CommentsGeneral Comments
Yoshihisa Nomi ＊1. Introduction
My comment will focus on some general topics which would beof common interest among the participants of this symposium. First,I would like to discuss the meaning and importance of comparing thetrust laws in Asia. Second, I will discuss several topics related to thecreation of trust such as the requirement of trust property at the outsetof trust creation and the reservation of power by the settlor to instruct
the trustee.

2. The Meaning and Importance of Discussing Trust Laws inAsia
What is the meaning of comparing trust laws in Asia? Up until
today we did not have occasion to discuss trust laws in Asia. We havein the past invited prominent trust law scholars such as Professor Donovan Waters from Canada and Professor David English from USA. But
they were all from those countries from which we imported the trustlaw. It is obvious that we still have many things to learn from AngloAmerican trust law. By the way, it happens that Professor English ishere today. Later we may have some comments from him on today’s
symposium. As for trust laws in Asia we do not know very much. ButAsia is a challenging field for a comparative study. We thought thetime is ripe for all of us to discuss trust law in Asia. Thus we decided
to invite trust law specialists from Asian countries and exchange our＊ Professor, Law School, Gakushuin University― 221 ―

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experiences of trust and trust law.
There are several reasons why we thought trust law in Asia is important today. First, the development in each Asian countries provides
us with rich materials and interesting examples of how trust law andtrust business have evolved over the years. Second, Asia is in itself interesting for its historical, cultural and societal diversity. The trust law
in each jurisdiction based on these backgrounds must be also interestingto compare.

3. Trust Laws in Asia
The jurisdiction which each of our panelist represents has its own
trust law and trust businesses. These jurisdictions can be divided in
two groups. The first group consists of China, Korea and Japan, whichhave basically a civil law system. These countries have been and still
are struggling to accommodate trust law in the civil law background.
The second group consists of Hong Kong and Singapore, which have thecommon law system and the trust law is a part of its system.
But it seems that Hong Kong and Singapore are not simply following the English trust law. We have learned today from Professor HOand Professor TANG that their trust laws were built on the bases ofEnglish trust law, but they have also been influenced recently from theoffshore trusts such as trust law of Cayman Islands and Guernsey. They
are competing with the offshore trusts. In the offshore trusts there has
been a departure from the traditional trust doctrine to attract the settlors and the beneficiaries.
This new trend has influenced the recent development of trust law
in Singapore and Hong Kong. For example, the rule against perpetuity
has been amended in Singapore to extend the perpetuity period to 100
years or abolished in Hong Kong. Also the reservation of the settlor’s
power to choose and instruct the trustee is a conspicuous character ofoffshore trusts and has influenced Singapore and Hong Kong as well. If― 222 ―the settlor has the power to control the trustee the trust assets could
be regarded as settlor’s property which could be seized by the creditorof the settlor. The traditional trust law therefore preferred giving discretionary power to the trustee rather than giving power of instruction
to the settlor to avoid this risk. But in Hong Kong and Singapore there
seem to be a new movement to give more power to the settlor. This
trend may have an impact on the trust law in UK and USA. I personallythink this is an important topic which deserves more attention. Until
now the academics and practitioners of trust in Japan have not paid
much attention to the offshore trusts. But learning from the experiencesof other Asian countries, Japan must realize that the competition with
offshore trusts will become an important problem in the future.

4. Similarities and Differences among Asian Trust Laws
4.1 Differences
As mentioned above I have grouped the jurisdictions in Asia in two.
One is the jurisdiction with a common law background and the other isthe jurisdiction with a civil law background. Within these groups there
are also differences.
The trust law in China, Korea and Japan was implanted into theircivil law background. Therefore we all have the same problem of how
to understand the beneficial interest in the trust structure avoiding
the explanation of double ownership. But the trust law in each of thesecountries is also a product of their social and economic background. For
example, the trust law in China was enacted at the time of reorganization and realignment of trust businesses and therefore had somewhat
conservative or restrictive attitude toward trust businesses. The oldTrust Act of 1922 in Japan was also restrictive, because the concern ofthe government at the time was to regulate trust companies. Thus forexample, the provision of the Trust Act prohibited the trustee’s conflictof interest absolutely even though the beneficiary gave consent to theself-dealing of the trustee. The new Trust Act of 2006 on the other― 223 ―

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hand was to facilitate and promote trust businesses by giving more
freedom to the parties. The trust law in Korea was influenced by thepolicy of promoting land development nationwide. This background also
influenced the development of trust doctrine and case law in Korea. Ifwe look at these different backgrounds surrounding the trust law, wewill come to a more profound understanding of the trust law in eachcountries.
In the other group which consists of Singapore and Hong Kongthe similarities of their trust law are obvious. But Singapore seems tobe more active under the governmental policy to become the financial
center in Asia and to bring back trusts from the offshore. Hong Kong isdriven by the same interest as Singapore, but it seems that the initiative of financial institutions is the driving force rather the policy of thegovernment.
4.2 Similarities
I may have emphasized too much the differences of trusts in Asia.
But in fact we have more similarities than differences. Many of the problems we are facing today are the same in each jurisdiction. For example,
the problem of the retained power of the settlor or the problem of thecertainty of the trust property are all important issues in each jurisdiction. Only the way we approach to these problems and how we solve
them are different.

