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Finance and Divorce March 2013 Update

Anna Heenan, solicitor and David Salter, Joint Head of Family Law at Mills & Reeve LLP analyse February’s financial remedies and divorce news and cases.

Anna Heenan and David Salter both of Mills & Reeve LLP

As usual, this update is divided into two parts:

1. News in brief
2. Case law update

News in brief
This section of the update highlights some of the news items that will be of particular interest to practitioners who advise on divorce and financial remedy cases.

Survive ten years and divorce is less likely
Research by the Marriage Foundation found that half of all divorces currently take place in the first ten years of marriage.

For couples who have been married for ten years or more, rates of divorce have remained unchanged since the 1960s. One in five marriages end after ten years of marriage and the likelihood of divorce reduces the longer a couple remain married.

For more information, click here

Family law matters most likely to lead to referrals to the Legal Ombudsman
The Ombudsman's latest report reveals that family law disputes give rise to more complaints than any other type of dispute. Around 18% of all complaints investigated by the Ombudsman relate to family law (and around 9% relate to divorce).

For more information, click here

Imerman financial remedy case resolved
Vivian Imerman and Lisa Tchenguiz are best-known for the Court of Appeal decision in 2010, which dealt with confidentiality of documents. The Guardian reports that they have now reached a settlement in their financial remedy dispute, outlined in a statement on behalf of Mr Imerman as follows:

"In order to avoid unnecessary, unfair and inaccurate speculation as to the terms of settlement and, given that such speculation has already found its way into the press, Mr Imerman confirms that he will pay a lump sum to Ms Tchenguiz of £15m in instalments, with no order for costs."

For more information, click here

Resolution founder has died
John Cornwell, the founder and first national chairman of Resolution (formerly the Solicitors Family Law Association), died on Friday, 22nd February, aged 69.

Resolution has commented: "Both Resolution and separating families owe a huge debt to John for his vision, passion and determination."

For more information, click here

Weston-Super-Mare wrongly identified as a divorce hotspot
MoJ figures for the number of divorce petitions filed in county courts throughout the country listed Weston-Super-Mare as the second most-used divorce court in the country (Birmingham topped the list). However, it transpires that 92% of the petitions issued in the court related to clients of Divorce-Online from across the country. The online company had been advised to issue petitions in Weston-Super-Mare by the MOJ as the court there had more capacity.

For the full story, click here

Heterosexual couples seek to be allowed to enter into civil partnerships
The Telegraph reports on four couples who are launching a challenge to the availability of civil partnerships in the European Court of Human Rights. The couples do not want a traditional marriage, but are not allowed to enter into a civil partnership because they are not of the same sex.

For more information, click here

Pension entitlements commonly undervalued on divorce
A report from DivorceLifeline suggests that half of all divorce settlements in the last twelve years (since the possibility of pension sharing was introduced in 2000) may have been undervalued. In some circumstances, cash equivalents can be an undervaluation, which may create problems where a couple uses offsetting.

For more information, click here

Marriage (Same Sex Couples) Bill passes its second reading
MPs debated the second reading of the Marriage (Same Sex Couples) Bill in the House of Commons on Tuesday 5 February 2013. Second reading was agreed on division, 400 votes to 175.

For the full story, click here 

Children and Families Bill passes second reading
The Bill passed its second reading on 25 February 2013 and will now be considered by a Public Bill Committee.

To track the progress of the Bill, click here

Supreme Court to hear appeal in Petrodel Resources Ltd & Ors v Prest & Ors
The Supreme Court hearing, listed for 5 and 6 March 2013, will consider whether courts have the jurisdiction in financial remedy proceedings to order the transfer of properties or other assets belonging to companies owned by the parties.

Case law update
This section of the update considers cases dealing with the court's approach to assisting couples entering into arbitration, res judicata and an injunction to prevent a couple engaging in arbitration.

Re AI and MT [2013] EWHC 100 (Fam) (Baker J) 30 January 2013
This case considers the court's approach to a case in which the parties chose to use a process of arbitration conducted by a rabbinical authority.

The husband was Canadian and aged 29. The wife was British and aged 26. Both were orthodox Jews. The parties moved internationally during their marriage. The wife gave birth to their first daughter in London in 2007, but the parties returned to Israel later that year.

