Cross Border Succession and Nepali Law

Cross border succession in Private International Law involves the transfer of a deceased person’s diverse property – including movable, immovable, and intangible assets – across different national jurisdictions, leading to inherent conflicts of law. For immovable property, the universally established principle is lex situs, meaning the law of the place where the property is situated governs any transfer, including those arising from succession. This principle is widely accepted with minimal criticism, ensuring that disputes concerning rights created, assigned, or transferred for immovable property are adjudicated by the law of its location. A significant reinforcement of lex situs for immovable property is the Mozambique Rule, originating from the 1893 case of British South Africa Company v. Companhia de Moçambique. This rule, or similar principles, asserts that courts generally lack jurisdiction to hear cases directly involving the title or right to possession of immovable property situated in another country, or for trespass to such land, thereby cementing the application of the local law of the land.

For movable property in cross-border succession, several principles may apply, including the principle of mobilia sequuntur personam (“movables follow the person”), which suggests the law of the owner’s domicile governs these assets. Party autonomy, or the proper law, is also crucial, particularly concerning wills related to movable property, allowing individuals to specify the governing law. Other considerations include lex loci actus, the law of the place where the transaction occurred or documents were executed, though lex situs can also apply in specific instances involving third-party rights. In the case of intangible properties like patents, debts, or negotiable instruments, principles such as the law of the parties’ domicile, lex loci actus, or the proper law (based on party intention) are considered. Domestic legal frameworks, like the Hindu Succession Act, Indian Succession Act, and Muslim Personal Law, illustrate the national variations that necessitate the application of private international law principles in complex cross-border succession scenarios.

Introduction to Property:

The idea of property is multi-faceted. The term ‘property’ is used in common and some legal parlance to describe types of property that is both real and personal. ‘Real’ property encompasses interests in land and fixtures or structures upon the land. ‘Personal’ property encompasses tangible or ‘corporeal’ things; chattels or goods. It also includes certain intangible or ‘incorporeal’ legal rights, also known in law as ‘choses in action’, such as copyright and other intellectual property rights, shares in a corporation, beneficial rights in trust property, rights in superannuation and some contractual rights, including, for example, many debts. Intangible rights are created by law. Tangible things exist independently of law but law governs rights of ownership and possession in them including whether they can be ‘owned’ at all.[1]

Introduction to Succession:

Succession is defined as “the acquisition of rights or property by inheritance under the laws of descent and distribution.”[2] As per the EU Succession Regulation, ‘succession’ means succession to the estate of a deceased person and covers all forms of transfer of assets, rights and obligations by reason of death, whether by way of a voluntary transfer under a disposition of property upon death or a transfer through intestate succession.[3]According to Article 237 Muluki Civil Code, 2074, “If a person dies, their succession is considered to have opened.” This establishes the foundational principle that the process of succession begins upon the death of an individual. It has also clarify the meaning of succession as, “succession” means devolution of liabilities and rights in regard to debt, wealth and property of the deceased upon his or her heirs in accordance with law.” The issue of succession arises when a person dies leaving properties interstate or without a will. Every national legal system provides certain rules on the distribution of private property of its citizen who dies without leaving a will. There may not be much problem to settle the dispute if it is territorial or has no foreign element. However, there will be real problems when a foreign element is involved in the dispute, and the legal system of relevant countries treat the same question differently. Various laws may designate the prospective successor of the interstate property differently. For example, under the law of country A, the surviving spouse may be the beneficiary, whereas the children may be the successor under the law of B, and the parents in C. The right beneficiary must be identified by the choice of law rules which may vary according to whether the estate consists of movables or immovable and whether the deceased left a will or died intestate. The traditional Common Law, the modern European Instruments and the relevant Hague Conventions are considered as the main source of principles governing these issues.

