A Study On The Legal Application Of Foreign Trust

Trust，as one of the means of property management, is a legal relationship created by thesettler, through a trust document. It is designed for assets to be placed under the control of anominated trustee for the benefit of a beneficiary or for some specified purposes. The trustsystem originated and has long been prevailing in the common law system countries, howeverfor China, it was an entirely new concept and therefore in order to make it suitable for ourvery own legal system and circumstances, localization is inevitable. Although in the practicefield of trust business, the use of foreign trust is rare, we can definitely predict that with thegradual development of the trust business itself the related areas will expand greatly togetherwith the same. The development of foreign trust law is merely a matter of time.Internationally there is the Hague Recognition of Trusts Convention specializing insolving conflicts of foreign trust law and nationally we have the Law of the People’s Republicof China on Law Application for Foreign—related Civil Relations. The purpose of thefollowing article is to summarize and extract general rules from the theory of foreign trustrelations. After a detailed analysis of the Hague Recognition of Trusts Convention, attention ispaid to the domestic legislation. In specific, the emphasis is placed on the following aspects:first, analyzing and commenting on Clause17of the Law of the People’s Republic of Chinaon Law Application for Foreign—related Civil Relations; then pointing out the loopholes ofthis legislation and provide some advice on how these can be improved.To be more specific, this article is divided into four individual parts. Being Part one startswith the history and the basic theory of the trust system, introducing the trust system in bothforeign and national legal systems and therefore brings the discussion about the foreign trustlegal relationship and potential legal conflicts between the two legal systems. Part twointroduces the legal applications of the foreign trust system. Owing to the complexity of thetrust system itself, the author proposes to adopt the division theory, namely dividing theforeign trust relationship into foundation of trust and trust itself, adopting different regulationsin practice. Part three provides a brief introduction on the Hague Recognition of TrustsConvention. Given the main focus of this article is on domestic legislations, this part paysmajority of the attention on the discussion of problems encountered by civil law countrieswhen in the process of adopting and applying foreign trust laws. This part attempts to revealthe real hinder in popularization of the convention, laying basis for the later part. The last part focuses on the domestic regulations, especially the regulations in the law application offoreign trust in our country. After the discussion, the author provides suggestions as to theimprovement of legislating the legal application of foreign trust in China.