Wealthy individuals in the UK may start to move their assets offshore to avoid big payouts in the event of divorce, following a potential landmark court ruling in Jersey, say lawyers.

The Jersey Royal Court has reversed an order of the London High Court that the wife of an Indian millionaire jeweller should get a share of his assets - held in a trust in Jersey - as part of their divorce settlement.

Sandra Davis, Head of Family Law at Mishcon de Reya, told WealthBriefing that the case was important because Jersey and other offshore financial centres had previously been willing to implement orders made in English divorce courts concerning offshore trusts.

“As a result of the decision, which is likely to be followed by tax havens worldwide, wealthy UK based individuals will increasingly be advised to move their assets into the shelter of offshore trusts to avoid the punitive awards made in the world's divorce capital," Ms Davis said.

“New trusts legislation in Jersey has meant that the Jersey Courts have now ruled that the English Courts' willingness to interfere wholesale in the workings of Jersey trusts incompatible with their own law and therefore a step too far,” she said.

The decision means that estranged spouses could, in future, be blocked by their ex-partners from claiming wealth held in Jersey or the other Channel Islands and other international financial centres.

The ruling in Jersey concerned the case of Mubarak v Mubarik, a dispute over the wealth of Iqbal Mubarik, who owns the Dianoor jewellery chain. Jersey's Royal Court rejected an order by the High Court in London that the jeweller must hand over a share of his assets, held offshore on the Channel island in a trust previously shared with his ex-wife.

The case underscores how divorce remains a key issue in wealth management. London has been regarded as the world’s “divorce capital”. Earlier this year, Ms Davis told Wealthbriefing that the UK Law Commission's recently proposed reform of the law to make pre-nuptial agreements enforceable will call time on huge payouts for divorce. Pre-nuptial agreements are currently only enforceable on divorce to the extent a judge decides to hold the parties to their agreement. Such reforms would bring the UK in line with most other Western nations, she said.

Grant Howell, of private client specialist law firm Charles Russell, told WealthBriefing that the Jersey court's action was important but it would be premature to suggest that it would dramatically change the economics of divorce in the UK.

"It is significant; it does however reflect something that has been a feature of the English courts for some time. It is true that there have been examples where English courts have ignored Jersey courts on occasion in the past . But what the English courts have been saying in more recent decisions is that it is up to the English and Jersey courts, or indeed other jurisdictions, to work together," Mr Howell said.

"If there is money in a trust that is needed to satisfy a financial order made on divorce, enquiries are made in advance. We would in any event speak to Jersey lawyers beforehand so we don’t have a situation where English courts and offshore courts end up at loggerheads and waste clients’ time and money," he said.

Mr Howell said that the Mubarak decision drew a distinction between alteration and variation of a trust. A Jersey court will not alter a trust (which means in practice requiring trustees to do something they have no power under the trust to do) unless all the beneficiaries agree. However, it can vary a trust within the existing terms. However, what is required is categorised though "They [Jersey] are saying that they are not going to be a rubber stamp for what the English courts want," Mr Howell added.

Mr Mubarik was last year ordered by the high court to give his wife Aaliya - who disagrees with her ex-husband over the spelling of their surname, claiming it should be Mubarak - money from a trust in Jersey thought to be worth about 18 million pounds ($32 million). Shortly before their divorce, the businessman removed his wife as a trustee.

The case represents a turnaround from what happened in England's largest ever divorce payout, in which businessman John Charman was last year ordered to pay his ex-wife Beverley £48 million after the High Court ruled that assets he held in a Bermudian trust should be included in their settlement.

Mr Charman's Bermudian lawyers are contesting the English courts' right to make decisions about offshore trusts on the island.