CONVENTION
ON THE LAW APPLICABLE TO TRUSTS AND ON THEIR RECOGNITION
(Hague, 1.VII.1985)
The States signatory to the present Convention,
Considering that the trust, as developed in courts of equity
in common law jurisdictions and adopted with some modifications in
other jurisdictions, is a unique legal institution,
Desiring to establish common provisions on the law applicable
to trusts and to deal with the most important issues concerning
the recognition of trusts,
Have resolved to conclude a Convention to this effect, and
have agreed upon the following provisions -
Chapter I. SCOPE
Article 1
This Convention specifies the law applicable to trusts and
governs their recognition.
Article 2
For the purposes of this Convention, the term "trust" refers
to the legal relationships created - inter vivos or on death - by
a person, the settlor, when assets have been placed under the
control of a trustee for the benefit of a beneficiary or for a
specified purpose.
A trust has the following characteristics -
a) the assets constitute a separate fund and are not a part of
the trustee's own estate;
b) title to the trust assets stands in the name of the trustee
or in the name of another person on behalf of the trustee;
c) the trustee has the power and the duty, in respect of which
he is accountable, to manage, employ or dispose of the assets in
accordance with the terms of the trust and the special duties
imposed upon him by law.
The reservation by the settlor of certain rights and powers,
and the fact that the trustee may himself have rights as a
beneficiary, are not necessarily inconsistent with the existence
of a trust.
Article 3
The Convention applies only to trusts created voluntarily and
evidenced in writing.
Article 4
The Convention does not apply to preliminary issues relating
to the validity of wills or of other acts by virtue of which
assets are transferred to the trustee.
Article 5
The Convention does not apply to the extent that the law
specified by Chapter II does not provide for trusts or the
category of trusts involved.
Chapter II. APPLICABLE LAW
Article 6
A trust shall be governed by the law chosen by the settlor.
The choice must be express or be implied in the terms of the
instrument creating or the writing evidencing the trust,
interpreted, if necessary, in the light of the circumstances of
the case.
Where the law chosen under the previous paragraph does not
provide for trusts or the category of trust involved, the choice
shall not be effective and the law specified in Article 7 shall
apply.
Article 7
Where no applicable law has been chosen, a trust shall be
governed by the law with which it is most closely connected.
In ascertaining the law with which a trust is most closely
connected reference shall be made in particular to -
a) the place of administration of the trust designated by the
settlor;
b) the situs of the assets of the trust;
c) the place of residence or business of the trustee;
d) the objects of the trust and the places where they are to
be fulfilled.
Article 8
The law specified by Article 6 or 7 shall govern the validity
of the trust, its construction, its effects, and the
administration of the trust.
In particular that law shall govern -
a) the appointment, resignation and removal of trustees, the
capacity to act as a trustee, and the devolution of the office of
trustee;
b) the rights and duties of trustees among themselves;
c) the right of trustees to delegate in whole or in part the
discharge of their duties or the exercise of their powers;
d) the power of trustees to administer or to dispose of trust
assets, to create security interests in the trust assets, or to
acquire new assets;
e) the powers of investment of trustees;
f) restrictions upon the duration of the trust, and upon the
power to accumulate the income of the trust;
g) the relationships between the trustees and the
beneficiaries including the personal liability of the trustees to
the beneficiaries;
h) the variation or termination of the trust;
i) the distribution of the trust assets;
j) the duty of trustees to account for their administration.
Article 9
In applying this Chapter a severable aspect of the trust,
particularly matters of administration, may be governed by a
different law.
Article 10
The law applicable to the validity of the trust shall
determine whether that law or the law governing a severable aspect
of the trust may be replaced by another law.
Chapter III. RECOGNITION
Article 11
A trust created in accordance with the law specified by the
preceding Chapter shall be recognized as a trust.
