WWW.ABACUS.GI Expert Wealth Management & Financial Solutions GIBRALTAR · PORTUGAL LONDON · HONG KONG Trusts21,400 feet high, and emerging vertically out of the western Mediterranean, the Rock of Gibraltar evokes stability, solidity and permanence the world over. For America’s Prudential Insurance Company, the Rock became their corporate logo: “The Prudential has the Strength of Gibraltar” ran the traditional advert. For Ella Fitzgerald, her love was “as solid as the Rock of Gibraltar.” The Rock has even made it into the Oxford English Dictionary as a yardstick for permanence and safety. In times of significant and occasionally disruptive change in the offshore trust industry, practitioners will naturally be searching for similarly solid foundations for their trust and fiduciary structures. In this field, Gibraltar has for many years cultivated a well-earned reputation for stability. In particular, the past few years have seen Gibraltar develop its legislative and regulatory framework, its local industry, and its court system in ways that make it an increasingly attractive choice for international private wealth business. BY ANDREW HOLDEN Gibraltar 1,400 feet of stability THE ABACUS GROUP Abacus is an independent, privately owned group of companies, established in Gibraltar over 40 years ago. We provide comprehensive financial solutions and services to both private and corporate clients worldwide. Four decades of expertise in wealth management, corporate structuring, international pensions, tax, fund administration and accounting services help us create and deliver professional solutions that are simple, effective and bespoke. Clients that choose to work with us will benefit from a broad range of integrated services that will be personally selected to suit their needs and implemented to our highest service standards. FEATURE ARTICLE4 Legislative support Gibraltar is home to many very substantial fiduciary structures, often with connections to the UK (including UK resident non-domiciled settlors), but also hosts structures established by and on behalf of international clients looking for a European entrepot. Gibraltar’s legislature – which is independent of the UK Parliament – has accommodated and improved the landscape for this business via a series of innovative legislative developments. In particular, a series of statutory reforms in 2015 has given Gibraltar unique or cutting-edge and competitive features that increase its attractiveness as a trusts centre. Thus: The Trusts (Private International Law) Act 2015 provides for a modern, comprehensive firewall regime to protect Gibraltar trusts from the enforcement of foreign orders, while (uniquely) linking this regime to the EU Single Market framework by rendering the firewall protection subject to EU law. The result is an attractive ‘hybrid’ firewall regime, in which EU civil and commercial judgments are liable to be enforced in Gibraltar, but non Member State orders and orders pertaining to, for example, forced heirship regimes may be excluded by the firewall. The merits of such a regime for settlors looking to protect their structures, but without the reputational risk of a firewall that is incompatible with EU law, is obvious. It remains to be seen how the Gibraltar model of firewall will adapt to Brexit, but it may well be that the hybrid model will be modified and continue to work well if the UK accedes to the Lugano Convention. The Purpose Trusts Act 2015, which clarifies the right under Gibraltar law validly to create and administer non-charitable purpose trusts. The 2015 Act has some unique features over and above purpose trust legislation in competitor jurisdictions, and provides a comprehensive modern framework enabling the creation of NCPTs, including in commercial contexts such as securitisation transactions structured through a trust relationship. The Private Trust Companies Act 2015: again, a modern and cutting- edge/competitive framework for the incorporation and administration of PTCs. The jurisdiction is also to be praised for its innovative approach to regulation. For example, in 2018 the Gibraltar Financial Services Commission introduced a comprehensive regulatory framework for Distributed Ledger Technology, enabling entities to be licensed as regulated ‘DLT Providers’. In circumstances in which English law has only recently recognised that cryptocurrencies are a species of property capable of, for example, being held on trust (see e.g. AA v Persons Unknown [2019] EWHC 3556 (Comm)), the Gibraltar DLT Regulatory Framework is evidence of a strikingly accommodative and forward-looking local regulator.55 FEATURE ARTICLEA strong professional network As many practitioners will be well aware, enhanced legislative support for trust and fiduciary structures counts for little if the jurisdiction is not supported by well-trained and trustworthy trustees, accountants, lawyers and other professionals. In that regard, Gibraltar is fortunate to have a large and well-resourced trust and professional network: it has over 50 licensed trustees, including several well-known and highly-regarded full-service fiduciary businesses such as Abacus, Finsbury, and Line. In addition, Gibraltar has over 200 practising advocates, including full-service firms such as Hassans, ISOLAS LLP, TSN, and Triay & Triay, and litigation boutiques such as Signature, and including over a dozen Queen’s Counsel for Gibraltar. In my experience, having a ‘local QC’ to complement a legal team that may also contain English solicitors/ barristers is