Testate Succession or Will in Cross Border Succession

Testate succession is the process of leaving the property by the rightful owner to the beneficiary under a will. It includes civil law aspects of succession to the estate of a deceased person, a form of transfer of assets, rights and obligations by reason of death, by way of a voluntary transfer under a disposition of property upon death.[4] Testamentary succession has its root in Roman law, where upon the death of a person, an inheritance (heredites) was conceived as the whole of the property, movables and immovables, rights, claims and obligation of the deceased.  The Romans first sought to regulate the power of testamentary disposition, initially developing elaborate rules for non-testamentary dispositions. Julius Caesar, in a codicil to his will, named Octavian as his adopted son and heir. Though, not all countries including Germany followed the will system, it was in practice in many other countries under Roman influence.  At Common Law, the will system was developed by the judges of the Court of Chancery. There was originally no concept of will in Hindu Law, and there is no synonym for the word ‘will’ in Sanskrit literature. The will system in Indian sub-continent was brought by British colonial system originally through the judicial decisions. In India, the colonial era law, the Indian Succession Act 1925, has detailed provisions on testamentary succession.[5] There has been a system of a kind of will in Nepal, by means of which, a title of a property can be transferred by the owner with immediate effect or upon death. However, the main objective of such testament is donation or gift rather than to bequeath the inheritance in the form of succession.

Nepali Legal System on Testament.

Till date, the Nepali legal system hasn’t introduced a ‘will’ system as such similar to the other legal systems, where the owner of property disposes the assets by a written instrument called a ‘will’ or ‘testament,’ for the event of the person’s death. The will system is not followed in Nepal especially because the property owned by a family is considered as a ‘property in common’. The property in common also includes the property inherited from ancestors. The property in common is always subject to apportionment among family members who are entitled to a share of the property (Partition). It means as long as person remains in a family, the property owned by any member of that family is considered as common property. It is not necessary for a person, who is a member of a particular family to leave a will or testamentary disposition of the property the person possesses. Upon the death of that person, the property he possessed/ owned continue to remain with the family for the partition purpose among the surviving members. Because the property upon the death of a person goes to a successor designated by the law, one does not need to leave a will or testamentary deed even if the person is living alone and dies interstate.

There is a provision in Section 406 of the NCC which relates to the donation and gift of property by the owner to another person for religious, social, or public or community purposes. Such donation or gift may become effective immediately or effected after a certain period of time or after the death of its maker. The donation or gift effected after the death of its maker could be considered as testamentary donation or gift resembling to the concept of will. The same Chapter further confirms that a person may transfer a property in which the person has the right and ownership, to another person with immediate or testamentary effect, through the execution of a deed as required by law. Although the will system is not a common process of transferring property ownership in Nepal, the system of testamentary gift (Shespachhi ko Bakaspatra) has long been in practice which transfers all the rights and obligations of the deceased to the beneficiary as defined in the deed. The deed of testamentary gift excludes all persons who otherwise are in the line of succession. Similarly, in case of Mathura Chipalu v Manoj Chipalu, N.K.P. 2056, D.N. 6729, the Supreme Court of Nepal confirmed the system of transferring the property ownership through testamentary gift where the in the case of Gopal Bahadur Pradhan v. Katak Bahadur Pradhan, D.P. No. 61 of 2026 B.S. (Nepal Kanoon Patrika 2027, Decision No. 566, p. 208), the principle laid down appears to have been based on the then-prevailing provision of Section 33 of the Chapter on Partition (Anshavanda) of the Muluki Ain. In that case, where the mother and two sons were living together in common residence, the mother had executed a deed of gift (Bakashpatra) of her share of the property in favor of only one of the sons. The Supreme Court, sitting in Full Bench, held—on the basis of the statutory provision in Section 33 of the then Partition Chapter that “the property earned and the debts incurred by co-parceners living together without separation of measure (mano nachhutrī) shall be equally divided among all co-parceners”—that if the mother transferred her share of the property to only one son, it would be contrary to law, and thus the property had to be partitioned equally among all sons.[6]

However, in the present case, the factual situation is different: the mother, in accordance with Section 1 of the then Muluki Ain Chapter on Widow’s Share Property (Vidhwa Anshadhan), executed and duly registered a deed of gift (Bakashpatra) of her share of the property in favor of the son and daughter-in-law with whom she resided. Therefore, since the present case and D.P. No. 61 of 2026 are of different nature and subject matter, the principles laid down in the two cases are distinct and cannot be regarded as conflicting.

