Default in Argentina, Repercussions in New York, Self-Settled Trusts and Choice of Law
A choice of law provision in a trust agreement, as is the case with any contract, may not be enforceable against persons who are not parties to the agreement. This point was recently reinforced by the U.S. Court of Appeals for the Second Circuit in EM Ltd., et.al. v. The Republic of Argentina which involved the validity of a self-settled trust created outside of the U.S. by parties who have basically no connection to the U.S. in terms of domicile or residence.
It is noteworthy that EM, Ltd. did not arise in the context of estate or asset protection planning. Clearly, EM, Ltd. is a reminder to those of us who prepare trust instruments that the law chosen to govern the trust may not be the law that a court will actually apply in a particular circumstance.