2010: Legal capacity and proxy decision making
Issues surrounding the loss of legal capacity/ competence
Definition of legal competence
According to the Act on Legal Competence, No.71/1997 (hereafter referred to as ALC), a person becomes legally competent at the age of 18. A legally competent person is considered to be competent to manage his/her personal and financial affairs (section 1).
Conditions for the deprivation of legal competence
According to section 4 of the ALC, a person can, if necessary, be deprived of legal competence, personal competence alone, financial competence alone, or both by judicial decision:
a. If he or she is unable to manage his or her personal or financial affairs by reason of mental debility, old age infirmity or mental disease, or by reason of other serious health condition.
b. If he or she is, as a result of excessive use of alcohol or drugs of habituation or dependence, unable to manage his or her personal or financial affairs.
c. If he or she is not able to manage his or her personal or financial affairs in a satisfactory manner by reason of physical disability, health failure or other impairment, and therefore decides to request deprivation of legal competence.
d. If the provisions of health care legislation make it necessary to commit the person in question to a hospital without his or her approval.
Extent of deprivation of legal competence
A person can be deprived of legal competence for a limited or unlimited period of time. Financial competence can also be limited or unlimited in time, as well as limited to particular property. This includes real property, aircraft, ships and vehicles for which registration is required, negotiable instruments and money on deposit accounts with commercial banks and savings banks, and shares owned in securities funds (section 5).
After a request for deprivation of legal competence has been submitted to the relevant court, a person may be provisionally deprived of competence if the conditions outlined above are deemed fulfilled and deprivation of legal competence is urgently needed (section 6). A person can only be deprived of legal competence to the extent the judge considers necessary in each case (section 12)
Who can request deprivation of legal competence?
According to section 7 of the ALC, the following people can make a request for the deprivation of legal competence:
- The person him/herself (known as the respondent in this law)
- The respondent’s spouse, his/her relatives by direct descent and siblings
- The respondent’s guardian or administrator
- The respondent's nearest successor under the law of inheritance or an irrevocable testamentary disposition
- The social security office or a corresponding municipal authority at the respondent's place of stay at the time a request for deprivation of legal competence is considered advisable as a result of his or her own petition or that of his or her next of kin, physician or friends, or by reason of knowledge of his or her situation otherwise obtained.
- The Minister of Justice, if recommended by the public interest.
What is the procedure for the deprivation of legal competence?
Section 8 of the ALC states that a request for deprivation of legal competence should be made in writing and that the following information must be provided:
a. The name, National Registry number and legal domicile of the plaintiff.
b. The name of the respondent, his or her National Registry number and legal domicile, and his or her place of stay, if other than the legal domicile.
c. Whether the request is made for deprivation of personal competence, financial competence, or both.
d. If temporary deprivation of legal competence is requested, the period of time for which this is requested.
e. If deprivation of financial competence in relation to particular property is requested, an exact specification of the property or properties.
f. The names and addresses of the respondent's spouse or cohabiting partner, his or her legally competent children and parents, and information on whether those persons know of the request.
g. The name of the respondent's family physician and of any medical consultants he or she may have consulted, if known, provided their written opinions are not attached to the request.
h. The reasons why deprivation of legal competence is requested.
i. The legal basis for the plaintiff's status as a party to the case.
If possible, medical certificates and other documentary evidence in support of the request should be attached. In any case, the judge may collect on his/her own any evidence, including medical certificates, that were not submitted when the claim was made. The person making the request can withdraw it at any stage of the proceedings.
The judge may summon the respondent to appear in court, explain the request and give the respondent the opportunity to express his/her views on the matter. The judge may also summon the person making the request and any witnesses to appear in court if necessary. If the respondent ignores the judge’s request to appear in court, he or she may be brought to the court by the police. If it is not possible for the respondent to appear in court, the judge must go to the respondent’s place of residence in order to personally ascertain his/her condition (unless it is clear from a medical certificate or other evidence that this is of no significance for the outcome of the case) (section 11).
The remuneration of the counsel appointed for the respondent and the representative appointed for the plaintiff (the person making the request), and any other legal costs, including the cost of obtaining medical certificates and other expert evidence, is paid by the State Treasury (section 17).
Proxy decision making
Appointment of an administrator
Conditions for the appointment of an administrator
A person possessing financial legal competence who is not able to manage his or her financial affairs in a satisfactory manner by reason of illness or disability can request the appointment of an administrator provided that he or she is aware of the significance of such a measure.
How this is arranged
To do this, the person must submit a petition for the appointment of an administrator to the supervisor of guardians using the official form for this purpose. This should be accompanied by a medical certificate which includes the doctor’s opinion as to whether the petitioner is aware of the significance of the requested measure. Details of the spouse or cohabiting partner should be given along with the details of the property/affairs to be managed and any request for the appointment of a particular person as administrator.
The supervisor then looks into the matter, collects additional information and consults the spouse or cohabiting partner. He or she then makes a decision and appoints an administrator if necessary. This procedure does not seem to involve any court procedure (article 33 to 37 of ALC).
