The Privy Council (Neuberger, Mance, Reed, Hughes and Hodge) handed down its judgment in Crociani on 26 November 2014. In a single judgment delivered by the court, the decision of the Jersey Court of Appeal has been upheld, and a stay of the Jersey proceedings in favour of Mauritius refused.
The Privy Council's reasoning does not fundamentally differ from that of the Jersey Court of Appeal. However, there are certain important aspects of the decision in which the Privy Council has added its own slant, and in doing so has arguably reduced rather than enhanced the clarity of the current position.
Thus, where the Jersey Court of Appeal had concluded that in the context of Clause Twelfth (the clause asserted by the Appellants to confer exclusive jurisdiction on the Courts of Mauritius), 'forum of administration' meant no more than the place where the trust was to be administered on a day-to-day basis, the Privy Council has taken a slightly softer line. It has held that the expression can also refer to the court which is to enforce the trust. However, on the basis of the wording and context of the clause, the Privy Council has concluded that in this instance the draftsman's intention was simply to identify the place where the trust's affairs were to be run.
In particular, it noted that it was feasible to think that the draftsman would have considered it appropriate to stipulate where the trust's affairs were to be organised or run, as this could have affected the way in which the trustees were taxed. The court also observed that the draftsman had referred to a country rather than its courts, and this suggested that what was intended was a reference to the place where the trust was to be managed.
The Privy Council has then clouded the water a little further by observing that even if the effect of the wording in clause Twelfth does confer jurisdiction on the courts of Mauritius, it is not sufficiently clearly expressed to confer exclusive jurisdiction.
It therefore appears that in future cases where wording of this type falls to be construed, close attention will need to be paid to the context and to the precise manner in which the clause is expressed.
As to the meaning of the words 'subject to the express jurisdiction', the Privy Council has held that in the context of clause Twelfth the purpose of the wording was to ensure that all issues concerning the trust were governed by the same proper law, rather than to confer exclusive jurisdiction on the courts of a country. The court noted in particular that the latter interpretation was at odds with wording elsewhere in the trust deed.
Finally, and perhaps most interestingly, the Privy Council has drawn a clear distinction between the effect of exclusive jurisdiction clauses in a trust context and similar clauses in a contractual situation. It has concluded that it should be less difficult for a beneficiary to resist the enforcement of an exclusive jurisdiction clause than for a contracting party to do so. Put another way, the weight to be given to an exclusive jurisdiction clause in a trust deed is less than the weight to be accorded to an equivalent clause in a contract. What is required is a balancing exercise in which the strength of the case needed to defeat the enforcement of the clause is "less great where the clause is in a trust deed". In doing so, it has rejected the approach of the Jersey Court of Appeal which had, albeit in a passage of the judgment which is not very clearly explained, concluded that no such distinction exists.
The Privy Council relied in particular on the fact that the court has a supervisory role to play in a trust context which does not exist in contract, and that this is employed primarily to protect the interests of beneficiaries. Moreover, while it is reasonable to expect that a beneficiary will hold themselves bound by the terms of the trust if they are to benefit from it, this is not of the same order as a contractual commitment. For these reasons, it appears that a trustee will have to come up with 'a good reason' for adhering to such a clause, and that where appropriate the court will intervene to uphold the interests of the beneficiaries. The reasoning is certainly attractive; quite how this rather woolly test will operate in practice remains to be seen.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.