How London is becoming the Divorce Capital of the world

Landmark ruling overturns the High Court but is London in line for a surge in divorce tourism?

Credit:  Zoriana Stakhniv on Unsplash & Bywire News
Credit: Zoriana Stakhniv on Unsplash & Bywire News
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LONDON (Within the Law) - In 2014, Natalia Potanina was awarded $41m as part of a divorce settlement with her billionaire husband, Vladimir Potanin. However, for her, it was not enough and she wants another hearing, this time in London.

That hearing will be allowed to proceed thanks to a decision from an appeal court. Speaking about the decision, Lady Justice Eleanor King said: “No doubt to most people, whether affluent or poor, the sums received by the wife made her a rich woman. Everything is, however, relative. The wife’s settlement represented only a tiny proportion of the vast wealth of this family, all of which had been accumulated during this very long marriage”, she said.

The couple were married in the eighties and spent most of their time living in Russia. During this time, Potanin amassed a fortune thought to be worth $20bn including a controlling stake in Norilsk, one of the world’s largest Nickel and Palladium producers.

She believes she should be due a far larger proportion of the fortune and is looking to bring a $6bn claim to London.

Her claim had initially been blocked by the High Court on the grounds that the couple does not have a significant connection to the UK. Were it to be allowed to proceed, a judge said, ‘there is effectively no limit to divorce tourism’. We will now get to see if he is right as the court of appeal gave her the go-ahead.

Divorce capital

The UK has long been seen as one of the top destinations for divorces as it tends to offer more favourable treatment to the financially weaker party, often the wife. As such, there is often a battle between both sides over where a case should be heard.

Under English law, someone who has a connection with England can have their case heard in English courts, even if they have already received settlements elsewhere. As such, it’s a popular place for parties who believe they have been short-changed to come and have a second bite at the cherry.

However, those who have been awarded huge sums in the past may find it difficult if their spouse’s assets aren’t held in the UK. This could be a problem for Pontanina whose settlement would make her wealthy by anyone’s standards.

The situation has become even more convoluted recently with the advent of Brexit. Under EU law, if divorce proceedings were taking place in two EU countries the one which started first would have been given preference. The other would stand aside.

After Brexit, there is nothing to stop a case from going ahead in the UK even if other proceedings have also taken place overseas. The court in England will decide whether it is the most convenient forum to settle the dispute.

The other country could also apply its own laws to decide whether it is the most convenient, so you could have two different countries both deciding that they are the best place for the case to be heard. Wealthy individuals could then find themselves with two sets of proceedings running concurrently in two different countries.

It opens up the possibility of a whole new set of litigations over where the divorce proceedings should take place with spouses differing depending on where they think they will get the most sympathetic hearing. 

(Written by Tom Cropper, edited by Klaudia Fior)

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