Conceptualizing the Chinese Trust

Abstract

English trusts are founded on the historical and doctrinal basis of equity and its consequent division of legal and equitable ownership of the trust fund. Evidently, this conceptualisation is not suitable for the civilian trust which lacks an equity heritage and is averse to fragmentation of ownership under the civilian numerus classus principle of real rights.

Notwithstanding so, many civilian jurisdictions have transplanted the concept of trust into their respective jurisdictions. With growing international recognition and utilization of the trust concept, China also caught up the trend by enacting a Trust Law of China in 2001. However, the basis of the Chinese trust has yet to be conceptualized satisfactorily. Although the common law trust is seen to be a hybrid of obligation and property concepts, the recently enacted the Real Right of China (2007) does not contain any trust concept. This article examines a number of civilian explanations have been propounded to see whether they fit into the structure of the Chinese trust. These include an agency or contract arrangement or a separate patrimony theory. It will be suggested that these are deficient one way or another. The possibility of conceptualizing the Chinese trust as an obligation, rather than a form of property ownership, will also be explored.