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08 February 2016

Financial claims following an overseas divorce

Family law expert Claire Filer explores how the legal landscape has changed when dealing with divorcing transnational couples and explains why a Part III application is not just for the super-rich.

The Telegraph recently featured the story of the “divorce” proceedings brought in England by a supermodel against her Saudi billionaire former husband.  “Divorce” appears in quotation marks here, because the couple are already in fact divorced, following proceedings overseas.  According to the article, Sheikh Walid Juffali, is already paying his ex-wife over £70,000 a month in maintenance and has given her a property in Beverley Hills.  Christina Estrada’s claim apparently seeks to top-up what she receives, and relates (amongst other assets) to properties in this country worth many millions of pounds.

Tucked away in the story is reference to Ms Estrada’s claim being brought under Part III of the Matrimonial and Family Proceedings Act 1984 (“Part III”).  But what is Part III and how does it allow Ms Estrada to make an application for financial provision to the English Family Court?

Part III – A brief history

The family law landscape has changed radically in the last forty years.  Prior to the 1970s, the English Family Court’s approach was entirely home-grown and inward-looking.  A Judge dealing with a separating couple needed only to be concerned with English law, and apply that to achieve the right outcome. 

Then came the 1970s and 1980s, when affordable international travel became widely available.  With that came the emergence of more transnational relationships and families.  The previous parochial approach was no longer good enough when those relationships broke down.

So, the early 1980s saw the introduction of a range of measures designed to achieve fairness when it came to dealing with transnational families.  One of those measures was Part III.

Part III allows an English Court to grant financial provision to a spouse after an overseas divorce.  An order might still be made under Part III even if the foreign court has already made its own financial order. 

Who can apply under Part III?

Before a spouse can apply under Part III, they must have been legally separated or divorced through proceedings in an overseas country.  That legal separation or divorce must be recognised as valid here.

The spouse bringing the application must then show there is something that connects the family to England and Wales.  This is done by demonstrating that:

  • either spouse ordinarily lives here (the “habitual residence” test);
  • either spouse treats England and Wales as their permanent home (the “domicile” test), and / or
  • either spouse owns or has an interest in a property in England and Wales that at some time was the family home.

Procedurally, it is necessary to get the English Court’s permission to bring a Part III application.  The permission-stage is designed to weed-out wholly unmeritorious applications.  If permission is given, the English Court may then (after a trial) make one or more of the orders available to it in domestic financial remedy applications – lump sum payments, transfers of property, maintenance, pension sharing and so on.

Part III in practice

After Part III was introduced, a number of cases were successfully brought under the new law.  Following this initial success, however, the English Family Courts began to become much more nervous and uneasy about using Part III.  Only a handful of cases each year was brought in the 1990s and early 2000s.  Our Judges appeared concerned to limit Part III to only the most extreme and exceptional situations.

In 2010, our Supreme Court looked at Part III for the first time, twenty-five years after the legislation was introduced.  That decision - Agbaje –v- Akinnoye-Agbaje – remains the leading case about when and how Part III may be used.

Mr and Mrs Agbaje were Nigerian nationals.  They acquired UK citizenship in 1972, had been married for thirty-eight years and had five children (all born in England).  They bought a family home in England in 1975, although family life remained largely based in Nigeria.  They separated in 1999 and Mrs Agbaje moved to England.  Her husband started divorce proceedings in Nigeria, at the end of which Mrs Agbaje was awarded a life interest in a property in Lagos and a lump sum of about £21,000.

Mrs Agbaje applied here under Part III.  A High Court Judge ordered that she should receive the lion’s share of the sale proceeds of the English property – about £275,000.  The Court of Appeal overturned that decision, saying that “it would not be appropriate to grant Mrs Agbaje even another nibble at the cherry”.  Mrs Agbaje then took her case to the Supreme Court, where her appeal was allowed and the order of the High Court Judge reinstated.  The Supreme Court said the whole purpose of Part III is to alleviate adverse consequences of no, or no adequate, financial provision being made by a foreign court in a situation where the parties had substantial connections with England.

The Supreme Court went on:  relevant to the question of whether an order should be made (and, if so, what order) will be a number of factors such as the financial benefit which the applicant has already received, or whether the applicant has failed to take advantage of a right under the foreign law to claim financial relief.  The hardship or the injustice which would result if no award were made will be relevant factors.

The Supreme Court said the amount of financial provision awarded under Part III will depend on all the circumstances of the case, but three general principles should apply: 

  1. primary consideration should be given to the welfare of any child of the marriage;
  2. it will never be appropriate to make an order which gives the claimant more than she or he would have been awarded had all proceedings taken place in England, and
  3. where possible the order should have the result that provision is made for the reasonable needs of each spouse.

Part III today

The Ministry of Justice do not appear to maintain statistics on the number of Part III applications made.  Undoubtedly, however, the aftermath of the Supreme Court decision saw a rise in the number of such claims.  Whilst still not an everyday application, Part III applications are now much more common than they were, say, five years ago.  This is not surprising in a society where transnational families are now so commonplace (in 2014 over a quarter of UK births (27%) were to mothers born outside of the UK). 

This anecdotal experience in everyday practice is also borne out in the popular press.  Ms Estrada’s application – referred to at the start of this piece - is not unique.  In October last year, a High Court Judge found a husband in Part III proceedings guilty of contempt for failing to disclose his financial resources when ordered.  He was sentenced to prison for nine months.  In that case, the wife’s claim was made in the context of the husband having "immense wealth" and the parties having enjoyed a standard of living described by the Judge as "exceptionally high".

Part III and you

Applications like Ms Estrada’s could not be further removed from the type of desperate hardship cases for which Part III was reserved for much of its early life.  Part III is not reserved for the super wealthy.  Mrs Agbaje’s case is closer to type of situation more frequently encountered – where the family’s financial resources are relatively modest, but where nevertheless justice has not been done during the foreign divorce.

Part III may provide a remedy if you have been divorced overseas, but received an unfair or inadequate (or no) financial award.  Part III might be especially helpful: 

  • if you have a very strong connection with England and the divorce outcome abroad is very different than an English Family Court would order;
  • if the law of the country where the divorce occurred does not allow enforceable orders to be made in respect of offshore property (particularly properties in England);
  • to obtain a pension sharing order relating to English pension assets, where the foreign court did not take pension assets into account, or
  • to implement a pension sharing order made by a foreign court relating to an English pension where the pension provider will not recognise the foreign order.

To speak with a member of the top-ranked family law team about financial matters and divorce call 01753 279046 or email familylaw@bpcollins.co.uk.

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