China’s High Court Weighs In on Sham Divorces

China's Supreme People's Court has issued a draft judicial interpretation to clarify family law matters, including sham divorces and property disputes among unmarried cohabiting couples. The draft, released on April 7 and open for public comment until April 30, aims to guide lower courts in applying the Civil Code [para. 1][para. 2].

The document addresses the issue of sham divorces, which have been used by couples not genuinely intending to separate but to circumvent legal and financial restrictions. Historically, during China's real estate boom, couples would divorce to bypass limits on purchasing additional properties or to avoid higher down payments required from existing homeowners. Additionally, some used these fake divorces to transfer assets cheaply or freely between spouses, shielding them from creditors [para. 3][para. 4][para. 5].

The new guidelines suggest that courts should deny requests to nullify such divorces if initiated under false pretenses. They also empower creditors with evidence of deceitful asset transfers during these divorces to request court intervention [para. 4][para. 5]. Furthermore, if one spouse retains assets obtained through a sham divorce and refuses to annul the arrangement, courts are advised to support the other spouse in invalidating the divorce agreement [para. 6].

For unmarried couples who split up after living together, the draft interpretation covers disputes over jointly acquired property or investments. It recommends that judgments favor women or those caring for minors while considering each party's contribution level. Courts may also intervene in compensating individuals for contributions like childcare or business assistance if the couple cannot agree independently [para. 7][para. 8].

Additionally, the interpretation touches on inheritance issues within marriages, advising generally against supporting claims by one spouse preventing another from renouncing their inheritance rights unless it affects their ability to meet other legal obligations [para. 9].

Economic assistance provisions are detailed further for parties facing financial hardship post-divorce. Courts might allow an economically disadvantaged ex-spouse to live rent-free or pay nominal rent at their former partner’s home for a period deemed appropriate by the court. This measure is seen as part of increasing judicial focus on protecting vulnerable groups such as divorced women with custody responsibilities [para. 10][para. 11].

Overall, this draft interpretation by China’s top court reflects an effort to refine legal approaches towards modern family dynamics and economic behaviors influenced by regulatory environments [para. 1]-[para. 11].