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David Hodson on International Family Law: EU proposals on marital property rights

Date:24 MAR 2011

David HodsonThe EU has just published its long-awaited proposals for divorce property rights in cross-border cases. It is in many regards very good, much to be welcomed and should make resolution and implementation easier for international families. Yet within the draft regulation the obsession remains by the EU to impose applicable law across the EU including on countries such as the UK and the Republic of Ireland which historically apply only their own law. Without this and with some changes, it could be usefully implemented.

Creating uniform rules and procedures for recognition and enforcement of family court property orders across Europe is hugely valuable, saves time and costs and increases the likelihood of successful implementation. It uses the customary exaquatur procedure. This is an excellent development.

Some EU countries will not make property orders on divorce in respect of property abroad. In contrast, some EU countries will make property orders in respect of property in their country even though another country is dealing with the financial consequences of the divorce - including that foreign property! One primary purpose of this Regulation is to overcome these sorts of inconsistencies and injustices.

Quite rightly in the commentary, the EU states that it is important that disputes of an international family should be dealt with by a single court in one place and forum. Courts of different countries should not be separately dealing with, for example, divorce and property consequences. England would always expect to deal with ancillary relief after an English divorce. This is not so across much of Europe. So bringing together divorce and property consequences is to be thoroughly applauded.

However a fundamental problem arises from the continental European distinction of maintenance and property. Maintenance is covered by Brussels I, to be replaced in June 2011 by the EU Maintenance Regulation, No 4/2009 of 18 December, 2008 which has distinctive rules and jurisdiction criteria. Specifically maintenance is not just periodic payments but closer to "needs", following guidance of Van den Boogaard v Lauren [1997] 2 FLR 399 and Moore [2007] EWCA Civ 361 where the Court of Appeal set out six propositions for identifying maintenance.

Yet property outcomes will now have a separate Regulation, with different jurisdictional bases and other provisions. An international couple may well find that maintenance consequences are dealt with in one country before one court and property consequences are dealt with in another country and another court with different criteria. The English family courts could not contemplate such a separation: fairness can only occur on looking at the totality of the available resources and the totality of the relevant s25 criteria. Whilst many more cases now have a sharing element rather than just pure needs, the reality is that very many cases are a fairness mix of sharing and needs. Separating out between maintenance and property for enforcement purposes, perhaps even jurisdictional purposes, will be very difficult indeed and alien within the English family law tradition.

The commentary indicates that the country with jurisdiction for the divorce would deal with property issues, in the English tradition. However Article 4 states that this is only if the parties agree; a very different scenario. If no agreement, there is a hierarchy of jurisdiction with the first being the common habitual residence and then other lesser connections. This sort of hierarchy has been argued by me and others as the way forward in overcoming the race to issue problems in Brussels II but has been adamantly opposed as a reform. It will be important in debating the Regulation to ascertain what would happen if one country eg England was dealing with the divorce and one party did not agree with England dealing with the property consequences so the Article 5 jurisdiction criteria were invoked. It might well create more satellite litigation on the arguments of the definition of habitual residence. This is simply forum litigation of another form!

Ultimately the Regulation comes down to applicable law being imposed across Europe. The commentary recognises the real problems with the race to issue divorce proceedings explicit in Brussels II. They state that differences between national legal systems often produce unexpected and sometimes unwelcome consequences for international families; an amazing understatement and denial of the real injustice created for many vulnerable parties, often women, in the past decade by the Brussels Regulation. Their solution is not to sort out the problems with the Brussels II race to issue the divorce. Their answer is applicable law: it doesn't matter where proceedings take place in Europe if it is known to everyone which country's law will be applied. This ignores of course that different countries apply a law in very different ways, particularly foreign courts often apply differently a law than that of the national court. It ignores the major procedural differences ancillary to applicable law such as colossal delays in some countries and woefully inadequate disclosure obligations in other countries. It disregards the unsatisfactory circumstances in which choices of applicable law are sometimes made, without separate legal representation and full knowledge of the consequences. The EU also ignores that as recently as late December, they were unable to gain EU unanimity on a proposed applicable law Regulation and instead accepted Enhanced Co-operation from 14 of the member states.

It may well be that the UK can adopt most of the Regulation but not the applicable law elements.

Predictably, lis pendens, first to issue, makes a repeat appearance in Article 12 where there are proceedings involving the same cause of action and between the same parties in different courts. Lis pendens is not the preferred way of resolving matters in any other group of jurisdictions around the world. When will the EU desist?! 

There is a separate draft Regulation for registered partnerships on similar lines although choice of law being restricted to the country where the partnership was registered.

There is much which is commendable in this proposed Regulation. We do need a much better system across Europe for recognition and enforcement of financial (property) orders made by family courts on divorce and other relationship breakdown. There needs to be proper processes so that there are not inconsistencies of approach between EU countries. The EU is right to cover this issue for the very many international families in Europe. However the reference to applicable law should be restricted to those countries operating choice of law and not imposed on others. The European Commission should grasp the nettle of maintenance and property having different regimes, jurisdictions and outcomes. Until then, this proposed Regulation will still look primarily continental European centric! Which will be a great pity as the many continental European families based in England need help in sorting out their financial affairs on relationship breakdown.

Postscript (12 April 2011): News reaches me that whereas with the EU Maintenance Regulation it was possible to opt in to only those parts not dealing with applicable law, this is simply not possible with the draft EU Property Regime Regulation. So we could not simply adopt it net of the applicable law elements. I have no idea why this one is different nor apparently do others involved in commentary on this EU development. There has been a lot of secrecy in the responses over the past six months from England on this issue. As it has such a fundamental importance to practitioners and clients, there really must be more openness and transparency.

David Hodson is a Consultant at The International Family Law Group. He acts in complex family law cases, often with an international element. 

He is an English specialist accredited solicitor, mediator, family arbitrator, Deputy District Judge at the Principal Registry of the Family Division, High Court, London and also an Australian qualified solicitor, barrister and mediator. He is a Fellow of the International Academy of Matrimonial Lawyers and author of A Practical Guide to International Family Law (Jordan Publishing, 2008). He is chair of the Family Law Review Group of the Centre for Social Justice. He can be contacted on dh@davidhodson.com.

The views expressed by contributing authors are not necessarily those of Family Law or Jordan Publishing and should not be considered as legal advice.

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