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Encyclopedia > Trusts (conflict)
Conflict of Laws
Preliminary matters
Characterisation  · Incidental question
Renvoi  · Choice of law
Conflict of Laws in the U.S.
Public policy  · Hague Conference
Definitional elements
State  · Jurisdiction  · Procedure
Forum non conveniens  · Lex causae
Lex fori  · Forum shopping
Lis alibi pendens
Connecting factors
Domicile  · Lex domicilii
Habitual residence
Nationality  · Lex patriae
Lex loci arbitri  · Lex situs
Lex loci contractus
Lex loci delicti commissi
Lex loci solutionis  · Proper law
Lex loci celebrationis
Choice of law clause
Forum selection clause
Substantive legal areas
Status  · Capacity  · Contract  · Tort
Marriage  · Nullity  · Divorce
Get divorce  · Talaq divorce
Property  · Succession
Trusts
Enforcement
Enforcement of foreign judgments

In Conflict of Laws, the Hague Convention on the Law Applicable to Trusts and on Their Recognition was concluded on 1 July 1985 and entered into force 1 January 1992. The Convention aims to harmonise not only the municipal law definitions of a trust both within the USA and outside the USA, but also the Conflict rules for resolving problems in the choice of the lex causae. Image File history File links Scale_of_justice. ... Private international law comprises provisions of national law regarding contracts and lawsuits involving foreign laws or jurisdictions. ... In Conflict of Laws, characterisation is the second stage in the procedure to resolve a lawsuit involving a foreign law element. ... In the Conflict of Laws, an incidental question is a legal issue that arises in connection with the major cause of action in a lawsuit. ... In Conflict of Laws, renvoi (from the French, meaning send back) is a subset of the choice of law rules and it is potentially to be applied whenever a forum court is directed to consider the law of another state. ... Choice of law is a concept within the field of the conflict of laws, relating to relationships between different nations, and in the United States between individual states. ... The choice of law rules in the Conflict of Laws in the United States have diverged from the traditional rules applied internationally. ... Public policy or ordre public is the body of fundamental principles that underpin the operation of legal systems in each state. ... The Hague Conference on Private International Law is the preeminent organisation in the area of private international law. ... For the purposes of Public International Law and Private International Law, a state is a defined group of people, living within defined territorial boundaries and subject, more or less, to an autonomous legal system exercising jurisdiction through properly constituted courts. ... In law, jurisdiction from the Latin jus, juris meaning law and dicere meaning to speak, is the practical authority granted to a formally constituted body or to a person to deal with and make pronouncements on legal matters and, by implication, to administer justice within a defined area of responsibility. ... In all lawsuits involving Conflict of Laws, questions of procedure as opposed to substance are always determined by the lex fori, i. ... Forum non conveniens is Latin for inconvenient forum or inappropriate forum. ... The lex causae is the Latin term for law of the case in the Conflict of Laws. ... Lex fori is a private international law doctrine meaning the law of the court in which proceedings are being conducted. ... Forum shopping is the informal name given to the practice adopted by some plaintiffs to get their legal case heard in the court thought most likely to provide a favourable judgment, or by some defendants who seek to have the case moved to a different court. ... The principle of lis alibi pendens applies both in municipal, public international law, and private international law to address the problem of potentially contradictory judgments. ... In Conflict of Laws, domicile (termed domicil in the U.S.) is the basis of the choice of law rule operating in the characterisation framework to define a persons status, capacity and rights. ... The lex domicilii is the Latin term for law of the domicile in the Conflict of Laws. ... In the Conflict of Laws, habitual residence is the standard civil law connecting factor used to select the lex causae in cases characterised as status, capacity and family law. ... In English usage, nationality is the legal relationship between a person and a country. ... The term lex patriae is Latin for the law of nationality in the Conflict of Laws which is the system of public law applied to any lawsuit where there is a choice to be made between several possibly relevant laws and a different result will be achieved depending on which... The lex loci arbitri is the Latin term for law of the place