Jersey & Guernsey Law Review – February 2012
A New
World of Trust Litigation: a Cayman perspective
Anthony Smellie
Introduction
1 There
are some aspects of the “new world” in which litigation affecting
trusts is being conducted that are of significant concern to offshore
practitioners and, as a judge actively engaged in the business, it is hoped
that the following remarks will be of interest.
2 Notwithstanding
the remarkable success of the financial industry in overseas territories such
as the Cayman Islands, even a cursory glance at the morning newspapers over the
last few years, and certainly since the catastrophic economic collapse of 2008,
would make it increasingly apparent that we now live and work in a “brave
new world” of international regulation; one driven at least in part by
the need to enlarge and protect the revenue bases of the leading economic
powers and in which the onshore powers have declared their intention to move
inexorably towards a new, universal standard for automatic exchange of tax
information.
3 The
inevitability of conflict between this objective and the intended use of the
offshore trust, for the protection and management of private wealth, is already
apparent.
4 The
modern offshore trust was forged by careful judicial reasoning and legislative
activity. Its development has, to some extent, been influenced by the pressure
caldron created over the years by the various international initiatives led by
onshore regulators and revenue agencies; initiatives which, at times, have
threatened to undermine the offshore trusts industry. At times, the changes
wrought by those initiatives, or the very assumptions which underlie them, have
threatened to alter fundamentally the rule of law in financial regulation in
the British Overseas Territories.
On each occasion, inroads are made, and adjustments are
required, but the trust concept, buffered by its ancient and extensive root
system in English law, survives.
5 These
renewed efforts towards an international standard for transparency will require
careful and constructive responses from offshore legislators and practitioners.
Those responses may themselves change the context in which trust litigation
takes place offshore. Ultimately, and depending on the offshore responses, in
particular from the legislators, judges will have the task of balancing the
competing demands of transparency and confidentiality with the interests of the
litigants. What then does this new regulatory climate mean for resolution of
disputes and court applications affecting trusts, in particular so far as it
concerns the disclosure of information relating to assets held in trusts in
jurisdictions like the Cayman Islands?
The
development of the offshore trust
6 The
so called offshore jurisdictions, in spite of the common legal heritage they
share with England,
with each other and with the other leading Commonwealth countries, are often
perceived by onshore commentators as offering “new fangled” and “illegitimate”
products for use in objectionable ways. Given the common root of the trusts law
of jurisdictions like the United States,
England and the British Overseas Territories,
one may well ask the question whether there is any good reason for this
profound scepticism on the part of some onshore regulators. Is there any good
reason why offshore trusts should be viewed or treated differently than their
onshore counterparts?
7 The
trust was born in English common law and equity and the concept underwent
significant changes in its infancy and adolescence in England to reflect the changing
social and economic reasons for its use. To quote Maitland—
“if we were asked what is the greatest and most
distinctive achievement performed by Englishmen in the field of jurisprudence,
I cannot think that we shall have any better answer to give than this, namely
the development from century to century of the trust idea.”
8 However,
the rapid evolution of the modern trust concept has taken place over a
relatively short period of time and the pace has been led in
this regard by the leading British Overseas Territories,
such as the Cayman Islands, Bermuda and the BVI, as well as the Channel Islands.
9 English
law and, with it, the concept of the trust, was imported into the British Overseas
Territories on settlement which, in
the case of the Cayman Islands, occurred in
the mid-17th century.
As they emerged during the late 20th century as financial centres, these
territories were, however, keen to set off on their own path, and it is fair to
say that some distance emerged during the late 1980s and early 1990s between
the English legislation and their home grown statutory provisions which have
breathed new life into the trust concept.
