Letters of request: will other countries co-operate? By Robin Charrot

Divorce|February 24th 2010

Some recent, and surprising, court decisions from offshore jurisdictions, namely Bermuda and Jersey, demonstrate the fluctuating levels of cooperation that the English family courts can expect to receive in divorce cases.

In English divorces when there are offshore assets, often held in offshore trusts, it is common for wives to meet with resistance when they try to find out information about those assets or trusts from their husband.

One way of remedying this is by issuing Letters of Request. These are letters from an English court to the appropriate authority (usually a court) in the other jurisdiction requesting information about the assets or trusts held in that country. The letter is written by your solicitors, who then apply to the English court for its approval and to request that it is sent. The English court can, and frequently does, amend the content of the letter.

After receiving the letter the authority in that other jurisdiction can choose to do three things:

  • Tell someone (for example the trustee of a trust, or the husband’s accountant) to release the documents requested
  • Make someone attend court in the other country to give evidence in person
  • Tell the English court to effectively “get lost”.

Bermuda goes one way…

Over the last few years, Bermuda has acquired a reputation for being “trust friendly” by – amongst other things – rejecting letters of request out of hand.

The most famous example of this was in the case of Charman V Charman in 2005. The divorce’s financial settlement hung on a dispute over an offshore trust the husband had set-up in Bermuda.

The English High Court, and then the English Court of Appeal (after an unsuccessful appeal by the husband) issued letters of request to the Bermudian authorities, only to find that the Bermudian judge refused to order the trustees of Mr Charman’s massive trust (thought to be worth £67 million) to disclose any information.

When they heard that the Bermudian judge was refusing to budge the English courts described his behaviour as “somewhat churlish” and the decision as “rather parochial”.

However, the Bermudian courts, perhaps stung by this criticism, seem to have changed their view.  In the case of Sarah Felicity Jennings v Robert Albert Jennings, decided in December 2009, the Supreme Court of Bermuda decided that it had previously been wrong to refuse the English Court’s letters of request during the Charman V Charman proceedings. The Supreme Court concluded that the English Court of Appeal’s decision represented the correct law to be applied by the Bermudian courts when dealing with Letters of Request from English courts.

…And Jersey goes the other way

Historically, Jersey has been much more cooperative than other offshore jurisdictions when dealing with Letters of Request from English courts.

In the 2005 case of Minwalla v Minwalla [1 FLR 771] the Jersey Royal Court compelled the trustees of a large family trust to produce  information requested following a High Court decision in England.

The pendulum now seems to have swung the other way. In the Jersey Royal Court case of Deery v Continental Trust Company Limited and Peter Lawrence Watts, which was decided in January 2010, the Jersey Royal Court refused to grant the English court’s Letter of Request. The request was refused because the letter asked for disclosure of affidavits sworn by the trustees in separate Jersey court proceedings (brought by the trustees to ask for guidance in running the Trust).

The Jersey Royal Court said that if trustees thought such documents could be disclosed in different proceedings within another country, to someone who was hostile to the trust, they would no longer be “full and frank” in their disclosure to the Jersey Royal Court when taking part in proceedings about the running of the trust.

Constantly changing

The two recent decisions give an interesting insight into the constantly changing relationship between English courts and those of offshore jurisdictions.  The shifting dynamics provide a constant challenge to advisors when telling wealthy clients where it will be safest to set up an offshore trust.

They also go to show that you should never take a foreign court’s level of cooperation (or indeed non-cooperation) for granted.

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