London - Divorce Capital of the World

By Joanne Lawrence- Hall, Associate, Family Law Department, Kerman & Co LLP

In recent years, London has acquired the reputation of being the ‘Divorce Capital of the World’. The appeal of the English legal system to foreigners seeking family law remedies has been recognised at the highest level of the judiciary. In the case of Charman v Charman [i], the President of the Family Division, Sir Mark Potter, said “Now that London is regularly described in the press as the ‘divorce capital of the world’ it is inevitable that applicants will seek to achieve London awards”.

So why has London, or rather the jurisdiction of England and Wales become such an attractive venue to those who might be expected to be looking to other jurisdictions to resolve their matrimonial disputes? The clue might appear to be in the President’s words, namely it is the prospect of a ‘London award’ which gives this jurisdiction its allure, at least to the financially weaker party. However, it is the view of the writer that there is rather more about the English family law system to make it attractive, to foreign nationals, than simply the prospect of a big payout.

One factor which makes this jurisdiction so attractive is the reputation of the English Courts and Judiciary as being, respectively, reasonably efficient and incorruptible. This gives the English Courts an advantage over many jurisdictions, particularly those outside the EU, where the wheels of justice grind exceedingly slow and the officers of the Court may be all too easily importuned. There is also the expertise of English solicitors in family law. Over the years, family law has become a highly specialist area, particularly where there are complex financial structures and/or an international dimension. London boasts a host of highly skilled and experienced practitioners, who are able to offer foreign clients the services they need and can communicate their advice in the language of the client.

Another attraction is the way that the English Courts deal with ‘divorce’ itself. When the press describes London as being the ‘Divorce Capital of the World’ it is actually referring to the financial claims on matrimonial breakdown, known as ‘ancillary relief’. These financial claims can only be determined by the Court if one or both of the parties has made an application to the Court formally to bring the marriage to an end. This can be done by way of divorce (where the marriage is legally dissolved), judicial separation (where the parties remain married but they are legally separated and the Court can regulate their financial affairs) or nullity (where the marriage is declared to have been void, in which case it never subsisted, or voidable, in which case it will be deemed no longer to subsist). Obviously, a petition for divorce is by far the most common way of bringing a marriage to an end. It is much easier to obtain a divorce in England and Wales than it is in many other jurisdictions. In the Republic of Ireland, for example, the parties must show that they have been separated for a period of at least four years before they can apply to the court. In England and Wales, under the provisions of the Matrimonial Causes Act 1973 (the ‘MCA’) [ii], there is only one ground for divorce, namely, the irretrievable breakdown of marriage. That the marriage has broken down irretrievably must be proven by one of five facts. These are as follows [iii]:-

1. The Respondent has committed adultery and the Petitioner finds it intolerable to live with the Respondent
2. The Respondent has behaved in such a way that the Petitioner cannot reasonably be expected to live with the Respondent
3. The Respondent has deserted the Petitioner for a continuous period of at least two years immediately preceding the presentation of the petition
4. The parties have lived apart for a continuous period of at least two years immediately preceding the presentation of the petition and the Respondent consents to a decree being granted
5. The parties have lived apart for a continuous period of at least five years immediately preceding the presentation of the petition

Hence, the provisions of the MCA provide a full menu of options which can satisfy almost every need. For those who need or wish to apportion blame there are three fault based facts. Whereas, for those who wish to proceed amicably, or who have no fault upon which to rely, there are two facts based on separation.  Even those whose spouses are not at fault and will not consent to a divorce can still have their marriages dissolved in England and Wales if they have been separated for five years. The procedure can be very quick, for example, if a divorce is based on the adultery or the behaviour of the Respondent and the suit is undefended, or if the petition is based on two years’ separation and consent, it is possible to obtain the final decree in as little as four months from the issue of the petition. In certain circumstances, it is possible to apply to expedite the final decree, thereby curtailing the procedure.

The English way of dealing with matters concerning children may also be a draw for some parties, particularly mothers emanating from countries with a patriarchal attitude to family life. Whereas some jurisdictions might give greater rights in respect of children to a father, rather than to a mother, in England and Wales a married couple will have equal rights, known as ‘Parental Responsibility’ in respect of their children. Where a couple are unmarried, only the mother will have Parental Responsibility, unless the father and mother jointly registered the birth (where the child was born after 1st December 2003), or there is formal agreement between the parties, which has been registered at Court, or there is a Parental Responsibility Order in force. Also, the English Courts are more likely to favour a mother when determining where and with whom a child should live (known as ‘Residence’) This is not because it is considered that mothers are better carers for children than fathers per se, but rather because the Court has a statutory checklist [iv] it has to apply when making decisions concerning children and one of the factors to be considered within that list is the likely effect on a child of any change in his or her circumstances. Therefore, if a mother has been the primary carer for a child, the English courts are highly unlikely to diverge from the status quo and award Residence of the child to the father, unless there are very compelling reasons to do so.

