PRESS RELEASE

FOR IMMEDIATE RELEASE
Date: 25 March 2008
Contact: Catherine Chesnut
Telephone: 244-3840

Chief Justice Speaks to International Audience:
External Debate on Cayman Trusts Turns on “Control” Issues

“The real impetus for the debate (is) no longer genuine concerns about abuse...but more about the control of movement of money in our ever more globalised economy,” said Chief Justice Anthony Smellie, QC, commenting in a speech on allegations that offshore trusts were “shams”. The Chief Justice was recently speaking to an international audience of lawyers, judges and trust practitioners in Provence, France, on the legal and judicial aspects of administration of Cayman-based trusts.

“The ‘dark side’ (that) sometimes dominates (‘onshore’ perceptions of trusts) are baseless,” the Chief Justice told the audience of some 200 members of the international legal and trust practitioners fraternity.

Supporting his position by exploring widely recognised case precedents, the Chief Justice said that, with ever widening awareness, there is “hope that there could yet be an enlightened approach to the onshore discussion on the subject of offshore trusts.” At the same time, the Chief Justice, noting that this was not a newly emergent threat, referenced a New York Times quote by US Senator Carl Levin, who authored a damning report based on the thesis that “the law should assume that any transaction in a tax haven is a sham”.

Legal Week, the flagship publication of the UK publishing company, organised the forum as part of a regular programme of high profile events for the legal profession. Legal Week is said to be the only legal title to ever win what is classed as the publishing industry's most coveted award -- the PPA Business Magazine of the Year. The PPA is an association for publishers and providers of consumer, customer and business media in the UK.

In his presentation the Chief Justice noted the common root of trust laws among jurisdictions such as the US, England and, by extension, the Cayman Islands, and examined whether there was any “tension” among these related pieces of legislation. He noted, for example, that Cayman’s legislators drew “inspiration” from the New York Estates, Powers and Trusts Law, when (they were) formulating the foreign element provisions in related local legislation.

Cayman’s legislation, he concluded, had the same core provisions of exemplary legislation elsewhere, with respect to “requiring trustees to perform trusts honestly and in good faith for the benefit of the beneficiaries...and creditors...”.

This approach, he said, aimed to achieve a compromise between the rights of the individual to protect his or her assets and, on the other hand, the rights of legitimate creditors to pursue their claims. Thus legislators and the judiciary had to achieve a fine balance between these competing imperatives, including assuring the integrity of the international crime-fighting and anti-money-laundering regimes.

Presenting case study after case study showing that these tests have been met in terms of how matters are settled, the Chief Justice then posited his perspective on the real underlying concern – the issue of where the real control of trusts lay.

At the conclusion of outlining those issues, Chief Justice Smellie said the resolution of those concerns took the discussion to the heart of the trust concept – and that was the “the central idea that gives it its legal magic” -- that it must have “the flexibility that is desired as well as the certainty that is necessary”.

And that, the Cief Justice said, is exactly what underpinned the approach of local courts: “At the heart of the judicial approach – at least in the Cayman Islands – is the notion that the trust, in order to be valid, must be subject to the supervision of the court in the enforcement of the core obligations to perform it honestly and in good faith.”

And that message is getting home, the Chief Justice said, at least among legal professionals. “On this occasion,” he told his audience, “it has ... been a pleasure to present the Cayman Islands’ point of view to such an obviously enlightened gathering.”

For the verbatim text of the Chief Justice’s speech, go to http://www.caymanjudicial-legalinfo.ky