where arbitration is to take place in the Conflict of Laws. ... The term lex situs (Latin) refers to the law of the place in which property is situated for the purposes of the Conflict of laws. ... The lex loci contractus is the Latin term for law of the place where the contract is made in the Conflict of Laws. ... The lex loci delicti commissi is the Latin term for law of the place where the tort was committed in the Conflict of Laws. ... The lex loci solutionis is the Latin term for law of the place where relevant performance occurs in the Conflict of Laws. ... The Doctrine of the Proper Law is applied in the choice of law stage of a lawsuit involving the Conflict of Laws. ... The lex loci celebrationis is the Latin term for law of the place where the marriage is celebrated in the Conflict of Laws. ... A choice of law clause in a contract is one whereby the parties to that contract specify which law (i. ... A forum selection clause is a clause in a contract in which the parties agree that any litigation resulting from that contract will be brought in a specific forum. ... The capacity of both natural and artificial persons determines whether they may make binding amendments to their rights, duties and obligations, such as getting married or merging, entering into contracts, making gifts, or writing a valid will. ... In the Conflict of Laws, the validity of a contract with one or more foreign law elements will be decided by reference to the so-called proper law of the contract. ... In Conflict of Laws, the choice of law rule for tort is the proper law. ... In Conflict of Laws, the issue of marriage has assumed increasing public policy significance in a world of increasing multi-ethnic, multi-cultural community existence. ... In Conflict of Laws, the issue of nullity (known as annulment in the United States) in Family Law inspires a wide response among the laws of different states as to the circumstances in which a marriage will be valid, invalid or null. ... In modern society, the role of marriage and its termination through divorce have become political issues. ... For the religious process, see Get (divorce document) A get or gett (גט) is the Jewish form of divorce which, when one is available in the state of residence, is supervised by a Beth Din (בית דין), a rabbinical court. ... In Islamic Law, there are two forms of divorce known as the talaq and its less well-regulated version of triple talaq. ... In Conflict of Laws, the subject of Property Law follows the terminology of the civil law systems out of Comity. ... In the Conflict of Laws, the subject of succession deals with all procedural matters relevant to estates containing a foreign element whether that element consists of the identity of the deceased, those who may inherit or the location of property. ... In the Conflict of Laws, issues relevant to the enforcement of foreign judgments are frequently regulated by bilateral treaty or multilateral international convention to facilitate the reciprocal recognition and enforcement of judgments between states. ... Private international law comprises provisions of national law regarding contracts and lawsuits involving foreign laws or jurisdictions. ... The longtime status of Netherlands as a largely neutral nation in international conflicts and the corresponding ascendance of The Hague as a primary location for diplomatic and international conferences has led to several negotiated conventions over the years being termed the Hague Convention: The Hague Conventions of 1899 and 1907... In international law, harmonisation refers to the process by which different states adopt the same laws. ... For trusts in senses other than the legal sense, see trust; for the law of trusts in the USA see Trust (Law) USA. A trust is the legal term for a situation where one person, known as a trustee, holds assets for the benefit of another person, known as a... Choice of law is a concept within the field of the conflict of laws, relating to relationships between different nations, and in the United States between individual states. ... The lex causae is the Latin term for law of the case in the Conflict of Laws. ...

Contents


Explanation

Many states do not have a developed law of trusts, or the principles differ significantly between states. It was therefore necessary for the Hague Convention to define a trust to indicate the range of legal transactions regulated by the Convention and, perhaps more significantly, the range of applications not regulated. The definition offered in Article 2 is: For the purposes of Public International Law and Private International Law, a state is a defined group of people, living within defined territorial boundaries and subject, more or less, to an autonomous legal system exercising jurisdiction through properly constituted courts. ...