The parties made preparations to move to Canada in April 2009 so that the husband could begin working for his father's business. By that stage, there were difficulties in the marriage. The wife's case was that she had travelled to Canada for a limited period, whereas the husband argued that it was the start of their joint plan to live there indefinitely.

The wife returned to London in June 2009 to give birth to their second daughter. She had concluded that the marriage had broken down and did not intend to return to Canada. She did not communicate this to the husband. When the husband found out, he began proceedings in Canada under the Hague Convention on the Civil Aspects of International Child Abduction 1980.

The father returned to London in September 2009. The wife alleged that he attempted to remove the eldest daughter from her care and she successfully applied for a prohibited steps order in England. The Hague proceedings were served on the wife and a five day hearing was listed for February 2010 where the principal issues were the habitual residence of the parties and the children. 

The parties entered into negotiations prior to the hearing in February 2010 and agreed that they would explore the possibility of arbitration conducted by the New York Beth Din (a rabbinical authority). To enable this to happen, the court made a "safe harbour" order permitting the wife to travel to the United States with the younger daughter to participate "in rabbinical negotiations in New York over all aspects of the marital break-up during the week commencing 1 February 2010" and then return to this country with the younger daughter. The husband undertook not to interfere with the mother's freedom of movement. The elder daughter remained with her grandparents in England.

During the rabbinical negotiations, the parties agreed that they would refer all disputes between them to arbitration by a senior rabbi of the New York Beth Din.

At the start of the hearing in England on 8 February 2010, the parties produced an order to the court that provided that they agreed "to enter into binding arbitration before Rabbi Geldzehler" and that they undertook to "seek and abide by any determination of the family issues through binding arbitration before the New York Beth Din." Baker J held at that hearing that the terms of the order were not lawful as "they flouted the principle that the court's jurisdiction to determine issues arising out of the marriage, or concerning the welfare and upbringing of the children, cannot be ousted by agreement." However:

"…. having regard to the parties' devout religious beliefs and wish to resolve their dispute through the rabbinical court, and acknowledging that it is always in the interests of the parties to try to resolve disputes by agreement wherever possible, including disputes concerning the future of children and ancillary relief on the breakdown of a marriage, I indicated that the court would in principle be willing to endorse a process of non-binding arbitration. Before doing so, however, I requested further information as to the principles and approach to be adopted by the rabbinical authorities to resolving disputes, in particular as to the care of the children."

After considering that further information, Baker J approved the parties' proposal to refer their dispute to arbitration to the New York Beth Din "on the basis that the outcome, although likely to carry considerable weight with the court, would not be binding and would not preclude either party from pursuing applications to this court in respect of any of the matters in issue."

It had been anticipated that arbitration could be concluded within a matter of weeks, but it ended up taking eighteen months. This led to a problem with contact. The husband was able to have contact with the younger daughter when she travelled to the United States with the wife. However, as the elder daughter remained with her grandparents, the husband had no contact with her. The New York Beth Din made a ruling on interim contact. The mother felt obliged to accept this for religious reasons, but equally felt uncomfortable with what was being suggested. The matter was, therefore, referred to Baker J for an urgent telephone hearing and he made an order in line with that determination.

The New York Beth Din finally handed down its ruling and this was followed by further negotiations between the parties. However, further input was required from the court on the issue of the Get. Under Jewish law, the husband must give a Get to the wife. In Jewish culture, a great social stigma attaches to a woman who is separated from her husband but who has not been granted a Get. This resulted in a deadlock between the parties. The wife was unwilling to agree to the provisions of the arbitration award, unless a Get was given. However, the husband was unwilling to give the Get until the court had approved the award and indicated that its terms could be incorporated into a consent order. The solution was as follows:

1. The court convened a hearing to consider the terms of the draft order;

2. If the court indicated that it would be prepared to grant the order, the parties would attend at the London Beth Din to go through the ceremony for the giving of the Get; and

3. Once the Get was given, the parties would return to court and the order would be sealed.

As the order was made by consent, this judgment would not normally have been reported. However, Baker J agreed to the parties' request that it should be on the basis that it explained the court's approach to the process of arbitration chosen by the parties. In reflecting on the case, Baker J highlighted the following legal principles as being of particular relevance in considering the parties' proposals to refer the dispute to arbitration:

