How to deal with a UK pension after an overseas divorce

Given increasing globalisation, both in the population generally and in the workplace, it is not unusual for couples and families to live and work in a location other than their ‘home’ country (or countries) for some or all of their relationship. If that relationship breaks down, a number of legal issues can arise, not the least the jurisdiction where the parties should get divorced if married, or their relationship dissolved if civil partners, and whether one or both parties wish to return to their home country or seek to move elsewhere in the world with their family.

Issues such as the relocation of children to an alternative legal jurisdiction, even their perceived ‘home country’ and/or general principles about where a divorce should take place are beyond the scope of this article, which concentrates on pensions.

However if either scenario does apply, it is crucial for the parties involved to take legal advice in the jurisdictions in which they have a connection, reside and/or are planning to leave and move to, sometimes with some urgency. For more information about international family breakdown, contact our international family solicitors.

Overseas assets

If a divorce or dissolution were to take place in an overseas jurisdiction, there is no guarantee that the overseas court will be able to make orders in relation to assets held outside of its jurisdiction.

It is crucial to take advice on this issue before deciding where the legal proceedings take place. If an asset is held outside that jurisdiction, a court may not be able to deal with it at all. Even if the court can and does deal with it, one party may find that they cannot enforce that order in the alternative jurisdiction if the other party defaults, as the overseas order has no ‘teeth’ there.

Expert lawyers can help a party decide the pros and cons of choosing a jurisdiction for divorce/dissolution and also how best to ensure that a financial settlement does what it is intended to do and can be enforced if necessary where it needs to be enforced.

Pensions

Pensions may be the last thing on someone’s mind when a relationship breaks down, but the jurisdiction in which a divorce (or dissolution) takes place — and whether and how a court may deal with a pension as part of a financial settlement — can be an important consideration, particularly if a pension is a valuable asset for the family.

An overseas divorce court cannot make an order over a UK pension and if a divorce takes place in a jurisdiction other than the UK, one party may be left in a situation where a UK pension remains with one party when it could, and should, be shared fairly between them.

In this article, we explore how the English and Welsh courts can sometimes help after an overseas divorce.

In a separate article in this series we also explore how an English/Welsh court may be able to deal with an overseas pension as part of English or Welsh divorce or dissolution proceedings.

Part III of Matrimonial and Family Proceedings Act 1984

It might be possible to bring an application in England and Wales under Part III the Matriomonial and Family Proceedings Act 1984.

The primary purpose of the legislation is to provide a legal remedy to someone who has divorced overseas, received no or inadequate financial provision from that foreign court and they have substantial connections to England and Wales.

It is not a route to provide a second shot at obtaining a more generous settlement than was originally awarded by the foreign court, but instead it can be used to deal with assets that the overseas court could not deal with — such as UK-based pensions.  

The procedure is in 2 stages — seeking permission to apply and thereafter (if permission is granted) applying for the remedy.

Can a claim be brought at all?

A claim can be made only if there is a marriage/divorce (or dissolution, legal separation or annulment) that is recognised in England and Wales as being valid. This may need to be confirmed by an expert family law solicitor.

Unmarried separated couples have no recourse to a pension under Part III or any other legislation in England and Wales.

The parties must then be divorced in the foreign court.

If the party seeking to make a claim has remarried, they are barred from bringing a claim.

Next, the application must meet one of the following requirements:

• Domicile. Either party is domiciled in England and Wales on the date of the permission application, or was on the date that the foreign divorce (or dissolution etc) took effect in the overseas country.
• Habitual residence. Either party was habitually resident in England and Wales for at least 12 months ending with the date of the permission application or the date when the foreign divorce (etc) took effect in the overseas country.
• Matrimonial home in England and Wales. Either party has at the date of the permission application a beneficial interest in possession in a dwelling-house in England or Wales that was at some time during the marriage a matrimonial home of the parties (Note: if the claim is brought on this basis, the court is confined to dealing with the property itself or its value only — and so not UK pensions).

As such, to deal with a UK pension, one of the parties must be domiciled in England and Wales or habitually resident for at least one year.

This criteria will not apply to all divorcing couples with a UK pension, and it may mean that the English and Welsh court is unable to assist.

However, it may not always be the end of the road. Other, practical, options might be available and should be considered with legal (and financial) advice, such as the possibility of transferring a UK pension overseas to the jurisdiction where the divorce is taking place. This is beyond the scope of this article and requires specialist expertise.

How is a claim brought?

Stage 1: Permission to bring the application

The first stage of the two-stage process is whether the court will grant permission for the application. The applicant must demonstrate that the application is for a substantial or solid claim and is not without merit.

The court will consider the connection of parties with England and Wales, their connection with the country in which the marriage was dissolved and their connection with any other countries outside England and Wales.

It will also review the financial benefit that the applicant or a child of the family has received, or is likely to receive in the foreign jurisdiction, the extent to which the foreign order has been complied with or is likely to be complied with, the availability in England and Wales of any property for which an order in favour of the applicant could be made together with issues of enforcement.

Stage 2: Whether in all the circumstances of the case it would be appropriate for the order to be made

The court has criteria to follow, set out in Part III, but in general terms it will approach the matter broadly, having regard to the purpose of the legislation which is to alleviate hardship in cases of foreign divorce.

If the court is not satisfied that an order is appropriate, it must dismiss the application.

Just because the foreign court could not deal specifically with a UK pension does not necessarily mean that the overseas divorce settlement failed to factor in the value or benefits afforded by the UK pension in making its award. Part III may not therefore be appropriate for all cases where a UK pension arises.

In some cases, the issue of a UK pension may be ‘parked’ with the express intention of it being resolved back in England and Wales, when a claim under Part III would be justified and likely to succeed.

In other cases, it may simply have failed to have been addressed or factored into a settlement at all. In this case, the court will need to weigh up the extent to which the English or Welsh court should assist.

Summary

Given the scope for potential litigation in two different jurisdictions, it is essential for parties to take legal advice at an early stage.

Our experience is that many parties consider using Part III as they agree that a UK pension should be shared in some way between them and recognising the limitations of the foreign court. In those cases, matters can be dealt with by consent, subject to approval by the judge.