something that cultivates client confidence. If litigation ever becomes necessary, Gibraltar is also flexible enough to give the client access to specialist English counsel, who can be admitted to the Gibraltar Bar for the purpose of specific cases. There is thus the ‘best of both worlds’ – a thriving local Bar, with the ability to bring in English counsel in more complex cases requiring specialist input. Wigs and wisteria – Gibraltar’s court system The Gibraltar Law Courts are housed in a charming and fully functional building on Main Street. Walking into the building under a canopy of wisteria, practitioners have access to four full-service courtrooms, which were fully refurbished and modernised in 2012, and are used for all civil and commercial matters. The court of first instance is the Supreme Court, and under Chief Justice Anthony Dudley it has developed over the past few years in particular a reputation for fair, impartial, and expert judgments in respect of Gibraltar trusts. 67 Appeals from the Supreme Court are to the Gibraltar Court of Appeal, which is has two sittings a year and is staffed by some of the most distinguished retired English Court of Appeal judges (including, presently, Sir Colin Rimer, Dame Janet Smith, and Sir Patrick Elias). And as with other British Overseas Territories, the court of final appeal for Gibraltar remains the Privy Council. The result is that Gibraltar boasts as strong and fair a judicial framework as any trust jurisdiction. Summary The Gibraltar trust industry may operate in the shadow of the imposing Rock of Gibraltar, but the foundations on which it stands are just as solid. Gibraltar’s accommodative legislation, innovative and engaged regulator, talented trust, legal and professional services industries, and powerful Court system make it an attractive choice for private wealth and fiduciary business the world over. After all, who wouldn’t want their structures to be “as solid as the Rock of Gibraltar”? ANDREW HOLDEN XXIV Old Buildings London Andrew is a chancery and commercial law specialist, whose highly-regarded practice encompasses trusts, fraud and asset tracing, probate and estate administration, and commercial litigation and arbitration. FEATURE ARTICLEGibraltar’s long association with Great Britain dates back as far as 1704 when, during the War of Spanish Succession, a force led by Admiral Rooke captured the Rock on behalf of the pretender to the Spanish throne, Archduke Charles of Austria. Subsequently, in 1713 Spain ceded Gibraltar to Great Britain in perpetuity under the Treaty of Utrecht. For most of its history, Gibraltar has been a British colony under the administration of a Governor. For well over 250 years the Rock served as an important strategic base in the Mediterranean and played key roles in the Battle of Trafalgar, the Second World War and the Falklands War. The 1969 Gibraltar Constitution represented a major advance in the rights of its citizens, providing for an elected House of Assembly and the transfer of certain powers that were previously vested in the Governor to the local Government such that the territory acquired the authority fully to manage its own civil and fiscal affairs. Great Britain nonetheless retained responsibility, inter alia, for defence and international matters but, notably, also exercised the right to appoint the Financial Secretary and the Attorney General. The 2007 Constitution advanced the cause of Gibraltarian self-determination as far as legally possible without the territory becoming an independent state. Thus, in addition to the transfer of further reserved powers from the Governor, who, whilst he remains a British Government appointee, has largely become Her Majesty’s representative on the Rock, other significant and not merely cosmetic changes were brought in. Both the Financial Secretary and the Attorney General became Gibraltar Government appointments; the House of Assembly became the Gibraltar Parliament; the number of elected members increased from 15 to 17; most importantly, clause 44 determines that whilst executive authority vests with Her Majesty the Queen, it is the Gibraltar Government, and not the Governor or any other UK-appointed official, which is empowered to exercise such authority on Her behalf. Whilst the Gibraltar Parliament introduces relevant legislation as required, the Gibraltar legal system is underpinned by English common law and cases decided in both the UK and overseas common law courts have application locally. In particular, Gibraltar recognises and gives full effect to the concept of the trust. Cases involving Gibraltar trusts are heard in the Supreme Court of Gibraltar with any subsequent appeals being heard before a Court of Appeal comprised of four senior retired UK judges. The court of ultimate appeal in Gibraltar is the Judicial Committee of the Privy Council in London. Gibraltar agreed a double taxation agreement with the UK in November 2019 which came into force in March 2020. Whilst Gibraltar voted overwhelmingly to remain in the EU in the 2016 referendum, it exited the EU with the UK in January 2021. The terms of Gibraltar’s exit from the EU have had and will have no impact on the attraction of Gibraltar as a stable English law jurisdiction where trusts can be safely established and administered. Gibraltar and Great Britain 8 THE ATTRACTION OF GIBRALTAR AS A STABLE ENGLISH LAW JURISDICTION WHERE TRUSTS CAN BE SAFELY ESTABLISHED AND ADMINISTERED.RESILIENT HISTORY STRATEGY ROBUST DEFEND TRUST REINVENT PROACTIVE WWW.ABACUS.GINext >