England v Germany: A clash between two countries’ legal systems

As will be well known to regular readers of this blog, family courts in England and Wales deal with financial claims on divorce rather differently to the courts in many other countries. The fundamental basis of the rules that govern such claims here is quite different to that in most other jurisdictions. This, of course, means that in certain circumstances our courts may be considered to be more generous than the courts in other countries, hence the phenomenon of ‘forum shopping’, whereby a spouse may seek to have the divorce dealt with in the country where they believe they will get the best outcome.

As one can imagine, these differences can sometimes lead to a clash between two countries’ legal systems.

This was the situation in the recent case Re MF, heard by Mr Justice Mostyn in the High Court in December.

The background to the case needs to be explained. Unfortunately, the judgment is quite brief, and I have had to make a few assumptions about certain details – I hope I am correct. The case concerned an English husband and a German wife. They cohabited in Germany from 1999, and were married in 2003. They lived all their married life in Germany, in a house owned by the wife. They had two children, born in 2003 and 2005. They marriage broke down in 2011, when the husband left the matrimonial home. He returned to England the following year. The wife and children continue to reside in the former matrimonial home.

The particular feature of the case is that the matrimonial home was the only asset of the parties, and it actually decreased in value over the course of the marriage (the judgment doesn’t explain why this was so). Accordingly, there were no ‘matrimonial assets’, i.e. assets accrued during the course of the marriage.

Under German law any capital provision made to a spouse on divorce can only come out of matrimonial assets. Accordingly, as there were no such assets, when the parties were divorced in Germany it was agreed that the husband would not make any claim for capital provision in the German courts.

However, the husband subsequently made an application in the English court “for financial relief following a foreign divorce in circumstances where the powers of this court would be wider than directing a division of the marital aquest [i.e. the matrimonial assets] and could extend to awarding a lump sum to the husband to meet his needs”, as explained by Mr Justice Mostyn. The husband’s particular need was to have the debts that he had incurred since the divorce in rehousing himself met by the wife.

The wife indicated to the English court that she opposed the husband’s application, on the basis that the matter had been dealt with by the German court. Other than that, the wife did not take any further part in the English proceedings, and the English court awarded the husband a lump sum of £20,000. However, as the only source of payment of that debt would be further borrowing on the matrimonial home, the judge decided that it was reasonable and fair for enforcement of that the lump sum to be deferred until completion of full-time tertiary education by the youngest surviving child of the family. In order to compensate the husband for being kept out of his money, he awarded interest on the outstanding sum at 2% per annum.

The decision was appealed (this is what Mr Justice Mostyn’s judgment was about), but the appeal was dismissed.

So we have a situation where a divorce had been dealt with, and apparently finalised, by the courts of a country whose courts one would expect to be fully ‘respected’, and yet the courts of another country make a different, and apparently conflicting, decision. I’m not sure that I feel that this outcome is the right one, even if, as Mr Justice Mostyn found, it is legally correct.

You can read the full judgment here (note that the first four paragraphs relate to the issue of whether or not the appeal should be heard in public).