"When faced with a trust governed by Jersey law, the applicant seeking to enforce the order against the trust will need to invoke the assistance of the Royal Court in Jersey"
"English orders which 'alter' the terms of a Jersey trust will be prima facie unenforceable in Jersey, irrespective of whether the Jersey trustee has submitted to the English jurisdiction."

Enforcing English matrimonial orders against Jersey trusts

16 Oct 2013

The English matrimonial courts have jurisdiction to vary a trust in accordance with domestic law. This is so, even where the trust is located abroad and governed by the law of another jurisdiction. Thus, 'nuptial settlements' (whether on-shore or off-shore) are prima facie susceptible to variation by the English Family Division under section 24(1)(c), Matrimonial Causes Act 1973 ("MCA 1973").

If the trust property is in England, and the settlement can be varied under s.24(1)(c), MCA 1973, there is usually no difficulty with giving effect to the court's judgment, given the range of enforcement powers at the disposal of the English courts.

However where the trust and its assets are located outside the English jurisdiction, serious difficulties in terms of implementing the English order may be encountered. When faced with a trust governed by Jersey law, the applicant seeking to enforce the order against the trust will need to invoke the assistance of the Royal Court in Jersey, and it is with this in mind that this briefing sets out the position under Jersey law.

The 'old law' in Jersey
Prior to 27 October 2006, where there was an order made by the English court against Jersey trust assets under s.24(1)(c), MCA 1973, if the trustee submitted to the jurisdiction of the English court, the order could be directly enforced through the Jersey courts without further ado.

If the trustee had not submitted to the English court, the question of enforcing the order essentially remained a matter at the discretion of the Jersey court, although in practice often that discretion was exercised to give substantial effect to the English order by means of an equivalent order made in Jersey (e.g. Minwalla [2005]).

Trusts (Amendment No. 4) (Jersey) Law 2006
Since 27 October 2006, the position was changed by virtue of Article 9(4) of the Trusts (Amendment No. 4) (Jersey) Law 2006. Article 9(4) prevented the Jersey Court from directly enforcing a judgment of the Family Division varying or altering a Jersey trust under s.24(1)(c), MCA 1973, even where the trustees had submitted to the jurisdiction of the English court.

In Radmacher [2010], the Supreme Court confirmed the decision of the Court of Appeal in Charalambous [2005], that foreign law should not be applied in English matrimonial proceedings affecting a foreign law trust. This confirms that all English orders made under s.24(1)(c), MCA 1973 will continue to automatically fall foul of Article 9(4), meaning  direct enforcement through the Jersey courts can no longer be contemplated at all.

The Jersey Royal Court's seminal decision in Mubarak [2008] makes the following two points clear about the operation of Article 9(4):

  • Where the proposed order of the Family Division amounts to a ‘variation’ of the trust (i.e. requiring the trustees to do something which is authorised by the terms of the trust), the Jersey court may give directions to the trustee under Article 51, Trusts (Jersey) Law 1984 which have the effect of achieving the objectives of the English judgment. Whether the court will do so in a particular case is a matter of discretion for the Jersey court, having regard to the interests of the beneficiaries.
  • Where the proposed order of the Family Division does not amount to a ‘variation’ but rather an ‘alteration’ of the trust, the Jersey court has no jurisdiction to give directions under Article 51 which authorise or direct the trustees to act in a manner which is outside the powers conferred on them by the trust deed, making the English order completely unenforceable. An example of an ‘alteration’ might be an attempt to add an excluded person as a beneficiary where the addition is not permitted by the terms of the trust.

Trusts (Amendment No. 5) (Jersey) Law 2012 [in force from 2 November 2012]
The latest round of changes introduced by Amendment No. 5 aim to ensure that any issues relating to a Jersey trust are decided exclusively in accordance with Jersey law. The list of matters set out in Article 9(1) which must be determined in accordance with Jersey law has been extended to include questions concerning 'the exercise by a foreign court of any power to vary a Jersey law trust' as well as 'the nature and extent of beneficial rights or interests in trust property'. Article 9(4) has been replaced - it now includes decisions of foreign tribunals as well as judgments of foreign courts, and applies to the giving of effect to, as well as the enforcement in Jersey, of such decisions.

In reality, Amendment No.5 is a refinement and reinforcement of the existing Article 9 in light of Mubarak, not a complete re-write. The implementation of orders which 'vary' the terms of a Jersey trust will be possible by the making of equivalent orders in Jersey, subject to the discretion of the Jersey court. English orders which 'alter' the terms of a Jersey trust will be prima facie unenforceable in Jersey, irrespective of whether the Jersey trustee has submitted to the English jurisdiction.

The future
The challenge for the English courts in the future remains how to respond to the evident displeasure of the offshore legislatures and courts as to the 'meddling' of English courts with their trusts. Some soothing words have been issued by the English courts in recent times (e.g. Charman [2007]), but it remains to be seen whether this will diminish the invoking of jurisdiction under s.24(1)(c), MCA 1973.

It will be sensible as a matter of course to seek specialist Jersey trusts law advice prior to obtaining orders against a Jersey trust in the English court (rather than leaving this issue to be considered after the English ancillary relief proceedings have concluded, albeit that an application to the Royal Court for enforcement purposes may well also be necessary at that time). To avoid any enforcement difficulties, it may also now be worth asking the English court to invite the Jersey court to become an auxiliary in order to effect a trust variation more 'cleanly' (as suggested by the Royal Court in the postscript to In the Matter of the B Trust [2006], noted by the English Court of Appeal in Charman).

Both from a wealth management and enforcement perspective, the need for cooperation across jurisdictions seems greater than ever.