Is It An Offshore Sham? A Balanced Perspective Is Welcomed

'these sophisticated offshore structures are very

familiar nowadays to the judiciary who have to try them. They

neither impress, intimidate, nor fool anyone. The courts have lived

with them for years.'

- Coleridge J in J v V 2003 EWHC 3110 (Fam), 2004 1 FLR 1042

It is interesting to note the air of adversity that has

intensified over the past few months between the powers that be of

the onshore jurisdictions, and those of the offshore jurisdictions,

particularly in the face of collapse of the economic stability of

certain onshore jurisdictions. For those offshore jurisdictions

that feel they have been well regulated and well managed over many

years and have worked hard to ensure their good standing in the

global market, it would seem unfair and unfounded. Such offshore

jurisdictions take the view that it would require instead,

introspective soul searching of those onshore jurisdictions that

have allowed overall poor management and poor judgment to possibly

cause their own demise. Such a demise that has regretfully taken

along with them, other jurisdictions whose markets are naturally

well intertwined with theirs.

It would seem inconceivable that Iceland itself could or would

ever be able to look to an offshore jurisdiction, to point the

finger at, as having any direct or indirect relation to their

demise, especially as the direct ties to the US market seem

undeniable.

All aspects of the offshore jurisdiction appear vulnerable to

the blame game. The above quote from Coleridge J in J v V 2004 1

FLR 1042, brought an interesting perspective as to how offshore

jurisdictions and their products might be viewed in the eyes of the

onshore Court. A slightly venomous remark, that may or may not be

justified, but one that certainly appears to have been spawned in

retaliation to offshore legislation that has been designed to

effectively address the legitimate needs of individuals or

corporations who are proactive in legally addressing their own long

term fiscal goals. Often these goals are not set in reaction to an

existing problem but to preempt any potential problem down the

line, having due regard to the existing laws of the day. Some may

call it being fiscally responsible, be it for commercial or for

personal purposes, to ensure the mitigation of possible losses that

might be incurred in the event of certain circumstances.

How does one address the unfortunate perception by some, that

all that is offshore must be a sham?

The case of A v A 2007 EWHC 99 brings, it seems, a much needed

balanced perspective, where there is a legitimate transaction

established under well established trust principles and having due

regard to the relevant legislation of the jurisdiction.

The case of A v A involved ancillary relief proceedings

following the breakdown of a relationship of almost 20 years. The

matrimonial assets at stake included the husband's 23%

shareholding and the wife's 22.98% shareholding in a family

company which had been established by the husband's father many

years ago. Two separate discretionary trusts held 54% of the shares

in that company, one trust created by the husband's parents and

the other by his brother before the marriage. The beneficiaries of

the trusts were the children and remoter issue of the husband and

remoter issue of the husband's parents. Therefore the husband,

his children, their children and his brother were included as

beneficiaries and so the group of beneficiaries was not closed

which was an important...