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The Hague Trusts Convention : Scope, Application and Preliminary Issues - Jonathan Harris

The Hague Trusts Convention

Scope, Application and Preliminary Issues

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Trusts cross borders. When they do, real difficulties may arise. Will the understanding of what a trust is be different in a foreign state? Will the rights, powers and duties of the trustee and settlor be the same? What rights will the beneficiary be able to assert? To what extent will the trust assets be safe from the claims of creditors, forced heirs, or third parties? Which legal system will be applied to the trust? Within what limits? What if the trust needs to be recognized in a state which does not have the institution of the trust in its domestic law? The Hague Trusts Convention, enacted into English law by the Recognition of Trusts Act 1987, seeks to ameliorate the situation by providing harmonized choice of law rules for "trusts created voluntarily and evidenced in writing." It also provides for the recognition of trusts in Contracting States. Those Contracting States should recognize the trust, even if they do not have the institution in their domestic law. This book is the first published in England to devote itself to a detailed analysis of the Convention. It is aimed at academics and practitioners, private international lawyers, and trust lawyers. Frequent reference is made to the position in civil law states (especially in the Contracting States of Italy and the Netherlands) and in other trust states, both offshore and onshore. The Hague Trusts Convention deals with the operation of the trust itself. It does not deal with the preliminary steps needed to create a trust. These preliminary matters raise a highly complex and uncharted choice of law issues. Detailed discussion of these matters is also provided, and appropriate solutions suggested.

The strength of Harris's book lies in the way he applies his deep knowledge of the substantive law of trusts in his detailed treatment of the Convention...Harris's book is a much needed comprehensive treatment of the Convention, which will be of great interest to both academics and practitioners dealing with trusts in an international setting. H.L.E. Verhagen, Nijmegen ZeuP January 2006 ...a welcome addition to the private international law literature, being the first detailed analysis of the Convention published in the UK...[an] erudite and lucidly written monograph. It deserves to be widely read. Jonathan Hill, University of Bristol Trusts and Trustees May 2002 Harris' book can be useful in helping to understand the law even in those countries where the convention is not going to enter into force. This is certainly all the merit of the author having written this excellent book. the book is not only useful for English lawyers - which is rather obvious - but also for practitioners in civil law systems. Michael Traest European Review of Private Law May 2003

Table of Casesp. xxi
Table of Legislationp. xxxiii
The Creation of Transnational Trusts: Launching the Rocket
Introductionp. 3
Generalp. 3
Creation and Transferp. 4
Inter vivos Trusts--Matters to be Consideredp. 5
To What Extent are Matters of Capacity and Essential Validity Excluded from the Hague Trusts Convention?p. 5
Capacityp. 5
Whose capacity?p. 5
Declarations of oneself as trusteep. 6
Constitution of Trustsp. 7
Capacityp. 7
What is Capacity?p. 7
Status and capacityp. 7
Essential validity and capacityp. 7
The Choice of Law Rule for Capacity Questionsp. 10
Capacity and other Branches of the Conflict of Lawsp. 11
Contractsp. 11
Capacity to transfer propertyp. 15
Trusts and Capacityp. 16
One question or two?p. 17
The transfer of propertyp. 17
The creation of the trust structurep. 18
Declarations of oneself as trusteep. 19
Corporate trusteesp. 19
