Research On The Application Of Law Of Off-Shore Trust

Modern Trust originated in Britain, and is prevalent in the common law countries, but in civil law countries, many countries are still not quite familiar with the trust legal system. It is a modern property management system which has property as the core, credit as the basis and commission as the manner. Also, it is a clever design to transfer and manage possessions and has strong adaptability and a wide range of social functions.Legal systems have borders, but human societies often have cross-border economical exchanges. The activities that people manage and transfer possessions are not only within the same country. Accompanied by these cross-border economical exchanges, many legal conflicts happen and the law stipulations become more complex. It has become more necessary to study the law application of off-shore trust when the complicated trust is across the national boundary.The article is divided into four chapters, the first chapter overviews the emergence and development of the off-shore trust and the law conflicts. This chapter is organized from two aspects. The first aspect is about the emergence, development and functions of off-shore trust. More efforts are on these particular functions such as property protection and tax saving. The second aspect gives a detailed analysis about the law conflicts and their appearance. These conflicts are about trust property, rights and obligations and etc. Since the 20th century, the degree of law conflicts is becoming lesser. However, due to the two legal systems derived from different historical conditions, it is destined that the law conflicts in trust will last for a long period of time.Facing the law conflicts, the problem of how to apply the law has been put on the agenda. The second chapter discusses the general principles and foreign legal practice of law application. Because the trust comes international, scholars from many different countries did a lot of research on this topic. Three principles are generally accepted by most Jurists worldwide. The three principles are: principle of party autonomy, principle of independence and principle of division. In light of the two legal systems have much difference in the law application of off-shore trust. So the article separately discusses the two different situations of law application. In the common law , the law application is divided into the trust management, supplementary interpretation and the transfer of trust interests, etc. Different laws apply to different aspects. Through the classification of the different nature of off-shore trust, it is applied to different law application rules. While in the civil law, that the division of ownership is forbidden, strong conflicts have happened between the two legal systems. At the same time, the recognition of trust is facing many challenges. And the rules of law application are quite different. This chapter only selects German as a representative country and makes a deep formulation about the law application.The third chapter introduces the background of"Hague Convention on the Law Applicable to Trusts and on Their Recognition"and makes analysis to the rule in the convention. To ease the law conflicts and make sure that the verdicts is stable and anticipatable ,after years of hard working, the 15th Hague Conference on Private International Law in 1984 passed the"Hague Convention on the Law Applicable to Trusts and on Their Recognition"after years of hard working,. The main aim of the convention is to provide a set of new rules of law application of off-shore trust. In this way the expectation of law application is guaranteed and the legal order becomes more coordinated. And the application rules become internationalization and the judges have guard lines to apply the law. In the convention, the application of the international trust law can be determined in accordance with the principle of party intention. If the applicable law is without a choice, we should use the law which is most closely linked to it. The purpose is to be generally recognized by all countries in the world. So the trust system is given a full play to show its strong flexibility. This chapter also analyzed these rules one by one, such as law application, recognition of trust and etc. Through these analysis, the law application rules in the convention are effective and explicit.In the fourth chapter, there is an analysis on the way how our country should solve the existing problems of conflict of off-shore trust laws and policies. For one thing,"Trust Law"needs to improve the application part for off-shore trust conflict as there is only a blank. The Article 91 of"Model Law on Private International Law"states:"The application of the trust law, firstly use the principle of party intension to choose the law. The privy's choice, should be in written form. Secondly, if the parties have not made a choice, then use the most closely linked principle to determine the applicable law.""Model Law"is similar to the"Hague Convention",The article points out that we should boldly absorb the outstanding and mature international legislation; On the other hand, in order to make China's rules of private international law consistent with the international community, in my view, at the same time to improve the application of Trust Law in the domestic legislation, it is also necessary to join in the"Hague Convention". The definition of trust in the convention not only contains the definition of trust in common law but also in the civil law. Such compatibility that the convention owns provides a premise for China to join the convention. At the same time Chinese Trust Law paves the way and provides a good condition for China. In addition, the definition in the two law documents has something similar. This point makes a good legal foundation for us to join the convention. So the law application of the off-shore trust in China Trust Law has a linkage to the Hague Convention.