How Choosing the Country you Divorce in Can Affect the Financial Settlement
The divorce of Christina Estrada and Saudi businessman Sheikh Walid Juffali will be forever remembered for the amount of money Ms Estrada stated that she needed to maintain her lifestyle.
Under cross-examination, the former supermodel stated that she required:
- £40,000 a year for fur coats
- £109,000 a year for haute couture dresses
- £21,000 a year on shoes
- £60 million to afford a luxury London home
- £4.4 million countryside home in Henley-on-Thames
- £495,000 for five cars – three in London and two in the US
She told the court: “I was a top international model. I have lived this life. This is what I am accustomed to.”
In the end, Ms Estrada was awarded £75 million, the largest ‘needs’ award ever granted by a UK court.
This extraordinary case highlights two legal issues in high-net-worth (HNW) divorce cases:
- Can filing for divorce in the UK be advantageous to those seeking large financial settlements?; and
- How do the UK court interpret what a person, ‘needs’ to maintain their lifestyle?
Jurisdiction and HNW divorce cases
London is considered as the divorce capital of the world amongst the wealthy. It is well-known in legal circles that making a divorce claim in England and Wales can get you a massive payout if you can get the right judge.
For example in 2014, hedge fund billionaire Chris Hohn had to pay more than a third of his £981 million wealth to his American-born former wife Jamie Cooper-Hohn, after a court battle in London. In 2015, a Russian divorcee Ekaterina Parfenova was awarded £3.3 million after an English judge ruled that she could not “reasonably” be expected to live too far from her familiar surroundings of Chelsea and Knightsbridge.
Around one sixth of divorce cases before London courts involve foreign nationals. Generally as long as both parties are habitually resident in England or Wales, either one can issue divorce proceedings in this jurisdiction. However, there are exceptions.
If divorce proceedings are brought in London, often the pay-out to the financially weaker party will be far larger than what they would have received in the home jurisdiction. For example, Sheikh Walid Juffali divorced his wife in Saudi Arabia in 2014 under Islamic law, without her knowledge. He had married a 25-year-old Lebanese model in 2012 while still married to Ms Estrada.
Divorce in a foreign jurisdiction can be tricky and can take years to finalise. Often this is because one or more of the parties are wealthy enough to implement delaying tactics. Mr Juffali was found to have attempted to defeat his ex-wife’s action by asserting a ‘spurious’ legal immunity based on his appointment as a Caribbean diplomat in London.
The court found Mr Juffali had ‘not undertaken any duties of any kind’ since taking up his post in April 2014, and there was no evidence he knew anything of the role at all. The judge said his status amounted to an ‘entirely artificial construct’ and refused to strike out Ms Estrada’s legal claim on her former husband’s £150 million property portfolio.
English judges have an extremely wide discretion when making financial awards in HNW divorce proceedings. Their start point is generally one of equality, particularly in big asset cases. The approach is no longer geared towards meeting reasonable needs and instead towards sharing the property, capital and assets that form part of the matrimonial pot.
Post or pre-nuptial agreements entered into in another jurisdiction are not binding on the English judiciary.
The tabloid press made a meal out of highlighting Ms Estrada’s ‘needs’. Under cross-examination, she mentioned she needed, (on top of what is listed above):
- £50,000 for Christmas dinners
- £28,000 for three Wimbledon tickets
- £10,000 so she can attend Elton John’s annual white tie ball
- £12,160 for a ‘holiday entertainment budget’ for 76 days’ holiday a year
- £26,000 for a mobile phone
- £93,793 on beauty treatments – including 52 facials, 44 manicures and 52 massages
- £2.1 million annual travel budget, including nearly £600,000 to charter private jets
Ekaterina Parfenova did not fare much better. The UK papers delighted in reporting that she required £60,000 a year for hairdressers and beauty treatments alone and another £75,000 holiday fund; however, the judge in her case did find in her favour.
In his judgement, Mr Justice Holman stated, the settlement awarded would allow Ms Parfenova to buy an apartment in central London close to favoured schools around Knightsbridge at a cost of around £2.3 million.
“They have lived since 2011 in very central Chelsea or Knightsbridge,” he said.
“There’s a limit to how far the wife can reasonably be expected to move from the centre.”
These cases highlight that divorce does not mean the weaker financial party is condemned to struggle. Some people are reluctant to get divorced because they are worried about the impact it would have on them and their children financially i.e. where they will live, how will they pay for bills, will they have enough to give up their lifestyle, pull the children out of private education etc?
When deciding how to apportion wealth and assets, under Section 25 of The Matrimonial Causes Act 1973, courts in England and Wales must look at the following factors:
- Welfare of the children
- Financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future
- Income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future
- The standard of living enjoyed by the family before the breakdown of the marriage
- The age of each party to the marriage and the duration of the marriage
- Any physical or mental disability of either of the parties to the marriage
- The contributions which each of the parties has made to the relationship such as looking after the home or caring for the family
- The value to each of the parties any benefit which would be lost if the marriage broke up
- The conduct of each of the parties if that conduct is such that in the opinion of the court it would be inequitable to disregard it
The standard of living enjoyed by both parties during the marriage must be taken into account. And whether or not the financial needs of a particular party are considered ‘reasonable’ by members of the ordinary public is not something a London family court judge has to concern him or herself with. They must evaluate the level of ‘need’ against the backdrop of the lifestyle lived during the marriage.
Divorce is always painful. But the possibility of having to compromise on a lifestyle that you and your children have become accustomed to over the course of your marriage can cause even more anguish.
Examining whether it is beneficial and legally possible to bring divorce proceedings in London may provide you with an opportunity to fight for and receive a far more generous financial settlement than you may be awarded in your home country.
No one else will protect you and your children’s financial future. It is therefore imperative to make the right decisions around jurisdiction and highlighting your financial needs. After all, as the queen of HNW divorce, Ivana Trump, once said, “Remember girls: don’t get mad, get everything.”
Saracens Solicitors is a multi-service law firm based in London’s West End. We have dedicated and highly experienced family law specialists who can assist you with any questions you have regarding divorce and financial settlements. For more information, please call our office on 020 3588 3500.