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The Issue Of Offshore Jurisdictions

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Introduction

At first glance, the legislation in offshore jurisdictions makes the repatriation of assets seemingly impossible, providing the impossibility defence for debtors unwilling to relinquish assets owed to creditors. Offshore jurisdictions may use clever tactics such as duress and flight clauses to make repatriation of the assets in protection trusts difficult, but onshore jurisdictions are not to be fooled; the court will either declare the trust a sham, void the transaction, threaten professional negligence against the attorney or hold the settlor in contempt until compliance. As long as the debtor is physically residing in the onshore jurisdiction and subject to the laws of that nation, the court can effectively through coercive means attempt to repatriate the assets from the trust.

Sham Trusts

In Snook v London and West Riding Investments Ltd [1967] 2 QB 786, 802, Lord Diplock defined sham as, ‘acts done or documents executed by the parties to the “sham” which are intended by them to give to third parties or to the court the appearance of creating between the parties legal rights and obligations different from the actual legal rights and obligations (if any) which the parties intend to create. But one thing, I think, is clear in legal principle, morality and the authorities ... that for acts or documents to be a “sham” with whatever legal consequences follow from this, all the parties thereto must have a common intention that the acts or documents are not

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