Luxembourg

Abstract

Luxembourg's fiduciary contract—or ‘fiducie’—under the Grand-Ducal Regulation of 19 July 1983 on Fiduciary Contracts with Credit Institutions was one of the first attempts to the regulation of a fiduciary relationship in the context of a civil law system and certainly a unique move within the framework of the French Code Civil. Indeed, the definition of a ‘trust’ under Article 2 of the Hague Convention on the Law Applicable to Trusts and on their Recognition of 1 July 1985 was to some extent foreseen in Luxembourg's domestic institution which predated the Hague Convention by 2 years and provided an outstanding example of a trust-like arrangement outside of the equitable jurisprudence. Under a relatively laborious Bill that took nearly 4 years to be adopted by the ordinarily swifter Luxembourg Parliament, the Grand-Duchy ratified the Hague Trusts Convention and updated the corresponding domestic institution. As a result of the Law of 27 July 2003 relating to Trusts and Fiduciary Contracts, which came into force on 1 January 2004, the previous Grand-Ducal Regulation of 1983 was repealed and a new, strengthened notion of fiduciary contract was made available to Luxembourg practitioners. In fact, to some of them only: the Luxembourg fiduciary contract, which in this respect can be seen as a model for France's recently enacted ‘fiducie’, is restricted to banks and financial intermediaries in the context of corporate transactions (as opposed to family set-ups).