According to the UK’s society magazine, Tatler, cryptocurrencies have been dubbed the new ‘Cayman Islands bank account’ for high-net worth (HNW) individuals attempting to hide their assets in divorce proceedings.

The lack of domestic and internationally cohesive regulations around cryptocurrencies, such as Bitcoin, and the fact they are held in ‘digital wallets’ which can prove difficult to trace back to a specific person, means that crypto can provide a cunning vehicle for concealing wealth.

Family law solicitors specialising in international and HNW financial proceedings on divorce have been swift to get to grips with the legal issues surrounding cryptoassets and divorce financial settlements.

What are cryptoassets and cryptocurrencies?

Cryptoassets are digital representations of value that you can transfer, store, or trade electronically. As well as currencies, cryptoassets include non-fungible tokens (NFTs).

Cryptocurrencies are purely digital and use a peer-to-peer system and blockchain to undertake and record transactions. Cryptographic keys are stored in ‘wallets’ which are managed by a centralised crypto exchange (CEX).

There are several different types of cryptocurrencies, however, the most widely used and well known are Bitcoin and Ethereum.

Cryptocurrencies sit outside central banks, regulatory authorities, and governments. At present, they are unregulated, although there are moves to rectify this in many parts of the world, including the UK, Europe, and the USA.

Can cryptoassets and/or currencies form part of a divorce financial settlement?

Yes, and therefore any cryptoassets held by a party to a financial settlement proceedings on divorce must include them when making a full and frank financial disclosure. Although cryptocurrencies are notoriously volatile, the courts do have methods and expertise at their disposal to undertake valuations and assess their values.

What can I do if I believe my spouse is hiding cryptoassets?

Cryptocurrency can be difficult to identify and trace because there is no centralised ownership register for cryptocurrency assets. A specialist forensic expert may therefore need to be instructed to establish where cryptoassets are being held and to determine their approximate value.

Although it is widely believed that cryptocurrencies are anonymous, they are in fact more transparent than most people realise. Currencies such as Bitcoin do not have a centralised authority to provide identifying information, however, most cryptocurrency blockchains are public, meaning anyone with the required expertise can track an entire transaction history.

If you believe your spouse is hiding cryptoassets, it is possible to apply for a freezing order to prevent them from dealing with or disposing assets, including cryptocurrency, for a period of time. Whilst the freezing order is in place, a solicitor can instruct an expert such as a forensic accountant to trace and value your spouse’s cryptoassets. Freezing orders can only be applied for in limited circumstances and there are strict costs warnings which need to be considered ahead of issuing such proceedings.

Sometimes, cryptoassets cannot be traced. In such circumstances it may be possible to persuade the court that your spouse does possess cryptocurrency by providing evidence such as crypto wallet transactions or bank statements showing dealings in cryptocurrencies.

If the suspected cryptoassets cannot be traced but there is substantial evidence to show that they exist, the court has the power and ability to attach a notional value to the cryptocurrency and account for it as a matrimonial resource to be divided between you and your spouse. After considering all the factors contained within section 25 of the Matrimonial Causes Act 1973, the court will decide how the property and assets of the marriage are to be divided, and this can include untraceable cryptoassets.

Concluding comments

Across the civil, criminal, and family courts, the judiciary has moved quickly to ensure that those adversely affected by the hiding and/or fraudulent dealings in cryptoassets receive access to justice. This is a fast-paced area of law, in which technology can rapidly outstrip legal remedy. In financial settlement cases on divorce, especially those involving significant assets and/or an international element such as obtaining a divorce in a foreign jurisdiction, securing advice from an experienced and specialist family law solicitor can make a significant difference to the outcome of your financial settlement.

Edwards Family Law is a niche London-based firm specialising in high-net-worth divorce and international family law. To find out more about divorce and financial settlements, please phone +44 (0)20 3983 1818 or email contact@efl.fabledlabs.co. All enquiries are treated in the strictest confidence.

At a date to be as yet confirmed (likely to be 6 April 2022), divorce law in England and Wales will catch up with most other common law jurisdictions by saying goodbye to fault-based divorce. And for almost all family law judges, barristers, solicitors, and campaign organisations, the coming into force of the Divorce, Dissolution and Separation Act (DDSA) 2020 cannot happen soon enough.

The Government called for consultation on removing the need to claim the divorce was one party’s ‘fault’ following the highly-publicised 2018 case of Owens v Owens. In this case, the Supreme Court ruled that, because the wife had not proven that her husband’s behaviour was ‘unreasonable’, she could not divorce her husband until the pair had been separated for five years.

Because so few divorces are contested, the public was shocked to discover that under English law, one spouse could force the other to remain married to them. David Gauke, the Justice Secretary at the time Owen v Owen was decided declared that divorce law in England and Wales was “out of touch with modern life”.

What are the current grounds for divorce in England and Wales?

At present, the only ground for getting a divorce is that the marriage has irretrievably broken down for one of the following reasons:

• Adultery

• Unreasonable behaviour

• Desertion

• You have lived apart for more than two years, and both agree to the divorce

• You have lived apart for at least five years, even if your husband or wife disagrees

What is are the new grounds for divorce under the DDSA 2020?

Under the DDSA 2020, neither party has to ‘blame’ the other for the marriage breaking down. Instead, one or both parties simply need to make a statement that the relationship has irretrievably broken down. There is no scope for one party to contest the divorce in order to prevent it. The Court must accept the individual’s or couple’s statement that the marriage has irretrievably broken down and make a divorce order.

Allowing for joint divorce applications provides a foundation for couples to complete divorce negotiations around the financial settlement and arrangements for children amicably.

What other changes to divorce law will come into force when the DDSA comes into force?

There DDSA 2020 makes several other changes to divorce law in England and Wales, including:

• The time between the start of proceedings and the granting of the Conditional Divorce Order (Decree Nisi) is 20 weeks. This is to allow couples ample time to make arrangements regarding their children and finances.

• The terms Decree Nisi and Decree Absolute have been replaced with Conditional Divorce Order and Final Divorce Order to make the language of the divorce process friendlier and easier to understand.

The new divorce laws will not necessarily make the process of ending your relationship any easier. However, being able to file a joint petition or filing a petition on your own without needing to list factors of unreasonable behaviour or cite adultery mitigates the risk of you and your spouse becoming hostile towards each other from the start. No one likes to be blamed for a relationship ending. Removing the need for fault to be assigned to one spouse by another is a significant step forward, bringing family law in England and Wales in line with modern expectations and other common law jurisdictions.

Should I wait until the new divorce laws come into force?

At the time of writing, no date has been set regarding the DDSA coming into force outside of the loose ‘6 April 2022’. For some people, especially in high-net-worth and/or international divorce, waiting until later in the year to start divorce proceedings may not be in their best interests.

If you are considering divorce, it is essential to speak to an experienced Family Law Solicitor.

Ending a marriage is emotionally, legally, and financially complex. Just the presence of so much change is enough to make the process highly stressful for many adults and children. A Family Lawyer can listen to your situation, help you establish what you need and want out of the divorce to secure your financial future, and advise you on every related matter, including whether you should delay filing your petition until the DDSA 2020 comes into force.

Edwards Family Law is a niche London-based firm specialising in high-net-worth divorce and international family law. We are members of Resolution, an organisation of Family Law Solicitors that abide by a Code of Practice that promotes a non-confrontational approach to family law practice.

To find out more about no-fault divorce, please phone +44 (0)20 3 983 1818 or email contact@efl.fabledlabs.co. All enquiries are treated in the strictest confidence.

Many people believe that unmarried couples who live together (known as cohabitees) enjoy the same legal rights and protections as those that are married, but they are mistaken.

There is no such thing as a ‘common law’ marriage under English law and despite cohabitation being the fastest growing family type in England and Wales, if the relationship breaks down, cohabitees have to rely on complex property and trust law principles. Unmarried couples also have no automatic right to inherit under the rules of intestacy.

Last month, the Women’s and Equalities Committee (WEC) published a report on the rights of cohabitees. WEC made clear that the current law did not reflect the reality of the many diverse types of family structures in 21st century Britain and identified the need for urgent reform.

What were the main findings of the WEC Rights of Cohabitee’s Report?

The WEC received 380 written submissions from the general public, legal academics, legal practitioners, and campaign groups. The report’s key findings include:

A 2019 British Social Attitudes Survey showed almost half (46%) of the total England and Wales population wrongly assumed cohabitants living together form a ‘common law marriage’. This false belief leaves many cohabitees in shock when they discover how little legal protection is provided to unmarried couples who live together.

Unmarried couples have no automatic right to ownership of each other’s property if their relationship breaks down. Because they are forced to rely on property, trust, and contract law, the outcomes of court decisions are uncertain and case specific. Generous outright capital provisions that can occur in financial settlements upon divorce are not readily available to cohabiting couples. There are also very specific costs consequences in such cases.

As the general law prioritises financial contributions over domestic contributions, most witnesses called by the WEC argued that the financially weaker partner in a cohabiting relationship often ends up with nothing following a relationship breakdown.

Current law does not allow for caring and non-financial contributions to be considered by the court, prohibiting judges from crafting more effective remedies.

