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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".
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