Treatment of international assets on divorce in Scotland

Divorces involving assets in multiple jurisdictions are relatively common in Scotland, particularly in the North-East, where many individuals are involved in the energy sector and have spent time working overseas. Individuals may have accumulated properties, pensions and bank accounts whilst abroad, all of which may require to be identified and valued upon separation.

The Family Law (Scotland) Act 1985 provides the legal framework which applies to financial provision upon divorce. The presence of international assets, however, gives rise to a number of distinct legal and practical issues, which are considered below.

Jurisdiction

An individual can raise divorce proceedings in Scotland if either they or their spouse has been habitually resident in Scotland for one year immediately prior to seeking divorce or if either party is domiciled in Scotland.

Where the marriage has a connection to an overseas jurisdiction and proceedings for separation or divorce are raised in that jurisdiction, arguments may be advanced that that other country is the more appropriate forum for the divorce, and that the law of that country should apply.

The outcome of a divorce can vary significantly between jurisdictions. As such, it is imperative that advice is sought at an early stage from practitioners qualified in the law of each relevant jurisdiction to ascertain where best to seek divorce..

Valuation of international assets

For divorces being dealt with under Scots Law, parties will go through a process of identifying and valuing the “matrimonial property” as at the “relevant date” (which is usually the date of separation). In cases involving overseas assets, currency fluctuations, market volatility and political events can materially affect the value of those assets for the purposes of financial provision. As a result, the timing of separation itself can become a contentious issue, particularly where valuations have changed significantly over a short period of time.

Disclosure and information gathering

Obtaining full financial information in respect of foreign assets can be challenging. Letters of request procedures or the utilisation of other cross border mechanisms may be required to obtain the relevant information from local banks, financial institutions and authorities. Where the relevant country is not party to bilateral agreements with the UK, requests for information may be denied or ignored. Where there is a failure to provide full and frank disclosure of resources and matrimonial property, the Scottish courts may be persuaded to draw adverse inferences.

Enforcement of Scottish orders abroad

An order for financial provision is only effective if it can be enforced. It is therefore imperative, if seeking orders via the Scottish courts, that the order sought can be enforced in the jurisdiction where the asset is held. Specific advice should always be obtained from lawyers practising in the relevant foreign jurisdiction on the recognition and enforceability of Scottish court orders.

Conclusion

Cases involving international assets require careful strategic planning and coordinated cross-border advice. Early consideration of jurisdiction, disclosure, valuation, and enforcement issues, and timely advice from qualified practitioners in each potentially relevant jurisdiction, is essential to avoid unintended and potentially irreversible outcomes.