tradition. For the time being there are no important law reforms under way Historic development The Marriage Act of 1929 was preceded by the Law on Property and Debts of Married Spouses of 1889 and the Code of Marriage of The law of 1889 was based on the principle of community of property ad the guardianship of the husband. However, some property was excluded from the scope of community by the law itself, e.g. certain kinds of inherited real property. The spouses were allowed to conclude a marriage settlement before the marriage. The community principle could be excluded completely or partially in the settlement.1 During the marriage no settlements or transactions between the spouses were allowed. The husband administered the property and represented the wife in court and in transactions with third parties. Under certain conditions it was possible for the wife to effect a separation of property already during the marriage; thereafter she administered her part of the property herself. The system of debts was complicated because of the possibility of three kinds of property (common, private/husband, private/wife) and the guardianship of the husband After the dissolution of the marriage both spouses were entitled to half of the common property, and, of course, the whole of his or her private property. The Marriage Act of 1929 came in force in 1930 and brought remarkable changes in comparison to the old system: equality of the spouses, abolition of the husband s guardianship, principle of separate property etc. Therefore the effects of the reform as to marriages concluded before the year 1930 were restricted. In personal matters the wife became completely equal with the 1 A concise representation of the old regulation can be found, e.g., in the work M. RAUTIALA, Avioliitto-oikeus (The law of marriage), Vammala 1969 and also in A. AARNIO M. HELIN, Suomen avioliitto-oikeus, Helsinki 1992, p See also E. GOTTBERG, Vanhat avioliitot (Old Marriages) in EIF Part III, Jyväskylä 1996, p. 856a-858b. T.M.C. Asser Instituut/UCL Matrim.Prop Finland 5

6 husband in all marriages with the law of However, the old regime of community of property and the administration rules persisted in marriages concluded before Still, both spouses had equal rights to effect a separation of property and thereafter, if they so wanted, make a marital settlement in order to get their property under the new regulation of marital property and marital right. For natural reasons, the number of marriages concluded before 1930 is nowadays scarce but they still exist (the so-called old marriages ). There are also estates of deceased old couples still waiting for division. In these cases the law of 1889 shall be applied to the spouses property if they have not effected a separation of property and adapted the new regime by making a marriage settlement. Of course, the Marriage Act of 1929 has been amended in many ways during the past decades. As to the economic relation of the spouses, the rules concerning conveyance restrictions of property (sections 38-39) were amended in In the same year it became possible to adjust the distribution of matrimonial property (S 103 b; see below). However, one can say that the main principles of the system have remained untouched. The most recent amendment (the rules of private international law, in force since ) shall be represented separately below Primary regime Marriage does not restrict the right of a spouse to enter into transactions unless otherwise provided in the law. Spouses may also enter into mutual transactions of all kinds. The property that a spouse has when concluding marriage shall remain his or her. He or she shall also own what he or she acquires during the marriage. There are no restrictions or differences of rights bound to the sex of the spouse.2 Each spouse has the right to administer his or her property independently. However, there are special mandatory rules that restrict the right to convey the common home of the spouses without the consent of the other spouse also in cases he or she does not own the home even partially. Each spouse has a marital right to property of the other spouse. Under this right, the surviving spouse and the heirs of the deceased spouse (in case of death), or each of the spouses (in case of divorce), shall acquire half of the net property of the spouses at the distribution of the marital property (S 35 MA). Net property is each spouse s property after his/her debts and/or his/her share of common debts deducted. However, some rights of personal nature are excluded from the scope of the marital right by the law itself. The marital right can also be completely or partially excluded by a marriage settlement made by the spouses either before or during the marriage. It shall be underlined that the marital right has no effects or economical value as long the marriage persists: it cannot be transferred or distributed during the marriage; it materializes only after the dissolution of the marriage, in the distribution of the matrimonial property 2 As regards concise representations see A. AARNIO M. HELIN, op.cit., p and E. GOTTBERG, Aviovarallisuusoikeus (Marital Property Regime), EIF III, Jyväskylä 1996, p and same, Avio-oikeus (Marital Right), EIF III, p T.M.C. Asser Instituut/UCL Matrim.Prop Finland 6