Such recognition shall imply, as a minimum, that the trust
property constitutes a separate fund, that the trustee may sue and
be sued in his capacity as trustee, and that he may appear or act
in this capacity before a notary or any person acting in an
official capacity.
In so far as the law applicable to the trust requires or
provides, such recognition shall imply, in particular -
a) that personal creditors of the trustee shall have no
recourse against the trust assets;
b) that the trust assets shall not form part of the trustee's
estate upon his insolvency or bankruptcy;
c) that the trust assets shall not form part of the
matrimonial property of the trustee or his spouse nor part of the
trustee's estate upon his death;
d) that the trust assets may be recovered when the trustee, in
breach of trust, has mingled trust assets with his own property or
has alienated trust assets. However, the rights and obligations of
any third party holder of the assets shall remain subject to the
law determined by the choice of law rules of the forum.
Article 12
Where the trustee desires to register assets, movable or
immovable, or documents of title to them, he shall be entitled, in
so far as this is not prohibited by or inconsistent with the law
of the State where registration is sought, to do so in his
capacity as trustee or in such other way that the existence of the
trust is disclosed.
Article 13
No State shall be bound to recognize a trust the significant
elements of which, except for the choice of the applicable law,
the place of administration and the habitual residence of the
trustee, are more closely connected with States which do not have
the institution of the trust or the category of trust involved.
Article 14
The Convention shall not prevent the application of rules of
law more favourable to the recognition of trusts.
Chapter IV. GENERAL CLAUSES
Article 15
The Convention does not prevent the application of provisions
of the law designated by the conflicts rules of the forum, in so
far as those provisions cannot be derogated from by voluntary act,
relating in particular to the following matters -
a) the protection of minors and incapable parties;
b) the personal and proprietary effects of marriage;
c) succession rights, testate and intestate, especially the
indefeasible shares of spouses and relatives;
d) the transfer of title to property and security interests in
property;
e) the protection of creditors in matters of insolvency;
f) the protection, in other respects, of third parties acting
in good faith.
If recognition of a trust is prevented by application of the
preceding paragraph, the court shall try to give effect to the
objects of the trust by other means.
Article 16
The Convention does not prevent the application of those
provisions of the law of the forum which must be applied even to
international situations, irrespective of rules of conflict of
laws.
If another State has a sufficiently close connection with a
case then, in exceptional circumstances, effect may also be given
to rules of that State which have the same character as mentioned
in the preceding paragraph.
Any Contracting State may, by way of reservation, declare that
it will not apply the second paragraph of this Article.
Article 17
In the Convention the word "law" means the rules of law in
force in a State other than its rules of conflict of laws.
Article 18
The provisions of the Convention may be disregarded when their
application would be manifestly incompatible with public policy
(ordre public).
Article 19
Nothing in the Convention shall prejudice the powers of States
in fiscal matters.
Article 20
Any Contracting State may, at any time, declare that the
provisions of the Convention will be extended to trusts declared
by judicial decisions.
This declaration shall be notified to the Ministry of Foreign
Affairs of the Kingdom of the Netherlands and will come into
effect on the day when this notification is received.
Article 31 is applicable to the withdrawal of this declaration
in the same way as it applies to a denunciation of the Convention.
Article 21
Any Contracting State may reserve the right to apply the
provisions of Chapter III only to trusts the validity of which is
governed by the law of a Contracting State.
Article 22
The Convention applies to trusts regardless of the date on
which they were created.
However, a Contracting State may reserve the right not to
apply the Convention to trusts created before the date on which,
in relation to that State, the Convention enters into force.
Article 23
For the purpose of identifying the law applicable under the
Convention, where a State comprises several territorial units each
of which has its own rules of law in respect of trusts, any
reference to the law of that State is to be construed as referring
to the law in force in the territorial unit in question.
Article 24
A State within which different territorial units have their
own rules of law in respect of trusts is not bound to apply the
Convention to conflicts solely between the laws of such units.
