protective features of trusts in the context of creditors' rights, has been drafted by a sub-committee of the Law Reform Committee.

The new laws will clarify the circumstances in which actions can be brought by creditors, including future creditors, and, in addition, cap opened ended exposure to creditors.

The completion of the draft legislation marks the conclusion of 15 months of research by the sub-committee into the highly sensitive and complex area of asset protection.

The new legislation, if approved by the full Law Reform Committee and the Cabinet, will alter Section 37 of the Conveyancing Act 1985.

Senior partner at law firm Appleby, Spurling & Kempe, Mr. John Campbell, chaired the sub-committee of the law reform committee, that composed the final draft.

Mr. Campbell said at the very least, the recommended legislation "will create an environment in which the well-intentioned high net worth individual has a sufficient comfort level that the asset protection of other jurisdictions will not deflect him elsewhere''.

The sub-committee was anxious that the new legislation preserve Bermuda's image as a jurisdiction of integrity.

Conyers, Dill & Pearman partner Mr. Alec Anderson, CD&P associate Mr. Nicholas Johnson, Mello Hollis Jones & Martin partner Ms Elizabeth Jones, and a parliamentary draftsman were also on the sub-committee.

Bermuda International Business Association's trust law and practice committee originally made recommendations to the sub-committee.

According to Mr. Anderson, chairman of the trust law and practice committee, the current law focuses on the ability of creditors to attack trusts.

"Future arising creditors, who ostensibly could not be known, expected or even be reasonably foreseen, at the time the trust was established could six or eight years later attack the trust under the present law. Mr. Anderson, who has specialised in trust and private client work for nine years, said: "They may not have much of a chance, but there is uncertainty in terms of the case law.

"The trust law and practice committee produced a report to recommend that Bermuda alters its laws to create more certainty as to how far in the future a creditor would be able to arise and be able to set aside a trust,'' said Mr.

Anderson.

The law reform sub-committee began detailed analysis, based on BIBA's suggestions. One key aspect of the recommended Bill is a three part definition of an "eligible creditor''.

A person to whom on, or within two years of, the date of the transfer the transferor owed an obligation (in the sense of owing him a sum of money), which obligation remains outstanding on the date of the action or proceeding; A person to whom, on the date of the transfer, the transferor owed a contingent liability and since that date the contingency has fallen in, with the liability remaining unsatisfied; or A person to whom the transferor owes an obligation in consequence of a claim that he made against the transferor, where the cause of action giving rise to the claim occurred prior to, or within two years of, the transfer.

Mr. Alec Anderson said: "We recommended changes, that balance the interests in favour of the creditors, more than any other law that has been passed in off-shore jurisdictions to change these rights as they relate to attacking trusts.

"Laws, that have been changed in other jurisdictions, have been much more aggressive, more debtor-friendly. Our proposals are more conservative and responsible.

Mr. Campbell said legislation that other jurisdictions have enacted has sought to restrict or deny the rights of legitimate creditors.

"We looked at Cayman Islands, Bahamas, UK, and the United States legislation.

We seemed to have struck a reasonable balance between creditors' rights and the rights of settlors, who set up the trusts,'' said Mr. Anderson.

The Attorney General's chambers is reviewing changes to pension laws, recommended by a BIBA report, produced by its trust law and practice committee. "Bermuda should take advantage of changes to the pension laws in Hong Kong,'' said Mr. Anderson. "The law permit employers in Hong Kong to establish pension trusts in Bermuda, that qualify under their rules for tax benefits,'' he said.