Potanina v Potanin [2024] UKSC 3 concerned a Russian couple who married in 1983 and divorced in 2014. The husband, Potanin, was described by the court as ‘one of the richest men in the world’. He amassed a fortune in the 1990s worth an estimated $20bn, mainly comprising shares and business interests, after the fall of the Soviet Union. The wife, Potanina, sought half her husband’s assets, and their divorce was followed by litigation in Russia, Cyprus and the US.
In 2019, the High Court granted the wife permission to apply for financial relief under Part III of the Matrimonial and Family Proceedings Act 1984 (which gives courts in England and Wales powers to make financial orders after a divorce has been granted in a foreign jurisdiction), but subsequently allowed the husband’s application to have this set aside on the basis the judge had been misled. The case was appealed.
In a 3-2 majority judgment, the Supreme Court held in favour of the husband. They held that existing case law on Part III powers sets too high a threshold for the contesting party, unfairly tilting the balance in favour of the party making the application. It ruled, therefore, the law does not require a compelling reason for setting aside a grant of permission, despite this being the standard practice adopted by the courts and previously endorsed by the Supreme Court.
Baroness Shackleton, partner, Payne Hicks Beach, acting for the husband, said: ‘I am delighted, and grateful to the Supreme Court for its careful analysis of how this troubling practice had developed in family law and for putting it right.
‘The judge at first instance wished to change his mind having heard from both parties and I am pleased that he has been vindicated for doing so. Divorce tourists will now have their claims subject to fair and robust scrutiny before being granted leave in this jurisdiction. It is long overdue.’
However, the Supreme Court also rejected the husband’s argument that the wife’s case should now be dismissed. It agreed with the wife that the Court of Appeal had not yet considered her substantive case and had only considered the procedural issue. Therefore, it remitted her application to the Court of Appeal.
Frances Hughes, partner at Hughes Fowler Carruthers, acting for the wife, said: ‘Mrs Potanina is delighted that this decision means the Court of Appeal will now focus on the merits of her case rather than on procedure.
‘In giving their judgment on the procedure, no criticism was made of Mrs Potanina, who has followed the rules of the court and standard court practice endorsed by the Supreme Court and the Court of Appeal for the last 12 years. The Supreme Court has now decided that this standard practice was wrong and that future applications should follow a different procedure. The Supreme Court has not in any way dealt with the merits of Mrs Potanina’s case and this has now been remitted to the Court of Appeal and will likely be heard during 2024.’
Commenting on the case, Peter Burgess, partner at Burgess Mee Family Law, said: ‘In its long-awaited judgment, the Supreme Court has narrowed the window for divorce tourists by allowing their spouse the chance to be heard at an early stage and for the court to look at the application afresh without the need for a knockout blow or compelling reason.
‘The Supreme Court considered the right of both parties to be heard as a matter of procedural fairness which has been overlooked until now. It remains possible to apply to the English courts for a “second bite of the financial cherry” but this can now be challenged at a much earlier stage.’
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