The practice of testamentary donation or gift in Nepal, however is not a general form of transferring the ownership of property as in the will system.

a. Validity and Revocation of Gift or Donation in Nepal

Muluki Civil Code has provisioned several specific conditions under which a gift or donation automatically becomes ipso facto be void. If the person entitling to donation or gift does not accept the donated or gifted property himself or herself or through his or her agent, if a property is donated or gifted to a person with entitlement after testament and the receiver of donation or gift dies before the person making such a donation or gift or the organization obtaining donation or gift is dissolved, if a property is donated or gifted to an unborn baby and the baby is not born alive, if the donated or gifted property is so destroyed that its existence is extinct before the donation or gift becomes effective.[7] Likewise, Section 410(1) provides that maker of gift with testament may, if he or she so wishes, amend the terms of, or revoke, the deed of gift with testament executed by him or her at any time by making an application in person in front of the concerned authority.

Section 711 of the Muluki Civil Code, 2074 provisioned that:

1. The matter concerning validity of a donation or gift shall be governed by the law of the country of donor’s nationality existing when the donation or gift was made.
2. If the formalities are completed according to the law of the country where a donation or gift is given, the donation or gift shall be deemed to have been donated or gifted with due formality.

Subsection (1) has adopted the nationality as connecting factoer in determining the governing law in the question of the validity of donation or gift, which may also be ultimately applied in the question of the testamentary deed. As regards the question of formality of donation and gift, the lex loci actus has been provided as governing law.

Intestate Succession

Intestate succession is ‘the method used to distribute property owned by a person who dies without a valid will.[8] Normally the succession law of the respective country has to say whom the property goes to if the owner dies intestate. Therefore, there will be no problem as long as the dispute is within the scope of territorial jurisdiction. However, a problem of intestate succession requiring PIL rules arises when the dispute crosses the territorial boundary. For example, a person may die without a will leaving behind the property indifferent countries, or a foreigner governed by a different system of law dies intestate leaving the property in the local territory. The PIL rules also differ depending on whether the property in question is a movable or an immovable one. The following example provided by Schulze illustrates the circumstances that make choice of law rules functional.

A German national, his wife and three children immigrate to South Africa where they take up permanent residence, although retaining their German citizenship. After a few years, the marriage is dissolved by divorce and shortly thereafter the father dies in a car accident. In terms of his last will and testament executed in South Africa, he bequeathed his entire estate comprising movable and immovable assets both in South Africa and in Germany to his female companion who had joined him after the divorce. His three children who were not mentioned in their late father’s will, wish to claim their compulsory minimal portions in terms of the German law of succession and contest the will…The relevant choice-of-law rules under South African PIL refer to the lex ultimi domicilii as far as all movable property, wherever situated, is concerned, and to the lex sitae with regard to the immovable assets. Consequently, the succession rights related to the estate of the deceased are those of South African domestic law regarding all movable assets of the estate and the immovables situated in South Africa, whereas the immovable property situated in Germany will devolve according to the German law of succession. [9]

In India, a person is deemed to have died intestate in respect of all property of which he has not made a testamentary disposition which is capable of taking effects,[10]

1. A has left no will. He has died intestate in respect of the whole of his property.
2. A has left a will, whereby he has appointed B his executor; but the will contains no other provision. A has died intestate in respect of the distribution of his property.

• A has bequeathed his whole property for an illegal purpose. A has died intestate in respect of the distribution of his property.

1. A has bequeathed 1,000 rupees to B and 1,000 rupees to the eldest son of C, and has made no other bequest; and has died leaving the sum of 2,000 rupees and no other property. C died before A without having ever had a son. A has died intestate in respect of the distribution of 1,000 rupees.

