Recognition of a Trust as a Specific Problem in Private International Law

Abstract

Recognition of a trust as a legal institution established under foreign legal order is quite remarkable per se because the objective law governs the recognition with exception of the application of the law governing the personal issues. The recognition of a legal institution is a reaction to the ancient theory under which a legal institution may have foreseen legal consequences only in the territory of a country under who’s law it was established. The aim of the recognition of a trust is to allow it to develop its functions under its governing law in the legal context of a country of recognition. This requires to recognize it in terms of transposition of all possible effects enumerated for instance in Article 11 (2) and 3 of The Hague Convention on the law applicable to trusts and on their recognition into the other legal system. This aim should be achieved by transformation into similar legal institution of the country of recognition. The process of recognition faces with two major problems: Depeçage and conflict with the mandatory laws including the legal rule of so called ordre public of the country of recognition. These problems have to be overcome by mainly two instruments, namely qualification (classification) and adaptation which often go hand in hand and are understood and applied in substantive legal sense. The results based on comparative analysis focused on one international treaty and five national laws lead to optimistic results. There is an evident trend towards an amicable understanding of trust the prevalent consensus on the possibility to have a trust governed by foreign law even in the complete absence of the trust regulations in the domestic legal order is of a great relevance. A connection to a trust governed by the foreign law should be single. A single law applicable to the trust should notably govern the trustees’ duties, rights of beneficiaries, trustees’ liability and legal relationships between the trustee and trust creditors. The content and objective as well as the nature of the respective trust shall be undoubtedly decisive. The issues of capacity and of the form of the trust are to be connected differently.