Cayman Islands
| Jurisdiction | United Kingdom |
| Pages | 377-400 |
| Author | Morven McMillan |
23
CAYMANISLANDS
Morven McMillan
A. Jurisdiction 23.01
e Hague Convention on the Law Applicable
to Trusts and eir Recognition 23.02
Conict of Law Rules 23.03
Additional Conventions 23.09
B. Recognition and Enforcement of
Foreign Judgments and Orders 23.10
Statutory Reciprocal Enforcement
Provisions 23.11
Common Law Principles on Enforcement 23.13
Letters of Request 23.17
Mutual Legal Assistance Treaties 23.22
C. Reserved Powers 23.23
Protectors 23.23
Statutory Reserved Powers 23.24
Sham 23.29
D. Asset Protection and Insolvency 23.30
e Fraudulent Dispositions Law
(1996 Revision) (‘FDL’) 23.30
e Bankruptcy Law (1997 Revision) 23.33
Co- operation in Insolvency Matters 23.34
E. Removal and Retirement of Trustees
and Protectors 23.40
Court’s Powers to Remove 23.42
Voluntary Retirement and Statutory
Powers of Retirement or Replacement 23.43
Indemnities 23.47
F. Rights to Information 23.52
Condentiality Statutes 23.52
Statutory Provisions in Relation to
Rights to Information 23.59
G. Guidance to Trustees, Protectors,
or Enforcers 23.65
Statutory Provisions 23.65
Administration Actions 23.68
H. Involvement of Charitable Interests 23.69
Charity Legislation 23.69
Position of the Attorney General 23.76
I. Alternative Dispute Resolution 23.78
J. Procedural Issues 23.84
Court Structure 23.84
Rules 23.87
e Local Bar 23.88
Representation and Capacity 23.90
Appea ls 23.95
Costs 23.96
K. Cases of Note 23.97
L. Special Legislation 23.105
STAR Trusts 23.105
Private Trust Companies 23.107
Controlled Subsidiaries 23.109
Foundation Companies 23.110
Mistaken Exercise of Fiduciary Powers 23.111
Variation of Trusts 23.112
Tax Information Exchange 23.115
Benecial Ownership 23.117
Economic Substance 23.119
A. Jurisdiction
e Cayman Islands introduced its rst trusts statute in 1967. e Trusts Law is currently
in its 2018 revision (the ‘Trusts Law’).1 e Cayman Islands is a common law jurisdic-
tion and its court will have regard not only to local reported cases but to reported trusts
cases and equitable principles developed over centuries in England and other common
law jurisdictions.
1 ATrusts (Amendment) Law, 2019 (the ‘TAL 2019’) came into eect on 14 June 2019 revising the Trusts Law.
23.01
Morven McMillan, Cayman Islands In: International Trust Disputes. Second Edition.
Edited by: Steven Kempster, Morven McMillan, Alison Meek, Oxford University Press (2010).
© Oxford University Press. DOI: 10.1093/oso/9780198832737.003.0023
378 :
e Hague Convention onthe Law Applicable toTrusts and
eirRecognition
e Hague Convention has not been extended to the Cayman Islands.
Conict ofLawRules
e Islands were the rst international nancial centre to introduce ‘rewall’ provisions and
they are contained in Part VII of the Trusts Law. Under s 89(2) ‘a term of the trust selecting
the laws of the Islands to govern the trust is valid, eective and conclusive regardless of any
other circumstance’.
Section 90 provides that if a trust is governed by Cayman Islands law and has a jurisdiction
clause in favour of the Cayman Islands court, all questions arising in relation to that trust will
be determined in accordance with Cayman Islands law without reference to the laws of any
other jurisdiction with which the trust has a connection.2 Such questions include:
(a) the capacity of the settlor;
(b) any aspect of the validity or construction or eect of the trust or disposition of
property to it;
(c) the administration of the trust, including questions as to the powers, obligations, li-
abilities, and rights of trustees and their appointment and removal; and
(d) the existence and extent of powers in the trust.
ere are a number of provisos to the operation of s 90. It will not:
(a) validate a disposition of property if the property is not owned by the settlor or he
does not have the power to dispose of it;
(b) aect the recognition of foreign laws in determining the ownership of the said
property;
(c) with regard to questions of the capacity of a company, it will not aect the recognition
of the laws of the place of that company’s incorporation;
(d) validate a testamentary trust or disposition of property if it is invalid under the laws
of the testator’s domicile;
(e) aect the recognition of foreign laws prescribing generally the formalities for dispos-
ition of property ; or
(f) validate a trust or disposition of immovable property located in a jurisdiction
other than the Cayman Islands which is invalid according to the laws of that
jurisdiction.
Section 91 is subject to the same provisos. It provides, amongst other things, that no trust or
disposition of property will be:
void, voidable, liable to be set aside or defective in any fashion, nor is the trustee,
any beneficiary or any other person to be subjected to any liability or deprived of
any right because the trust avoids or defeats rights, claims or interests conferred by
foreign law upon any person by reason of a personal relationship with the settlor or
2 See In the matter of the B Trust [2010] (2)CILR 348.
23.02
23.03
23.04
23.05
23.06
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