The development of the trust industry in China as compared to the development of the trust industry in Malta

Abstract

The trust is a legal institution originally developed in English courts of equity. It plays a vital role in the economic, social and political life of the United Kingdom, the United States and other common law countries and jurisdictions. For certain historical and doctrinal reasons, the trust concept is generally thought to be foreign to continental civil law, and that the exact equivalent of the trust institution cannot be achieved under that law. The utility and versatility of the trust, however, has long been appreciated outside the common law system, and many non-common law countries and jurisdictions have enacted their own trust laws as the need for such an institution arose. The Trust Law of the People’s Republic of China, enacted on April 28, 2001, began to take effect on the 1st October 2001. The implications of the law are very significant, as it provides a clear set of regulations with which to recognize and establish trust structures. The main principles of the Trust Law echo many concepts inherent in Trust Laws in other countries. The Chinese legal system stems from the Civil Law System.

Trust law in Malta has recently been though an extensive overhaul which culminated in the enactment of the Trusts and Trustees Act of 2004 (Laws of Malta, Cap. 331). Prior to 2004, Maltese residents could not set up a trust governed by Maltese Law, although foreign trusts were recognized in Malta under the Recognition of Trusts Act 1994 (Laws of Malta, Cap. 374) which enabled Malta to ratify the Hague Convention on the Law applicable to Trusts and their Recognition (The Hague Convention 1985). Under the 2004 Act, trusts can be governed by either Maltese or Foreign Law and the trustees.