1. The court's jurisdiction to determine issues arising out of the marriage, or concerning the welfare and upbringing of the children, could not be ousted by agreement (see Lord Hailsham in Hyman v Hyman [1929] AC 601);

2. Save where statute provides otherwise, the children's welfare is the paramount consideration when considering issues concerning their upbringing;

3. Whilst the court gives appropriate respect to the "cultural practice and religious beliefs" of all cultures and faiths, "that respect does not oblige the court to depart from the welfare principle because… the welfare principle is sufficiently broad and flexible to accommodate many cultural and religious practices";

4. It is always in the parties' interests to try and resolve disputes by agreement wherever possible;

Baker J noted that at the time he made his order, there was no precedent for referring matrimonial cases to arbitration. However, since then "the Rubicon has been crossed". He noted that "The rule in Hyman prevents the arbitration award being binding, although it has been suggested by its proponents that an award should amount to a 'magnetic factor' in any subsequent analysis of the issue by a court."

Not only did arbitration offer speed, confidentiality and costs benefits, but the parties were able to select the arbitrator. Baker J commented that:

"[i]n this respect, it can be argued that arbitration is in line with the principle underpinning the Children Act 1989 that primary responsibility for children rests with their parents who should be entitled to raise their children without the intrusion of the state save where the children are suffering, or likely to suffer, significant harm. That principle in turn is in line with Article 8 of the European Convention for the Protection of Human Rights and Fundamental Freedoms, the right to respect for private and family life, and the concept of personal autonomy which underpins that right. In short, it is up to parents to agree how their children should be brought up and, if they cannot agree, they should be entitled to choose how their disagreement should be resolved without state intervention, unless either, (a) one or both parents invoke the help of the court or (b) the children are suffering or likely to suffer significant harm as a result of their parents' actions."

Finally, Baker J drew attention to three final features of the case which led him to support and facilitate the parties' proposal to refer the case to arbitration and to endorse the outcome of that process:

1. The fact that the arbitration was conducted by the Beth Din was an integral aspect of the process. "It was a profound belief held by both parties, and their respective extended families, that the marriage which had been solemnised in accordance with the tenets of their faith should be dissolved within those tenets." However, this did not mean that any process of religious arbitration would be sanctioned by the courts (as has perhaps been the suggestion in some newspaper reports of the case):

"In this case, having been reassured as to the principles which would be applied by the rabbinical authorities, which so far as the children were concerned, were akin to the paramountcy principle on which English children's law is based, the court was content to accept and respect the parents' deeply-held wishes, subject to the proviso that the outcome would not be binding without the court's endorsement. It does not, however, necessarily follow that a court would be content in other cases to endorse a proposal that a dispute concerning children should be referred for determination by another religious authority. Each case will turn on its own facts."

2. Both parties benefitted from emotional support from their extended families (on at least one occasion, all four grandparents had been present in court). Their presence and involvement benefitted the parties and underlined the strength of the parties' family identity as a component of their faith;

3. The court both accommodated the parties' wish to refer their dispute to a religious authority and supported the process. For example, "by adjourning the case for arbitration; by using wardship as a protective mechanism for the children pending the outcome of the arbitration; by making the 'safe harbour' orders that enabled the mother to travel to New York with [the younger daughter] for the purpose of taking part in the process; by holding an emergency interim contact hearing; and by giving provisional approval of the draft final order to facilitate the granting of the Get."

Baker J concluded that "I consider that the resolution of the issues between the parties by this process was largely in accordance with the overriding objective of the Family Procedure Rules 2010. I have some concern about the delays in the process, and thus question whether it can be said that the case was dealt with "expeditiously". I have no information as to the costs incurred by the parties. But overall it was, I think, fair and proportionate. So far as the children were concerned, the outcome achieved by the Beth Din award, as refined subsequently by the parties through further negotiation and agreement, was manifestly in the interests of their welfare. It was unnecessary for the court to embark on any lengthy analysis of welfare issues. So far as the financial settlement was concerned, the terms of the agreement were unobjectionable. The parties' devout beliefs had been respected. The outcome was in keeping with English law whilst achieved by a process rooted in the Jewish culture to which the families belong."

Re BP v KP and NI (Financial Remedy Proceedings: Res Judicata) [2012] EWHC 2995 (Fam) (Mostyn J) 26 October 2012
This case considered the application of res judicata, the legal doctrine by which a matter that has been judicially decided cannot be re-litigated.

