Community Of Property And Trusts – Expect A Slew Of New Cases

Michael Wells-Greco, Maitland, Partner, Geneva, 13 June 2013


In the leading judgment Lloyd LJ said that the matrimonial law of Russia, as the jurisdiction where the couple married and divorced, took precedent over English law. “The application of Russian law as that of the matrimonial domicile, under English conflict of law rules, has to be carried through to all stages of the relevant history,” he said, discussing the chain of events which saw the property ownership transferred to the trust. “It is not correct to pause at the first stage and then to consider how, if it had had to, an English court would have given effect to the rights then existing as determined in accordance with Russian law. […] I therefore agree with the judge that the validity and effect of Mrs Slutsker’s dealings with anything that was joint family property under the Russian regime must be determined by reference to Russian law, without adding requirements which apply as a matter of English domestic law”, Lloyd LJ added.

This case:

·         Shows how the English courts will approach civil law concepts such as “community property” where there is no exact equivalent in English law. This is probably not going to be the only dispute of this nature (particularly as here the husband was found to have acquiesced). Such cases are likely to become increasingly common given the number of trusts settled by people from civil law jurisdictions.

·         Acts as a reminder of the importance of identifying what property falls in or outside of a property regime before trusts (or other vehicles) are settled and ensuring the consent of those interested in the property is recorded before assets are settled.

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