Divorce in England for High Net Worth Indian Nationals: An Overview
1 August 2023
Introduction
Divorce is a significant event with implications across multiple spectrums, including legal, social and financial. High Net Worth (HNW) Indian nationals, due to their cross-border status, face a unique set of complexities, particularly when navigating divorce proceedings in England. This article seeks to provide a succinct summary of the essential aspects regarding divorce in England for HNW Indian nationals, with reference to critical legal citations and landmark cases such as Gadhavi v Gadhavi (2015).
Registration of Marriage in England
Further to the principle of overseas marriage recognition under Section 44 of the Marriage Act 1949, the principle of ‘lex loci celebrationis’ – the law of the place of celebration – is applied. This principle, followed in many jurisdictions, including England, dictates that the validity of a marriage is determined by the laws of the jurisdiction where the marriage took place. Therefore, even if the marriage was not registered in England, it can be recognised as valid, provided it complies with the law of the country where it was solemnised.
In line with this principle, English courts respect marriages performed in India in accordance with Indian law. The legal systems in India, including Hindu, Muslim, Christian, and others, each have their marriage laws, such as the Hindu Marriage Act 1955, the Special Marriage Act 1954, etc. As long as a marriage was carried out in adherence to these acts, the English courts will acknowledge it, irrespective of whether it was registered in England or not. It is important to note that the English courts will recognise the marriage, not merely for the purpose of dissolution but also for related matters. These could encompass issues related to other aspects of divorce proceedings, such as:
- maintenance
- division of property, and
- child custody.
However, there may be complexities if the foreign marriage is potentially polygamous. In such instances, the court would need to consider additional factors as per the Matrimonial Causes Act 1973. Yet, as most Indian marriages are monogamous, this is unlikely to be an issue for many Indian nationals.
While the registration of a marriage in England is not strictly necessary for initiating divorce proceedings in the country, it is critical that the marriage is legal and recognised in the country where it was solemnised. For this reason, couples should ensure they are well-versed in their home country’s marriage laws, and when in doubt, seek expert legal advice.
Residency Requirements for Divorce Proceedings
Elaborating on the Domicile and Matrimonial Proceedings Act 1973, the Act is particularly concerned with establishing jurisdiction for matrimonial proceedings, such as divorce or nullity of marriage, in England and Wales. The act is grounded in the legal principles of domicile and habitual residence.
In terms of the Domicile and Matrimonial Proceedings Act 1973, Section 5, English courts can entertain proceedings for divorce, nullity of marriage or judicial separation only if certain conditions are fulfilled. One of these conditions is that either of the parties to the marriage should be habitually resident in England and Wales for a period of at least one year immediately before the application was made or, alternatively, that either party should be domiciled in England and Wales on the date of the application.
“Domicile” is a legal concept that refers to the country that a person treats as their permanent home or lives in and has a substantial connection with. Being ‘domiciled’ in a country is not necessarily the same as being resident, although they often go together. A person might stop living in a country, yet remain domiciled there, if they have not formed a settled intention to live permanently in another country. You can read more about domicile and how to acquire it here.
In the case of an individual not domiciled in England or Wales, but being a resident, it’s crucial to understand what constitutes ‘residency’. The term ‘resident’ is not defined in the statute, but it has been interpreted by the courts to mean more than mere physical presence and generally requires some degree of permanence and continuity. Therefore, if an individual is not domiciled but resides in England, they must have been resident for at least a period of 12 months, indicating a degree of permanence and continuity, before the courts will accept jurisdiction for divorce proceedings.
It is worth noting that the English courts have a discretionary power to stay (halt) proceedings if it appears that another jurisdiction is the more appropriate forum for the divorce proceedings, but they will take into account a whole range of factors when deciding on forum. These factors include:
- where the parties are living
- where the matrimonial home was
- where other assets are held
- the nationalities of the parties, their domicile, and
- their future place of residence.
The court will generally lean towards accepting jurisdiction if one of the parties has a real and substantial connection with England.
Scope of English Courts in Asset Division
The potency of the English courts’ jurisdiction in financial settlements extends far beyond the boundaries of the UK. Armed with the legal provision of the Matrimonial Causes Act 1973, the courts have a broad perspective, accounting for “the income, earning capacity, property and other financial resources” in their considerations. In addition, the courts may consider “the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future”. This can include the maintenance and financial security of both parties post-divorce, and where applicable, the welfare of any children involved. Furthermore, the court has the power to order a party to transfer property to the other party or a child of the family. This is a powerful tool which can be exercised in favour of a fair distribution of assets.
