Beneficiaries’ Right to Information in Cyprus International Trusts: A Significant First-Instance Decision
By Dr Pavlos Neofytou Kourtellos and Dr Marina Himoni
Introduction
The District Court of Nicosia has recently issued a noteworthy judgment in Shcherbinina v Abacus (Nominees) Ltd, concerning the right of a beneficiary of a Cyprus International Trust to obtain disclosure of trust documents and information from the trustee.
The decision is important because the Court expressly noted the absence of prior Cypriot case law on the specific issues before it. In doing so, the Court drew guidance from English and wider common law authorities and articulated a principled framework for the treatment of disclosure requests by beneficiaries of Cyprus International Trusts.
Background
The case concerned “The Wigan Trust”, a Cyprus International Trust governed by the International Trusts Law, Law 69(I)/1992. The applicant, one of the beneficiaries of the Trust, sought extensive disclosure from the trustee, including documents relating to the establishment and administration of the Trust, its assets, underlying companies, accounts, valuations, correspondence, letters of wishes, and information concerning other trusts and structures allegedly connected with the settlor.
The trustee, as well as the other beneficiaries who appeared as interested parties, opposed the application. Among other matters, they argued that the request was overly broad and that the applicant was seeking the information for purposes connected with separate matrimonial and related proceedings.
The Court’s Approach
The Court held that the right of a beneficiary to seek disclosure of trust documents is not an automatic or proprietary right. Rather, it is an aspect of the Court’s inherent supervisory jurisdiction over the administration of trusts.
In reaching this conclusion, the Court relied in particular on the principles developed in Schmidt v Rosewood Trust Ltd and related common law authorities. The relevant question is not whether a beneficiary can demand disclosure simply by virtue of being a beneficiary. The Court must instead assess whether disclosure is appropriate in the circumstances, what categories of documents should be disclosed, and whether any safeguards or restrictions should be imposed.
This approach requires a careful balancing exercise. The Court must consider the interests of the beneficiary seeking disclosure, the interests of other beneficiaries, the position of the trustee, the confidentiality of trust administration, and the proper interests of the trust itself.
Cyprus International Trusts Law and Confidentiality
The judgment also considered section 11 of the International Trusts Law, Law 69(I)/1992, which regulates the disclosure of information and documents relating to Cyprus International Trusts.
The Court observed that, under the statutory framework and the terms of the Trust Deed, the trustee’s ability to disclose certain categories of documents and information is subject to important limitations. In particular, disclosure of accounts or information relating to receipts and payments may be made only where the trustee considers that such disclosure is necessary and safeguards the best interests of the trust, subject also to the terms of the trust instrument.
The Court further held that the statutory route for disclosure under section 11(2) was not available in the circumstances, as the requirements for such an order were not satisfied.
Controlled Disclosure, Not a Fishing Expedition
A central feature of the decision is the distinction drawn between legitimate trust disclosure and broad discovery for use in separate litigation.
The Court made clear that disclosure by a trustee to a beneficiary should not be confused with disclosure in civil proceedings. The purposes and governing principles are different. A beneficiary’s request must be connected with the proper supervision and administration of the trust, rather than being used as a wide-ranging investigative exercise or as a substitute for procedural disclosure in other litigation.
On the facts, the Court considered that much of the material sought was excessive and disproportionate. The application sought, among other things, information concerning underlying entities, investments, asset structures, correspondence, other trusts, valuations and broader dealings connected with the settlor. The Court found that this went beyond what was reasonably necessary in the circumstances, particularly in the absence of evidence of bad faith, mismanagement, fraud, breach of fiduciary duty or other concrete grounds justifying such extensive disclosure.
Documents Ordered to Be Disclosed
Although the Court rejected the broader disclosure sought, it allowed the application in part.
The Court ordered the trustee to disclose:
- the instrument establishing the Trust, together with any documents amending it from the date of establishment to date; and
- the accounts of the Trust for the last three years.
The Court held that the trust instrument and amendments should generally be available to beneficiaries, as these documents define the trustee’s powers and the framework within which the trust is administered.
As to the Trust accounts, the Court considered that, given the trustee’s stated intention to terminate the Trust, it was reasonable for the beneficiaries to be provided with the financial picture of the Trust for the relevant period.
The trustee was ordered to disclose the above documents by affidavit within 60 days.
Significance of the Decision
This is a measured but significant decision for Cyprus trust law.
It confirms that beneficiaries of Cyprus International Trusts do not have an automatic right to wholesale disclosure of trust documents. At the same time, it confirms that beneficiaries are not without remedy. The Court retains an inherent supervisory jurisdiction to order disclosure where this is justified by the circumstances and where it serves the proper interests of the trust and its beneficiaries.
The decision therefore strikes an important balance between transparency and confidentiality. It recognises the need for trustees to remain accountable, while preserving the confidentiality of discretionary trust administration and protecting against disproportionate or collateral disclosure requests.
For trustees, the judgment provides useful guidance on how to approach requests for information from beneficiaries. For beneficiaries, it confirms that carefully framed and properly justified requests may be enforceable through the Court. For practitioners, it is likely to become an important reference point in future disputes concerning disclosure, information rights and the administration of Cyprus International Trusts.
Key Takeaway
The beneficiary’s right to information in a Cyprus International Trust is recognised, but it is controlled. It is not an automatic entitlement to all trust documents. It is a matter for the Court’s supervisory jurisdiction, to be exercised by balancing the proper interests of the trust, the rights of beneficiaries, the trustee’s duties, confidentiality, and the purpose for which disclosure is sought.
Disclaimer
P. N. Kourtellos & Associates LLC acted on behalf of the Applicant beneficiary in these proceedings. The matter was principally conducted by Dr Marina Himoni and Marcos Demosthenous, Advocates. This article is intended solely as a general legal analysis of the issues discussed and does not constitute legal advice or commentary on the merits of the case, which remains pending before the court.