Empowering Settlors: How Proper Language Can Increase the Enforceability of a Mandatory Arbitration Provision in a Trust
57 Pages Posted: 7 Apr 2012 Last revised: 10 Apr 2012
Date Written: April 6, 2012
With hostile trust litigation reaching epidemic proportions, many people within the trust industry are interested in identifying new and less expensive ways to resolve trust-related disputes. Arbitration is often proposed as a possible alternative, although questions exist about whether and to what extent a mandatory arbitration provision found in a trust will be considered enforceable by a court.
Up until now, most commentary in this area of law has focused on purely jurisprudential issues, with little attention being paid to the practical efforts that settlors can make to increase the enforceability of arbitration provisions found in trusts. This Article takes a slightly different approach to the question of trust arbitration in that it analyzes the extent to which a settlor can overcome the various legal challenges facing mandatory trust arbitration through appropriate use of language in the trust.
In so doing, this Article not only discusses the opinions of both courts and commentators, it also analyzes the effectiveness of various model arbitration clauses specially drafted by two of the world’s leading arbitral institutions, the American Arbitration Association (AAA) and the International Chamber of Commerce (ICC), for use in trusts. Although these provisions have been in existence since 2003 and 2008 respectively, no commentator has yet discussed them in any depth. This Article fills that gap, providing settlors and trustees with practical, yet theoretically sound, advice on how to draft an enforceable arbitration provision in a trust. In so doing, the Article also introduces a number of relevant judicial opinions that have not yet entered the legal literature.
Keywords: trusts, trust law, trust and estate, arbitration, international commercial arbitration, ADR, Federal Arbitration Act (FAA) drafting, American Arbitration Association, AAA, International Chamber of Commerce, ICC
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