Although there is the option of creating a cohabitation agreement, this can be “emotionally and practically difficult”. Dr Charlotte Bendall, Lecturer in Law at Birmingham Law School, provided evidence

showing that when couples were seeking to make decisions as to finances there was “little to suggest that people are acting on the basis of a knowledge of the law, or even that they are aware of what the law is”.

Did the WEC provide any recommendations?

Suggestions for improving the law to protect unmarried couples who live together include:

The law must recognise the “social reality of modern families” and provide legal protection whether couples choose to marry, enter into a civil partnership, or live together. However, marriage should still be

recognised as holding important social and religious status in England and Wales. Therefore, the Law Commission’s 2007 proposals for an opt-out cohabitation scheme provides a sensible approach to reforming cohabitation law.

There needs to be a public information campaign aimed at educating people on the fact that ‘common law marriage’ does not exist. The public needs clarification on the legal distinctions between marriage,

civil partnership, and cohabitation, and the risks of wedding ceremonies that do not meet legal formalities.

The Law Commission’s 2011 recommendations concerning intestacy and family provision claims for cohabiting partners should be immediately implemented.

At present, financial settlement solutions such as spousal maintenance, pension sharing or off-setting, and the requirement for the court to consider all the factors under section 25 of the Matrimonial Causes Act 1974 are not available to couples that live together, unless they have specifically made provisions in a legally binding cohabitation agreement and taken independent legal advice.

High-net-worth cohabitee relationship breakdowns often result in one partner being left financially vulnerable. If you and your partner have, or are considering separating, it is vital that you obtain legal advice from a specialist and experienced family law practitioner.

As Resolution members, we remain constantly alive to changes in family law and will keep you updated as to the uptake of the WEC’s recommendations.

Edwards Family Law is a niche London-based firm specialising in high-net-worth divorce and international family law. To find out more about cohabitation law, please phone +44 (0)20 3983 1818 or email contact@efl.fabledlabs.co. All enquiries are treated in the strictest confidence.

Whilst the Supreme Court decision in Radmacher v Granatino [2010] UKSC 42 held that weight should be given to a nuptial agreement it does not follow that such agreements will always be upheld by the court.

This was illustrated by the recent case of SC v TC [2022] EWFC 67, in which His HonourJudge Hess placed no weight on a post-nuptial agreement in financial remedy proceedings. He concluded that its terms were unfair due to the husband’s vulnerability at the time of signing and that the agreement would leave him in “a predicament of real need”.

Before examining the case, it is useful to briefly state the current law around the enforceability of nuptial agreements.

What makes a nuptial agreement legally enforceable?

The Radmacher decision states that the court will give weight to a nuptial agreement provided it is fair to do so, with ‘fair’ being the operative word. The Supreme Court referred to other landmark cases when deciding Radmacher, including McFarlane v McFarlane [2006] UKHL 24, in which it was established that fairness should be based on the principles of:

need compensation sharing

The Court will also apply a three-part fairness test concerning the nuptial agreement;

1. that the agreement was freely entered into (i.e. there was no undue pressure),
   
2. both parties understood the agreement (i.e. there was financial disclosure before the agreement was signed and both parties received or had the opportunity to receive independent legal advice), and
   
3. it is reasonable to hold both parties to the agreement (i.e. it is fair and the prevailing circumstances).

What were the facts in the case of SC v TC

The couple married in 1994 and had one child. The husband (H), worked in investment banking but had stopped after being diagnosed with early-onset Parkinson’s disease. From around 2003, H began to experience the early effects of his illness. He was formally diagnosed in 2011 and by 2013, the marriage was unhappy and lacked sexual intimacy. H visited a sex worker and later told the wife (W). W asked for a divorce, however, H asked for another chance to make the marriage work. W agreed on the condition H enter into a post-nuptial agreement to ensure her financial security.

Although the terms of the nuptial agreement were significantly more generous than what the court would award, H signed the contract. H’s solicitor told him the division of the financial assets was 80/20 in favour of W and recorded that he had advised H that it would be financially imprudent to agree to these terms. H stated that given his prognosis it made no sense for him to fight for assets and he, therefore, would not contest these terms of the post-nuptial agreement.

The post-nuptial agreement was signed in 2014 and divorce proceedings began in 2020. H wanted the marital assets to be divided evenly. Unsurprisingly, W argued that the post-nuptial agreement terms must be adhered to when alighting upon a financial settlement.

Why did the court not uphold the post-nuptial agreement?

Although His Honour Judge Hess concluded there had been financial disclosure, legal advice and both parties

were, when signing, mature and intelligent, he was concerned that the post-nuptial agreement disregarded any needs arising from H’s Parkinson’s diagnosis, including housing needs and home care requirements. The agreement would leave H in a position of “a predicament of real need”, with W comfortably provided for, and this would be fundamentally unfair.

His Honour Judge Hess stated:

“In summary on this area of the case, I have reached the conclusion that it would be wrong for me to place weight on the Pre-Marital Agreement. Not only was it very much to the husband’s disadvantage in financial terms, I have reached the overall conclusion that, at the time that it was signed, he was a vulnerable person (in the ways described above) and the wife rather took advantage of that vulnerable situation to gain a substantial financial advantage.”

Concluding comments

This decision highlights that even if all of the formalities required have been adhered to, fairness will always be the court’s primary consideration. The court fulfils a vital role in protecting vulnerable parties in situations of this kind and prevents a contracting out of the fundamental principles of English family law. In many cases, it is difficult or impossible to predict the situation a couple may find themselves in at the time of divorce, be that children, illness or otherwise. However, rather unusually in this matter, the husband’s future was a lot clearer given the reasons that the agreement was entered into. Therefore, when entering into a pre or post nuptial agreement, parties and their advisors must ensure that the agreement being entered into is in fact worth the paper that it is written on. A keen assessment of the likelihood that a court will deem the terms unfair is therefore essential to achieving the desired outcome.

Edwards Family Law is a niche London-based firm specialising in high-net-worth divorce and international family law. To find out more about pre and post-nuptial agreements, please phone +44 (0)20 3 983 1818 or email contact@efl.fabledlabs.co. All enquiries are treated in the strictest confidence.

The Family Court In England and Wales has come under fire for being a “desert island” in the justice system, shrouded in secrecy and making its decisions behind closed doors. In October 2021 the then president of the Family Division, Sir Andrew Macfarlane, acknowledged that “justice taking place in private…is bound to lead to a loss of public confidence”. He called for the Family Court’s rules on transparency and reporting to be scrutinised and set up the Transparency Implementation Group (TIG).

Mr Justice Mostyn’s Campaign for Greater Transparency

Senior judges in the Financial Remedy Court (FRC) are not in agreement as to how to strike the right balance between transparency and privacy in matters such as who can attend hearings, what documents should be provided to reporters, and retaining parties’ anonymity. Mr Justice Mostyn has made waves by unequivocally asserting in a series of judgments since late 2021 that the FRC has been getting the law wrong for decades. Mostyn J’s position is that, whilst Family Court proceedings sit in “private” (as opposed to “open” court, like the majority of court divisions), that does not in and of itself require reporting restrictions or that the parties be anonymised when the judgment is published on a public database. He has made statements such as:

• “Had a member of the press or a legal blogger attended I consider that they could have reported everything that they heard during the proceedings” (Aylward-Davies v Chesterman [2022]);

• “The correct question is not: ‘Why is it in the public interest that the parties should be named?’ but rather: ‘Why is it in the public interest that the parties should be anonymous?’” (Xanthopoulos v Rakshina [2022]); and

• “if very rich businessmen are in court fighting at vast expense with their ex-spouses over millions, then the public has the right to know who they are and what they are fighting about. The judgment should therefore name names. Redactions can be made of commercially sensitive information, but…the redactions should never obscure the way the court has decided the case” (Gallagher v Gallagher (No. 1) (Reporting Restrictions) [2022]).

“Is it fair that one party’s poor behaviour could result in the other party’s identification?”

You might notice something that the above three cases have in common: you can read the names of the parties. That is because Mostyn J did not anonymise his judgments. The vast majority of financial remedy judgments heard by judges other than Mostyn J, however, continue to be anonymised. The lead FRC judge, Mr Justice Peel, has been the most prolific publisher of judgments since November 2021 and all have been anonymised. Since parties have no control over which judge hears their case, they face a bit of a lottery as to the publication protections they might be afforded.

The TIG Report 

TIG has just reported its findings on all issues of transparency as they relate to the FRC. Acknowledging Mostyn J’s judgments, it states “it is not for this report to set out what we consider the law to be on any particular, controversial, point. That must be a matter for the Court of Appeal. We acknowledge that there are different approaches to certain issues by different judges at High Court level and that this is far from ideal…it will be for others to decide whether the conclusions we reach should be implemented”.

The TIG report’s most critical recommendations can be summarised as follows:

Attendance at hearings

Cases should continue to be heard in private – ie, the only individuals permitted to attend are the parties, their representatives, and accredited journalists. Efforts should be made to better inform practitioners and judges on what to do if a reporter attends their hearing.

Reporting 

Reporters attending hearings currently cannot see any case documents without specific permission of the Court, meaning that the hearing is often impossible for them to follow. The report recommends that, when a reporter attends, a standard Reporting Order be made by the judge which:

• permits reporting of what the reporter witnesses, subject to anonymisation and protection against intrusive and personal identification; and

• entitles the reporter to see the parties’ position statements, together with the “ES1” (a brief case summary document) – reporters cannot publish any information that would breach the Reporting Order, even if it appears in a provided document.

