Over the past decade or so, London became known as the divorce capital of Europe, as wealthy litigants flocked to have their claims heard by UK judges. British courts were also seen as relatively more generous to the poorer partner, usually the woman. The Supreme Court’s latest ruling will reinforce this.
In the case of the Nigerian oil tycoon Michael Prest and his former British wife, Yasmin, the court awarded a number of disputed properties to Ms Prest. It thus overruled an Appeal Court decision that the properties belonged to off-shore companies and not personally to her husband. The Supreme Court agreed unanimously that the properties, worth millions of pounds, were held in trust for Mr Prest and should therefore be considered his.
As a decision that upholds a spouse’s rights, even when assets are tied up in offshore companies, this is to be welcomed. Where UK-registered companies are concerned, greater transparency meant there was less opportunity for assets to be concealed in the event of marital strife. The position with off-shore companies was murkier. It was argued on behalf of Mr Prest that the companies were separate entities and that shareholders’ rights took precedence. Family law was pitted against company law.
It is an exaggeration to conclude, however, that family law – the protection of a divorcing spouse – has been judged always to pre-empt company law – the protection of shareholders. Rather, what has happened is that another loophole that might have been exploited by cheating ex-spouses has been closed. It does not jeopardise the protection available to genuine shareholders in genuine companies. It just makes it harder for the wealthier party in a separation to profit from this sort of scam.
Divorce lawyers can give thanks that Yasmin Prest’s victory will do nothing to discourage the ex-wives of the super-rich pursuing their divorce settlements in London. But it does give their wealthier ex-husbands one more reason to seek justice elsewhere.