Trust Law DIFC Law No. 4 of 2018

PART 1: GENERAL ....................................................................................................................................................... 1

1. Title and repeal..................................................................................................................................................... 1

2. Legislative authority............................................................................................................................................. 1

3. Application of the Law.......................................................................................................................................... 1

4. Scope of the Law.................................................................................................................................................. 1

5. Date of enactment................................................................................................................................................ 1

6. Commencement.................................................................................................................................................... 1

7. Interpretation ....................................................................................................................................................... 1

8. Administration of this Law.................................................................................................................................... 1

9. Default and mandatory rules ............................................................................................................................... 1

10. Common law and principles of equity................................................................................................................. 2

PART 2: CHOICE OF GOVERNING LAW; PLACE OF ADMINISTRATION............................................................................... 3

11. Governing law .................................................................................................................................................... 3

12. Provision for change of governing law............................................................................................................... 3

13. Matters determined by governing law ............................................................................................................... 4

14. Limitations in foreign law .................................................................................................................................. 4

15. Heirship rights ................................................................................................................................................... 5

16. Foreign judgments.............................................................................................................................................. 5

17. Place of administration ...................................................................................................................................... 5

PART 3: JUDICIAL AND NON JUDICIAL PROCEEDINGS ................................................................................................... 6

18. Role of the Court in administration of trust ....................................................................................................... 6

19. Jurisdiction of the Court .................................................................................................................................... 6

20. Application to and certain powers of the Court ................................................................................................. 6

21. Payment of costs................................................................................................................................................ 7

22. Articles 23 to 28: Interpretation.......................................................................................................................... 7

23. Application of powers under Articles 24 to 28................................................................................................... 8

24. Power to set aside a transfer or disposition of property to a trust due to mistake .......................................... 8

25. Power to set aside a transfer or disposition of property to a trust exercised by fiduciary power...................... 8

26. Power to set aside the exercise of powers in relation to a trust or trust property due to mistake................... 9

27. Power to set aside the exercise of fiduciary powers in relation to a trust or trust property ............................. 9

28. Applications and orders under Articles 24 to 27 ............................................................................................... 9

29. Savings in respect of applications made under Articles 24 to 27 ................................................................... 10

30. Articles 31, 32 and Schedule 2: Interpretation ...................................... ..........................................................10

31. Arbitration of trust disputes..................................................................... ........................................................10

32. Powers of the arbitral tribunal ........................................................................................................................ 11

PART 4: CREATION, VALIDITY AND MODIFICATION OF A DIFC TRUST............................................................................. 12

33. Creation of a trust ............................................................................................................................................ 12

34. Requirements for creation.......................................................... ......................................................................12

35. Trust purposes.................................................................................................................................................. 12

36. Duration of a trust.............................................................. ..............................................................................12

37. Validity and invalidity of a trust ................................................. ......................................................................13

38. Charitable trusts............................................................................................................................................... 13

39. Non-charitable trusts or purpose trusts.......................................................................................................... 14

40. Variation and revocation of a trust................................................................................................................... 15

41. Power of Court to authorise dealings with trust property ............................................................................... 16

42. Failure or lapse of interest .............................................................................................................................. 16

43. Termination of a trust ...................................................................................................................................... 17

44. Distribution of property .................................................................................. ..................................................17

PART 5: THE BENEFICIARIES OF A DIFC TRUST ......................................................................................................... 18

45. Beneficiaries of a trust.......................................................................... ...........................................................18

46. Disclaimer ................................................................................................. .......................................................18

47. Interest of beneficiary and dealings thereof........................................................ ............................................18

48. Termination of interest of beneficiary upon trust being challenged ............................................................... 18

PART 6: PROTECTIVE TRUSTS AND CREDITORS’ CLAIMS ............................................................................................. 20

49. Protective trusts .................................................................................... ..........................................................20

50. Creditors’ claims in relation to a discretionary trust........................................................................................ 20

PART 7: OFFICE OF TRUSTEE...................................................................................................................................... 21

51. Accepting or declining trusteeship ............................................................. ....................................................21

52. Vacancy in trusteeship and appointment of a new trustee ............................................................................. 21

53. Resignation of trustee ..................................................................................................................................... 22

54. Removal of trustee by Court or under the terms of a trust............................................................................... 22

55. Position of outgoing trustee ............................................................................................................................ 22

56. Remuneration of a trustee ............................................................................................................................... 23

57. Advisory trustees............................................................................ ..................................................................23

58. Custodian trustees...................................................................................... .....................................................24

PART 8: DUTIES AND POWERS OF TRUSTEES ............................................................................................................. 26

CHAPTER 1 – DUTIES OF TRUSTEES ......................................................................................................................... 26

59. Duty to administer a trust ........................................................................ ........................................................26

60. Duties of trustees ............................................................................................................................................ 26

61. Duties of co-trustees to act together................................................... ...........................................................27

62. Impartiality of a trustee.................................................................................................................................... 27

63. Cost of administration ..................................................................................................................................... 27

64. Enforcement and defence of claims................................................................................................................. 27

65. Collecting trust property.................................................................................................................................. 27

66. Duty to inform and report......................................................................... .........................................................28

CHAPTER 2 – GENERAL POWERS OF TRUSTEES......................................................................................................... 28

67. Powers of trustee.............................................................................................................................................. 28

68. Specific powers of trustees ............................................................................................................................. 28

69. Power of accumulation and advancement....................................................... .................................................30

70. Delegation by a trustee ................................................................................................................................... 31

71. Corporate trustee may act by resolution ......................................................................................................... 31

72. Combination and division of trusts................................................................................................................... 31

PART 9: LIABILITY OF TRUSTEES AND RIGHTS OF PERSONS DEALING WITH A TRUSTEE................................................ 32

73. Liability for breach of trust............................................................................................................................... 32

74. Remedies for breach of trust............................................................................................................................ 32

75. Damages in absence of a breach................................................................. .....................................................33

76. Legal fees and costs........................................................................................................................................ 33

77. Limitation of action against trustee................................................................................................................. 33

78. Reliance on trust instrument ............................................................................ ...............................................34

79. Exculpation or insurance of trustee ................................................................................................................ 34

80. Beneficiary’s consent, release or ratification.................................................................................................. 34

81. Limitation on personal liability of trustee........................................................................................................ 34

82. Protection of persons dealing with trustees .................................................... ...............................................35

83. Trustees of more than one trust ........................................................................ ..............................................35

PART 10: RESERVED AND RESTRICTED POWERS AND INTERESTS .............................................................................. 36

84. Reserved and restricted powers....................................... ...............................................................................37

85. Incapacitation of protector or settlor................................................. ..............................................................37

PART 11: PROVISIONS APPLICABLE TO A FOREIGN TRUST........................................................................................... 38

86. Enforceability of a foreign trust........................................ ...............................................................................38

SCHEDULE 1..................................................................... .......................................................................................39

SCHEDULE 2 ............................................................................................................................................................ 43