Court of Appeal clarifies Part III 1984 Act leave test in billionaire divorce case

The Court of Appeal's decision in Potanina v Potanin (No.2) [2025] EWCA Civ 1136 provides crucial guidance on applications for financial relief under Part III of the Matrimonial and Family Proceedings Act 1984, particularly regarding the threshold test for obtaining leave and the impact of EU maintenance regulations.

Background and procedural history

The case involved Russian nationals married for approximately thirty years before divorcing in Russia in 2014. The husband, described as one of Russia's wealthiest individuals, held assets primarily through trusts and companies. The Russian court's equal division of "marital property" awarded the wife less than 1% of the total marital assets, as it only recognised legally owned property rather than beneficial interests.

The wife, who had obtained UK investor status and purchased London property in 2014, applied for leave under Part III in 2018. Cohen J initially granted leave ex parte but subsequently set it aside after an on-notice hearing, finding the wife's connection to England "recent and modest" and describing her application as "divorce tourism."

The Court of Appeal's decision

Lord Justice Cobb, delivering the leading judgement, identified several errors in Cohen J's approach and allowed the appeal on both contested grounds.

The "substantial ground" test

The Court clarified the threshold test following the Supreme Court's guidance in the same case. The test requires applicants to demonstrate something analogous to a "real prospect of success" - higher than showing the claim is not totally without merit, but not as demanding as establishing a good arguable case. The Court emphasised that "substantial" means "solid" but rejected the notion that connections with England must be "substantial."

Connection with England

Cohen J erred in characterising the wife's connection as inadequate. By the hearing date, she had held a UK investor visa for over five years, owned London property, and been habitually resident since at least January 2016. The Court stressed that connection should be assessed at the hearing date with forward-looking consideration, not at the application date.

The judgement clarified that section 16(2)(a) of the 1984 Act requires only "connection" with England, not "substantial connection." This distinction preserves the flexible approach courts should adopt when weighing English connections against foreign jurisdiction connections.

The maintenance regulation issue

Under the EU Maintenance Regulation (then applicable), maintenance creditors could choose their preferred jurisdiction from specified options. Section 16(3) of the 1984 Act prevented dismissal of applications on forum grounds where this would frustrate that choice. Cohen J's narrow interpretation failed to recognise that once jurisdiction was established through the wife's habitual residence, connection became irrelevant for maintenance claims.

Addressing "divorce tourism" concerns

The Court rejected Cohen J's characterisation of the wife as a "divorce tourist," noting this inference was improperly drawn from her consultation with English matrimonial solicitors and refusal to waive legal professional privilege. Such motivation questions required full evidential investigation rather than summary determination.

Key implications

The judgement establishes several important principles:

• The threshold test focuses on real prospects of success rather than demanding extensive English connections
• Courts must assess substantial ground and connection at the hearing date, considering likely circumstances at trial
• The existence of beneficial interests not recognised in foreign matrimonial law may constitute grounds for Part III relief
• Hardship and injustice remain relevant factors, though not preconditions
• EU maintenance regulations (where applicable) significantly constrain courts' discretion to decline jurisdiction

The Court granted leave and remitted the substantive application to the Family Division, noting the wife's strong position to argue that Russian proceedings had been unjust given the significant disparity between her award and what she would have received in English proceedings.

This decision provides valuable guidance for practitioners advising clients seeking financial relief following foreign divorces, particularly where there are questions about the adequacy of foreign awards or recognition of beneficial ownership structures.