Where parents of a child are unmarried, the Court has the power, pursuant to section 15 the Children Act 1989, to make substantial financial awards for the benefit of that child. This includes not only maintenance payments but also capital provision, including lump sum orders and the transfer or settlement of property.

A major attraction of this jurisdiction, particularly for the financially disadvantaged party, is of course, the prospect of achieving a substantial financial award; what Sir Mark Potter called a ‘London Award’. The family Courts of England and Wales have a wide discretion to redistribute the ownership of property; force the sale of assets, including real property, shares and even companies; divide pension funds; award lifelong maintenance payments and set aside transactions designed to defeat the financial claims of the weaker party or issue injunctions to prevent such transactions form occurring. The MCA provides a list of factors which must be taken into account, the ‘statutory criteria’ [v]. The Court is obliged to consider all circumstances of every case, first consideration being given to the welfare of any dependent children of the family[vi]. This gives the Court a huge amount of flexibility, allowing it to formulate bespoke solutions to individual circumstances.

Since the case of White v White[vii], the Courts have determined awards not simply on the basis of needs (though needs, generously interpreted, will be the starting point) but by the sharing of wealth. An unequal division of assets must be justified. This is not to say that in the English Courts an applicant can expect to walk away with 50% of everything the parties owned, (indeed in the case of Charman v Charman, the wife received only 36.5% of the total assets) but he or she can be confident that the Court will take equal account of non financial contributions, such as home making, as it will of financial contributions. As well as assessing needs and applying the sharing principle, the English Courts will compensate a party who has suffered a detriment for the sake of a marriage, for example, by giving up a high flying career. Together these factors have made the English Courts amongst the most generous in the world in their treatment of financially disadvantaged parties seeking remedies against their wealthy spouses.

Added to this is the fact that unlike many EU countries, the English Courts are not obliged to uphold pre-nuptial agreements and will certainly not do so where such an agreement is inequitable. However, where an agreement has been entered into on the basis of full and frank financial disclosure on both sides, the parties have each taken independent legal advice and either the present circumstances are anticipated in the agreement or there has been no change of circumstances which would render the outcome inequitable, the likelihood is that the Courts will uphold a prenuptial agreement.

Another reason why the English divorce Courts play host to so many international couples is that the UK’s extraordinarily generous tax regime, which allows wealthy non domiciled individuals to avoid paying tax on income earned abroad, has attracted many plutocrats to these shores and especially to London. On the breakdown of a marriage, the wealthier party may realise the English Court is not the most advantageous forum, from his or her point of view and may seek to bring the matter into the ambit of an alternative jurisdiction. The treaty commonly known as Brussels II (revised) [viii] regulates on the question of jurisdictional forum in EU countries (other than Denmark, which is not a signatory). The simple rule is that the legal system of the country in which the proceedings are first issued will have jurisdiction over the matter, provided that the applicant meets the qualifications of Article 3 of the Regulations.

So, how does a non-English or Welsh party avail him or herself of the generous provisions of the English Courts? As previously stated, in order to apply to the Court for the full range of financial orders available, it is necessary that a petition for divorce, judicial separation or nullity has already been issued (although it is possible to make an application for maintenance by way of an application under s27 of the MCA ‘failure to maintain’ provisions. However, it should be noted that the residence/domicile qualifications for making such an application differ slightly for those for issuing a petition, as set out below). A Respondent to a petition may issue a claim for financial orders whether or not the Petitioner has made such a claim. To qualify to issue a petition in the English Courts one must show one of the following conditions applies [ix]:-

1. the Petitioner and the Respondent are both habitually resident in England and Wales
2. the Petitioner and the Respondent were last habitually resident in England and Wales and either the Petitioner or the Respondent still resides there
3. the Respondent is habitually resident in England and Wales
4. the Petitioner is habitually resident in England and Wales and has resided there for at least a year immediately prior to the presentation of the Petition
5. the Petitioner is domiciled and habitually resident in England and Wales and has resided there for at least six months immediately prior to the presentation of the Petition
6. the Petitioner and the Respondent are both domiciled in England and Wales

Domicile is the country, or rather legal jurisdiction, in which a person is, or presumed to be, permanently resident. Domicile may be:

1. of origin
2. of dependence
3. of choice

Since 1973, a married woman’s domicile can be determined independently and is not taken from her husband.

