I have recently defended my PhD thesis at UCL, which focuses on trusts law in Japan as well as Quebec from an English legal perspective. The thesis has two parts: first, I aim to show that the structures of Japanese and Quebec trusts are highly similar to English express trusts, understood as a set of legal rules which restrict the authority of the trustee as titleholder to property, and which has important effects on property law in the host legal system. Secondly, the thesis argues that civil law countries’ relative disinterest in understanding as a single body of rules what common lawyers describe as “fiduciary” principles explains the lack of appreciation of the trustee’s discretionary powers in Japan. Drawing on Quebec’s experience, the thesis proposes the civil law notion of good faith as a strategy to assist the Japanese court in understanding the normative consequences of parties’ choice of trusts law to govern their property relationships. As Japan has one of the oldest populations in the world, there is some urgency in developing family trusts to deal with a variety of social problems. I suggest that the expansion of family trusts in Japan has a latent democratising potential in facilitating the implementation of the wishes of ordinary elderly individuals and those without capacity.
For English lawyers, the trust is often viewed as a distinctively common law institution, conventionally understood as the result of “split” legal and equitable titles to property. While that view no longer commands mainstream support (e.g. Ben McFarlane and Robert Stevens, “The Nature of Equitable Property” (2010)), jurists in civil law countries continue to explain the trust’s absence in Europe in terms of the nonexistence of equity as a source of law. This view is problematic in a number of ways. First, trust-like institutions such as the Roman fiducia or the German Treuhand have a long pedigree in the Romano-Germanic legal tradition, even though the latter was not mentioned in the BGB (German Civil Code) and was developed by courts in the late nineteenth century. Secondly, the increasing acceptance of the trust as a part of the law of obligations among English legal scholars suggests that equity as a source of law is not necessary for the existence of the trust.
In civil law countries, the widespread development of the trust has largely been a response to the use of the Anglo-American trust in commercial settings. In 1922, Japan was one of the first civil law countries to adopt the trust. As it was based on the Indian Trusts Act 1882 and the California Civil Code 1872, the Japanese trust bears clear common law origins, even though the widespread use of the trust did not take place until the 1970s/80s (Shōwa 50s). During the height of the Japanese bubble economy in the 1980s, new types of products emerged including the fund trust, corporate investment trust, pension trust, trusts for personal finances and inter vivos gifts, trusts to dispose of stocks, and trusts for managing securities. A new Trust Act was introduced in 2006, by which point the Japanese Trust Act had already inspired similar laws in neighbouring countries including Korea, Taiwan and mainland China. Both the scale of usage of the Japanese trust, and the extent to which the trust interferes with underlying property law principles, are more extensive than many continental European trusts such as the French fiducie (2011).
There exists a second and older group of trusts in the classic mixed legal systems (Scotland, Quebec and South Africa among others), which are properly viewed as a subset of civil law countries from the perspective of property law. There the use of the trust began in the nineteenth century or before. Socio-legally, the introduction of the trust was a result of the direct influence of English law (often as a direct outcome of British colonisation). From the standpoint of trusts law, it meant that the trust first developed in the family and succession contexts. In Quebec, the protection of the freedom of testation under the Quebec Act 1774 allowed English settlers to set up trusts notwithstanding the province’s civil law system. While eighteen brief articles recognising the trust were codified in 1886 and inserted into the province’s civil code, over the course of the nineteenth and twentieth centuries, Quebec jurists led organised resistance to the extension of the trust. This historical reality gives legal history much weight in understanding the nature of the Quebec trust, with leading authors describing the experience as stormy (Alexandra Popovici, Êtres et avoirs (2019)) or a cause of heartbreak (Sylvio Normand, Introduction au droit des biens (3rd edn 2020)).