5. Some Specific Issues
Now I would like to move on to the specific issues of trust law. As
Professor Kanda will comment on the commercial trusts and ProfessorArai will discuss the non-commercial private trusts, I will focus on somegeneral problems related to the creation of trust.

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5.1 The Meaning of Trust Property at the Stage of Creation of aTrust
5.1.1 The Relaxed Rule on Trust Property
What kind of property do we need to create a trust? As the formation of a contract is the threshold to the problem of contract, so is thecreation of a trust an important problem for trust. The Trust Act 2006of Japan has detailed and systematic provisions on the rights and dutiesof a trustee in contrast to the rather sparse provisions on the requirements of the creation of a trust.
As for the requirements of the trust creation the rule of the threecertainties will be applied. Thus, as Professor TANG mentioned in his
report, the certainty of object, of subject matter, and of beneficiary arenecessary at the time of the creation of a trust. From the requirementof the certainty of subject matter it follows that a trust property is necessary at the outset. But Japanese trust law has a relaxed and liberalrule on the certainty of subject matter compared to other jurisdictions.
The present Japanese trust law does not require the existence of atrust property at the time of creation of a trust. Professor TANG said
that the trust law in Singapore requires a certain property to exist at
the moment of trust creation, therefore a future property which is uncertain at the time of trust creation cannot fulfill the requirement of thecertainty of subject matter. As for this issue the present Trust Act inJapan clearly provides that trust property is not necessary. A trust inter vivos in Japan is nothing but a contract. Under the old Trust Act according to the majority of academics transfer of property to the trustee
was necessary to create a trust. But even under this old Trust Act aprominent trust law scholar SHINOMIYA argued that a future property will fulfil the requirement of certainty of subject matter. Under theJapanese law future claims, such as future income or future rents can betransferred. It is not easy to understand why a future claim which has
not yet come to existence can be transferred before its actual existence.
But the case law and the majority of the academics acknowledge the― 225 ―信託法研究第40号（2015）transferability of future claims. Based upon this idea, it would also be
possible to create a trust by transferring future claims to the trustee toconstitute a trust property.
A related problem in Japanese law is whether an aggregate ofthings or an aggregate of claims can be transferred to the trustee tocreate the trust asset. Under the Japanese law an aggregate of things
is regarded as a single object which can be transferred to the trusteewith a single act of transfer. An aggregate of things (universitas rerum)
can be a trust property under the Japanese law. For example, “thewhole merchandise of a certain warehouse” or “the whole potatoes inthe specified certain storage room” can be a trust property. Usually
there are some merchandise in the warehouse at the time of the creation of a trust. But it is possible that at the time of the creation of atrust the warehouse is empty. Still the trust will be created without any
merchandise in the warehouse. If asked what the trust property is in
this case, the answer would be as follows. The setting of a frameworkor a criteria of an aggregate of things is the original trust property. If ata later time any merchandise enters the warehouse or into this framework these merchandises will immediately constitute the trust property, Such a trust of aggregate things may be useful in a case where trust
is used for the purpose of providing security for the creditor.
Whether universitas iuris such as an estate of a deceased person
can be transferred to the trustee to create a trust was discussed in theLaw Reform Committee for the revision of trust law. Some academics
supported the idea, but the majority of the Committee rejected thetransferability of universitas iuris. Especially when debts were includedin the universitas iuris, transfer of debts requires the consent of thecreditor and therefore it is difficult to transfer universitas iuris with asingle act.
5.1.2 The Time of Transfer of the Trust Property
Another issue is the time of transfer of the trust property to thetrustee from the settlor. The new Trust Act has taken the position that― 226 ―transfer of the trust property does not have to occur at the creation oftrust. It could be transferred after the trust has been created. A trust
thus created is only an agreement between the settlor and the trustee
in which the trustee promises to manage and dispose the trust property in a certain way agreed in the trust instrument. Though the trust
property is not necessary to exist at the outset, there must be a trust
property at a certain time after the trust is created. If the situation of
the trust without any trust asset continues for a certain period of time,
the trust will be terminated because of lack of trust property or impossibility of trust object.
In this context what Professor LOU mentioned in his report about
the land trust in China was very interesting. He explained that in China
land trust is at the moment difficult to create because of lack of theprovisions for registration of trust in the Land Registration Act. Therefore what actually being done in China is a creation of a trust of future
income from the land. Such a trust of future income will be economically almost the same as a trust of land itself. This example shows usthat the problem of trust property can be solved in various ways. Sometypes of property cannot be transferred from various reasons. But thehindrances can be overcome by looking it from an entirely different
angle, by recharacterising the trust property. What we need perhaps isthe flexibility of our minds.
5.1.3 Seed Money Trust
In regard to the necessity of trust property new issues on trust
property are discussed among the trust lawyers. Among such the socalled “seed money trust” is interesting. The settlor transfers a small
amount of money as seed money to the trustee for a startup of a trust.
After the trust has been created the trustee borrows money from investors. The trust fund thus enlarged in amount will be used for further
investments buying stocks or other securities. The seed money which
was used to create the trust could be returned to the settlor. Does thisviolate the nature of a trust that a trust is created by a property of― 227 ―

