The X Trusts Decision – a Cayman Islands’ perspective

Published: 30 Mar 2026

Protectors in the Cayman Islands

Cayman Islands trusts are commonly established with provisions appointing one or more protectors.

A protector derives their role and responsibilities from the terms of trust deed. There are many reasons for the creation of the office of protector. In particular, a settlor may wish to establish an office to exercise some degree of control over the trustees. We are seeing more and more settlors appoint professional fiduciary service providers as protectors.

Typically, the role of the protector will involve monitoring the activities of the trustee; a trust deed may provide that the protector will be required to consent to the exercise of certain trustee powers; and / or the protector may have certain ‘positive’ powers, such as the power to remove and appoint trustees and the power to change the governing law and the forum of administration of the trust.

A protector’s powers will typically be considered to be fiduciary in nature; and will, therefore, carry with them certain fiduciary responsibilities.


The X Trusts Decision and protectors in the Cayman Islands

While the recent Privy Council decision in A and 6 others (Appellants) v C and 13 others (Respondents) [2026] UKPC 11 (“the X Trusts Decision”), is not strictly binding on the Cayman Courts, in our view it will be of particularly persuasive value, and will most likely be followed by the Cayman Courts.

The X Trusts Decision will be especially relevant to any person or entity acting as a protector; any trustee of a trust with a protector; and individuals otherwise considering establishing a trust in the Cayman Islands. In particular, many of the general features or terms of the X Trusts are not dissimilar to those found in Cayman Islands trust deeds.

A trust deed is often silent about how a protector should decide whether to approve or veto a trustee proposal. There have been two competing schools of thought regarding a protector’s decision-making process in such situations.

One view, being the “the Narrow Role”, is that a protector’s task in strictly limited to reviewing the legality of a trustee’s proposal. By contrast, “the Wider Role”, provides that the protector is entitled to form their own view of the merits of a trustee proposal and may legitimately veto the proposal even if it is one within the range of decisions which the trustee could lawfully make.

The Privy Council in the X Trusts Decision, unanimously held that the X Trusts (as defined below) conferred the “Wider Role” on the protectors.

Background to the X Trusts Decision

The appeal from the Court of Appeal of Bermuda concerned the default role of a fiduciary protector in trust administration.

The case concerned a series of discretionary trusts (all non-Cayman law governed) (“the X Trusts”), all except one of the X Trusts had broadly similar provisions regarding the office of the protector.  The relevant provisions conferred powers on the protectors to approve or refuse two key trustee decisions, regarding the appointment of capital and dealing with specified securities.

The protectors had determined that they were unlikely to approve the trustees’ proposal regarding the appointment and division of the property of the X Trusts. The protectors had approached the question of whether they should approve the trustees’ proposal on the assumption they had a Wider Role.

While the Bermuda Supreme Court and the Court of Appeal of Bermuda both concluded that the trust deeds confer the Narrow Role on the protectors; on hearing the appeal, the Privy Council unanimously disagreed, and decided that the X Trusts confer a Wider Role on the protectors.

We summarise certain key points from the Privy Council decision below.

Key Points from the Privy Council judgement

The Privy Council, after considering two key legal principles, namely the proper construction of the trust deed; and any implied terms of the trust deed, determined that neither confine the protectors to the Narrow Role.

Construction:

  • Where the settlor has provided for the protectors to exercise precisely defined powers but remain silent about how those powers should be exercised, the question is “what if any constraints did the trust instrument actually impose, construed in its context and with regard to any constraints imported by the general law?”.
  • The relevant settlements do not by any express language impose any constraints upon the protectors in the exercise of the powers of veto.
  • In the X Trusts, the powers conferred on the protectors are fiduciary; and those powers therefore come attached with all the usual fiduciary constraints. These constraints, however, do not confine the protectors to the Narrow Role.
  • Even though the protectors are paid professionals (meaning that they were likely subject to a professional duty of care) this constraint again does not confine the protectors to the Narrow Role.
  • In addition to there being no terms in the trust deeds which support the Narrow Role, there are several terms which support the Wider Role, including (i) the trust deeds providing for the release and waiver of the protectors powers; (ii) the ability for the trustees to proceed with a proposed decision even where the unanimous consent of joint protectors has not been obtained (provided that the trustees take into account the views expressed before making a final decision); and (iii) the fact that the protectors’ consent is only required for a limited range of trustee actions.
  • There were also several broader contextual factors which support the Wider Role.