The husband was the co-owner of a successful investment management company called XYZ. In outline, the history of the case was as follows:

• 2003: parties married.

• 2006: the Regulator served notice of an investigation into alleged market abuses by XYZ. The fund continued to trade.

• March 2008 (on H's case): H and his friend NI entered into an agreement (the effective date of which was 8 February 2008):

o NI bought 2,465.177 shares in the ABC Fund for £7,766,959.

o If the value of ABC Fund increased then NI would receive the first 5% of the profit and any additional profit would be shared equally between H and NI.

o If the value of ABC Fund decreased, then H would guarantee all losses apart from £100,000.

• 2008: The Regulator concluded its investigations into XYZ and filed a complaint. The funds were suspended. Heavy litigation ensued.

• July 2010: W petitioned for divorce.

• 2010 (On W's case): H and NI entered into the agreement outlined above.

• April 2011: The litigation and the global financial crisis caused the value of ABC Fund to collapse. NI sued H in the Chancery Division, claiming £6,501,915. H did not defend the claim.

• May 2011: Default judgment was entered against H in the sum of £6,540,767 (comprising the claim, interest and costs).

• 2012: A judgment against XYZ found the complaint partially proven and ordered XYZ and H's co-owner to disgorge their illegitimate pecuniary gains of $30m and imposed a civil penalty of $30m. XYZ was then placed in administration for a few months.

W's case was that the agreement between H and NI was fraudulent. She alleged that it was entered into in 2010 when the marriage had broken down and that, when the dust had settled, NI would return all or most of the money to H.

In order to test the veracity of H's case, W wanted to examine the original agreement to forensically test the paper and find out when it was manufactured. H said that his original version had disappeared from the papers in his bedroom and accused W of taking it. NI said that his original version was sent to his solicitors and lost in the post. When W asked to examine NI's computer (on which the agreement was prepared), NI said that he had thrown his computer away as it was outdated. W relied both on the total absence of any original paper or electronic documents and the absence of any surrounding letters or emails in 2008; there was no reference to the agreement anywhere in any medium before 2010.

W therefore applied to the Chancery Division to set aside the default judgment, alleging fraud against H and NI and that the agreement had been made in 2010.

An OS v DS hearing had been listed in the financial remedy proceedings (a hearing at which the strengths and weaknesses of the parties' cases are tested under cross-examination to enable an effective FDR to take place). However, it transpired that, after the default judgment against H, 1,068 of NI's shares had been compulsorily redeemed at £2,179.61 per share (giving him £2,326,910). That redemption figure meant that his remaining 1,178 shares would be worth £2,567,709.

This resulted in a compromise agreement between W/H and NI (under which W agreed to withdraw her application to the Chancery Division). As a result, the loss suffered by H and W was reduced to between £2,258,931 and £3,826,640. W argued that it was her concession in withdrawing her application alone that reduced the loss; H would have been content to allow the whole judgment to have been enforced.

The issues were:

1. W accepted that the effect of the Chancery judgment (which would not now been challenged because of the compromise agreement) was that res judicata prevented her from arguing that the agreement was procured by fraud and therefore void. However, W argued that the default judgment had nothing to do when the agreement was actually formed. The agreement would be equally valid whether it was formed in 2008 or 2010; and

2. W sought to attribute the remaining loss to H under the "add-back" doctrine at a final hearing.

Res judicata
This is a legal doctrine which prevents an issue being re-litigated. Once the issue has been judicially determined, it is final.

In considering the facts of this case, Mostyn J commented that, "…the key question is this: is the fact relied on a cardinal fact without which the earlier decision cannot stand? I cannot see that the asserted fact that the agreement was formed in 2008 has such a status. The contract is equally valid whether it was executed in 2008 or 2010. NI's rights under it are equally valid on either date, and the impact of H's failure to comply with his obligations is the same whenever it was formed." Further, there was no question of H being "unjustly harassed" if W were allowed to pursue her case as to the date of formation of the agreement in the financial remedy proceedings:

"… the overall compromise that has been reached (to which H has been a party and which, in the consent order embodying that compromise, specifically records W's contentions) provides for a dismissal by consent of W's claims for a set-aside against NI…. In my view it is simply absurd to argue that H would be the subject of abusive harassment were W to be allowed to put forward her case. On any view this compromise is hugely beneficial to H as well as W."