Under Nepali legal system, the MCC provides the order of next of kin who inherits the property of a deceased left behind at the time of death.[11] It is common in Nepali legal or cultural system that there will be no will or any other testamentary deed, except given in the name of donation or gift including with testamentary effect to bequeath a property of a dying person. If a person grants free of cost a property in which the person has right and ownership to another person or for any religious, social, public or community purpose such an act shall be deemed to be a donation.[12] Hence, few disputes with respect to intestate succession emerge in Nepal. The new National Civil Code, however, has tried to provide solution in an intestate succession related dispute where conflict of law problems will arise. Before engaging with the Nepali legal provisions, it would be better to have a quick survey on the general principles developed under different legal systems.

a. Diversity in Conflict Rules and New Approaches

The well-established rule in Common-Law system is that the question of movable property in case of intestacy is to be distributed according to the law of the domicile of the deceased at the time of death. The rule accords with the old maxim mobilia sequuntur personam. And, it is the lex situs that determines the question of intestate succession to immovable property. In Civil Law system, the law of nationality of the deceased governs the question of movabie and the lex situs determines the question on the administration of intestate immovable property.  Still, other countries follow different rules, for example, the Netherlands which is known as a ‘unitarist’ state, does not categorized a property and use nationality as a connecting factor for all. Because of such differences in conflict rules, the problem of renvoi emerges. When the forum court refers to the law of nationality but the conflict rule of that country refers to the law of domicile which results in the application of the lex fori or the law of the third country, and vice versa. The following example, provided by the Waters Explanatory Report on Hague Succession Convention, properly illustrates the circumstances of conflict of laws in the issue of intestate succession.

Suppose a Mexican national who lives and makes his home in London, England, has at his death assets in the Netherlands and Denmark. To the Netherland sassets, the Netherlands will apply Mexican law as his national law, and to his Danish assets Denmark will apply English law as his domiciliary law. Now suppose that the assets include a house in Amsterdam. The Netherlands,beinga ‘unitarist’ State, would apply Mexican law to this asset, but the UnitedKingdom is a ‘scissionist’ state (i.e., it applies one law to movables, and another law – the situs to immovables) and therefore for English succession purposes the law of the Netherlands applies. At this point, the lawyer needs to know whether the United Kingdom applies renvoi in matters of sucession, and consequently would apply Mexican law as the law which the situs would apply. [13]

The lex situs rule on immovables, however, is found increasingly insufficient to address the modern reality where the probability is there that a person may have immovables in various countries. At this, professor Magdalena Pfeiffer opined that, “the traditional lex rei sitae rule for immovables under scission, if the immovable property is scattered across a number of countries, makes it a sophisticated and expensive exercise to organise succession in advance in accordance with a number of applicable laws.” The EU Committee of the House of Lords found that, “the current distinction, known as scission, has been widely criticised by academic commentators as a “historical anomaly” and by the judiciary in some decided cases on the basis that it constitutes an unjustified complexity which can give rise to artificial and inappropriate results.” The Waters Report provides the following commentaries on the new development that the states are moving towards the unitarist approach.

Though many States today already are unitarist, a few States of the Civil Law tradition as well as the Common Law States-scission is general to the Common Law jurisdictions- follow the scission principle. Many people, including authors on the conflict of laws, regard the connecting factor of situs in the case of immovables to be practically inevitable, but it has been widely recognised in the scissionist jurisdictions that the rule of the situs is open to serious criticism. Since situs governs for the purposes of both testacy and intestacy, unintended injustice can occur in the distribution among close family of the deceased’s international estate. Also, the arguable distinction between movables and immovable, and the ease with which one can be converted into the other, make scission today much less defensible.[14]

EU Follows Unitarist Approach

The European Succession Regulation, 2012 is the main law governing the matters relating to intestate succession. With the objective of avoiding contradictiory results and uncertainity,  making rules more predictable, the EU has harmonized their laws enabling EU citizens to know in advance which laws will apply to their succession. Accordingly, the general conflict rule in the Succession Regulation has been that “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.”[15] The Regulation further clarifies that, “for reasons of legal certainty and in order to avoid the fragmentation of the succession, that law should govern the succession as a whole, that is to say, all of the property forming part of the estate, irrespective of the nature of the assets and regardless of whether the assets are located in another Member State or in a third State.”[16] It adheres the monist ‘unitarist’ approach of conflict of laws.

