Repeals and replaces the Trust Law 2005 and governs the creation, variation and termination of trusts in the DIFC, the duties and powers of trustees and the rights of beneficiaries, and gives the DIFC Courts jurisdiction over DIFC trusts and certain foreign trusts. Consolidated Version No. 3, March 2024.
The Trust Law, DIFC Law No. 4 of 2018, is the DIFC's trust statute. Article 1 repeals and replaces the Trust Law 2005 (DIFC Law No. 11 of 2005), and the current text is Consolidated Version No. 3 of March 2024, incorporating amendments made by DIFC Laws No. 8 of 2018, No. 2 of 2022, No. 1 of 2024 and No. 3 of 2024. It applies in the DIFC to all DIFC trusts other than those created under the Investment Trust Law, and to foreign trusts for acts done in the DIFC (Article 4).
The Law is largely a default code: Article 9 lets the terms of the trust override it except for listed mandatory matters, such as the requirements for creating a trust, the trustee's duty of good faith and the Court's powers, and Article 10 lets the common law of trusts and equity fill gaps while excluding English trust statutes unless replicated. Part 1 also contains the DIFC's firewall provisions: foreign law and foreign orders cannot reach a DIFC trust where they would undermine it (Article 13), transfers into trust are not voidable for the settlor's bankruptcy or creditor claims unless made with intent to defraud a creditor and leaving the settlor insolvent, with the burden on the creditor (Article 14), foreign heirship rights are not recognised (Article 15) and inconsistent foreign judgments are not enforced (Article 16). Article 16A removes a trustee or protector from office immediately if a foreign court orders them to act and the action is not dismissed.
Articles 33 to 50B deal with creation, purposes, duration, validity, variation, termination and beneficiaries. There is no rule against perpetuities (Article 36). Non-charitable purpose trusts require an enforcer, and a trustee who fails to fill an enforcer vacancy within 30 days can be fined up to 10% of the value of the trust property (Article 39). Articles 51 to 83 cover trustees: resignation on 30 days' notice (Article 53), removal (Article 54), duties of prudence and utmost good faith (Article 59), beneficial-ownership records kept six years and produced to the Registrar (Article 60), liability for breach, which cannot be excluded for fraud, wilful misconduct or gross negligence (Article 73), and a limitation period of three years from an adequate trustee report or otherwise seven years (Article 77). Part 10 lets settlors and protectors reserve powers such as revocation, amendment and investment direction without invalidating the trust (Article 84).
Articles 30 to 32 and Schedule 2 allow trust disputes to be arbitrated under the Arbitration Law, and Articles 24 to 28 let the Court set aside transfers and exercises of power made by mistake or in breach of fiduciary duty. The Court's jurisdiction extends to DIFC trusts and to foreign trusts with a DIFC-resident trustee, DIFC property or DIFC administration (Article 19). The Law is in force and administered by the DIFCA (Article 8).
Settlors, trustees, protectors, enforcers and beneficiaries of trusts governed by DIFC law, foreign trusts administered in or holding property in the DIFC, and anyone dealing with a DIFC trustee; the DIFC Courts and the DIFCA as administering body.
| Article 4 | The Law applies to all DIFC trusts other than trusts created under the Investment Trust Law, and to foreign trusts in respect of acts done in the DIFC; matters arising before commencement remain governed by the previous law. |
| Article 9 | The terms of the trust prevail over the Law except for listed mandatory rules, including the requirements for creating a trust, the trustee's duty to act in good faith and the powers of the Court. |
| Articles 13–16 | Firewall rules: foreign law and orders cannot undermine a DIFC trust; a transfer into trust is not voidable for the settlor's bankruptcy or creditors' claims unless made to defraud a creditor leaving the settlor insolvent, the creditor bearing the burden of proof; foreign heirship rights are not recognised and inconsistent foreign judgments are not enforced. |
| Article 16A | A trustee or protector ordered by a foreign court to act, where the action is not dismissed, immediately ceases to hold office and a successor is appointed under the trust terms or by the Court. |
| Article 19 | The Court has jurisdiction over DIFC trusts and over foreign trusts where a trustee is resident in the DIFC, trust property is situated there or administration takes place there. |
| Article 36 | A trust may continue indefinitely or terminate under the Law or its terms; the rules against perpetuities and excessive accumulations do not apply. |
| Article 39 | A non-charitable purpose trust needs an enforcer, a possible purpose, a stated end event and surplus provisions; a trustee who fails to fill an enforcer vacancy within 30 days may be fined up to 10% of the value of the trust property. |
| Article 60 | Trustees must preserve trust property, avoid self-dealing, keep accounts and segregate trust assets; trustees of express trusts must identify beneficial owners, keep the records for six years after ceasing to act and produce them to the Registrar on notice. |
| Article 73 | A trustee is liable for breaches it commits or concurs in, including loss and lost profit; co-trustees are jointly and severally liable, and no trust term can relieve liability for fraud, wilful misconduct or gross negligence. |
| Article 77 | Claims for breach of trust must be brought within three years of an adequate trustee report, or otherwise within seven years of removal, resignation, death or termination; no limitation applies to fraud or recovery of trust property from the trustee. |
| Article 84 | A settlor or protector may reserve powers such as revocation, variation, distribution, appointment of trustees, investment direction and change of governing law without invalidating the trust; a trustee following a valid direction is not in breach. |
| Articles 30–32 | A trust instrument's arbitration clause operates as an arbitration agreement under the Arbitration Law, subject to Schedule 2, and the tribunal may exercise the Court's powers over administration and variation unless the instrument says otherwise. |
The Law is mainly civil: a trustee is liable for loss and lost profit caused by a breach of trust (Article 73), and the Court may compel performance, remove the trustee, reduce remuneration, trace property or impose a constructive trust (Article 74). The one express fine is for a trustee of a purpose trust who fails to fill an enforcer vacancy within 30 days: up to 10% of the value of the trust property (Article 39). Non-compliance with the Registrar's request for beneficial-ownership records under Article 60 can be pursued by Court order.
We do not form trusts or act as trustee; our fiduciary work runs through foundations. This Law is nonetheless the comparison point whenever a client weighs a DIFC trust against a DIFC foundation, and the differences we walk them through come straight from it: no perpetuity limit, the Article 13 to 16 firewall, reserved powers under Article 84, and the trustee's unlimited liability for gross negligence under Article 73. We also meet it in practice when a DIFC company we administer is named as settlor, protector or beneficiary in someone else's trust deed. In those cases we check the company's authority to act, the Article 60 beneficial-ownership records the trustee will ask for, and the Article 16A consequence if a foreign court ever orders our client, as protector, to act. Where a trust is wanted, we refer the trusteeship to a DFSA-regulated trust service provider and handle the corporate side.
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