Navigating cross-border family law in an increasingly borderless world
Divorce and separation are rarely smooth processes. They have far-reaching and deeply impactful consequences for families, financially, practically, legally and personally. When families cross-borders, whether physically or economically, there can be added complications particularly in the areas of financial planning and, in some cases, child arrangement decisions. This is becoming an increasingly common phenomenon that family lawyers are facing with their clients as families become more internationally mobile. New ways of thinking and working are needed to better service those individuals and families, particularly Ultra and High-Net-Worth clients with complex financial structures.
Globalisation and family law
Family law is a specialised area; its deeply personal and no two cases are the same, despite what they may look like from initial glance. It is also inherently domestic, meaning that each country has its own rules and structures around how divorce and separation, and all that comes with family breakdown, are dealt with. In a globalised world where people and money move relatively easily across national borders, this can be a real obstacle – there is no one-size-fits-all despite family law remaining stubbornly national. A divorce case outcome is now less dependent on the details of the case than on the jurisdiction in which is it heard.
As such, family lawyers are more regularly seeing what has been termed a ‘jurisdiction race’. Upon separation, the parties will explore where their best outcome may be and ‘race’ to put in an application first. Of course, ‘best’ outcome depends on what the individual party is seeking. For the financially weaker party, they will likely be looking for a system that equally values non-financial contributions throughout a marriage. Prenuptial agreements, financial plans and childcare arrangements will also be factored into decision-making. Each jurisdiction will have specific criteria that the applicant will need to meet in order to pursue a divorce case in that country, most likely an appropriate residence status or connection through nationality. Seeking these connections to then present a divorce application is known as divorce tourism.
How is this playing out in divorce cases?
Cross-border wealth
Divorce is not just the legal dissolution of a marriage, the breaking of a contract. It also involves the severing of a couple’s financial ties to one another, particularly significant for cases involving cross-border wealth.
It is more common than ever before for couples to have complex financial structures in multiple jurisdictions. Whilst they may be primarily resident in one country, for example England, off-shore accounts, properties abroad and international business interests can create complication when managing financial matters in divorce proceedings.
All sole and joint assets need to be taken into consideration in financial negotiations. This does not necessarily mean they are all shared, although the general ‘starting point’ for finances is a 50/50 split. However, understanding the extend of wealth held in different countries is extremely important, especially in England and Wales where full financial disclosure is a requirement. Family law and financial planning are intrinsically linked in cases such as these, and it is important for clients to get advice from both sides on the best outcome for their unique situation in relation to the principle of fairness.
London has long been considered the ‘divorce capital of the world’. It is perceived to be generous to the financially weaker party, treating financial and non-financial contributions to a marriage on equal footing. In addition to the legal obligation to provide a full breakdown of finances, and a (relatively) low weight to prenuptial agreements in comparison to some other jurisdictions.
However, for other individuals, the faster process and ‘fixed formula’ of dividing assets is more attractive. Some countries do not require a holistic view of the matrimonial financial landscape, sometimes a better proposition for those with complex and international wealth structures.
Marriage in one country, divorce in another
Divorcing couples have more choice than ever before on where their divorce is heard, providing specific criteria is met. In England, for example, clients who married abroad must meet thresholds for habitual residence in England/Wales or domicile. For couples who married in England but live abroad, they must also meet the criteria. In addition, the marriage must be legally recognised under UK law. In most cases, provided the marriage is legally recognised in the country in which it was conducted, it will be recognised in England. However, an Islamic marriage conducted in England, for example, is not legally recognised and the parties would need to apply for a divorce under Islamic law.
It is also possible for parties who married in England to divorce abroad should the family law system suit their needs better. For example, the UAE has recently modernised its structure to better meet the needs of internationally mobile and wealthy expatriate families. In a similar vein to England’s thresholds, other jurisdictions will require some level of residency before an application can be submitted.
Practical realities
In reality, more choice does not always mean a better outcome. Forum shopping can mean difficulties in implementing and enforcing court orders. An order granted by the English courts for a division of a structure held abroad may not be as easily enacted as first hoped. Elongated processes can cause additional stress and cost, and may not end ultimately in the desired result.
There can also be complications in children cases. Separating parents need to keep the best interests of the child at the centre of their arrangement making. However, this can be difficult when family interests are spread across the globe, with extended family in multiple locations. Opportunities for better education and a strong community to raise children could be found in many countries, and tensions can arise between parents making this decision.
Is family law keeping up?
Family law has sometimes struggled to maintain pace with the changing needs of families; one only has to look at the case for reform of cohabitation laws to see this. However, with globalisation and many families having cross-border interests, family law has no choice but to act.
Legal services are beginning to organise themselves around compatible legal systems, rather than traditional notions of geography. Many are expanding worldwide whether through partnerships or
under their own banners to ensure they can better service clients across multiple countries. In a world that is rapidly changing, and the needs of family law clients with it, firms need to be responsive.
Shivi Rajput is a Partner at Stowe Family Law
