Jersey Court Decision In Beddoe Application May Have Implications For Statutory Firewall

• Published date: 29 September 2020
• Subject Matter: Litigation, Mediation & Arbitration, Disclosure & Electronic Discovery & Privilege, Trials & Appeals & Compensation
• Law Firm: Collas Crill
• Author: Sam Williams

Private Client analysis: The Royal Court of Jersey has issued a judgment on a Beddoe application in which it blessed the decision of a trustee to submit to the jurisdiction of the English High Court and to adopt a neutral stance in proceedings where the claimants asserted proprietary claims to the trust assets. In doing so, it ceded control of the determination of whether the trust was validly established and the ownership of the assets to a foreign court. It is not immediately clear why the facts were thought to be so exceptional as to justify the decision. The court was also prepared to direct the trustee to waive privilege in its legal advice, despite the benefit of doing so being both marginal and speculative. Written by Sam Williams, group partner at Collas Crill LLP, Jersey.

In the matter of the Arpettaz Settlement [2020] JRC 161 (registration required)

What are the practical implications of this case?

The case is significant as an example of the Jersey court approving a trustee's decision to submit to the jurisdiction of a foreign court and to provide full cooperation in overseas proceedings such that the validity of a Jersey trust and beneficial ownership of its assets should be determined by the foreign court. While the Royal Court has previously stated that a trustee should only submit in 'exceptional' circumstances, on this occasion the court seems to have been guided by sheer pragmatism despite fairly vanilla facts. The consequence may be that the presumption against submitting to a foreign court is being eroded and the statutory firewall provisions, which are designed to guard against the impact of challenges to Jersey law trusts in foreign courts, undermined.

The decision is also remarkable in relation to the issue of waiver of privilege in legal advice obtained by trustees. The court was prepared to direct that privilege in the trustee's advice be waived in the foreign proceedings, taking the bullish view that it was probably a decision for the court itself and that in any event the consent of all the beneficiaries was probably not required. Again, this appears to have been motivated by pragmatism rather than supported by sound authority.

What was the background?

The trustee brought an application seeking a direction from the Royal Court of Jersey approving its decision to submit to the jurisdiction of the English High Court and adopt a neutral stance in proceedings there between its principal beneficiary, the settlor of the trust and...