International Family Wealth: Cross-border Divorce Considerations
At Edwards Family Law, we increasingly act for clients whose lives (and whose money) do not sit neatly within one country. A spouse may hold shares in an overseas family business, a couple may own a holiday home abroad, wealth may sit within an offshore trust, or one party may have relocated for work with a view to settling permanently in a new jurisdiction. When a marriage with an international dimension breaks down, the question of where proceedings should be issued, and how any award will actually be enforced become very important.
This article will cover why cross-border divorce has become so common, how the court decides which country should deal with a case, the recognition and enforcement of orders made abroad, and how international family wealth can be protected within the context of financial remedy proceedings.
Why is this an issue?
International mobility has increased significantly in recent decades. People relocate for work or for love, or simply choose to build a life split between two or more countries. As a result, family wealth is very often no longer held in one place: it may be spread across bank accounts, pensions, property, and businesses or trust structures in multiple jurisdictions, each with its own tax regime, disclosure rules, and approach to dividing assets on divorce.
England and Wales as a jurisdiction has long had a reputation for taking a generous and needs-focused approach to financial remedies, particularly when compared with jurisdictions that apply strict matrimonial regimes or fixed formulae. So much so that it has been described as the “divorce capital of the world” as international parties have historically sought to relocate to England to be able to divorce here. This means that, where more than one country could potentially deal with a divorce, the outcome can look very different depending on where the case is heard.
For separating couples with an international dimension to their marriage, this raises a number of practical questions: which country has jurisdiction to deal with the divorce, whether it is possible or advantageous to issue proceedings elsewhere, and how any order made will be recognised and enforced against assets that may sit far outside the court’s own borders.
Jurisdiction: which country deals with the case?
Establishing jurisdiction
Before a party can ask the English court to deal with their divorce and finances, the court must first have jurisdiction to do so. This means that at least one of the parties must meet at least one of the jurisdictional criteria.
Broadly, this depends on habitual residence and domicile. A party may be able to issue proceedings in England and Wales where, for example, both parties are habitually resident here, where the respondent is habitually resident here, or where the applicant has been habitually resident for a sufficient period and is domiciled here.
Habitual residence is a question of fact rather than a fixed legal test: the court will look at where a person’s life is genuinely centred (the “centre of interests” test), taking into account matters such as where they work, where their children go to school, and the degree of integration into the social and family environment of that country. It is entirely possible for a couple to have connections to two or more countries at once, which is precisely where the difficulty arises.
Domicile can similarly be difficult to define. Broadly, a person is domiciled in a country if they consider it their permanent home and to which they intend to return.
Forum Non-Conveniens
Even where the court of England and Wales has jurisdiction to entertain proceedings, that does not necessarily mean that the proceedings should be determined here. The doctrine of forum non conveniens provides a mechanism by which the court may stay proceedings where another available forum is clearly or distinctly more appropriate for the determination of the dispute.
In applying the doctrine, the court may consider a range of connecting and practical factors. These can include the parties’ connections with the competing jurisdictions, the location of relevant evidence and witnesses, the law governing the dispute, the availability of effective relief, and the practical consequences of litigating in one jurisdiction rather than another. The inquiry is not confined to considerations of convenience: the ultimate question is where the proceedings can most suitably be tried in the interests of the parties and the ends of justice.
The starting point is therefore not whether the jurisdiction of England and Wales has some connection with the dispute, but whether there is another available forum which is more appropriate for resolving it having regards to the above factors. Where proceedings have already been served in England and Wales and a stay is sought, the defendant ordinarily bears the burden of demonstrating that there is another available forum which is clearly or distinctly more appropriate.
Financial claims in England following a foreign divorce
Sometimes a couple will have already divorced overseas, whether by necessity or choice, without the financial aspects of the marriage having been resolved to a standard the English court would recognise as fair. In certain circumstances, a party may be able to apply to the English court under Part III of the Matrimonial and Family Proceedings Act 1984 for financial relief, notwithstanding that the divorce itself took place abroad.
This is not an automatic right. The applicant must first obtain the permission of the court to bring a claim, and the court will consider factors such as the parties’ connection to England and Wales, the length of time that has passed since the foreign divorce, and whether the foreign proceedings already provided adequate financial relief. Where permission is granted, the English court has a wide discretion to make an award, although it will typically be more restrained than in a case that had been in England from the outset.
Enforcing orders across borders
Enforcing English orders abroad
Securing a favourable order in England is only half the battle if the assets in question, or the paying party, are located overseas. Enforcement mechanisms vary considerably from country to country. Some jurisdictions have reciprocal arrangements that allow an English order to be registered and enforced with relative ease. In others, there is no such mechanism, and a party may need to bring fresh proceedings in the country where the assets are held, relying on the English order as evidence of the underlying obligation rather than as something directly enforceable.
Where a significant proportion of the matrimonial assets are held abroad, it is often sensible to consider enforceability at the outset of a case, not as an afterthought once an order has already been made. This may influence how a settlement is structured, for example, by weighting an award towards assets that are readily accessible in England, or by requiring undertakings or security in relation to overseas property.
Why specialist drafting matters
It is easy to assume that a mechanism which works reliably in England will simply carry over into another country. This is often not the case, and it is one of the most common pitfalls in cross-border cases. Provisions that practitioners in England treat as routine may have no equivalent, or no binding force at all, once the order is taken abroad.