7 Secondary regimes Existence or not of rules on matrimonial property regimes There are no special rules on secondary regimes. However, the spouses can always conclude a marriage settlement in order to make changes to the primary regime Notion of matrimonial property regime The notion matrimonial property regime (aviovarallisuusjärjestelmä) covers the rules concerning: marital right and marriage settlements; administration of the property of the spouses; debts of the spouses in their inter partes relation; and. distribution of the matrimonial property after death or divorce. It must be noted that maintenance obligations, although existing, are not covered by this notion since they are regarded to be personal rights and duties arising from the marriage. On the other side, there is no special matrimonial regulation in regard to pensions or life insurances, which, of course, does not exclude the possibility of taking such property and transactions into account within the general rules of the matrimonial property regime if they are notably fraudulent (see especially below ) Legal matrimonial property regime (in case a regime is foreseen by law when spouses have not enetered into a marriage contract) See the general description of the primary regime above Marriage contracts Marriage contracts (the Finnish term avioehtosopimus is usually translated in English marriage settlement ) are allowed. Although no exact statistics are available on the frequency of these settlements, in law literature their frequency is estimated to be about 20 % of all marriages, the percentage showing a slightly increasing trend during the last decade. 3 About advantages and disadvantages see below Specific matrimonial property regimes regulated by law that can be chosen by the spouses None. Still, in international marriages the spouses can make a choice of law as described below in A.AARNIO and U.KANGAS, Perhevarallisuusoikeus (Family Property and the Law), Helsinki, 2002, p.55, and M. LITMALA, Avioehtosopimus ja taloudellinen turvallisuus (Marital Settlement and Economic Security), Helsinki 1998, passim. T.M.C. Asser Instituut/UCL Matrim.Prop Finland 7

8 Wheteheer the matrimonial property regime can change or not during marriage The matrimonial property regime can be changed during the marriage with mutual consent of the spouses and following the regulation of marriage settlement. One-sided changes are not allowed, with the exception of the other spouse s personal bankruptcy S 35.4 MA) Particularities of the national sysytem No local special r egimes or any particularities of this kind. 1.2 TYPES OF REGIMES Comments as to the primary regime Fundamental rights and duties of spouses In the marriage the spouses are personally and economically equal. They own their own property acquired before or during the marriage, and each is alone liable for a debt he or she has incurred before or during the marriage. (An exception is made in the law concerning debts that are incurred by one spouse for the maintenance of the family; still not for a monetary loan under S 52 MA). If the spouses own something together, their ownership is fractional as any normal coownership. If they have incurred a debt together during the marriage, they are jointly and severally liable for such a debt, unless otherwise agreed. This rule is corresponding to the general regulation on joint debts. However, the marital right, practically invisible during the marriage, becomes extremely important after the dissolution of the marriage. The marital right can be characterized wide: it includes all the property of the spouses, may it be acquired before or during the marriage, with the exception of: property excluded from the scope of the marital right by a marriage settlement; property expressly excluded from the marital right by a gift deed or a will; or rights which cannot be conveyed or which otherwise are of a personal nature (e.g. pension rights, copyrights to unpublished works). 4 Also the surrogate of this kind of property is free of marital right. Still, the marital right exists as to the proceeds of such property, if not otherwise stipulated or agreed. These rules are stipulated in S 35 MA. As mentioned above, this regime came in force in 1930, when divorces were few and the whole system built on the idea of a life-long marriage and the primary aim to protect the widow. Until 1966, the old Code of Inheritance of 1734 was in force, the hereditary rights of the widow under that Code being rather limited. With the increasing rate of divorces, on one hand the wide marital right and on the other the freedom of marriage settlements produced the amendment of See A. AARNIO U. KANGAS, op.cit, p T.M.C. Asser Instituut/UCL Matrim.Prop Finland 8