Anonymity in published judgments

This is at the centre of Mostyn J’s standpoint and is arguably the most controversial issue. The report considers that “the default position should be one of anonymity”, but “there will be cases in which the presumption of anonymity will not be upheld”, which is a matter for the judge to decide on a case-by-case basis. Examples might include “situations of poor behaviour, either within the proceedings (by way of litigation conduct) or outside the proceedings in appropriate cases”, or where the public interest in identification outweighs the privacy justifications. The report also strongly encourages judges at all levels, not just High Court, to publish their judgments, to reset the imbalanced focus on “big money” cases heard by the High Court. 

The TIG report’s recommendations, if implemented, would undoubtedly provide greater clarity as to what parties to FRC proceedings can expect from a transparency and privacy perspective. The idea, however, that a party’s conduct could lead to a loss of their anonymity leaves much room for judicial discretion. What sort of behaviour outside of proceedings should this cover, what is the threshold for “poor behaviour”, and is it fair that one party’s poor behaviour could result in the other party’s identification? The question of transparency is by no means answered and we eagerly await a Court of Appeal case on the topic. In the meanwhile we will report back on the extent to which the TIG report recommendations are implemented by the Family Division.

In a social climate which sees fewer and fewer couples deciding to get married, or enter into civil partnerships, the subsequent separation of cohabiting parties is causing increasing difficulty in circumstances where they are simply not afforded the same financial rights on separation as divorcing couples or in the dissolution of partnerships.

Despite considerable pressure from family law solicitors, barristers, and judges, and family law groups such as Resolution, there is still reluctance amongst politicians to change the law in England and Wales so that it recognises the legal rights of cohabiting couples.

For unmarried parents who require financial provision to provide for their children following the end of a relationship with a high net worth (HNW) person, there is some light at the end of the tunnel.

Alongside an application for child maintenance to the Child Maintenance Service (CMS), an application for financial provision for the benefit of the child(ren) of the family can be made under Schedule 1 to the Children Act 1989.

What does Schedule 1 to the Children Act 1989 say?

Schedule 1 provides the Court with limited powers to make financial provision available for the benefit of the child(ren) of a relationship, where the parents were not married and have subsequently separated.

Needless to say, Schedule 1 also comes into play in circumstances where a child has been born to a mother, even after a very brief or fleeting relationship with the father.

It is possible to apply for the following orders:

• Periodical monthly maintenance payments for yourself on the child’s behalf (or to an adult child directly, where applicable);

• Secured periodical payments for yourself on the child’s behalf (or to an adult child directly, where applicable);

• Lump sum for yourself on the child’s behalf (or to an adult child directly, if applicable);

• Settlement of property for the benefit of the child, reverting to the paying party at the end of a specified term; and/or

• A transfer of property outright to you on the child’s behalf (often held on trust for them) (or to an adult child directly), but this is only likely to happen in very specific and limited circumstances.

Who can make an application under Schedule 1 of the Children Act 1989?

The Court can make a periodic payment order in respect of:

• Topping up the CMS maximum assessment amount, if the non-resident parent’s income is greater than £156,000 gross per annum. The Court will need to be satisfied that the circumstances of the case make it fair and reasonable for a top up order to be made;

• A regular payment for school fees or vocational training; and/or

• Meeting any reasonably foreseeable recurring expenses associated with the child’s disability (if they have one).

When would a Schedule 1 lump sum order be made?

Lump sum orders can be made by the court for the purposes of enabling liabilities and expenses already incurred in connection with the child to be met. These can even include the costs of their birth in some circumstances, or costs more generally which have been incurred in maintaining the child, even where those expenses were incurred prior to the application (as long as the application is made without unreasonable delay).

Specific future expenses and foreseeable liabilities can also be claimed. Whilst the court’s discretion is wide, the welfare of the child is paramount. Provision might be made, for example, for furniture for a new home purchased for the benefit of the child, a car to transport the child, or indeed a sum to be invested for future school fees. Lump sums are not, however, designed to be maintenance ‘by the back door’ for the resident parent.

How does the Court decide whether an order should be made?

The welfare of the child is a paramount consideration of the court in deciding these cases, and the standard of living enjoyed by both of the parties to the proceedings will also be considered. If, for example, the non-resident paying party is very wealthy and enjoys a luxurious standard of living, incredible accommodation, designer clothes and numerous international holidays each year, the court is likely to want to see the child’s standard of living when they are with the resident parent to be comparable, and will look at their suggested ‘reasonable needs’ in light of this.

The Court will also consider very similar factors to those listed under section 25 of the Matrimonial Causes Act 1973, namely:

• The child’s financial requirements;

• Any physical or mental disabilities relating to the child;

• The current and future income, earning capacity, and financial needs and obligations of the parents;

• How long the child is expected to be in education or vocational training;

• The income, earning capacity, and property of the child; and

• The way the child was being or is expected to be educated.

How long do Schedule 1 orders last?

Unless the child is attending further education or vocational training, or has a disability, periodic payments will usually end when the child turns 18 years. If the paying party dies during the term of payment, the direct payments will of course stop, but whilst an existing order is in place, and if the child remains a dependent of the paying party, an application can be made under the Inheritance Act 1975 for a claim against the deceased’s estate.

If property has been settled or transferred, it will normally be returned to the financially stronger party once the child turns 18 or finishes their secondary education, but will sometimes only revert once the youngest child finishes their tertiary education. If special circumstances apply, such as an adult child with a continuing disability, the term might be even longer still.

Where does this leave us?

Applications for orders under Schedule 1 of the Children Act 1989 are normally extraordinarily complex and require the advice and representation of a family law solicitor experienced in HNW separation.

At a high level, these types of cases tend to involve people in the public eye where privacy is also a significant issue to weigh and manage. It is vital to instruct a law firm that understands the need for strict confidentiality and can manage media enquiries. Edwards Family Law can also support you through private processes of dispute resolution, outside of the more public court proceedings, with processes such as mediation, Early Neutral Evaluation, private FDR hearings, and Arbitration.

To discuss any points mentioned in this article, please contact our office.

Edwards Family Law is a niche London-based firm specialising in high-net-worth divorce and international family law. To find out more about Schedule 1 application, please phone +44 (0)20 3983 1818 or email contact@efl.fabledlabs.co. All enquiries are treated in the strictest confidence.

Research has confirmed what most of us already knew – following a divorce, women are more likely to lose out on pension-generated wealth than men, putting them at risk of low living standards in later life. For high-net-worth (HNW) couples, pensions are often located abroad and unless you have an experienced international family law Solicitor advising you, the overseas-based pension could fail to be included in the financial settlement.

Debora Price, the co-author of the Pensions and Divorce: Exploratory Analysis of Quantitative Data report and Professor of Social Gerontology at the University of Manchester commented in The Guardian:

“Divorce is a very emotional time for couples. It is especially difficult for them to think about pensions and often, the person with the larger pension – almost always the husband – does not want their pension to be shared as an asset in divorce.

“Women are often very focused on keeping their homes for themselves and the children and are often prepared to give up quite a lot to secure that.”

In this article, we explain how international pensions are dealt with in divorce financial settlement proceedings. However, before covering international pensions, below is a quick guide to how UK pensions are handled.

How pensions rights are divided in a divorce

When a couple divorce there are several options for dividing pensions:

Pension sharing

A Pension Sharing Order provides one spouse with a percentage share (referred to as a pension credit) of their ex-spouse’s pension pot. The pension credit can be assigned to an existing or new pension scheme. This option provides for a clean break concerning pensions.

Pension offsetting

One party retains their entire pension in exchange for other assets such as the family home. If the pension rights are worth less than the offsetting asset, the party receiving the pension under the financial settlement can relinquish the equivalent value of the property.

Pension attachment (formally known as pension earmarking)

In this scenario, the Court will make a Pension Attachment Order. This will provide for a portion of one party’s pension to be set aside for their ex-spouse. The ex-spouse will receive their percentage when the pension starts being paid out.

This option comes with the risk that if the pension holder dies before the pension pays out, the receiving spouse may never receive their percentage of the pension fund.

Applying UK pension sharing options to pension rights-based abroad

In Goyal v Goyal [2016] EWFC 50 (Fam), The Hon. Mr Justice Mostyn adopted the approach that pension sharing under section 24B of the Matrimonial Causes Act 1973 is not available for foreign pensions unless there is compelling evidence that a pension sharing order would be implemented in the overseas jurisdiction. Therefore, if international pension rights make up a considerable portion of the financial assets in a divorce, the jurisdiction where the divorce and financial remedy proceedings are heard will be crucially important.

Pension attachment orders, either lump sum or periodical, are sometimes enforceable in foreign jurisdictions. However, they are rarely used as a solution when dividing foreign pensions due to significant limitations, such as the Court not being able to direct the pension holder to retire at a set time, and the uncertainty surrounding pension attachment orders because they can be varied by the Court.

The financial remedies when sharing internationally based pension rights

The first thing your international divorce solicitor will do is seek legal advice in the jurisdiction the pension rights are located. They will ascertain whether the pension provider would consent to implement a pension sharing or pension attachment order made by an English Court. If the answer is negative, the option of whether an equivalent local order could be made and enforced will be explored.

