Expert Insights

Expert Insights

Recent Trends In Firewall Legislation: BVI, Bermuda And Gibraltar

In 2004, BVI enacted section 83A of the Trustee Ordinance, thereby bringing into effect firewall provisions designed to insulate BVI trusts against “rights, claims or interests conferred by foreign law upon any person by reason of a personal relationship to the settlor or by way of heirship rights” (“personal relationship claims”). As originally designed:

a) subsection (13) is the actual firewall; and what it insulates from personal relationship claims are the trust itself, any disposition of property into the trust, and the capacity of the settlor. In addition, “the trustee or any beneficiary or other person” are insulated from being “subjected to any liability or deprived of any right” by a personal relationship claim;

b) subsection (1) defines “personal relationship” and therefore determines what personal relationship claims can be resisted by the firewall – “personal relationship” [to the settlor] “includes every form of relationship by blood or marriage”; and

c) insulation is achieved by expressly negating as grounds for attack: i) that the foreign law prohibits or does not recognise trusts; and/or ii) that the BVI trust or disposition has the effect of (1) avoiding or defeating the personal relationship claim; or (2) contravening any rule or ruling of foreign law which gives effect to the personal relationship claim.

Imminent Changes To BVI Firewall Legislation

This year, and for the first time since its introduction, section 83A is to be amended. The amending statute (the Trustee (Amendment) Act 2021) was gazetted in the BVI on 12 March 2021 and is expected to come into effect shortly upon proclamation by the Governor.

The changes preserve and build on the original design. While not extensive in length, they are important and broaden the scope of the existing provisions significantly. The overall thrust of the amendments is two-fold: the existing provisions are clarified to offer greater certainty to fiduciaries, beneficiaries and practitioners; and at the same time, the amendments also modernise the existing legislation to accommodate the evolution of family structures as well as advances in reproductive science. In doing so, they seek to offer greater protection from claims based on foreign law concepts, especially forced heirship and matrimonial property regimes.

S83A(1) – “expanded definition of personal relationships and a new category of “persons internal to the trust relationship”

The definition of “personal relationships” in s. 83A(1) is expanded to encompass “every form of relationship by blood, adoption, marriage or cohabitation, whether or not the relationship is recognised by law”. Particular examples which have been added (which do not appear intended to be exhaustive) are step-children and children born by means of artificial fertilisation or surrogacy. However, since the BVI does not recognise same-sex marriage or civil partnerships, we perceive a tension between the overarching provision that personal relationships encompass those “whether or not … recognised by law” and the references in the particular examples to marriage and analogous arrangements recognised under BVI law. We would expect the overarching provision to prevail.

Alongside the expanded scope of personal relationships, a new category of “persons internal to the trust relationship” is added to s. 83A(1), with corresponding amendments to subsections (12) and (13). This new category embraces settlors, beneficiaries (including objects of a discretionary power) and office-holders – itself defined to include trustees, protectors, enforcers or any other persons having any powers (fiduciary or otherwise) under a trust, for example investment advisors with powers under the trust instruments.

The effect of these changes is to enhance the firewall in the various ways discussed below.

Subsection (13) – the firewall itself

In addition to accommodating the new scope of “personal relationships”, subsection (13) itself is amended to cover:

a) not just personal relationships with the settlor but also personal relationships with any beneficiary (including objects of a discretionary power); and

b) “persons internal to the trust relationship”, so that what are now insulated by the firewall

i) from attack, are not just the capacity of the settlor but the capacity of “any persons internal to the trust relationship”; and

ii) from being “subjected to any liability or deprived of any right, claim or interest”, are not just “the trustee of any beneficiary or other person”, but “any person internal to the trust relationship”.

Subsection (12) – scope of application of the law applicable to trusts

The opening words of subsection (12) have been amended, giving greater clarity of expression to the intent that all questions arising in regard to a trust are to be determined by its governing law; and a new sub-subsection (c) expressly provides that where that law is BVI law, no law of any other jurisdiction can be applicable.

Additionally, the new category of “persons internal to the trust relationship” (which includes trustees) now replaces “trustees” as the persons whose rights, powers, obligations and/or relationships identified in subsection (12) fall to be determined by the governing law of the trust.

The effect of these amendments is to bolster the extent of the firewall provisions, ensuring that matters relating to all “persons internal to the trust relationship” are within the scope of the firewall provisions’ choice of law rules.