With regard to the determination of the law applicable to the succession the authority dealing with the succession may in exceptional cases – where, for instance, the deceased had moved to the State of his habitual residence fairly recently before his death and all the circumstances of the case indicate that he was manifestly more closely connected with another State – arrive at the conclusion that the law applicable to the succession should not be the law of the State of the habitual residence of the deceased but rather the law of the State with which the deceased was manifestly more closely connected. That manifestly closest connection should, however, not be resorted to as a subsidiary connecting factor whenever the determination of the habitual residence of the deceased at the time of death proves complex. [17] Similarly, Special rules imposing restrictions concerning or affecting the succession in respect of certain assets, where the law of the State in which certain immovable property, certain enterprises or other special categories of assets are located contains special rules which, for economic, family or social considerations, impose restrictions concerning or affecting the succession in respect of those assets, those special rules shall apply to the succession in so far as, under the law of that State, they are applicable irrespective of the law applicable to the succession.[18] Therefore, neither conflict of-laws rules subjecting immovable property to a law different from that applicable to movable property nor provisions providing for a reserved share of the estate greater than that provided for in the law applicable to the succession under this Regulation may be regarded as constituting special rules imposing restrictions concerning or affecting the succession in respect of certain assets.[19]

HCCH Convention

Depending on the level of territorial connection, the question of succession under the 1989 Hague Convention is governed either by the law of the habitual residence or the nationality of the deceased. The law of the state of habitual residence at the time of death governs if he was then a national of that state or if he had been residing there for the period at least five years immediately before his death. This rule is quite flexible. If at the time of his death, he was manifestly more closely connected with the state of which he was then a national, the law of that state applies.[20] In other cases succession is governed by the law of the State of which at the time of his death the deceased was a national, unless at that time the deceased was more closely connected with another State, in which case the law of the latter State applies.[21]

The major characteristics of HCCH Convention is that it terminates scission by taking a unitarist approach, i.e. it applies on law to both movables and immovable in the deceased’s estate. Article 7(1) states that the applicable law…. governs the whole of the estate of the deceased wherever the assets are located. It provides that where the lex situs, with its distinct economic, family or social policies in mind, imposes a special order of inheritance upon particular assets or operations located on its soil, the applicable law, when it is other than the lex situs, is to give way to the lex situs on that specific area of inheritance. For instance, the situs may legislate that with regard to family-owned farms at or under a given size the farm is to devolve as one unit by way of the male line of proprietor. In another case the concern may be not so much a particular line of descent, but that however the farm is held in ownership, whether by an individual, a company, or a partnership, it shall not be divided whether as an immovable or as shares or interests as a consequence of two or more persons being entitled to inherit the whole, or a part each, but devolve as a whole. The policy of the article may also extend to other movables.[22]

Intestate Succession under Nepali PIL

Traditionally, all properties in common owned by a family are subject to apportionment to coparceners i.e. husband, wife, father, mother, son and daughter. As even if a person having no family members or living alone dies leaving property intestate, the succession to his or her property shall be deemed to be opened[23] his or her nearest heir shall be entitled to such succession.[24] It means that there will be no gap even if a person died without testamentary disposition or will. Therefore, the practice of will or testamentary disposition of property is a system totally alien to Nepali commoners except donating or giving as a gift for a purpose different than succession. The Nepali private international law seems inclined to address the question of intestate succession through some choice of law rules.

Section 695. Successor to be Determined According to Foreign Law:

While determining the successor to a foreigner residing in Nepal when his or her property is open for succession, the successor shall be determined according to the law of the country of his or her nationality, if such country cannot be determined, according to the law of the country of his or her habitual residence, and if even such residence cannot be ascertained, according to the law of the country where he or she is residing for the time being.

