All the legislative changes and, of course, Brexit have affected the status of London as the "divorce capital of the world", but will these forces derail this business? The author of this report doesn't think so.

We carry a number of articles from lawyers and others about divorce cases as they affect high net worth couples. COVID-19, the UK departure from the European Union and other legal changes create a web of forces affecting how divorce cases play out for couples with cross-border interests. 

To address these issues is Emma Morris, managing associate, family and matrimonial, divorce and relationship breakdown team at Ince. 

The editors are pleased to share these views, and the usual editorial disclaimers apply. To join the conversation, email tom.burroughes@wealthbriefing.com and jackie.bennion@clearviewpublishing.com.

Coronavirus lockdown did not stop the march of the larger money divorce cases being heard in England and Wales over the last 12 months. The question put to me to consider was, will this continue? Whilst I don’t possess a crystal ball I think the answer lies in three areas;

Brexit and jurisdiction changes
There has been some commentary suggesting that Brexit will reduce the flood of these cases but certainly the cases referenced below would not have been affected. Whilst there is no official data on the domicile of divorcing couples, a cursory glance at the bigger money cases does seem to highlight that the majority of those that are not homegrown emanate from outside of the European Union.  

To be able to issue habitual residence in England and Wales, domicile or connection needs to be determined. Arguably “connection” for wealthy international families is easy to achieve with homes in England and Wales, education for a child perhaps happening here or an established business making significant connection easy to prove.

Brexit and the move away from the European Regulations previously used to determine jurisdiction races are now in the past and have been replaced with the Domicile and Matrimonial Proceedings Act. This also allows the issue of petition based on only one party’s domicile in England and Wales which may widen the net for possible petitioners.

Jurisdiction shopping is not new, often one spouse would prefer this jurisdiction over their home country in the knowledge that it will provide an arguably fairer outcome. That said, when someone is determined to thwart an order, as was allegedly the case in the divorce of Tatiana Akhmedova, enforcement proceedings are necessary and can often be lengthy. Mrs Akhmedova had been awarded £453 million ($627.8 million) back in 2016 but had received little or none of her award in the following years. It was alleged by her that her son, Tema, had assisted her spouse in placing assets beyond her control which resulted with her son being ordered to pay £75 million to his mother in April 2021.  

This year has also seen several larger money cases that have emanated elsewhere but are having, some would say, a second bite of the cherry in England and Wales. Natalia Potanina divorced her husband Vladimir Potanina, said to be Russia’s second richest oligarch, in 2013. She was awarded £30 million but Mrs Potanina argued that she was not given a fair share of the marital wealth because of her husband’s influence in Russia. The Court of Appeal ruled on 13 May 2021 that Natalia Potanina is able to bring a financial claim against her former husband in England as “arguably the sum she received originally would nowhere near meet her long-term needs when considered by reference to the lifestyle to which she had long been accustomed.” This hearing will obviously happen in the future and it is reported that Mrs Potania is seeking £5 billion from her former husband who, according to Forbes magazine, is worth more than £21.375 billion. There is no reason to think these types of cases will stop coming to this jurisdiction.

Divorce law changes
The long awaited no-fault divorce which is due to be available in April 2022 will make matters simpler still for those wishing to divorce in this jurisdiction. Ancillary relief with an emphasis on full and frank disclosure and an outcome aimed at fairness within our system is obviously appealing, as is the court’s objective to consider each case on a case-by-case basis. Both spouses have equal standing in the eyes of the court and the breadwinner, save for truly exceptional circumstances, should not expect a significantly higher pay out than the homemaker caring for the children. That differentiates the system here from a great many others where outcomes are more rigid.

Those trying to escape the jurisdiction of the English courts such as Saudi billionaire, Walid Juffali, have not succeeded. Mr Juffali had allegedly tried to avoid the proceedings through the assertion of diplomatic immunity but that failed and his wife received a significant pay out.

So what will stem the flow of these divorces in our courts?  

There has been a move away from lifelong periodical orders in recent years, but for the truly high net worth cases this will have little impact as the capital split is so significant as to render this change less important.

Pre-nuptial agreements
Arguably the one thing that may have some effect is the treatment of pre-nuptial agreements. Historically, they were something that were thrown into the mix of considerations which the Judge would weigh up upon divorce, but since 2010 the emphasis is that they should be upheld on the proviso that the outcome would be fair and provide for minor children. Fair does not equate to what one could have achieved at the end of litigation if no such pre-nuptial agreement existed. The landmark case (2010) of Radmacher - v - Granatino did change everything when the Supreme Court decided that the Court of Appeal was correct to hold the parties to the terms of their pre-nuptial agreement and that led to the 2014 Law Commission’s recommendations.  

So in conclusion, I do not think Brexit or the jurisdictional changes will stem the flow of these large money cases in this jurisdiction. The courts here and our system are considered fair and outcomes rigorously argued and considered and dealt with on a case-by-case basis. A pre-nuptial agreement that is significantly unfair or does not provide sufficiently for a child will not be fully upheld so will not deter those who wish to pursue litigation here with such an agreement in tow. 

Perhaps the only thing that might change is the existence of a properly drafted pre- or post-nuptial agreement that is fair and provides sufficiently for those it is required to provide for. However, those divorcing couples post Radmacher were probably not destined to end up in court in any jurisdiction.

Author: 

Emma Morris is managing associate, family and matrimonial, divorce and relationship breakdown team, Ince. Morris specialises in high net worth divorce cases often involving multi jurisdictions together with private children matters and pre-nuptial agreement advice.