Implied Terms

  • The absence of a more precisely specified role for the protectors must be taken to have been a deliberate gap. It is not a gap which needs to be, or can be, filled by an implied term.

Implications for trust drafting

Appleby anticipates that the X Trusts Decision will have implications for how trust deeds are drafted moving forward. In particular, it will be necessary to specify that the Narrow Role applies if that is the intention.

 

 

Bermuda-1024x576-1
1 Jul 2026

A Forest for the Future

A first since the blight, the airport cedar forest is growing tall and standing strong.

Appleby-Website-Regulatory-Practice
1 Jul 2026

Complied out of business

Firms are complying themselves out of business because compliance no longer matches the evolving sophistication of the Bermuda Monetary Authority (BMA).

Appleby-Website-Insurance-and-Reinsurance
1 Jul 2026

The long game: how Bermuda became the world’s life reinsurance capital

Ask a life insurer in New York, London or Tokyo where the liabilities behind their book ultimately sit and there is an increasingly good chance the answer is a 21-square-mile island in the North Atlantic.

Appleby-Website-Insurance-and-Reinsurance
1 Jul 2026

Record H1’26 Cat Bond Issuance Driven by Rising Sponsor Comfort and Diversified Risk

With H1 2026 officially breaking the record for the most catastrophe bond deals to come to market and settle in the first six months of the year, a key trend driving this momentum is how comfortable sponsors have become with the mechanics of the overall cat bond space. This familiarity has ultimately encouraged a wave of new sponsors to enter the market, according to Brad Adderley, Managing Partner at law firm Appleby.

The Global Website header
30 Jun 2026

The Global - 2026 Q2 Review

The Global sees us share updates and insights from across our network of international offices on the latest legislative news, trends or developments impacting the corporate sector.

JPLs, Directors and Arbitration: Grand Court Clarifies the Scope of Provisional Liquidators' Powers
26 Jun 2026

Contested Points of Foreign Law in the Winding-Up Context: Grand Court Provides Guidance

In China Export & Credit Insurance Corp v Hyalroute Communication Group Ltd, Asif J provided guidance on how a creditor’s winding up petition will be treated where the asserted dispute turns on complex issues of foreign law – here, in the context of PRC insurance law. This article considers the decision and the lessons that can be drawn from it.

Appleby-Website-Fraud-and-Asset-Tracing
26 Jun 2026

National Budget Highlights - Making Mauritius future ready

THE MAURITIAN NATIONAL BUDGET 2026/2027 - “FUTURE READY ECONOMY” On 12 June 2026, Dr Navinchandra Ramgoolam GCSK, FRCP, Prime Minister of Mauritius, in his capacity as Minister of Finance (Minister of Finance) tabled the National Budget for the fiscal year 2026-2027 under the theme “Future Ready Economy”. The National Budget builds on six strategic pillars namely, AI & Digitisation, SMEs & Start-Ups, Economic Modernisation, Sector Re-engineering, Blue Economy and Investment Growth.

Appleby-Website-Regulatory-Practice
25 Jun 2026

CIMA Enforcement Action in Focus: Reminders and Recommendations

The Cayman Islands Monetary Authority (CIMA) has recently published a number of Enforcement Notices that provide helpful context for regulated entities, including Licensees and Registered Persons under the Securities Investment Business Act (Revised) (SIBA), seeking to understand and meet their ongoing regulatory obligations in the Cayman Islands. In early June 2026, CIMA exercised its enforcement powers under SIBA Section 17 to cancel the registrations of several SIBA Registered Persons on the basis that it had reasonable grounds to believe that such Registered Persons had failed to meet certain key regulatory obligations. The Appleby Team takes this opportunity to review the relevant findings and CIMA enforcement action; and to highlight certain key obligations that attach to regulated entities in the Cayman Islands.

