The Trusts (Special Provisions) Amendment Act 2020 (Bill) was tabled in the House of Assembly on 3 July 2020. The Bill seeks to amend the Trusts (Special Provisions) Act 1989 (Principal Act) to clarify the jurisdiction of the Supreme Court in respect of Bermuda trusts and foreign trusts with a connection to Bermuda; to enhance and modernise provisions of the Principal Act with regard to the application of foreign laws and foreign orders to Bermuda trusts; and to make consequential amendments to the Conveyancing Act 1983.

The Bill, once it becomes operative, is intended to make the following amendments to the Principal Act:

  • New section 1A – To improve certain definitions in the Principal Act such as “foreign court” (to cover foreign arbitration and other tribunal determinations), “foreign order” (to include interim or final judgments, awards, orders or other decisions of a foreign court), “settlor” (to include the testator of a will trust and the settlor/trustee of a declaration of trust). Of particular importance in the context of firewall provisions is a new definition for ”Bermuda trust”, as it has been specifically tailored to allow for the possibility that Bermuda law may apply to a severable part of a trust only, in accordance with section 8 of the Principal Act;
  • Amend section 2A – To repeal section 2A(9) pertaining to the definition of settlor which is now provided under the new section 1A.
  • Amend section 6(2) – To provide for the use of the term ‘Bermuda trust’ and to extend to the provision the inference that a trust may be governed by Bermuda law only in part.
  • Amend section 9 – To repeal and replace section 9 in order to specify that the Supreme Court has the power to adjudicate claims concerning the validity, construction, effects of administration of the trust, including any of the matters set out in section 7(a)-(j) of the Principal Act. The new section is intended to enhance the provisions of the current section and is also considered an improvement on the provisions of competitor jurisdictions as it provides for the express jurisdiction of the Supreme Court where the trust instrument provides for it.
  • Amend section 10 – To repeal and replace section 10 in order to enhance the effectiveness of firewall protections under that section. It has been recognised that the current sections 10 and 11 of the Principal Act embodying the firewall protections, can be improved. The revised approach as contained in the new section 10 is intended to provide for an exclusion of foreign law where appropriate as opposed to providing for a blanket application of Bermuda law, subject to exceptions. This is accomplished by specifying the circumstances under which any foreign law shall be excluded from application to a Bermuda trust. The new section 10(3) will clearly state that no foreign law shall apply to the determination of any question concerning the validity, construction, effects or administration of a Bermuda trust. This will include any matters concerning the appointment of trustees, rights and duties of trustees, powers of delegation, investment and accumulation of income, duration of the trust, relationship between trustees and beneficiaries and any liability, variation or termination of the trust and distribution of trust assets. The firewall protection afforded under the new section 10 will not apply to foreign land or in cases where foreign law has been chosen to apply to any severable aspect of a Bermuda trust in accordance with section 8 of the Principal Act.
  • Amend section 11 – To repeal and replace section 11 in order to supplement the protective measures under the new section 10 by preventing the enforcement or recognition of any order of a foreign court where such order is in conflict with the provisions of the new section 11.
  • Consequential amendment – To repeal and replace section 36G of the Conveyancing Act 1983 (Bermuda’s fraudulent transfer legislation) so as to simplify the language and to allow for consistency with the updates to the firewall provisions of the Principal Act. This will clarify that Bermuda’s fraudulent transfer legislation will not enable a creditor’s claim if the claim is precluded by Bermuda’s firewall provisions.

The legislative amendments clarify Bermuda’s application of foreign laws and foreign orders to Bermuda trusts so as to ensure that Bermuda remains a competitive jurisdiction for trust structures.

Where a Bermuda trust is properly constituted, the so called “firewall” provisions are intended to (a) protect against foreign law application relating to heirship rights, matrimonial/other familial relationship, or matters of insolvency, to the determination of any question concerning a Bermuda trust, (b) exclude the application of foreign law to questions relating to the validity, construction, effects or administration of a Bermuda trust, and (c) prevent the enforcement of foreign orders in relation to property held in a Bermuda trust (with the exception of immovable property outside Bermuda), which are inconsistent with Bermuda law.

The Bill requires passing through the Senate and Royal Assent from the Governor of Bermuda before it becomes operative.

Share
Twitter LinkedIn Email Save as PDF
More News
11 Jun 2021 | News

Appleby And AGS To Sponsor And Speak On ESG And LATAM Panels At Bermuda Captive Conference

Appleby and Appleby Global Services (AGS) are pleased to once again sponsor the annual Bermuda Capti...

Contributors: Eduardo Fox
27 May 2021 | News

Appleby And AGS Bermuda Featured As Sponsors And Speakers At International Trusts Conference

Appleby and Appleby Global Services (AGS) are pleased to once again sponsor the Transcontinental Tru...

Contributors: Caljonah Smith
21 May 2021 | News

Appleby Global Services to sponsor 46th Bermuda Festival of the Performing Arts

Appleby Global Services (AGS) Bermuda are pleased to once again sponsor the Bermuda Festival of the ...

22 Apr 2021 | News

Appleby Donates $25,000 to Bermuda Hospital Vaccination Clinic

Leading offshore law firm Appleby has donated $25,000 to the Bermuda Hospitals Charitable Foundation...

8 Apr 2021 | News

Appleby’s top tier Regulatory practice in Bermuda expands its Compliance Services

Appleby’s market-leading Regulatory practice, which is the only firm in Bermuda ranked in Tier 1 b...

6 Apr 2021 | News

Appleby’s top tier Regulatory practice in Bermuda expands its Compliance Services

Leading offshore law firm Appleby has expanded its Compliance Services in Bermuda. Appleby’s marke...

Contributors: Jarion Richardson
31 Mar 2021 | News

Appleby announces new Partner and Counsel promotions

Appleby announces the promotion of three Partners and the appointment of five lawyers to the positio...

26 Mar 2021 | News

Appleby Bermuda partnering with SailGP and other sponsors to support Earth Hour

Greenrock is proud to announce that SailGP - the sport's pinnacle league that starts its season next...

10 Mar 2021 | News

Appleby Global Services celebrates second year with triple growth

Appleby Global Services (AGS), Appleby’s specialist corporate and trust services provider recently...

5 Mar 2021 | News

Appleby and AGS sponsor the 6th International Women’s Day Bermuda celebration

Appleby and AGS are pleased to once again be sponsoring and supporting the 6th International Women...