10 Professor
Donovan Waters, QC remarked in a paper published in the Journal of International Trust and Corporate Planning
in 2006 that “the period from 1975 to the present day has belonged, so
far as trust law is concerned, to the so-called offshore jurisdictions.” His
central thesis was that doctrinal change has been almost exclusively wrought by
the offshore jurisdictions during that period. The first major change,
according to Professor Waters, involved the “separation of beneficial
enjoyment from the right to enforce trustee duties”, the leading example
of which appears in the STAR provisions of the Cayman Islands Trusts Law, now
in the 2009 Revision.
The second change was the implementation of “legislative provisions
[designed to ensure] that a trustee only has those duties which [it] has been
given by the settler”. Hence, the idea was developed that the trust deed
can relieve a trustee of all responsibility for holding assets, for example,
for the fate of underlying companies. The clearest manifestation of this was in
the VISTA legislation introduced in the BVI in
2004.
11 Legislative innovation was apparent in the very early
days of the development of the industry as well. In the Cayman
Islands, the Fraudulent Dispositions Law 1989 replaced the Statute
of Elizabeth, creating a regime for balancing legitimate asset protection
objectives against creditors’ rights.
In the same year, foreign element protection provisions were introduced into
the Trusts Law.
12 This
legislative innovation has been mirrored by equally careful reinforcement by
the courts in many of the leading offshore jurisdictions of the central
principles underlying the concept of a trust. The judges in those territories
face what the Cayman judiciary has described as the unique challenge of
frequent examination and reinforcement of the “irreducible core” of
the trust, in relation to the new and exciting ways of using them offshore. In
so doing, we return inevitably to our roots in English law. The core concept of
the trust has time and again been reinforced by offshore courts, applying the
well known dicta of Millett, LJ in Armitage v Nurse
to the effect that—
“there is an irreducible core of obligations owed
by the trustees to the beneficiaries and enforceable by them which is
fundamental to the concept of a trust.”
That principle,
based as it is on an understanding of the trust as an idea underpinned by what
are essentially moral obligations—those of the trustee to its
beneficiaries—and enforceable by them, re-traces the origin of the trust
as a development and extension of the “use”.
13 Professor
Waters and others have provided us with fascinating explorations of the history
of the development of the trust, noting, for example that—
“The common law system’s
trust has its origin around the middle of the fourteenth century, when the
medieval Lord Chancellors began to enforce a ‘use’ against the
transferee . . .”
14 Notwithstanding
this common heritage, rooted in English law, and shared not only with the
mother country but also with the United States of America, onshore regulators
and revenue agencies at regular intervals—motivated by the domestic
concerns of the leading economic powers—sought to impose measures which
threaten to erode the concept of the trust entirely; proceeding, as many of
them appear to do, upon a presumption that all offshore transactions are
illegitimate until proven to be legitimate. It is indeed ironic that a legal
tool developed in order to bind the conscience of those who had taken property
to hold for the benefit of others, could now be presumed to be devoid of
substance until proven otherwise.
International
regulatory initiatives
15 It
is worth beginning by highlighting some of the various international
initiatives before moving on to consider some of the case law.
16 In
the United States
there have been various congressional initiatives, in particular the Stop Tax
Haven Abuse Act, on which President Obama campaigned and which has been
re-introduced as a Bill in Congress. It establishes presumptions relating to
offshore entities, many of which fly in the face of the legal principles
actually applicable to those entities in the governing jurisdictions. One of
the proposed provisions of the statute, for example, would mean that all powers
and interests held by protectors of foreign trusts, should be attributed to the
US
grantor. Another aspect of the bill is the provision that “if in a tax
proceeding a US
person directly or indirectly formed, transferred assets to, and was a
beneficiary of, or received distributions from an [offshore] entity, it will be
presumed that the person exercised control over the entity”.
17 It is to be assumed that the presumptions would only be
rebutted by adjudication by the US
revenue authorities or courts. The Bill appears to require information exchange
protocols geared towards automatic exchange of information in order for a
territory’s information exchange practices to be deemed effective. For
those purposes, it identifies 24 “Offshore Secrecy Jurisdictions”;
including all the major offshore financial centres, as “probable
locations for US tax evasion.”
