Saint Lucia throughout its history has been ruled by the French, The British and The Spanish, who often fought each other for control over the island’s resources and strategic location. The legacy of this conflict has left the jurisdiction with two concurrent legal systems. One is Saint Lucia’s Civil Law which comes from Saint Lucia’s civil code, and was adopted by the French. The other is Saint Lucia’s common law system which was adopted by the British. The Civil Code is the embodiment of French codified law, containing provisions that arrange the obligations inherent on all civil commitments entered into by Saint Lucia’s citizens. The code deals with claims, trusts, Property, Wills and Estates, just to name a few.
Saint Lucia’s common law is made up of domestic legislation and case law primarily emanating from Saint Lucia and the regional Caribbean, as well as some use of UK case Law and other common law jurisdictions. Both of these systems exist in tandem and in some respects, the Civil Code overrides any existing common law precedent and indeed any existing Saint Lucia legislation, unless that legislation makes it clear that the Code in any specific case is to be overridden. This means the Code is “gospel” except in the rare cases where a new law comes along and says otherwise.
As a result of this duality there are two separate types of Trusts that can be established in Saint Lucia. The First is a domestic Saint Lucia Trust. This trust is governed by the provisions of the Saint Lucia Civil Code which in turn states that all Saint Lucia Trusts are to be governed by the law of trusts in force, from time to time of England and Wales. In other words, a Saint Lucia Trust is for all intents and purposes, a UK trust. The Second type of Trust is an International Trust. This type of Trust is governed by the International Trustees Act and is regulated by this Act.
Both types of trusts, Saint Lucia Trusts and International Trust, are tax exempt with regards the income generated by the trust, so long as this income is generated outside Saint Lucia. The Saint Lucia Civil Code however, provides for the appointment of a body corporate as a trustee of a Saint Lucia trust. That body corporate can be a tax exempt Interntional Business Company or IBC as provided byThe international Trustees Act. Therefore when read together, the duality that exists between the Code and the Act clearly allows for an IBC to be appointed as Trustee under St. Lucia’s laws. Thus, a Saint Lucia trust can have as its appointed Trustee, a Saint Lucia International Business Company or IBC which is tax exempt. The assets of a Saint Lucia trust can also be owned by an International Business Company or by any company or person for that matter, which is not unusual to offshore trust structures.
An International Trust on the other hand must be registered with the Regulator and only a local trustee is able to perform this task. A Saint Lucia tax exempt company or IBC is an eligible trustee for an International Trust, but to be treated as an International Trust it must be registered by a local trustee. A Saint Lucia Trust therefore need not have an appointed institutional trustee at its helm, but will still enjoy tax exempt status so long as the income generated is outside the jurisdiction. Both an international Trust and Saint Lucia Trust can be established as a unit trust for the purposes of establishing a fund.
So what are the differences between a Saint Lucia Trust and an International Trust? Except for a few provisions relating to asset protection in relation to an International Trust, both types of trusts are identical. The asset protection clauses contained in the International Trustees Act, can easily be duplicated in terms of implementation, in a Saint Lucia Trust, by simply separating the Trustees from the ownership of the underlying assets of the trust. The advantage of a Saint Lucia Trust, in addition to its tax exempt status, is that there is no need to appoint a locally licensed Trustee. The client is free to appoint any one as Trustee through the incorporation of a trust company or IBC , with directors chosen from any persons available to the client. This saves considerable running costs, as there are no fees chargeable by an institutional trustee.
It is unlikely this current state of the law will ever change, as it would mean denying Saint Lucian residents the benefit Saint Lucia’s Trust law in favor of the international trust law that has been enacted. Just as with many other provisions of Saint Lucia’s Civil Code, this duality in the law of trusts, between the Saint Lucia Civil Code and The International Trustees Act, will continue to coexist which is for the most part, consistent with Saint Lucia’s legal historical record, where these dualities have existed for over one hundred years.
Author- Tonjaka Kho-Hinkson B.A (Ont) L.L.B (Lond.) BVC (Lond.)-Barrister at Law