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Reviewing Foreign Financial Settlements: High Court Confirms ‘Solid Basis’ Rule

Date: November 25th, 2019 - Written by: Brookman Solicitors

 

As international divorce lawyers we are sometimes asked if it’s possible to reopen a financial settlement that’s been approved by a foreign court. Often one spouse is a high net worth individual so the stakes can be high. It’s a complicated area of family law and so anyone entertaining the idea of an application to reconsider a foreign financial order should always seek advice from a specialist solicitor before doing so.

 

Can A Foreign Divorce Settlement Be Challenged?

In principle the courts in England and Wales can review foreign judgments relating to financial matters in divorce. But as we discussed following the decision in Vasilyeva v Shemyakin a spouse must have a substantial or ‘solid’ reason to revisit the financial settlement.

In that case the Russian wife was permitted to proceed to a full hearing for a number of reasons, including a doubt over whether the foreign court’s decision was in fact intended to be a full and final settlement. Whether Ms. Vasilyeva is ultimately successful in her bid to increase her financial settlement remains to be seen. Remember she has only passed the first hurdle of obtaining the ‘leave’ or permission of the court to have a full hearing.

No doubt of interest to Ms. Vasilyeva as she and her lawyers prepare their full case will be another, more recent case involving another Russian spouse who wished the English courts to reopen a Russian court’s financial settlement. We discuss this latest case and the implications of the decision below.

 

The Potanin Case: A Restriction On ‘Divorce Tourism’?

Partly because of the extraordinary sums of money involved the case of Potanin v Potanina has generated a great deal of media attention. The Potanins are Russian and at the time of their divorce in 2014 had been married for 30 years. They had three children. According to the judgment, the husband became ‘massively rich’ during the marriage because of the conditions that existed in Russia at the time. Estimates of his wealth were in the region of $20 billion. The amount of the wife’s Russian settlement was disputed but was certainly in the tens of millions of dollars.

Like Ms. Vasilyeva in the case referred to above Ms. Potanina succeeded in persuading an English judge to allow her to have her case heard in full. Before she could do so however her husband applied to reverse that decision. And, in a judgment that has been interpreted as copper-fastening some of the limitations in so-called ‘divorce tourism’, Mr. Potanin succeeded.

 

Satisfying The Conditions Of The Family Proceedings Act

Intervening in a financial settlement decision of the courts of another country is not something judges here would ever undertake lightly. But our legislation does permit it in certain circumstances. Under the Matrimonial and Family Proceedings Act, 1984 (‘MFPA’) a court can grant a spouse financial relief following a settlement in another country if, after considering a number of factors, it believes it would be appropriate to do so.

In the Potanin case the relevant factors of the MFPA related to the connection the parties had to England and Wales and the connection they had to Russia.

It’s clear from the judgment that any connection of the couple to England and Wales was minimal. The judge highlighted that:

  • The husband had no connection with England and Wales either during or after the marriage
  • The wife had no significant, if any, connection to the UK during the marriage. Her first contact with England after the marital breakdown was to obtain advice from London divorce lawyers
  • The wife’s first property acquisition after the divorce was in Long Island, New York although she did purchase a smaller property in London at a later date
  • The wife kept a property in Russia

 

In light of these findings the judge decided that the wife had only a recent and modest connection to England. In contrast both husband and wife had a strong connection to Russia: they were born there, grew up, married and lived there. In fact the judge indicated that the case he said was ‘a classic example of a spouse whose background and married life was firmly fixed in her home country and who had no connection with England’.

As a result he decided that the earlier permission given to the wife to make a full application for financial relief should be withdrawn.

 

How We Can Help

The Potanin case demonstrates that the courts will not readily allow spouses to seek a ‘second bite of the cherry’ through the English courts when a financial settlement has been reached abroad. There are however circumstances when a settlement can be reviewed. But it’s essential to seek specific advice about your particular circumstances at an early stage before embarking on such a claim.

If you would like to discuss your case further please call us on 44 (0) 20 7430 8470 or contact us online.


 

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