There are an estimated five million British Nationals living abroad today. For these people, often referred to as ‘Expats’, it is not unheard of to face complex legal challenges due to the multiple jurisdictions that naturally affect their lifestyle.
For instance, when it comes to divorce, the consequences of the choice of jurisdiction of where a spouse chooses to petition, could produce major differences in the final financial settlement further down the line.
Often it is more beneficial for financially weaker parties to petition the divorce in England and Wales, since the English courts look at the needs of the parties, aim to compensate non-financial contributions and make both parties ‘share the fruit of the marriage’.
This generally means that the English court’s values wives’ efforts to the household as being equal to the husband, even if their contribution had no direct financial value.
As a part of the divorce proceedings, the English courts have the power to order a share of a spouse’s pension to be transferred to the other partner.
This power is laid out under Section 24B of the Matrimonial Causes Act 1973 and for a long time it had been accepted that orders for property adjustment could be made in respect of foreign property, provided that there was clear evidence that such an order could be enforced in the foreign jurisdiction.
However, in the case of Goyal v Goyal, it is clear that this assumption is wrong if the property in question is a foreign pension. In the case, concerning a divorce in England and the dispute of a pension arrangement in India, it was held that Pension Sharing Orders cannot be made against a foreign pension even with clear evidence that it could be enforced in the concerned country.
This might serve as good news for Expats who are worried about their pension and future financial security in case of a divorce.
Nevertheless, the judgment does suggest ways around the finding, such as consent orders in conjunction with undertakings. Even so, this can hardly be seen as a substitute to the powers the court confers over domestic pensions.
Another solution could be to use the variation of nuptial settlement power under the Matrimonial Causes Act 1973 to split the pension. However, this option was eliminated in 1999 for domestic pensions, which makes it uncertain that such a line of argument would be successful before the court, even if the principle technically still could apply to foreign pensions.
Overall, it still appears that the foreign pension should be seen as an asset and should be added to the financial assessment of the party in a divorce proceeding. This could mean that the other party could still be compensated through other matrimonial assets even though a direct pension sharing arrangement would not be available.
People facing the prospect of divorce or separation who are concerned about their overseas pension holdings or assets should ideally seek advice as soon as possible, ideally from a solicitor with an international approach.
The same goes for spouses who believe that they may lose out if they are cut out of a pension agreement following a divorce.