Article 25
The Convention shall not affect any other international
instrument containing provisions on matters governed by this
Convention to which a Contracting State is, or becomes, a party.
Chapter V. FINAL CLAUSES
Article 26
Any State may, at the time of signature, ratification,
acceptance, approval or accession, or at the time of making a
declaration in terms of Article 29, make the reservations provided
for in Articles 16, 21 and 22.
No other reservation shall be permitted.
Any Contracting State may at any time withdraw a reservation
which it has made; the reservation shall cease to have effect on
the first day of the third calendar month after notification of
the withdrawal.
Article 27
The Convention shall be open for signature by the States which
were Members of the Hague Conference on Private International Law
at the time of its Fifteenth Session.
It shall be ratified, accepted or approved and the instruments
of ratification, acceptance or approval shall be deposited with
the Ministry of Foreign Affairs of the Kingdom of the Netherlands.
Article 28
Any other State may accede to the Convention after it has
entered into force in accordance with Article 30, paragraph 1.
The instrument of accession shall be deposited with the
Ministry of Foreign Affairs of the Kingdom of the Netherlands.
The accession shall have effect only as regards the relations
between the acceding State and those Contracting States which have
not raised an objection to its accession in the twelve months
after the receipt of the notification referred to in Article 32.
Such an objection may also be raised by Member States at the time
when they ratify, accept or approve the Convention after an
accession. Any such objection shall be notified to the Ministry of
Foreign Affairs of the Kingdom of the Netherlands.
Article 29
If a State has two or more territorial units in which
different systems of law are applicable, it may at the time of
signature, ratification, acceptance, approval or accession declare
that this Convention shall extend to all of its territorial units
or only to one or more of them and may modify this declaration by
submitting another declaration at any time.
Any such declaration shall be notified to the Ministry of
Foreign Affairs of the Kingdom of the Netherlands and shall state
expressly the territorial units to which the Convention applies.
If a State makes no declaration under this Article, the
Convention is to extend to all territorial units of that State.
Article 30
The Convention shall enter into force on the first day of the
third calendar month after the deposit of the third instrument of
ratification, acceptance or approval referred to in Article 27.
Thereafter the Convention shall enter into force -
a) for each State ratifying, accepting or approving it
subsequently, on the first day of the third calendar month after
the deposit of its instrument of ratification, acceptance or
approval;
b) for each acceding State, on the first day of the third
calendar month after the expiry of the period referred to in
Article 28;
c) for a territorial unit to which the Convention has been
extended in conformity with Article 29, on the first day of the
third calendar month after the notification referred to in that
Article.
Article 31
Any Contracting State may denounce this Convention by a formal
notification in writing addressed to the Ministry of Foreign
Affairs of the Kingdom of the Netherlands, depositary of the
Convention.
The denunciation takes effect on the first day of the month
following the expiration of six months after the notification is
received by the depositary or on such later date as is specified
in the notification.
Article 32
The Ministry of Foreign Affairs of the Kingdom of the
Netherlands shall notify the States Members of the Conference and
the States which have acceded in accordance with Article 28, of
the following -
a) the signatures and ratifications, acceptances or approvals
referred to in Article 27;
b) the date on which the Convention enters into force in
accordance with Article 30;
c) the accessions and the objections raised to accessions
referred to in Article 28;
d) the extensions referred to in Article 29;
e) the declarations referred to in Article 20;
f) the reservation or withdrawals referred to in Article 26;
g) the denunciations referred to in Article 31.
In witness whereof the undersigned, being duly authorized
thereto, have signed this Convention.
Done at The Hague, on the first day of July, 1985, in English
and French, both texts being equally authentic, in a single copy
which shall be deposited in the archives of the Government of the
Kingdom of the Netherlands, and of which a certified copy shall be
sent, through diplomatic channels, to each of the States Members
of the Hague Conference on Private International Law at the date
of its Fifteenth Session.
(Follow the signatures)
|