Other solutions include:

Transferring the international pension to an English pension (this would be subject to the consent of the pension provider and the laws of the country where the pension is held).

Offsetting the pension against other assets.

Applying for an order under the Matrimonial and Family Proceedings Act 1984, Part III (financial relief in England and Wales after an overseas divorce). To qualify to apply for a Part III order one of the following must apply:

Either party must be domiciled in England and Wales on the date of the application or the foreign divorce.

The applicant must be habitually resident in England and Wales throughout the period of one year ending with the date of the application for leave or the foreign divorce.

The respondent must be a resident in England and Wales on the date of application.

Transferring (part of) the English pension to an overseas pension arrangement, against which the overseas order/agreement would be enforceable or by taking advantage of the pension freedoms

created by the Taxation of Pensions Act 2014 (where possible and subject to consideration of the tax consequences).

Summing up

As illustrated above, dividing an internationally based pension in a divorce financial settlement is a complex procedure that should be managed by an experienced solicitor with experience in dealing with complex cases. Although reaching a satisfactory solution may be difficult, it is certainly not impossible. With the right advice and representation, you can ensure you do not miss out on international pension rights that can provide you with a comfortable retirement in the future.

Edwards Family Law is a niche London-based firm specialising in complex and high-net-worth divorce and international family law. To find out more about dividing international pensions upon divorce, please phone +44 (0)20 3983 1818.

The case of X v C [2022] EWFC 79 dealt with a situation one might not automatically associate with family law – the right to freedom of speech. His Honour Justice Farquhar was asked to consider whether the financial remedies ‘needs’ case before him should have reporting restrictions attached to protect the parties’ seven year old child’s European Convention on Human Rights (ECHR) Article 8 (private life and family) rights.

What are the ECHR Article 8 and 10 rights?

The ECHR in question are as follows:

Article 8 – Right to respect for private and family life

1. Everyone has the right to respect for his private and family life, his home and his correspondence.

2. There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well-being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others.

Article 8 has been interpreted broadly by the courts. Article 10 – Freedom of expression

1. Everyone has the right to freedom of expression. This right shall include freedom to hold opinions and to receive and impart information and ideas without interference by public authority and regardless of frontiers. This article shall not prevent States from requiring the licensing of broadcasting, television or cinema enterprises.

2. The exercise of these freedoms, since it carries with it duties and responsibilities, may be subject to such formalities, conditions, restrictions or penalties as are prescribed by law and are necessary in a democratic society, in the interests of national security, territorial integrity or public safety, for the prevention of disorder or crime, for the protection of health or morals, for the protection of the reputation or rights of others, for preventing the disclosure of information received in confidence, or for maintaining the authority and impartiality of the judiciary.

Neither Article 8 or Article 10 rights are absolute, meaning that unlike Article 3 for example, which prohibits torture and “inhuman or degrading treatment or punishment” the courts must conduct a balancing exercise by weighing up the claimant’s ECHR right and, to put it broadly, factors such as the public good, national security, and the independence of the judiciary (to name but a few).

Why did the court decide that the child’s Article 8 rights were greater than the parents’ Article 10 rights?

What is interesting about this case is that neither the husband nor wife were high net worth or famous, situations that most commonly involve anonymity decisions. His Honour Justice Farquhar commented that the mere fact the parties to the proceedings had a child who could be identified was not sufficient justification to anonymise a financial remedy judgment. What did warrant consideration, however, was the presence of highly contentious, ongoing Children Act 1989 proceedings in which both parties had made various allegations against one another. This fact increased the child’s Article 8 rights as they were aware of the dispute and would undoubtedly be adversely affected by any publicity surrounding the case. This risk increased the child’s Article 8 rights being compromised.

In addition to the above, there was an accepted risk that the child’s father may publish an un-anonymised judgment for inappropriate purposes. His Honour Justice Farquhar was satisfied that H had at times been dishonest and was motivated to cause W distress, which would inadvertently cause harm to the child.

What does the decision in X v C mean for parties to Financial Remedies Court proceedings?

His Honour Justice Farquhar stated that proceedings in the Family Court, including the Financial Remedies Court, should remain as open as possible. The Family Court has faced years of criticism regarding closed-door hearings and accusations of ‘secrecy’. In June 2022, The Hon. Mr Justice Mostyn controversially reiterated his opinion in Gallagher v Gallagher (No 1) (Reporting Restrictions) [2022] EWFC 52 that the standard practice of anonymising financial remedy judgments conflicts with Scott v Scott [1913] UKHL 2 and Family Procedure Rules 27.10 and 27.11, and concluded it is unlawful. Instead, an anonymisation order and reporting restrictions can only be made after a formal application has been filed in court and a careful balancing exercise has been undertaken. He confirmed that this was his final opinion on the matter, but he would “leave it to others to determine [if he is] right or wrong”.

Undoubtedly, a higher court will indeed do just that and hopefully clarify the matter for family litigants.

Edwards Family Law is a niche London-based firm that deal with complex, high value and international family law. To find out more about financial dispute resolution, please phone +44 (0)20 3983 1818 or email contact@efl.fabledlabs.co. All enquiries are treated in the strictest confidence.

If you or a family member is in immediate danger, please call 999. Further support can be found at http://www.refuge.org.uk/ or by phoning the free 24-hour National Domestic Violence Helpline on 0808 2000 247.

Domestic abuse affects people of all cultures and socio-economic statuses. Affluent victims of domestic abuse will often experience economic abuse, and coercion and control during an abusive relationship. If you have been able to escape your situation and are now divorcing your abuser, one of the foremost questions in your mind is likely to be, whether or not the abuse you have suffered will lead to a more favourable financial settlement.

What is domestic abuse?

The Domestic Abuse Act 2020 (the Act) provided a statutory definition of domestic abuse for the first time. The definition consists of two parts, the first being the relationship between the victim and their abuser, and the second defining what domestic abuse is.

Under section 1 of the Act, domestic abuse occurs if Party A and Party B are both aged 16 years or over and the behaviour is abusive. Abusive behaviour is defined as:

• physical or sexual abuse;

• violent or threatening behaviour

• controlling or coercive behaviour;

• economic abuse; and/or

• psychological, emotional, or other abuse.

Economic abuse is also defined as any behaviour that has a substantial adverse effect on B’s ability to:

• acquire, use, or maintain money or other property; or

• obtain goods or service.

What factors will the court consider when deciding on a financial settlement order?

The Court will look to section 25 of the Matrimonial Causes Act 1973, paying consideration to the following factors when making a financial order in a divorce case:

The resources available to the parties, both in terms of capital and income, and those being extant or reasonably foreseeable;

• The financial needs of each party, considering the needs of dependent children and any disabilities;

• The duration of the marriage and the age of the parties;

• The conduct of the parties (but only in exceptional circumstances);

• The standard of living enjoyed by the parties.

• Any benefit either party will lose as a result of the divorce; and

• The contributions of each party to the marriage (both financial and non-financial).

Many clients assume that the fact one spouse was abusive means that the court will consider this under the guise of ‘conduct’ when considering the section 25 factors. However, this is not the case. Conduct will only be taken into account if the court concludes that it would be inequitable to disregard it. To illustrate how high the hurdle to overcome is, in H v H (Financial Relief: Attempted Murder as Conduct) [2005] EWHC 2911 (Fam) the court made an order to leave the husband with only a small percentage of the matrimonial assets after he had tried to murder his wife, but he received a portion of the matrimonial assets nonetheless.

Will domestic abuse be considered when assessing financial need?

If domestic abuse is taking place within a marriage or civil partnership that results in the victim being unable to earn their own income, then it is likely that the conduct could be considered when the financial need of the financially weaker party. In addition, as a way of keeping control of the situation, the abuser may not make a full and frank financial disclosure. These are persuasive factors that may result in the court looking at the effect that the domestic abuse has had on matters, such as the resources available and the financial needs of the victim.

Take for example a situation where one spouse runs a successful business and the other focuses on looking after the home and children. Under the principle set out in the landmark case of White v White [2000] UKHL 54 “There should be no bias in favour of the money-earner and against the home-maker and the child-carer”. So the fact that one spouse earned the money and the other ran the home and family will not automatically result in the breadwinner receiving a greater share of the matrimonial capital. Developing on this, if the spouse who was the victim of domestic abuse can show that they were prevented from working outside the home and/or having their own money, or that their self-confidence has been so eroded that it will take time for them to re-enter the workforce, the court may award them a greater share of the assets based on lack of resources and real need. This is especially true if the victim is caring for young children.

Wrapping up

To summarise, although conduct more generally will not normally be given too much automatic weight by the court when gauging the section 25 factors against the facts of the case and the making of a final financial orders, the impact that domestic abuse (including economic abuse) has had on the victim’s economic needs and resources may be considered as a factor alongside the section 25 factors as a material part of the case which could influence its outcome in some cases. It all depends on the circumstances of each individual case. What is important is that victims of domestic abuse leave the relationship and find safety. With expert legal advice and support from other services, you can move on to a positive future.

Further help and support are available from the below organisations.

