Wolters Kluwer - "I Quaderni di Step Italy"
The Trustee in International Practice: Regulation, Powers and Governance
In an article included in the second volume of the series "I Quaderni di STEP Italy" published by Wolters Kluwer, entitled
The Trustee in International Practice: Regulation, Powers and Governance, Andrea Vicari developed a central theme.
Civil lawyers often regard a trust as a type of contract, creating a legal relationship.
Therefore, they focus on the regulation of trustees’ activities under the control of an administrative body as for most professional activities involving the management of assets in the interests of others (banks and other financial intermediaries). Public regulation of the manager’s activities is considered the main manner to ensure proper administration and prevent breaches.
In common law, proper administration of trusts is ensured by the supervisory jurisdiction of the courts. Standing to petition the courts is granted to beneficiaries, protectors, co-trustees, public bodies and those with special interests. While these types of proceedings require the full involvement of all the relevant parties and are decided by specialized judges, proceedings by regulators are conducted by the administrative body in autonomy and decided by public officials who do not necessarily have expertise in trust matters. Furthermore, regulators often intervene only when the organization, procedures and management of the trustee do not comply with the principles imposed by the regulations, not with the trust law. As Lusina Ho and Richard Nolan have emphasized, trusts and contracts are different.
Under a contract, a party can generally choose to break it and pay expectation damages instead of performing. That’s why public regulation of banks and intermediaries tends to prevent this event. Specific performance is an exceptional remedy in contract law. Trust Law prioritises the absolute execution of the settlor’s intent. Actual execution of the trust is of paramount importance. The law does not view paying damages as an acceptable alternative to proper administration. Supervisory jurisdiction over trust administration is essential to ensure proper administration of trusts. Without supervisory jurisdiction, no public regulation of trustees can really ensure execution of trusts.
In his article he explained how in the Republic of San Marino — a civil law country — the lawmakers created the Court for Trusts and Fiduciary Relations for the control and supervisory jurisdiction over trust administration, while entrusting to an administrative body, namely the Central Bank of the Republic of San Marino, acting as the competent Supervisory Authority, the regulation of and ongoing supervision over the professional exercise of the office of trustee, including the verification of the existence and permanence of the relevant requirements.
INDEX
Regulation of Trustee Activities– Republic of San Marino
1. Legislative sources and general framework
2. Competent authorities and authorisation or registration procedure
3. Rules of conduct and compliance obligations (including AML and fit & proper requirements)
4. Private Trust Companies: regulation and practice
5. Non-professional or occasional trustees: conditions and limits
6. Liability and supervision of Trustees under San Marino Trust Law
