Monday, 27 May 2024

Choosing the right jurisdiction for high-net-worth divorces: A look at Singapore's appeal

5 min read

By Josephine Chong and Kym Anstey

In a world where wealth attracts wealth, the location of divorce proceedings can make a significant difference. Joesphine Chong and Kym Anstey discuss why Singapore has become a compelling choice for divorcing couples with substantial assets, offering a unique approach to asset division, efficiency, and a focus on preserving familial relationships.

In a country with a per capita gross domestic product (GDP) of over SGD 114,000 ($83,000) in 2022 and an exponential increase in family offices established on site (including by the likes of Ray Dalio, Sergey Brin and Mukesh Ambani), headlines predicting that 13% of Singaporeans will be millionaires by 2030 are not farfetched. The work of fiction, Crazy Rich Asians, begins to resemble a work of fact.

There is no doubt that prosperity attracts the wealthy, or that wealth begets wealth. Unfortunately, success and affluence are no shields against marital discontent, and rather, provide the impetus and wherewithal for parties to take steps to terminate the marital relationship. It is no wonder then that the number of marital dissolutions in Singapore has also increased by 13.4% in the same time period.

Marriage is a partnership – whatever the dynamics of the relationship, each spouse brings something to the marriage, be it financial or otherwise, and each party should be awarded, from the fruits of the marriage, justly and fairly for their contributions if the marriage is to be dissolved. However, that is not to say that all assets should be subject to division between the former spouses, nor does it mean that the division should necessarily be equal. The ultimate goal is to achieve what is fair – what that looks like, however, depends, very often, on the country in which the divorce is determined.

One does not have to look further than across the Causeway to appreciate the importance of where divorce proceedings should be heard. In 2014, the English High Court was asked to determine whether it could hear the multi-hundred-million-pound divorce between Tan Sri Khoo Kay Peng, one of Malaysia’s richest men at the time and the owner of Laura Ashley, and his estranged wife, Pauline Chai, a former Miss Malaysia. Concurrent proceedings were also commenced in the Malaysian courts, in an attempt to have the divorce proceedings heard in the Malaysian courts instead, ultimately, to no avail. In fact, the jurisdiction issue was so hotly contested in Peng v Chai that more than GBP 5 million ($6 million) in legal fees had been racked up in two years on just the issue of where to have the divorce tried – this even before the English courts had touched on the issues of the divorce proper.

Why, then, was jurisdiction so significantly challenged in the English courts and the Malaysian courts? What made this so important that the parties in Peng v Chai were willing to pay such significant sums in legal fees to “win” on this preliminary issue? It is common knowledge that the English courts are significantly more generous to the non-earning spouse than most other courts, and Chai was significantly more likely to receive half, or close to half, of the matrimonial assets in the English courts, as compared to the percentage she could expect to receive in the Malaysian courts.

When talking about a pool of assets that was initially assessed at some GBP 440 million ($533 million), a tendency towards equality is indisputably favourable to a non-earning spouse and simultaneously devastating to a breadwinning spouse. Eventually, Chai was awarded some 40% of a confirmed GBP 161 million ($195 million) pool by the English courts, or some GBP 64.4 million ($78 million).

It is little wonder then that London is typically dubbed the “divorce capital of the world” (particularly preferred by non-earning spouses). For the breadwinner spouse with a choice of London or some other jurisdiction, Ayesha Vardag (who was Chai’s lawyer in Peng v Chai) had this piece of pithy advice:  “Hop on the Eurostar and get over to France, where the laws are very different.”

For those in Singapore (including those who have relocated here), there would be no need to hop onto the Eurostar to France. Instead, provided sufficient connection to Singapore can be established, the Singapore courts would have jurisdiction to determine one’s divorce.

Why choose Singapore? One reason is the approach to the division of matrimonial assets. In contrast to English family law, where in practical terms, the starting point of division is generally acknowledged to be equal (with deviation therefrom, where there is good reason, based on the facts of the case), Singapore family law builds each party’s entitlement from the ground up, based on each party’s contributions (both financial and non-financial, and direct and indirect). The apex court in Singapore has considered, but firmly rejected, emulating the English approach.

