Under Part III of the Matrimonial and Family Proceedings Act 1984 (MFPA), a spouse may apply to the English court for financial relief following a foreign divorce. This provision is not without controversy, as it arguably allows a spouse, dissatisfied with the outcome in another country to have a "second bite at the cherry".
However, there are safeguards to ensure that the court's power to make financial orders after a foreign divorce is not misused. Before an application can be made, the applicant must apply for leave (permission) under s.13 of the Act. To be granted leave, the applicant must show both that the English court has jurisdiction and that there is a substantial, or "solid", ground for the application. Whether a solid ground exists is determined by reference to all the circumstances of the case, with particular regard to factors set out in s.16 of the Act. These include the parties' connection to this and any other country, the financial benefit they would receive, or any order already made in another country and the extent to which any such order is likely to be enforceable.
Mr Potanin and Mrs Potanina were married for over 20 years. Mr Potanin's fortune is said to be in the region of US$20 billion, but Mrs Potanina argued that, during divorce proceedings in Russia, assets in which Mr Potanin held only a beneficial (rather than a legal) interest such as those held in trusts and corporate vehicles were not taken into account. As a result, Mrs Potanina received a "tiny" fraction of what she might have done had the case proceeded in a jurisdiction (such as England) where the court takes into account beneficially held assets, including corporate and trust interests, when assessing financial resources.
Mrs Potanina applied for leave under s.13. At that time, such applications were typically determined without notice to the other party, so leave was granted without Mr Potanin having an opportunity to object. Leave was subsequently set aside by the same Judge after hearing from both parties. The matter ended up before the Supreme Court, which considered that the procedure followed (by which Mr Potanin could only set aside the leave granted to Mrs Potanina if he could demonstrate a compelling reason, or "knock out blow" for the court to do so), was unfair. However, the question as to whether leave should have been granted or not was returned to the Court of Appeal for determination.
Decision
The Court of Appeal clarified the threshold test for leave, namely whether an applicant for leave has "solid" ground for making the application. The test, compared by the Supreme Court to a "reverse summary judgment" test in civil proceedings, was a lower bar than previously understood to be the case, namely having to prove that the applicant had more than a "good arguable case". Furthermore, when considering the parties' connection to this jurisdiction, there is no requirement for an applicant to demonstrate a "substantial" connection before being granted leave. While there is no requirement to show that, without an order from the English court, the applicant would suffer hardship or injustice, the presence of those factors may be relevant. The court should adopt a flexible approach to applications under Part III.
On the facts, the Court of Appeal considered that Mrs Potanina had satisfied the jurisdiction requirement (having been habitually resident in England for more than a year before her application) and considering all the circumstances – including the fact that, in a case involving wealth of this nature, the order of the Russian court might be considered to be insufficient to meet her needs, leave should be granted for her to bring a financial application.
James Rees says:
"When the Supreme Court considered this case, it clarified that the test to set aside a grant of leave under s.13 should be less onerous than previously thought. While the decision upheld the importance of both parties having the opportunity to be heard before leave is granted, there was some concern amongst practitioners that this might lead to an increase in parties litigating over leave, significantly increasing costs and placing pressure on the financially weaker party. "
"The Court of Appeal's decision, in confirming that the bar for leave to be granted is relatively low, provides support to the proposition that the leave requirement is designed to filter out wholly unmeritorious claims, rather than being an opportunity for a "dry run" of matters better resolved at a substantive hearing, when the court has the opportunity to hear full evidence from the parties. It is hoped that this decision will help those involved in applications for leave under s.13 to take a pragmatic approach to arguments regarding the degree to which the applicant has connections to this jurisdiction. "