Crociani and others v Crociani and others

Crociani and others v Crociani and others

The ever increasing international mobility of wealthy families and entrepreneurs and their advisers means that it is commonplace for settlors, trustees, beneficiaries, and the administration and assets of trusts to be located in different jurisdictions. When disputes arise this raises the question as to which laws govern the trust and where the “home court” should be. This is important because rules on time barring, disclosure, evidence, costs and enforcement of judgments can vary between different jurisdictions. The choice of law and jurisdiction can quickly become a key tactical battleground.

The recent case of Crociani decided whether legal proceedings commenced in Jersey should be stayed on the ground that they had been brought in breach of an exclusive jurisdiction clause. In 1987 Madame Crociani settled the Grand Trust under Bahamian law for the benefit of beneficiaries including her daughters Camilla and Cristiana. Clause 12 of the trust agreement gave the trustees power to resign and appoint new trustees from outside the jurisdiction. It also gave them power to declare the governing law of the Grand Trust to be the law of the country of residence of the new trustees. Importantly, clause 12 stated that: “thereafter the rights of all persons and the construction and effect of each and every provision hereof shall be subject to the exclusive jurisdiction of and construed only according to the law of the said country which shall become the forum for the administration of the trusts hereunder”.

From October 2007, the trustees were resident in Jersey with the effect that Jersey law became the proper law of the Grand Trust. In 2011, the relationship between Mme Crociani and Christina Crociani broke down. In 2012 the Jersey Trustees resigned and appointed a Mauritian company, Appleby Trust (Mauritius) Ltd as sole trustee. In 2013 Cristiana and others brought proceedings in Jersey against the Jersey Trustees and Appleby challenging various appointments, retirements and distributions from the Grand Trust. The Jersey Trustees and Appleby made an application to stay the proceedings in Jersey on the basis that the effect of Clause 12 was to confer exclusive jurisdiction upon the Mauritius courts.

After two appeals, the Privy Council concluded that Clause 12 was not concerned with identifying which court should have exclusive jurisdiction to determine disputes relating to the Grand Trust. Clause 12 was a choice of law clause and not an exclusive jurisdiction clause. The expression “the forum for the administration of the trusts” indicated the place where the Grand Trust was being administered and managed, and not which court should resolve disputes. Even if Clause 12 did mean that the courts of Mauritius had jurisdiction, the words “shall be subject to the exclusive jurisdiction” refers to the applicable law which applies to all aspects of the Grand Trust and not where disputes should be resolved.

Given the interpretation of Clause 12, whether the proceedings should be stayed was not an issue because the Mauritius courts did not have exclusive jurisdiction. However, the court did offer guidance as to the correct approach to interpreting jurisdiction clauses – it explained that less weight should be given to exclusive jurisdiction clauses in a trust deed as is given in a commercial contract. In this case, the court would not have stayed the Jersey proceedings on the basis that the majority of the actions being challenged were made under Jersey law, which would make the Jersey court the appropriate forum to decide the matter.

This is a significant move away from previous authority which interpreted the term “forum for the administration” as conferring an exclusive choice of law and jurisdiction for both hostile litigation with third parties and internal matters of administration. It is now clear to those engaged in international trusts disputes that the courts will weigh up all relevant factors before deciding jurisdiction. It is also useful guidance to draftspersons who may abandon the phrase “forum for the administration” and find clearer ways to define which laws and jurisdiction apply to certain types of trusts dispute.