RECOGNITION OF TRUSTS ORDINANCE

RECOGNITION OF TRUSTS ORDINANCE

LAWS OF HONG KONG


RECOGNITION OF TRUSTS
ORDINANCE


CHAPTER 76

REVISED EDITION 1989

PRINTED AND PUBLISHED BY THE GOVERNMENT PRINTER

HONG KONG




CHAPTER 76

RECOGNITION OF TRUSTS

To enable the Hague Convention on the law applicable to trusts and on the
recognition to apply to Hong Kong.


Originally 60 of 1989

1. Short title and commencement

(1) This Ordinance may be cited as the Recognition of Trusts Ordinance.

(2) This Ordinance shall come into operation on a day to be appointed by the
Governor by notice in the Gazette.

2. Applicable law and recognition of trusts

(1) The provisions of the Convention set out in the Schedule shall have the
force of law in Hong Kong.

(2) If there is any inconsistency between the text of the Convention in English
as so set out and the text in Chinese, the text in English shall prevail.

(3) The provisions of the Convention shall, so far as applicable, have effect not
only in relation to the trusts described in Articles 2 and 3 thereof but also in relation
to any other trusts of property arising under the law of Hong Kong or by virtue of a
judicial decision whether in Hong Kong or elsewhere.

(4) Where Articles 15 and 16 do not prevent the application of any provision of
law, that provision of law shall, to the extent specified in Articles 15 and 16, apply
notwithstanding anything to the contrary in any other Article of the Convention.

(5) In Article 17 the reference to a State includes a reference to any country or
territory (whether or not a party to the Convention) which has its own system of law.

(6) Article 22 shall not be construed as affecting the law to be applied in
relation to anything done or omitted before the coming into force of this Ordinance.

3. Application to the Crown

This Ordinance shall bind the Crown.





1989




SCHEDULE [s. 2(1)]

CONVENTION ON THE LAW APPLICABLE TO TRUSTS
AND ON THEIR RECOGNITION

BEING THE CONVENTION A DRAFT OF WHICH WAS ANNEXED TO
THE FINAL ACT OF THE FIFTEENTH SESSION OF THE HAGUE
CONFERENCE ON PRIVATE INTERNATIONAL LAW DATED
AT THE HAGUE 20 OCTOBER 1984 IN ENGLISH AND
FRENCH, BOTH TEXTS BEING EQUALLY AUTHENTIC

CHAPTER I-SCOPE

Article 1
This Convention specifies the law applicable to trusts and governs their
recognition.

Article 2

For the purposes of this Convention, the term 'trust' refers to the legal relationship
created-inter vivos or on death-by a person, the settlor, when assets have been placed under the
control of a trustee for the benefit of a beneficiary or for a specified purpose.

A trust has the following characteristics

(a) the assets constitute a separate fund and are not a part of the trustee's own estate;

(b)title to the trust assets stands in the name of the trustee or in the name of another
person on behalf of the trustee;

(e)the trustee has the power and the duty, in respect of which he is accountable, to
manage, employ or dispose of the assets in accordance with the terms of the trust
and the special duties imposed upon him by law.

The reservation by the settlor of certain rights and powers, and the fact that the trustee
may himself have rights as a beneficiary, are not necessarily inconsistent with the existence of a
trust.

Article 3

The Convention applies only to trusts created voluntarily and evidenced in writing.

Article 4

The Convention does not apply to preliminary issues relating to the validity of wills or
of other acts by virtue of which assets are transferred to the trustee.

Article 5

The Convention does not apply to the extent that the law specified by Chapter 11 does
not provide for trusts or the category of trusts involved.

CHAPTER II-APPLICABLE
LAW

Article 6

A trust shall be governed by the law chosen by the settlor. The choice must be express
or be implied in the terms of the instrument creating or the writing evidencing the trust,
interpreted, if necessary, in the light of the circumstances of the case.

Where the law chosen under the previous paragraph does not provide for trusts or the
category of trust involved, the choice shall not be effective and the law specified in Article 7
shall apply.




