Update 1 February 2017. The stay was reinstated  UKSC 6 (to the degree that is still effective) by the Supreme Court.
The Hague Trust Convention arguably is of limited (not obviously irrelevant) ambition only. It gives trusts a passport, so to speak, which ensures them entry into other jurisdictions. However such entry does not guarantee fuss-free onward travel. Some trusts for that reason often prefer not to travel, keeping assets etc, domestic. For once on a journey, all sorts of mishaps might happen. For others, the prospect of foreign shores is simply too enticing to resist. Evidently, residents of countries which do not traditionally employ trust-like concepts, likewise are often tempted to use common law trusts to surpass limitations in their own national property etc. law.
A common foreign element in the life of a trust is its holding of foreign assets, often real estate or shares in foreign corporations.
The analogy often used in describing the Convention’s approach to applicable law is that of the rocket-launcher v the rocket (the latter, as the Court of Appeal held in  EWCA Civ 1516 Akers v Samba, ‘presumably when the rocket is in orbit’): Its provisions are obviously aimed in part at establishing the law applicable to trusts (see articles 6 and 7 that relate to identifying that law, and article 8 that defines what the law specified shall govern). But article 4 acknowledges that there are some preliminary issues to which the Convention and its applicable law rules will not apply.’
In Akers v Samba, the trusts concerned arose from transactions which took place between 2002 and 2008. In each of the transactions, Mr Maan Al-Sanea (“Mr Al-Sanea”), who is a citizen of and resident in Saudi Arabia, declared himself a trustee of certain Saudi Arabian shares for one of the claimant companies, SICL, a Cayman Islands company which is now in liquidation (and massively insolvent). SICL was Mr Al-Sanea’s family investment vehicle, which was managed in Geneva. SICL’s liquidators seek to challenge the validity of a disposition to Samba of the shares that were the subject of the 6 transactions, made just before SICL’s winding up order was made. The effect of the disposition, if the liquidators are right, was to deprive SICL’s creditors of shares to which it was entitled worth some US$318 million. The underlying issue, put shortly, is whether it was at least arguable that the shares were indeed held on trust for SICL.
The Court of Appeal at this stage is not concerned with whether the liquidators will ultimately prove to be entitled to a declaration that the Transfer was void. Nor with whether Samba might be entitled to a validation order in respect of the Transfer on the grounds that Samba was a good faith purchaser of the Shares: it is ‘simply’ concerned with whether or not to confirm a stay of proceedings in England, granted earlier. Reasons given for that stay were that each of the relevant trusts was governed by either Saudi Arabian law or Bahraini law, neither of which will enforce foreign (trust) laws or recognise any division of the legal and beneficial interests in shares. Sir Terence Etherton at the High Court  EWHC 540 (Ch) had held that these proceedings should be stayed on the grounds that the courts of Saudi Arabia were clearly and distinctly a more appropriate forum.
Lord Vos leading, the Court of Appeal lifted the stay after complete yet somehow fairly concise review of the most relevant existing scholarship on the implications of the various articles of the Hague Convention. (including the most recent by prof Hayton in the Recueil des cours). It was held:
i) On the assumption that the governing law of the declarations of trust is Cayman Islands law, article 4 does not operate to exclude the application of the Convention to the declarations of trust under the 6 transactions. Whilst Saudi Arabian law as the lex situs would still govern the question of whether Mr Al-Sanea had capacity to alienate the Shares at all, Cayman Islands law would govern the capacity of Mr Al-Sanea to alienate an interest in the Shares by way of declaration of trust, and the transfer of the beneficial interest effected by the declarations of trust.
ii) It was not appropriate in this case to determine on a stay or summary judgment application whether article 15 applied to the transfer of the equitable interests under the declarations of trust, because (i) the mandatory nature of the Saudi Arabian law rules was not explored in the expert evidence, and (ii) it would be better for the interaction between the application of the governing law of the trust to the validity, construction and effects of the trust under article 8, and the application of article 15(d) to the transfer of the beneficial interest in the Shares to SICL, to be decided after a full evidential hearing.
iii) It is at least arguable that it is to be implied from the terms of the declarations of trust in the later transactions that they were to be governed by Cayman Islands law under article 6. In that event, article 7 would not be engaged for those later declarations of trust. It would be better for all questions under articles 5, 6 and 7 to be determined after a full evidential hearing in the light of all the circumstances of the case.
Both counsel had argued that the case had monumental consequences: at 35: ‘There must be large numbers of trusts established under the laws of common law jurisdictions, onshore or offshore, that comprise registered shares in civil law countries amongst their assets. Mr Mark Howard QC, counsel for the liquidators, opened this appeal by pointing out that it would be remarkable if all those trusts were to be held to be ineffective. Mr Mark Hapgood QC, counsel for Samba, responded by pointing out that there was nothing to stop people purporting to put shares registered in civil law jurisdictions into common law trusts; it was just that the trusts would create only personal remedies in those jurisdictions and not proprietary remedies against third parties to whom the shares were transferred or in the event of the trustee’s bankruptcy’. It would seem the High court for now would seem to side with the need to ensure effectiveness of those many trusts which are a staple part of international finance and assets management.
To be continued, however. Geert.