Who will be the referee for Abramovich’s divorce?
The finer details of the divorce settlement are likely to remain shrouded in mystery, this article argues.
In this article, Richard Kershaw, a partner at Hunters Solicitors, considers the divorce case of Russian billionaire and Chelsea FC owner Roman Abramovich.
News that Russian billionaire Roman Abramovich, who is best known as the owner of Chelsea FC, and his third wife Dasha Zhukova, a 36 year-old businesswoman-turned-art collector, have decided to separate has inevitably been a gift for headline writers. It followed the release of a joint statement by the couple that they had agreed to part amicably after nine years of marriage. During that time, they had two young children. The statement added: “We remain close friends, parents and partners in the projects we developed together.”
Given Abramovich’s previous experience of two divorces and his vast business wealth, estimated to be around $9 billion, it is highly likely that there is a comprehensive nuptial agreement in place stipulating exactly how the parties’ assets should be divided on divorce, and in which country the settlement should take place.
In 2007, before Abramovich divorced his second wife Irina, with whom he had five children in a marriage that lasted 16 years, he was widely reported to have consulted lawyers in London. However, the divorce proceedings were eventually undertaken in Russia with a settlement estimated to be around $300 million, one of the highest ever agreed. It would therefore be no surprise if the choice of jurisdiction was once again Russia rather than London.
Like many of his fellow Russian oligarchs, Abramovich is widely known to be a man who fiercely guards his privacy. In the unlikely event that his latest divorce does indeed take place in London, it will probably be settled out of court through the complete privacy afforded by arbitration, and so be far removed from any media scrutiny.
At nine years, Abramovich’s third marriage is relatively short. Critically, the bedrock of his fortune was accumulated long before his third marriage commenced. Indeed, some independent analysts estimate his wealth to have been far greater in 2008 than it is now: Forbes magazine suggested his net worth was then $23.5 billion, more than double the current estimates. There is therefore no realistic likelihood of a 50-50 split in the division of assets.
It is also worthy of note that when she first met Abramovich, Zhukova was herself independently wealthy as the daughter of a prominent Russian oil magnate, although nothing like on the same scale as her husband.
If, contrary to expectations, the matter were to be disputed in London, Mrs Abramovich’s settlement would be calculated by reference to her “needs, generously interpreted”. Needs, of course, are relative. In a case of this magnitude, excluding the needs of their two children, they revolve around three primary headings for consideration: properties and their running costs; holidays and travel; and personal expenditure (e.g. entertaining, clothing and personal security).
The lavish international lifestyle enjoyed by the Abramoviches throughout their marriage, involving multiple substantial properties, means that “needs” can easily run into many millions of pounds each year to maintain something comparable for Mrs Abramovich in the years ahead. This would come on top of the outright capital provision for properties, private jets, yachts and so forth.
Hypothetically, if Zhukova’s annual “income needs” were £5 million, when capitalised to effect a clean break for a 36-year-old woman this would require a settlement of £162 million. This figure would be in addition to the capital required for appropriate properties, private jets, yachts and whatever else she already owns independently.
Although the tone of the statement issued by the Abramoviches was remarkably amicable, especially when benchmarked against several prior divorces of comparable billionaires, the scale of the settlement is still likely to be very sizeable. But when it comes to the detail, we will almost certainly never know.
This article was originally published in WealthBriefing and can be found here, behind a paywall.