The Swiss Federal Tribunal’s jurisprudence on foreign trusts evolved in two phases. Pre-2007, trusts were analogized to fiduciary contracts or “organized assets” under old law, offering limited recognition with high reclassification risk. Post-ratification of the Hague Convention (2007), validly constituted foreign trusts are automatically recognized, ensuring asset separation and protection from the trustee’s creditors. This recognition is subject to Swiss public policy and mandatory laws. Key cases include Harrison (1970) for the pre-convention era, Hirsch (1976) and ATF 135 III 614 on public policy and inheritance reserves, ATF 143 II 350 on post-convention tax recognition, and the landmark ATF 151 III 361 (2024), which extended principles to irrevocable discretionary trusts, particularly from Liechtenstein. In conclusion, Switzerland fully recognizes foreign discretionary trusts, but this yields to public policy (e.g., crime tracing) and mandatory protections like forced heirship. In the Otiv case, this explains why undistributed payments remained protected, while traced assets (a villa) could be criminally sequestered.
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