9 (adjustment of distribution; see below under ). The social changes have, certainly, contributed to the increasing number of marital settlements in order to protect personal property in advance against the claims of the other spouse in case of divorce Obligations to contribute to the costs and expenses of the household; property reserved for the household The spouses shall participate in the common household of the family and the maintenance of the spouses to the best of his or her abilities (S 46 MA). The maintenance of the spouses includes the fulfilment of the common needs of the spouses as well as the personal needs of each spouse. This duty does not fall under the notion of matrimonial property regime but is regarded as a personal duty arising from the marriage. It can be fulfilled e.g. with household work or monetary distributions. The maintenance of children is regulated in a separate Act on Child Maintenance (1975/704). Property legally reserved for the household none. Still, see the conveyance restrictions below in Legal position of the matrial residence, the matrial home, housing of the family Also the administration of property is separated. If one spouse is the sole owner, he or she can administrate, convoy etc. all his/her property (real or movable) without the consent of the other spouse. However, here is an exception made in the interests of the family (sections MA). A spouse cannot convey real property intended for use as the common home of the spouses, unless the other spouse consents to the same in writing. The establishment of a leasehold or of another right of use thereof shall be deemed corresponding to a conveyance. These rules also apply to stocks, leaseholds or other rights entitling to the possession of an apartment which is intended solely or mainly to be used as the common home of the spouses. However, the District Court may, upon petition, grant permission to a conveyance or to another transaction if the other spouse has refused to consent or if, for some other reason, it has not been possible to obtain the said consent (S 40 MA). There are also conveyance restrictions concerning movable property owned by the other spouse alone which forms part of the common household goods used by both spouses, any necessary tools used by the other spouse or movable property which is meant for the personal use of the other spouse or the children. These norms are nowadays practically desuetudo they are very seldom claimed to. NB! These restrictions are exceptions of the main rule (free administration) and cannot be interpreted expansively. 6 Also, it must be remembered that the restrictions under this point only apply to situations where one of the spouses is sole owner of the property in question. If both are owners the normal principles of co-ownership apply and then it is of no importance what kind of property is concerned or in what kind of use it is. The n, of course, both owners have equal owner s rights as regards their shares. 5 M. LITMALA, op.cit., passim. 6 As regards the legal ways to act against the economic interests of the other spouse, see A. AARNIO U. KANGAS, op.cit, p. 78. T.M.C. Asser Instituut/UCL Matrim.Prop Finland 9

10 Professional occupation of one of the spouses As prescribed in Marriage Act, S 2, each spouse shall have the right to decide whether to engage in gainful employment and in societal and other activities outside the family Openiing of bank accounts or safe deposit-boxes There is no special regulation on opening bank accounts or safe-deposit boxes. Thus, both spouses have the right to open a bank account or rent a safe-deposit box without the consent of the other spouse. Consequently, the spouses have no right to get information about bank accounts or safe deposit-boxes of each other, as these questions fall under the general regulation of secrecy in banking Representation by the spouses General representation rules are applied. 7 However, see the liability for debts incurred by a spouse for the maintenance of the family, S 52 MA. Under S 60 MA, a spouse can permit the other spouse to administer his or her property. In these cases, the latter spouse has the right to use the proceeds of the property for the maintenance of the family without a need to account therefore, unless otherwise is agreed or unless it is otherwise to be presumed. A spouse may also at any time withdraw this permission even if the contrary has been agreed. (S 60 MA is original from 1929 and, as far as known, very seldom referred to in practise.) Protection against acts of one the spouses which may endanger the family property See above A transaction entered into by one spouse in violation of the provisions in named sections shall be declared void, if the other spouse brings an action to this effect within three months of becoming aware of the transaction. In cases of real property, the conveyance shall gain validity, if the title of the acquirer has been registered, and the acquirer did not know nor should have known at the material time that the conveyer was not entitled to convey the property in question Matrimonial property regime provided by law There are no secondary or alternative regimes provided by law. If no marriage settlement is made, the relation of the spouses is governed by the general rules of Marriage Act Marital settlements In a marriage settlement concluded before or during the marriage, the engaged parts may exclude from the marital right any property owned or later acquired by a spouse. If not otherwise agreed, the proceeds of the property excluded from the scope of the marital right are under this right (S 35.2 MA). If a spouse has acquired property by a gift or a will where the marital right of the other spouse is excluded, the spouses cannot revoke this stipulation by a marriage settlement. 7 See A. SAARNILEHTO, Aviopuoliso toisen puolison edustajana, (A Spouse as a Representant of the Other Spouse). Turun yliopisto, juhlajulkaisut A:1 (University of Turku; Series A:1), Turku 1987, pages T.M.C. Asser Instituut/UCL Matrim.Prop Finland 10

