Partner Article

The Financial Cost of International Divorce – Key Questions Answered

By Andrew Fox, barrister

Increasing global mobility, which has broken down cultural and geographical barriers, has also led to an increase in the number of international family law and divorce disputes.

People move across international borders with great ease – whether for work or to follow a new relationship.

Even if a couple does not live abroad, one of them may have been born overseas. In 2013 more than a quarter of births (26.5%) in England and Wales were to mothers born outside the UK. Record numbers of UK citizens also own second homes - often abroad.

If a marriage with international dimensions breaks down the fallout can be complicated - and potentially expensive.

Here are some of the most commonly asked questions about international divorce, particularly in relation to finance and assets.

Where should I divorce – are there financial advantages to proceedings being heard in the UK or abroad?

Divorce legislation can vary hugely from country to country. We see a lot of big money cases in London because people believe that English courts are more generous when it comes to dividing assets and awarding spousal maintenance.

As divorce laws can differ widely across different jurisdictions, it is not unusual for spouses to ‘shop’ around for the jurisdiction that seems to them to offer the most financially advantageous divorce settlement. This can lead to a rush between the divorcing parties to be ‘first past the post’ in issuing divorce and financial proceedings since, as a general rule, the proceedings raised first will take precedence.

What are the challenges of dealing with financial assets in an international divorce case?

In ‘big money’ divorce cases there could be complicated offshore trust structures established in places such as Jersey or Bermuda. The challenge is to find out about these funds, how much is in the trust and if a client can access the money.

It is expected that there will be full and frank disclosure between the divorcing parties about such matters but, more often than not, the trust can be shrouded in a ‘cloak of secrecy’ as the funds are often in the hands of third party offshore trustees. A process exists where an English court can send a ‘letter of request’ to ask a foreign court to look into an offshore trust, although this process can be lengthy and costly.

In a case involving assets held overseas, English courts can make orders regarding the enforcement of financial orders as there are reciprocal arrangements in place in a number of foreign jurisdictions. However, this is not always the case.

In an international divorce case is there more chance that one party will try to hide assets?

Some high profile international cases do seem to suggest that wealthy high flyers are more likely to try to squirrel away assets. However, in divorce cases across the spectrum we see people who try to ‘hide’ something.

At one end of the scale, the multi-millionaire will have a team of advisers to put in place a complex financial structure (more often than not such a structure is initially put in place for tax reasons and not because of an impending divorce). A business owner may undervalue the worth of his or her business, while couples of more modest means might argue over the value of a painting, car or piece of furniture.

Is it worth spending money to chase maintenance payments and financial assets in an international divorce case?

In theory you can secure English financial orders overseas but in some countries this can prove incredibly difficult and the order will be largely worthless. You may have to be pragmatic and simply look to what is immediately available because you will need deep pockets to chase financial matters through a foreign court.

If you are faced with a situation where a spouse is in a foreign jurisdiction where reciprocal enforcement arrangements do not apply, then your only hope might be to bide your time and wait for the spouse to come back into the jurisdiction (where proceedings were started).At this point you could, in extreme cases, seek a court order to take away their passport until they have complied with the order made against them.

International divorce cases require very specialist family law advice. In some instances clients will also need additional advice from accountants or financial advisers.

This was posted in Bdaily's Members' News section by Jones Myers LLP .