London has been dubbed the divorce capital of the world for its relatively generous treatment of the financially weaker partner. A recent case involving Malaysian nationals highlights some of the issues at stake.

A vexed issue in law is when an estranged couple cannot even agree over the jurisdiction in which their divorce case will be held because of disputes about which place is likely to offer the most favourable terms to one of the parties. A case has come up concerning two Malaysian nationals locked in a dispute since 2013. Brett Frankle, partner at the family law team of Withers, the international law firm, examines the case and its implications. The editors of this publication are pleased to share these insights and invite readers to respond. 

The Court of Appeal in England recently handed down judgment in the case of Peng v Chai. This case involves two Malaysian nationals who, since 2013, have been engaged in litigation in both England and Malaysia, ostensibly arguing about which of those two courts should deal with their divorce.
 
The wife, 68 and largely living in the UK since 2012, brought proceedings in England first back in 2013 and a couple of weeks later her husband, now 76, issued divorce proceedings in Malaysia.

Since then there have been a number of hearings dealing with interim maintenance and occupation of the home in England, but the vast majority of court time, in both countries, has been spent considering which court is the most appropriate to hear the divorce.

In England, for cases not involving two European Member states, the court has discretion as to whether it will hear a divorce. It has the ability to decline jurisdiction if it considers there is a more appropriate forum for the case to be heard. That in turn requires an analysis of the facts and circumstances of the case to see how closely connected to England the family in question is, where the assets are and what the alternative would be if the English court declined to deal with the matter.  

In this case, both the Malaysian court and the English court had embarked on similar exercises and reached remarkably similar conclusions as to appropriateness.

The Malaysian Court had found that it was not “so inappropriate a forum” as to render a continuation of proceedings there “oppressive and vexatious”. As a result, the husband was told he could continue to pursue his divorce in Malaysia. However, the court did not find it was more appropriate a forum than England, so they did not stop the wife from proceeding with matters here.  

The English Court found that “the connecting factors to each jurisdiction pan out fairly equally, with a small bias in the wife's favour”. That indicated a close run race, but not a dead heat, in favour of England being the more appropriate forum, by however slight a margin. It was so close though that the English court could not say it was inappropriate for the matter to be heard in Malaysia. As a result, the husband was not stopped from proceeding with his application for divorce there. This is the decision the Court of Appeal upheld in the recent ruling.

As it stands, there are concurrent divorce proceedings continuing in both jurisdictions. The wife is proceeding in England and the husband in Malaysia, with each party trying to push forward their divorce and financial issues first in their respective jurisdictions in the hope of seizing the advantage.

What is the advantage though?  
England has garnered a reputation for being the divorce capital of the world, and for good reason. The starting point on divorce here is that all assets, however and whenever acquired, are divided between the parties equally, unless there is a good reason to the contrary. Subject to there being enough money available to meet the needs of both parties, good reasons to depart from equality might be the existence of a pre-nuptial agreement or pre-marital money, inherited wealth or a special contribution by one party that is unmatched by the other.

The fact that the parties in Peng v Chai have, to date, spent some £5 million ($7.28 million) on legal fees shows how grave the financial consequences of a divorce in a less financially favourable jurisdiction may be. People are prepared to fight to ensure they have the advantage of jurisdiction, given the financial consequences of that decision.

Being an international family is more common these days. Children attend schools abroad, parties have houses in different jurisdictions etc. These facts could allow a spouse to file for divorce in different jurisdictions, as Ms Chai did here. As a result, anybody thinking of establishing such connections in England would be well advised to speak to an English family lawyer beforehand, so as to try and protect their position, just in case.