Industry News Update, Protection by anti-Bartlett clauses

In recent days the trust industry received reports that The Hong Kong Court of Final Appeal (CFA) has upheld that trustees are protected by anti-Bartlett clauses, meaning they have no overriding duty to supervise the management of an underlying company.

On 22 November 2019, the CFA allowed an appeal and overturned the decision in Zhang Hong Li and others v DBS Bank (Hong Kong) Limited and others [2019] HKCFA 45.

The unanimous ruling established that so-called anti-Bartlett clauses in the trust deed of a Jersey family trust exempted the trustees from any liability for losses incurred in transactions by the trust’s underlying investment company.

However, they warned the decision should be treated with relative caution, for two reasons:
• While specialist evidence of Jersey law was provided at first instance and was considered in the appeals in this case, it remains to be seen how the Royal Court of Jersey, and the courts in other jurisdictions, would apply the law.
• For anti-Bartlett clauses to be effective they need to be drafted with care and with the specific circumstances of the trust and the intended investments in mind.

Simon Voisin of Forward Group commented “this judgement is certainly welcome and tells us how one foreign court, at least, views such situations.”

The news article can be viewed from various industry sources below:

https://www.step.org/news/trustees-are-protected-anti-bartlett-clauses-says-hong-kong-appeal-court

https://legalref.judiciary.hk/doc/judg/html/vetted/other/en/2019/FACV000002_2019_files/FACV000002_2019ES.htm

https://legalref.judiciary.hk/lrs/common/ju/ju_frame.jsp?DIS=125573

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