Appleby-Website-Regulatory-Practice
23 Jun 2026

Important Cayman Islands Industry Advisory: Common Reporting Standard 2.0 and Economic Substance Updates

Further to the introduction of the Tax Information Authority (International Tax Compliance) (Common Reporting Standard) (Amendment) Regulations, 2025 (the CRS Amendment Regulations or CRS 2.0), the Cayman Islands Department for International Tax Cooperation (DITC) has issued an Industry Advisory flagging certain key updates in respect of Common Reporting Standard (CRS) and Economic Substance (ES) reporting in the Cayman Islands. Cayman Financial Institutions will be required file 2025 CRS Returns and Declarations by 31 July 2026, ahead of the online DITC Portal’s closure to facilitate its transition to XML Schema v3.0. ES courtesy reminders (which have historically been sent by email to designated Responsible Persons in advance of annual ES reporting deadlines) will no longer be issued such that Relevant Entities will need to independently track such deadlines themselves. Updated Individual and Entity CRS Self-Certification forms, aligned with CRS 2.0, are now available online via the DITC website.

Appleby-Website-Technology-and-Innovation
22 Jun 2026

2026 Guide to Blockchain & Crypto-Assets in the Cayman Islands

This updated 2026 guide covers the regulatory regime in the Cayman Islands applicable to virtual assets, tokenised funds and securities. We also cover evolving regulation and practices across blockchain technology, smart contracts, DeFi, stablecoins, tokenisation of real world assets, as well as share our outlook for future developments in the sector.

Share
More publications
The Global Website header
30 Jun 2026

The Global - 2026 Q2 Review

The Global sees us share updates and insights from across our network of international offices on the latest legislative news, trends or developments impacting the corporate sector.

JPLs, Directors and Arbitration: Grand Court Clarifies the Scope of Provisional Liquidators' Powers
26 Jun 2026

Contested Points of Foreign Law in the Winding-Up Context: Grand Court Provides Guidance

In China Export & Credit Insurance Corp v Hyalroute Communication Group Ltd, Asif J provided guidance on how a creditor’s winding up petition will be treated where the asserted dispute turns on complex issues of foreign law – here, in the context of PRC insurance law. This article considers the decision and the lessons that can be drawn from it.

Appleby-Website-Regulatory-Practice
25 Jun 2026

CIMA Enforcement Action in Focus: Reminders and Recommendations

The Cayman Islands Monetary Authority (CIMA) has recently published a number of Enforcement Notices that provide helpful context for regulated entities, including Licensees and Registered Persons under the Securities Investment Business Act (Revised) (SIBA), seeking to understand and meet their ongoing regulatory obligations in the Cayman Islands. In early June 2026, CIMA exercised its enforcement powers under SIBA Section 17 to cancel the registrations of several SIBA Registered Persons on the basis that it had reasonable grounds to believe that such Registered Persons had failed to meet certain key regulatory obligations. The Appleby Team takes this opportunity to review the relevant findings and CIMA enforcement action; and to highlight certain key obligations that attach to regulated entities in the Cayman Islands.

Appleby-Website-Regulatory-Practice
23 Jun 2026

Important Cayman Islands Industry Advisory: Common Reporting Standard 2.0 and Economic Substance Updates

Further to the introduction of the Tax Information Authority (International Tax Compliance) (Common Reporting Standard) (Amendment) Regulations, 2025 (the CRS Amendment Regulations or CRS 2.0), the Cayman Islands Department for International Tax Cooperation (DITC) has issued an Industry Advisory flagging certain key updates in respect of Common Reporting Standard (CRS) and Economic Substance (ES) reporting in the Cayman Islands. Cayman Financial Institutions will be required file 2025 CRS Returns and Declarations by 31 July 2026, ahead of the online DITC Portal’s closure to facilitate its transition to XML Schema v3.0. ES courtesy reminders (which have historically been sent by email to designated Responsible Persons in advance of annual ES reporting deadlines) will no longer be issued such that Relevant Entities will need to independently track such deadlines themselves. Updated Individual and Entity CRS Self-Certification forms, aligned with CRS 2.0, are now available online via the DITC website.

