Why arbitration may become an increasingly attractive way to resolve Guernsey trust disputes

Trust disputes frequently come before the Guernsey Courts. However, litigating trust disputes in the Royal Court can come with several potential downsides, including unwanted publicity, delay, lack of finality due to appeals and high costs.

In light of the recent revisions to the Trusts (Guernsey) Law 2007 passed by the States of Guernsey in May 2026, it is worth revisiting and reviewing the potential use of arbitration for certain trust disputes.

This is the fourth of a series of short articles summarising key aspects of trusts law in Guernsey. See our earlier articles here:

• Trustee blessing applications in Guernsey: what trustees need to know

• Removing a trustee in Guernsey: key considerations and upcoming changes to the law

• Gross negligence and trustee liability in Guernsey: update on key principles and case law

Advantages of arbitrating a Guernsey trust dispute

Confidentiality

This is a key advantage over litigation in the Royal Court of Guernsey where matters are usually dealt with in public. In arbitration, there is complete privacy and confidentiality as to what is said, the dispute itself and the outcome.

Selecting your judge or judges

If a dispute justifies the cost, it is normal for each side to appoint their own arbitrator and for the two party-appointed arbitrators to jointly appoint the third who will normally act as the chair of the tribunal.

If only a single arbitrator is wanted, it is up to the parties to agree who should decide the dispute in question. When parties cannot agree on a sole arbitrator, the appointment is usually dictated by the incorporated arbitral rules, the designated appointing authority or the local court at the seat of arbitration.

Tailoring procedures by agreement

It is usually possible for the parties to direct the arbitrator or tribunal to make an award on a particular basis, for example:

• limiting the obligation as to disclosure

• written representations only

• applying the strict rules of evidence, or not

Potential cost-saving

Although parties will have to factor in paying the costs of the arbitrator(s), if the procedure is streamlined – for example, by limiting disclosure of documentation – there may be cost savings overall compared with the cost of litigating the same dispute through the courts. The potential for appealing an arbitration award is greatly reduced.

A limited right of appeal

Under the Arbitration (Guernsey) Law 2016 (the Arbitration Law), the right to appeal an arbitration award as a matter of Guernsey law to the Royal Court is strictly limited. Challenges generally fall into the following specific categories:

• substantive jurisdiction: a party may challenge an award because the arbitral tribunal lacked substantive jurisdiction (for example, no valid arbitration agreement or dealt with matters outside the scope of submission)

• serious irregularity: a challenge can be brought for a serious irregularity affecting the tribunal, the proceedings or the award

• appeal on a point of law: an appeal to the court on a question of law arising out of an award is permitted, but this is subject to strict statutory requirements and requires either the agreement of the parties, or the leave of the court

Delays may be avoided

Given the parties chose the arbitrators, they can be appointed after first ensuring that they are available to progress the arbitration swiftly. Often, arbitrations have less delays than court proceedings where the parties have no control over court and judge availability.

The ease of enforcement of a New York Convention arbitration award

Guernsey is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention). It is generally easier to enforce New York Convention arbitration awards than court judgments internationally. Over 170 countries are signatories to the New York Convention, though enforcement of its arbitral awards can still be difficult in certain jurisdictions.

Find out more about how Ogier can help in international arbitration matters.

Key difficulties in arbitrating a Guernsey trust dispute

Limits on the relief available

Certain forms of relief cannot presently be granted by an arbitral tribunal. These limits on relief mean that some of the wider and more frequent requests to the court by trustees, like Public Trustee v Cooper [2001] WTLR 901 blessings of momentous decisions, variations and rectifications can only be resolved in court under current rules.

Binding beneficiaries, minors and unborns

One of the principal concerns over the use of arbitration in trust disputes is how to ensure that all the beneficiaries, including minors and unborns, are bound to submit to the arbitration process and / or any award.

When it comes to disputes in relation to the internal administration of a trust, there is a key difference to a typical commercial arbitration. In the latter, the parties have consented to the use of arbitration. By contrast, the funds in a family trust usually represent a potential gift to the beneficiaries, who might not have been aware of the fact and would not have been asked at the outset to sign up to the trust terms.

For a disgruntled beneficiary who wishes to have publicity, it has been easy for them to claim that they are not bound to submit their dispute to arbitration.

A number of international arbitration organisations have sought to address this and put forward a form of model clause that can be used in trust instruments to require disputes to be submitted to arbitration rather than to the courts. What these clauses seek to do, in order to ensure that there is mandatory arbitration of trust disputes, is ensure beneficiaries are deemed to have accepted and agreed to the arbitration clause if they seek to claim any other rights under the trust document.

Who will be bound by the outcome?

A further issue is ensuring that all beneficiaries will be bound by the outcome of an arbitration.

Compared to commercial arbitrations, some of the relevant or affected parties to a trust dispute may well be underage children, incapacitated adults or unborns.

In a court process, all beneficiaries (including unborns) will typically have their interests represented by a person who is duly appointed. Unless the statute deals with this issue, it would have to be dealt with creatively, for example:

• applying to the court solely for the limited purpose of having representatives appointed to the arbitration for underage or unborn beneficiaries

• the trust document itself may set out a mechanism for the appointment of a representative so that those beneficiary and unborn interests can be represented in the arbitration

Amendments to the Trusts Law

In terms of using arbitration to resolve trusts disputes in Guernsey, the most important amendments passed by the States in May 2026, currently being drafted by legislative draftsmen, are:

• an arbitration clause found in the terms of a trust deed is deemed to be a valid arbitration agreement under the Arbitration Law (subject to any contrary order by the Royal Court of Guernsey)

• the types of disputes eligible for arbitration are broadened beyond claims against a trustee for breach of trust and now encompass internal trust disputes involving trustees, beneficiaries and other power-holders, such as protectors or enforcers

• an interested party who has not expressly consented to arbitration can apply to the Royal Court for an order to prevent the arbitration clause from taking effect

• the previous requirement under Section 63 of the Trusts Law – which mandated that Alternative Dispute Resolution (ADR) settlements be recorded in a document signed by or on behalf of all parties to be binding – has been removed to accommodate flexible ADR processes

• a recommendation that the Trusts Law and the Arbitration Law should be amended with the objective providing "as comprehensive a code as possible for the arbitration of trusts disputes" and making such ancillary amendments as may be necessary

The intention behind these amendments is clearly to encourage and facilitate the use of arbitration and other ADR processes to resolve trust disputes in Guernsey.

It is yet to be seen whether these amendments have the desired effect. Section 63 of the Trusts Law already states that a settlement made in accordance with its terms is binding on all beneficiaries of the trust, whether or not yet ascertained or in existence, provided the safeguards set out in the remainder of the section such as to notice and representation are met. As the scope of section 63 is to be widened, it may well be that more trust disputes in Guernsey are subject to arbitration rather than resolved before the Royal Court once the amendments come into force.

How Ogier's Dispute Resolution team can help

Ogier's trust disputes experts in Guernsey have extensive experience advising trustees, beneficiaries and other parties on contentious and non-contentious trust matters, including the possible arbitration of trust disputes. To find out more, contact a member of the team via the details below.

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Disclaimer

This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.

Regulatory information can be found under Legal Notice