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the settlor? If the seed money is returned to the settlor/the original
beneficiary, what left after the retreat of the settlor with his money is
the money from the third party investors. I do not have a firm opinion
how to respond to this kind of trust. It may be an undermining of a typical model of a trust. It may be regarded as a progress of trusts. Trustlawyers in Japan are probably not so negative against this phenomenon.
It comes from the tendency in the Japanese trust law that a trust isa contract and the property requirement is not rigid. We have heard
from Professor HO and Professor TANG that it is not unusual in Hong
Kong and Singapore that a trust is first created with a small amount ofmoney and then increased afterwards. I would like to know what ourguest speakers think about this.
5.2 Reservation of Powers by the Settlor
According to Professor HO’s report, to bring back offshore trusts toonshore and to offer a more attractive trust to the settlors, Hong Kong
has made it clear by legislation that the settlor’s reservation of power
to instruct the trustee does not make the trust voidable. Singapore isahead of Hong Kong in this respect.
In a traditional Anglo-American trust the settlor does not reserve
powers to instruct the trustee, because by the creation of a trust thesettlor transfers the title of the property and therefore a typical typeof trust is a discretionary trust in which the trustee has all the powers
in regard to the trust property. If the settlor retains power over trust
property there is a risk that the transfer of ownership to the trustee
may be denied and the creditor of the settlor can reach the trust property. If the power of the settlor is so strong and the trustee is only anominal existence, there may even be a risk that the trust itself could
be void. What Professor HO mentioned about the power reserved tothe settlor is that the reservation is not too extensive lest that the trust
should be declared void. Only to the extent that the settlor has somepower to influence the trustee would satisfy the needs of the settlors.
Such a development of trust in Hong Kong and Singapore is evidently a― 228 ―departure from the traditional Anglo-American trust.
A comment on this point from the Japanese side is that our trust
law starts from a different starting point. The Japanese trust law gives
the settlor a strong position to control the trustee. It was so under theold Trust Act of 1922. The idea behind this was that the settlor is theparty who creates a trust with the trustee by agreement. Trust is basically a contract. Therefore the settlor has an interest to seek the performance of the trustee as agreed and if the trustee violates his obligations
the settlor can enforce and sanction the trustee. The old Trust Act thus
gave the settlor various powers to control the trustee. The new Trust
Act of 2006 denied some of these powers, Most of these powers to control the trustee was given exclusively to the beneficiary. But still thebasic idea of trust in Japan is that a trust inter vivos is a contract. The
majority of the trust lawyers are of the opinion that a settlor can retainpowers to control the trust and instruct the trustee. How much power
can be reserved by the settlor is not fully discussed in Japan.
Among the powers reserved by the settlor are the power to decide
the investment, the power to change and appoint the trustee, the power
to change the beneficiary and the power to change the content of thebeneficial interest. The Japanese trust law does not set any limit to thereservation of power by the settlor. In an investment trust the settlorinvestment company has the power to instruct the trustee. Though
the trustee in an investment trust is the owner of the trust property,
it is only managing the trust property following the instruction of thesettlor-investment company. The validity of such a trust has never beenquestioned.
Even though the trustee must follow the instructions of the settlor,a problem arises when the instruction was not appropriate and would
harm the trust property and thus the beneficiaries. In principle thetrustee must follow the instruction and if he did so there would be noliability of the trustee. But what if the instruction was obviously not appropriate or if the trustee knew that following the instruction will harm
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the trust property? What happens if the trust property was therefore
damaged? Can the beneficiaries claim damages against the trustee oragainst the investment company who gave the instruction? The instructor who has the discretionary power is evidently a fiduciary, But theJapanese law do not have the legal concept of fiduciary broad enough toinclude those people with discretionary powers.
If the settlor can reserve the power to instruct the trustee and if
the instruction was inappropriate the same problem mentioned above
will arise in other Asian countries as well. I am curious to know how
these jurisdictions will solve this problem.

6. Conclusion
Through the comparison of Asian trust laws, we can learn the similarities and differences of the trust law in each jurisdiction. The similarity comes from the fact that an important issue in one jurisdiction isalso an important issue in other jurisdictions. A difficult problem in one
country is also a difficult problem in other countries. But the interesting
part of the comparison is that we learn there are different approachesto the same problem. This will not only enhance our knowledge on trust
but also gives us impetus to improve our legal system on trust.
The diversity of trust laws in Asia is full of excitement and future. I
hope we can further our collaboration and step up to a more productive
relation in the future.

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