WU Ying-Chieh, Trust Law in Korea: Modified Transplant and Doctrinal Challenges, Seoul Law Journal, Vol. 60, No. 4(2019), pp. 97–131.
<Abstract>
Private Law in Korea is based on the civil law tradition. It requires clarity in definition and coherence in the system-building. Therefore, a modified transplant is inevitable when importing the common law trusts to this civilian soil. Indeed, the legislation on trust law (i.e., the Trust Act) attempted to make several modifications when it was enacted in 1961 and amended in 2011. That said, the Trust Act has also resulted in some conceptual, systematical, and theoretical problems. Due to the space constraint, this article cannot cover all of them but aims to discuss three of these problems. They are: (1) those concerning the creation of the trust; (2) those pertaining to the third-party effect of the trust and to the doctrine of separate patrimony; (3) those relating to the effect for the breach of the no-profit rule and its doctrinal foundation. These also form the core issues when comparing the common law trust with the civil law trust. The views adopted in this article are as follows: (1) it is worth considering the option of substituting the contract-based trust regime for the unilateral-intention-based regime, thus regard the trust as created when the settlor’s intention to create the trust is manifested; (2) unlike the common law approach, the beneficiary’s right cannot be proprietary. The bankruptcy-effect could be explained by the doctrine of separate patrimony and the third-party effect should be achieved by regarding the deal made by the trustee and the third party as void, rather than by the current means of according a right of rescission to the beneficiary; (3) the effect for the breach of the no-profit rule is personal and it constitutes an exception to the existing compensational mechanism that always requires actual damage to be caused to the aggrieved party. Furthermore, Art.36 of the Trust Act that prescribes the no-profit rule needs amending.
<Keywords>
acts creating the trust, unilateral-intention-based regime, separate patrimony, the no-profit rule, the beneficiary’s right of rescission, proprietary right, personal right.
WU Ying-Chieh, Trust Law in Korea: Modified Transplant and Doctrinal Challenges, Seoul Law Journal, Vol. 60, No. 4(2019), pp. 97–131.
<Abstract>
Private Law in Korea is based on the civil law tradition. It requires clarity in definition and coherence in the system-building. Therefore, a modified transplant is inevitable when importing the common law trusts to this civilian soil. Indeed, the legislation on trust law (i.e., the Trust Act) attempted to make several modifications when it was enacted in 1961 and amended in 2011. That said, the Trust Act has also resulted in some conceptual, systematical, and theoretical problems. Due to the space constraint, this article cannot cover all of them but aims to discuss three of these problems. They are: (1) those concerning the creation of the trust; (2) those pertaining to the third-party effect of the trust and to the doctrine of separate patrimony; (3) those relating to the effect for the breach of the no-profit rule and its doctrinal foundation. These also form the core issues when comparing the common law trust with the civil law trust. The views adopted in this article are as follows: (1) it is worth considering the option of substituting the contract-based trust regime for the unilateral-intention-based regime, thus regard the trust as created when the settlor’s intention to create the trust is manifested; (2) unlike the common law approach, the beneficiary’s right cannot be proprietary. The bankruptcy-effect could be explained by the doctrine of separate patrimony and the third-party effect should be achieved by regarding the deal made by the trustee and the third party as void, rather than by the current means of according a right of rescission to the beneficiary; (3) the effect for the breach of the no-profit rule is personal and it constitutes an exception to the existing compensational mechanism that always requires actual damage to be caused to the aggrieved party. Furthermore, Art.36 of the Trust Act that prescribes the no-profit rule needs amending.
<Keywords>
acts creating the trust, unilateral-intention-based regime, separate patrimony, the no-profit rule, the beneficiary’s right of rescission, proprietary right, personal right.