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Steven Kempster looks at how Jersey is taking a stand against submitting to foreign court orders

An English judge described it as a case of “won’t pay rather than can’t pay; one of the worst of its kind”. Mubarak v Mubarak illustrates the lengths to which a husband will go to frustrate the enforcement of a financial order made in favour of his wife. After eight years, and 30 English judges, the wife successfully obtained an order from the English Court varying a Jersey law trust of which the husband and their children were beneficiaries. The wife sought to enforce the order in Jersey and in August 2008 the Jersey Court varied the trust in her favour. So why then is this case being hailed as evidence that the Jersey Court is fighting back against the interference of foreign divorce courts?

Jersey under attack

There has been some debate over whether the Jersey Court has been too willing to accede to orders made by foreign divorce courts against Jersey trusts. In recent cases, orders have been enforced in Jersey on the broad principle of comity of nations. This is all very well where the trustee has submitted to the jurisdiction of the foreign court: at that point they arguably become bound, as a matter of obligation, by the court’s decision when it comes to being enforced in other countries. Despite revisions made to article nine of Jersey’s Trusts Law in 2006, cases such as Re B Trust [2006] and Re H Trust [2007] showed that the Jersey Court remained willing on the ground of comity to give effect to the terms of a foreign court order varying a Jersey trust. This was so even where the trustee had not submitted to the foreign court’s jurisdiction. Meanwhile, Jersey’s competitor trust jurisdictions have arguably displayed a more robust stance in the face of foreign courts interfering with local trusts. Note, for example, the “parochial” decision of the Bermudan Court to deny the wife access to information regarding a Bermudan trust in Charman v Charman [2006]. It seemed time then for the Jersey Court to take a firmer approach when faced with an order of a foreign divorce court. So what happened in Mubarak?

A bitter battle

Divorce proceedings were commenced by the wife in 1998 after a 16-year marriage. In 1999 the husband was ordered to pay £4.8m (£2.7m) to the wife. He persistently flouted the order. After various failed attempts at enforcement in England, the wife turned her focus to the Jersey law trust which she and her husband had settled just two years before proceedings began. The assets included various jewellery businesses worth in the region of $35m (£19m), but subject to substantial loans owing to the husband. The husband held various reserved powers under the provisions of the Jersey trust. When the wife initiated divorce proceedings, the husband exercised his power to exclude the wife as a beneficiary under the trust. The wife applied to the English Court to set aside her exclusion as a beneficiary. She also sought an order varying the Jersey trust so that the trustees could pay to her the amounts owed by the husband.

On the first point, her application failed. The English Court found that the husband’s action in excluding her did not amount to a disposition of property for the purpose of the statutory provisions that allow the Court to set aside transactions intended to defeat financial claims on divorce. The wife succeeded though in obtaining her order to vary the Jersey trust, athough the English judge acknowledged that in normal circumstances it would be “an exorbitant exercise of jurisdiction” for the English Court to vary a non-English law trust. The wife then attempted to enforce the variation order in Jersey.

Enforcement in Jersey

The considered judgment of Deputy Bailiff Birt in Mubarak v Mubarak [2008] contains a clear analysis of the principles relevant to the enforcement of foreign divorce orders in Jersey. He held that:

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