More Than a Watchdog.

A family’s wealth was held through a set of discretionary trusts — the X Trusts, so called because a privacy order forbids naming them — governed variously by English law, the law of Bermuda, and, in one case, the law of Jersey. The trustees proposed a substantial restructuring. Certain of the steps could not be taken without the written consent of the trusts’ protectors, whose consent the deeds required for any appointment of capital and for dealings in certain defined securities. After consultation, the protectors made plain that they were minded to withhold it. The question that reached the courts was not whether the protectors were right, but whether the choice was theirs to make at all.

The Supreme Court of Bermuda and, on appeal, the Court of Appeal of Bermuda both held that it was not — that a protector is a watchdog, entitled to refuse consent only where the trustees’ proposal would itself be improper. The Privy Council disagreed. In A v C(the X Trusts), [2026] UKPC 11 (P.C. 19 March 2026), the Board held that a protector who holds such a power as a fiduciary exercises an independent discretion of his own. He is to form his own view of the merits, and he may withhold his consent — even to a decision that a reasonable body of properly informed trustees was perfectly entitled to make.

The protector is now a fixture of the offshore settlement, yet the law has never told us quite what one is. A trustee’s duties are settled by centuries of authority; the very word carries them. “Protector” carries nothing of the kind. As the Board observed, the word “has yet to acquire the status of a term of art” — it describes an office a settlor has created, not a role the law has defined.

That left a gap. A settlor is free to give a protector whatever role he wishes — a narrow one, a wide one, or something in between — and to make the power fiduciary or personal as he chooses. But most settlements, including these, say nothing on the point. They require the trustees to obtain the protector’s consent and stop there, silent as to what the protector is meant to be doing when he gives or refuses it. The case turned on what the law should presume in that silence: the default role of a fiduciary protector.

The argument resolved into a binary, and the commentators had already named its two poles:

• The Narrow Role. The protector is a watchdog. His task is to satisfy himself that the trustees’ proposal is one a reasonable trustee could lawfully make, and, if it is, to consent. He may refuse only to head off a breach of trust. The merits are the trustees’ affair, not his.
• The Wider Role. The protector exercises an independent discretion. He weighs the proposal on its merits — taking account of relevant considerations and disregarding irrelevant ones — and may withhold consent even from a decision that is entirely proper, because in his own judgment it is not the right one.

The difference is not academic. Under the narrow reading a protector can almost never say no; under the wider one he holds a genuine veto, and with it the power to create deadlock. The Bermuda courts, troubled by exactly that prospect, had chosen the narrow reading.

The Board found its answer in the deeds themselves. Three features, it held, made sense only if the protectors held the wider role. The settlements let the protectors release or waivethe requirement for their consent, at large or case by case — and, as the Board dryly put it, it is “unusual to allow a watchdog or enforcer to stand down whenever it chooses to do so.” They provided that where protectors disagreed among themselves the trustees could proceed anyway, provided they took the protectors’ views into account — a sensible compromise between competing judgments, but a strange way to treat a mere check on legality. And they required consent only for a handful of especially consequential decisions, where a settlor would most want a second mind brought to bear, rather than for every act that might conceivably breach the trust.

Taken together, the Board concluded, these terms “overwhelmingly” favoured the wider role; and because “protector” is no term of art, there was nothing in the bare label, or in any term to be implied, from which a narrower role could be constructed. The gap the settlors left was a deliberate one, to be filled not by a presumption of timidity but by the ordinary duties of a fiduciary.

For the wider role is not a licence. A protector who exercises an independent discretion exercises it as a fiduciary: he must act for a proper purpose, must not allow his own interest to conflict with his duty, and must reach a decision reasonably open to him on the relevant considerations. The Board widened the protector’s power and, in the same breath, bound it.

The decision binds the courts of Bermuda and speaks with great authority everywhere the Privy Council is followed — Nevis, the Cayman Islands, the British Virgin Islands, Jersey and Guernsey among them, the jurisdictions in which structures of this kind are made and administered. Its first lesson is one of drafting. If a settlor wants a protector who is truly a watchdog and no more, the deed must now say so — in clear and unequivocal terms — and should state, of each power, whether it is fiduciary or personal and whether it is narrow or wide. Silence will be read as the wider role.

Its second lesson is about who should hold the office. A protector with an independent discretion carries a fiduciary’s duties and a fiduciary’s exposure; the role is no longer the honorary appointment of a trusted friend but a post of real responsibility, to be filled with the same care as the trusteeship itself. A protector who declines consent must be able to show he turned his own mind to the question, for proper reasons, free of conflict.

None of this is a reason for unease. A well-drawn settlement has always allocated power deliberately — what the trustees may do, what the protector may check, where the final word rests. The Privy Council has simply confirmed that, when a settlor goes to the trouble of requiring a protector’s consent, the law will presume he meant that consent to count. The firm has long drafted on that understanding. After the X Trusts case, every settlor would be well advised to do the same.