Research On The Hague Convention On The Law Applicable To Trusts And On Their Recognition

Originating from the common law tradition in England,the trust legal system has spread all over the world both in civil law and common law countries.In today's society where economic globalization and people mobility are more free,more and more centuries are transplanting the trust law or designing trust law with their characterizes,whether it is the world's major economy or the traditional offshore jurisdictions,no countries can deny that trust institution play a very important role in the national asset allocation,attracting international capital and facilitating cross-border investment,or that trust institution act as the legal basis for special investment vehicles around the world.It is undeniable that the trust has developed into a worldwide legal mechanism.Although the common law based trust model shows the trend of convergence in the legislation of all countries,it is still inevitable that conflicts of laws applied to trusts and obstacles to characterization or recognition of trust would arise in the cross-border trusts and legal relationships,based on the differences between legal systems.Under the circumstances of economic globalization and the great liberalization of the financial industry,the trust has also embarked on an international path of development.The trust gradually has the characteristics of becoming beyond the borders of all countries.The trust urgently needs the effect of global mobility under the premise of recognition by other countries.In today's international community,which respects the participation of private international law in global governance,it is a good solution to formulate international conventions and international norms governing trusts.Convention of 1 July 1985 on the Law Applicable to Trusts and on their Recognition(hereinafter referred to as the "the Convention")came into being as a benchmark for conflict of trust rules and recognition of international harmonization.The Convention has filled in the blank space for international legislation of conflict of laws for trusts,and provided a set of application of laws and recognition of trust rules for many countries with or without trust legal system,also promoted trust mechanism to be widely used and recognized in the world.Under the great background of the globalization of economic activities,and in the reality of the convergence of international trust legislations and the growing demand for international trust mobility,this Article starts from studying the Convention from the perspective of global governance by private laws,combining with the formulation and negotiation proceeding of the Convention.Then this Article deeply studies the scope of application of the Convention and the choice of law rules and the recognition rules of the trust.And then,fourteen States which has ratified or accessed to the Hague Trust Convention were closely examined on their trust laws and conflict of law rules for trusts.Finally,this Article analyzes the status quo of legislative and judicial practice in China's foreign-related trusts and probes into the feasibility and necessity of our country's ratification of the Hague Trusts Convention.This Article consists of three parts,the introduction,the text and the conclusion.The text is divided into seven chapters.Chapter I "The Trust under the Background of Globalization of Trust and Global Private Law Governance" studied the historical evolution of the trust legal system originated from the common law tradition in England,and in the globalization of economic and financial activities,whether civil law countries or mixed legal system countries,from European continent to Latin America,are trying to transplant the common law trust model to their own legal system.Although the legislation of substantive law of trust in each country tends to be the same or similar,they still cannot avoid the legal conflict and recognition of the trust relationships with international factors.Under this background,the unified private international law instruments represented by the Convention play an important role in global governance.This Chapter then introduces the proximate and distant cause of the conclusion of the Convention and the proceeding of the Convention,and at the same time it describes the developing trends of the Hague Trust Convention in the 21 st Century.Chapter II "Scope of the Convention" examines the types of international trusts governed by the Convention,and the types of trust covered by the Convention are mainly examined in terms of form and substance.Because of the wide variety types of common law trusts,this Chapter also examines the types of trusts that are not covered byte Convention.In the light of the fact that the Convention excludes the judicially created trusts which are commonly used in common law jurisdictions,this Chapter also analyzes the logic of the Convention excluding judicially created trusts based on the negotiation literature and national practices.To determine the scope of application of the Convention,the characterization of international trusts is the most important issue,so this chapter explores whether the Convention's description of trust characteristics can constitute an exclusive basis for the identification of trust relations.The second is whether the preliminary matters of the trust can be covered,although it is clear that the Convention precludes its application to preliminary matters,but this chapter also discusses in depth some of the theoretical controversies concerning preliminary matters.Chapter III "Choice of the Applicable Law of the Convention" has studied the choice of applicable law for which is one of the main contents of the Convention.The Convention adopts the new viewpoints and principles since the revolution of the conflict of law in America and European states.The first is the principle of the Settlor Autonomy of choice of trust law,from the starting point of the principle of autonomy,this Article studies the theoretical logic and the rules of express and implied choice of law stipulated in the Convention.At the same time,it also discusses whether the principle of autonomy is limited by the objective factors of the trust,which is controverter fiercely in the negotiation process of the conference.The second is the application of the principle of the law of closest connection.The time factors of the trust from creation to duration and the four factors from the places where the trust property is managed or located,the residence of the trustee and the purpose of the trust,are respectively discussed.In addition,the application of this principle to testamentary trusts which are not valued by the Convention has also been discussed.The third issue is the scope of the applicable law.Governing law of the trust should adjust the validity,its construction,its effects and administration of the trusts,particularly the ten matters listed in the Convention.Since this issue involves the contents of the trust substantive law such as trust administration and is also a controversy in international trust relations,it is necessary to conduct in-depth discussions on the