Therefore, W was not prevented from seeking a finding as to the date upon which the agreement was formed at a final trial in support of her add-back argument.

Mostyn J referred to his earlier judgment in the case of BJ v MJ (Financial Order: Overseas Trust) [2012] 1 FLR 676 in relation to add-back:

"…. I attempted to summarise the principles applicable to this technique in my decision of N v F (Financial Orders: Pre-Acquired Wealth) [2011] 2 FLR 533 where I stated at paragraph 39:

"In this country we have separate property. If a party disposes of assets with the intention of defeating the other party's claims then such a transaction can be reversed under s 37 of the MCA 1973. Similarly, where there is 'clear evidence of dissipation (under which there is a wanton element)' then the dissipated sums can be added back or re-attributed (see Vaughan v Vaughan [2008] 1 FLR 11 at para [14]). But short of this, a party can do what he wants with his money. What is not acceptable is a faint criticism falling short of either of these standards. If a party seeks a set-aside or a re-attribution then she must nail her colours to the mast."

Although intellectually pure, the problem with this technique is that it does not re-create any actual money. It is in truth a process of penalisation. In my judgment it should be applied very cautiously indeed and only where the dissipation is demonstrably wanton… Generally speaking, I suggest that it would be altogether better where a reversal of a transaction is sought, that it is made pursuant to s 37 MCA 1973, where the disponee can be heard and where strict statutory criteria must be met…"

Mostyn J was not prepared to strike out the wife's add-back arguments although he noted that she faced "a stiff climb to meet the test."

T v T (Anti-arbitration injunction) [2012] EWHC 3462 (Fam) (Nicholas Francis QC sitting as a deputy High Court Judge) 29 November 2012
This case considered the circumstances in which an injunction should be granted to prevent the husband engaging in an arbitration process provided for in the terms of a pre-marital agreement.

The parties were US citizens. They were married on 3 April 2004 in US State B. Shortly before their marriage, they entered into a pre-marital agreement (PMA), which made provision for financial resolution on divorce. The key elements of the agreement were as follows:

1. It was governed by the law of State A (US);

2. It provided for the possibility that the parties might reside in various jurisdictions and recited that the PMA was still intended to bind them and remain subject to the law of State A;

3. It contained the following arbitration clause (Article 8.1):

"The parties agree to submit to binding arbitration any dispute or controversy regarding the validity, interpretation or enforceability of this Agreement, as well as all issues involving its enforcement in connection with a dissolution proceeding between the Parties. Each party expressly waives any right to trial by a court or trial by a jury on such issues. The parties further agree that any arbitration that should be required under this Article shall be conducted in [State A]."

4. It recorded that the husband had resources of not less than $139,217,494; and

5. The provision for the wife was to be (a) $50,000 on execution of the agreement and thereafter (b) $200,000 per annum up to a maximum of $3m (the annual payments for the benefit of the wife were to be paid into a trust).

The parties had lived in London since February 2005 and had indefinite leave to remain. They had also had two children born in London and educated in England.

The proceedings
Almost simultaneously, the husband had filed for divorce in State A and the wife had filed for divorce in England. The wife disputed that the courts in State A had jurisdiction and was applying in State A to dismiss the husband's petition. The husband had issued an application to stay the English proceedings on the basis of (a) the arbitration clause; and (b) forum conveniens.

The husband's application to stay the English proceedings had not yet been heard and the wait for the return date had effectively operated as a stay of the English proceedings. In the meantime, the husband was attempting to invoke the arbitration process under the PMA in State A. In addition to applying to stay his own suit in State A to enable arbitration to take place, the husband sought an order in the courts of State A to compel the wife to engage in arbitration.

The arguments
The wife argued that the PMA was unenforceable as it had been entered into 4 days prior to the wedding and that she was told the marriage would not proceed if she did not sign it. She argued that this, plus the imminent arrival of guests from around the world, put her under a great deal of pressure. She also said that she had been led to believe that there would be some flexibility in the event of separation. The judge was prepared to accept this as potentially true for the purposes of the application.