What this thesis aims to do is to undertake what Eric Descheemaeker and Helen Scott describe as “oxymoronic comparative law” (Iniuria and the Common Law (2013)). By this I mean that the rich experiences of Quebec as a civil law country which has nonetheless developed trusts in the family and succession law context might offer useful lessons for Japan, which has the opposite experience in developing commercial trusts successfully but not family trusts. Furthermore, although the nature of “mixity” in the two jurisdictions is not the same, given that Japan lacks the kind of procedural innovations which define the Quebec legal system’s mixed character (e.g. Jacinthe Plamondon, “La procédure civile québécoise” (2020)), Japan’s location in the American-dominated Western Pacific region nonetheless explains the deep influence not only of civil law but also of common law on Japan’s legal system. To the present author, this hybridity of legal experiences explains Japan and Quebec’s strong commitment to the trust as an institution, compared to other civil law countries without such a historical background (Joyman Lee, “Settlor’s Retention of Powers in Civil Law Trusts” (2021)).
The first part of the thesis describes the use of Japanese and Quebec trusts in securitisation and pensions and the terrain for a likely expansion of family trusts in Japan. The second part offers a detailed comparison of the doctrinal structures of trusts from the perspective of the three trust parties, namely the settlor, trustee and beneficiary. For settlors, the tendency for Japanese trusts to be constituted by contract explains the peculiar relationship between settlor and trustee, which is more akin to contract than is the case in common law trusts. Consequently, settlors in Japanese trusts are more likely to retain a sizeable role, although that role has been cut back in the 2006 Act, partly as a result of challenges in the context of the trust’s use in securitisation (True Sale). For trustees, I observe that core trustee duties in all three trusts are largely similar. For beneficiaries, I suggest that a bifurcated understanding of the beneficiary’s interest in English law as one consisting of a right to due administration and a beneficial entitlement to property (Akers v Samba Financial Group  AC 424,  (Lord Sumption)) is also helpful in other jurisdictions. Given the strong commitment in civil law countries to the beneficiary’s interest as a personal right, I show that patrimony as developed by Pierre Lepaulle provides a valuable way of understanding that interest. At the most basic level, patrimony refers to the totality of a person’s assets and liabilities, although by the eighteenth century it came to be associated in French law with a person’s assets and liabilities available to creditors. I suggest that the concept of patrimony is useful whether it affects only internal relations in the trust (Japan) or is placed on a legislative footing (Quebec).
The third and final part of the thesis offers good faith as a possible solution to Japanese courts’ weak understanding of the normative basis of the remedies which are provided to beneficiaries under the Trust Act. As Michele Graziadei notes (“Virtue and Utility” (2019)), many civil law countries have not followed the distinction between contract and fiduciary duties made in common law countries, and have other ways of accommodating similar situations through contract or the notion of good faith. After an overview of good faith in a number of civil law countries, in my final chapter I connect the line of Quebec cases responding to the “no profit” rule in common law Canada with the challenges confronted by Japanese courts. While Quebec courts have definitively rejected the direct application of English fiduciary duties under that name (Provigo Distribution inc v Supermarché ARG inc  RJQ 47), Quebec courts’ attempts to reconcile these concepts with civil law have nonetheless provided the basis for the development of a new body of rules based on the mandate, which respond to the contemporary challenges posed by trusts and other situations in which concepts deriving from Anglo-American fiduciary law may apply (Madeleine Cantin Cumyn and Michelle Cumyn, L’administration du bien d’autrui (2nd edn 2014)).
Methodologically, my thesis embraces the modern view of functionalism as described by Ralf Michaels (“The Functional Method of Comparative Law” (2019)) with its sensitivity to social and cultural factors. I see such an approach as compatible with a historical view sensitive to the fluidity which characterises the development of mixed legal systems as highlighted by H Patrick Glenn (“Droit québécois et droit français” (1993)), which is also not fundamentally dissimilar to the historical experience of common law. By embracing a historical and “granular” approach to differences between legal systems, I hope to develop a methodology which is more applicable to jurisdictions beyond legal systems in Western Europe and North America. In this respect, Japan’s rich experiences in the development of trusts offer particularly fertile ground for building a comparative law with global aspirations.
Joyman Lee is Lecturer in Common Law at the University of Glasgow. He holds a PhD degree in history from Yale University, and has been awarded a PhD degree in private law from UCL (Apr 2022). His thesis was supervised by Professor Charles Mitchell, with Professor Paul Davies serving as the secondary supervisor, and examined by Professors Alexandra Braun and Lionel Smith. Building on his earlier career in economic history, Joyman is interested in the relationship between private law and colonialism, focusing on Japan and West Africa.
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