National Centre for Domestic Violence (NCDV) – 0800 970 20 70

Refuge – 0808 2000 247 (24 hours)

Women’s Aid 0808 200 0247 (24 hours)

ManKind – 01823 334 244

Galop LGBT Domestic Abuse Helpline – 0800 999 5428

Edwards Family Law is a niche London-based firm specialising in high-net-worth divorce, separation, and international family law matters. To find out more about divorce and financial settlements, please phone +44 (0)20 3983 1818 or email contact@efl.fabledlabs.co. All enquiries are treated in the strictest confidence.

Whilst researching this article we searched extensively through various academic databases for articles discussing the effect perimenopause and menopause has on women who are in the process of divorce. The fact that we found almost nothing on the subject illustrates how little attention has been paid to the potential psychological impact of the two most stressful events a woman can experience occurring at the same time. it is only very recently i.e. this year, that people are starting to talk about it and the effect it can have.

In complex divorce cases where there may be hidden assets, jurisdictional disputes, and multiple mediation sessions and court hearings, both parties have to remain emotionally robust to ensure they can negotiate for what they need to move forward to an independent future. Menopause, however, leaves many women feeling the antithesis of strong, more often words such as exhausted, befuddled, emotional, and confused are used by peri/menopausal women to describe their physical and mental state.

Divorce and peri/menopause are predominantly middle-aged life events. The average age for UK women going through a divorce is 44.5 years. Peri/Menopause usually occurs between the ages of 45-55 years and is accompanied by a variety of symptoms including:

• hot flushes – short, sudden feelings of heat, usually in the face, neck, and chest night sweats – hot flushes that occur at night

• difficulty sleeping – this may make you feel tired and irritable during the day

• a reduced sex drive (libido)

• problems with memory and concentration

• vaginal dryness and pain, itching or discomfort during sex headaches

• mood changes, such as low mood or anxiety

• palpitations – heartbeats that suddenly become more noticeable joint stiffness, aches, and pains

• reduced muscle mass

• recurrent urinary tract infections (UTIs)

Dealing with a divorce whilst battling one or more of the above symptoms is incredibly demanding and may lead to stress-related symptoms, including:

• feeling overwhelmed

• racing thoughts or difficulty concentrating irritability

• feeling constantly worried, anxious, or scared loss of confidence

• insomnia and exhaustion

• increased or decreased appetite

• increased alcohol consumption

Coping with peri/menopause and divorce at the same time comes with enormous emotional, physical, and mental pressures and that is without considering other mid-life challenges such as career demands, teenagers, and ageing parents.

Due to the limited studies on how peri/menopause and divorce affect women mean it is impossible to draw any inferences on the subject. Common sense, however, tells us that should these two major life events happen simultaneously, some women will find it exceptionally difficult to argue for what they need in terms of a financial settlement.

If you are going through a divorce during peri/menopause, below are some ideas on how to take care of your physical and mental health during this challenging time.

Find a Divorce Solicitor who you trust and get on with. Divorce, especially one that involves international elements can take months or even years to conclude. You need a Solicitor on your side who you can be

confident will listen to your objectives and provide practical, emotion-free advice on how best to get what you want. It is also advisable to instruct a Solicitor who belongs to Resolution as its Code of Practice encourages members to resolve disputes in a non-confrontational way, thereby reducing stressful conflicts.

Take care of your health. Middle age is one of the busiest times in a woman’s life and it can be exceptionally difficult to find time to eat well, exercise, spend time with friends, and get enough sleep. The studies on stress, however, all show that self-care is essential for mitigating symptoms.

Seek additional support from a Counsellor or other mental health professional if the situation becomes overwhelming.

Wrapping up

It is imperative not to underestimate the effects of going through a divorce at the same time as peri/menopause. If you are struggling with your mental health, reach out to your Divorce Solicitor who can assist you with finding the support you need to move through this challenging life situation.

Edwards Family Law is a niche London-based firm specialising in complex divorce and international family law. To find out more about divorce and financial settlements, please phone +44 (0)20 3 983 1818 or email contact@efl.fabledlabs.co. All enquiries are treated in the strictest confidence.

The recent Family Court case of Randhawa v Randhawa raised the interesting question of what would happen if one party to a marriage filed for divorce and eventually received a decree absolute without the knowledge of their married partner. This also raises serious questions about the fallibility of the divorce system to fraudulent acts, how courts decide whether to set aside a decree absolute where it was gained on a false pretext, and what happens where a final decree is set aside if the guilty party has remarried.

Background to the case of Randhawa v Randhawa

Mr and Mrs Randhawa married in 1978, aged nineteen and sixteen years old, respectively. They went on to have four children, one of whom, Manpreet, died in 2003. Over several years, Mr and Mrs Randhawa invested in residential and commercial properties and, in the words of the judgement, “amassed a small fortune”.

The couple divorced in 2010 after being granted a final decree by Slough County Court. The divorce was granted on the basis that the marriage had irretrievably broken down due to Mrs Randhawa’s unreasonable behaviour. Mr Randhawa went on to remarry and have a child with his new wife.

Mrs Randhawa subsequently submitted a court application to have the final decree set aside for the following reasons:

• She did not receive any notice of the divorce

• The acknowledgement of service document, which told the court she did not wish to defend the divorce, was not signed by her, and

• The signature used for this purpose was a forgery.

In response to the application, Mr Randhawa denied the allegations, asserting that the divorce was genuine and Mrs Randhawa knew about the proceedings and actively engaged in them.

The parties also disagreed on the date of the separation. Mr Randhawa said this happened when he left the family home in October 2009, and there had been discussion of divorce prior to this. Mrs Randhawa denies having knowledge of this and did not know of the divorce until she petitioned for judicial separation in December 2019.

The Judge in the case, therefore, had to decide on the following questions:

a. What was Mrs Randhawa’s knowledge of the divorce Petition dated 22nd January 2010?

b. Did Mrs Randhawa sign the acknowledgement of service that was signed on 11th February 2010? If not,

c. Was the signature forged by Mr Randhawa or on his behalf?

d. Depending on the answers to the above questions, should the decree absolute stand or be dismissed?

The Judge relied on the basic legal principle that the person seeking to rely on a disputed fact must prove that fact.

Forensic Document Examiner confirmed the signatures were forged

Evidence was provided by nine witnesses, including a Forensic Document Examiner. The Forensic Document Examiner confirmed that there was “very strong evidence to support the proposition that the questioned signature was not written by [Mrs Randhawa] but that it is a simulation (freehand copy) of her genuine signature style, by another individual”. Falsified signatures were also used to secure a mortgage in the name of Mrs Randhawa and other property-related matters. Despite this, the Judge made it clear that the evidence of the expert was not the determining factor and that this had to be considered “in the context of the wider evidential canvas”.

What did the Judge conclude?

Having heard evidence from nine witnesses over a period of eight days, Judge Moradifar agreed that both parties had a difficult relationship and were devastated by the loss of their son. He stated that Mr Randhawa was “highly evasive and his evidence devoid of any detail” during his testimony when it appeared that the answers he provided might damage his case. The Judge also stated of Mr Randhawa, “I have no doubt that he is a man who would take any necessary steps to achieve his ends and where such steps fall foul of the law or morality, he seeks to deny his conduct unless faced with no other option but to admit the same. In the latter instance, he will seek to divert attention onto others, blame others or become altogether evasive”.

On the key matter of whether Mrs Randhawa signed the Acknowledgement of Service form and hence was given proper notice of her divorce, the Judge reached the following final conclusions:

a. Mrs Randhawa had no notice of the divorce proceedings that were initiated by a Petition for divorce by Mr Randhawa on 22nd January 2010.

b. Mrs Randhawa’s purported signature on the Acknowledgement of Service form dated 11th February 2010 was a forgery.

c. The signature was forged by or on behalf of Mr Randhawa

Judge Moradifar set aside the final decree granted on 22nd January 2010.

Final words

The case of Randhawa v Randhawa highlights that any attempt to circumvent the divorce process will be looked on extremely unfavourably in the family courts. The legal implications of taking such a course of action can be extremely complex, especially if the party who used fraud to apply for divorce then goes on to remarry and have children. Where a decree absolute is set aside, the parties effectively remain married and, therefore, any claimed remarriage effectively becomes void. This may then lead to a more serious criminal charge of bigamy. Aside from the criminal charge, this also leaves questions about ownership of marital assets and the joint ownership of any property in the actual and purported marriages.

Edwards Family Law is a niche London-based firm specialising in high-net-worth divorce, international family law, and children’s law. We are members of Resolution, an organisation of Family Law Solicitors that abide by a Code of Practice that promotes a non-confrontational approach to family law practice.

To find out more about divorce proceedings, please phone +44 (0)20 7129 7978 or email contact@efl.fabledlabs.co. All enquiries are treated in the strictest confidence.

