The Hague Trusts Convention and Mauritius

A trust is a creation of common law. Mauritius has its own statute for it, the Trusts Act 2001, but many of the countries where a family lives, owns property or has heirs follow the civil law tradition and have no such institution. The Hague Trusts Convention (the Convention on the Law Applicable to Trusts and on their Recognition) exists to bridge that gap. This guide explains what the treaty does, how it bears on a Mauritius trust, and where it stops.

It is general information, not advice. Whether the Convention helps in a given case depends on the countries involved, and that needs a qualified adviser's analysis.

What the Hague Trusts Convention is

The Convention is a treaty of private international law. It does not create a trust, and it does not harmonise trust law. It does two narrower things:

• it tells the courts of a contracting state which law governs a trust, and
• it requires those courts to recognise a trust created under that law, with a defined set of consequences.

It is a conflict-of-laws instrument. A civil law judge who has never seen a trust deed is given a route: identify the governing law, check that the arrangement fits the Convention's definition of a trust, then apply the recognition rules.

Why civil law countries are the problem

In a civil law system, property generally belongs to a person, and the idea of one asset having a legal owner (the trustee) and a separate group of persons who benefit from it does not sit easily in the code. Without a recognition rule, practical questions arise:

• Is the trustee the true owner, so that the trustee's personal creditors can reach the assets?
• Do the assets fall into the trustee's own estate or matrimonial property?
• Can a notary or land registry record a trustee as holder on behalf of beneficiaries?
• How is the transfer treated against local succession rules?

For comparison, the Mauritian legal system itself blends civil law and common law influences, which is why the relationship between a trust and the French-derived concept of the fiducie is worth reading separately: see fiducie and trust compared.

What recognition means in practice

When a contracting state recognises a trust under the Convention, the trust is treated as more than a private contract. The main effects are:

• the trust assets form a separate fund, not part of the trustee's own estate;
• the assets are held in the trustee's name, or in the name of another person on the trustee's behalf;
• the trustee may sue and be sued, and appear in a capacity as trustee;
• if the trustee's personal estate fails, the trust assets are not part of it;
• if the trustee breaches the trust, the beneficiaries may trace and follow the assets, within the limits of the applicable law.

These effects are what make the structure work outside its home jurisdiction. They do not turn a foreign trust into a local one, and they do not remove the mandatory rules of the court's own system.

How it fits with Mauritius law

Mauritius deals with trusts on both sides of the border. For a trust governed by Mauritius law, the Trusts Act 2001 supplies the substantive rules. For a foreign trust being administered or relied on in Mauritius, section 60 of the Act provides that it is governed by its own terms and law, but it is not enforceable in Mauritius to the extent that it would amount to an offence, be contrary to public policy, or apply directly to immovable property situated in Mauritius.

The Convention works in the opposite direction: it concerns what other states do when a trust is put in front of them. The two layers should not be confused. How Mauritius treats trusts created elsewhere is covered in how Mauritius recognises foreign trusts; this page is about the treaty framework outside Mauritius.

Whether a particular country is a contracting state, and on what terms, must be checked against the current list of the Hague Conference on Private International Law. Some civil law countries have joined, others have only signed, and others stay outside. Do not assume that a country will recognise a Mauritius trust because a neighbouring country does.

Reading the Convention's definition of a trust

The treaty applies only to trusts that meet its own description. In outline, it covers legal relationships created voluntarily and evidenced in writing, where assets are placed under the control of a trustee for the benefit of a beneficiary or for a specified purpose. The assets form a separate fund, title stands in the trustee's name, and the trustee has the power and duty to manage and dispose of them in accordance with the trust's terms.

Two consequences follow for a Mauritius trust:

1. A properly drafted trust deed that reflects the Trusts Act's core features will normally fit the definition. See what a trust deed contains.
2. A trust that is not what it seems, for example where the settlor keeps such control that the trustee is only a name, may fail to fit and may be disregarded. See sham trusts.

Where recognition stops: the limits

Recognition is not a shield against everything. The Convention keeps room for a court to apply its own mandatory rules and to refuse results that conflict with its public policy. Three areas matter most to families.

Succession and forced heirship

A civil law country usually reserves part of an estate for children and sometimes a surviving spouse. The Convention does not override those rules. A court may protect reserved heirs even where the trust is otherwise recognised. Mauritius law has its own position: under section 8 of the Trusts Act 2001, the transfer by a settlor who is not a Mauritian citizen cannot be set aside under the succession rules of the settlor's domicile or nationality. That is a Mauritian rule, and a foreign court is not bound by it. Read forced heirship and trusts before treating a trust as protection against reserved shares.

Matrimonial and family property

Marital property regimes and divorce courts are another area where national mandatory law applies. A recognised trust may still be examined if assets were moved to defeat a spouse's rights.

Public policy, fraud and tax

Courts may refuse recognition where giving effect to the trust would offend public policy or facilitate fraud. Tax is a separate matter: recognition of a trust for civil law purposes does not decide how it is taxed. Many countries have their own rules on foreign trusts, reporting duties and attribution of income to a settlor or beneficiary.

How a court may approach a Mauritius trust

The following diagram sets out a simplified reasoning path. It is a guide to the questions, not a prediction of any outcome.

Summary table

Practical points for a family

• Check the country list. Each country where you live, hold assets or have heirs should be reviewed separately.
• Pick the governing law deliberately. The Convention respects a choice of law made in the trust instrument, within limits. See choosing the governing law of a trust.
• Keep the structure genuine. A trustee who truly administers the assets supports recognition. A FSC-licensed corporate service provider (Management Licence) is required to act as a qualified trustee in Mauritius.
• Do not rely on the treaty for succession planning. Reserved heirs, matrimonial regimes and tax are handled by separate rules.
• Keep records. A court asked to recognise a trust will want to see the deed, trustee appointments and the record of what was transferred.

If your family is connected with a particular civil law country, the position there will be specific. For a French connection, start with Mauritius trusts for French resident families.