- Limitation of liability — Insolvency clauses and damages
This chapter reviews what is meant by a trust and contains an international survey of trust recognition in the families of jurisdictions. It criticises the legal objections to the trust in those jurisdictions which do not recognise the trust and then examines the maximisation of trust recognition and risk mitigation. It explains that a trust is a situation where one person has the public title to an asset where the asset belongs to someone else so that the beneficial ownership is immune from the private creditors of the trustee. The recognition of trusts is absent or restricted in many jurisdictions outside the English and American common law jurisdictions. The two main commercial uses of the trust are securities settlement systems and custodianship of investment securities for safe custody and administration. Other important uses include bondholder trustees and the holding of collateral by an agent bank as trustee for a syndicate of lending banks. Additional cases include mutual funds and pension funds. The use of a governing law like English law can improve the recognition of commercial trusts in the courts of a non-trust jurisdiction.
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