Bermuda enacted the Trusts (Special Provisions) Amendment Act 2020 in August 2020, updating and refining the firewall provisions contained in the Trusts (Special Provisions) Act 1989.

Among the key changes to the legislation are provisions giving the Bermuda Supreme Court express jurisdiction to adjudicate claims concerning the validity, construction, effects or administration of a Bermuda trust, where the trust instrument provides for it. As a counterpoint to this, the new section 10(3) of the Amendment Act contains a positive exclusion of the application of foreign law to Bermuda trusts subject to certain exceptions (such as matters concerning foreign land). Previously the legislation had been formulated to direct a blanket application of Bermuda law except in specified circumstances. These amendments are reinforced by an amended section 11 which prevents the enforcement or recognition of any foreign judgment in conflict with the amended section 10.


The Trusts (Private International Law) Act 2015 came into force in Gibraltar on 17 September 2015. The Private Foundations Act 2017, which contains firewall-type provisions relating to Gibraltar foundations, subsequently came into force on 11 April 2017. Although adapting some of the legislation from other offshore jurisdictions, Gibraltar’s firewall provisions, in some respects, go further than their counterparts in other jurisdictions and indeed predate some of the provisions enacted by the BVI and Bermuda in the last few months.

For example, when it was enacted, the 2015 Act was unique in its attempt to explain how a foreign judgment may be inconsistent with local law, and in extending the protection to arbitral awards as well as judgments. The 2015 Act also has parallels with the recent amendments to the BVI legislation, as it subjects the capacity of not only the settlor but also the trustees, beneficiaries, protectors, enforcers of or objects of a power to local law. Section 44 of the Private Foundations Act 2017 is formulated in the same manner as the upcoming amendments to the BVI legislation in that it requires local law to be applied to all questions arising in relation to a Gibraltar Foundation, without limitation to the matters listed in the remainder of the subsection.

Latest Signposts For The Road Ahead

The breadth of offshore jurisdictions which have enacted firewall legislation is indicative of its importance to asset holders when electing how to structure their wealth in a manner that gives them security and certainty. Trusts established in these jurisdictions typically involve assets, relationships and structures situated in multiple jurisdictions from which conflict of law issues inevitably arise. The continuing evolution of these provisions evidenced by the examples given above demonstrates the willingness of those jurisdictions to ensure that their legislation keeps pace with social, economic and geopolitical trends. The authors identify three key elements of the evolution as i) clarification; ii) enhancement; and iii) modernisation.


The amendments brought into effect by BVI and Bermuda are representative of a desire to ensure that the firewall legislation offers settlors, fiduciaries and practitioners (and indeed, the judiciary) certainty with regard to the scope and effect of the firewall provisions. Both amendments clarify and confirm the primacy of local law in relation to trust matters. This is particularly visible in the Bermuda amendments where the disapplication of foreign law in a Bermuda trust context is made the rule rather than the exception. It may well be that future developments in other jurisdictions will adopt a similar approach.


The developments in the BVI legislation in particular recognise that claims may arise not only against the persons choosing to settle assets offshore, but also those who (with or without their knowledge) are beneficially entitled under those structures. The amendments broaden the scope of protection against claims arising under foreign law and judgments in foreign jurisdictions and extend this protection to the key parties involved in the trust relationship, beyond solely the settlor and the trustees. In an increasingly crowded marketplace, the perceived robustness of the firewall legislation is a significant factor for many asset holders when electing where to structure their wealth and we would expect this to be a feature in future developments.


The enhancement of firewall legislation often includes attempts to modernise existing provisions, even if this is not always the primary focus. This is apparent from the incorporation by the BVI legislation of the wider definition of children to include step-children and children born by assisted reproductive technology – although as noted above, this has exposed a difference between local marriage law and the international trend towards marriage equality. We would expect to see future changes which make appropriate allowance for both.


It will be interesting to see how firewall legislation continues to evolve and adapt to mirror social developments on which their provisions turn – as society’s conception of the family unit evolves, so too do claims recognised by systems of law based on those personal relationships. It is foreseeable that a number of other offshore jurisdictions will introduce their own amended legislation in the near to medium term. As ever, these changes will need to balance the competing considerations of ensuring that the jurisdiction is competitive and commercially attractive, but not one that is perceived as overly protective of assets and prejudicial to pre-existing rights and legitimate claims by creditors and individuals with a personal relationship.

This article was first published in the IFC Review ( on 21 April 2021.

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