LEGAL ACTION AGAINST A CURACAO TRUSTEE

Who can bring an action?

If the trust assets have been prejudiced, the action can be brought by any co-trustee. Unless provided for to the contrary in the trust deed the action can also be brought by a protector or beneficiary on the understanding that the compensation is paid as soon as possible to a Trustee not being the Trustee who violated his duties (Section 3:143 subsection 4 Curacao Civil Code {‘CCC’}). The question is to whom the protector has to pay the compensation if there is no co-trustee. This question is not answered in legislation, but in practice in such cases the Trustee will be replaced by another person.

In many cases there will be only one single Trustee and then it depends on the trust deed whether an action can be brought and by whom. In such a case it should be possible to fall back on the possibility (i) of appointing a second Trustee (if this has been provided for in the trust deed) and/or (ii) of having the Trustee removed by the court (Section 3:144 subsection 4 CCC), so that a successive Trustee can be appointed. Anyway it can be determined in the trust deed that the settler or the protector can remove the Trustee at its discretion and replace him or not (Section 3:144 subsection 5 CCC).

In addition, it might be determined in the trust deed – although this would be exceptional – that such an action cannot be brought at all. The question is how this provision relates to the exoneration prohibition of Section 3:143 subsection 3 CCC. I would think that someone should be entitled to be able to bring an action in all cases. In special cases the court can render the trust provisions inapplicable or amend them at the request of an interested party or the Public Prosecutor’s department (Section 3:133 subsection 1 CCC). It is possible that this provision can provide relief in certain circumstances.

Although it is not stated in Section 3:143 subsection 4 CCC in so many words, I assume that a Trustee can in principle also be held liable by a successive Trustee.

Karel Frielink
Attorney (Lawyer) / Partner

(22 November 2012)

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