The recent Chinese Trust Act has created a stir in trusts scholarship by taking no position on the location of title in the trust assets, not requiring that title to vest in the trustee. The Act thus permits settlors to retain title in the trust assets despite having appointed another as trustee. Leading trust scholars have criticised the Chinese Act’s noncommittal approach, pointing to the difficulties created by settlors continuing to own the trust assets. The present article attempts to evaluate the efficacy of such “shapeless trusts” and “settlor title retention trusts” by examining the career of the Chinese Act’s principal predecessor – the Israeli Trust Act of 1979, which established the world’s first shapeless trust regime. I identify two advantages of such regimes. One is their making trustees’ duties and beneficiaries’ effective remedies applicable in fiduciary situations conventionally analysed as agency, nomineeship or, under civil law systems, mandate. A further advantage is that “settlor title retention trusts” may help introduce the trust mechanism to potential settlors unaccustomed to it, who may be deterred by the prospect of giving away title in their property.
Chinese Trust Lawsupra note 2 at § 20 (emphasis added).
Reidsupra note 20 at 7; the same point was noted by Ho Reception of Trusts in Asiasupra note 8 at 295-96; Ho Trusts in China: Property or Contract?supra note 8 at ¶ 8.
Chinese Trust Lawsupra note 2 at § 40; under § 52 a trust is not terminated by the death insolvency or incapacity of its settlor or trustee.
Chinese Trust Lawsupra note 2 at § 15 provides that where a settlor is not also a beneficiary on his death dissolution cancellation or bankruptcy “the trust shall subsist and the trust property shall not be his legacy or liquidation property.”
Reidsupra note 20 at 7 10-12.
The Conventionsupra note 4 § 2. See Lupoi Trusts supra note 3 at 327-67 (critique of the convention); for further criticism of art. 2 see Principles of European Trust Law supra note 30 at 38-40.
The Conventionsupra note 4 § 2. Lupoi noted the “closeness” of the definition in the 1979 Act § 1 to that in the Hague Convention. Lupoi Trusts supra note 3 at 279 334. Lupoi described the Israeli definition as “the only legislative formulation which defines the relationship without indicating its source.” Lupoi Trusts supra note 3 at 305 n.228. The Israeli definition lost its exclusiveness in 2001 with the enactment of the Chinese Trust Law. Lupoi’s statement appears to have been correct when he made it: the original (Italian) version of his book appeared in 1994. See also Donovan Waters’ brief analysis of the 1979 Act in D.W.M. Waters The Institution of the Trust in Civil and Common Law 252 Recueil des cours 113 376-78 (1995).
The Conventionsupra note 2 at § 2 (emphasis added) (alterations added).
Chinese Trust Actsupra note 2 § 2 (alterations added); see discussion in Part I.
Moffat et al.supra note 54 14.
Goldman lettersupra note 74.
Shamgar to Goldman Apr.31972same file.
Trusts Billsupra note 85; Comments by Yadin protocol of the Knesset Legislation Committee meeting held January 16 1978 p. 8.
Comments by Kerem in protocolsupra note 93 pp. 2-3.
The draft dated March 211978is in the Knesset Archives.
Alon KaplanThe Use of Trusts and Offshore Structures in Israel and Major Changes in Israeli International Taxation8.9 Tr. & Trustees 14 (2002). See also Alon Kaplan et al. Israel Launches Trust Tax Amnesty 10.5 Tr. & Trustees 21 (2004). Similar sentiments were expressed by another leading Israeli trusts practitioner Michael Shine in an interview held May 12 2011 [hereinafter: Shine Interview].
Alon Kaplan, The Use of Trusts and Offshore Structures in Israel and Major Changes in Israeli International Taxation, 8.9 Tr. & Trustees 14 (2002). See also Alon Kaplan et al., Israel Launches Trust Tax Amnesty, 10.5 Tr. & Trustees 21 (2004). Similar sentiments were expressed by another leading Israeli trusts practitioner, Michael Shine, in an interview held May 12, 2011 [hereinafter: Shine Interview].)| false
Friedmansupra note 131 at 334. By his next edition of 1998 he retreated to a less distinct position noting that it is unclear whether the Act requires as a precondition for the creation of a trust that title in the trust assets be transferred to the trustee. Daniel Friedman The Law of Unjust Enrichment 535-36 (2d ed. 1998). He still hinted however that the wider reading of the Act is preferable. Id. at 154 n.60.
Kerem Trusts 1st ed.supra note 133 at 20; Kerem Trusts supra note 38 at 37-39.
Kerem Trusts 1st ed.supra note 133 at 28 61; Kerem Trusts supra note 38 at 42.
Kerem Trusts 1st ed.supra note 133 at 26 50; Kerem Trusts supra note 38 at 80-84; see also S. Kerem Guaranteeing Trust Assets and the Beneficiary’s Rights 35 HaPraklit 52 (1984).
Alter Dissertationsupra note 41 at 22-62; Avraham Alter The Cestui que Trust’s Right in the Trust Property 35 HaPraklit 307 (1984). Following Alter’s unpublished dissertation and his article of 1984 the quantity of Israeli academic treatments of trust law questions started declining rapidly excepting Kerem’s later editions. For a few later treatments see Cohen supra note 109; Deutsch supra note 109; Rabinovich-Brun supra note 37.
Weismansupra note 66 at 378-81; Ho Trusts in China: Property or Contract?supra note 8 at 5.