Brexit: Choice of jurisdictions could leave spouses millions better or worse off
There is a rush amongst the estranged spouses of High Net Worth individuals to file for divorce in England before the December 31 Brexit deadline, says Boodle Hatfield, the leading private wealth law firm.
Individuals, especially internationally mobile couples, are rushing to file for divorce to ensure that settlements are decided under English law. English courts have a reputation for offering generous maintenance payments and an equal split of marital assets.
An example of this could include a wealthy spouse of French origin who has lived in the UK for the last ten years with their former partner. It is likely the wealthier individual might argue for the divorce to be heard in France, which means the financially weaker spouse is likely to have a much lower pay-out compared to a settlement by the English courts.
A no deal Brexit could lead to lengthy cross-border disputes over which court should have jurisdiction over the case if the other member of the couple files for divorce in a different European jurisdiction.
Without an agreement with the EU to the contrary, if petitions are applied for after December 31, in two different jurisdictions, it’s expected the country which the petitioners have the strongest links will hear the divorce case. However, this may be difficult to determine, particularly if either party has lived in different countries and could reasonably claim to have links within multiple jurisdictions.
There is uncertainty as to whether current legislation will continue to be used in the UK once the Brexit transition period has come to an end. At present, the UK is governed by EU regulation known as Brussels II, which carries a ‘first past the post’ rule. This means in cases where divorce proceedings could take place in multiple EU states, for example if parties are of different nationalities, the country where proceedings are lodged first will have priority.
Divorce proceedings that are already underway are expected to continue under current EU regulations. However, as of January 1, there is no guarantee that EU member states will continue to recognise judgements made by UK courts.
Katie O’Callaghan, Partner at Boodle Hatfield, says: “The outcome of Brexit leaves the future of the UK’s divorce system hanging in the balance. International couples living in the UK are hastily acting now in the fear they might be locked into lengthy disputes.”
“The jurisdiction in which a divorce takes place can have an enormous impact on a settlement. The financially stronger partner could save millions by successfully avoiding the English courts.”
“If the UK is unable to make a deal with the EU, this is likely to bring a number of complications to divorce proceedings – parties are expected to face the burden of higher litigation costs.”
This article was first published in eprivateclient on 9th December 2020.