Compensation and liability of administrators
The supervisor of guardians fixes the amount of remuneration to be paid by the client to the administrator. The client must also pay ISK 5,000 to the State Treasury for the appointment of an administrator and for any changes to his or her functions
Conditions for the appointment of a guardian
As soon as the supervisor of guardians receives notification that a person has been deprived of personal competence, financial competence or both (including limited deprivation), he or she takes the necessary measures to appoint a guardian on that person’s behalf (section 50).
How guardianship is arranged
The decision to appoint a guardian is made in writing and states the following:
- The name, National Registry number and legal domicile of the person not possessing legal competence, and his or her place of stay, if other than the legal domicile.
- The name, National Registry number and legal domicile of the appointed guardian.
- Where and when the person in question was deprived of legal competence, personal or financial, and whether the deprivation of legal competence was temporary. If so, the time of its cancellation shall be stated. In case of deprivation of financial competence that relates to particular property, only that property shall be stated exactly.
- The remuneration of the guardian, and the manner of its payment.
The supervisor of guardians then issues a letter of appointment of guardian which is sent to the guardian who has been appointed.
Who can be a guardian
Guardians must be in possession of full legal competence, financially solvent, reliable and prudent, and otherwise well suited for the task. They must also have agreed to being appointed. The person who has been deprived of legal competence can request the appointment of a specific guardian. Provided that such appointment would not be in conflict with the interests of the person deprived of legal capacity, he or she will be appointed. The spouse or cohabiting partner of the person deprived of legal capacity is entitled to make observations concerning the selection of a guardian (section 55).
The duties and responsibilities of guardians
Guardians must consult the person not possessing legal competence for any affairs that they are handling, except for matters of a minor nature. They should also conduct the person’s affairs in the best interests of that person at that particular time. Guardians must also respect any further instructions given by the supervisor of guardians and/or the Ministry of Justice (section 60).
Guardians of people not possessing financial competence must immediately after appointment compile a report of the person’s liabilities and assets, unless the guardianship is limited to a particular property. They must also submit a yearly report to the supervisor of guardians giving details of any significant decisions made in the last year (section 63).
Guardians’ powers are defined in section 58 as follows:
- The guardian of a person deprived of personal competence shall have the power to take any necessary decisions concerning the personal affairs of the person so deprived, which that person is unable to take on his or her own. Any lawful decision of the guardian shall be binding upon that person as if he or she had taken it in possession of full personal competence.
- Concerns involuntary internment (please refer to the previous chapter on involuntary internment).
- Subject to any other provisions of law, the guardian of a person not possessing financial competence shall be in charge of that person's financial affairs. If a person has been deprived of financial competence in relation to particular property, the guardian shall only be in charge of that property. Any lawful disposition by the guardian shall be binding upon the person deprived of financial competence as if he or she had made it in possession of full financial competence.
How the financial affairs of the ward are handled
Chapter VI of the ALC of 1997 deals with the management of assets and liabilities of people not possessing financial competence.
Immediately on taking up his/her duties, guardians must make an inventory of all the ward’s assets, make an annual report on the status of assets and liabilities and send a copy to the supervisor of guardians (section 63). If the amounts concerned are quite high, an auditors report may be necessary. Donations or winnings equaling or in excess of ISK 500,000 must be notified to the supervisor of guardians.
The person’s assets must be well safeguarded and managed so as to provide a good return when needed. If the assets amount to more than ISK 500,000 in value, the guardian must consult the supervisor of guardians (section 67).
Income and dividends must be used for the benefit of the person lacking legal capacity. S/he may be allocated by the guardian a suitable amount of money for personal use (section 68).
Approval from the supervisor of guardians is needed for certain transactions such as the purchase, receipt or sale of property, aircraft, ships or vehicles; the lease of property for more than 3 years; or for transactions of a significant or extraordinary nature such as the appointment of a managing director for a business enterprise (section 69). There are also special provisions for mortgages and extending loans (section 72).
Measures to protect the ward from misuse of power
In certain cases (e.g. for amounts equaling or exceeding ISK 500,000), when someone makes a payment to the guardian of a person lacking financial competence, s/he must notify the supervisor of guardians (section 73).
The funds and negotiable instruments (assets?) of the person lacking incapacity must be kept separate from those belonging to the guardian. The supervisor of guardians may decide to take over the control of any assets of the person lacking capacity. In that case, the guardian would not have any control over those assets.
The Minister of Justice may issue further regulations concerning the managements by a guardian of the assets of a person lacking capacity (section 67).
The work of the guardians is monitored by the supervisor of guardians who must keep a record of his/her decisions relating to each guardianship case.
Compensation and liability of guardians
Guardians are refunded for any costs incurred as a result of carrying out their functions. This is generally paid from the property of the person deprived of legal competence. The supervisor of guardians may also decide that the guardian should receive payment for his/her work. If so, this is also be taken from the property of the person deprived of legal competence. However, if the latter has a very low income or for certain specific reasons, the supervisor of guardians may decide that such expenses are to be paid by the State Treasury. The Minister of Justice can also issue more detailed rules on the remuneration of guardians.