The wife's case was that the husband's underlying policy was to delay in England and progress the US arbitration in order to hijack the English application for a stay. Counsel for the wife argued, therefore, that the Hemain jurisdiction should be invoked to prevent the husband from engaging in arbitration until the issue had been properly investigated in England. This would maintain a level playing field.

Counsel for the husband argued that the English court only restrained foreign arbitration proceedings in exceptional circumstances and that it should not do so here. Instead, the court should await the decision of the court in State A and, if the arbitration process were to proceed, the outcome of the arbitration.

The husband disputed the wife's claims that the PMA was unenforceable, although he submitted that these arguments should be determined by the arbitration process in State A and not the English court.

The law
The English courts have power to grant in personam injunctions (known as Hemain injunctions) to restrain a party from pursuing foreign proceedings.

Counsel for the wife argued that this was "quintessential territory" for such an injunction: the husband should not be able to secure an unfair advantage by delaying or stopping the English proceedings. Further, here the wife was applying for an interim injunction, designed to preserve the status quo until the application for a stay was heard by the English courts. He relied on the case of R v R (Divorce: Hemain injunction) [2005] 1 FLR 386.

Counsel for the husband argued that the jurisdiction must be exercised with caution. Although an in personam remedy, it indirectly interfered with the process of a foreign court. Relying on the cases of Soc. Nat Industrielle Aerospatiale v Lee Kui Jak [1987] AC 871 and Turner v Grovitt [2002] 1 WLR 107, he argued that it was necessary to show that the pursuit of the foreign proceedings was vexatious, oppressive or that for some other reason the ends of justice required the grant of an injunction.

The judge noted that the authorities all dealt with the restraint of proceedings in foreign courts, rather than jurisdiction pursuant to an arbitration clause in a PMA. Whilst counsel for the husband conceded that the court had jurisdiction to grant an injunction in these circumstances, in reliance on a footnote to Dicey, he maintained that the circumstances in which this could be done were even more limited than in relation to foreign proceedings. This was accepted.

Counsel for the wife argued that the arbitration clause in the PMA was void either on the basis of:

1. s 34(1) Matrimonial Causes Act 1973, which provides that:

"If a maintenance agreement includes a provision purporting to restrict any right to apply to a court for an order containing financial arrangements, then –
(a) that provision shall be void."; or

2. the rule in Hyman v Hyman [1929] AC 601.

Counsel for the husband's argument was that the Article 8 of the PMA contained the arbitration clause and that article did not contain a maintenance agreement. Further, s 7 Arbitration Act 1996 provides that:

"Unless otherwise agreed by the parties, an arbitration agreement which forms or was intended to form part of another agreement (whether or not in writing) shall not be regarded as invalid, non-existent or ineffective because that other agreement is invalid, or did not come into existence or has become ineffective, and it shall for that purpose be treated as a distinct agreement."

Whilst s 7 only applied to arbitration agreements governed by English law, it was derived from s 4 of the United States Arbitration Act 1925.

The Court had jurisdiction to grant the injunction sought by the wife. However, the jurisdiction needed to be exercised with caution:

"In an exceptional case, an injunction to interfere with foreign proceedings (or, as here, foreign arbitration, which I find is reasonably included within the term "foreign proceedings") might be granted, particularly where, as here, the injunction is sought for a limited period.  I have to decide whether the Husband is being oppressive or vexatious in desiring to continue his arbitration process in State A whilst having, in effect, stayed the Wife's proceedings in England.

It would be easy for me simply to assert that, since there is no apparent harm to the Husband in "levelling the playing field" the way that the Wife wishes, the balance of convenience lies in granting the order so as to preserve…the status quo ante.  I agree … that an interim order is to be viewed differently from a full anti-suit injunction, the former being limited in scope and purpose.

