The days when so many divorces involving HNW and international couples took place in London may change because of Brexit. What considerations apply in this new environment?

For years London has been dubbed the “divorce capital” of the world because the English common law was perceived as being a more flexible framework for handling break-ups than elsewhere. A number of prominent foreign-born HNW individuals living and spending significant time in England and Wales may, however, think that circumstances are changing. The UK has left the European Union and the country is still attempting to thrash out trade and other agreements with the bloc. 

So where do such HNW individuals go from here? To explore the topic is Claire Gordon, partner at London law firm Farrer & Co. The editors are pleased to share these views, and invite responses. The usual editorial disclaimers apply. Email tom.burroughes@wealthbriefing.com and tom.burroughes@wealthbriefing.com

While headlines have understandably been dominated by the pandemic, and more recently the US election, Brexit remains live and highly contentious. Leaving the EU last January raised thorny issues for family lawyers and our clients, and the end of the transition period at 11.00 pm on 31 December 2020 looms large in our minds.  
 
The loss of the status quo will undoubtedly affect international families who are separating and there is still, even now, some uncertainty regarding exactly what will replace the current rules. For international families dealing with relationship breakdown, there are some key points that they, and their advisors, need to consider. For some, time may be of the essence.
 
Is this the end of divorce “tourism”? 
Quite the contrary. When working with international families, it is not uncommon for there to be a jurisdiction to divorce in more than one country. An EU regulation standardised these jurisdictional rules across the EU and included an important “first in time” rule. This meant that if there were two sets of divorce proceedings in different EU countries, the one that was issued first would go ahead, and the second in time would stand aside.
 
Post-Brexit, this rule will no longer apply. As such, from 11.00 pm on 31 December 2020, if divorce proceedings are started in two different countries, there is no rule to determine which country should proceed. The English court will decide for itself whether it is the most convenient forum for the dispute, and the other country will likewise apply its own national law to determine whether it thinks it should have jurisdiction. It is perfectly plausible that one could end up with two sets of proceedings running concurrently in different countries. 
 
The basis for jurisdiction for a divorce is also broadening. Just one party being domiciled in England will be enough to file a petition here wherever their spouse is domiciled, thus opening the court room doors to couples not previously eligible (though caveat emptor – there are traps for the unwary along that legal path).
 
It seems clear that litigation over where proceedings should take place will increase dramatically. For some, there will be an advantage in the English court being able to consider which country it believes to be the most convenient forum, rather than being subject to an arbitrary first in time rule. However, the necessary result will also be more protracted and expensive litigation. Greater uncertainty makes it harder for lawyers to advise and harder for families to resolve disputes.  
 
For families where jurisdiction is likely to be an issue, divorce proceedings may need to be issued as a matter of urgency before the end of the year. It will then fall within the “old” rules, and the first in time rule will apply.
 
When can you be divorced, yet not divorced? 
At present, all EU Member States recognise divorces obtained in other EU member states. However, after the end of the transition period, this will no longer apply. There is a Hague Convention that seeks to achieve the same thing, which will continue to apply, but only a few EU member states are signatories and it doesn’t apply to civil partnerships. Those countries which are not signatories will apply their own national law to decide whether or not to recognise an English divorce.
 
This can have major consequences. For example, Ireland is not a signatory to the relevant Hague Convention. Therefore, if an Irish couple living in London get divorced here, and then return to Ireland, they may be understandably surprised to find out that as far as Ireland is concerned they are still married. This is because under Irish law, divorces obtained abroad are only recognised if one of the couple was domiciled in that foreign country at the time. In this example, both husband and wife were Irish domiciled. Their English divorce would therefore not be recognised and further proceedings in Ireland would be required. Local advice in the second country will become crucial, adding to the costs, delay and stress for all parties.
 
It is worth remembering that divorce proceedings that are issued here before 11.00 pm on 31 December will continue to operate under the “old rules” and will therefore be automatically recognised by other EU member states.
 

England - the divorce capital of the world no more?
The English family courts are renowned for being among the most generous to the financially weaker spouse, but sometimes that generosity has been partially constrained by EU law. At present, the rules governing which country has jurisdiction to determine claims based on needs (for example, housing and spousal support) are set out in an EU regulation. In certain circumstances, English judges have been able to determine how sharing claims could be addressed (how to share the assets generated during the marriage, for example) but had to cede to another EU jurisdiction to determine the parties’ needs. Will this continue from 1 January 2021? No-one knows.
 
The crucial Brexit family law question is whether we will become signatories to the Lugano Convention. If we do, then this will replace the EU regulation in determining jurisdiction for financial claims based on needs. It also contains a first in time rule so that having competing financial applications in different countries is avoided. Broadly, this would maintain much of the status quo.
 
However, if we do not, then our own domestic law will govern whether the English court has jurisdiction to determine financial claims as a whole – and that could have a dramatic effect for some international families.   
 
With the end of the transition period only six weeks away, the likelihood of signing up to the Lugano Convention swiftly enough for a seamless transition seems slim. Our national law seems bound to apply for at least a period of time, leading to confusion and expense for those couples trying to steer a course through the distinctly murky waters.
 
For now, the only way to achieve certainty is to apply for any financial claims before the end of the transition period. Applications made before 11.00 pm on 31 December 2020 will continue under the “old rules”.  
 
Enforcement in 2021 and beyond
For couples who don’t yet have proceedings under way, enforcement may prove a rather trickier path than before. At present, an EU regulation ensures that orders obtained in an EU member state are recognised and can be enforced in other member states. Importantly, and helpfully, this EU regulation will still apply to all orders obtained under the “old rules” even if the order itself was made after the end of the transition period. However, for proceedings issued after the end of the transition period, it is likely to be more difficult (and more expensive) to enforce orders across Europe. 
 
The road ahead for many international wealthy families dealing with relationship breakdown is likely to be far more convoluted than ever before. Pre-nuptial agreements are going to need a very careful review both pre and post-Brexit. Where a marriage is on the rocks, clients will be well advised to take early advice not just from a specialist English family lawyer but also, through their lawyer, local advice in other relevant jurisdictions. Where there is more than one option, it will be crucial to consider where to file proceedings carefully and on a holistic basis. 

Finances will be one obvious factor for many couples, but timing can also be key, plus the practicality of attending hearings, the effects on the wider family, and where the divorce needs to be recognised or any financial court order enforced. It is going to be challenging terrain to navigate.