A recent Court of Appeal decision has been said to cement London’s position as the ‘Divorce Capital of the World’.
In this post we will look at that decision and consider briefly whether London can indeed be accurately described as the ‘Divorce Capital of the World’.
But first we need to examine what is meant by this description.
Dubious reputation
It is not known who first described London as the world’s divorce centre, but according to Mr Justice Cobb the city first acquired “this dubious reputation”, as he called it, in the mid-noughties. The simple idea behind the label is that when considering financial settlements, the divorce courts of England and Wales are believed to be considerably more generous towards the weaker spouse, usually the wife, than courts in other jurisdictions.
As a result of this reputation, it is argued that London has become the forum of choice for foreign wives in high-net worth international divorces, who believe that they will be awarded a significantly larger settlement here.
Since the label was first coined it has often been repeated in the media, no doubt catching the attention of foreign divorcées (or divorcées to be). And indeed, over the ensuing years we have seen a steady flow of foreign wives seeking the assistance of our courts, of which the wife in the recent Court of Appeal case is just one of the latest.
The label has also often been repeated by London lawyers, inevitably leading to criticisms that they are promoting it as a means to attract lucrative business, an attitude famously encapsulated by the then Mayor of London in 2012, when he stated: “I have no shame in saying to the injured spouses of the world’s billionaires, if you want to take him to the cleaners, darling, take him to the cleaners in London. Because London cleaners will be grateful for your business.”
Moving swiftly on, what, then, did the Court of Appeal decide?
Real and meaningful connection
The decision was the latest in the long-running case Potanina v Potanin, in which the former wife of a Russian oligarch is seeking a financial award from our courts, following her divorce in Russia. Such a claim can be made if the claimant can demonstrate a sufficient connection with this country.
The Russian court had made an award in favour of the wife, but in doing so it had only taken into account assets that were legally owned by one or both of the parties.
The wife claims that most of the husband’s vast wealth was held by various trusts and companies, and that as a result she received less than 1% of the marital assets, and had been denied an award of approximately $6 billion.
The wife therefore turned to the courts in London for redress, and proceedings have been going on here since 2018.
The Court of Appeal decision followed an earlier decision of the court below denying the wife permission to make an application here, as she had failed to demonstrate the necessary connection with this country. The wife appealed, and the Court of Appeal found in her favour – the wife did have a “real and meaningful” connection with this country, owning property here and being based here since 2016.
Accordingly, the wife is now free to proceed with her claim which, if successful, could surely involve one of the largest settlements ever awarded by our courts.
A bonanza for wives?
The idea that London is the go-to destination for foreign wives of rich husbands is based upon what Mr Justice Cobb called this “unattractive notion that the English family judges bend over backwards to offer some kind of bonanza for wives – deserving or undeserving.”
But whilst our courts may well be more generous than those in Russia, is it really the case that the courts here are more generous than the courts anywhere else?
Of course, a full answer to that would require a detailed knowledge of the law of all other jurisdictions – something that few, if any, people possess.
It is however possible to put forward arguments on both sides. On the one hand, for example, the wide discretion allowed our courts could certainly result in a more generous award than the ‘community of property’ regimes favoured elsewhere, in which assets acquired during marriage are considered to be joint property.
On the other hand, since the momentous decision of the House of Lords in White v White back in 2000 we have effectively had something similar, whereby as a general guide, an equal division of assets between husband and wife should be departed from only if, and to the extent that, there is good reason for doing so.
But the question of whether London (or indeed anywhere else) can accurately be described as the divorce capital of the world does not rely solely upon whether or not our courts are more generous. We must not of course forget the problem that Mrs Potantina faced: merely being attracted by our system is not enough. A connection with this country is also required, and that will be a hurdle that few foreign wives will be able to leap.