Journal article Open Access

Trust Institute as a Way of Providing Fulfilment of Obligations: Strengths and Shortcomings

I.V. Nesterenko

The article deals with the issue of trust as a new legislative provision of civil law. As the author elucidates, trust provides a supplementary tool for relevant parties of principal obligation to secure it via trust agreement. Allegedly, the reason for this new legislative provision based on the main Ukraine’s economy issue such as inability to raise credit funds caused by inflated lending rates. Particularly, the last one exists due to the risks of timely received or even non-payed credit funds. To evaluate this the author goes primarily through the definition of trust and its brief outline. Thus, trust is an arrangement whereby a person (a trustee) got and holds a property from settlor as its nominal owner for the good of one or more beneficiaries; with respect to performance of the obligations assumed hereunder the credit arrangements or loan agreements. Based on the analysis of different approaches to the definition of trust, provisions on positive aspects and shortcomings of this type of secured obligations have been developed. Trust clearly regulated on the legislative level, much easier than recoveries taken by mortgages and completed in a shorter time, so this whole thing is a welcome step. Avoiding of recoursing to the property of the debtor by fictitious trust is among the most dangerous risks. Other issues include corruption schemes extension, the time frame for implementation of the trust mechanism and the matter of lifting the moratorium on eviction from housing. The author also addresses the historical aspect of trust formation, examining its features in Romanian, French and other regulations of the rest Europe countries.

 In conclusion, the author elaborates that the trust institute will become a tool of maintaining the balance between the interests of the creditor and the debtor. Despite of its purely mechanical implementation, benefits cannot be underestimated. However, no doubts that trust should be properly adapted to Ukrainian civil law. That means taking into account the particularities of the legal family which Ukraine belongs.

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