27 February 2020
High-net-worth foreign divorces with a Jersey connection
Many practitioners will appreciate that Jersey is a self-governing Crown Dependency, with constitutional rights of self-government and judicial independence – we have our own government, legislation and currency (as is also the case in Guernsey – which is not covered in this article). In Jersey, only locally qualified advocates are entitled to appear before the Royal Court of Jersey, which deals with all family law cases. Despite the heavy influence of French law in the islands, the approach of the Royal Court to family law matters closely follows that adopted in the courts of England and Wales, as Jersey legislation is largely based on the various family law acts passed in the United Kingdom.
This article briefly discusses two cross-jurisdictional issues arising in foreign divorces on which we are regularly instructed to advise from a Jersey law perspective.
The foreign divorce & the offshore trust
Given Jersey's status as a leading and highly regulated, offshore financial services centre, we frequently encounter HNW and UHNW divorces featuring Jersey trust structures. In almost all cases, Jersey trusts are administered by professional trustees regulated under our Financial Services (Jersey) Law 1998 by the Jersey Financial Service Commission and further subject to the supervision of the Royal Court of Jersey. When beneficiaries of a Jersey trust become involved in foreign divorce proceedings, it is helpful for them to understand that the trustee(s) have a number of important decisions to make, including;
- What information should/can be disclosed and to whom?
- Should and will the trustee submit to the foreign jurisdiction and participate in proceedings?
- Will any order of the foreign court be enforceable in Jersey?
It will be less helpful for beneficiaries to hear that the answer to each of those questions is 'it depends'! It is however clear from a number of seminal, Jersey authorities in which these very questions are considered that the trustee (and the Court) must have in the forefront of its mind the whole class of beneficiaries, and not just the parties to the foreign matrimonial proceedings. This may lead to a very different outcome to that which might be anticipated by the foreign Court.
In considering the key issues for a trustee, the trustee will need to have regard to the nature of any spouse's interest in the trust (e.g. if they are a beneficiary), the location of the trust assets and whether the foreign order varies or alters the terms of the trust in a manner contemplated by the Trust Instrument. It would not be at all unusual for the trustee to seek the Royal Court's blessing of its decisions in respect of any one or more of these issues, which could fundamentally impact upon the outcome of any later hearing before the Royal Court in respect of the enforcement of a foreign order.
Jersey = forum conveniens?
Given the close ties between the UK and Jersey, as well as the good transport links and Jersey's personal tax regime, it is relatively common for couples to have significant links to both jurisdictions. Where this is the case, a dispute may arise between spouses as to which jurisdiction should hear their divorce. What’s more, Jersey is not (and never has been) part of the European Union and therefore the Brussels II regime does not apply; it is not as simple as there being a "jurisdiction race". Instead, the issue becomes one of forum conveniens. But where is this dispute going to be heard?
It is interesting to note that Jersey is listed as a "related jurisdiction" under Schedule 1 of the Domicile and Matrimonial Proceedings Act 1973, "Staying of Matrimonial Proceedings" and there are special provisions that apply to such related jurisdictions.
Where proceedings for divorce are simultaneously live in both England and Jersey, but a trial has not yet taken place, there will be cases where the English court will be under a duty to order that proceedings in that jurisdiction be stayed. This will be the case where the following conditions have been met:
- the parties to the marriage have resided together after they entered Jersey, and
- the parties resided together in Jersey when the proceedings began or if they did not, the parties' last resided together in Jersey before the proceedings were initiated; and
- either of the parties was habitually resident in Jersey through the year ending with the date on which they last resided together before the date on which the proceedings were started.
Therefore, in almost all cases where the parties have lived together in Jersey prior to their separation, notwithstanding that they may be domiciled elsewhere or one party might have been habitually resident in another jurisdiction for the last year, the English proceedings will be subject to an obligatory stay and the forum argument, at least, will take place in Jersey.
Where the above conditions have been met, the Royal Court will, if the issue of jurisdiction is still contested, need to decide whether England is "clearly and distinctly" the more convenient forum for the dispute: SGI Trust Jersey Limited v Wijsmuller  JLR 310. The Spilada test will be applied "… not one of convenience, but the suitability or appropriateness of the relevant jurisdiction" and the burden on proof will be on the party who adopts the position that England (or Wales) is the appropriate jurisdiction. It is manifestly evident from just the handful of reported matrimonial cases in which forum conveniens has been considered that the threshold to be surpassed in persuading the Royal Court that a foreign jurisdiction is more appropriate is a high one; it is therefore important to ensure that careful consideration is given to jurisdiction from the earliest stages of your instruction.
An original version of this article was published by ThoughtLeaders4 HNW Divorce, February 2020.
© Carey Olsen 2020.