With decisions dated 9 May 2014 and 5 December 2014 in two proceedings led by the author, the Supreme Court for the first time dealt with the rights of a founder as principal against the fiduciary founder of a foundation, therefore the trustee, in the context of the establishment of a foundation.
Until these decisions the Supreme Court had surprisingly never had dealt with the essential and, at a first glance, clearly answerable question whether a founder and principal has a claim against the trustee for handover of copies of all files and documents linked to the establishment of the foundation and thus to the mandate. This was apparently owed to the obviousness of these claims which in the past had not been denied to a founder.
Also in the Austrian jurisprudence regarding the Austrian law of mandate, being the relevant basis of reception for the Liechtenstein law of mandate, the Supreme Court surprisingly never dealt with the question, whether a principal has a claim against the agent for handover of copies of all documents linked to the mandate.
In the aforementioned decisions the Liechtenstein Supreme Court now clarified that the founder and principal has a claim against the trustee to receive copies of all documents and files related to the establishment of the foundation and thus to the mandate.
The two decisions were based on two requests of founders to the trustee from end of 2012 and the beginning of 2013, who wanted to obtain clarity about the actions of the trustee in connection with the establishment of two foundations, since they had no precise information in this regard. To their surprise the trustee denied them any access to the documents and the handover of copies of all documents, where after each of the principals initiated a proceeding against the trustee.
With final and binding decisions of 9 May 2014 and 5 December 2014 the Supreme Court clarified that the claim for handover and information of the principal includes all documents related to actions in connection with the mandate.
According to the Supreme Court the obligation to handover is part of the reporting duty toward the principal. Due to this obligation the contractor has to report to the principal about the execution of the mandate and the related circumstances truthfully and in full. Only this way the principal may verify whether the contractor has fulfilled the trust of the principal.
According to the Supreme Court the reporting duty of the trustee and contractor, apart from financial reporting, also includes the handover of copies of all documents linked to the performance. The purpose of these documents is to complement and also to verify the report of the agend regarding the execution of the mandate.
The Supreme Court ruled that the reporting duty naturally also includes the obligation of the agent to inform the principal exhaustively and truthfully about the performance of the mandate and to prove this as well, since the principal only thereafter is able capable to verify whether the trust put in the agent was justified. Based on the documents the principal should be able to verify and assess whether the contractor fulfilled his contractual duties it its entirety. The principal may obviously only conduct this verification and assessment if he is completely aware of the events within the performance of the mandate.
The documents that must be handed over for example also contain all correspondence that the trustee exchanges with third persons within the context of the mandate. Moreover, the claim is not limited to documents in paper, but also encompasses documents that are not in writing, such as data carriers (CDs, USB sticks) and also originally purely electronic documents like e-mails, Word documents etc. According to the Supreme Court, only strictly internal documents of the agent such as Due Diligence documents are excluded from the claim for handover. The latter documents according to the Supreme Court do not originate from the mandate relationship but rather from a public law documentation obligation of the fiduciary founder.
With the above-mentioned decisions the Liechtenstein Supreme Court made an essential contribution to the clarification of the claims of the principal against the contractor which have universal validity.
For further information please contact:
Dr. Matthias Niedermüller
Attorney at Law/Partner
Schwärzler Attorneys at Law
Feldkircherstrasse 15, FL-9494 Schaan
Telephone: 423 239 85 40