The Analysis Of Applicable Laws Of Foreign Trust Relationship

Trust is a very special instrument towards which Common law countries and Civil law countries never made an agreement. But the international trust happens easily as well as England expanded with Scotland. Right now, the different idea and substantive laws of trust in the two law system results the conflict about the recognition, the validity, the administration of an international trust arrangement. Together with the highly developed economy, the conflict of laws happens more easily and quickly. The convention on the law applicable to trusts and on their recognition is a compromise actually, which means we need more than the Convention.A court maybe confronted with the validity of a trust, the administration of a trust, and the interpretations of a trust basically. Among all the maters in dispute, the validity of a trust is really a starting point of researching the applicable law of trusts, considering that with no validity there should be no space and move for the court and an America court could just approve a motion of dismiss.A Inter vivos trust is a trust that is created and becomes effective during the lifetime of the settler. The courts in Common law countries are more likely to adopt “the policy of giving effect to the settlor’s intention”, or the doctrine of “giving effect to a trust”. Guided by the policy or doctrine, the Proper-law method and Segmentation 2 method can be used together to solve the disputes. For example, as a severable aspect of the trust, while choosing the applicable law governing the administration of the trust, Proper-law method, which always contains the doctrines of lex voluntatis and the most connected will handle find the most appropriate law to govern such matter. Besides, with the condition that the trust property is real estate or other immovable property, based on the principles of Comity and their property-distinguish system, Common law countries prefer the strict lex loci situs for the validity of the trust. For the administration and the supplementary construction, the settlor is allowed to decide the applicable law and the court will try to find his intention. Sometimes, the law directed by the conflict laws of the loci situs will apply. The rules of applicable laws for personalty are not so rigescent. According to Rule 120 of the conflict of laws, Proper-law would ensure the whole trust governed under a sole law directed by the parties’ autonomy or the doctrine of the most-related connection. Similar, American court will consider the law chosen by the party and the law most-related to the subject in practice. To locate the most-related place, there is a trend that the court prefers the administration place of a trust.The concept of inter vivos never shows up in Civil law countries. To analysis the application of that, the Germany dichotomy doctrine and Japanese scholars’ theory matter a lot. The Germany dichotomy doctrine divides an inter vivos trust into debts of contracts and transmission of properties. For the law governing the debts of contracts, articles in EGBGB and Regulation(EC) No. 593/2008 of the European parliament and of the Council of 17 June 2008 on the Law Applicable to Contractual Obligations(“Rome I”)established the principle of lex voluntatis excepted the special rules for the assignment contracts of real property. As there are inter vivos trust of personalty and real estate, the applicable law for transfer of property counts a lot. The Germany law provided the lex loci situs for inter vivos trusts of real estate. The validity of formation of inter vivos trusts of personalty may become very important and there are more sof t rules besides the lex loci situs doctrine. Though that Japanese scholar prefers the trust in Common law system and holds that no distinguish of ownership and debts, the Japanese Legislation and Act on General Rules for Application of Laws both stress the transfer and registration of real property.The convention on the law applicable to trusts and on their recognition left the problem of transfer of trust property away and contained the Proper-law method and the Segmentation method.The testamentary trusts are trust that do not become effective until after the death of the settlor. Common law countries’ law will consider the validity of a testament and the validity of a trust at the same time. As a prerequisite issue, the courts in Anglo-Saxon countries will examine the legal formation’s governing law related to the testator’s capacity and effectiveness in the form of wills and alike. Besides, the courts will try their best to effective the testament. According to the Rule 118 of conflict of laws, the object and substantial validity of testamentary trusts of the immovable are governed by the lex loci situs. And Rule 117 of conflict of laws chose the law of the domicile of the testator when he death to govern the object and substantial validity of testamentary trusts of the movable. The testator could choose the governing law according to Rule 119, and if no choice, the law of the testator domicile would apply. The conflict laws towards the real property are same in the inter vivos and testamentary trusts, which emphasis on the lex loci situs. But the conflict law of testamentary trust of the movable contains no Closest Contact Doctrine, which differs from the conflict law of inter vivos trust of the movable contains. According to Article268, Article269, Article271, the law chosen by the testator and, if no choice, the law of the testator domicile would apply.Civil law courts’ approach to testamentary trust is completely different from common law courts, where the Civil law tends to treat a testamentary trust as a special arrangement in will. Thus, the applicable rules of inheritance and intestacy laws should be used to deal with the international testamentary trust problem. In addition, the combination of testamentary trust with dynastic executorships in civil law countries is a suitable method. Thus, in the case of testamentary trusts, civil law countries’ "simplified policy" is actually a completely overlook the value of the trust system. In German, the rights and obligations of a testamentary trust trustee and dynastic executor are almost the same of distribution and processing heritage based on the testator’s instructions. Japan has alternative "replacement will living trusts". Both two countries will give special consideration to the legal rules applicable to wills in the analysis of the application of testamentary trust. Therefore, in the study of civil law’s applicable laws of testamentary trust only temporarily remain within the scope of the will. Articles in EGBGB, which are Article25 and Article 26 provides the applicable law on succession and wills. In Japan, Article 26, Article 27 of the Japanese Legislation, the Applicable Law to Way of Wills and Article 36, Article 37 of Act on General Rules for Application of Laws provides the applicable law on succession and wills. In fact, Germany and Japan have established a unitary system of rules of succession with no distinguish of movable and immovable property. However, wills on real estate have a special and rigid connection point of loci situs. In the case of movable testamentary trust, the connections are relatively flexible.The convention on the law applicable to trusts and on their recognition gives up on provisions about the validity of the will as a precedent issue, and therefore space for discussion will once again be confined to the Proper-law method and segmentation method.Since the establishment of the Trust Law in 2001 until the enact of Applicable Law of Foreign-Related Civil Relations in 2011, the applicable law of foreign trust relationship officially comes into people’s eyes. However, the Article 17 is too vague and weak. Even the Performance Principles established in the civil legislation in early years are not included. It also does not include testamentary trust. This will allow the article unable to be adapted to the specific, complex trusts conflict. This can be attributed to the trust system in our country, which is still difficult to qualitative, and the basic concepts of trust and property rights, the trust and the trust contract, are still wavering. In this case, I believe, to establish a scientific system of foreign trust law applicable rules, we should(1) clarify the value and kinetic positioning of Trust, here we can refer to Japan changes in legislation, and(2) confirm the special value of testamentary trust, rather than just a passing Trust law with no practice or theory, and(3) integrate the use of the Proper-law method and the Segmentation method together. If necessary, depending on the nature of the trust property, use the different appropriate legal rules.