2015 Amendments to the Nevis International Exempt Trust Ordinance

In 1996, the Nevis Island Assembly enacted the Nevis International Exempt Trust Ordinance, Cap. 7.03 (the “NIETO”), to bring certainty and clarity to international trust planning. The original NIETO catered to the needs of asset-protection counsel through a preclusion of the Statute of Elizabeth, statutory presumptions against fraudulent transfer in defined circumstances, a beyond-reasonable-doubt burden on creditors, and an explicit creditor-bond requirement — first of its kind.

After twenty years, the Nevis Island government revisited the NIETO. Telbert Glasgow, Director of the firm’s Nevis office, formed a committee of American lawyers, chaired by Shawn Snyder, to review and recommend amendments. The committee’s starting point was a comprehensive package of amendments advanced in 2014 by Jonathan Gopman of Akerman LLP. On balance the committee found the 2014 proposal sound; the 2015 recommendations incorporate substantial portions of it, while addressing additional concerns.

Subsections (3) and (4) of § 23 of the NIETO appear to have been modeled on the Cook Islands International Trust Act (the “ITA”) — but to the exact opposite effect. The ITA deems a transfer notfraudulent if it occurs more than two years after a creditor’s cause of action (with a one-year window) or before the cause of action accrues at all. The NIETO, by scrivener’s error, deems those very transfers to be fraudulent. The committee cautioned the Nevis Island government that the NIETO as in force did not offer the asset-protection benefits the legislation intended, and recommended that subsections (3) and (4) of § 23 be revised to correct the error.

Eliminate the “sliding window.” Subsection (3) of § 23, modeled on § 13B(3) of the ITA, creates a window of one to three years for a creditor to bring a claim. The ambiguity has been widely misunderstood. The committee recommended a fixed one-year window beginning when the creditor’s cause of action accrues.

Increase the bond. The bond requirement under § 54 has not kept pace with comparable jurisdictions. Belize, in 2011, enacted an LLC bond requirement equal to the greater of BZ $50,000 and one-half of the claim. The committee concurred with the 2014 proposal that the NIETO bond is inadequate, while identifying competing concerns: an effective barrier to specious litigation versus access to court for meritorious claims. The committee recommended a sliding-scale formula: the greater of EC $100,000 or one-half of the claim.

Foreclose Mareva and Anton Piller relief. The 2014 proposal recommended limits on Mareva injunctions under the NIETO. The committee agreed and observed that cases seeking Mareva injunctions often also involve Anton Piller orders or similar interim measures. The committee’s recommendation was a comprehensive prohibition on each.

Duress. Many international-trust jurisdictions hold that instructions given in respect of an international trust must be free of duress. The NIETO contained no such provision. In American proceedings concerning international trusts, courts regularly order settlors or beneficiaries to repatriate trust assets; without an express duress provision, the impossibility defense is difficult to maintain. The committee recommended that § 13 be revised to include a general duress provision applicable to all international trusts, requiring those with power over the trust to disregard instructions given under duress, while preserving freedom to abide where personal exposure would otherwise result.

The firm thanks Mr. Snyder for sharing the committee’s proposal and his explanatory letter to the Nevis Island Premier, and Inga Ivsan for her insight on Mareva injunctions and Anton Piller orders.