International divorce: In our globalised world, it’s common for people from different nationalities to meet, fall in love and partner up. But unique problems can arise when such relationships break down. Let’s take a brief look at some of the things to bear in mind if you are splitting from a spouse and there is an international context.
What are some of the legal issues surrounding separation and divorce if partners live in different countries or the relationship had assets that were located overseas? Issues will need to be considered regarding where legal proceedings should take place (the jurisdiction), how assets will be treated, and how enforceable any Australian agreements and orders might be.
International divorce: Jurisdiction issues
One of the biggest issues is determining which country is the appropriate jurisdiction to hear divorce or property proceedings when there are citizens of more than one country involved.
Different countries have different ways of working out jurisdiction issues. In Australia, the test is whether Australia is “a clearly inappropriate forum” test to hear the matter. What this usually means in practice is this: for financial matters, if the parties are Australian residents, or if they own assets in Australia, then the Australian courts will be an appropriate forum. For parenting matters, usually if the parents and the children are in Australia, then the Australian courts will be appropriate.
However, in many other countries, the “closest connection” test is used to determine jurisdiction. The test establishes to which country the parties have the closest connection—for example, where they are habitually resident, or where the majority of assets are held. But in some countries there are laws designed to avoid jurisdictional conflict which enable the first party that files proceedings to determine where the jurisdiction should be.
Why does jurisdiction matter?
There can be strategic advantages to filing proceedings in certain countries. This can be due to their differing laws, tax systems, court costs, and issues such as a country’s powers of enforceability with regard to overseas orders and agreements. The length of time a country takes to resolve disputes might also be a factor in someone’s choice of how to proceed.
Fairness for all
And some countries simply have fairer systems than others, which will impact decisions. For example, in some countries, laws are still heavily gender biased. They may also not provide the same rights to LGBTIQ parties. By contrast, Australia’s family law is gender neutral, and treats same-sex marriage the same as heterosexual marriage.
De facto relationships
There are also major differences in how countries might treat de facto relationships and how provision is made for property division after a de facto relationship breaks down. In Australia, there is fair provision for de facto couples when it comes to property settlements.
While Australian courts do make spousal maintenance orders in property settlements, our courts aim for a “clean break” between parties and therefore make orders that try to completely finalise matters. Therefore, spouse maintenance is rarely ordered as an ongoing obligation. In some other countries, spousal maintenance awards can have a continuing effect or be made for very long periods into the future.
Property settlement issues
An important aspect of jurisdiction is the difference in how assets might be treated when held in other countries. They may be valued differently and there can be big differences in how assets that were acquired before or after a marriage are treated.
There are often much weaker rules of financial disclosure. In Australia, our duty of full and frank disclosure is pretty robust by comparison.
What about overseas assets? Binding orders can be made in Australian courts for property that is held outside of Australia, however not all overseas countries are able to do this. Many countries can only make property orders for the property located in their country. Also consider whether the overseas country’s courts can make protective orders to stop assets being transferred out of a jurisdiction.
Ask your lawyer to explain exactly how your property (including superannuation) might be treated if jurisdiction is in another country.
Make sure you discuss jurisdictional issues with your lawyer. Deciding how to proceed will mean weighing up the advantages and the disadvantages of filing in particular jurisdictions—and of course, how much choice you have in the matter.
A pre-emptive step
It’s sensible to take the precaution of entering into a Binding Financial Agreement (“prenup” or “postnup”) to ameliorate some of the risks of being in a relationship with someone from another country.
BFAs can build in protections for how property and wealth will be treated in the event of a relationship ending. They can handle succession plans (for example, by including clauses that ensure trusts will not be treated as a resource of either party) and deal with the potential tax consequences of transferring assets or income.
Even though the enforceability of an Australian BFA can become an issue in some countries, it is still a strong indicator of people’s intentions as to ownership of various assets, in the event of a future separation.
Depending on the country involved, if there is no BFA in place, entities like trusts can be determined to belong to the matrimonial asset pool. Although an overseas court might not have the ability to enforce orders against a trust held in a different jurisdiction, they are still able to take the trust’s existence and quantum into account when making decisions about the fair division of the marital assets.
When it comes to estate planning and the tax and legal requirements of more than one jurisdiction, you really need specialist legal and financial advice on cross border tax and succession plans.
We have not canvassed here the complex issues relating to parenting of children within an international context, including Hague Convention issues and international child support issue. For advice in relation to a parenting matter involving children either held overseas, or parenting issues after divorce from a parent from another country, please give us a call.
If you are a member of an international couple, or some of these issues are likely to affect you, please get in touch so we can give you accurate personalised advice. Please contact Canberra family lawyer Cristina Huesch or one of our other experienced solicitors here at Alliance Family Law on (02) 6223 2400.
Please note our blogs are not legal advice. For information on how to obtain the correct legal advice, please contact Alliance Family Law.