London has long been established as the preeminent centre of the world for divorcing high-net-worth couples, in large part because law courts here are known to award sizeable settlements to the financially less well-off party. This reputation was cemented in 2000 in the case of White v White, involving Martin and Pamela White, who had three children together and divorced after 30 years of marriage. During the case which reached the House of Lords, it was concluded that the couple’s £4.5m net worth should be split 57% to Mr White and 43% to Mrs White. Crucially, Lord Nicholls of Birkenhead made it clear that in such cases, “There should be no bias in favour of the money-earner and against the home-maker and the child-carer”. The judgement went on to say, “As a general guide, equality should be departed from only if, and to the extent that, there is good reason for doing so”. Many high profile separations have now passed through London’s divorce courts, including that of Paul McCartney and Heather

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Mills (Ms Mills received a settlement of £24.3m) in 2008, and Bernie Ecclestone and ex-wife Slavica (Slavica Ecclestone receives £60m per year from her ex-husband) in 2009. Most recently, Her Royal Highness Haya Bint Al-Hussain received the largest ever settlement in British legal history of £554m from the Ruler of Dubai, His Royal Highness Sheikh Mohammed bin Rashid al-Maktoum, reconfirming London’s status as the divorce capital of the world.

Background to the divorce of Princess Haya from Sheikh Mohammad

The details of the divorce of Princess Haya from Sheikh Mohammad are notable not just because of the sheer scale of the settlement but also the background of the case. Princess Haya Bint Al-Hussain is the daughter of Jordan’s former King Hussein and married Sheikh Mohammed Bin Rashid Al-Maktoumon on 10th April 2004, becoming the youngest of six wives. The settlement followed a long-running custody battle, in which Princess Haya fled Dubai in 2009 to London along with her children, citing serious concerns for their safety. Her concern related to a High Court judgement in 2019 in which it was ruled that Sheikh Mohammed bin Rashid al Maktoum had previously abducted his other daughters, Sheikha Latifa Mohammed al-Maktoum and Sheikha Shamsa al- Maktoum, and held them against their will in Dubai. As a result and following several threats, Princess Haya had a real concern that her daughters would be abducted and returned to Dubai against their will. This was further reinforced after it was discovered that Sheikh Mohammed had ordered the hacking of the mobile phones of Princess Haya, her bodyguards and her legal team using spyware developed in Israel called Pegasus.

What did the Family Court rule in the divorce of Princess Haya from Sheikh Mohammad?

On 19th November 2021, in the Royal Courts of Justice Family Court, Mr Justice Moor ruled on the divorce case of Princess Haya from Sheikh Mohammad, specifically in relation to three applications;

1) a settlement for two children of the marriage, Jalila and Zayed, 2) financial provision following an overseas divorce and 3) declarations as to the ownership of various horses, jewellery, and other artefacts. Justice Moor made the following award in favour of Princess Haya and her two daughters, Jalila and Zayed:

Security – a lumpsum payment of £251,500,000 (£210m + £41.5m); Education – £3,040,000;
Maintenance and other costs – £5,600,000 to be paid each year for each child.

As such, this is believed to be the highest ever divorce settlement awarded in an English Court. The amounts awarded cover a range of costs, including education, holidays, visas, living costs, refurbishments, employee wages, IT costs, a vehicle fleet manager, VAT and other taxes, utility bills and insurance costs, wear and tear, horses and horse equipment, vets, nanny’s, tutors, and nurses. A sizeable portion of this award relates to security costs, given the extreme level of threat posed to Princess Haya and her daughters. Citing Princess Haya’s Head of Security, Justice Moor explained, “He [the Head of Security] considered that, although the threat level to HRH changes daily, it remains of a significant magnitude at all times. He exhibited his security assessment. He assessed the current threat level as “severe”. In other words, an attack is highly likely at some point, given the proven history of abduction. If there is a vulnerability in HRH’s security, the threat level rises to “critical”, which means an attack is highly likely in the near future.

In addition to the main threat from HH, there; plus the ever-present risk of kidnap and ransom”.

Final words

While it is true that the scale of the divorce settlement, in this case, is the highest of its kind in London, the background and circumstances of those receiving the awards are by no means normal. As Justice Moor stated, Princess Haya and her daughters will continue to face a “clear and present” risk to their safety for some time, and hence there is a need to fund effective security. Nevertheless, this case undoubtedly reaffirms London’s place as the capital of the world for divorcing high-net-worth couples.

Edwards Family Law is a niche London-based firm specialising in high-net-worth divorce and international family law. To find out more about divorce and financial settlements, please phone +44 (0)20 7129 7978 or email contact@efl.fabledlabs.co.
All enquiries are treated in the strictest confidence.

Arbitration offers significant advantages, and some downsides, in comparison to the England and Wales court system in family law matters, as Isobel Rarok of Edwards Family Law explains.

Many are aware of the significant presence of arbitration in the corporate and commercial spheres but may not appreciate that this form of alternative dispute resolution (ADR) is also available within the family law setting. Since 2012, arbitration has offered an alternative to court proceedings in financial remedy cases and, since 2016, has also been available in relation to child arrangements and relocation matters.

“Arbitration differs from other forms of ADR, which are designed to guide but not bind parties.”

Arbitration has increased in popularity due to the ongoing backlog faced by the court system; statistics released by the Law Society in December 2022 (covering the period from July to September 2022) show that the family courts continue to face significant delays and issues with judicial capacity. According to these statistics, all types of cases (save for consent order applications) are taking longer to dispose of than during the same period in 2021. These delays often lead to additional legal costs for both parties and can add to animosity. While many parties endeavour to resolve their cases voluntarily, this is not always possible, and many assume that there is no alternative to court proceedings. Could arbitration be the answer?

What is Arbitration?

 Arbitration is a form of ADR and takes place outside of court proceedings. Parties enter into an agreement to appoint an arbitrator, by whose determination (known as the “award”) they agree to be bound. The arbitrator will take the role of the “judge”, hearing and then determining the application. The arbitrator’s determination is equivalent to a final judgment and will be binding upon the parties. The arbitration award is then drafted into an order, which is sent to the court in the usual way to be approved and sealed by the court.

It is important to understand that arbitration differs from other forms of ADR, such as mediation and private financial dispute resolution hearings that are designed to guide parties, but not bind them.

The court will not vary the terms of the arbitrator’s determination when it makes the formal order, which means that the process effectively replaces court proceedings. The court retains a residual power to overturn or vary the arbitrator’s award if it is not deemed to accord with the relevant statutes, but given that family law is inherently discretionary, such a situation will be rare; only occurring in exceptional circumstances.

“Agreeing to arbitration can be very useful if one party is concerned about details of their financial and personal affairs ending up in the public domain.”

Further, following the case of Haley v Haley ([2020] EWCA Civ 1369), it is now possible to appeal an arbitral award. Again, this is likely to be the exception, rather than the rule.

Notwithstanding the above, arbitration is one of the most effective means to promote certainty and a swift resolution in family proceedings.

Advantages

Timing

One of the main advantages of proceeding by way of arbitration is timing. There are a number of arbitrators in England and Wales who are qualified and recognised to hear family law disputes. The arbitrators have control over their own workload and so typically do not have the significant backlogs faced by publicly funded courts and judges. Due to the number of practitioners qualified to arbitrate matters, there will almost always be someone available to take on the case, even at short notice.

Further, the arbitrator is privately funded, by the parties, which enables them to dedicate more time to considering the issues, the documentation and evidence placed before them, than a publicly funded court judge could. This can be particularly valuable to the parties if the case has additional complexities, such as international or offshore wealth structures. The costs of the arbitrator can be met by one or both of the parties, but the avoidance of the lengthy delays often faced in the public courts system means that the benefits often outweigh the costs of arbitration.

Flexibility/control

Parties also have additional control over the process. The parties will agree on which arbitrator to select, and can opt for an experienced family law practitioner, in many cases with expertise in the issues specific to their case. This is something that cannot be guaranteed in the court process, where parties have no influence or control over which judge will hear their case.

There can also be fewer procedural requirements. The parties and their solicitors can, in conjunction with the arbitrator, elect what directions they consider necessary to resolve the dispute, allowing them to build a more tailored approach. Timeframes can be led by the parties, subject to the arbitrator’s availability.

Confidentiality

The arbitration process, including the documents and evidence produced, remains confidential to the parties and their advisors. The same is not always true of family law cases; increasingly so as, while family law cases are heard in private, the family court “Transparency Pilot” launched in January 2023.

This Pilot has given rise to a presumption that accredited journalists and legal bloggers are permitted to attend family court hearings, report on what they see and hear, and are allowed access to certain documentation (see further details here). Whilst anyone reporting on a case must ensure children cannot be identified, more cases are likely to be reported and details made public, as a result of this new approach.

The guarantee of confidentiality within the arbitration process makes it an attractive alternative to court proceedings in many cases. This can also help to promote full transparency from parties to facilitate candid negotiations. Agreeing to arbitration can also be a good form of leverage if one party is particularly concerned about details of their financial and personal affairs ending up in the public domain.

Any appeal of an arbitration award would take place openly and removes this confidential protection, but as set out above, most awards will be made by experts in their field after significant consideration, so appeals are infrequent.

And the Downsides?

Parties should be aware that there are limitations to what arbitration can achieve, certain orders cannot be made by an arbitrator, such as third-party disclosure orders or certain interim orders, such as injunctions.

It is always best to seek specialist legal advice to ascertain whether a case is suitable for arbitration and what the options are more generally in relation to all the ADR processes potentially available.

One question we are routinely asked by our clients is whether nuptial agreements, either pre or post, carry any weight in Court. After all, after going to the effort of entering into an agreement to protect pre-marital assets, if this held no legal weight, what would be the point?