...the legal relationship created, inter vivos or on death, by a person, the settlor, when assets have been placed under the control of a trustee for the benefit of a beneficiary or for a specified purpose.
A trust has the following characteristics:
(a) the assets constitute a separate fund and are not a part of the trustee's own estate;
(b) title to the trust assets stands in the name of the trustee or in the name of another person on behalf of the trustee;
(c) the trustee has the power and the duty, in respect of which he is accountable, to manage, employ or dispose of the assets in accordance with the terms of the trust and the special duties imposed upon him by law. The reservation by the settlor of certain rights and powers, and the fact that the trustee may himself have rights as a beneficiary, are not necessarily inconsistent with the existence of a trust.

Article 3 provides that the Convention only applies to express trusts created voluntarily and evidenced in writing. It will therefore not cover oral trusts, resulting trusts, constructive trusts, statutory trusts or trusts created by judicial order. But signatory states are free to apply the Convention to any form of trust and the Recognition of Trusts Act 1987 has applied the provisions to all trusts arising under English law, no matter when or how they were created, albeit only applying the provisions to transactions affecting those trusts made after 1 August 1987. There are incidental question problems if the trust is testamentary and, under Article 4, if it is alleged that the testator lacked capacity, or that the will is formally or substantively invalid, or that it had been revoked, these issues must be determined first under the lex fori Conflict rules on characterisation and choice of law before the Convention rules can apply. This will include, for example, a detailed consideration of any marriage settlement or applicable law containing community property provisions which might prevent the testator alienating property from a spouse or child of the family (see succession (conflict)). Obviously, if the will purporting to create the trust is held invalid, there are no trusts to adjudicate upon. A living trust (or inter vivos trust) is a type of trust created for the purpose of holding ownership to an individuals assets during the persons lifetime, and for distributing those assets after death. ... The word trustee is a legal term that refers to a holder of property on behalf of some other beneficiary. ... A beneficiary in the broadest sense is a natural person or other legal entity who receives money or other benefits from a benefactor. ... Where property is passed to a person but no gift is made, it is held for the owner, this is the Resulting trust; where property should for some reason of public policy or fairness or rule of Equity be held for someone other than the legal owner, this is either... In common law legal systems, a trust is a relationship in which a person or entity (the trustee) has legal control over certain property (the trust property or trust corpus), but is bound by fiduciary duty to exercise that legal control for the benefit of someone else (the beneficiary), according... A constructive trust is a legal device used by courts sitting in equity to resolve claims raised by a plaintiff whose property has been converted to a profitable use by the defendant. ... English law is a formal term of art that describes the law for the time being in force in England and Wales. ... In the Conflict of Laws, an incidental question is a legal issue that arises in connection with the major cause of action in a lawsuit. ... A testator is a person who has made a legally binding will or testament, which specifies what is to be done with that persons family and/or property after death. ... The capacity of both natural and artificial persons determines whether they may make binding amendments to their rights, duties and obligations, such as getting married or merging, entering into contracts, making gifts, or writing a valid will. ... Lex fori is a private international law doctrine meaning the law of the court in which proceedings are being conducted. ... In Conflict of Laws, characterisation is the second stage in the procedure to resolve a lawsuit involving a foreign law element. ... Community property is a marital property regime that originated in civil law jurisdictions, and is now also found in some common law jurisdictions. ... Marriage is a relationship that plays a key role in the definition of many families. ... A female child A child (plural: children) is a young human, or someone who has not yet reached puberty (someone who is prepubescent). ... In the Conflict of Laws, the subject of succession deals with all procedural matters relevant to estates containing a foreign element whether that element consists of the identity of the deceased, those who may inherit or the location of property. ...


The applicable law

Article 6 allows the settlor to select the applicable law in the inter vivos or testamentary document. Under normal circumstances, the settlor will be acting on professional advice and will make an express selection or it will be implied from the facts of the case. But, under Actable 6(2), if the settlor selects a law with no relevant provisions or the provisions in the municipal law selected would be inappropriate, or there is no selection, Article 7 applies to select the law which is most closely connected with the transaction. This is judged by reference to four factors which are to be considered as at the time the putative trust is created:

  1. the place where the trust is to be administered;
  2. the place where the assets are to be found (for immovables, there is no problem — the lex situs is easily identified; for movables, the most common form is choses in action such as shares and bonds, and their location does not change (bearer bonds and other instruments where title is determined by mere possession are relatively uncommon), but for tangible assets, this will usually be the place where the assets are located at the time of the hearing given that this represents the place where any Court Order would have to be enforced: see property (conflict));
  3. the place where the trustee is resident or conducts his or her business;
  4. the place where the purpose or object of the trust is to be fulfilled.