foundation of trust and structure so as to correctly understand the meaning of the provisions of the Convention.The fourth is the principle of dépe?age,which offers considerable flexibility in the application of the law.This Chapter,starting from the dépe?age theories and controversies,explores the different parts of trust with different legal relationships that can be splitted and governed by different laws and even in the circumstance of absence of choice of law,and distinguishes between the validity of the trust and other aspects of the trusts.This Chapter also discusses matters which cannot be controlled by the terms of the trust.Finally,changing the applicable law of the trust,which has great divergences during the negotiation in the Hague conference,can change the applicable law of the trust during its existence,this means the changing can "move" the trust beyond the border of a country and also enable the parties to choose the jurisdiction for the trust.This Chapter explores the jurisprudence of the changing applicable law,and analyzes the prominent problems such as the law initially applied to the trust and the modification of the legal contents during the existence of the trust,based on some countries allow the law of the applicable law to be changed.Inter alia,some issues as retrospective effect and relationship with other laws and the principle of dépe?age in the changing applicable law.Chapter IV "Exclusions and Reservations to the Hague Convention" discusses the circumstances where the Convention is excluded.First of all,the Convention could be excluded in the light of the fact that the law designed by the conflicts rules which do not have the institution of the trust or the category of trust involved.Secondly,in order to obtain the ratification of more countries,the Convention stipulates the application of mandatory rules and the direct applicable law,the reservation of public policy and the sovereign immunity of fiscal and taxation.Starting from the proceeding of the conference and controversial points,this Chapter discusses in depth the legislation process of these exclusion rules and the implementation in various countries.Finally,this Chapter discusses the provisions that allow States parties to declare reservations,including the provisions extending the Convention to the judicial created trust which is familiar to common law countries and unfamiliar to civil law countries,and the provisions restricting the recognition of trusts,and provisions reserving whether retroactively apply the Convention to the previous created trusts,and provisions reserving whether apply the Convention to part of territories by States consisting of several territorial units.Chapter V "The Recognition of Trust " is the other aspect of the study of the Convention.The recognition of the trust is the prerequisite for the trust globally mobility and the correct application of the law.The recognition of the trust is different from the recognition of foreign judgments and has unique logic.This Chapter first explores the legal implications of the intent of international trust recognition,its distinction from other conventions on "recognition".The Convention provides minimum standards and specific requirements of recognition.Secondly,it explores the legislative purpose of denial of recognition provisions and the background and proceeding of the conference for such provisions.This Chapter also introduces the practice of these refusal provisions in Britain and Italy.Finally,a brief sample of the trust registrations under the Convention was drawn from the examples in Italy,the Netherlands and the United Kingdom.Chapter VI "The Convention implemented in the Contracting States " introduces the implementation of the Convention in the fourteen countries from the aspects of their legislation,administration and judicature.The Convention currently has a total of 14 contracting states,including common law jurisdictions in Britain,Australia,Canada and Hong Kong,and civil law countries of Italy,the Netherlands,Switzerland,Luxembourg and Malta,as well as mixed legal system countries of Cyprus,San Marino,Liechtenstein,Monaco and Panama.These countries are distributed in Europe,Asia,American and Oceania,some are major economies in today's world and some are traditional and emerging offshore financial centers.Some countries have their own trust legal systems or similar institutions before ratifying the Convention,and some states transplants the trust law while ratifying the Convention,but some states still remains the status without domestic trust law when they ratify the Convention.The implementation of the Convention in these countries varies from one case to another.In this Chapter,the implementations of the Convention in the above jurisdictions have been discussed one by one.Chapter VII "The Convention and the System of Trust Conflict Law of China" put forward the feasibility and necessity of ratifying the Convention on the basis of an analysis of the status quo of the legislative and judicial practice in our country's foreign related trusts.The flaw in the substantive law of trust and the simplicity of application law of trust,leading to our country neither the substantive law or the application law can meet the demands from economic globalization and trust internationalization,not to mention the challenges of attracting global capital under the great background of the liberalization of global finance,as well as the challenge of jurisdictions competition initiated by various countries.If the trust law and application rules are not consummated in time,the probability of our country's trust law being selected or being applied in the international trust would be greatly reduced.This Chapter argues that our country can strengthen its international exchange with the Hague Conference on Private International Law and other states parties to the Convention through the study of the legislative achievements of the Convention and gain experience in the international trust legislation and practice.It can also strengthen the research of the Convention by signing or ratifying it,leading to improve the theoretical and practical level of China's trust law and conflict of laws rules,and also leading to force the domestic legislative bodies to amend the substantive law and conflict rules in order to follow the development trend of trust globalization in the 21 st century.This Chapter elaborates the feasibility of ratifying the Convention from the compatibility between the Convention and our country's trust substantive law,applicable law and fiscal and tax laws.From the current characteristics of multi-jurisdictions in our country and the establishment of China(Shanghai)Pilot Free Trade Zone,this Chapter discusses the applicability of the Convention in China.It also explored the necessity of ratifying the Convention from the point of view of global jurisdictions competition and promotion improvement of the domestic substantive trust law and conflict rules.Particularly,In the context of the Hague Convention of 30 June 2005 on Choice of Court Agreements was signatured by our state,ratification of the Covenant is even more necessary for our country.