11 The spouses may likewise agree to restore the marital right of a spouse to property previously excluded from this right by way of a prior marital settlement. The marriage settlement does not take effect if it has been submitted to the Court after the marriage has been dissolved or at a time when proceedings relating to the divorce of the spouses are already pending (see below 1.4.). Agreements between engaged persons or spouses may not effect other than the above exceptions to the provisions on the property relations between the spouses. (S 41.2 MA) As it can bee seen, the engaged persons or spouses can develop a regime of their own fairly freely. They can both exclude and restore the marital right to some or all of their property, symmetrically or asymmetrically, to property already owned or later acquired. The exclusions can also be bound to the quality of the acquirement, e.g. the spouses can exclude the marital right to property already acquired or to be acquired in the future by one or both by will or gift but leave the marital right otherwise intact. In law literature there has been much discussion about special conditions included in marriage settlements and their validity. 8 It has been indisputable that stipulations not in keeping with god morals (e.g. bound with the spouses personal conduct or other conditions of private nature) are not valid. More interesting, however, was the question whether the spouses are able to effectively connect the effects of their settlement with the cause of dissolution of the marriage. This question was at lea st partially settled by the Supreme Court in 2000 (KKO 2000:100): a marriage settlement that gave the marital right for the widow in case of death but did deny it from both spouses in case of divorce was regarded as valid. The case was a divorce case. Still, until now it remains unclear whether a marriage settlement of this kind would have been valid also in case of death. Under chapter 17, S 1 of the Code of Inheritance, an agreement pertaining to the estate of a person still living shall be invalid. Also the right to lawful share of the direct descendants of the spouse has its effects on the problematic. 9 As to the usefulness of the marriage settlements one can say that the spouses can plan their economic future in many ways by means of a marriage settlement, not least in relation with questions of inheritance in cases where the spouses have children from earlier marriages. It can also be presumed that the high divorce rates of today all more often make people see the marriage settlement as a protective measure against property losses in a possible divorce. On the other hand, also tax questions are significant. All acquisitions based on the marital right are tax-free, which is not the case with gifts or wills between spouses. Thus, the possibility of tax planning is worth mentioning. The conditions of validity of a marriage settlement consist of two parts. The personal requirements are those of a normal economic contract: the parts shall be at least18 years old and not under guardianship. In case one or both of the parts are under 18 years of age or under guardianship, the guardians(s) shall give their consent to the settlement, may it be before or during the marriage. Of course, the general requirements concerning the validity or invalidity of any economic contract (fraud etc.) also hold true. - Formally, the marriage settlement shall be written, properly signed and witnessed by two disinterested persons and registered in Court in order to be valid. (S 66 MA) As to the publication of the settlement, see below See A. AARNIO - M. HELIN, op.cit., p and A. AARNIO U. KANGAS, op.cit., p A. AARNIO U.KANGAS, op.cit, p. 54. T.M.C. Asser Instituut/UCL Matrim.Prop Finland 11

12 1.3 CHANGE OF MATRIMONIAL PROPERTY REGIMES Principles As mentioned above, the regime can bee freely changed whenever during the marriage with a marriage settlement. However, a marriage settlement shall not take effect if it has been submitted to the Court after the marriage has dissolved or at a time when proceedings relating to the divorce of the spouses are already pending (S 44 MA). Of course, the spouses may distribute their property by contract with binding effects inter partes in any way they agree. Still, the marriage settlement does not gain the effects of a marriage settlement towards third parties if it is not registered in the District Court, although it would be properly signed and witnessed before the dissolution of the marriage by death or the beginning of the divorce proceedings. The justification of the principle lies on practical grounds. First of all, the spouses are considered to be equal parts in their family economy and shall have the right to plan their economy also in circumstances that may change during the marriage. The freedom of contract between a married couple being the basic principle of the Marriage Act, there is no need to restrict the spouses right to make also new marriage settlements in case of need and unde r mutual consent. Secondly, the marriage settlement has no direct effects on the creditors rights. As mentioned above, the marital right concretises in the distribution of the net property of the spouses. If one of the spouses or both lack net property after their debts have been covered in the division calculation, the marital right (and therewith also the marriage settlement) loses its effects with regard to the spouse s obligation to hand over property to the other spouse. A spouse without net property can never be obligated to hand over anything to the other on the basis of the marital right. Simply, the creditors always over-step the spouse or the heirs of the spouse. On the other hand, a spouse has in many ways stronger rights then the heirs of the other spouse. In case of death, the distribution between the spouses is made before the division in the deceased spouse s estate. In these cases a marriage settlement may be an important instrument when planning the division between the spouses and thus also their heirs estates Modalities for change Changes have to be made by means of a marriage settlement as well substantially as formally (above 1.2.3; below 1.4.2). There are no requirements as to the duration of the marriage; neither is there any substantial control over the contents of the settlement. 1.4 PUBLICATION OF THE REGIME Principles All marriage settlements shall be submitted to the District Court of either spouse s place of residence. If neither spouse resides in Finland, the marriage settlement shall be submitted to the District Court of Helsinki (S 43 MA). The District Court shall register the settlement and send a copy thereof to the Register of Marriage Settlements of the State, maintained by the Ministry of Justice. The register is public: everyone interested is allowed to get information about the registered settlements. T.M.C. Asser Instituut/UCL Matrim.Prop Finland 12

