I Preliminary Matters, 2 The Use of Trusts in Financing Transactions: Special Issues Relating to Arbitration of Commercial Trusts

Subject(s):

Arbitrability — Arbitral agreements — Arbitral tribunals — Arbitrators — Statehood, jurisdiction of states, organs of states

This chapter discusses the use of trusts in financing transactions and the overlap with arbitration. It attempts to identify the strengths and weaknesses of arbitration as a dispute resolution forum for commercial financing structures employing a trust vehicle. It begins by describing briefly several of the more prominent financing structures involving trusts: a securitization transaction employing an asset trust, a public or private bond offering with an indenture trustee, owner-trust lease financing, and mutual funds (known as unit trusts in the UK and other jurisdictions influenced by English law). It then illustrates the advantages and disadvantages of arbitration for each of these financing structures. It shows that only a discrete range of trust-related financings exists for which arbitration is equal or better suited when compared with a judicial forum.