Foreign penal rules and rules which infringe English public policyp. 20
Conclusionp. 20
The Capacity of the Trusteep. 21
The Capacity of the Beneficiaryp. 21
The Vesting of Property in the Trustee Inter Vivosp. 23
Introductionp. 23
One question or two?p. 24
Declarations of oneself as trusteep. 25
Intention to create the trustp. 25
Immovable Propertyp. 26
The general rulep. 26
Renvoip. 26
Tangible Movable Propertyp. 28
What does "lex situs" mean?p. 28
Exceptionsp. 29
Renvoip. 29
Intangible Movable Propertyp. 30
The situsp. 30
Assignment of debts: the issues raisedp. 31
Assignability of debtsp. 31
The assignment of the debtp. 32
Title to the chose in actionp. 32
Conclusionp. 33
Perpetuities and Accumulationsp. 33
The Situs of Equitable Interests and Dealings with Subsisting Equitable Interestsp. 34
Generalp. 34
Trusts and Unadministered Estatesp. 34
Beneficial Interests and Rights to Enforce a Trustp. 35
A Principled Answerp. 38
Transfers of Subsisting Equitable Interestsp. 39
Sub-trustsp. 41
Incompletely Constituted Trusts and Trusts of the Benefit of a Covenantp. 41
Testamentary Trusts: Administration of Estatesp. 43
The Need for an English Grantp. 43
The Jurisdiction of the English Courtsp. 44
Grants obtained in Scotland, Northern Ireland and the Commonwealthp. 45
Applicable Lawp. 45
Delimiting the Administration of Estates and the Trustp. 45
Testamentary Trusts: the Law Applicable to Successionp. 46
Testate Successionp. 47
Movablesp. 47
Intestate Successionp. 50
Movablesp. 50
Immovablesp. 51
Renvoi and Successionp. 51
Capacity to Create a Testamentary Trustp. 52
Essential Validity and Testamentary Trustsp. 52
General Rulep. 52
Executor Trusteesp. 53
Forced Heirshipp. 54
The Potential Impact of the Hague Convention on the Law Applicable to Succession to the Estates of Deceased Persons of 1 August 1989p. 56
Generalp. 56
Forced Heirship, Claw-back and the Hague Trusts and Succession Conventionsp. 57
Testamentary Powers of Appointmentp. 59
Generalp. 59
Essential Validityp. 59
Constructionp. 60
Capacityp. 60
Formal Validityp. 61
Revocationp. 61
Subsequent will or codicilp. 61
Act of revocationp. 61
Subsequent marriagep. 61
Matrimonial Property Regimesp. 61
Generalp. 61
Choice of Law Rulesp. 62
No ante-nuptial contractp. 62
Ante-nuptial contractsp. 63
Matrimonial Property Regimes and the Law Applicable to Succession: Double Recovery and No Recoveryp. 64
The Creation of Transnational Trusts in Offshore Jurisdictionsp. 65
The Cayman Islandsp. 66
Bermudap. 69
Jerseyp. 72
The Isle of Manp. 75
Conclusionp. 77
The Hague Convention on the Law Applicable to Trusts and on Their Recognition
Evolution and Applicationp. 81
Backgroundp. 81
The Desirability of an International Trusts Conventionp. 83
A Convention Evolvesp. 86
Current Status of the Conventionp. 88
The Status of the von Overbeck Reportp. 89
The Implications of Ratification for Non-Trust States and their Domestic Legal Systemsp. 90
An Open-Ended Conventionp. 93
Application of the Convention in the United Kingdom: the Time Factorp. 94
The Convention's Provisionsp. 99
Preamblep. 99
Functions of the Conventionp. 100
Choice of Lawp. 100
The Recognition of Trustsp. 101
Characteristics of the Trustp. 103
Introductionp. 103
The General Characteristicsp. 105
The Specific Characteristicsp. 107
The Characteristics Considered: the "Shapeless" Trustp. 111
Characterisationp. 116
Trusts and the Rome Conventionp. 120
Types of Trust Governed by the Conventionp. 123
Formalitiesp. 123
Which Types of Trust are within the Convention?p. 124
Voluntary Trustsp. 124
Resulting Trustsp. 125
Constructive Trustsp. 128
Statutory Trustsp. 133
Hayton's Views Consideredp. 133
Why Exclude Judicially Created Trusts?p. 134
Generalp. 134
The "Problem" of Recognition of Foreign Judgments in Relation to Trustsp. 135
"Remedial" Judicial Trustsp. 137
Trusts Imposing a Continuing Obligationp. 138
The Statutory Extension of the Convention Rules in the United Kingdomp. 139
