Trust Law Concept Challenging Civil Law System: Mongolian Example

Abstract

This article aims to demonstrate that law trust concept can contribute to the improvement of property law as a comprehensive device external to the tradition of the civil legal system. At the same time, an incorrect or incomplete understanding of trust principles may give rise to problems such as the defrauding of creditors, the circumvention of laws prohibiting certain activities or the unfair distortion of the fabric of existing law. While trust law concept originated in common law systems plays an important role in property management system all over the world, especially in financial and banking sectors, the civil law system with its absolute ownership concept and remedial structure based on obligation law still challenge in receipt of the trust law rules. Therefore, this article will cover the standards applicable to trust relationships in the legal systems of the United States of America and Japan, for the purpose of identifying norms that may help in the further development of the property relationship in Mongolia from a legal and economic point of view. The author has chosen these two jurisdictions as a particular reference not only because of the size of their economies, but also because of the characteristics of their social and legal structure. Japan is a civil law country which has more than 80 years’ experience with trust regulation, and is now in the process of reforming its own law. The United States is a country having statutory trust regulation and successfully developing trust structure in both of the social and commercial sphere. The existence of the UTC is a big factor, too, because it is more compact than a mass of case law provided by English law of equity.