Contributed By Maples and Calder
Under s48 of the Trusts Law, any trustee or personal representative is at liberty to apply to the court for an opinion, advice or direction on any question respecting the management or administration of trust money or assets of any testator or intestate. Provided a trustee acts on the advice or direction given, that trustee will be deemed to have discharged his duty in respect of the subject matter of the application unless he is guilty of fraud, wilful concealment or misrepresentation of the facts in respect of his application. It follows that a trustee seeking the directions under s48 has a duty of full and frank disclosure and as such must disclose all material facts in relation to that application.
Order 85 of the Grand Court Rules also allows for a trustee, beneficiary, enforcer, executor or administrator of an estate to make an application to the court for determination of any question which could be determined in an administration action, including any question arising in the execution of a trust or about the composition of a beneficial class or the rights or duties of an enforcer.
The Cayman Islands has a modern Arbitration Law, currently in its 2012 Revision and largely based on the English Arbitration Act 1996. Arbitration clauses are rarely found in Cayman Islands trust deeds.
While there is no requirement under Cayman Islands law that trust disputes should be referred to arbitration or to any other form of alternative dispute resolution, the court has implemented an "overriding objective" which is set out at the preamble to the Grand Court Rules 1995 (revised edition). The overriding objective is expressed to be a method by which the court can deal with every cause or matter in a "just, expeditious and economical way". Mediation of trust disputes is therefore increasingly utilised as a form of alternative dispute resolution.
Beneficiaries of ordinary private trusts are entitled to enforce the trusts against a trustee and to seek recourse against it for failure to administer the trusts for their benefit in accordance with the terms of the trust instrument and statute. There are no statutory limitations on a trustee's liability for breach of trust, save that there is at s67 of the Trusts Law a power in the hands of the court to relieve a trustee from personal liability for breach of trust if he or she has acted honestly and reasonably and ought fairly to be excused either wholly or in part for the breach and for failing to apply to the court for directions.