The Relevant Provisionsp. 139
A Choice of Law Rule for Resulting and Constructive Trusts?p. 140
Trusts Arising under the Law of Any Part of the United Kingdomp. 141
Trusts "Arising" by Judicial Decisionp. 145
A source of complexityp. 145
Constructive trustsp. 145
Presumed resulting trustsp. 148
Judgments Entitled to Recognitionp. 148
Conclusionp. 149
Exclusion of Preliminary Matters; the Rocket-Launcher and the Rocketp. 151
Preliminary Matters Excluded from the Conventionp. 151
Distinguishing between the "Rocket" and the "Rocket-Launcher"p. 153
Non-trust Jurisdictionsp. 158
Applicationp. 158
Depecagep. 161
Categories of Trustsp. 163
Express or Implied Choice of Lawp. 166
The Triumph of Settlor Autonomyp. 166
Trusts of Landp. 169
A Need for the Lex Situs?p. 169
The Trusts of Land and Appointment of Trustees Act 1996p. 171
Trusts for Salep. 172
Other Interests in Landp. 174
A Look Offshorep. 175
Where no Law is Chosen to Govern the Trustp. 175
Trusts of Movable and Immovable Propertyp. 178
A Need for an Objective Connection to the Chosen Law?p. 179
"International" Trustsp. 182
Choice of the Law of a State Comprising Several Territorial Unitsp. 184
The Need to Choose the Law of a Recognised Legal Systemp. 185
Multiple Settlementsp. 186
Contracts and Trustsp. 186
Consent to the Choice of Law Clausep. 188
Choice of a Legal System minus its Mandatory Rulesp. 190
Implied Choice of Lawp. 191
Nature of Implied Choicep. 191
Implied Choice and the Law of Closest Connectionp. 194
Implied Choice and "The Circumstances of the Case"p. 196
The Settlor's Purpose--Implied Choice of a Law by which the Trust is Valid?p. 198
Common Law Authorities on Implied Choice and the Objective Proper Lawp. 198
Relevancep. 198
Testamentary Trustsp. 199
Inter Vivos Trustsp. 201
Implied Intention to Create a Valid Trust?p. 208
The Common Law Cases Evaluatedp. 209
Conclusions on Implied Choice of Lawp. 209
Which Law Determines whether a Choice can be Inferred?p. 212
Time for Ascertaining an Implied Choice of Lawp. 213
The Applicable Law in the Absence of Choicep. 215
Origin and Applicationp. 215
The Four Factors Consideredp. 218
Place of Administrationp. 218
The Situs of the Trust Assetsp. 220
The Place of Residence or Business of the Trusteep. 221
The Objects of the Trust and their Place of Fulfilmentp. 222
The Relevance of the Place of Residence of the Settlor and Beneficiariesp. 224
Testamentary Trustsp. 225
Objective Factors Pointing to a Non-Trust Statep. 226
Validity and the Law of Closest Connectionp. 227
Reflections on the Application of Article 7p. 227
Time for Assessing the Law of Closest Connectionp. 228
What if the Law of Closest Connection States that Certain Terms of the Trust are not Valid?p. 229
Law of Closest Connection and the Brussels Conventionp. 232
Scope of the Applicable Lawp. 233
Article 8(1)p. 233
Article 8(2)p. 235
The Appointment, Resignation and Removal of Trustees, the Capacity to Act as a Trustee and the Devolution of the Office of Trusteep. 235
Appointment and removalp. 235
Capacity of the trusteep. 237
The Rights and Duties of Trustees among Themselvesp. 239
The Right of Trustees to Delegate in Whole or in Part the Discharge of their Duties or the Exercise of their Powersp. 240
The Power of Trustees to Administer or to Dispose of Trust Assets, to Create Security Interests in the Trust Assets, or to Acquire New Assetsp. 241
Administrationp. 241
The trustee's power to deal with and acquire trust propertyp. 242
The Powers of Investment of Trusteesp. 243
Restrictions upon the Duration of the Trust, and upon the Power to Accumulate the Income of the Trustp. 244
The Relationships between the Trustees and the Beneficiaries including the Personal Liability of the Trustees to the Beneficiariesp. 245
Personal and vicarious liabilityp. 245
Who is a "beneficiary"?p. 245
Fiduciary duties owed by the trustee to the beneficiaryp. 246
Liability and remediesp. 253