1989




Article 7

Where no applicable law has been chosen, a trust shall be governed by the law with
which it is most closely connected.

In ascertaining the law with which a trust is most closely connected reference shall be
made in particular to

(a) the place of administration of the trust designated by the settlor;

(b) the situs of the assets of the trust;

(c) the place of residence or business of the trustee;

(d) the objects of the trust and the places where they are to be fulfilled.

Article 8

The law specified by Article 6 or 7 shall govern the validity of the trust, its
construction, its effects and the administration of the trust.

In particular that law shall govern

(a)the appointment, resignation and removal of trustees, the capacity to act as a
trustee, and the devolution of the office of trustee;

(b) the rights and duties of trustees among themselves;

(c)the right of trustees to delegate in whole or in part the discharge of their duties or
the exercise of their powers;

(d)the power of trustees to administer or to dispose of trust assets, to create security
interests in the trust assets, or to acquire new assets;

(e) the powers of investment of trustees;
restrictions upon the duration of the trust, and upon the power to accumulate the
income of the trust;

(g)the relationships between the trustees and the beneficiaries including the personal
liability of the trustees to the beneficiaries;

(h) the variation or termination of the trust;

(i) the distribution of the trust assets;

(j) the duty of trustees to account for their administration.

Article 9

In applying this Chapter a severable aspect of the trust, particularly matters of
administration, may be governed by a difrerent law.

Article 10

The law applicable to the validity of the trust shall determine whether that law or the
law governing a severable aspect of the trust may be replaced by another law.

CHAPTER III-RECOGNMON

Article 11

A trust created in accordance with the law specified by the preceding Chapter shall be
recognized as a trust.

Such recognition shall imply, as a minimum, that the trust property constitutes a






separate fund, that the trustee may sue and be sued in his capacity as trustee, and that he may
appear or act in this capacity before a notary or any person acting in an official capacity.

In so far as the law applicable to the trust requires or provides, such recognition shall
imply in particular

(a) that personal creditors of the trustee shall have no recourse against the trust
assets;

(b)that the trust assets shall not form part of the trustee's estate upon his insolvency
or bankruptcy;




1989




(c)that the trust assets shall not form part of the matrimonial property of the trustee
or his spouse nor part of the trustee's estate upon his death;

(d)that the trust assets may be recovered when the trustee, in breach of trust, has
mingled trust assets with his own property or has alienated trust assets. However,
the rights and obligations of any third party holder of the assets shall remain
subject to the law determined by the choice of law rules of the forum.

Article 12

Where the trustee desires to register assets, movable or immovable, or documents of
title to them, he shall be entitled, in so far as this is not prohibited by or inconsistent with the
law of the State where registration is sought, to do so in his capacity as trustee or in such other
way that the existence of the trust is disclosed.

Article 14

The Convention shall not prevent the application of rules of law more favourable to
the recognition of trusts.

CHAPTER IV-GENERAL
CLAUSES

Article 15

The Convention does not prevent the application of provisions of the law designated
by the conflicts rules of the forum, in so far as those provisions cannot be derogated from by
voluntary act, relating in particular to the following matters

(a) the protection of minors and incapable parties;

(b) the personal and proprietary effects of marriage;

(c)succession rights, testate and intestate, especially the indefeasible shares of spouses
and relatives;

(d) the transfer of title to property and security interests in property;

(e) the portection of creditors in matters of insolvency;

(f) the protection, in other respects, of third parties acting in good faith.

If recognition of a trust is prevented by application of the preceding paragraph, the
court shall try to give effect to the objects of the trust by other means.

Article 16

The Convention does not prevent the application of those provisions of the law of the
forum which must be applied even to international situations, irrespective of rules of conflict of
laws.

Article 17

In the Convention the word 'law' means the rules of law in force in a State other than
its rules of conflict of laws.

Article 18

The provisions of the Convention may be disregarded when their application would be
manifestly incompatible with public policy.

Article 22

The Convention applies to trusts regardless of the date on which they were created.


1989

https://oelawhk.lib.hku.hk/items/show/2383

1964

v7

76

9