Take the recent high profile divorce case of Kirsty Bertarelli from Italian-born Swiss businessman Ernesto Bertarelli. As Tatler points out, “The former husband and wife were listed together at 14th place in this year’s Sunday Times Rich List, with a combined estimated fortune of £9.2 billion…” Whilst there is speculation as to the exact amount, it is believed that Ms Bertarelli received a divorce settlement of around £350m, in addition to a property on the shores of Lake Geneva worth £52m, and she retains ownership of an £8m ski chalet in the Swiss resort of Gstaad. This would make Ms Bertarelli the richest “British born divorcee in legal history.” In this case, the couple are believed to have entered into a pre-nuptial agreement when they married in 2000, and it is reported that they wanted to avoid a lengthy and drawn-out legal battle. The existence of the ‘pre-nup’ may have allowed the couple to focus on reaching such an agreement out of court. So just how legally enforceable are nuptial agreements in England and Wales?

Are nuptial agreements legally enforceable?

Contrary to what many people believe, nuptial agreements are not legally enforceable, and the Court has the final say when it comes to deciding how assets should be divided in an application for financial remedy following divorce. The Court will, however, take nuptial agreements into consideration by giving them appropriate weight.

The Court is required to take into account a range of factors when deciding on a financial order in accordance with the Matrimonial Causes Act 1973 (MCA 1973), Section 25; these include:

• the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future

• the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;

• the standard of living enjoyed by the family before the breakdown of the marriage;

• the age of each party to the marriage and the duration of the marriage;

• any physical or mental disability of either of the parties to the marriage;

• the contributions which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family

• the conduct of each of the parties.

Based on these factors, the nuptial agreement may be given a lesser or greater weight by the Court.

Nuptial agreements – a matter of fairness

It is important to understand that there is a difference between saying that a nuptial agreement is legally enforceable versus saying that a nuptial agreement carries weight when deciding a financial settlement. The principle that weight should be given to a nuptial agreement was established in the landmark case of Radmacher v Granatino [2010] UKSC 42. In Radmacher, the Supreme Court came to the conclusion that weight should be given by Courts to a nuptial agreement when exercising their discretion under section 25 of the MCA 1973; the judge stated, “The Court should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to the agreement”.

All of this means that a nuptial agreement should be given due weight by the Court where it is fair to do so. The word ‘fair’ is key here. The supreme Court referred to other landmark cases, including McFarlane v McFarlane [2006] UKHL 24, in which it was established that fairness should be based on the principles of:

• need – i.e. it is fair to take into account the needs of both parties to a divorce;

• compensation – this means that if one person is left financially stronger once both parties’ needs are met, the Court may award some compensation to the other person, and;

• sharing – i.e. each party to a divorce is entitled to an equal share of their joint assets unless there is a good reason otherwise (i.e. if some assets were acquired before getting married).

The Court will apply a three-part fairness test when faced with a case in which there is a nuptial agreement:

1) That the agreement was freely entered into;

2) Both parties have a full appreciation of the implications of the agreement; and

3) it is fair to hold both parties to the agreement in the context of the circumstances prevailing.

In practical terms it is widely considered that a pre-nuptial agreement should be signed at least 28 days prior to the marriage, and indeed not less than 21 days prior.

The court will consider each agreement and case on the basis of its own context and facts so specialist family law advice is always required whether you are considering entering into a nuptial agreement, or have one and are looking to divorce.

International cases

Different jurisdictions have varying attitudes towards nuptial agreements, but in many cases where there is a nuptial agreement, there will be an international element. Regardless of whether the nuptial agreement was prepared and signed in England and Wales or in another jurisdiction, if the divorce is being heard in England and Wales, the court will apply English law to its assessment of the agreement.

The court will carry out the three stage assessment detailed above when considering the foreign nuptial agreement, in line with the other factors it must consider pursuant to the Matrimonial Causes Act. Where the nuptial agreement was prepared and signed in a jurisdiction in which nuptial agreements are enforceable, this can be good evidence that the parties intended to be bound by it.

Final words

When it comes to nuptial agreements, whether drawn up before or after marriage, as long as they are freely entered into in a fair and transparent manner by both parties who understand the full implications of the decisions made, case law requires that Courts give them appropriate weight. In addition, the existence of a nuptial agreement can help focus the parties’ minds during a divorce and can be a good starting point for negotiations to ensure an amicable and timely financial settlement is reached for the good of both parties and any children involved.

Edwards Family Law is a niche London-based firm specialising in high-net-worth divorce and international family law. To find out more about pre or post-nuptial agreements, please phone +44 (0)20 3 983 1818 or email contact@efl.fabledlabs.co. All enquiries are treated in the strictest confidence.

Forty percent of people are relying on potential inheritances to fund their retirement, according to research conducted for Hargreaves Lansdown. Although this is a risky strategy, the reality of the astronomical rise in property prices over the past 30-odd years has meant many of the baby boomer generation now have million-pound plus legacies to hand down to their children and grandchildren, who are struggling to put away money for retirement or purchase a home of their own.

Given the above reality, when it comes to negotiating a financial settlement following divorce, those who have or expect to inherit considerable wealth will naturally attempt to ensure that it is classed as non-matrimonial, and separated out of the asset pot to be divided.

Is an inheritance classed as matrimonial property?

In the absence of a Pre or Post-Nuptial Agreement, assets acquired during a marriage or civil partnership are likely to be considered matrimonial property and notionally added to the pot that will be divided up between a couple upon divorce or dissolution. However, inheritances are treated differently in that they are not automatically deemed matrimonial property, but this does not mean that they will not be included, if certain criteria are met.

The separation of inherited wealth from matrimonial property was confirmed in the landmark family law case of White v White [2000] UKHL 54; [2000] 3 WLR 1571. Lord Nicholls examined the issue of property acquired during the marriage by one spouse by gift or succession or as a beneficiary under a trust (which he deemed ‘inherited property’ for the sake of brevity).

“This distinction [between inherited property and property acquired before the marriage, and matrimonial property] is a recognition of the view, widely but not universally held, that property owned by one spouse before the marriage, and inherited property whenever acquired, stand on a different footing from what may be loosely called matrimonial property. According to this view, on a breakdown of the marriage these two classes of property should not necessarily be treated in the same way. Property acquired before marriage and inherited property acquired during marriage come from a source wholly external to the marriage. In fairness, where this property still exists, the spouse to whom it was given should be allowed to keep it. Conversely, the other spouse has a weaker claim to such property than he or she may have regarding matrimonial property”.

Does that mean my inheritance is safe from the divorce financial settlement?

Not necessarily. The Court must consider all the factors under section 25 of the Matrimonial Causes Act 1973, namely:

• the income, earning capacity, property, and other financial resources each party has access to now and in the reasonably foreseeable future;

• the financial needs, obligations, and responsibilities of each of the parties now and in the reasonably foreseeable future;

• the standard of living enjoyed by the family before the breakdown of the marriage;

• the age of each party to the marriage and the duration of the marriage;

• any physical or mental disability of either of the parties to the marriage;

• the contributions that each of the parties has made or is likely to make in the reasonably foreseeable future concerning caring for any children of the marriage;

• the conduct of each of the parties, if that conduct is such that it would, in the opinion of the court, be inequitable to disregard it; and

• the value of any benefit one party will fail to acquire due to the divorce.

The brutal reality is that if the needs of both parties cannot be met by sharing the matrimonial resources available to them both, without recourse to all or part of the inheritance, then it is likely that the inherited assets will be included in the matrimonial pot to be divided between the couple.

What other factors could lead to my inheritance becoming matrimonial property?

Several factors could lead to the Court finding that an inheritance is likely to be considered to be matrimonial property rather than separate property, including:

• The length of the marriage and intermingling of assets. The longer that you and your spouse have been together, the more likely the inheritance has intermingled with the matrimonial property, to the point where it is impossible to separate it out. For example, often an inheritance is used to make improvements to the family property, which is difficult to separate from the overall value of the home. However, if funds from the inheritance was used to purchase a buy-to-let property and only the inheriting spouse had their name on the title deeds, then it is much easier to declare that the buy-to-let sits outside the matrimonial property pot, if the matrimonial pot is sufficient when divided to meet their needs.

• Matrimonial home. If an inheritance is used to purchase the family home itself the Court is more likely to view it as matrimonial rather than separate property.

There are no overarching rules as to whether an inheritance will be treated differently to matrimonial property. Everything will depend on whether, after consideration of the section 25 factors, a fair settlement can be achieved without recourse to the inherited assets or funds. Fundamentally, if the needs of the parties cannot be met by dividing the matrimonial property and assets, then inheritance will almost certainly be added to the matrimonial pot, especially if there are young children involved whose needs will be considered a priority.

Final words

Drafting a Pre or Post Nuptial Agreement will provide an opportunity to protect your inheritance from becoming part of any financial settlement following a divorce. Although not legally binding, if certain safeguards are in place, the agreement is fair and reasonable, and both parties have had the opportunity to take full and independent legal advice involving disclosure on both sides, the Court will give the contents of a Nuptial Agreement considerable weight and are more than likely to uphold its content.

To discuss any points mentioned in this article, including Pre or Post Nuptial Agreements, please contact our office.

Edwards Family Law is a niche London-based firm specialising in high-net-worth divorce and international family law. To find out more about divorce and financial settlements, please telephone +44 (0)20 3983 1818 or email contact@efl.fabledlabs.co. All enquiries are treated in the strictest confidence.

