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Divorce in England - the implications for internationally mobile families

Posted on 24 May 2018 by Miles Geffin

Divorce in England - the implications for internationally mobile families

Whilst the debate around no fault divorce in England is interesting from a domestic perspective, a rather more important question is whether our matrimonial finance laws may be making London a less attractive destination for the world's super rich.

There has been a lot of noise in the English broadsheets and legal press recently about the introduction of "no fault" divorce into English law. The hook has been the case of Mr and Mrs Owens.  Mr Owens has opposed his wife’s request to dissolve their 40-year marriage, denying her claims that his behaviour during their marriage was such that she could not be expected to live with him.

Having been denied a divorce by the family judge, Mrs Owens appealed to the Court of Appeal.  When that was refused, she appealed to the UK Supreme Court which has recently heard arguments about whether Mrs Owens, who is 67, should be able to have a divorce from her 79 year old husband.

Although the case is about the interpretation of English divorce legislation, and the UK Supreme Court has no constitutional power to create a new law of "no fault" divorce, much of the legal and popular commentary has been about the desirability of introducing new laws enabling divorce on demand whereby one spouse can obtain a quick divorce without having to allege adultery or detail the other spouse's behaviour.

Whatever the outcome of Mrs Owens' case or any moves by the UK Parliament to introduce "no fault" divorce, the current debate rather misses the point; particularly from the perspective of the internationally mobile who have made a home in London.  For those individuals, and their domestic and international advisors, the real issue is the breadth of the power of the English courts to make primary or secondary financial awards following a domestic or overseas divorce.

Although there are over 100,000 divorces in England each year, only about 2,500 fully contested trials to decide the financial implications of divorce take place annually; the vast majority of those cases involve wealthy non-nationals who have made a home in this country. Many of the individuals involved find it surprising that the English legal system has no concept of applicable law:  English courts only ever apply English law, irrespective of the domicile, nationality or foreign connection of the parties to the litigation. Many other countries, particularly civilian jurisdictions, will apply foreign law where it would be appropriate to do so having regard to the nationality of the litigants.

The implications of this for international families can be stark, and expensive.

In Akhmedova v Akhmedov the English court awarded £453 million to the wife.  The award comprised 41.5% of the total marital assets. Although judgment was given on 15 December 2016, for much of the intervening period the English court has made a number of increasingly draconian orders intended to assist the wife to enforce her award overseas.  So far, it seems, those orders have yet to bear fruit against the husband.

In Estrada v Al-Juffali, following an overseas divorce, the husband unsuccessfully argued that he was immune from a financial order being made against him in England on the basis of his diplomatic immunity.  The wife's claims were ultimately assessed on the basis of what she needed by way of accommodation and a capital sum sufficient to meet her annual expenditure.  The court awarded her £53 million to supplement £20 million of the wife's own assets.  Sadly, the husband died before the wife's award was paid, and she has been left having to pursue his estate for satisfaction.

In both cases, the English court's award was substantially greater than either husband could have expected their wives to receive from the courts of their respective countries of origin. In neither case has the outcome been particularly satisfactory. Whilst the English court has shown itself prepared to make very substantial awards, satisfaction is fundamentally dependent on the ability of the recipient to successfully enforce those awards in overseas jurisdictions. 

The world's super-rich have long been comfortable in England, whether as resident non domiciles or investors in super prime real estate. Forbes currently ranks London the world's pre-eminent city, which, with New York, is said to hold a "hegemony" over the rest of the world.  If this is to continue, a more nuanced approach to international matrimonial finance cases is necessary so as to rein back the awards made by the English family courts.  Until then, the responsibility lies with domestic and international advisors to ensure that internationally mobile families who wish to make a home in England understand the risks of exposure to our matrimonial laws.

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