In addition, the Singapore legal system is efficient, and “therapeutic justice” is the ‘lens of care’ that underpins all Singapore-based matrimonial proceedings, with a comprehensive ‘whole of agencies’ approach in which parties are encouraged as far as possible to preserve healthy and constructive familial relationships even where the relationship itself is disharmonious, and which increases the chances of reaching effective solutions at minimal cost and acrimony. (For a more detailed and comprehensive analysis of how the Singapore courts divide matrimonial assets, please look out for the series of articles on “The Art of Dividing Assets”, to be published on Wealth and Society).

Under what circumstances would the Singapore courts hear a divorce action? There are two aspects to consider. The first is to establish that the Singapore courts possess the jurisdiction to hear the matter. To satisfy this requirement, at least one party must be either domiciled in Singapore at the time of commencing proceedings, or habitually resident for a period of at least three years immediately preceding commencement of proceedings (in United Kingdom, the requirement is a one-year habitual residence).

Two necessary features are required to establish ‘habitual residence.The first is that the residence is adopted voluntarily. Enforced presence by reason of kidnapping or imprisonment, or a “Robinson Crusoe” existence on a desert island with no opportunity of escape, may be so overwhelming a factor as to negative the will to be where one is. The second is that the residence must be for settled purposes. The purpose may be one; or there may be several. It may be specific or general. All that the law requires is that there is a settled purpose.

This is not to say that the person intends to stay where he is indefinitely; indeed, his purpose, while settled, may be for a limited period. Education, business or profession, employment, health, family, or merely love of the place spring to mind as common reasons for a choice of regular abode. And there may well be many others. All that is necessary is that the purpose of living where one does must have a sufficient degree of continuity to be properly described as settled.

Even if it is established that the Singapore courts have the jurisdiction to hear the divorce, they may yet exercise their discretion not to do so. This is the second aspect. This occurs if one of the spouses successfully persuades the court to stay, i.e., suspend, the Singapore action on the ground that Singapore is not the appropriate forum. This legal principle is described as forum non conveniens. To raise this successfully, the spouse who does not wish for the divorce to be heard by the Singapore courts will have to show that there is a clearly more appropriate foreign forum. This involves a two-stage test:  

Stage one: The spouse seeking the stay must show that there is another available forum that is clearly or distinctly more appropriate than Singapore to determine the dispute. The court will take into consideration connecting factors, such as factors affecting convenience or expense (eg, availability of witnesses), the law governing the transaction and the places where the parties reside or carry on business.

Stage two: If there is another forum which is on the face more appropriate, the court will ordinarily grant a stay, unless there are special circumstances by reason of which justice requires that a stay should nevertheless be refused. At this stage, the burden shifts to the spouse who commenced the Singapore action to show such special circumstances.

If it is established that the Singapore courts have jurisdiction and Singapore is an appropriate forum, the Singapore courts’ approach to the division of matrimonial assets, as outlined before, would be reason enough to choose Singapore as the place to determine the divorce. Another factor in favour of Singapore is that all matrimonial proceedings in Singapore are conducted in camera (meaning the public cannot attend the hearings) and all decisions and judgments published are only done so after the redaction of the names of parties and any other sensitive information, including potentially commercially sensitive information such as the names (and therefore valuations) of privately held companies which may form part of the matrimonial assets.

In addition, the Singapore courts’ robust and practical approach to spousal maintenance and children’s issues, as well as cross-border enforceability of court orders, makes Singapore a pragmatic choice.  We examine the Singapore courts’ approach to these issues in greater detail in the next few articles of this series and invite you to stay tuned.

Josephine Chong, Advocate and Solicitor Singapore, Josephine Chong LLC; Kym Anstey, Advocate and Solicitor Singapore and Solicitor of the Senior Courts of England and Wales. 

Views expressed in this opinion editorial are strictly of the authors/contributors and do not reflect that of Wealth and Society. Please note that the above is not to be construed as legal advice, which can only be given upon knowledge of all circumstances.

Keywords: High-net-worth, Wealth, Centi-millionaires, Categorisation, Very-high-net-worth, Legacy Planning, Investment, Estate Planning, Taxation
Institution: Capgemini, WealthX, Credit Suisse, UBS, Henley & Partner’s, Goldman Sachs, Investopedia
Country: US, UK, India, China, Switzerland, Vietnam.
People: Zita Nikoletta Verbényi
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