Forum shopping is key to a good international divorce with Scotland being a case in point, says Catherine Thomas.
The majority of my clients come from transnational marriages and relationships with international assets and connections. One of the first considerations is often which different countries could have jurisdiction to hear the divorce and which would be the most appropriate.
There has been much interest around the divorce of my client, Pauline Chai, from her husband of over 40 years Khoo Kay Peng, which involves a dispute as to whether the divorce should be heard in England or Malaysia. The press has estimated Ms Chai’s claim to be around £500million which, they say if heard, would make it one of the biggest divorce claims in the English courts.
Many of you will think such disputes are limited to countries as far apart as England and Malaysia or perhaps to exotic off shore locations where the bread winner in the relationship will be given preferential treatment under those laws. This is often the case, but it comes as a surprise to many that one of the most challenging jurisdictions for the dependant spouse can be Scotland.
There can be a big difference between the division of finances on divorce from one county to the next. For example, if the division of the finances takes place in Russia, any financial award can only be made from properties or assets held under the couple’s names and not from any property or assets held by companies or trusts, whereas in England the courts have a wide discretion to include assets held on trust in certain circumstances.
Whilst the difference in the rules between countries as far apart as England and Russia would not come as a surprise to most people, many are shocked to discover the difference which exists between England and Scotland. It could be in one spouse’s best interests to divorce in England, but better for the other for it to take place in Scotland.
Where proceedings have been brought in both of these related jurisdictions, then each court must consider certain criteria which can lead to one of the courts being forced to stay (i.e. pause) their proceedings in favour of the other.
The courts will consider:
1. whether the couple have resided together after the date of the marriage;
2. where they were residing when the divorce in both courts was commenced or, if they were not residing together at the time the divorce was commenced, where they last resided together; and
3. where each party was habitually resident for the year ending with the last time they resided together.
This means that if one of the parties is Scottish and one is English and both parties have lived together in England, then the Scottish courts will have no choice but to stay their proceedings and vice versa. However, if the parties split their time between a property in England and a property in Scotland, then detailed investigation will have to be undertaken as to where they had spent their time recently.
The law is Scotland is markedly different to England and often disadvantageous to the dependant spouse. The headline differences are that:
• In Scotland, assets acquired prior to the marriage or post separation are not included in the matrimonial pot. This means that even with a long marriage, if a company was set up or the asset acquired prior to the marriage, any increase in value would not be included in the final order made. Such assets can be highly relevant in England.
• Unlike in England, the Scottish court will not consider any asset acquired by way of a gift or inheritance from a third party.
• In Scotland, maintenance is limited to a maximum period of three years from the divorce whereas in England joint lives maintenance can be awarded.
The Scottish emphasis on fixed short term maintenance can be detrimental to the dependant spouse who has stayed at home and raised the children while the other spouse has accumulated the family wealth, but conversely, it could be a significantly advantageous jurisdiction for the breadwinner. Divorce is far from easy, but if it is going to happen the location is simply crucial.
Catherine Thomas is Senior Director at Vardags