18 The
fate of the bill, of course, remains to be seen, but it is exemplary of the
current onshore attitude.
First, the presumption is that the offshore transaction or structure is
controlled and/or owned beneficially by the domestic taxpayer. Secondly, the
assumption is also one of illegitimacy until proven otherwise and the issue of
legitimacy is expected to be adjudicated upon within the taxing jurisdiction. Finally,
on the basis of these assumptions, a framework for almost wholesale exchange of
otherwise confidential information must be erected in return for reduced
scrutiny of transactions and in order to avoid negative publicity and even the
imposition of financial sanctions such as those already enabled by the
so-called “Patriot Act” (31 USC 5318(a)). The tendency to merge
anti-money laundering and anti-terrorism efforts with these efforts, is another
manifestation of the attitude of presumed illegitimacy adopted against offshore
structures.
19 The
Bill has not received universal acclaim. A typically objective criticism
appears in the Minnesota Journal of International Law—
“In the event of its passage, the Stop Tax Haven
Abuse Act will fail to eliminate tax havens and foreign tax evasion. The Act is
not geared toward international co-operation. Instead, it uses a ‘name
and shame’ strategy, which other countries have an incentive to oppose.
Fortunately, alternative mechanisms for the exchange of
international tax information exist, such as an international tax authority
with domestic enforcement powers . . . These alternatives take into
account the needs of tax haven jurisdictions and therefore
are more likely to promote international co-operation.”
Confidentiality
and information exchange
20 It
is important to say something about duties of confidentiality owed by trustees
and others who come into contact with trust structures, one of the key areas where,
especially because of the international initiatives, there will be challenges
and difficult questions arising in the “new world of trust
litigation”.
21 The
first wave of litigation—now diminished—that affected Cayman Islands trusts in the late 1980s and early 1990s,
arose from attacks from foreign quarters as a result of forced heirship or
other claims, or in an attempt to enforce foreign orders. The challenge of the
next decade is likely to be the need—
“to strike the balance between the legitimate
objectives of claimants and of the global initiatives against serious crimes,
while at the same time protecting the legitimate interests of beneficiaries of
valid Cayman Islands trusts, as well as those
of innocent third parties”.
In other words,
and it is self-evident, a balance needs to be struck and maintained between the
rights of the client to confidentiality and the needs of law enforcement and
regulators for access to information.
22 More
than ten years ago, in its 1998 Report,
the OECD proposed that—
“Ideally, all Member countries (and by extension
tax havens) should permit tax authorities to have access to bank information,
directly or indirectly, for all tax
purposes so that tax authorities can fully discharge their revenue raising
responsibilities and engage in effective exchanges of information.” (Emphasis
added.)
23 This proposal would make all claims to
legitimate confidentiality redundant as it would allow the tax regulators to
have unrestricted access to confidential information without the need to show first
that there is a reasonable basis for believing that a tax crime had been
committed.
24 At the
time,
the author made the following remark—
“This refusal to acknowledge the distinction
between criminal (tax evasion) and morally wrong conduct on the one hand and
conduct which is legal, economically advisable and often desirable on the
other, is a clear danger sign for the future. From the legal and
jurisprudential point of view, the implications are very far-reaching. Most
fundamentally, if the prima facie
showing of a (tax) crime is no longer to be required, then on what proper basis
can the proposed invasion of privacy be justified?”
25 Transparency was one of the key issues on the
agenda at the G20 London summit in April 2009 and at their follow up meeting in
Pittsburgh in
September 2009. Immediately following the London
summit, the OECD published its “Progress Report” on 82 financial
centres (“the OECD Report”) in which it assessed their progress
towards achieving the new international standard. Achievement of the highest
tier of the list (the so-called “White List”) was dependent on the
number of Tax Information Exchange Agreements (“TIEAs”) which a
financial centre had concluded prior to the Summit. The “Black List”, which
was notably described by one commentator as “the world’s shortest
black list”
is now empty. By August, within months of the publication of the OECD report,
the Cayman Islands and the BVI had been
elevated to the White List as a result of having concluded the requisite number
of TIEAs.