Undertakings are a good example. In England, an undertaking given to the court, for instance to maintain life insurance, to transfer a specific asset by a certain date, or not to deal with a property pending sale, is treated as a solemn promise to the court, breach of which can be enforced by way of committal. Many other jurisdictions have no direct equivalent of the undertaking as a concept, and simply reproducing the same wording in an order intended to take effect abroad may leave the recipient with nothing meaningful to enforce if it is later broken.
The same is true of other features that are taken for granted in English orders, such as automatic charges over property, pension sharing mechanisms, or orders expressed to take effect on a future contingency. Whether any of these will be recognised, and if so how, depends entirely on the law of the country in question. An order that looks watertight on paper in England and Wales can turn out to be unenforceable, or enforceable only after fresh and costly proceedings, once it needs to be relied upon overseas.
For this reason, where an order will need to bind a party, or reach an asset, outside England and Wales, it should not be drafted in isolation. It is essential to take advice from a lawyer who is experienced in cross-border matters, and, ideally, to take corresponding advice in the other jurisdiction before the order is finalised, so that any provision intended to have effect abroad is expressed in a way that is actually capable of being enforced there. A well-drafted order anticipates these gaps; a standard domestic precedent, used without adaptation, might not.
Protecting international family wealth
Trusts and offshore structures
Family wealth is often held within trusts or corporate structures, particularly where it has been accumulated across generations or where there are tax planning considerations at play. The English court has power to look behind these structures where appropriate, and assets within a trust will not automatically be treated as being beyond the reach of the parties simply because they are not held directly.
The court will consider matters such as who established the trust, how it has been administered in practice, whether distributions have historically been made to meet the family’s needs, and whether a spouse is likely to receive further benefit from it in future. Where a trust is found to be a resource that is realistically available to a party, the court may take this into account when assessing what award to make, even though the trust assets themselves may not be capable of being divided directly. If you want to learn more about trusts, you can read my article here: Offshore Trusts, Hidden Assets and Divorce: What Courts Can Do
Pre-nups and post-nups
As with purely domestic wealth, a well-drafted nuptial agreement is one of the most effective tools available to protect international family wealth. For couples with connections to more than one country, this becomes more complex, and more important, than in a domestic case.
A cross-border nuptial agreement should ideally address which country’s law is intended to govern the arrangement, and anticipate the possibility of proceedings being brought in more than one jurisdiction. It is common, and often prudent, for parties to enter into mirror agreements in each of the relevant countries, drafted so as to be consistent with one another, with independent legal advice taken in each jurisdiction. This reduces the risk of the agreement being enforceable in one country but disregarded in another.
As with any nuptial agreement, this will not automatically bind the English court, which retains an overriding duty to ensure that neither party, nor any child of the family, is left without their needs being met. However, an agreement that has been entered into freely, with full financial disclosure and independent legal advice in each relevant jurisdiction, and which is fair at the time it is sought to be enforced, is likely to be given significant weight.
At Edwards Family Law we regularly advise on, and work alongside overseas counsel to prepare, nuptial agreements designed to protect international family wealth, so do not hesitate to get in touch should you need assistance.
Frequently Asked Questions
This depends on habitual residence and domicile. More than one country may have jurisdiction at the same time, in which case it is vital to take specialist legal advice at the very outset.
It depends on the circumstances, but England and Wales is often seen as favourable to a financially weaker party because of its broad, needs-based approach to dividing assets. Whether this benefits you will depend on your individual circumstances, and specialist advice should be taken before assuming either jurisdiction is preferable.
Potentially, yes, under Part III of the Matrimonial and Family Proceedings Act 1984, provided you can show a sufficient connection to England and Wales and obtain the court’s permission to proceed. This is not automatic, and the court will consider whether the foreign proceedings already dealt with finances adequately.
This depends entirely on the country in question and whether reciprocal enforcement arrangements exist. Where they do not, a party may need to bring separate proceedings overseas to enforce the English order, which can add significant cost and delay.
The court cannot automatically treat trust assets as belonging to a spouse, but it will look at the reality of how the trust operates, including whether distributions have historically been made to support the family, in deciding what resources are realistically available.
This will depend on how the agreements were drafted and whether they were intended to work together. This is exactly the kind of situation where mirror agreements, prepared with advice from lawyers in each relevant country, are particularly valuable in avoiding later disputes about which document governs.
It may do. The court will look at the genuine centre of a party’s life, not simply the length of time spent in a country, when assessing habitual residence, although a short period of residence can still be sufficient in some circumstances.
If a foreign court is validly seized first, this could have implications for how the English court can deal with the matter, which is why acting promptly and taking early advice is so important where more than one jurisdiction may be relevant.
This will usually require expert valuation evidence, and the court will consider matters such as each party’s role in the business, how central it is to the family’s income and lifestyle, and whether a clean break can realistically be achieved without disrupting its operation.
A carefully drafted nuptial agreement, ideally supported by mirror agreements and independent legal advice in each relevant jurisdiction, remains the most reliable way to set out how international assets are to be treated if the marriage later ends.
Our experience
At Edwards Family Law, we have extensive specialist experience advising clients on the international dimensions of financial remedy proceedings, from establishing the right jurisdiction at the outset, to protecting family wealth held in trusts and structures overseas, to enforcing orders across borders. Please do not hesitate to get in touch should you have any questions arising from this article.