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Adjudication or arbitration..

Step 7: Adjudication or Arbitration

Wills and Probate

For a General Overview of Adjudication or Arbitration, please refer back to the main menu.

However, it must be noted that in England and Wales arbitration of wills and trust disputes has not been formally recognised by the current legislation enacted in the Arbitration Act 1996 (1).

Scholars and practitioners have commented extensively on the desirability and workability of trust arbitration agreements(2) under the current legislation. The Trust Law Committee has also advocated in 2011 for the amendment of the Arbitration Act 1996 in order to permit compulsory or ‘imposed’ arbitration of trust disputes(3) but the debate has not been concluded.

There is currently much contradiction between renowned practitioners as to whether an arbitration clause in a trust instrument is effective without legislation to amend the Arbitration Act 1996. In short, the main difficulties with the arbitration of trust disputes are that:

  • Trust disputes are allegedly non-arbitrable (the concept of ‘trust’ is a creature of the courts exercising judicial discretions with respect to the legal rights of beneficiaries and trustees);

  • Trust instruments/wills are not arbitration agreements engaging the Arbitration Act;

  • Even if they were to amount to arbitration agreements, there would be difficulty in ascertaining beneficiaries (especially minor, unborn, unascertained beneficiaries and beneficiaries lacking capacity) as parties to the agreement, and thus the arbitration award would not bind them;

  • Arbitrators would not be able to grant relief necessary in certain types of trust disputes.

A recent paper by Andrew Holden presenting the different views on this topic can be accessed at: http://tandt.oxfordjournals.org/content/early/2014/12/24/tandt.ttu255.full?keytype=ref&ijkey=oexy KZ13WBf4kBO.

(1) As opposed to some civil law countries (Germany, Spain, Malta), the US States of Florida and Washington and offshore centres such as Bahamas and Guernsey, which have adopted legislation explicitly validating arbitration agreements in trusts and wills.

(2) See for example a commentary by Lawrence Cohen QC and Joanna Poole, “Trust Arbitration – is it desirable and does it work?”, Trusts & Trustees, Vol. 18, No. 4, May 2012, pp. 324–331: http://gmjones.org/pdfs/trust-arbitrationmay-2012.pdf.

(3) Trust Law Committee, “Arbitration of Trust Disputes” https://www.kcl.ac.uk/law/research/centres/trustlawcommittee/otherpapersandreports/Arbitration-of-Trust-Disputes.pdf.