13 With regard to the spouses themselves, the registration is a means of security. A marriage settlement has its main importance in the division of property that can take place decades after the settlement is concluded. A print of the registered settlement can always be received from the Register also in cases where the spouses or their estates do not anymore possess a copy thereof. As regards to third parties, their right to information is as described above. This right is mainly informative due to the general nature of a marriage settlement as regards its effects on the marital right. The spouses creditors, children or other heirs cannot legally react agains t the marriage settlement. Still, as mentioned above in 1.3.1, the creditors rights cannot be endangered by a marriage settlement because of the net property principle and the fact that the settlement only has effects in the division after the dissolution of the marriage. With regard to the children of the family or other heirs, the situation is the same as to their reaction possibilities. A marriage settlement principally is a contract inter partes Modalities for publication As to the competent authorities, see above If the marriage settlement only covers questions concerning the marital right in the division, it comes in force with the registration. However, under S 43 MA, if there is a gift of movable property between the spouses included in the same document, the District Court shall further proceed in accordance with the provisions on the registration and publication of gifts in the Act on Promises of a Gift (Lahjanlupauslaki, 1947/625) In cases of spouses mutual gifts in connection wit h a marriage settlement this means that the District Court, before the registration, is obligated to get acquainted with the contents of the marriage settlement in order to find out whether a gift is included or not. If not, the registration is enough; if there is a gift included, the District Court is liable to publicly declare the gift, as stipulated in the Act on Promises of a Gift. It shall be noticed that the scope of the proceedings above is limited to the factual contents of the marriage settlement and the legal formalities pursuing thereof. There against, the court has no right to control the contents of the settlement substantially in order to accept or reject it. If the formal acquirements (see above 1.2.3) are fulfilled, the court has no right t o intervene. As noted above, the initial regime is directly prescribed by law and needs not to be publicly declared in any way. The nation-wide Register of marriage settlements contains all marriage settlements in force, and third parties can always control the existence of an eventual settlement between certain spouses. If there is no settlement registered, the matrimonial property regime of the spouses is automatically the regime provided by law. On choice of law inter partes and in relations to third parties, see below ADMINISTRATION OF ESTATES Administration under the regime provided by law (statutory regime) Under S 36 MA, each spouse shall administer his or her property subject to the restrictions referred to in sections MA. The contents of the sections (the restrictions concerning the home of the spouses and certain movable household and personal objects) have been reported on above in T.M.C. Asser Instituut/UCL Matrim.Prop Finland 13

14 Under S 37 MA, also all other property subject to the marital right shall be administered so that it will not unnecessarily decrease to the detriment of the other spouse. However, this section does not give the other spouse any concrete possibilities to prevent the owner spouse from conveying or otherwise decreasing his or her property subject to the marital right during the marriage. Thereagainst, after the dissolution of the marriage, S 94 MA gives the other spouse a right to compensation in the distribution. Under the section, if a spouse, by mismanaging his or her financial affairs or by misusing his or her right to administer property subject to the marital right of the other spouse or through other action inappropriate to his or her circumstances, has caused that the said property has essentially decreased, the other spouse or his or her heirs shall receive compensation corresponding to the decrease in net property. Half of this compensation that cannot otherwise be paid may be taken also from property not subject to the marital right, provided that the said property is not needed to cover a debt. Under S 58 MA, if a spouse, without the content of the other spouse, conveys or pledges joint property or property belonging to the other spouse, the other spouse shall have the right to redeem it. If the third party was not in good faith or if no consideration was paid, the other spouse shall regain the property without redemption. These rules correspond to the normal civil law rules in case a person conveys or pledges property completely or partially owned by other person, and they were included into the Marriage Act mostly in order to accentuate the fact that, after 1930, also married spouses are in their internal relation equal with normal owners in case of violation of the owner s rights Administration under marital settlements ( contractual regime) If one or both spouses own property not subject to marital right (directly by law or owing to a marital settlement or the provisions of a will or gift), the owner can convey and otherwise use the property completely freely and without the consent of the other spouse (and without risks for compensation in the distribution; see above 1.5.1). The only exception is the family home (see above ), where the consent of the other spouse is always needed regardless to the reason why the common home is or is not subject to marital right. Thus it can be stated that a marriage settlement as such has no direct effects on the administration of property. In law literature the question has arisen, whether the other spouse can give his or her consent to the conveyance of the common home also beforehand. The prevalent opinion is that a beforehand consent in writing can be given; still, the object must be specified and it shall already by the time of the consent be in the ownership of the s pouse. An abstract beforehand consent (e.g. in a marriage settlement) is not valid Contracts between spouses during marriage Sales between spouses Sales between spouses are completely admitted and fall under the normal rules of sales and purchases. As a creditor, also the spouse nowadays has normal creditor s rights in a possible 10 See A. AARNIO and U.KANGAS (op. cit), p.68 and A. SAARENPÄÄ, Avioliittolain muuttuneet säännökset (The Changed Rules of Marriage Act), Rovaniemi 1994, p. 95. T.M.C. Asser Instituut/UCL Matrim.Prop Finland 14

