Rome III... or not

In March 2005, the European Commission launched a public consultation on applicable law and jurisdiction in divorce matters in the form of a Green Paper that relates to a future regulation, Rome III. This Regulation is intended to simplify divorce procedure for EU nationals who live in other member states by dealing with the choice of applicable law and setting out clear rules relating to them.

The Commission's last move towards the simplification and standardisation of EU divorce law, Brussels II (Regulation 1347/2000 on Jurisdiction and Recognition and Enforcement in Matrimonial Matters), came into force on 1 March 2001. Brussels II, which applies to all member states bar Denmark, simplified the conflict of law regime throughout Europe, providing that, in the case of a conflict where two or more EU countries have jurisdiction, the country in which proceedings are first brought has exclusive jurisdiction and no challenge is possible.

Foreign law in English courts

Brussels II does not include rules that specify which system of national law should be applied to determine the rights and obligations of parties to a case, 'applicable law'. At present, a number of member states have rules that allow foreign law to apply to family proceedings, for example, Spanish and German courts will routinely apply English law to cases involving English nationals divorcing in those particular jurisdictions. Conversely, a number of jurisdictions, including England, apply their own national law (lex fori) to all cases where they have jurisdiction regardless of the nationality or origins of the parties.

Rome IIII was intended to improve legal certainty. To quote vice president Franco Frattini, EU commissioner for justice, liberty and security: 'These initiatives will simplify life for couples in the EU'¦ they will increase legal certainty and enable couples to know which law will apply to their matrimonial property regime and their divorce.' The architects of the draft Regulation, while appreciating the inadequacies of Brussels II, may have underestimated the huge difficulties in implementing applicable law in the UK, where we have no tradition of applying foreign law. Accordingly, in October 2006, the UK, along with Ireland and Malta, decided not to opt in to Rome III.

The UK's decision to exercise its opt-out in relation to Rome III highlights the inevitable difficulties UK domestic family law is experiencing in adjusting to the increasing mobility of Europe's families. That said, it was clear to the government that the implementation of applicable law in this jurisdiction would have been exceptionally difficult to effect as it would certainly have given rise to severe practical, as well as procedural, difficulties.

Rising number of international divorces

There are around 2.2 million marriages in the EU every year. The Commission estimates that around 350,000 of these involve an international couple. The EU has a comparatively high divorce rate. Of the 875,000 divorces in member states, it is estimated that 16 per cent are international. If the proportion is similar in England and Wales, around 24,000 of our 150,000 divorces annually involve international couples who need to be aware of the difficulties they may face navigating the wide variation in divorce law across European jurisdictions.

Research has shown that, before they relocate, couples tend to focus on the externals of the move, such as where they will live. They are unprepared for the feelings of disorientation and isolation that often accompany an international move and many fail to realise that an international move may prove fatal to a marriage.

International 'big money' cases: tax benefits v divorce risk

The fact that many international ultra-rich people have relocated to London can be attributed to this country's unique, 'non-domiciled tax rule', which allows tens of thousands of wealthy individuals to avoid paying tax on income earned overseas. While relocation to England may well have serious tax advantages, it could be an exceptionally expensive move if the marriage goes wrong.

Our generous tax system, which has benefited numerous Russian oligarchs and the like, is matched by a divorce jurisdiction that is arguably the most generous in the world. England is at present the jurisdiction of choice for 'forum shopping' wives, who can be confident that the income and capital awards here in big money cases can generally not be bettered elsewhere. The implementation of Rome III in this jurisdiction would have led to a decrease in 'big money' international divorces, as there would be no incentive for, say, a French wife living in England with her French husband to rush into a divorce here if an English district judge was compelled to apply French law.

If either the husband or the wife is from an EU member state, or has a close connection with that member state, there is the potential for a choice of jurisdiction if the couple divorce. For example, if a German banker husband married to a German wife is transferred to work at the London Head Office of the bank and the marriage breaks down after they have lived in England for a couple of years or more:

• the English Court would have jurisdiction because the couple are 'habitually resident' here; and
• the German Court would also have jurisdiction because they are German nationals.

There would then potentially be a scramble to see who could issue divorce proceedings first, because the English legal system would benefit the wife and the German legal system would benefit the husband. If the wife wanted to save the marriage, she might be discouraged from attempting a reconciliation by the knowledge that if her husband 'got in first', it could have serious adverse financial consequences for her.

