With big cases continuing to come through London, the UK capital continues to enjoy – if that is the correct word – the title of "divorce capital of the world." This article examines the future of "jurisdiction shopping."

"Jurisdiction shopping” is, so some say, on the rise and has given London its reputation as “divorce capital” of the world. This is an important topic for wealth advisors and private client advisors, given the vast sums involved and the risks that cases can present to assets. It is a reason why we track divorce and family law as part of the meta-theme of “protecting the client.”

To discuss this topic is Nicholas Fairbank, barrister at 4PB. The editors are pleased to share these views and invite responses. The usual disclaimers apply to views of guest writers. Email tom.burroughes@wealthbriefing.com if you want to comment.

In the popular press, London has consistently held the title of divorce capital of the world, attracting high net worth individuals to the UK courts for financial provisions proceedings.

In a recent address, Mr Justice Cobb questioned whether this was really the case, and whether, with the much-awaited Supreme Court's ruling in the Potanin v Potanina case, was this the approach that English courts should take to applications for divorce by foreign nationals? Will London still be considered the “divorce capital?” The public is led to believe it is.

There have been various instances where high net worth individuals have had their cases heard in the English courts. In 2021, Dubai ruler, Sheikh Mohammed bin Rashid Al Maktoum, was ordered to pay around £550 million to his former wife and their two children in one of the largest awards ordered by an English court. It is such headline-grabbing cases which continue to attract litigants from overseas to settle their divorce battles in the UK, not to mention our courts’ reputation for excellence, powers of discretion and a reputation for awarding substantial financial rewards to the financially weaker spouse. 

In the case of Potanin v Potanina, although financial remedies proceedings in Russian had already awarded Ms Potanina between $40 million and $84 million, she claimed that this amount was a ‘drop in the ocean’ compared with the true wealth which had been accumulated over their 30 years of marriage, mostly (she said) held by third parties on behalf of Mr Potanin. Although the English court system allows a party who feels that they have not been sufficiently provided for in their foreign divorce proceedings to bring further proceedings in this country, there is a filter mechanism – an applicant first needs the court’s permission, before being allowed to proceed with litigation. Ms Potanina’s legal claim in the UK was therefore reliant on proving “substantial grounds” for the application for financial relief.  

But, what quantifies substantial ground? 
Mrs Potanina moved to London in 2014 and asked for the Court’s help under the provisions of Part III of the Matrimonial and Family Proceedings Act (1984). Under this Act, her property and permanent residence in London since 2014 satisfied the court’s criteria and led to Mr Justice Cohen granting her permission to proceed with her claim at a one-sided hearing (Mr Potanin was not given notice) in January 2019. Ten months later, when he had heard Mr Potanin’s side of the story, he reversed that decision. 

In November 2019, Mr Justice Cohen accepted Mr Potanin's argument that his ex-wife was attempting to take advantage of the English courts' more lenient approach and that allowing it to go ahead meant there would be “no limit to divorce tourism.” He also echoed Mr Potanin’s claim that his ex-wife’s background and marital history were firmly rooted in Russia. In another dramatic switch, in May 2021 the Court of Appeal overturned Mr Justice Cohen's decision, allowing Mrs Potanina’s appeal. It is now up to the Supreme Court to make a final judgment on whether the Court of Appeal was right to grant permission for her application to proceed. 

It is Important to note that even in the event of Mrs Potanina’s success in the Supreme Court, her legal challenges persist, as she must still prove her case in the High Court. This is all in circumstances where Mr Potanin is subject to international sanctions in the aftermath of the Russian invasion of Ukraine, which will render all his assets frozen. 

Therefore, what impact could this case really have on London’s presumed status as divorce capital of the world? Much of London’s reputation is based on the perceived leniency of the English and Welsh courts towards the financially weaker spouse. But, as Mr Justice Cobb was at pains to point out, this is often more a matter of presentation (and perception) than reality. Moreover, if Mrs Potanina’s case is unsuccessful, the challenges facing foreign spouses to bring a second financial divorce claim here will only increase – possibly deterring other litigants contemplating bringing their divorce claims to London. 

However, it is important to mention that it’s not simply the prospective financial awards that make London an attractive divorce centre. Our judges are world renowned, and those going through a divorce are reassured by the history, quality and strength of the judiciary and the enforceability of the judgments. A powerful, unbiased and fiercely independent judiciary is reason enough for many to seek to have their claims determined in London – the fair hearing they can expect here is the gold standard to which all jurisdictions aspire.

Over the coming weeks, we will see the international community await the developments of this case, no doubt with bated breath.