This power is not limited to assets in England and Wales. English courts have frequently been willing to assert jurisdiction over foreign assets, especially in cases where one or both parties are domiciled or habitually resident in England and Wales. English law does not discriminate between the homemaker and breadwinner, aiming instead for a ‘yardstick of equality’. This sharing principle applies not only to matrimonial property but also to other types of property held in the names of either party, including foreign assets, pensions and businesses.
Overall, the power of the English courts in cases of divorce involving HNW individuals is extensive. This, combined with the court’s robust approach to financial settlements, results in a comprehensive and fair process that considers not just the assets based in England and Wales, but also those located elsewhere in the world, including India. As such, HNW individuals with cross-border interests need to carefully consider the implications of these provisions and decisions when navigating divorce proceedings in England.
Landmark Case: Gadhavi v Gadhavi (2015)
The case of Gadhavi v Gadhavi is a precedent-setting judgement in relation to divorces involving High Net Worth Indian nationals in England. The core issue at stake was the jurisdictional reach of English courts concerning foreign assets and the appropriate division of those assets. The Gadhavi case involved a marital dispute between two Indian nationals with significant matrimonial assets, including properties located in India. The English court, applying the principles outlined in Section 25 of the Matrimonial Causes Act 1973, was asked to resolve the division of assets. The court’s powers to make financial orders on divorce extend not only to assets within England and Wales, but also to assets located anywhere in the world.
The decision in this case emphasised the broad powers of English courts in respect to matrimonial finances. The husband, in this case, was arguing that India was the appropriate jurisdiction for dealing with the matrimonial finances because most of the assets were located there. However, the English court held that it had jurisdiction to deal with the finances of the parties, despite the majority of the assets being located in India. The court maintained that since the wife was habitually resident in England and the couple had made England their home for a substantial part of their married life, it was only fair to treat the financial matters here. The court applied the principle of ‘needs’ (one of the key factors under Section 25 of the Matrimonial Causes Act 1973) and decided that the wife’s needs could be met best by English courts, considering the living standards the couple enjoyed while they were together.
This landmark judgement thereby reinforced the principle that English courts have the power to deal with financial settlements upon divorce regardless of the location of the assets and may assert jurisdiction if it is the most appropriate forum to ensure a fair and equitable financial settlement. Therefore, the Gadhavi case has had a profound influence on subsequent divorce cases involving Indian nationals and their overseas assets in English courts. It underlines the importance of seeking expert legal advice and thoroughly considering jurisdictional issues when dealing with cross-border divorce cases involving significant assets. The case further proves that the English courts, known for their fairness, are ready to stretch their jurisdictional reach when necessary to ensure a fair outcome.
Conclusion
The intricacies of the legal and financial aspects of divorce for HNW Indian nationals in England cannot be understated. At the heart of this complexity is the English courts’ remarkable ability to deal with cross-jurisdictional issues and oversee the fair distribution of worldwide assets. These extensive powers are vested under the Matrimonial Causes Act 1973, particularly Sections 23 to 24, which provide a framework for dealing with maintenance, lump sum payments, property adjustment, and pension-sharing orders.
The case of Gadhavi v Gadhavi is a testament to the extensive jurisdiction of the English courts. In this case, the court exercised its power to distribute worldwide assets equitably, including properties located in India. It demonstrated that regardless of the location of assets, whether within the jurisdiction or abroad, they may be subject to scrutiny and division in the divorce proceedings. Moreover, the English courts also have extensive powers to pierce the corporate veil and consider the beneficial ownership of assets, as evidenced by the landmark case of Prest v Petrodel Resources Ltd [2013] UKSC 34. Here, the court bypassed the company structure to reach the underlying assets for the purpose of a fair financial settlement in divorce. This principle can be applicable in divorces involving HNW Indian nationals with complex asset structures and holdings.
Another salient point is the English courts’ willingness to award generous settlements to the financially weaker party in a marriage. In White v White [2001] 1 AC 596, the House of Lords underlined the ‘yardstick of equality’ as a starting point for the division of matrimonial assets. This could lead to substantial settlements being awarded, particularly in high-value cases involving HNW individuals. Given the complexities of these proceedings, it is crucial for HNW Indian nationals to seek legal advice from solicitors with international expertise. They can help untangle the intricate cross-jurisdictional issues, understand the potential implications on their global asset portfolio, and work towards a resolution that minimises the financial impact while ensuring compliance with the legal requirements of multiple jurisdictions. In conclusion, the English courts, equipped with their broad-reaching powers, ensure that all factors are taken into consideration to deliver a fair and comprehensive resolution in divorce proceedings. HNW Indian nationals considering divorce in England should be aware of the potential implications on their global assets and ensure they have adequate legal representation to navigate this complex legal terrain.