15 bankruptcy of the other spouse, after the special rule concerning married couples in S 57 MA was repealed in Gifts between spouses Gifts between spouses were prohibited until the year 1992 (with exception of usual gifts as birthday or Christmas presents of reasonable value). The prohibition was repealed when the Act of Recovery of Assets to a Bankruptcy Estate (Laki takaisinsaannista konkurssipesään, 758/1991) came into force. Inter partes (and in relation to the heirs of the spouses) all gifts are valid without special measures. Still, if a spouse donates movable property to the other spouse, he or she shall notify the gift to a Court for the done e to be protected against recovery claims from the creditors of the donor in the event of bankruptcy or enforcement of debts (S 45 MA) A gift connected to a marriage settlement needs not to be separately notified by the spouses, the District Court being liable to publicly declare such gifts (see above 1.4.2) Gifts of real property are always registered and published under the general norms on conveyances of real property, and thus do not need any special regulation as regards transactions between spouses or near relatives Companies between spouses Companies, firms and partnerships between spouses are admitted without restrictions Employment contracts between spouses Employment contracts between spouses are admitted without restrictions. However, under the S 64 MA, if a spouse assists the other spouse in the latter s business and wants to receive compensation therefore, he or she shall prove that compensation was agreed upon or meant to be paid, or that its payment, with a view to the nature of the work and the other circumstances, is to bee deemed reasonable. If no compensation was agreed upon, action therefore shall be brought within a year from the end of the calendar year during which the work was performed. This section prevents the working spouse from claiming compensation afterwards, which maybe should come as a surprise to the other spouse and/or his/her creditors. There against, if the spouses have made a normal working contract, the questions of salary are settled as prescribed in the Labour Law. 1.6 DISSOLUTION, LIQUIDATION AND DISTRIBUTION OF THE MATRIMONIAL PROPERTY REGIME Following dissolution of the marital bond Proof of ownership. Determintation of goods which are to be delivered. Proof of ownership follow s the normal civil rules. Registered property (real estates, stocks, vehicles) is considered to belong to the registered owner, which starting-point, of course, can be objected and proved to be otherwise. 11 As the spouses usually have had a common household and as there seldom are receipts or other documentation left as to mobile property, the 11 See A. AARNIO U. KANGAS, op.cit.(1992), p T.M.C. Asser Instituut/UCL Matrim.Prop Finland 15

16 rule in S 89 MA shall be followed. If, in the separation of the property of the spouses, the circumstances do not indicate and it cannot be proved which spouse a movable object belongs to or that it is joint property, the spouses shall be deemed to have acquired it jointly and with equal rights. A very important date is, under S 90 MA, the date when the court proceedings for the appointment of divorce have been instituted. Under S 90.2 MA, property that a spouse has earned or inherited or received as a gift or under a will after court proceedings for divorce have been instituted, shall be deemed property to which the other spouse has no marital right. Still, this norm has no effect in cases where the divorce proceedings have lapsed for another reason than the death of the other spouse while they are pending (this, of course, mainly points to a reconciliation between the spouses during the maximum 1-year reconsideration period, see sections MA.) Under S 60 MA, a spouse has the right to demand that the other spouse co-operates in drawing up a list of the movable property belonging to each spouse and that, if a spouse does not have marital right to certain property, this be recorded in the list. If the said demand is not complied with, a trustee shall, upon the request of the spouse, be appointed to represent the other spouse. The spouse shall have the right to have a notary public or a sheriff certify the date on whic h the list was presented to him or her. In case of dispute over the property, the court shall decide the probative value of the list. This norm has not been widely used in practise. Under S 85 MA, if the spouses have joint property, the said property shall be divided upon request when the matrimonial property is being distributed or the property of the spouses separated. Usually, this means the sale of the property in question and distribution of the sales price, if neither spouse is willing to take over the property by paying the normal price for the share of the other spouse. After the division calculation is made, the spouse who owns more net property is obliged to hand over so much of his/her marital right property or a correspondent sum of money to the other spouse, that their final shares are equal. With the small exceptions under S 91 MA, the receiving spouse has no right to claim any special property to be included into his/her distribution share; the choice is to be made by the paying part. In this sense, not even the home of the spouses is under any special regulation. Under S MA, if the property of a spouse (or the deceased spouse, see below 1.6.2) has been surrendered into bankruptcy, the other spouse need not hand over property in the distribution of matrimonial property. This rule underlines the personal nature of the marital right: the spouse s rights do not pass to his/her creditors if the bankruptcy is declared before the final payments of the distribution Methods for division Methods for distribution are two. First, the spouses can always distribute their property by consent. The distribution document shall be dated, properly signed by both spouses and witnessed by two disinterested persons. There is no obligation of registration of the document. However, if the spouses want to secure that their distribution is valid also in regard to their creditors, they shall submit the distribution instrument to the District Court, and the date of the submission shall forthwith be published by the court in the Official Gazette. This procedure is not necessary for the validity of the distribution inter partes and it is relatively infrequent in practice. T.M.C. Asser Instituut/UCL Matrim.Prop Finland 16