26 The somewhat arbitrary set of criteria on
which the OECD Report was formulated did not examine the implementation of
existing disclosure provisions or mechanisms; or the adequacy of legal gateways
to information which were already available in the centres concerned. There was
no review of existing jurisprudence or the legislative framework, other than
the number of TIEAs implemented. Perhaps it is not too much to expect that
meaningful scrutiny will come with other progress reports in the future.
27 The first
point to note when considering the implications of all this for the development
of the law within the territories affected is, of course, the history of
private client confidentiality, as it has developed in English law—the
legal system that anchors that of the overseas territories.
28 Duties of confidentiality, as part and parcel
of the duties of loyalty and good faith, are necessary incidents of a fiduciary
relationship, a relationship established by duties which come from the
wellspring of equity; from the obligations, policed by the courts of equity, to
hold identified property for the benefit of others. These obligations, forming
part of the moral code which governs fiduciaries, are the hallmarks of personal
relationships of “trust and confidence”, underpinned by the solemn
obligation of the professional or entrusted person to respect the privacy of
those whose interests he must protect. This is an idea with deep roots in the
common law of both England
and the United States of
America.
29 Indeed, until recently, the information
concerning the property itself could be seen as part of the fund in question,
to which the beneficiaries of the arrangement in question had proprietary
rights which could not be usurped any more than their rights to the beneficial
enjoyment of the property in question could be usurped. To do so would be a
fundamental breach of duty.
30 The law has developed so as to move away from
the idea that there are proprietary rights in trust documents and towards the
view, expressed by the Privy Council in Schmidt
v Rosewood that—
“the more principled and correct approach is to
regard the right to seek disclosure of documents as one aspect of the
court’s inherent jurisdiction to supervise, and if necessary intervene
in, the administration of trusts. The right to seek the court’s intervention
does not depend on entitlement to a fixed and transmissible beneficial
interest. The object of a discretion (including a mere power) may also be
entitled to protection from a court of equity, although the circumstances in
which he may seek protection, and the nature of the protection he may expect to
obtain, will depend on the court’s discretion”.
31 Courts throughout the Commonwealth
are familiar with the balancing exercise required in discharging this role. To
quote again from the decision in Schmidt
v Rosewood—
“Especially where there are
issues as to personal or commercial confidentiality, the court may have to
balance the competing interests of different beneficiaries, the trustees
themselves, and third parties. Disclosure may have to be limited and safeguards
may have to be put in place. Evaluation of the claims of a beneficiary
. . . may be an important part of the balancing exercise which the
court has to perform on the materials before it.”
32 Since at least the early 1990s, in cases before
the Cayman courts dealing with applications for the disclosure of trust
information, the courts have conducted the kind of balancing exercise envisaged
by the Privy Council in that later case.
33 The public policy considerations which come
into play when considering the wider disclosure of trust information (or other
confidential information exchanged in the course of a professional or fiduciary
relationship) have also been given extensive judicial consideration.
34 The widely accepted common law principle that
the trustee (or any fiduciary), concomitant with his or her duties of loyalty,
owes a duty not to divulge confidential information has, as one would expect,
informed the judicial approach to these questions of disclosure. In the case of
Re Ansbacher (Cayman) Ltd,
the principle was affirmed in these terms; a request for confidential
information from the Irish authorities being, at that stage, patently based
upon nothing more than an unsubstantiated presumption of wrongdoing—
“One principle has, however, always remained
constant here, as it has in all countries which share our common law heritage:
the law is not premised upon any presumption of wrongdoing . . . it
follows that this court must stand ready the more so to reject any request for disclosure
which may proceed upon a presumption that the mere fact of doing business with
a Cayman financial institution points to some reproachable objective such as
tax evasion”.
