Adam Cole
Partner
Guernsey
In Guernsey, trust disputes have traditionally been resolved by the Royal Court, which has developed a sophisticated body of trust jurisprudence and performs an important supervisory role in relation to Guernsey trusts.
In May 2026, the States of Guernsey approved proposals for reforms to the primary piece of legislation that governs trusts in the jurisdiction (the Trusts (Guernsey) Law, 2007 (Trusts Law)) and directed the preparation of legislation to give effect to the amendments.
The reforms are not intended to displace the Court's role. Instead, they seek to expand the range of tools available for resolving trust disputes, particularly in relation to alternative dispute resolution (ADR) methods, privacy, standing, and Hastings-Bass relief. Ultimately, the reforms should increase the accessibility, flexibility, and confidentiality mechanisms for resolving trust disputes in Guernsey.
This article explores the reforms that specifically impact trust dispute resolution in more detail.
The current framework
The existing Trusts Law has several limitations when applied in trust dispute resolution scenarios.
Firstly, pre-reform, section 63 provides a statutory mechanism by which an ADR settlement can be binding on all beneficiaries of a trust (including unborn, minor, and legally disabled beneficiaries). However, that mechanism is confined to claims against trustees founded on breach of trust and is subject to the following cumulative safeguards:
- The trust terms must authorise ADR, or the Royal Court must order it;
- The claim must be referred to ADR; and
- Any settlement must be recorded in a document signed by, or on behalf of, all parties;
- Each beneficiary must have been represented in the ADR proceedings or, if not, have had notice of them and a reasonable opportunity to be heard; and
- For any unborn, minor, or legally disabled beneficiary, the person conducting the ADR must certify that the beneficiary was independently represented by a person appointed for that purpose by a court
While other claims and applications related to a trust can still be resolved through ADR, the legislation does not currently provide the same statutory route for making the outcome binding on all beneficiaries in those cases.
Secondly, section 63 of the Trusts Law already recognises a broad range of ADR processes, including mediation, early neutral evaluation, adjudication, expert determination, and arbitration. However, the practical difficulty is that the current statutory mechanism is built around a signed settlement document, which does not sit comfortably with some ADR processes such as expert determination or arbitration, where the outcome may be an award, determination, or decision rather than a settlement agreement.
Thirdly, under the existing framework, an underlying difficulty in using some ADR methods, such as arbitration, in trust disputes is that a trust is not contractual in nature. Without statutory assistance, an arbitration clause in a trust instrument may not operate in the same straightforward way as an arbitration clause in a contract. This makes it difficult to bind those with an interest in a trust to arbitration.
For these reasons, the application of section 63 in trust disputes is limited; the reforms address the limitations directly.
Use of ADR
The reforms do not alter the existing position that ADR may be used where authorised by the terms of the trust or ordered by the Royal Court. However, the requirement for it to result in a signed settlement agreement in order to bind beneficiaries is expected to be removed, which should enable a wider range of ADR outcomes to have binding effect.
Expansion beyond breach of trust claims
The amendments to the Trusts Law will increase the types of trust disputes that may be determined using arbitration to include 'internal trust disputes between trustees, beneficiaries and/or other power holders' rather than only breach of trust disputes. The proposed reforms are aimed at internal trust disputes such as disputes between trustees, beneficiaries and/or other power holders, including disputes about the exercise of discretionary powers and decisions by trustees or protectors.
Importantly, the reforms are not intended to force third parties, such as service providers, into arbitration merely because the trust instrument contains an arbitration clause.
Binding other parties to ADR
The reforms will include amendments to the Trusts Law and the Arbitration (Guernsey) Law, 2016 (the Arbitration Law) in order to more comprehensively enable the arbitration of trusts disputes. This is expected to include provisions that an arbitration clause in a trust deed can be deemed to be an arbitration agreement for the purposes of the Arbitration Law, subject to any order of the Royal Court to the contrary. This puts an arbitration clause in a trust deed on almost quasi-contractual footing.
The reform is a pro-arbitration provision but with a court-controlled safety valve: an interested party who has not expressly agreed to arbitration should be able to apply to the Court for an order preventing the clause from taking effect as an arbitration agreement.
Prescription
The reforms also address prescription (time limits) for breach of trust claims. At present, section 76 provides a general three-year period running from the date on which the claimant first has knowledge of the breach, subject to the fraud/property exceptions and 18-year longstop.
The proposal is to reintroduce an alternative trigger, so that time may run from the earlier of the delivery of complete and accurate trust accounts to the beneficiaries or the claimant’s first knowledge of the breach. For trustees, that may make the provision of proper accounts more significant. For beneficiaries, the detail of what counts as adequate disclosure will matter.
Privacy
The reforms should also make privacy applications more predictable in appropriate trust administration proceedings. The proposal is not that trust proceedings become automatically private. Rather, the amendments to the Trusts Law are expected to expressly permit the Royal Court to make court rules that deal with private hearings and ancillary matters, such as anonymisation of parties, the trust, and trust assets. Whilst the starting point will remain open justice unless there is a statutory basis or other sufficient justification for privacy, clearer rules on privacy should reduce uncertainty around privacy and reduce the cost and time incurred by privacy applications particularly in relation to administrative applications. This reform also complements arbitration by offering a clearer confidentiality route where matters remain before the Royal Court.
Hastings Bass
The Hastings-Bass 'rule' enables the Court to intervene in a trust for the purpose of unwinding a transaction that the trustees failed to consider relevant matters or considered irrelevant ones if the transaction has had a negative result for the trust. The Court can do so even if the trustee’s actions do not constitute a breach of duty.
The reforms should put Guernsey on a more flexible statutory footing in relation to transactions that have been given inadequate consideration by fiduciaries. Following the UK Supreme Court’s decision in Futter v HMRC; Pitt v Holt, the modern English position requires inadequate deliberation to amount to a breach of fiduciary duty before the court can intervene on Hastings-Bass grounds. The Guernsey proposal is to reinstate the less stringent pre-Futter approach, so that a breach of fiduciary duty will not be necessary before the Royal Court has power to set aside the exercise of a fiduciary power in circumstances of inadequate consideration. Moreover, the reforms should clarify that the Court may determine the exercise of such a fiduciary power to be void, or of such effect as the Court may determine, or of no effect.
Wider standing for trust officials
The reforms should also make it easier for trust officials, such as protectors, to access the Royal Court without first seeking leave. At present, section 69(2) of the Trusts Law lists the persons who may apply to the Royal Court, including trustees, settlors, beneficiaries, the GFSC and, with leave, any other person. The proposal is to add 'trust officials' to that list. In practice, this matters where a protector or other office-holder has a positive power under the trust instrument but is not a person whom the trustee is required to consult or obtain consent from before exercising a power.
Conclusion
The reforms are not a wholesale recasting of Guernsey trust litigation; they are a targeted modernisation of the tools available to resolve trust disputes.
If implemented as proposed, they should inter alia make ADR more practical for internal trust disputes, provide a clearer route to privacy in appropriate Court proceedings, widen access to the Court for trust officials, clarify aspects of prescription, and restore a more flexible version of Hastings-Bass relief.
For Guernsey trust professionals, the immediate practical point is to review how trust instruments deal with dispute resolution, powers, disclosure, and accounts, and to bear the incoming reforms in mind when drafting new trust instruments.