The key differences in the approach to divorce in different EU countries highlights the fact that it is crucially important to consider the question of jurisdiction in all international cases. Some of the core differences can be summarised as follows:

• Countries that apply the laws of other states (applicable law)

Austria, Estonia, France, Germany, the Netherlands, Greece, Italy, Portugal, Poland and Spain apply the divorce laws of other states in some circumstances.

• Availability of divorce

In Spain and Scotland, there is no requirement to be married for a year before divorce. By contrast, in Northern Ireland, there is a requirement to be married for two years before divorce. In Sweden, no ground for divorce is needed, but a six-month consideration period applies where one spouse is opposed or there is a child aged under 16. However, in the Republic of Ireland, a divorce can only be granted after four years' separation when it is shown that there is no prospect of reconciliation and adequate arrangements have been made for the spouse and any children. There is no principle of a clean break. At the most extreme, in Malta, there is no provision for divorce at all.

• Significance of blame for the break-up

In Austria and Poland, fault can be taken into account in financial orders.

• Prenuptial agreements

While they are merely a factor to be taken into account in England and Wales, prenuptial orders are binding in France, Sweden, Portugal, Poland, Spain and the Czech Republic, and in Germany in certain circumstances. They are enforceable in Latvia only on the division of capital. They are also enforceable in Scotland where the courts are very reluctant to interfere with properly drafted agreements.

• Maintenance for spouses

Most other EU countries (including Scotland) take a more restrictive approach to maintenance for spouses than England and Wales. If maintenance is available, it is usually short-term and specifically targeted at situations where it is difficult for a spouse to support herself because of her age and lack of recent, or indeed any, work experience, or because she is caring for young children. Examples of countries taking this approach include Greece, Cyprus, Estonia, France (maintenance during pregnancy and until a child reaches three years old), and Germany (spouses are expected to work full-time by the time a child is 15 years old). In Denmark, maintenance is uncommon and usually does not last longer than ten years. In Sweden, there is no general maintenance but it may be awarded to provide support during a 'transitional period' to find employment or undertake training. In Scotland, maintenance tends not to last beyond three years. In Italy, a spouse who is able but unwilling to support herself can be denied maintenance. Unusually, in Belgium, maintenance does not stop automatically on remarriage.

• Marital property

A large number of countries allow inherited wealth or assets acquired before the marriage to be excluded from the pool of marital property to be shared on divorce. This is the case in Belgium, Germany, Scotland, the Czech Republic, Estonia, France, Latvia, Poland, Slovakia.

Rome III harmonisation

The Rome III Regulation, which is intended to come into force on 1 March 2008, aims to harmonise these disparate rules and:

• create a clear, comprehensive legal framework in matrimonial matters in the EU;
• bring legal certainty, predictability, flexibility and ensure access to court;
• prevent the 'rush to court'; and
• increase flexibility and party autonomy.

The Regulation will establish a consistent set of rules for deciding which country's law would apply in a given case. The rules will set out a scale of factors for the court to consider, starting with the country in which the spouses last had their home together to ensure the divorce is governed by the law with which the marriage has the closest connection.

There would also be a mechanism for the spouses to designate by agreement which laws would apply to allow flexibility for them to make an autonomous choice which could be made in a premarital agreement or by agreement in writing at the time of the divorce application.

Where does that leave international divorce rules in England and Wales?

Since the implementation of the Brussels II regulation in 2001, European couples have needed specialist advice on the advantages and disadvantages of bringing proceedings in each EU state to which they have a connection. Undoubtedly, these considerations have encouraged a rush to divorce to secure a beneficial jurisdiction. Measures to counter this trend would be welcomed by family lawyers.

However, the imposition of applicable law is not the answer. If applicable law is introduced (and the government could of course opt in in the future), the 'rush to court' may be replaced by chaos, confusion and higher legal costs.

The introduction of the proposed new Regulation throughout most of the EU will lead to more couples having their divorces dealt with by courts in other member states, applying their interpretation of English law. English family lawyers can therefore expect to receive more instructions from foreign lawyers.

For the time being, the immediate advice for international couples planning a move to another EU member state would be to get good advice on their position in the event of marriage breakdown before packing their passport.