17 If the spouses cannot distribute their property in consent, each of them can turn to the District Court in order to have an estate distributor appointed as stipulated in Code of Inheritance, Chapter 23, S 3. If both spouses or one of them does not accept the decision of the estate distributor, they have equal rights to contest the distribution in District Court Possibilities for compensation and equitable rights. Under the S 94 MA, if a spouse, by mismanaging his or her financial affairs or by misusing his or her right to administer property subject to the marital right or through other action inappropriate to his or her circumstances, has caused the said property essentially to decrease, the other spouse shall receive compensation to the said decrease in net property. Half of the compensation that cannot otherwise be paid may be taken also from property of the spouse not subject to the marital right, provided that the said property is not needed to cover a debt. This sort of compensation is used when the decrease has occurred during the marriage, i.e. before the divorce proceedings are pending. Also it must be noticed that, if the decrease has been so considerable that full compensation cannot be paid in the distribution, the rest of the compensation becomes extinct, i.e. it does not remain in force as a debt after the distribution. 13 Under certain conditions a gift given by the spouse can be ordered to be returned or its value compensated, if the spouse cannot pay the compensation to the other spouse (S 40a MA) Also, a gift or other fraudulent transaction with a third party can be declared void under the general rules of private law in order to protect the marital right of the other spouse. 14 If a spouse has caused an essential decrease in his or her property after the divorce proceedings are pending but before the distribution, the compensation is calculated in accordance with the so-called restitution model. 15 In the distribution, the property is listed and the division calculated as if the lost property still were in the estate. Thus the calculated distribution part of the spouse in question is the same in size as it would be without the decrease. If the decrease has been so considerable that the spouse cannot pay full compensation in the distribution, the rest of the compensation remains in force as a normal debt after the distribution. 16 Under S 103b MA, the distribution of the marital property can be adjusted if the distribution would otherwise lead to an unreasonable result or to the other spouse receiving unjust financial benefit. When considering the need of adjustment, special attention shall be paid to the duration of the marriage, the activities of the spouses for their common household and for the accumulation and preservation of the property, as well as to other comparable facts regarding the finances of the spouses. When adjusting the distribution of marital property it may be ordered: 1) that a spouse is not, under the marital right, to receive any property of the other spouse or that the said right shall be restricted, 2) that certain property which the spouse has earned or received while the spouses were living separated or which the spouse had when the marriage was concluded or which the spouse has 12 On the proceedings see A. AARNIO M. HELIN, op.cit. p. 143 pp. 13 See A. AARNIO M. HELIN, op.cit, p A. AARNIO M.HELIN, op.cit., p A. AARNIO M. HELIN, op. cit. p A. AARNIO M.HELIN, op.cit., p T.M.C. Asser Instituut/UCL Matrim.Prop Finland 17