When couples divorce, disputes will often arise around the current ownership of assets and which of the parties should retain them, but what happens when extended family members stake a claim to an asset or assets the court is considering?

Such issues can include where there are informal or fluid arrangements in respect of family-owned assets such as properties and businesses, as well as where funds are provided to either or both of the spouses by extended family (often for the purchase of a property or investment in a business) and whether these funds were intended to be a gift or a loan. Conversely, parties to a divorce can also face difficulties where assets in which one of them has a beneficial interest is held in the name of a third party.

Despite it being fundamental that the judge in any case clearly understands the extent of parties’ interests in their assets, they can be left having to determine this with little or no documentary evidence.

An additional complication is that, generally, a decision in the family court will only be binding on the parties to the divorce, unless the relevant third parties are joined to the proceedings, meaning one party may be left with a decision that they could find difficult to enforce.

What is intervening?

Where a third party is claiming an interest in property that is the subject of financial remedy proceedings, or where one of the parties has an alleged interest in property owned by the third party, intervening in the financial application will formally add the third party to the proceedings. This gives them the opportunity to be heard in respect of their interest as well as binding them by the court’s decision.

While the court has the power to join or remove parties at it sees fit, often an application for a joinder will be made by one of the existing parties or the third party themselves. Such an application should be made at the earliest possible opportunity, on notice to the other parties.

The test that the court applies when considering whether to join a third party is namely whether:

a) it is desirable to add the new party so that the court can resolve all the matters in dispute in the proceedings; or

b) there is an issue involving the new party and an existing party which is connected to the matters in dispute in the proceedings, and it is desirable to add the new party so that the court can resolve that issue.

While the threshold for joinder is not particularly onerous, the parties must consider whether it is proportionate to do so, taking into account that intervening is likely to result in additional hearings, further witness evidence and pleadings.

Intervening also comes with a costs risk as the ‘no order as to costs’ approach within financial remedy proceedings, does not apply in intervenor cases. Instead, they are considered a ‘clean sheet’ case in which the court can make whatever costs orders it sees as fair. While costs orders are still discretionary and not automatic, an unsuccessful party (including intervenors) is at risk of being ordered to pay the legal costs of the successful party, as well as paying their own fees.

If intervening may not be worthwhile, a party can apply to for their extended family members to be heard as witnesses giving written and/ or oral evidence in respect of the arrangements in place. Where it is one of the parties asserting that the other has an interest in assets held by a third party, they may look into issuing a witness summons, which is a document requiring a witness either to attend court to give evidence or disclose documents in order to assist the court.

Each case is different, and arrangements in place can vary drastically, so it is vital that specialist family law advice is sought in respect of the strength of your case and the cost and risks that could be involved with intervening before any such application is made.

How to protect your assets for the future

Many families are now looking into how they can best protect their interests should divorce or another dispute as to ownership arise. Judges in the family court have a wide discretion to make findings based on the evidence before them, so iron clad protection is never guaranteed. That said, loan agreements and other contemporaneous documentation and written correspondence (including emails and text messages) can represent strong evidence of each party’s intention in giving or receiving gifts or loans.

A pre-nuptial agreement properly entered into can also be a useful tool in protecting family-owned assets and defining an extended family’s interest in individual assets at the outset of a marriage. While family law judges still retain an overall discretion in cases involving pre-nuptial agreements, such an agreement can provide a judge with evidence that each party to the marriage understood the wider family’s intentions and the arrangements in place.

Edwards Family Law is a niche London-based firm specialising in high-net-worth divorce and international family law. To find out more about pre or post-nuptial agreements, please phone +44 (0)20 3983 1818 or email contact@efl.fabledlabs.co. All enquiries are treated in the strictest confidence.

In all divorces, but especially in high-net-worth (HNW) divorces, the financial settlement is one of the most contested issues. The greater the income and assets, the higher the stakes.

Understanding how the Court reaches a financial settlement will give you the knowledge you need to build a robust case in your favour. Even if the matter does not go to Court and an agreement is reached through negotiation and/or mediation, the below principles will still apply.

Section 25 of the Matrimonial Causes Act (MCA) 1973 lists factors that the Court must consider when making provisions for a financial settlement in a divorce. However, the Court has full discretion on the weight given to each factor. The first consideration of the Court is to any minor children of the relationship; however, this is not the courts only consideration.

The Court will first look at what resources are available to the parties and then decide how to distribute them. Equality and fairness are the two principles that will guide the Court in any decisions concerning the distribution of wealth and assets.

What are the section 25 factors which the Court must consider?

The Court will consider the following section 25 factors when making a financial order in a divorce case:

• The resources available to the parties, both capital and income and extant or reasonably foreseeable.

• The financial needs of each party, considering the needs of dependent children and any disabilities.

• The duration of the marriage and the age of the parties.

• The conduct of the parties (but only in exceptional circumstances).

• The standard of living enjoyed by the parties.

• Any benefit either party will lose as a result of the divorce.

• The contributions of each party to the marriage (both financial and non-financial).

How have the Courts interpreted the section 25 provisions?

The House of Lords in Miller v Miller; McFarlane v McFarlane [2006] UKHL 24 identified three principles that justified the making of financial orders:

• Needs
• Sharing
• Compensation

Of the three principles, only needs features in section 25 of the MCA 1973. The other section 25 factors (as listed above) must always be considered by the Court when deciding on a financial settlement.

The ultimate objective of the three principles is to achieve a fair outcome.

Needs

No statute sets out the meaning of needs and case law gives it a wide definition. It refers to the income and asset (for example property, vehicles etc) requirements of the parties. In 2014, the Law Commission published a report, Matrimonial Property, Needs and Agreements. The report highlighted that a lack of statutory definition of ‘needs’ in a financial settlement context led to a lack of transparency and regional differences in settlements awarded. To rectify this, the Family Justice Council published a Guidance on Financial Needs on Divorce and Sorting out Finances on Divorce. These include examples of different types of need and highlights key principles about the duration of any financial provision and the transition towards financial independence (the latter is something that the Courts have placed particular emphasis on in recent years).

Sharing

In the landmark case of White v White, Lord Nicholls laid the groundwork for London becoming the ‘divorce capital of the world ’ when he stated:

“…there is one principle of universal application which can be stated with confidence. In seeking to achieve a fair outcome, there is no place for discrimination between husband and wife and their respective roles. Typically, a husband and wife share the activities of earning money, running their home and caring for their children. Traditionally, the husband earned the money, and the wife looked after the home and the children. This traditional division of labour is no longer the order of the day. Frequently both parents work. Sometimes it is the wife who is the money-earner, and the husband runs the home and cares for the children during the day. But whatever the division of labour chosen by the husband and wife, or forced upon them by circumstances, fairness requires that this should not prejudice or advantage either party when considering paragraph (f) [of section 25(2)], relating to the parties’ contributions … If, in their different spheres, each contributed equally to the family, then in principle it matters not which of them earned the money and built up the assets. There should be no bias in favour of the money-earner and against the home-maker and the child-carer.”

The sharing principle was then set out:

“A practical consideration follows from this. Sometimes, having carried out the statutory exercise, the judge’s conclusion involves a more or less equal division of the available assets. More often, this is not so. More often, having looked at all the circumstances, the judge’s decision means that one party will receive a bigger share than the other. Before reaching a firm conclusion and making an order along these lines, a judge would always be well advised to check his tentative views against the yardstick of equality of division. As a general guide, equality should be departed from only if, and to the extent that, there is good reason for doing so [Emphasis added].”

Although there is no defined good ‘reason’ for departing from equality, the most common situation is where one party has stepped back from their career and therefore has limited earning potential when compared with the spouse who continued to work. If the children of the marriage are to predominantly live with the financially weaker spouse, then it is likely that a fair settlement will require him or her to be awarded a greater share of the matrimonial assets.

Compensation

In cases where there is a “almost near certainty” that one spouse gave up a lucrative vocation that would have otherwise seen them enjoy an income similar to the party who continued with their career, compensation may be needed to achieve fairness.

Compensation awards are exceptional and will only occur in cases where:

• There are sufficient assets to fund the claim once a sharing award has been made and needs met.

• The claiming spouse has provided evidence of a lucrative career and that high levels of remuneration were likely.

• Documentary evidence supports the arguments made about the Claimant’s abilities and future career prospects.

Final words

The Courts have made clear that in matters concerning financial orders, the legislation must be paramount over case law. The Court of Appeal and House of Lords decisions relate to the process of reasoning when applying the section 25 factors to reach a fair settlement.

Lord Justice Thorpe made this clear in Lawrence v Gallagher [2012] EWCA Civ 394, 2012 WL 1015830 when he stated:

“Since the decision of the House of Lords in White v White the specialist judges have developed new approaches often expressed in newly minted phrases. I have myself contributed to this process to a limited degree. All this erudition is designed to guide the search for the fair outcome or to safeguard against the unfair outcome. But we must never forget the legislated check list which is designed to achieve the same ends. [Emphasis added]”

Edwards Family Law is a niche London-based firm specialising in high-net-worth divorce and international family law. To find out more about financial orders, please phone +44 (0)20 3 983 1818 or email contact@efl.fabledlabs.co. All enquiries are treated in the strictest confidence.