The Civil Law Trust
Lupoi, Maurizio, Vanderbilt Journal of Transnational Law
It is generally held that trusts are incompatible with the basic assumptions of civil law systems. In order to discuss this statement one would have to inquire, first, what is meant by the term "trusts"; second, what assumed common characteristics of the civil law systems are being envisaged and declared to be incompatible with trusts; and third, why those characteristics should be incompatible with trusts.
It is also commonly held that the Hague Convention of 1984 on the law applicable to and the recognition of trusts concerns only those trusts that are foreign to the jurisdiction in which the rules of the Convention are invoked.(1) In order to discuss this statement, one would have to inquire when a trust is sufficiently "foreign" to warrant the protection of the Convention.
This article asserts that trusts are not incompatible with the basic assumptions of civil law systems. Moreover, the Hague Convention does not require an element of foreignness other than the simple fact that a trust is governed by a foreign law. These two submissions are obviously interrelated and, once they are accepted, the conclusion follows that the Hague Convention allows ratifying civil law countries to have the same access to trusts that is peculiar to their common law counterparts. In other words, this article contends that trusts can be formed in Italy and in Holland just as they would in England or in Tennessee, provided they are governed not by Italian or Dutch law, but by English or Tennessee law.
II. THE ALLEGED INCOMPATIBILITY OF TRUST WITH CIVIL LAW STRUCTURES
A. What is Meant by "Trust"?
It is now fashionable to refer to the "Anglo-American" trust. This terminology is most confusing, for it puts in the same basket the laws of each states of the United States, England, Australia, Canada, New Zealand, the laws of offshore jurisdictions, and many others.
Some of those laws have a purely statutory origin, and a recent one at that.(2) While some jurisdictions have a separate equity jurisdiction, others have stated that they possess an inherent equity jurisdiction. Moreover, the trust structures prevailing in some of those countries have an overwhelming tax-planning purpose.
Looking at the rules, those relating to the constructive trust provide a good example of the remarkable differences between the long-standing English view and the remedial view prevailing in the United States, that is now making significant inroads in Canada, Australia, and possibly England. The rules of the offshore jurisdictions relating to the liability of trustees and to exclusion clauses are different from the English ones. The same is true with regard to the rules relating to the relationship between settlor and trustee or the rights of the beneficiaries.
One might say, as many do, that this is a purely academic view and, more specifically, a view that shows how comparative law scholars can confuse the issues and create insurmountable difficulties where none exist. These critics would say that there is a "common core" at the basis of the Anglo-American trust. That could hardly be denied, but, as will be shown, when one tries to define what belongs to the common core, the conclusion is reached that such a common core is not unique to the common law systems. Indeed, as this article explains, there is new and specific evidence that the trust belongs to the civil law, whence it was imported in England during the formative period of the Chancellor's jurisdiction over trusts.(3)
Finally, if classifications must be used, then it is most favorable to distinguish among trusts as follows: the English-model trust; the international-model trust;(4) and the civil law model trust.
B. Why Refer to "Civil Law" Generally?
The so-called dialogue between civil law and common law was the basic feature of post-World War II comparative law. It was such a novel attitude that each of the two participants to the dialogue stressed the unifying elements within its own group and the differences with the other group. …