Despite the identification of these four factors, the court must actually perform a rounded evaluation of all the circumstances. Thus, it would be relevant to consider the distribution of the assets if in separate states, the purpose of the trust (which might be the evasion of taxation or other provisions in some of the states where the assets are located), the lex domicilii or lex patriae of the settlor and the beneficiaries (particularly if the legal transaction is a marriage settlement or testamentary), the legal form of the document, and the law of the place where the document was executed (this latter factor may either be accidental and so of marginal value, or contrived to take advantage of a favourable law and so highly significant). The term lex situs (Latin) refers to the law of the place in which property is situated for the purposes of the Conflict of laws. ... A chose in action is an intangible personal property right recognised and protected by the law, which has no existence apart from the recognition given by the law, or which confers no present possession of a tangible object. ... In finance a share is a unit of account for various financial instruments including stocks, mutual funds, limited partnerships, and REITs. ... In finance, a bond is a debt security, in which the issuer owes the holders a debt and is obliged to repay the principal and interest (the coupon). ... A Bearer Bond is a legal certificate that usually represents a bond obligation of, or stock in, a corporation or some other intangible property. ... A court order is an official proclamation by a judge (or panel of judges) that defines the legal relationships between the parties before the court and requires or authorises the carrying out of certain steps by one or more parties to a case. ... In Conflict of Laws, the subject of Property Law follows the terminology of the civil law systems out of Comity. ... In law, the Doctrine of Evasion is a fundamental public policy. ... The lex domicilii is the Latin term for law of the domicile in the Conflict of Laws. ... The term lex patriae is Latin for the law of nationality in the Conflict of Laws which is the system of public law applied to any lawsuit where there is a choice to be made between several possibly relevant laws and a different result will be achieved depending on which...


The scope of the applicable law

Under Article 8, the law specified by Article 6 or 7 shall govern the validity of the trust, its construction, its effects, and the administration of the trust. In particular that law shall govern:

(a) the appointment, resignation and removal of trustees, the capacity to act as a trustee, and the devolution of the office of trustee;
(b) the rights and duties of trustees among themselves;
(c) the right of trustees to delegate in whole or in part the discharge of their duties or the exercise of their powers;
(d) the power of trustees to administer or to dispose of trust assets , to create security interests in the trust assets, or to acquire new assets;
(e) the powers of investment of trustees;
(f) restrictions upon the duration of the trust, and upon the power to accumulate the income of the trust;
(g) the relationships between the trustees and the beneficiaries including the personal liability of the trustees to the beneficiaries;
(h) the variation of termination of the trust (because variation is expressly within the scope of the Applicable Law, this may be a significant factor in any issue of forum non conveniens raised if an application to vary is made to a forum other than a forum of the Applicable Law);
(i) the distribution of the trust assets;
(j) the duty of trustees to account for their administration.

Forum non conveniens is Latin for inconvenient forum or inappropriate forum. ...

Severance

Articles 9 and 10 allow the Applicable Law by which the validity of the trust has been established, to sever aspects of the trust and its administration so that separate laws shall apply to each component. In fact, the settlor may expressly select an Applicable Law for each component and the forum court should respect his or her wishes. But, in general terms, it is desirable that a single law should be applied to the administration and the fact that there may be assets located in separate states should not, per se, justify severing the trust. The relevant lex situs can be applied to micromanage the asset(s) by the trustee(s) without having to apply the situs law to the administration of the trust in that state. Equally, this is not an argument for a judicial approach which favours the law of the place of administration as the Applicable Law. Although the administration must comply with the municipal laws for general purposes, the duty to honour the intentions of the settlor may make the law of the place where the most significant part of that intention is to be realised the most significant single law. This page includes English translations of several Latin phrases and abbreviations such as . ... The term lex situs (Latin) refers to the law of the place in which property is situated for the purposes of the Conflict of laws. ...