Section 696. Determination of Succession of Deceased:

1. If succession is open because of the death of any foreigner in Nepal and it is therefore necessary to determine his or her successor to the property situated in Nepal and the order of preference thereof, it shall be determined according to the law of the country of his or her nationality at the time of his or her death.
2. If the law referred to in sub-section (1) cannot be ascertained, it shall be determined according to the law of the country of his or her habitual residence at the time of his or her death, and if even such country cannot be ascertained, according to the law of Nepal.

Section 698. Regulation of property:

1. Succession to a movable property shall be governed by the law of the country of habitual residence of the deceased at the time of his or her death.
2. Succession to an immovable property shall be governed by the law of the country where such property is situated.

Conclusion

Cross-border succession of property under Nepali law uniquely merges traditional common-law principles with distinct local restrictions, particularly impacting foreign nationals. At its core, Nepal’s Muluki Civil Code 2074 (2017) firmly embeds the immovable-movable dichotomy, where succession to immovable property (such as land or buildings) is governed by the law of the situs (where the property is located), ensuring that land in Nepal always devolves according to Nepali law. Conversely, succession to movable property (like bank accounts or shares) is primarily determined by the law of the deceased’s habitual residence, aligning with the common-law principle of lex domicilii. While Nepal’s approach shares similarities with jurisdictions like India, the USA, and the UK in applying these traditional conflict-of-law rules, it distinguishes itself through its more restrictive stance towards foreign citizens who are not of Nepali origin or Non-Resident Nepalis (NRNs). Foreigners are generally steered towards their home country’s law for their property in Nepal, yet Nepali law expressly prohibits them from freely inheriting immovable property in the country without government approval, often requiring them to transfer such land to a Nepali citizen. This stringent control is a key feature of Nepali law, contrasting with some international approaches like the EU Succession Regulation which offers greater flexibility. However, Non-Resident Nepalis (NRNs) are a notable exception, being granted near-equal status to citizens in inheritance matters, provided they possess an NRN ID card. The comprehensive framework for succession in Nepal is primarily codified in the Muluki Civil Code 2074, which also addresses both intestate and testate succession and recognizes equal rights for various heirs. Ultimately, successfully navigating cross-border property succession in Nepal necessitates a detailed understanding of these specific provisions, particularly concerning land ownership restrictions and the unique status of NRNs, given Nepal’s reliance on its domestic laws and its non-ratification of major international treaties on succession.

References

• Muluki Civil Code, 2074
• Definitions of Property, Australian Law Reform Commission (Aug, 24, 2025), https://www.alrc.gov.au/publication/definitions-of-property/
• Black’s Law Dictionary, 8th edition by Garner BA, (New Delhi: Thomson & Reuters, 2015), 1472
• EUROPEIA, U. (2021). Regulation (EU) No 650/2012 of the European Parliament and of the Council of 4 July 2012 on jurisdiction, applicable law, recognition 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. Bruxelas. Disponível em: http://data. europa. eu/eli/reg/2012/650/oj. Acesso em, 26.
• EUROPEIA, U. (2021). Regulation (EU) No 650/2012 of the European Parliament and of the Council of 4 July 2012 on jurisdiction, applicable law, recognition 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. Bruxelas. Disponível em: http://data. europa. eu/eli/reg/2012/650/oj. Acesso em, 26. Recital (9).
• Prem Chandra Rai, Private International Law Principles and Nepali Legal System, Lex & Juris Publication Pvt. Ltd, Nepal, 2024, p.694
• Mathura Chipalu v Manoj Chipalu, N.K.P. 2056, D.N. 6729
• Intestate, Black’s Law Dictionary (11th ed. 2019), Westlaw.
• Indian Succession Act, 30 (1925).
• Muluki Civil Code, 239 (2074).
• European Succession Regulation (2012).
• Hague Conference on Private International Law. (1989). CONVENTION ON THE LAW APPLICABLE TO SUCCESSION TO THE ESTATES OF DECEASED PERSONS. § 3(1) & (2 https://assets.hcch.net/docs/5af01fa4-c81f-4e99-b214-64421135069f.pdf).
• DE MORT, A. S. A. C. CONVENTION SUR LA LOI APPLICABLE AUX SUCCESSIONS A CAUSE DE MORT.