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Foreign courts challenge trust confidentiality

A number of offshore jurisdictions are finding themselves in situations where they must balance the need to keep details of a trust confidential against requests from courts for these to be made public.

“The trend in several offshore jurisdictions has been to balance the requirement for public justice with the legitimate interest of parties to keep their affairs private, except to the extent that there is a genuine public interest in the disclosure of relevant facts or matters necessary to demonstrate the application of legal principle, without damaging the confidentiality of the specific facts relating the case before the court,” an international expert said.

Andrew Martin, a director at a leading law firm in Bermuda, was in Malta to address a seminar organised by Step, the Malta branch of the Society of Trust and Estate Practitioners.

He said that the principles applied in other offshore jurisdictions may be of relevance and interest to practitioners in Malta because of the close similarity in the principles of public justice and justifiable exceptions contained in Malta’s own constitution. “

Mr Martin also reviewed a judgment recently passed by a Bermuda court which considered the extent to which it is possible for draftsmen of trusts to include mechanisms to restrict the availability of trust information to beneficiaries and others. The court decided that it was in principle possible to do so provided that the clause did not oust the supervisory jurisdiction of the court and enabled the beneficiaries to hold the trustees to account.

“The case was decided on its own facts. However, a number of general points of interest arose for consideration as to how the trustees might react in a situation of conflict between the parties, what the trustees duties might be and some of the practical realities of managing difficult situations when relationships between bene­ficiaries broke down,” he said.

Step Malta is setting up two technical subcommittees working on trust-specific anti-money laundering guidelines and another reacting to the European initiative on the registration of beneficial owners of companies and trusts.

Practitioners local or foreign, practising in Malta in the areas of estate and succession planning are encouraged to participate on these committees as well as join Step Malta.

The next seminar will be held on February 24 and will cover recent Maltese case law on trusts and fiduciary obligations, to be delivered by Max Ganado.

E-mail [email protected] or visit www.stepmalta.com for further information about upcoming events.

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