16 April 2013

Beijing or Hong Kong - where is best to divorce?

Rita Ku
Partner | Hong Kong

It is now very common to see families in which mum lives with the children on the mainland while dad works most of the time in Hong Kong, or the other way round. Spouses will often have permanent Hong Kong ID cards and their children may have been born here. Such couples will often have property and investments on the mainland, Hong Kong and elsewhere. So if the marriage breaks down (government statistics show that of the 19,000 divorce decrees granted in 2011, one third involved a party from the mainland) spouses start thinking about where they should file their divorce, should any disputes arise over assets.

There a few factors to bear in mind:

Hong Kong is a common law jurisdiction where judges have wide discretion. Because fairness is the overriding principle here and courts view an equal division of assets as a reasonable starting point – although it is not a given – Hong Kong has been the forum of choice for the financially weaker party, normally the wife. The court must look at all the case’s circumstances and will take all assets into account.

The mainland, however, has a codified system based on the Marriage Act. There is a distinction between joint and separate property. Separate property includes premarital property and properties owned solely by one party by inheritance or gift. This may include the matrimonial home, especially when it is bought with the parents’ money. With jointly owned property, the court will usually adopt an equal division approach, unless there are grounds, such as adultery, to depart from this principle.

Prenuptial agreements are enforceable on the mainland, while in Hong Kong they are only one of the factors to be taken into account, albeit an increasingly important one.

In Hong Kong there is an obligation on parties to give full and frank financial disclosure. This would even include such items as jewellery and expensive watches and handbags. Hong Kong has a more comprehensive process, by way of questionnaires, to investigate both spouses’ finances.

However, it is not as effective on the mainland, where spouses are only required to provide a list of their assets to the court. While one party may question the sufficiency of financial disclosure, the burden is on that party to prove that his or her spouse has been untruthful.

In a recent case, the family court ruled that divorce should take place in Hong Kong, although the marriage was registered in Beijing. This was because the wife would be seriously disadvantaged if the process took place on the mainland. Although the family had always lived in Beijing, the husband’s business interests were all in Hong Kong, which also had a better financial discovery system and was therefore deemed the more appropriate forum.

An order for custody relating to children can be made in both jurisdictions. Beijing is not a signatory to the Hague Convention, which provides for the protection of children in international abductions.

If the divorce proceeds in Hong Kong, but the children live on the mainland, the Hong Kong court can order an International Social Welfare Investigation Report, so that the children need not travel to Hong Kong or be disturbed by the proceedings. It is obviously undesirable to have proceedings in two different forums but it can be done, just at double the expense.

The courts in Hong Kong also take a dim view of “forum shopping”. To petition in Hong Kong, the spouse must either be domiciled here, be habitually a resident here for three years or have a substantial connection.

Here’s a tip: think carefully before indulging in forum shopping – it is expensive and is only the start of the saga.

The article was originally published in South China Morning Post on 16 April 2013.

Category: Article