EU law has had a beneficial impact on family law

Date: 17 Nov 2016


Camilla Baldwin, partner and founder of the law firm Camilla Baldwin Solicitors also says, following Brexit, there will be an increase in conflict and litigation in the short term.

With the plummeting pound, assets are devaluing. Does this cause concern amongst divorcing clients?

The devaluation of assets is always a concern. Exactly how concerned clients are boils down to what assets a client has and where they are based. The impact of asset devaluation is less acute for those clients with greater internationally diversified wealth. For those outside the UK a weak pound gives foreign money greater buying power in this country, and with that the possibility of greater investment opportunities. In terms of my clients with financial proceedings already under way, this volatility means they have to think carefully about the appropriate values to attribute to their assets, as well as the overall fairness of any proposed split.

What consequences will Brexit have on children in divorce?

Under EU law the living arrangements for children are determined by the court in the jurisdiction where the child lives. Leaving the EU means it is likely that concepts of residence, nationality, domicile and the court’s inherent jurisdiction will come back into play. However, with these concepts will come a lack of clarity, the potential for conflict and increased risk of litigation, as we have seen in the recent Madonna case which although is not Brexit related highlights cross border differences. That said, there are other important conventions such as the Hague Convention on Child Abduction which is separate to the EU and we will therefore continue to be governed by it.

Will Brexit fuel more forum shopping?

Possibly although as illustrated by the recent case of Peng where fees have exceeded ¬£6.1m, the costs associated with arguing appropriate forum cases can be enormous. European law has property regimes that are designed to keep property within the family whereas England does not. So, as far as divorce law is concerned, the English Courts have wide reaching powers to order the transfer of property and redistribution of wealth, which European counterparts do not have. This is why England has come to be known as the divorce capital of the world. We’ll see what will happen when the Article 50 is triggered. There is no reason to think that EU law relating to jurisdiction will be allowed to continue, and in the absence of new legislation we will fall back to the old system.

Is Brexit changing how you draft prenups or postnups?

Yes Brexit will cause change in the negotiation of prenups and postnups. Clients will need to consider the assets that they each have, appropriate values to attribute to these and also the geographical location of those assets. It is standard practice to elect a jurisdiction within pre-nuptial and post-nuptial agreements, and as this area of law is likely to be in a state of flux couples will need to think carefully about which jurisdiction they chose.

Tell us more about divorce assets….and currency volatility.

Whilst many of my international cases were impacted by the recent market volatility, not all of them have been negatively affected. For example several of my cases involve land that is owned in America or US dollar accounts and investments and these values have improved in pound terms because of the weakened sterling. In particular a recent instruction involves divorce proceedings and a client with numerous international assets which are worth in excess of £30 million. This client has cash in a US Dollar account of about $5million and other investments of circa $11million, and numerous international properties. This client is pleased with the impact of Brexit on his assets, and in pound terms he is richer as a result. However on the reverse, another client, I have been instructed by, is a fund manager resident in the UK. The case involves the negotiation of a separation agreement, and a likely divorce later on. There are assets of circa £200 million, comprising land and property in the UK, Europe, America and the Caribbean, as well as some Jersey-based family trusts. These assets will have been affected by the recent market volatility. The appropriate values to attribute to these assets, timings, currency and the country into which money will be received will all be important considerations when negotiating the financial settlement.

What changes to family law do you expect from Brexit?

I expect the impact for EU nationals living here will be far-reaching. EU law has had a significantly beneficial impact on family law particularly in the areas of jurisdiction for divorce and for children’s proceedings. In the short term, inevitably there will be uncertainty and an increase in litigation. In the longer term, we’ll see what steps are taken to fill the gap that is left by European legislation. Sadly family law is rarely a priority on the legislative agenda, and in the interim our family courts will be stretched yet further at a time when they are already subject to reform.

This article was published in Citywealth Weekly, our mid-week roundup of topical news and exclusive expert comments.Sign up here to start receiving the Weekly in your inbox.

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