Recognition

Under Article 11, a trust complying with the Applicable Law shall be recognised as a trust which implies, as a minimum, that the trust property constitutes a separate fund, that the trustee may sue and be sued in his capacity as trustee, and that he or she may appear or act in this capacity before a notary or any person acting in an official capacity. In so far as the law applicable to the trust requires or provides, this recognition implies in particular: Civil law notaries are trained jurists who often receive the same training as advocating jurists — those with a legal education who become litigators such as barristers in England and Wales and Northern Ireland or avocats in France. ...

(a) that personal creditors of the trustee shall have no recourse against the trust assets;
(b) that the trust assets shall not form part of the trustee's estate upon his insolvency or bankruptcy;
(c) that the trust assets shall not form part of the matrimonial property of the trustee or his spouse nor part of the trustee's estate upon his death;
(d) that the trust assets may be recovered when the trustee, in breach of trust, has mingled trust assets with his own property or has alienated trust assets.

However, the rights and obligations of any third party holder of the assets shall remain subject to the law determined by the choice of law rules of the lex fori. Thus, although the Convention makes provision for the trustee(s) and any third parties, it fails to address the position of the beneficiaries who, for example, might wish to pursue assets intermixed with the trustee's personal property through actions for tracing. One of the problems that beneficiaries might encounter is addressed in Article 12 which considers the problem where the situs law does not have a title registration system which reflects ownership registration in a representative capacity. While recognising that the Convention cannot require states to modify their existing registers, it provides that the trustee shall be entitled, in so far as this is not prohibited by or inconsistent with the law of the State where registration is sought, to do so in his capacity as trustee or in such other way that the existence of the trust is disclosed. This implicitly recognises the desirability of all registration systems distinguishing between beneficial and representative titles. This article is in need of attention. ... Notice of closure stuck on the door of a computer store the day after its parent company, Granville Technology Group Ltd, declared bankruptcy (strictly, administration - see text) in the UK. Bankruptcy is a legally declared inability or impairment of ability of an individual or organization to pay their creditors. ... Marriage is a relationship that plays a key role in the definition of many families. ...


This general difficulty of municipal laws failure to support trusts is addressed in Article 13, which considers the situation of those who wish to create a trust but can only do so by invoking laws entirely outside their own state. As an application of comity, no forum state is bound to recognise a trust the significant elements of which, except for the choice of the applicable law, the place of administration and the habitual residence of the trustee, are more closely connected with States which do not have the institution of the trust or the category of trust involved. But, because this could be interpreted as an invitation not to validate otherwise perfectly appropriate financial arrangements for deserving beneficiaries, Article 14 provides that the Convention shall not prevent the application of rules of law more favourable to the recognition of trusts. This reflects the positive rules of public policy which require that the validity of a transaction (whether commercial or not) be upheld if at all possible where this will give effect to the reasonable expectations of the parties. The only exceptions shall be where this will produce consequences offending against the mandatory policies of the forum court in which case Article 18 empowers the court to deny the Applicable Law, even if it has been expressly selected by the settlor. But Article 15(2) nevertheless requires the forum court to consider adopting an approach that will preserve the overall validity of the trust insofar as that generality does not offend against the mandatory policy. Comity is a term used in international law (and in the law governing relations between U.S. states) to describe an informal principle that nations will extend certain courtesies to other nations, particularly by recognizing the validity and effect of their executive, legislative, and judicial acts. ... In the Conflict of Laws, habitual residence is the standard civil law connecting factor used to select the lex causae in cases characterised as status, capacity and family law. ... Public policy or ordre public is the body of fundamental principles that underpin the operation of legal systems in each state. ...


 
 

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