Trust law in civil law jurisdictions

Last updated August 03, 2019

Trust law is not part of most civil law jurisdictions , but is a common figure in most common law system (and thus in most Commonwealth jurisdictions). Trust law enters civilian jurisdictions through conflict of law arrangements recognizing it as a matter of private international law and has been implemented in the civil code of certain countries such as Liechtenstein and Curaçao.

Trust law three-party fiduciary relationship

A trust is a three-party fiduciary relationship in which the first party, the trustor or settlor, transfers ("settles") a property upon the second party for the benefit of the third party, the beneficiary.

Civil law, or civilian law, is a legal system originating in Europe, intellectualized within the framework of Roman law, the main feature of which is that its core principles are codified into a referable system which serves as the primary source of law. This can be contrasted with common law systems, the intellectual framework of which comes from judge-made decisional law, and gives precedential authority to prior court decisions, on the principle that it is unfair to treat similar facts differently on different occasions.

In law, common law is that body of law derived from judicial decisions of courts and similar tribunals. The defining characteristic of “common law” is that it arises as precedent. In cases where the parties disagree on what the law is, a common law court looks to past precedential decisions of relevant courts, and synthesizes the principles of those past cases as applicable to the current facts. If a similar dispute has been resolved in the past, the court is usually bound to follow the reasoning used in the prior decision. If, however, the court finds that the current dispute is fundamentally distinct from all previous cases, and legislative statutes are either silent or ambiguous on the question, judges have the authority and duty to resolve the issue. The court states an opinion that gives reasons for the decision, and those reasons agglomerate with past decisions as precedent to bind future judges and litigants. Common law, as the body of law made by judges, stands in contrast to and on equal footing with statutes which are adopted through the legislative process, and regulations which are promulgated by the executive branch. Stare decisis, the principle that cases should be decided according to consistent principled rules so that similar facts will yield similar results, lies at the heart of all common law systems.

Conflict of laws

Sometimes, in a civil law jurisdiction, a foreign trust is involved. This recognition often involves "translating" the trust's characteristics into legal concepts that do exist within the civil law country. With the accession of the United Kingdom to the European Community, the trust entered Community Law; the law of the member state where the trust is constituted (the situs) is designated as the applicable law (the law that must be followed) in member states.^[1] Certain trusts must be recognized by parties to the Hague Trust Convention (amongst which the civil law countries Italy, Liechtenstein, Luxembourg, the Netherlands and Switzerland) if they are following certain requirements: the trust must be an express trust reduced to writing.^[2]

The Hague Convention on the Law Applicable to Trusts and on their Recognition, or Hague Trust Convention is a multilateral treaty developed by the Hague Conference on Private International Law on the Law Applicable to Trusts. It concluded on 1 July 1985, entered into force 1 January 1992, and is as of September 2017 ratified by 14 countries. The Convention uses a harmonised definition of a trust, which are the subject of the convention and sets Conflict rules for resolving problems in the choice of the applicable law. The key provisions of the Convention are:

An express trust is a trust created "in express terms, and usually in writing, as distinguished from one inferred by the law from the conduct or dealings of the parties." Property is transferred by a person to a transferee, who holds the property for the benefit of one or more persons, called beneficiaries. The trustee may distribute the property, or the income from that property, to the beneficiaries. Express trusts are frequently used in common law jurisdictions as methods of wealth preservation or enhancement.

Curaçao, Sint Maarten and Liechtenstein

The Curaçao trust and Sint Maarten trust exist since 1 January 2012 and 1 April 2014 respectively. They enable creation of trusts in the jurisdiction of Curaçao/Sint Maarten, when constituted by notarial instrument.^[3] The legislation is similar as it is based on a legislative act proposed for the Netherlands Antilles, and which was adopted in both jurisdictions separately after the dissolution of the Netherlands Antilles.

Civil-law notaries, or Latin notaries, are agents of noncontentious private civil law who draft, take, and record instruments for private parties and are vested as public officers with the authentication power of the State. As opposed to most notaries public, their common-law counterparts, civil-law notaries are highly trained, licensed practitioners providing a range of regulated services, and whereas they hold a public office, they nonetheless operate usually—but not always—in private practice and are paid on a fee-for-service basis. They often receive the same education as attorneys at civil law but without qualifications in advocacy, procedural law, or the law of evidence, somewhat comparable to solicitor training in certain common-law countries.

An act is an instrument that records a fact or something that has been said, done, or agreed. Acts generally take the form of legal instruments of writing that have probative value and executory force. They are usually accepted as self-authenticating demonstrative evidence in court proceedings, though with the precarious status of notaries public and their acts under common law, this is not always so.

The Netherlands Antilles was a constituent country of the Kingdom of the Netherlands. The country consisted of several island territories located in the Caribbean Sea. The islands were also informally known as the Dutch Antilles. The country came into being in 1954 as the autonomous successor of the Dutch colony of Curaçao and Dependencies, and was dissolved in 2010. The former Dutch colony of Surinam, although it was relatively close by on the continent of South America, did not become part of Netherlands Antilles but became a separate autonomous country in 1954. All the island territories that belonged to the Netherlands Antilles remain part of the kingdom today, although the legal status of each differs. As a group they are still commonly called the Dutch Caribbean, regardless of their legal status.

The Liechtenstein trust requires a written agreement and registration on a trusts registry, which will not be publicly available if it is registered within 12 months. Later registrations require the registration in public record of the trustee's name, and certain details of the trust.^[4]

Czech Republic

The Czech Republic trust exists since 1 January 2014 and is based on Quebec Civil Code regulation.

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References

↑ C.D. van Boeschoten. "het Haags trustverdrag in Nederlands persectief" (PDF). vereniging voor burgerlijk recht (in Dutch). Retrieved 14 September 2012.
↑ "Status Table: 30: Convention of 1 July 1985 on the Law Applicable to Trusts and on their Recognition". Hague Conference on Private International Law . Retrieved 14 September 2012.
↑ M. Bergervoet and D.S. Mansur (14 April 2012). "De Curaçaose trust in de partijk" (PDF). Weekblad voor Privaatrecht, Notariaat en Registratie (in Dutch).
↑ "Liechtenstein trusts". Envisage Wealth Management Systems. Retrieved 14 September 2012.

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[1] C.D. van Boeschoten. "het Haags trustverdrag in Nederlands persectief" (PDF). vereniging voor burgerlijk recht (in Dutch). Retrieved 14 September 2012.

[2] "Status Table: 30: Convention of 1 July 1985 on the Law Applicable to Trusts and on their Recognition". Hague Conference on Private International Law . Retrieved 14 September 2012.

[3] M. Bergervoet and D.S. Mansur (14 April 2012). "De Curaçaose trust in de partijk" (PDF). Weekblad voor Privaatrecht, Notariaat en Registratie (in Dutch).

[4] "Liechtenstein trusts". Envisage Wealth Management Systems. Retrieved 14 September 2012.