35 Nor is confidentiality necessarily anathema
to good regulatory practices or international exchange of information. As Mr
Gabriel Makhlouf
stated in his announcement of the then highly controversial
OECD Report on Access to Bank Information for Tax Purposes—
“this Report is quite explicit in recognizing the
legitimate role that bank secrecy plays in protecting the confidentiality of
financial affairs and the soundness of financial systems”.
36 The traditional basis for disclosing private
client information is the suspicion or proof of the commission of a crime or
breach of fiduciary duty. Where that information is to be provided in the
absence of any such allegation, standards will be new and must be carefully
elaborated. New legislation (such as we have seen with the “Patriot
Act” and proposed Tax Haven Abuse Act) will no doubt emerge which require
scrutiny and interpretation by the offshore courts, balancing the public policy
concerns and considerations.
37 In the Cayman Islands,
the Confidential Relationships (Preservation) Law (1995 Revision) (“the
CR(P)L”) sets out comprehensive provisions for the protection of
confidentiality and for the disclosure of confidential information in
appropriate circumstances. It is a statute which has now been qualified in many
instances by the passage of subsequent legislation which provide for disclosure
of confidential information in keeping with the Islands’
international obligations. In this context, it is worth noting the Tax
Information Authority Law. This is legislation which has been enacted
specifically to enable the implementation of the Islands’
various treaty obligations for the exchange of tax information. In light of the
persistent criticisms emanating from some of the G20 governments, including in
particular the United States and in the United Kingdom, one might well be
surprised to learn that among these treaties executed by the Cayman Islands are
several with the United States, the UK and much of the rest of the European
Union.
38 The treatment of cases under the CRPL has
been consistent and has, notwithstanding the advent of the tax treaties,
reflected the type of balancing exercise in which courts are frequently engaged
when adjudicating upon claims to confidentiality. In In re Ansbacher (above), the author made the following
remarks—
“While the confidential information about the
affairs of persons doing business in and from the Islands
is required to be protected, the protection afforded by the Law is not
absolute. Disclosure will be allowed where appropriate to ensure that justice
is done in disputes between persons and where the enforcement of the criminal
law and the administration of justice—whether here or overseas—requires
that disclosure be allowed . . . the disclosure of confidential
information has been allowed and directed by this court in numerous cases,
involving many different countries and many different legal
issues and circumstances . . .”
39 There is also, however, the difficulty
presented by the conflict of laws. This conflict is likely to present unique
challenges in the future, with the stated intention of many of the
“onshore” regulators to assert jurisdiction over disputes
concerning the validity or effect of the structures concerned.
40 In the case of In re H, the central question was whether the
assets of a Cayman domiciled trust should be available to a US court-appointed trustee in
bankruptcy of the settlor, even though they had been settled upon trust long
before any event of bankruptcy occurred. The trust was a discretionary trust
for the benefit of the settlor’s family. The trustee was required on pain
of penalty by the US Grand Jury to disclose all information about the assets of
the trust and applied to the court in Cayman, whose law governed the trust, for
directions. Directions for disclosure were refused on the basis that the
presumption of continuing ownership of the trust assets by the settlor—the
presumption that underpinned the Grand Jury’s subpoena—was inconsistent
with the contrary position under Cayman law. The action in the US court
against the Cayman trust assets was not pursued. That was not surprising, as
the case In re H was decided on
principles already well settled as a matter of both English and American law
(see XAG v A Bank)
41 The judgment continued at p 244 that—
“If validly constituted, the trust must be regarded
as holding property independently of its settlor. That pivotal issue of
validity remains to be decided . . . as a matter of Cayman law, which
governs the trust. While that pivotal issue remains to be decided
. . . it would be contrary to public policy and an unwarranted
negation of the applicant’s duty of confidentiality owed as trustee, to
direct that he should give into evidence confidential information in (foreign)
criminal proceedings which, as a matter of Cayman law, may yet come to be
regarded as misconceived [premised as they were on the notion of the continuing
ownership of the trust assets by the settlor]”.
