If Britain has the biggest pay-outs for divorcing spouses, can anyone file for divorce there? The ex-wife of a Russian oligarch, who was denied permission to pursue her international divorce claims against her husband’s $19 billion fortune, just found out about jurisdiction the hard way.
To Russia With Love
Natalia Potanina, 58 was attempting to secure an increased pay out through English courts from her former husband, Vladimir Potanin – Russia’s second richest man, claiming that the initial amount she received left her facing ‘hardship’ and did not meet her ‘reasonable needs.’
Ms Potanina claimed that she was only given $41.5 million when the couple divorced in 2014 but deserved considerably more because of the role she played in helping to build her husband’s extensive business empire.
She was attempting to launch a case in the English courts, where divorce pay outs are notoriously high, protesting that when she tried in Russia she got considerably less because of her husband’s ‘wealth, power and influence,’ which denied her a fair settlement.
She also alleged that he had secreted his vast wealth out of her reach in a complex web of offshore companies while pleading to judges in Moscow that he had virtually no assets.
International Divorce Issues
International divorce often brings up the issue of jurisdiction. Who sues whom, how do you sue for divorce, and in what country are problems in an international divorce case. The answers are more difficult than people think as I have written before.
A British divorce might give more money because British courts can disregard prenuptial agreements, and the cost of living is high in London. However, in Florida, the outcome could be different still.
Rules about children and hiding assets is a problem in every divorce, especially in international cases. The problem of discovery of hidden wealth is even bigger in an international divorce because multiple countries, and multiple rules on discovery, can be involved. The problems in an international divorce are more complicated because hiding assets from a spouse is much easier in some countries than in others.
Florida, at one extreme, requires complete disclosure of assets and liabilities. In fact, in Florida certain financial disclosure is mandatory. At the other extreme, are countries which require very little disclosure from people going through divorce.
Choosing possible countries to file your divorce in can be construed as “forum shopping”. The European Union introduced a reform called Brussels II, which prevents “forum shopping”, with a rule that the first court to be approached decides the divorce. But the stakes are high: ending up in the wrong legal system, or with the wrong approach, may mean not just poverty but misery.
Residency for divorce is a very important jurisdictional requirement in every case. Generally, the non-filing party need not be a resident in the state in order for the court to divorce the parties under the divisible divorce doctrine. The court’s personal jurisdiction over the non-filing spouse is necessary only if the court enters personal orders regarding the spouse.
The durational domicile or residency requirement goes to the heart of the court’s ability to divorce the parties, because the residency of a party to a divorce creates a relationship with the state to justify its exercise of power over the marriage.
Back in the USSR
Lawyers acting for her husband took the matter to the High Court in London, asking for her English legal bid to be thrown out during a three-day hearing which took place last month. Delivering his judgment, Mr. Justice Cohen said that the claim that Mrs. Potanina received $41.5 million was ‘untrue and that the real figure was actually over $84 million. In addition to this, she also received $7.3 million in child maintenance. She also purchased a home in Long Island, New York, soon after the divorce, which is worth $6.5 million.
To most people it would seem inconceivable that someone who has received an award of $40-80 million could argue that reasonable needs have not been met, but each case is fact-specific and I accept that the wife could argue that her reasonable needs have not been met. However, the other 16 factors mitigate strongly against her claim proceeding.
If this claim is allowed to proceed then there is effectively no limit to divorce tourism”
Potanina is “very disappointed” and plans to appeal, the judge said. Lawyers for both sides declined to comment. Potanin, Russia’s richest tycoon with $27 billion fortune, is considered to be one of the few “oligarchs,” who became rich under first Russian President Boris Yeltsin. He also plays hockey at the so-called Night Hockey league, sometimes against President Vladimir Putin.
The judge dismissed arguments from Potanina that she couldn’t obtain justice in Russia, saying the local courts properly applied the law. Potanina said that her husband was “too powerful.”
“I do not believe that there is anything more I could have done to obtain justice in Russia. It was an impossible task,” she said in a written submission cited by the judge.
The couple lived in Russia for the length of their marriage, before Potanina moved to England in 2014, the judge said. Her first contact after her arrival appears to have been to obtain advice from London divorce lawyers, the judge said in his ruling.
The Bloomberg article is here.