Over the last decade or so London has established itself as the ‘divorce capital’ of the world.
A few key words on an internet search returns numerous examples of international couples embroiled in protracted litigation here. There can be no doubt that this has in part been because this jurisdiction is seen as giving more generous settlements to the financially weaker party, particularly on maintenance. But is the tide starting to turn? Will London’s reputation continue to grow, or will it become less attractive to bring proceedings here? There are a few recent developments and themes that may suggest so.
Part III claims – the possible impact of Potanina v Potanin [2024] UKSC 3
Although of course it must be acknowledged that we only see the cases where the applicant is successful, and we do not know how many attempted claims fail, the perception is that this jurisdiction is ready and willing to provide Part III relief.
The system has perhaps favoured the applicant who must make their application without notice to obtain leave, thus setting the wheels of litigation in motion before the respondent has a chance to engage. It is certainly not suggested that the Part III provisions, or indeed the principles in Agbaje v Agbaje [2010] UKSC 13, are not being rigorously applied, but the judgment in Potanina provides some important clarity on procedure that will favour respondents to Part III claims.
The Supreme Court judgement has made it clear that Judges should be thorough before granting permission, and that on set-aside applications the burden remains on the applicant. There should be a full review of the grounds given for permission in light of evidence from the applicant and the respondent, and the respondent no longer needs to demonstrate a ‘knockout blow’. It also suggests that before granting permission, Judges should hear from both parties, rather than just dealing with matters on an ex-parte basis.
This shift would suggest a higher level of risk for applicants, and therefore a reduction in the number of claims. That may well be proven true, but the Potanina case continues and, given the often huge monetary benefit of bringing a claim, this may not in reality deter many.
A review of financial provision on divorce
The law that governs the division of finances on divorce is now 50 years old, and many would argue it needs to be updated to reflect the views of modern society. In April 2023 the Law Commission announced a project to undertake a review, starting with a scoping report which is due in September 2024. As with any such projects we cannot expect any changes to be implemented for many years to come, if indeed any real changes are made. It is however likely that an area of real focus for the Law Commission will be maintenance provision, particularly given the contrast in the approach of this jurisdiction with most others and a general hardening on maintenance in case law. No doubt international practitioners will be keeping a watchful eye on the early indications from the Law Commission, and if maintenance provision is likely to see radical changes, this could lessen London’s litigation appeal.
Transparency
Many of the cases dealt with under Part III involve large sums of money, and personalities to match. These individuals are high profile, often politically and commercially. Some may argue that the media exposure that seems inevitable is ‘good for the brand’, but that may not always be the case. With greater transparency of proceedings, both applicants and respondents will need to consider the possible impact of airing their laundry in this jurisdiction. Where they will inevitably have connections to other jurisdictions, and frequently corporate interests, there could be a negative domino effect.
Enforcement
Adding a few additional words to our earlier internet search reveals as many examples of ex-spouses chasing down assets around the world in the hope that they can satisfy Court orders made here. It can be difficult at the outset of some cases to be fully satisfied as to the sum of assets, where and how these are held, and indeed if they can be made available in a settlement. With Part III claims it is likely there will have been some disclosure in the jurisdiction of the divorce, but circumstances may have changed. Cases of this nature often involve complex company and trust structures as well as beneficial interests in assets, just as in Potanina, further complicating matters.
Work on applications under Part III has always been ‘front-loaded’, but with heavier burdens now being placed on applicants this will only increase. It is therefore essential that assets are identified at the outset that can satisfy the extent of the claim that is being made, and indeed legal fees. Family lawyers must therefore be wary before issuing, and focussed advice is a must. In reality this is not a new issue, but given the heightened scrutiny on applicants at the early stages of a claim it may become a more important consideration.
So, what now?
The Potanina decision has been long awaited, and the general response from family practitioners is that it gives welcome clarity and guidance. The reinforcement of the need to robustly test the grounds for permission to bring a claim under Part III has also been well received.
From the perspective of super-rich applicants, where the possible rewards are significant, it is unlikely they will be deterred from litigating here. However, for those with more modest assets real thought will need to be given.
Whilst these cases will no doubt continue to fill our daily news feeds, some renewed caution is advised. On balance London’s position as the ‘divorce capital’ of the world seems safe for now.
Written by Sean Hilton, Managing Associate at Stevens & Bolton