Habitual residence, unlike domicile, does not require a permanent intention to make a particular jurisdiction one’s home. The meaning of habitual residence was recently considered in the case of Marinos v Marinos[x]. In this case the husband was Greek and the wife English. After several years’ residence in the UK, the parties moved permanently to Greece. Seven years later the marriage broke down and the parties separated. On 31st January 2007, the wife returned to the UK and on 1st February, she issued proceedings in the English Courts. The husband subsequently issued proceedings in Greece, claiming that this was the proper forum. He challenged the English proceedings on the ground that the parties were resident in Greece, though he conceded that the wife was domiciled in England and Wales. Among other things, the Judge, Mr Justice Munby, decided that a person can acquire a new habitual residence very quickly. Although length of time clearly can be a factor it is not a conclusive factor. Nor is there any particular period set down as a minimum. In this case a mere twenty four hours was sufficient but this was on the basis that the wife was undertaking a ‘planned, purposeful and permanent’ relocation form one country to another.

Another way in which foreign nationals may avail themselves of the benefits of English family law is by making an application under Part III of the Matrimonial and Family Proceedings Act 1984. Under this legislation, a party may apply to the English Courts for financial relief in a case in which a decree of divorce has been pronounced in another jurisdiction. In fact an application can be made even if financial orders have already been made in the other jurisdiction. Though that is not to say that the Act can be used to allow a party to have a second bite of the cherry just because he or she was dissatisfied with the result of the proceedings in the foreign jurisdiction. It has been stated that parties should not be encouraged to treat the English Courts as the Court of Appeal from foreign jurisdictions. Hence, leave of the Court is required before an application under the 1984 Act may be made [xi]. The test for obtaining leave is, to be able to show that there is a substantial ground for making an application. If the Court grants leave, it can make an order for interim periodical payments for a party or a child of the family [xii]. This may provide resources for the applicant to fund the main application.

The Court will have jurisdiction to entertain an application where one of the following factors applies [xiii]:-

1. either party was domiciled in England and Wales on the date of the application for leave or was so domiciled on the date on which the divorce, annulment or legal separation obtained in the overseas country took effect on that country
2. either party was habitually resident in England and Wales throughout the period of one year ending with the date of the application for leave or was so resident throughout the period of one year ending with the date on which the divorce etc obtained in the overseas country took effect in that country
3. either party had at the date of the application for leave a beneficial interest in possession in a dwelling house situated in England and Wales which was at some time during the marriage a matrimonial home of the parties.

In deciding whether or not to make an Order for financial relief, the Court must give consideration to nine statutory criteria [xiv], namely:-

1. the connection the parties have with England and Wales
2. the connection those parties have with the country in which the marriage was dissolved
3. the connection those parties have with any country outside of England and Wales
4. any financial benefit which the applicant or a child of the family has received, or is likely to receive, in consequence of the divorce  by virtue of any agreement or the operation of law of a country outside England and Wales
5. in a case where an Order has been made in a country outside England and Wales requiring the other party to the marriage to make a payment or transfer any property for the benefit of the applicant or any child of the family, the financial relief given by the Order and the extent to which the order has been complied with or is likely to be complied with
6. the right which the applicant has, or has had, to apply for financial relief from the other party to the marriage under the law of any country outside England and Wales and if the applicant has omitted to exercise that right, the reason for the omission.
7. the availability in England and Wales of any property in respect of which an Order under this part of the act in favour of the applicant could be made
8. the extent to which any Order made under this part of the act is likely to be enforceable
9. The length of time which has elapsed since the divorce

Where the Court decides that it is appropriate to make an Order, it can make any of the Orders which could be made under the provisions of the MCA 1973. Again, the Court is obliged to have regard to all the circumstances of the case [xv], so there is a great deal of flexibility.

The recent case of Agbaje v Agbaje [xvi] highlighted the fact that this legislation can only be relied upon in limited circumstances and an award made to the wife at first instance was overturned by the Court of Appeal, notwithstanding that the Court recognised that this would lead to genuine hardship. Lord Justice Ward emphasised that compassion was not the criterion. The outcome of that case prompted some to speculate upon London losing its status as the divorce capital of the World. However, the situation may change as the case is due to be appealed to the House of Lords soon and no doubt the issue of the availability of the legislation will be reconsidered.

In conclusion, the relative ease of divorce procedure, the range of Orders available, the flexibility of the legislation, the high calibre of the judiciary and lawyers and most of all, the generosity of the English Courts to the weaker financial party have made London the jurisdiction of choice for applicants of all nationalities and with all manner of issues to be determined.