Guardians are obliged to compensate the people they are representing for any damage that they cause, either by intent or negligence, in the exercise of their functions.
Duration of the guardianship measure
Guardians may be released from their duties if they so request or if the supervisor of guardians considers that they have neglected their duties, have acted in violation of their duties or no longer fulfil the general requirements for being a guardian (section 64). The death of the ward also results in the termination of guardianship.
On termination of his/her duties, a guardian must send a report to the supervisor of guardians with details of the transactions s/he has managed on behalf of the person with dementia. Details are not given about conditions for the ending of the guardianship measure. 64
Capacity in specific domains
Marriage and divorce
According to the Law in Respect of Marriage, no. 31 of 14 April 1993, a person who has been deprived of legal competence cannot enter into marriage without the guardian’s approval. If the guardian refuses to give his or her approval, the person may ask for the matter to be referred to the Ministry of Justice which may authorise the marriage if it considers that the denial was unwarranted (article 8). If one of the people to be married lacks legal competence, the marriage settlement must be confirmed in writing by the guardian (article 81).
Either spouse may claim annulment of the marriage if one of the partners was not “in command of their reason” at the time the union was proclaimed (article 28).
General conditions governing the right to vote are mentioned in article 33 of the Constitution of the Republic of Iceland of 17 June 1944 which states: "All persons who, on the date of an election, are 18 years of age or older and have Icelandic nationality have the right to vote in elections to Althingi. Permanent domicile in Iceland, on the date of an election, is also a requirement for voting, unless exceptions from this rule are stipulated in the law on elections to Althingi. Further provisions regarding elections to Althingi shall be laid down in the Law on Elections".
In the Local Government Elections Act, No.5/1988, article 33 states that people who are eligible to vote in a municipality and who have not been deprived of legal competence are eligible to stand for election to a municipal council.
It is not clear whether the right to vote is affected by the deprivation of legal capacity.
If a person lacking legal competence concludes an agreement without having the authority to do so, the other party has the right to rescind the agreement, provided that the agreement has not been confirmed by the guardian. If the other party was aware that the person lacked legal competence and that the guardian’s approval had probably not been granted, he or she cannot rescind the agreement until a suitable time for obtaining the guardian’s approval has elapsed (section 77).
If a person lacking legal competence is found to have acted fraudulently or dishonestly in concluding an agreement, he or she must compensate the other party. The courts may, however, reduce the amount of compensation to be paid depending on the means of the person lacking legal competence and other circumstances (section 77 of the ALC).
If a person knowingly concludes an employment agreement with a person not possessing legal competence (without reasonably believing that the guardian’s approval has been sought), he or she cannot rescind the agreement if the person not possessing legal competence performs his/her duties (section 77).
The culpa rule (please see sub-section on civil responsibility) also applies to contractual relations (Björnsson, 2009)
Article 34 of the Act on Inheritance of 1962 states:
Any person who has attained the age of 18 years, or has entered into marriage, can dispose of his or her property by will.
A will shall only be valid if the person making the preparing disposition was of such sound mind as to be capable of making the disposition in a reasonable manner.
In article 39, it is further stated that a provision in a will to the effect that the testator’s property should be destroyed is invalid, unless it is based on a sound and sensible reason. A will must be executed in writing and signed (or have the signature witnessed) in the presence of a public notary or two witnesses (article 40). The witnesses must certify that the testator was of sufficiently sound mind as to be capable of making a will (article 42).
If it is later established that a testator or his/her witnesses lacked capacity, the provisions contained in the will can be contested (article 45).
The above provisions concerning wills also apply to gifts to be handed over after death or in anticipation of death (article 54).
A person who has had an administrator appointed on his/her behalf does not lose the right to make testamentary dispositions (section 41 of the ALC).
Björnsson (2009) provides details of the parts of the Tort Damages Act (TDA) of 1993 (Skadabótalög nr. 50/1993) applicable in the case of non-contractual legal liability. The culpa rule is applied, which means that a person is held liable for intentionally or negligently causing harm. However, the tortfeasor is not considered liable and would be acquitted if s/he had a mental disorder of sufficient seriousness as to render him/her incapable of understanding the nature of his/her behaviour or the consequences of such behaviour. Nevertheless, it is still possible, according to a special rule in the “Jónsbók” (dating back to 1281), for a person with such a serious mental disorder to bear strict liability (i.e. legal responsibility without fault).
If it is established in a criminal case that a person lacking legal competence has acted criminally in concluding an agreement, he or she must compensate the other party (section 77 of the ALC).
Responsibility for a crime is also covered by article 15 Chapter 2 of the Penal Code which states:
A person who was, at the time an act was committed, totally unable to control his/her actions on account of mental disease, retardation or deterioration, or on account of impaired consciousness or other similar condition, shall not be punished.
- Björnsson, A (2009), A survey of Icelandic tort law, Stockholm Institute for Icelandic Law 1957-2009
- Ministry of Justice and Human Rights (2010), Act on Legal Competence, No.71/1997, Accessed online on 21 October 2010 at: http://eng.domsmalaraduneyti.is/laws-and-regulations/nr/98
Last Updated: Tuesday 27 March 2012