Jersey divorce ruling could see fortunes moved offshore
Jon Swaine | The Telegraph
Wealthy businessmen and women could start moving their assets offshore to avoid huge divorce payouts, following a landmark court ruling.
A court in Jersey has decided that a divorced husband or wife does not necessarily have the right to plunder their former spouse’s riches if they are banked offshore.
The island’s Royal Court rejected an order by the High Court in London that a millionaire Indian jeweller must hand over a share of his assets, held offshore on the Channel island in a trust previously shared with his ex-wife.
The decision means that estranged spouses could in future be blocked by their ex-partners from claiming wealth held on Jersey, or other Channel Islands and tax havens including British territories and dependencies in the Carribean.
Divorce law experts believe it will now encourage the wealthy increasingly to shift savings and large parts of their wealth to offshore accounts, shortly before or after they marry.
Grant Howell, a family lawyer at Charles Russell, said the judgment “provided an obstacle” for divorcees planning a raid on an ex-spouse’s wealth, highlighting that it could inspire rich Britons to shift assets to places such as Jersey.
Mr Howell said that the Channel island court’s snub to the mainland signalled the end of English courts “riding roughshod” after a series of recent cases in which the island’s authorities agreed to comply with orders to send millions of pounds back to divorcees.
“This ruling essentially states that Jersey courts should make their own decisions,” Mr Howell said. “English courts have just assumed that Jersey courts will comply. What this ruling shows is that might no longer be the case.”
The move could also persuade tax havens in other British territories and dependencies, such as some Carribean islands and the Isle of Man, to follow suit, in an attempt to attract lucrative investment.
The Jersey ruling was made in the case of Mubarak v Mubarik, a long-running dispute over the wealth of Iqbal Mubarik, who owns the Dianoor jewellery chain, which has a shop on London’s New Bond Street.
Mr Mubarik was last year ordered by the High Court to give his wife Aaliya – who disagrees with her ex-husband over the spelling of their surname, claiming it should be Mubarak – money from a trust in Jersey thought to be worth about £18m. Shortly before their divorce, Mr Mubarak removed his wife as a trustee.
However, the Jersey Royal Court found that under the trust’s own rules, Mr Mubarik was not legally entitled to pay his wife money from it – and refused to force him to do so.
The decision is likely to catch the eye of super-rich bankers and hedge-fund managers wary of settling down due to London’s reputation as Europe’s costliest place to divorce.
In England’s largest ever divorce payout, the businessman John Charman was last year ordered to pay his ex-wife Beverley £48m after the High Court ruled that assets he held in a Bermudian trust should be included in their settlement.
Mr Charman’s Bermudian lawyers are contesting the English courts’ right to make decisions about offshore trusts on the island.
Mark Harper, a partner at the city law firm Withers, said: “The judgment will be influential in other offshore jurisdictions”.