Brexit and Divorce

With Theresa May triggering Article 50 on March 29th many are referring to the UK’s exit from the European Union as a divorce in its own right. Family lawyers are now discussing the impact of Brexit on family law. No doubt, the greatest change following Brexit will relate to divorce.

Much of the law in England and Wales is determined by the EU. The EU has a policy of imposing laws for member states for their own nationals and own laws, even where there is no cross border issue. Once Britain has left the EU, it will be necessary for domestic law to be drafted to replace laws previously imposed by the EU.

Jurisdictional issues are often relevant in divorce, namely where the divorce should take place and consequently which law applies. It is often the case that the divorce could take place in a number of jurisdictions. In order to start a divorce in a specific country a divorcing couple must have a connection with that country. The rules in relation to jurisdiction are almost uniform throughout the EU (save for Denmark) and have been implemented by the EU.

Currently under EU law, a divorce can start in a specific named country if any one of the following applies:-

  1. Both are habitually resident there
  2. Both were habitually resident there and one of them still lives there
  3. The Respondent is habitually resident there
  4. The Petitioner is habitually resident there and has lived there for at least one year immediately preceding the Petition
  5. The Petitioner is domiciled there and is habitually resident there and has lived there for at least 6 months immediately preceding the Petition
  6. Both parties are domiciled there.

It is clear that there is a wide discretion as to where the divorce (and ordinarily any ancillary matters such as finances) will take place. The rule of thumb is that the country where the divorce was first issued will have jurisdiction. In the event that the first petition fails, then the process can be restarted in a different jurisdiction.

Many EU countries require a minimum period of separation before divorce proceedings can commence. There is no requirement for this in England and Wales and thus it is a popular choice for couples who wish to obtain a divorce immediately upon separation where one of the factors as set out above is satisfied.

As stated above, financial matters will ordinarily be heard in the same jurisdiction as the divorce. The law in relation to financial matters differs between jurisdictions and depending upon the facts of the case, it may be a race between parties to issue their petition first in their chosen jurisdiction so that financial matters can be resolved there too.

When a divorce and financial matters are determined purely by timing, this can lead to unhealthy results. The jurisdiction of England and Wales has a reputation for being very generous to the financially weaker party. This is why many wives rush to issue their divorce petition in England and Wales. It seems that this is against family protocol in that it undermines compromise, common sense and goes against attempting to reach a concluded agreement in an amicable non-acrimonious fashion.

Our laws in relation to jurisdiction are currently in line with the EU, once Britain has left the EU, this need not be the case going forward.

It is possible that the law will remain the same, alternatively jurisdiction for divorce may revert to the original law in England and Wales prior to the EU Law being implemented. Namely that England and Wales will have jurisdiction in relation to a divorce where either party is domiciled here or has been habitually resident here for at least one year immediately preceding the Petition. This will further widen the possibility of parties obtaining a divorce in this jurisdiction.

There is currently a white paper circulating in Whitehall that proposes turning the UK in to a low tax off shore competitor to Europe. This, coupled with the wide rules in relation to jurisdiction will no doubt leverage the UK’s perceived reputation as the divorce capital of the world. With wealthy people opting to divorce in the UK because of the associated benefits.

It has been proposed that England and Wales widen their jurisdiction in relation to divorce so that in addition to the criteria set out above, they may deal with divorce matters where either party to the divorce has

a)    a substantial interest in any company, trust, partnership operating out of the UK or any of its offshore crown dependencies or

b)   married such an individual

At this stage, this is a proposal only, however it shows the potential for change in this area of the law. When questioned about the plan a spokesman for the MoJ said:-

“As we head towards wider global trading outside of the EU, and as growing use of online services starts to breakdown existing jurisdictional boundaries, there are tremendous opportunities for the UK to use our undoubted expertise in handling big money financial claims to soften any Brexit blows.

Our family lawyers have enormous expertise in offshore trusts tax havens and LLP’s so just think how keen such asset holders might be to get divorced in a friendly, discreet and increasingly tax-efficient jurisdiction.”

The Bar Council has published a report which says that EU measures have had a significant beneficial impact on family law which includes having uniform jurisdictional rules for divorce proceedings. They concluded that for the law to change would bring major disruption and confusion.

It is thought that there will likely be some change in this area, the extent of the changes and the impact it will have remains unknown.

 

Townsend Family Law are able to provide services tailored to your budge.  Should you require assistance please telephone us on 01992 892214