Global instability, protectionist measures and flee clauses

Flee clauses were a common feature of Cold War-era structures. As the risks associated with Soviet invasion have disappeared, the popularity of flee clauses has diminished. That is not to say that they disappeared entirely from some older structures. The subject has come up with cataclysmic storms such as Hurricane Ivan in September 2004 and Hurricanes Irma and Maria in September 2017. Flee clauses were also discussed at the time of the Covid-19 pandemic. They are now being considered in response to the recent unfortunate turn of events in the Middle East. 

What is a flee clause in a trust?

The idea behind a flee clause is that, upon the happening of a prescribed external event, there will be an automatic retirement of a trustee and the appointment of a new trustee in their place. There might also be an automatic change to the proper law of the trust. The idea of external events triggering automatic changes to the trust is not confined to flee clauses. 

It is common, especially for trusts created by Russian and CIS settlors, to find a protector who is a family member or confidant. It is also common to find provisions that ensure this person automatically ceases to hold office in the event of their incapacity, which is defined widely to include detention, an inability to communicate, or some such restriction on their free will. Such provisions appeared in the trusts settled by Mr Sergei Pugachev. 

When are flee clauses triggered?

Flee clauses are not an uncommon feature of trusts and foundations created by families from the Gulf region. Common prescribed events, sometimes called a 'specified event' or 'emergency event', include:

• the declaration or existence of a state of war in consequence whereof any territory of which the trustee (as the case may be) is a citizen, national or resident is declared to be or is deemed to be an enemy of any foreign government;
• the invasion by military force of any territory of which the trustee (as the case may be) is a citizen, national or resident;
• an attack upon, or the occupation of, the territory of the jurisdiction in question by hostile military forces;
• the occurrence in that territory of civil war or of violent civil disturbances which cause, or appear likely to cause, a serious and prolonged interference with the ability of a trustee to function as such in that jurisdiction; and
• war, invasion, or revolution in the trust jurisdiction; attempted or actual confiscation, expropriation, or acquisition of trust assets, either with or without compensation.

The issue with flee clauses is that it can be difficult to determine whether the events on the ground come within those prescribed, thereby triggering the automatic changes. 

Examples of flee clause trigger events

• Existence of a state of war: where the flee clause refers to war, there might be a question in circumstances similar to Russia's invasion of Ukraine, described euphemistically as a 'special military operation'. The meaning of the term 'war' depends on the context. When considering the question for the purposes of access to justice issues, the court has taken a more formal approach and looked to the official view of the government.^[1] However, guidance developed over time in the insurance and commercial contexts is more flexible and includes:
• the actual state of affairs being taken into account, irrespective of whether there is official recognition of a state of war^[2];
• a rebellion being capable of amounting to war^[3]; and
• a decision on whether such a war exists generally involves a consideration of: (1) whether it can be said that the conflict was between opposing 'sides'; (2) what the objects of the 'sides' were and how they set about pursuing them; and (3) the scale of the conflict and its effect on public order and on the life of the inhabitants.^[4]

Taken in the round, it may be that without an official declaration of war, it will not be possible to ascertain whether there is a war until some time has passed and the severity of military action is apparent. This can lead to practical issues for flee causes.

• Attack upon a jurisdiction or state of conflict: this wording is potentially very broad. It seems that recent strikes in Gulf countries would be sufficient for this trigger wording, on the basis that missile strikes can be described as an 'attack'. However, while the effects of strikes should not be underplayed, this means that a handful of strikes in a short period can have the effect of replacing a trustee and changing the governing law of the structure permanently.
• Political conflict: wording like 'civil disturbances' is not clear. At its most basic, it could include protests such as those seen in Hong Kong in 2019-2020. Some clauses may specify some 'violence'. Quite what this means in practice is also unclear. 

It all turns on the precise wording of the flee clause in the light of the circumstances on the ground at the time. Where there is a doubt as to whether a flee clause has been triggered, advice should be taken. It may even be necessary to obtain the guidance of the court.

External events (such as war) may make it difficult or impossible to do this in the court of the forum of the trust, or in the place of the trustees' residence or business. It may be necessary for the putative replacement trustee to apply in the courts of the new putative proper law or in the place of its residence or business.

Practical issues with flee clauses

The idea behind a flee clause is that if the prescribed event arises, changes in the trust will take place automatically and quickly. There are, however, practical problems with flee clauses that are likely to take some time to resolve: 

• If the clause names a particular person to serve as the new trustee, what if that person has ceased to exist? Or what if they are unwilling or unable to assume a role in the structure?
• Does the new trustee have enough information to run the structure effectively?
• How will legal title to the assets of the trust be transferred from the outgoing trustee to the incoming trustee? 
• Do any indemnities need to be provided to the outgoing trustee? 
• Does the jurisdiction that the trust is moving to have its own issues with military unrest or similar matters that need to be considered?
• Are any taxes crystallised as a result of the change? Will new taxes be due in the new jurisdiction?
• What compliance steps must be completed in the original and new jurisdictions?
• Is the flee clause, as drafted, still legally effective under the relevant law?

Final observations on flee clauses

We are not necessarily advocating the use of flee clauses. We are saying that, as political instability increases, it is possible that they will come back into fashion. 

Clear framing of the prescribed events is desirable, but not easy in practice. Historic structures in the Middle East which include them might need to be reviewed to see whether the prescribed event has occurred and the clause has been triggered, with whatever consequences follow from this. 

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, March 2026

[1] Amin v Brown [2005] EWHC 1670 (Ch)

[2]  Kawasaki Kisen Kabushiki Kaisha of Kobe v Bantham Steamship Co Ltd [1939] 2 KB 544, [1939] 1 All ER 819.

[3]  Curtis & Sons v Mathews [1919] 1 KB 425, CA.

[4]    Spinney's (1948) Ltd v Royal Insurance Co Ltd [1980] 1 Lloyd's Rep 406 at 430.