We value readers' reactions to our guest articles, and here is an example about the use of arbitration in trusts disputes.

As readers know, we carry many guest articles and always remind people that these articles are to be viewed as part of a conversation, not the last word. We are delighted that a long-standing expert in trusts, estates and litigation, Dr Alon Kaplan, responded to this 4 March article by Tom McPhail about the use of arbitration in trusts disputes. Dr Kaplan is an advocate and notary and member of the Israel and New York Bars

To comment further on this or other articles, email tom.burroughes@wealthbriefing.com and amanda.cheesley@clearviewpublishing.com

From my research, as outlined in my book Trusts and Estate Planning in Israel, Tony Graham in his discussion on compulsory arbitration of trust disputes found it particularly thought-provoking. He expressed doubts regarding the acceptability of this procedure in the UK and referred to the Trust Law Committee, which recommended legislation to address the challenges highlighted in their report.

In his discussion of the Grosskopf case, McPhail described it as one based on an arbitration agreement signed between the parties. “Grosskopf involved a dispute between a claimant beneficiary and defendant trustees over the administration of a family trust. The parties entered into an arbitration agreement for the dispute to be determined by the Beth Din of the Federation of Synagogues., defendants. The defendants applied to stay the claim pursuant to s.9 Arbitration Act 1996.”

I do not think that arbitration of trust disputes should be considered valid solely based on provisions stipulated within a trust deed, if the relative parties do not sign an arbitration agreement as described in the Grosskopf case.

To provide a comparative perspective, I wish to highlight several jurisdictions where arbitration of trust disputes is recognised by legislation. Notably, the Bahamas, Liechtenstein, and Dubai have enacted laws that allow and regulate arbitration in trust matters. These jurisdictions provide a structured legal framework to ensure the enforceability and fairness of arbitration proceedings in trust disputes.

It may be particularly interesting to review the applicable law in Dubai, which has established a comprehensive legal infrastructure for trust arbitration, reinforcing its legitimacy and enforceability within its jurisdiction.

It may be interesting to read the applicable law in Dubai: 

Foundations Law  

DIFC Law No.3 of 2018

Consolidated Version 
(November 2018) 
As Amended by 
DIFC Laws Amendment Law 
DIFC Law No. 8 of 2018

51. Arbitration of Foundation disputes 
(1) Where the Charter or By-laws of a Foundation provide that any dispute or Administration Question arising between any of the parties in relation to the Foundation shall be submitted to arbitration, that provision shall, for all purposes under the Arbitration Law have effect as between those parties as if were an arbitration agreement and as if those parties were parties to that agreement. 

(2) Where the Charter or By-laws of a Foundation do not provide that any dispute or Administration Question arising in relation to the Foundation shall be submitted to arbitration but the parties to that dispute agree in writing to have it resolved by arbitration, that agreement shall, for all purposes under the Arbitration Law, have effect as between those parties as if it were an arbitration agreement. 

(3) The Arbitration Law shall apply to an arbitration under this Law in accordance with the provisions of Schedule 2. 

(4) The Court may make such orders in relation to an arbitration or possible arbitration which supplement or vary the application of Schedule 2 as the Court deems appropriate in the circumstances. 

52. Powers of the arbitral tribunal 

(1) This Article shall apply except to the extent otherwise provided in the Charter or By-laws of a Foundation. 

(2) The arbitral tribunal may, in addition to all other powers of the tribunal, at any stage in an arbitration under this Law, exercise all the powers of the Court (whether arising by law, including this Law, under the inherent jurisdiction of the Court or otherwise) in relation to the administration of a Foundation or the rights of any party in relation to the Foundation.

(3) The arbitral tribunal has the same powers to appoint a person to represent the interests of any person (including a minor, a person unborn or unascertained) or class of person in an arbitration concerning a Foundation as the Court has in relation to proceedings before the Court. 

Conclusion
This is a very important matter in the trust industry. There are certain developments in the US in the direction of accepting trusts disputes depending on the circumstances of the particular case involved.

I look forward to further discussion on the development of this issue in the UK.