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Hot topics in proceedings for financial provision after a foreign divorce (Part III)

Date: 21/09/2020 Type: Articles Topic: HNW Divorce | Finances | Modern Family | Author: Michael Allum

Proceedings for financial claims after a divorce has already taken place in another country (known in England and Wales as Part III applications) are politically, legally, and culturally sensitive.  These applications enable a court in one country to determine whether a financial outcome made in another country is fair and adequate and if not, additional financial relief can be secured. This can sometimes lead to very large financial settlements.  This talk deals with the most relevant cases in the last 12 months and discusses some current thorny issues including the difficulty in sharing English pensions after a foreign divorce post 31 December 2020.    

One of the most significant recent Part III cases is the matter of Potanin.  This case involved estimated wealth of $20 billion of which the former wife had already received between $41.5 million and $84 million in Russia.  In January 2019 Mr Justice Cohen granted the former wife (who was represented by specialist family law solicitors and counsel) leave to bring her Part III application.  However, at the next hearing in November 2019 Cohen J held that the leave had been given based on three grounds of misrepresentation including misrepresentation as to the law which should be applied.  This resulted in the grant of leave being set aside with the judge holding as follows (para 59):

“I am in no doubt that if I had had the full picture before me on 25th January 2019, I would not have granted W leave to make her application.  I am further satisfied therefore that the grant of leave was given as a result of material misleading of the court, however unintentional that might have been.” 

It is understood this decision is being appealed with the appeal hearing scheduled to take place in early 2021.  Given the scale of the wealth involved it has the potential to be one of the largest ever Part III settlements if allowed to proceed. 

Another late 2019 decision of MHW v GSH highlighted the inability to bring a Part III claims after a divorce in a country within the British Isles such as Jersey.  In that case the former wife had been given permission by Mr Justice Cobb to apply for a pension sharing order under Part III following a divorce in Jersey (where pension sharing orders are not available).  However the former husband responded by successfully applying to set aside that leave on the basis Part III is only available following a divorce from an ‘overseas country’ which is defined as meaning a country outside the British Islands and did not, therefore, include Jersey which is a British Island. 

In addition to covering recent case law this talk will also discuss the difficulties facing those divorcing abroad but wanting to share an English pension will face from 1 January 2021 onwards.  At the moment it is possible to use the residual power in the EU Maintenance Regulation to make needs-based orders, pension sharing, on an exceptional basis provided the courts of no other EU Member State have jurisdiction.  However, from 1 January 2021 this basis of jurisdiction will no longer be available so couples with an English pension, living and domiciled abroad will be unable to obtain a pension sharing order.

 

Michael Allum

The International Family Law Group LLP

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