Channel Islands trustees can take comfort from a judgement of the Privy Council, which has ruled on the application and meaning of an important Article of the Jersey Trusts Law, according to Bedell Cristin Partner, Rob Gardner.
The case involved Guernsey-based trustees of certain Tchenguiz family trusts, Investec Trust (Guernsey) LTD and Bayeux Trustees Ltd, which assumed liability for large banking facilities initially advanced by Kaupthing Bank. Central to the findings was that Article 32 of the Jersey Trusts Law can assist the trustees of a Jersey law trust when the extent of their liabilities is subject to litigation before the Royal Court of Guernsey, thereby offering protection to the trustees in respect of their personal assets.
Mr Gardner stated that this judgment represents an important analysis of Article 32. "It is clear from the judgment that the Guernsey equivalent (section 42 of the Trusts (Guernsey) Law 2007) will be interpreted in a similar way. Trustees will be relieved. Some re-balancing as between creditors and beneficiaries, favouring the latter, has taken place."
He added:: "Whether or not the protection offered to trustees by the Jersey and Guernsey limited recourse provisions are 'transportable' to courts outside the Channel Islands is quite another matter. For the time being, to give the issues some broader context, trustees and their contractual counterparties are always free to transact on whatever terms they wish. Trustees may wish to ensure limited liability provisions form part of any contract and their counterparties may deem it appropriate to take security or guarantees."
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