'Shari'ah compliant' has become a popular term,
especially in reference to financial products and services such as
trusts. However, the term must be used with caution.
In Guernsey we recognise that no one standard trust can be
regarded as being 'Shari'ah compliant' for all
purposes. There is no uniform Shari'ah code but at least eight
different schools of thought. Client requirements will depend on
their nationality, branch of Islam and also what they want to
achieve. We have service providers who are experienced and
skilled at working with clients and Shari'ah advisers
to establish bespoke structures that meet these needs.
Essentially, in Guernsey, we recognise the need and have
the expertise – working in conjunction with an
appropriate Shari'ah adviser – to craft tailor-made
trusts that reflect the specific requirements of a
Of course, 'Shari'ah compliant' trusts, as with any
trust, must be structured to meet the expectations of the settlor
while also according with the laws of the jurisdiction which will
govern it. This is usually, although not necessarily, the law of
where the trustees are located. Settlors should therefore take
great care in deciding upon a jurisdiction for establishing a
trust. Guernsey offers the advantages that it has: an established
trust regime; mature yet modern legislation that is flexible enough
to accommodate the application of principles from the Shari'ah;
professional advisers familiar with the relevant laws and
principles; and regulated trustees.
Certain jurisdictions new to the provision of trust services are
eager to establish themselves as locations in which to set up
fiduciary structures. Some of these are Islamic nations. It is
understood that settlors may prefer to set-up trusts closer to
where they are based, meaning that courts are on hand to deal with
disputes and the language in which the trust is established will be
However, most trusts are written in English and for historic
reasons the vast bulk of trusts jurisprudence, statutes, reported
case law and academic articles are to be found in English.
Therefore there will be challenges for practitioners who are asked
to prepare a trust in a language other than English and for a court
which is asked to interpret trust legislation and documentation in
another language. There may be difficulties for courts in
'new' trust jurisdictions when called on to apply this
judicial learning in circumstances where the corresponding words or
phrases may have a different meaning or emphasis.
A popular trust structure in Guernsey, when dealing with family
wealth held in companies, is that of a Private Trust Company (PTC).
Directors of such a company may include the settlor and members of
his family. The directors control the company, which as trustee, is
the legal owner of the trust assets. The Island is constantly
striving to ensure that local practitioners can offer clients the
very widest range of products and services and that is why we are
now working on introducing the concept of Foundations.
Service providers experienced and skilled at working with
Shari'ah advisers to provide tailored trusts that meet client
Tried and tested trust regime
Mature yet modern legislation
New Trust Law, including Purpose Trusts and perpetual
Private Trust Companies (PTCs)
Foundations coming on-stream
In the same time zone as the UK, which is convenient for doing
Located close and with links to London, other UK cities and
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