Almost half of US marriages end in divorce, while around 42% of couples in the UK will go their separate ways.
Each country and territory has its own laws, which means that the international fallout risks making a painful process even more difficult.
In this article, Polly Carver and Rosie Schumm from law firm Forsters highlight the three key questions trusted advisers should bear in mind.
Which countries will recognise my client’s divorce?
While lawyers in England and Wales treat the divorce as separate to the financial remedies which may be available to the parties, a precursor to the courts being able to seal an order (by consent or otherwise) for a financial settlement is that there must be a recognised divorce in train.
When clients have connections in multiple jurisdictions, they may start a divorce in one country before approaching advisers in another.
Be aware that the courts in England and Wales will only recognise an overseas divorce that is valid according to the laws of the jurisdiction in which it took place, together with applying tests based on domicile and habitual residence, depending on whether or not the divorce was “obtained by means of proceedings”.
A network of international contacts can be invaluable for the purposes of connecting clients with local legal advice to establish the validity of documents and ceremonies already executed for the purposes of divorce.
Of course, the same holds true for marriages—a surprising number of people discover only when they wish to divorce that they were never legally married, or that they are still legally married to a previous spouse.
Which jurisdiction will deal with the financial arrangements?
The court which eventually determines a financial settlement could be of major significance to the outcome.
England and Wales is known for being the ‘divorce capital of the world’ for its generous approach to sharing matrimonial assets in the exercise of its broad discretion to achieve fairness between the parties.
Other jurisdictions regularly take a more formulaic approach.
In some cases, courts in multiple countries simultaneously recognise themselves as having jurisdiction to deal with the case, often based on tests of (as in England and Wales) habitual residence and domicile.
In these circumstances, jurisdiction falls to be determined by international principles, including—within the EU—a ‘first in time’ rule.
This can leave spouses in the unfortunate position of there being a “jurisdiction race”, where they require fast advice and support in order to:
- a) make a decision about the value of securing their preferred jurisdiction;
- b) understand if they have a sufficient connection for that country to hear the case; and
- c) comply with the procedural requirements to start a process in that country, such as valid service of documents and obtaining notarised and translated marriage certificates.
Will my client have to disclose offshore assets?
In English courts, the parties are under a duty to provide “full and frank disclosure” of all their worldwide assets; including all bank accounts, pension assets, land (wherever situated), and interests in trusts.
These assets can then be taken into account when determining a financial settlement.
In terms of trusts, while some interests held in trust are not treated as part of the matrimonial pot, interests will still need to be disclosed, as if a spouse has been regularly drawing on trust resources, the courts may expect that this will continue.
Trusts can also be treated as ‘nuptial settlements’ in some circumstances.
The court has broad powers to order disclosure of specific documents, and ultimately make inferences about the wealth of any non-disclosing party.
If there is a real risk that a party is about to make dispositions (such as sending assets offshore or into trust) for the purposes of defeating claims for financial remedy on divorce, the court may make orders preventing those dispositions including, in extreme cases, worldwide freezing orders. English courts are well used to parties attempting to avoid their gaze.
That being said, an English court order is only as powerful as its ability to be enforced.
A ‘mirror’ order from a local court may be required to access, for example, overseas pensions, or an enforcement action in a local court may be required.
Some jurisdictions are more likely than others to give an English court order weight. Local laws about disclosure may also conflict.
Ultimately, the location of the assets may make a difference to the decision as to the jurisdiction in which one would choose to pursue or defend a claim for financial remedy on divorce.
Again, an international network of advisers can be invaluable in order for local advice to be sought at an early stage and a sensible plan made for an agreement to be negotiated amicably and efficiently.
This article was written for International Adviser by Polly Carver, trainee solicitor, and Rosie Schumm, partner, in the family team at Forsters.