However, the matter is far from being that straightforward.  It is clear from the authorities, and in particular from Munby J (as he then was) in Bloch v Bloch [2003] 1 FLR 1, and in R v R [2005] 1 FLR 386, and from Baker J in S v S [2010] 2 FLR 502, that I have to ask myself a number of questions:

"a) Can it be shown that England is the natural forum and that pursuit of the foreign proceedings (here, arbitration) would be vexatious or oppressive?   In my judgment, the answer to this question must be in the negative.  The parties entered into a PMA which the parties recorded as desiring, with the benefit of full advice.  Of course, the Wife may show that there are good reasons not to be held to it, but that is an issue which she can raise with the arbitrator appointed in accordance with the PMA.  I take fully into account the fact that, as Baker J said in S v S, when seeking an Hemain injunction, in contrast to a permanent anti-suit injunction, there is no need to show that England is the natural forum.  As [Counsel for the wife] succinctly put it, the question is not whether it is unconscionable for the Husband to take proceedings in the US, but whether it is unconscionable for him to issue an application for a stay of the English proceedings and at the same time press ahead with the proceedings in State A.   I do not find, in the particular circumstances of this case, that the Husband is acting to his own forensic advantage and, more particularly, in a manner that can properly be characterised as vexatious, oppressive or unconscionable.

b) The burden being on the Wife to show that England is the natural forum, has she discharged this burden?  Whilst it is possible that the Wife may, in due course succeed in showing that she should not be held to the PMA, I am unable to determine that issue in her favour at this stage.  The fact is, that given the terms of their PMA, and the express clause providing that issues as to its validity are themselves to be the subject of arbitration, the Wife has not yet satisfied the court, on the balance of probabilities, that England is the natural forum to determine the financial issues arising on the divorce of this American family who made a PMA with express provision that those issues be determined by arbitration in State A.  However, I recognise that, in the case of an interim injunction, this question is substantially subsumed into the wider question addressed at a) above and c) below.

c) Is The Husband behaving vexatiously or oppressively by seeking arbitration in State A?  In my judgment it is hard to see how the Husband can properly be accused of such behaviour when what he seeks to do is to invoke the arbitration clause contained within the PMA which the parties signed, with the benefit of legal advice.  That is not to pre-determine the issue which the Wife raises in relation to the pressure that she says she was under when she signed the PMA.  Indeed, as I have set out above, I am assuming for the purposes of this Judgment that she has an arguable case in that regard.  It was made clear by Baker J in S v S that it is not sufficient simply to demonstrate that the Respondent is seeking a stay of proceedings in this country whilst continuing in the meantime to litigate abroad.  It all depends on the facts.  The facts of the instant case are unusual, indeed I have been directed to no reported case of a Hemain injunction where a spouse is seeking to rely on an arbitration clause.  In my judgment, it is that arbitration clause which makes this case different.  An American couple took American advice and entered into an American PMA which contained an arbitration clause.  That clause also provided a means of resolving any issue as to the validity of the PMA itself.  This means that the Wife would appear to have a proper forum for airing her case that she was pressurised into signing the PMA.  I do not find that the Husband is behaving vexatiously or oppressively by invoking the arbitration clause in the PMA.

d) Does the fact that what the Wife seeks is only a temporary injunction tip the balance of convenience in her favour?  Munby J made it clear, at paragraphs 88 to 90 of Bloch, that, even though there is no need for the Wife at this stage to go so far as showing that England is the natural forum, she does still have to show that the conduct which she seeks to restrain is vexatious or oppressive.  I have already stated that in my judgment the conduct complained of is not vexatious or oppressive.

36. I also note that Baker J said, in S v S that it is not of itself vexatious, oppressive or unconscionable for a husband to pursue ancillary relief proceedings in a foreign court merely because his motive for doing so is to obtain what for him would be a more financially advantageous order.  This must apply all the more in a case where the parties have at least some expectation that their PMA will be upheld, although as I have said, there is provision for determining the status of the PMA itself.  If the matter is to proceed in State A, there will be an arbitration hearing there at which the Wife will have the opportunity to present evidence setting out the reasons why she should not be held to the PMA.  If it is determined that the Wife should not be held to the PMA for the reasons summarised above, or at all, then the question of forum will presumably remain very much alive between the parties. 

37. Finally, but importantly, I have to consider [counsel for the wife's] submission that the PMA is void as it purports to oust the jurisdiction of the English court.  I am concerned here with Article 8 of the Arbitration Agreement which I have set out above.  Following Dicey and the Fiona Trust case, I am completely satisfied that Article 8 is to be considered independently from the rest of the PMA.  Article 8 is not a maintenance agreement and, accordingly, cannot be contrary to the provisions of s 34 of the Matrimonial Causes Act or the rule in Hyman referred to above (if, indeed, that rule has survived the decision of the Supreme Court in Radmacher v Granatino)."

The wife's application for an injunction was rejected.