The number of people living outside their countries of birth continues to increase, with a concurrent growth in the number of transnational marriages. The U.S. Bureau of Labor estimates that over 46 million U.S. residents are foreign born, and a recent U.S. Census indicates that approximately 21% of married couples have at least one foreign born spouse. The growth in transnational marriages is leading to an increase in the number of cross-border divorces.
Unwinding cross-border marriages presents many unique challenges, ranging from choice of jurisdiction to spousal maintenance, property division and enforcement of court orders. In particular, identifying and locating marital assets is one of the most challenging aspects in a cross-border divorce.
Discovery
Cross-border divorces frequently involve structures and/or assets outside clients’ home countries. Outside the United States, pre-trial discovery in courts of law is often limited in scope, sometimes requiring parties to wait until the trial is underway for significant insights. Transferring assets to family and even friends when a divorce is apparent is more common in some countries compared to the United States. And the recent popularity of digital assets particularly favored by some multinational investors further complicates discovery. Often, a cost-benefit analysis suggests stopping short of an exhaustive search and pursuing what appear to be opportunities with the greatest likelihood of a significant recovery.
The trend toward global transparency may enhance efforts to locate hidden assets. For instance, under amendments to Australia’s Family Law Act 1975 and Income Tax Assessment Act 1997, spouses’ Australian pension information is available to interested parties during a divorce. The rise in government registries of beneficiary owners, while motivated by the fight against tax evasion and money laundering, may also prove to be helpful in tracking down a spouse’s assets. Although some countries restrict access to such registries, there are typically exceptions for law enforcement and persons with a legitimate interest.
Responses to what’s perceived by some offshore jurisdictions as an invasion of privacy range from enacting further firewalls to cooperating with foreign courts to achieve justice. For instance, in 2016, in UVW v. XYZ, a British Virgin Islands court authorized a third party to assist a foreign judgment creditor in tracing assets, based on the debtor’s past pattern of evasive conduct.
Enforcement and Collection
Enforcing a foreign court decree and collecting the assets is a final but often most difficult step in cross-border divorces. As previously noted regarding pension orders, one country may not recognize a divorce decree from another country. For example, under England’s Family Law Act of 1986, which guides English courts regarding the recognition of foreign divorce decrees, a U.K. family court refused to recognize a Dubai couple’s divorce on the grounds that the wife hadn’t understood what she was signing. And more recently, in Botwe v. Brifa, the U.K. Supreme Court didn’t recognize a divorce from Ghana, deeming it was obtained without the requirements for a U.K. divorce.
Religious-based divorces pose particular dilemmas. Islamic divorces by “taleq,” or the husband’s repudiating his wife by repeating “I divorce you” to her three times, often aren’t recognized in non-Islamic countries. This was the case with Hussein v. Parveen, in which an English court didn’t recognize a taleq divorce obtained in Pakistan. On the other hand, because religious marriages are the only legal form of marriage in Israel, in Cohen v. Shushan a Florida appellate court didn’t recognize an Israeli form of domestic union known as “reputed spouse” for succession purposes, noting “the deference we must afford to a sovereign nation’s authority to define, for its own people, the unique status of marriage . . .” and concluding that “the probate court erroneously conflated a domestic union under Israeli law with marriage under Israeli law.”
*This article is an abbreviated excerpt from “Cross-Border Divorce,” which appears in the June 2023 issue of Trusts & Estates.