18 received during the marriage as an inheritance or a gift or under a will shall totally or partly be excluded from the marital right of the other spouse; 3) that all or part of property which has been excluded from the marital right of the other spouse by way of a marriage settlement, shall, in the distribution, be considered as property subject to the marital right of the other spouse. A demand for the adjustment of distribution of matrimonial property may be made either at the distribution or thereafter. If there is an estate distributor appointed, the claim of adjustment can be made to the distributor, or, after the distribution to the District Court within six months from the distribution. If the spouses have divided their estate in consent, there still exists a possibility of adjustment in court. The claim of adjustment can, in these cases, be made to the District Court within a reasonable time of the distribution. It shall be emphasized that the adjustment of distribution is markedly based on economic evaluation of the spouses circumstances and their contributions for the common household during the marriage. Questions of guilt or other personal aspects of the relation of the spouses have no significance here Competent authorities The competent authorities, if the spouses do not divide their estate by consent, are the District Court a) to appoint a distributor of estate ; b) to decide the actions made in order to contest the distribution Following the death of one of the spouses In principle, the same rules are followed as following divorce. On demand of the surviving spouse any of the heirs a distribution shall be made. Still, in many cases no distribution is made after the death of the first spouse. Especially if all heirs are the spouses common children, the distribution and division of the estate often take place first after the death of both parents. Of course, if the spouses have different heirs, the distribution of the spouses estates is of remarkable interest for both groups of heirs, and in these cases also the immediate distribution/division of the estate is often claimed and carried out. Although even an adjustment of distribution is possible in a distribution after the death of one or both spouses, it is rarely used in these cases, and if, usually in the interests of the surviving spouse. An important rule concerning the rights of the surviving spouse is included in S MA. When the distribution of matrimonial property is carried out after the death of a spouse, the surviving spouse need not hand over his or her property to the heirs of the deceased spouse. This unilateral rule protects the widow notwithstanding what kind of heirs there are in the decedent s estate. If the widow s net property exceeds the net property of the defunct, the widow can always 17 P. VÄLIMÄKI, Osituksen sovittelu (The Adjustment of Distribution), Helsinki 1995, especially on this question p and on the adjustment in general, passim. T.M.C. Asser Instituut/UCL Matrim.Prop Finland 18

19 appeal to this right. Still, it is a personal right and does not apply, if the distribution takes place after the death of both spouses or if the distribution is not finished before the death of the widow As regards the possibilities to use this distribution privilege, see further KKO 1997:107,1999:104 and 2001:12 and A. AARNIO U. KANGAS, op.cit, p T.M.C. Asser Instituut/UCL Matrim.Prop Finland 19

20 CHAPTER 2. MATRIMONIAL PROPERTY. PRIVATE INTERNATIONAL LAW 2.1 GENERAL REMARKS Sources Principal international sources The Stockholm Convention between Finland, Iceland, Norway, Sweden and Denmark containing rules of private international law regarding marriage, adoption and guardianship (Tr.S 20/1931; the Stockholm Convention) was signed by the member states and implemented to the law of Finland by the Act 413/1931. With some later amendments it is still in force between the mentioned countries. The convention builds on a principle of double connection: in matrimonial property matters it applies only if both spouses have a Scandinavian citizenship and become after the conclusion of the marriage domiciled together in a Scandinavian state. The law of that state is then the applicable law. If they later move together to another Scandinavian state, the law of the new domicile state shall be applied immediately. However, the change of the law applicable does not affect the validity of a transaction concluded before the change (Art. 3). If one of the spouses moves alone to another state, the original law still applies, as long the spouses do not later domicile together in a Scandinavian state. If both have left the last common Scandinavian domicile state together and moved to a country outside Scandinavia, from Scandinavian point of view, the law applicable to their matrimonial property matters remains the law of their last Scandinavian domicile country. 19 There is no possibility of choice of law, nor a minimum time limit stipulated for the residence in the new domicile state as regards the automatic change of the applicable law. Still, the Scandinavian matrimonial property regimes build on similar principal grounds, and the spouses can usually make the changes they may desire by means of marriage settlements in their new Scandinavian home country. Of course, it cannot be foreseen, what possibilities the law in some not-scandinavian country gives to the spouses in this sense and what effects the old Scandinavian statute may cause in cases of law conflicts e.g. in cases they have left property in Scandinavia. Still, it must be noted that the system has worked well in inter-scandinavian relations, bearing in mind, that especially between Finland and Sweden there has been since the 1960 s a traffic of hundreds of thousands emigrants, immigrants and remigrants. On recognition and enforcement of Scandinavian court decisions and public acts concerning matrimonial property see below See H. T. KLAMI E. KUISMA, Suomen kansainvälinen yksityisoikeus (The International Private Law of Finland), Helsinki 2000, p T.M.C. Asser Instituut/UCL Matrim.Prop Finland 20

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