Supreme Court ruling is ‘long overdue’ on overseas divorces

Yesterday’s Supreme Court judgment on applications for financial relief in Potanina v Potanin, following an overseas divorce has been described as ‘long overdue’ by Baroness Shackleton, who represented Potanin and ‘a warning that an application in this jurisdiction is not necessarily a meal ticket’ by Katie McCann.

The case concerned whether the court should have granted the wife permission to apply for financial relief pursuant to Part III of the Matrimonial and Family Proceedings Act 1984. 

The majority judgment in Potanina v Potanin found the practice in dealing with application for leave under Part III of the Matrimonial and Family Proceedings Act 1984 flouted the essential requirement of procedural fairness.

Baroness Shackleton, who represented Potanin, said:

“I am delighted, and grateful to the Supreme Court for its careful analysis of how this troubling practice had developed in family law and for putting it right. The judge at first instance wished to change his mind having heard from both parties and I am pleased that he has been vindicated for doing so. Divorce tourists will now have their claims subject to fair and robust scrutiny before being granted leave in this jurisdiction. It is long overdue.”

It comes as no surprise that lots of family lawyers and legal professionals have been sharing their thoughts following the Supreme Court judgment.

Richard Kerhsaw, Partner in the Family department at Hunters Law, commented: 

“The 10 year long snakes and ladders game being played by Natalia Potanina and her former husband Vladimir Potanin looks set to continue. Whilst the Supreme Court, in what it described as a “dystopian situation” overturned a Court of Appeal decision which had allowed Natalia to continue with her claim in London, it has sent two of her grounds of appeal back to the Court of Appeal for further consideration.

This decision is a reminder of the complexity of such claims (known as Part III claims) and will do nothing to discourage so-called “divorce tourism” which allows typically UHNW litigants to bring financial claims in England following a divorce in other countries.

Emily Brand, Head of Family at Boodle Hatfield, comments:

 “The Supreme Court’s decision to allow the husband’s appeal leaves the door open for yet more litigation for these warring spouses, who have already been fighting each other in courts across the globe for a decade.

The Court of Appeal will now have to consider the issue afresh as to whether the wife’s application for an increase in her Russian divorce settlement can be entertained in this jurisdiction – and so the battle continues.”

Sean Hilton, Managing Associate at Stevens & Bolton, shared similar sentiment to many of the others, in that this long awaited decision has significant implications on those seeking to bring proceedings in England and Wales, if they have already been divorced elsewhere. He said:

“Today’s long-awaited decision has significant implications on those seeking to bring divorce proceedings in England and Wales having already been divorced in another country. The key question for the Supreme Court has been whether, with permission having been given to bring proceedings here, the burden is on the respondent in seeking to overturn that decision. Or, as perhaps seems a more logical approach, the Court should consider the issue afresh with evidence from both parties. The Supreme Court have decided the latter, noting that the respondent does not need to demonstrate a ‘knockout blow’. For several years now London has been given the tag line of ‘divorce capital of the world’ – time will tell on whether today’s decision will impact on London’s position within the international divorce market.”

Peter Burgess, partner at Burgess Mee Family Law, highlighted the fact that this ‘narrowed the window for divorce tourists’ after almost 10 years of litigation in a country they had no connection to, until after their divorce in Russia. He added:

“Mr Potanin’s successful appeal to the Supreme Court brings an end to almost 10 years of litigation between billionaire Russians who had no connection to this country until after their divorce in Russia.

In its long-awaited judgment, the Supreme Court has narrowed the window for divorce tourists by allowing their spouse the chance to be heard at an early stage and for the court to look at the application afresh without the need for a knockout blow or compelling reason.

The Supreme Court considered the right of both parties to be heard as a matter of procedural fairness which has been overlooked until now.  It remains possible to apply to the English courts for a ‘second bite of the financial cherry’ but this can now be challenged at a much earlier stage.”

Katie McCann, Managing Partner of Lowry Legal, reminded those reading that the wife’s claim has not been dismissed, but the decision was a common sense one, and goes one step closer to London losing the label of ‘divorce capital of the world’. She further commented:

“Part III of the Matrimonial and Family Proceedings Act 1984 has always been a controversial tool. It basically means that even though a divorce and all the financial implications of the same have been dealt with in another country, if one of the parties can satisfy certain criteria then the court can then effectively reopen the matrimonial finances in our courts. The main purpose of this legislation though is to alleviate hardship in cases of foreign divorce.

While the wife’s claim has not been dismissed, today’s decision is a common sense one and takes us one step closer towards shedding the label of London being the divorce capital of the world.

Such a decision will act as a warning to parties with significant wealth that an application in this jurisdiction is not necessarily a meal ticket!”

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