As a civil law jurisdiction based on the principles of Shariah, none of the constituent Emirates that make up the UAE have any tradition of trusts law as we in Anglo-Saxon jurisdictions know it. Ironically though, it is believed that the Shariah law equivalent of the charitable trust (known as the waqf) may have been the inspiration for the Anglo-Saxon trust when the Knights Templar discovered its use sometime around the twelfth century.

It is a misnomer to refer to a Dubai Trust. The Dubai Trust Law 2005 that ushered in the form of Anglo-Saxon trust in Dubai is only effective within the Dubai International Finance Centre.  DIFC is a 110-acre zone within the city of Dubai that operates as an onshore financial centre akin to the "Square Mile" in London but with its own institutions, laws and court system to regulate matters. However, the term Dubai Trust Law is used here for the sake of simplicity.

The Dubai Trust Law comprises a clear and comprehensively drafted framework for the establishment of an Anglo-Saxon type trust. Its provisions are structured, and in many cases worded, along very similar lines to the trusts laws in force in, for example, Jersey and Guernsey.

The provisions of Dubai Trust Law are therefore no less restrictive, and no less attractive, than those in other leading offshore trust centres. For example, where there is a strong desire on the part of the person setting up the trust to retain control and influence over the structure and the actions of the trustees, this is expressly permitted under Dubai Trust Law.

But who is the Dubai Trust Law designed to appeal to?  As a tool for flexible succession planning, it is unlikely that Muslims will feel able to sign up to the inherent flexibility, and therefore potential deviation from Shariah Law succession, that the Dubai Trust can offer. In an effort to address this concern, the Dubai Islamic Bank played an instrumental role in establishing Waqf Trust Services in 2007 as a trust service provider operating within DIFC with a particular focus on managing family wealth with strict adherence to Shariah guidelines.  This ensures that the other advantages of a family trust structure (i.e. asset protection, confidentiality, control mechanisms) are available to Muslims.

Other individuals who may be interested in using a Dubai Trust could include ex-patriates of non-Gulf states that have business interests in the region and may prefer to use local institutions in the region to manage the family wealth. With a perceived threat to certain offshore financial centres as a result of the initiatives of the Group of Eight bloc of industrialised countries, jurisdictions like Dubai would seem to be well positioned to expand their private wealth and trust market-share in the future.

One of the concerns that professional advisors and financial institutions may have with a Dubai Trust, is how any uncertainties or disputes over the trust will be resolved in a jurisdiction that is historically unfamiliar with the Anglo-Saxon trust. The DIFC Judicial Authority has been specially formed to adjudicate on the civil and commercial laws of the DIFC. The DIFC Courts will have jurisdiction over a trust (whether a Dubai Law Trust or one established under another jurisdiction's law) if it is:

•           Governed by Dubai Trust Law;

•           The trustee is resident in DIFC;

•           Trust property is based in DIFC or the trust is administered in DIFC.

The Dubai Trust Law is fairly comprehensive but does it (or indeed could it!) include every aspect of the Anglo-Saxon law of trusts?  In a word, no. But what the Dubai Trust Law does do is expressly incorporate "the common law of trusts and principles of equity".

What this means is that the DIFC Courts should be able to apply cases based on English trust law principles including decisions in the offshore trust jurisdictions of, say, the Channel Islands and the Caribbean. This is an important feature that should allow the use of the Dubai Trust Law to easily keep pace with decisions and developments in trusts law in its competitor jurisdictions.

The Dubai Trust Law is at an early stage in its evolution and use. The global economic crisis has arguably caused a setback - a number of major players in the private banking world have pulled out of or limited their involvement in, the region.  However, once the cranes in Dubai do start moving again, the Dubai Trust Law would seem to offer a strong platform with which to launch the next stage in the evolution of private trust services in Dubai.