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
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
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
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
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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