Trustees' liability to third partiesp. 254
Third parties' liability to trustees: personal and proprietary claimsp. 254
The Variation or Termination of the Trustp. 256
Variation of trustsp. 256
Termination of trustsp. 270
Variation, termination and administrationp. 270
Distribution of the Trust Assetsp. 271
The Duty of Trustees to Account for their Administrationp. 271
Formal Validity of the Trustp. 272
The Need for a Choice of Law Rule to Determine the Formal Validity of a Trustp. 272
The Choice of Law Rulep. 274
Formation and Essential Validity of the Trustp. 276
Essential Validity of the Trustp. 276
Existence of the Trustp. 278
The Terms of the Trustp. 280
Splitting the Applicable Law; the Administration of Trustsp. 281
The Right to Split the Trustp. 281
Severable Parts of the Trustp. 282
Distinguishing Validity from Administrationp. 283
Splitting the Law in the Absence of Choicep. 289
Choice of the Law of a Non-Trust State to Govern Part of the Trustp. 289
Matters which Cannot be Controlled by the Terms of the Trustp. 290
The Administration and Validity of Charitable Purpose Trustsp. 291
Validityp. 291
Administrationp. 292
Settling a Charitable Scheme; the Cy-pres Doctrinep. 293
Non-Charitable Purpose Trustsp. 295
Changing the Applicable Lawp. 297
Motivation for, and Permissibility of a Change of Governing Lawp. 297
A New Law of Closest Connectionp. 298
Change of Law and Variation of Trustsp. 299
The Role of the Law Initially Governing the Trustp. 299
Particular Issues Relating to Change of Lawp. 301
Retrospective Changep. 301
Other Relevant Lawsp. 301
Severable Elements of the Trustp. 303
Changing the Law Applicable to a Charitable Purpose Trustp. 304
One Trust or Two?p. 304
Changes to the Content of the Law Applicable to the Trustp. 306
Determining and Changing the Place of Administrationp. 308
The Recognition of Trustsp. 311
The Need for Article 11p. 311
Article 11(2)--a Uniform Law?p. 313
The Specific Requirements of Recognition: Article 11(3)(a)-(c)p. 314
Uniform Law?p. 314
Trusts Assets and Claims against the Settlorp. 314
The Inter-Relationship of Articles 11, 15 and 16p. 315
Italian Courts and the Separate Fundp. 315
Does the Convention Require a Contracting State to Acknowledge the Separate Status of the Trust Assets from the Trustee's Personal Assets?p. 317
The Issuep. 317
Interpretation in Italyp. 319
The Netherlandsp. 319
Following and Tracing the Trust Assets: Article 11(3)(d)p. 321
The Dominance of the Law Governing the Trustp. 321
Third Parties and the Residual Role of the Conflicts Rules Designated by the Law of the Forump. 322
Tracing Trust Assets or their Value into a Mixed Fund Held by a Third Partyp. 323
The Position of Third Party Purchasers of Trust Property Acting in Good Faithp. 324
Consequences in the United Kingdomp. 326
Constructive Trusts and Third Parties; Proprietary Effects of the Convention; Application in The Netherlandsp. 326
Reflection on Article 11(3)(d)p. 329
"Translating" the Trust into Civil Law Systemsp. 330
Scope of Discussionp. 330
Possible Approachesp. 331
Contractual Approachesp. 331
The Trust as a Companyp. 332
Agency and Mandatep. 334
Testamentary Trusts and Powers of Revocationp. 335
The Hague Convention--the Death of Translationp. 335
Registration of the Trustp. 337
Registration Permissiblep. 337
Prohibition of Registrationp. 337
English Reactionp. 338
Registration in Italyp. 339
Facility or Obligation?p. 340
Right to Refuse Recognition to Trusts Objectively Connected to Non-trust Statesp. 341
The Purpose of Article 13: A Necessary Compromise?p. 341
The United Kingdomp. 342
Application of Article 13p. 343
Generalp. 343
"Significant Elements"p. 346
The Time Factorp. 348
Partial Recognitionp. 349
The Consequences of Non-recognitionp. 349
Application in Italian Courtsp. 350
Freedom to Adopt more Liberal Recognition Rulesp. 354
Preservation of Mandatory Rules in Related Areas of Lawp. 355