Appleby-Website-Technology-and-Innovation
22 Jun 2026

2026 Guide to Blockchain & Crypto-Assets in the Cayman Islands

This updated 2026 guide covers the regulatory regime in the Cayman Islands applicable to virtual assets, tokenised funds and securities. We also cover evolving regulation and practices across blockchain technology, smart contracts, DeFi, stablecoins, tokenisation of real world assets, as well as share our outlook for future developments in the sector.

JPLs, Directors and Arbitration: Grand Court Clarifies the Scope of Provisional Liquidators' Powers
18 Jun 2026

JPLs, Directors and Arbitration: Grand Court Clarifies the Scope of Provisional Liquidators' Powers

In Peakwave Investment Management Ltd v Energy Evolution GP Ltd [2026] CIGC (FSD) 22, the Grand Court clarified the scope of joint provisional liquidators' powers following their appointment. In particular, the Court confirmed that the appointment of provisional liquidators does not automatically displace existing directors.

Appleby-Website-Cayman2
17 Jun 2026

Property, Fairness and the Constitution: The Grand Court Marks the Boundaries of Freedom of Information

The Grand Court of the Cayman Islands has overturned a decision of the Ombudsman in a successful judicial review brought by Caribbean Utilities Company, Ltd. (CUC), represented by Appleby.

Website-Code-Cayman-1
29 Apr 2026

2026 Guide to Lending & Secured Finance in the Cayman Islands

This country-specific Q&A provides an overview of Lending & Secured Finance laws and regulations applicable in Cayman Islands.

JPLs, Directors and Arbitration: Grand Court Clarifies the Scope of Provisional Liquidators' Powers
28 Apr 2026

The Interplay Between Supervision Applications and Winding Up on the Just and Equitable Ground: Re Atlas Capital Markets LLC

In its recent judgment in Re Atlas Capital Markets LLC [2026] CIGC (FSD) 19, the Grand Court considered itself bound to make a supervision order pursuant to s.131(b) of the Companies Act, notwithstanding that the company was the subject of a pending just and equitable winding up (J&E) petition when its voluntary liquidation was commenced; and rejected an attack on the joint voluntary liquidators’ (JVLs) independence, which was principally based on a misreading of the JVLs’ evidence and lacked any objective foundation. The authors, who successfully represented the JVLs in obtaining the supervision order, discuss this important judgment further below – which is believed to be the first decision on the interplay between supervision applications and J&E proceedings under the Companies Act – and offer their views on the guidance that shareholders petitioning on the just and equitable ground may derive from it in future cases.  The challenge to the JVLs’ independence was rejected on the well-established principles which Doyle J discussed in Re Global Fidelity Bank [2021] 2 CILR 361, and is not discussed in further detail below.

Appleby-Website-Insurance-and-Reinsurance
23 Apr 2026

ReConnect 2026: Practical takeaways for Reinsurers, Cedants and Investors doing business in the Cayman Islands

The Cayman International Reinsurance Commercial Association (CIRCA) held its annual conference, [Re]Connect, last week at the Ritz-Carlton, Grand Cayman. This year’s [Re]Connect has once again demonstrated Cayman’s growing influence in global reinsurance and the strength of the jurisdiction’s regulatory, professional and commercial ecosystem. The event brought together 675 registered delegates, including reinsurers, cedants, major US law firms, audit firms, tax practices, asset managers, overseas regulators, industry leaders and rating agencies – as well as Appleby Cayman’s [Re]Insurance Team, with Miriam Smyth, Regulatory Counsel, speaking on a panel of experts on structuring, licensing and operating a Cayman insurer.