Clifford Chance
Arbitration agreements in trust instruments - are they binding on beneficiaries?
28 June 2013
Agreements to arbitrate are generally binding only on the parties to the agreement and, accordingly, would not be binding on beneficiaries under many trust instruments. Some jurisdictions have legislated specifically to deal with this. In others, theories such as conditional benefits have been applied. In England, the issue remains untested.
A recent decision of the Supreme Court of Texas, in Rachal v Reitz, provides an interesting insight into how the courts in another common law jurisdiction have approached the issue, concluding that the beneficiaries were bound to bring any claims by way of arbitration.