Functionp. 355
Nature of Mandatory Rulesp. 355
Domestic and International Mandatory Rulesp. 356
Characterisation, the Trust and Article 15: is Mutual Exclusivity Impossible?p. 357
Article 15 and the "Rocket-Launcher"p. 360
Must a Judge Apply the Mandatory Rules of the Law Designated by the Conflicts Rules of the Forum?p. 361
Application of Article 15p. 363
Particular Matters Specified in Article 15p. 363
The Protection of Minors and Incapable Partiesp. 363
The Personal and Proprietary Effects of Marriagep. 364
Succession Rights, Testate and Intestate, especially the Indefeasible Shares of Spouses and Relativesp. 365
Forced heirship and the law applicable to the trustp. 365
Types of forced heirship rulesp. 367
Claw-back claims and inter vivos trustsp. 368
Civilian perspectivep. 370
The offshore dimensionp. 371
Administration of estatesp. 373
The Transfer of Title to Property and Security Interests in Propertyp. 373
The Protection of Creditors in Matters of Insolvencyp. 376
The Protection, in other Respects, of Third Parties Acting in Good Faithp. 377
Article 15(2)--Otherwise Giving Effect to the Objects of the Trustp. 378
International Mandatory Rules of the Forump. 380
Scopep. 380
Article 16(2)--Mandatory Rules of a State of Close Connection; Exclusion in the United Kingdomp. 381
Determining whether a Rule has an International Mandatory Applicationp. 383
Interaction with Article 15p. 384
Do the Mandatory Rule Provisions of Articles 15 and 16 Fatally Undermine the Convention?p. 385
Exclusion of Renvoip. 387
The Case for Exclusion Evaluatedp. 387
Express Choice of a State's Private International Law Rulesp. 388
Renvoi and Related Areas of Lawp. 389
Public Policyp. 390
Scopep. 390
The Inter-Relationship of Articles 18 and 15p. 392
Public Policy of a State of Close Connectionp. 393
STAR Trustsp. 395
Exclusion of Fiscal Mattersp. 397
A Neutral Approachp. 397
The United Kingdomp. 397
Article 19 Not Enactedp. 397
Refusal to Enforce Foreign Revenue Lawsp. 398
Taxation and Civil Law Statesp. 399
General Commentp. 399
The Netherlandsp. 400
Italyp. 400
Right to Extend Convention to other Types of Trustp. 402
Right to Restrict Recognition to Trusts Governed by the Law of a Contracting Statep. 404
A Compromisep. 404
Time for Ascertaining the Contracting Status of the State whose Law is Applicablep. 405
Change of the Applicable Law from that of a Non-Contracting State to that of a Contracting Statep. 405
Time-frame of the Conventionp. 406
States Consisting of Several Territorial Unitsp. 409
Application of Convention between Territorial Units of a Statep. 410
The Permissibility and Desirability of Excluding the Convention's Application to Disputes between a State's Territorial Unitsp. 410
Intra-United Kingdom Conflictsp. 411
Relationship to other International Conventionsp. 412
Reservations to the Convention's Scopep. 414
Final Clauses--Chapter Vp. 414
Application of Article 26p. 414
Accession of Member Statesp. 415
Accession of Non-member Statesp. 416
Application of the Convention to Selected Territorial Units of a Statep. 417
Entry into Forcep. 418
Denouncing the Conventionp. 419
Notification Processp. 420
Signature Clausep. 420
Much Ado about Little?p. 421
The Criticisms Evaluatedp. 422
Looking Back and Looking Forwardp. 425
Conclusionp. 429
Conclusionp. 431
Table of Current Ratification Status of the Conventionp. 432
Appendicesp. 435
The Convention on the Law Applicable to Trusts and on Their Recognitionp. 435
The Recognition of Trusts Act 1987p. 443
The Explanatory Report to the Convention by Professor A von Overbeckp. 449
Bibliographyp. 497
Indexp. 511
Table of Contents provided by Syndetics. All Rights Reserved.

ISBN: 9781841131108
ISBN-10: 1841131105
Audience: BAC
Format: Hardcover
Language: English
Number Of Pages: 544
Published: 4th May 2002
Country of Publication: GB
Dimensions (cm): 24.7 x 16.5  x 3.8
Weight (kg): 0.99
Edition Number: 1