Validity
and the conflict of laws
42 Common to
many of the TIEAs are provisions which require that trust information be
amenable to requests made by tax authorities pursuant to the TIEAs.
Fuelled by such provisions, and given the jurisprudential mismatch already
emerging from the treatment of offshore trusts as mere “grantor”
trusts, with their assets regarded as still being the assets of the grantors;
conflict of laws issues over the validity of offshore trusts are only likely to
escalate in the future.
43 Indeed, we
see from the Stop Tax Haven Abuse Act, that the presumption of continuing
ownership of offshore trust assets by their grantors is said to be among the
presumptions which are “needed in civil, judicial and administrative
proceedings” because the tax, corporate, or bank secrecy laws and
practices of these jurisdictions make it “nearly impossible for US
authorities to gain access to needed information”.
44 Anyone
having the faintest acquaintance with the factual realities would, of course,
recognise the hyperbole in that statement. Regrettably, however, the language
nonetheless foreshadows attempts to use the American judicial system to compel
disclosure on the basis of what one might term a “presumption of
irregularity”.
45 Other G20
members, including the authorities of civil law jurisdictions where the trust
concept is not recognised to begin with, are not likely to be any less inclined
to disregard trust settlements for taxation purposes. Where such conflict of
laws issues arise based on nothing more than a presumption of irregularity, it
should not be difficult to predict what the response of the courts of the
offshore jurisdictions would be. The response is already foretold in the case
law, if cases such as In RH and those
upon which it relied are a measure to go by.
46 But,
ironically, the appropriate response is perhaps also already well recognised in
American jurisprudence, if the following excerpt from Professor Mann
written as long ago as 1964 is any measure to go by—
“In
those cases in which the enforcing state asserts a prerogative right and
demands obedience to it abroad, an additional point of some significance is available.
The enforcing state . . . cannot achieve respect for its prerogative
rights in foreign countries by proceedings taken there. It is precluded, a fortiori, from achieving its ends
indirectly by having orders made in its own territory, which are to take effect
abroad and thus attribute to themselves a power equal to that of an order which
the foreign country could, but refuses to make. The crux of the matter lies in
the fact that the enforcing state requires compliance with its sovereign
commands in foreign countries where its writ does not run and where it cannot
be made to run by clothing it into the form of judgments of courts, whether
they be its own or those of the foreign country.”
Conclusion
47 In
conclusion, while the trust concept remains an important tool for the
protection and management of assets in the offshore world as it remains, say,
in City London or New York,
the courts do not regard the confidentiality of trust information as absolute. Far
from it, as the decided cases show. Indeed, as the case law evolves, the courts
have shown their willingness to develop the common law to ensure that the trust
is not abused for unlawful and unjust purposes.
48 Witness,
for instance, the case of In re IMK
Family Trust in which the Jersey court distinguished
between the “variation” of a trust and its
“alteration”, such that an order made for ancillary relief in
divorce proceedings in England could be and was enforced against the trust with
the consent of all the beneficiaries, adopting a broad interpretation of the
rule in Saunders v Vautier
by which beneficiaries acting together, may alter the terms.
