A second bite at the cherry- will it get harder after Potanina v Potanin?

There has long been a (legitimate) practice of parties who have international links choosing a jurisdiction for divorce which suits them best.  Often this relates to a particular jurisdiction’s approach to maintenance or specific types of assets, such as inherited, pre-acquired assets and so on. It is commonly known as “forum shopping”. Here, Lisa Brown looks at the ongoing case of Potanina v Potanin and their multi-million-pound separation.

The recent appeal decision in Potanina v Potanin [2023] UKSC 3, however, is an example of something slightly different.  Put simply, this is having “another go” in England and Wales if the jurisdiction in which you originally divorced may not have resulted in a favourable financial settlement.

Legal basis

Part III of the Matrimonial and Family Proceedings Act 1984 allows a party to make an application to the family court in England and Wales, even where there has been a divorce and financial settlement elsewhere.  In order to do so, there must be a substantial connection with England and Wales and the purpose, per the case of Agbaje, is to alleviate the adverse consequences of no, or no adequate, financial provision being made in a foreign court.

Background to Potanina v Potanin

Both parties in this case were Russian nationals.  They met as teenagers and married in Russia in 1983.  They had 3 children who were brought up in Russia and they divorced in Russia in 2014.  It was only after the dissolution of their marriage that Natalia Potanina moved to London.

In the early days of the marriage, they were not well off but, in the 1990s, Vladimir Potanin became hugely wealthy.

Between 2014 and 2018 there were 5 separate proceedings litigated in the Russian courts, there were also proceeding in the US and Cyprus.

The central issue, in terms of the provision by the Russian courts, was that whilst marital assets were divided equally, this only included assets legally owned by the parties and excluded the various trusts and companies in which the husband held almost all of his wealth.

The result ultimately was that Natalia Potanina received payments to her that she says totalled $41.5m and Vladimir Potanin says totalled $84m- in either case a fraction of what she would have received if all of the beneficially owned assets had been included.

English proceedings

On 8 October 2018 Natalia Potanina issued an application under section 13 of the 1984 Act for leave to apply for financial relief under Part III (on the basis she had been habitually resident here for 1 year).

The application was made without notice by Cohen J on 25 January 2019.  Whilst the judge’s strong inclination was to order a hearing on notice to Mr Potanin, he was ultimately persuaded by Leading Counsel not to, and he granted leave.

As the application was granted without notice Mr Potanin had 7 days to apply to set this aside which he duly did.  His application was heard by Cohen J on 3 and 4 October who then dismissed the wife’s application commenting that:

if this claim is allowed to proceed then there is effectively no limit to divorce tourism

Natalia Potanin then appealed this decision and her appeal was allowed by King LJ on the basis that whilst she felt the way it should have been dealt with was a hearing with both parties present, having made the decision not to do that, there were limitations on the judge’s ability to set aside his original decision which effectively meant that unless the court had been misled or a decisive authority overlooked the application to set aside should be adjourned to be heard with the main application.  The initial order granting leave was restored.

The Supreme Court (2 judges dissenting), however, did not feel that the law did/ should presently restrict a judge’s powers on a set aside application in the way described by King LJ.  They felt that on a such an application the court should consider whether the application should be set aside because the conditions for leave are not met.  They were, however, not critical of the Court of Appeal’s approach in the circumstances and given the procedural history (set out in the judgment).

So where are we now?

The test on an application to set aside leave in these types of cases should be to decide a fresh hearing both sides whether the order should be made or not.  It may be there is now procedural reform in respect of these types of application.

The case has been hailed as a “win” for Vladimir Potanin but, for Natalia Potanina, all was not lost as she had also challenged the set aside decision on the basis that:

  1. She has satisfied the test for the granting of leave in any event.
  2. The application shouldn’t be dismissed insofar as the court has jurisdiction under Maintenance Regulation.

These points of appeal have gone back to the Court of Appeal to be decided and so the case goes on….

The court did point out that the facts of this case were probably an unreliable guide for most people given the husband was on of the richest people in the world and the wife already has many millions of US dollars.  Put simply, in their case all this litigation and the costs that go with it are worth it in terms of what there is to lose/ gain.

For most people that may not be the case and therefore if the test for leave is effectively to be “harder” it is all the more important to get early advice from a specialist family solicitor with experience in jurisdiction issues.

If you need advice on this topic, or any other matters concerning divorce or family law, please get in touch with our team at McAlister Family Law.


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