¶ 601
Overview
Scope of the chapter. Chapter 5 described the Nevis International Exempt Trust Ordinance as a statute: its history, its definitions and the register on which every international trust must be entered (see supra ch. 5). This chapter asks what a planner must do to bring a valid international trust into existence. The questions are the classical ones of trust law, asked under a statute that answers several of them differently from English law: who may be a settlor, what capacity the settlor needs and under which law, what formalities the transfer requires, how certain the trust's terms must be, which law governs the trust, and which attacks on validity the statute shuts out. The chapter closes with the provisions that allow a settlor to keep powers and benefits without invalidating the trust, and with the English and Privy Council decisions that show what those provisions can and cannot do outside Nevis.
The statutory text. The Ordinance is cited in this chapter by section number from the revised edition showing the law as at December 31, 2017. Nevis International Exempt Trust Ordinance, Cap. 7.03(N) (rev. ed. 2017). After a first full citation in each paragraph group it is cited as "Trust Ordinance" followed by the section number. Most of the provisions examined here were substituted or inserted by Ordinance No. 2 of 2015, and the revised edition renumbered the sections that follow the court's powers. A section cited in a judgment given before the revision may therefore carry a different number from the same provision today. The revised edition marks the change in footnotes; for example, the present section 25 on the court's determination of validity was "[o]riginally section 23," and the present section 34 on beneficiaries was "[o]riginally section 32." Id. §§ 25 n.*, 34 n.§. A Bill to repeal and replace the Ordinance, posted by the Nevis regulator under the title Nevis International Exempt Trust Ordinance 2020, has not been found to have been enacted (see supra ch. 2), and this chapter states the law in force.
Two layers of law. A Nevis international trust is created under two bodies of law at once. The Ordinance supplies the rules peculiar to international trusts: the definition of the international trust, the choice-of-law rule, the validity provisions, the settlor-control provisions and the protections against creditors and foreign claims. The general law of trusts, received from England and applied by the High Court sitting in Nevis, supplies the rest: the requirement of certainty, the rules on completing a gift, the doctrine of sham and the court's supervisory jurisdiction (see supra ch. 2). The Ordinance does not codify trust law. Where it is silent, the court applies the common law and equity, and English and Commonwealth decisions are persuasive.
The planner's aim. A trust that will be tested is tested at its creation. A creditor who cannot meet the fraudulent-disposition standard of section 26 (see infra ch. 21) will look for a defect in formation: a settlor who lacked capacity, a transfer that was never completed, a class of beneficiaries too uncertain to administer, a trust that was never meant to operate as written. The Ordinance closes several of these routes in a Nevis court. It does not close them in a foreign court that asks whether the settlor ever parted with the property. The planner's work at creation therefore has two audiences: the High Court in Nevis, which will apply the Ordinance, and the court of the settlor's home jurisdiction, which may not.
Plan of the chapter. Paragraph 610 sets out the statutory definition of a trust and the four elements of an international trust. Paragraph 620 examines the settlor. Paragraph 630 deals with capacity, and ¶ 640 with formalities and the constitution of the trust. Paragraph 650 applies the three certainties to Nevis trusts. Paragraph 660 examines the governing-law rule in section 4. Paragraph 670 collects the validity provisions and the provisions that exclude foreign law. Paragraph 680 turns to settlor control, self-settled trusts and sham, with full discussions of Tasarruf Mevduati Sigorta Fonu v. Merrill Lynch Bank & Trust Co. (Cayman) Ltd. and JSC Mezhdunarodniy Promyshlenniy Bank v. Pugachev. Paragraph 690 treats duration and accumulation and ends with a checklist for the trust instrument.