According to Forbes, Russian billionaire Farkhad Akhmedov is worth around $1.4bn (£1.08bn), wealth he amassed after selling his stake in Northgas, one of Russia’s most efficient natural gas companies.
Described as an oligarch, the 62-year old Mr Akhmedov also has a political background, but these days reportedly spends most of his time in Baku, the capital of his home country Azerbaijan.
Mr Akhmedov has also made the headlines recently because he has found himself embroiled in what the British media has described as the country’s biggest divorce case of all time.
In 2013, Mr Akhmedov’swife of 20 years, Tatiana Akhmedova, filed for divorce in England and, after an unusual degree of wrangling, this was granted two years later.
In the financial proceedings which followed, the London judge, Mr Justice Haddon-Cave awarded Mrs Akhmedov the largest divorce pay-out in UK history, at £453m, which equated to a 41.5 per cent share of the Akhmedovs’ marital assets.
Key points
- It can be very hard to enforce a court ruling relating to a divorce settlement if most of the assets are offshore
- Locating assets is best left to professionals
- People are better off resorting to a more bespoke, less confrontational approach to divorce
That 2016 decision has not concluded the litigation, however. The dispute has resurfaced this summer, as Mr Akhmedov, who thought the original ruling was “toilet paper”, has refused to pay up.
The English court has imposed a worldwide freezing order over his assets, including his yacht, the £350m Luna, which includes a helipad and swimming pool.
More recently, the courts in Dubai have also become involved – the civil court there is said to be considering an application made by Mr Akhmedov to lift the freezing order on the yacht.
Back in England, Mr Justice Haddon-Cave has concluded that Mr Akhmedov is in contempt of court and that he has been evading enforcement of the judgment “by concealing his assets in a web of offshore companies”, spread across jurisdictions as diverse as Panama, the Isle of Man and the British Virgin Islands.
This complex case, for many people, sounds almost otherworldly – yachts and hundreds of millions if not billions of dollars of wealth, garrisoned around the globe in hard-to-penetrate trust and corporate structures.
However, Mr Akhmedov’s manoeuvrings illustrate a wider point, which is that it can be extremely difficult, and often hugely expensive, for the recipient of a divorce award to ensure payment is actually ever made. Mrs Akhmedova is far from alone in finding it hard to obtain satisfaction. Michelle Young, former wife of the late Scot Young, is reported not to have seen a single penny of the £20m awarded to her in 2013.
A complicated web of financial assets
The challenge for divorcing spouses and their financial and legal advisers in such cases is two-pronged – first, actually to locate the assets, and secondly to enforce any order a court is persuaded to make.
In today’s connected world, you would be forgiven for assuming that tracing assets would be comparatively straightforward but, if anything, the opposite is true.
The determinedly reluctant payer is likely to have used the full range of sophisticated corporate and trust arrangements at his or her disposal.
These are likely to be located in foreign jurisdictions with different (put neutrally) standards of transparency, and where the writ of our domestic courts means little. Obtaining proper disclosure is therefore frequently highly problematic.
In an ideal world, clients will be able to tell their advisers where assets are located and how they are held before any divorce proceedings are suggested. Of course, this is not always possible, but trying to ensure that all relevant paperwork is accessible and financial matters remain transparent is a good idea.
Locating assets is best left to professionals – although family lawyers will be extremely wary if presented with sensitive financial information belonging to an ex-spouse. If obtained by unlawful means such as from a locked filing cabinet, or, as is increasingly common, from the accessing of password-protected electronic data, the evidence gathered will not be admissible and could even prompt a claim for damages by the ‘owner’ of the data. There is no substitute for specialist legal advice in such situations.
And, as Mrs Akhmedova has found, even after an award has been made it can be incredibly difficult to enforce if the underlying assets are located in an overseas jurisdiction, particularly one with no special inclination to uphold an English order.
Judicial warnings that Mr Akhmedov faces a possible jail term if he sets foot in this country mean little if he is content to avoid this jurisdiction – which for £453m he might very well be.
Moreover, not every foreign court will automatically uphold an English award. Instructing local legal expertise is a must, but this too can be time-consuming and expensive, particularly if enforcement has to be pursued in a number of different overseas jurisdictions.
Freezing the assets
Freezing orders are a useful tool if there are well-grounded fears that a spouse has moved or is intending to move assets beyond the court’s reach, with the intention of defeating the claims of the other spouse.
Such an intention may be presumed by the family court in many cases. Most commonly, freezing orders are used to control property assets or bank accounts but can also be used more widely – be it a high-value painting or even a yacht – whether located in this jurisdiction or overseas.
However, as has been evidenced in the Akhmedov case, despite their purported reach there can be no guarantee that a freezing order will be upheld by a foreign court.
Avoiding this type of dispute?
It is a fact of life that transnational marriage is becoming more common, a feature of work and leisure lived beyond our borders.
Likewise, the nature of wealth is becoming more complex, tied up in multiple businesses, trusts and assets. Inevitably, a divorce under such circumstances is going to be more complicated.
Opportunities undoubtedly exist for those determined to avoid their responsibilities, if they are willing to risk the sanction of the English court.
For those hard cases, and indeed for every case, alternatives to traditional litigation should be explored and considered as a matter of course.
The vast majority of people will benefit from the adoption of a more bespoke and less confrontational approach to resolving divorce, the principal benefits being quicker, cheaper solutions allowing both parties to move on with their lives at the earliest opportunity. Children in particular benefit from this.
Thankfully there are ever more options available to couples looking to avoid litigation. Mediation and arbitration are both well-established alternatives. The former focusses on reaching a consensual settlement where this is possible.
The latter provides the parties with a similar process to traditional litigation except the final decision is not taken by a judge, but by an arbitrator – usually a senior barrister who can be chosen on the basis of their expertise – which might be particularly helpful if the case involves trust or offshore assets.
Another option enables couples to meet with a specialist barrister together right at the outset to hear what award a judge (or arbitrator) would most likely order in the event matters cannot be settled by agreement.
This helps align expectations from the beginning, which in turn results in a quicker process, lower legal costs and a reduced likelihood that one party will not be unhappy with the final outcome.
Whatever your budget, there are many alternatives to the court room. Anyone divorcing should seriously consider them.
Harry Gates is a barrister and co-founder of The Divorce Surgery
