Tethered to and inextricably linked with the absence or decline of democratic governance, there has always been empire. Empires rise and fall, as they say, but the imperial impulse is perennial and new iterations of old empires emerge with dismal regularity, showing us that imperial formations are hard to erase.
The relationship between empire and trust law is one that is gaining increased attention, particularly in the context of offshore financial centers and the inescapable historical force of British colonialism. Popular books like Butler to the World and, more recently, The Hidden Globe have brought the topic of colonialism into a wider conversation about wealth inequality and legal imperialism. Both historians and sociologists have dug into the subject, with excellent results like those of Vanessa Ogle and Brooke Harrington. And legal scholars are also joining the conversation, talking about colonial aftermaths and the ghosts of colonialism that persist in our systems of wealth transfer.
A new contribution to the literature—and our understanding—of trust law and colonialism is Masayuki Tamaruya’s chapter in the forthcoming Oxford Handbook of Comparative Trust Laws, aptly entitled Trust Law and Colonialism. Tamaruya takes the reader on a historical adventure through diverse empires and their spheres of influence. Tamaruya focuses in particular on the British empire, the Americas, and Asia explaining that “distinct patterns of colonialism naturally engender different dynamisms in using trust and trust laws.”
The Sun Never Sets on the British Empire
The development and fate of trust law varied across the British empire and was often tied to the fate of chancery courts that historically held jurisdiction over trusts. In Canada, for example, the “Chancery jurisdiction exercised by the colonial governor and later-established authorities was viewed with suspicion.” In what is presently Ontario, the Court of Chancery was not established until 1837, before which time trusts were enforced in a haphazard fashion, sometimes by the common law court and sometimes “with the intervention of the legislature.” New Zealand, on the other hand, had courts and a Supreme Court that was more willing to “adjust their equity jurisprudence” and—particularly after the Testator’s Family Maintenance Act of 1900—exercise judicial discretion to enforce both wills and trusts.
In India, a country with a longstanding legal tradition that included “trust-like devices” such as the Hindu benami and the Islamic waqf, trust law under the British empire built on these legal understandings, producing the Indian Trust Act of 1882. This Act, drawing from various sources, also relied on the New York Civil Code of 1865 and English treatises. Tamaruya remarks that even after the enactment of the Trust Act, however, “Indian judges routinely made recourse to English case law” up to and even after Indian independence
Traveling east and south-east, Singapore and Hong Kong were both jurisdictions that absorbed English common law and equity, as well as British statutes “largely intact,” and both developed trust legislation that was modelled after the U.K. Trustee Act of 1925, rendering their trust law “largely consistent with developments in the U.K.” More recently, both locales have “solidified their positions as Asian financial and wealth management centres” by offering boutique trust services and innovative wealth preservation services. In this sense, Singapore and Hong Kong resemble some of the offshore financial centers, which are either former or present British colonies such as the Cayman Islands and British Virgin Islands. Since colonization, English lawyers working with trust companies have drafted the trust codes of these jurisdictions just as they have trained the practitioners and judges in an attempt to attract global capital.
Traveling Through the Americas
Moving on to a discussion of the Americas, focused primarily on North America and in particular the United States, Tamaruya observes that “unlike the general alignment” seen in the British colonies, (both former and current), the history and state of trust law in the Americas is “marked by a departure from the English tradition.” In the United States, this departure from English law post-revolution was grounded in both a suspicion of chancery as it had been used in the English context as well as a conceptual rejection of aristocratic forms of property. Nevertheless, despite this desire to separate from English trust law, the industrialists of the late-nineteenth century still sought mechanisms to preserve and protect the extreme wealth that they created and in the United States the spendthrift trust prospered, as did the commercial trust.
Tamaruya remarks that, through the use of the commercial trust and related variants like the mortgage trust, “the US departure [from English trust law] has been influential worldwide.” In Latin American countries, the civil law tradition was strong and therefore trusts were not a core part of the legal history. But Latin American governments in the early twentieth century were interacting in international financial markets and “using corporate debentures and mortgage trusts” adopted from North American practice. The 1920s saw the adoption of trust law legislation in Panama (1925), Chile (1925), and Mexico (1926). Two decades later, jurisdictions in Central America, including Columbia, Honduras, and Costa Rica, adopted trust law legislation as did Venezuela and Brazil followed by South American jurisdictions, including Bolivia, Ecuador, Peru, Argentina, and Paraguay in the 1950s. In these jurisdictions, commercial trusts were predominant, while private family trusts were less commonly utilized.
Asian Empires and the Slow Growth of Trust Law
Asia represents, in Tamaruya’s organization, “the third sphere of colonialism” subject to both Western powers as well as Japanese colonial power. Surveying this third geography, Tamaruya first discusses Thailand and Japan, finding that trusts became available in Thailand in the mid-nineteenth century on “the basis of English practice” but that they were subsequently prohibited when the Civil and Commercial Code was introduced in 1935. It was not until 2008 that trusts were once again authorized, and only then for investment purposes.
In Japan, the adoption of trusts did not happen until the early 1900s, starting with mortgage trusts. A Trust Act in 1922 enabled more modern business purposes, drawing on both the Indian Trust Act and legislation from the United States. Taiwan and Korea, both subject to Japanese colonialism, followed Japanese law. Trusts companies opened their doors in these jurisdictions during the 1910s and 1920s and Japanese trust regulations applied in both colonies, facilitating primarily commercial trusts.
Finally, in China, the Civil Code in 1929-1931 “laid groundwork” for certain uses of trust law, in the Japanese tradition, but these laws were eliminated by the Communist Party when it came to power. After the Second World War, commercial trusts re-emerged and state-owned trust investment companies were put into place in order to generate funds for provincial governments. More recently, elite Chinese families with substantial business and personal wealth have started “onshoring” their family trusts rather than settling them in Hong Kong or Singapore but, as Tamaruya states, Chinese law provides little clear guidance for managing family inheritances through trust.
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In this enticing taste of colonial history and trust law, Tamaruya demonstrates that patterns of colonial conquest have shaped trust law and its adoption and usage across the globe and that “different conceptions and rules of trust have been devised in response to local and colonial conditions and shifting uses and circumstances.” Perhaps even more unexpectedly, Tamaruya also shows that that, “[c]ollectively, settlers, lawyers, judges, policymakers, bankers, and merchants on the colonial periphery may have been just as innovative as the judges of the English Court of Chancery.” Bringing these ebbs and flows of colonial power to light, this chapter is an important contribution to our understanding of trust law, its migrations, and its mobility.
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