49 Another
recent example from the Cayman Islands involved the appointment of a receiver
by way of equitable execution over a power of revocation retained by the
settlor of a trust such that the power was treated as his property and, when
vested in the receiver, allowed the receiver to revoke the trust and take its
assets to enforce a monetary judgment awarded against the settlor in Turkey in
favour of the Turkish government banking regulator. This was the final outcome
following a judgment by the Judicial Committee of the Privy Council (21 June
2011), explaining and expanding the reach of the common law
to the effect that a purely personal power of revocation of a trust (ie one to which no fiduciary obligation
attaches) can be tantamount to outright ownership of the trust assets of a
validly constituted trust and can be treated as the property of the holder of
the power, for the purposes of the appointment of a receiver by way of
equitable execution over it as part of his property, where the interests of
justice so require. The Privy Council invoked the broad equitable powers to
grant injunctive relief and to appoint receivers vested in the courts, now
expressed in the Supreme Court Act 1981, s 37 where it appears “just and
convenient” to do so. By its decision, in particular treating the power
of revocation as “property” over which a receiver can be appointed,
the Privy Council observed the “incremental advancement of the law”,
in a way that the courts below felt was best left to the legislature.
50 Another
important concern which had been earlier raised in the Court of Appeal was that
by appointing an equitable receiver at the instance of the Turkish banking
regulator by way of enforcing its judgment, the court would be preferring one
creditor over others who might have claims against the assets of the settlor—a
Mr Demirel—who had been ordered bankrupt in Turkey. The Privy Council
overcame that concern by the acceptance of the undertaking given by the banking
regulator that it would allow trust assets recovered to be treated as part of
Demirel’s bankruptcy estate and so amenable to all proper creditor
claims.
51 Novel and
far-reaching though its conclusions are, they are resonant of the outcome in an
earlier Privy Council judgment from the Cayman Islands
jurisdiction. In that case, discretionary trusts settled by Sheikh Fahad Al
Sabah, a member of the Kuwaiti royal family who had been ordered bankrupt by
judgment of the Bahamian court (the court of his chosen domicil), were found to
be amenable to bankruptcy enforcement proceedings taken in the Cayman Islands
by his trustee-in-bankruptcy. The assets of the trusts were eventually (by
further orders made by the Cayman court) surrendered to the
trustee-in-bankruptcy on the basis that they had been fraudulently disposed
into the trusts and were traceable to the proceeds of fraud committed against
the Kuwaiti government. The Kuwaiti government had petitioned for the making of
the bankruptcy order based on a judgment it had obtained in
the amount of US$800 million on account of Al Sabah’s fraud.
52 Viewed
objectively, such expository developments in the case law as explained in these
Privy Council judgments, state volumes about the recognition by the offshore
jurisdictions of the responsible role they must play in the interests of the
administration of justice and in the maintenance of stable national and
international financial systems.
53 But the
other side of the equation must be understood and appreciated by the regulators
in the so-called on-shore jurisdictions: the legal and judicial systems of the
offshore jurisdictions are based on foundations of equal rectitude,
venerability and transparency.
54 However
grudgingly, this reality is being more and more accepted by the G20 governments:
witness for instance, the recent admission to membership of the Cayman Islands
to the OECD Steering Committee for the implementation of TIEAs—the very
body which only weeks before was determined to black list that country.
55 The price
of admission was doubtless compliance with the G20 demands for subscription to
the minimal member of TIEAs. But that sort of quid pro quo is nothing new. Many of the offshore jurisdictions
have the most rigid anti-money laundering regimes in the world and by which
they have been able to secure their positions on other much vaunted
“white lists” of the FATF and OECD.
56 Yet the
disparaging rhetoric continues and the goalposts continue to shift. In this
seemingly endless skirmishing over fiscal sovereignty, it will be interesting
to see how the courts respond both in the “offshore” and
“onshore” world, to the emerging assault upon the trust concept.
Hon. Anthony Smellie QC, LLD (Honoris causa,
Liverpool) is an honorary bencher of Gray’s Inn and an honorary fellow of
the Institute of Advanced Legal Studies. He has held
appointments as Assistant DPP for Jamaica,
and as Solicitor General and Acting Attorney General of the Cayman
Islands. In February 1993 he was appointed a judge of the Grand
Court, and has been the Chief Justice of the Cayman
Islands since June 1998.