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Russian ex-wife fails in England and Wales 'divorce tourism' application

Monday, 11 November, 2019

Natalia Potanina's application for financial relief against her Russian husband has been rejected by the England and Wales High Court (Family Division)(EWHC).

Both former spouses are Russian nationals without any other nationality. They married in Russia in 1983, lived only in Russia throughout the marriage, and were divorced under Russian law in 2014, by which time Vladimir Potanin had amassed a fortune from what Cohen J in the EWHC called 'the extraordinary opportunities that existed at that time in Russia'.

It appeared to be common ground that Potanin transferred ruble balances worth about USD71 million to his ex-wife under their divorce settlement, although there are disagreements because of the exchange rate variations. However, as he accepts, this is only a tiny fraction of his true wealth because he has deliberately structured nearly all his assets as shares in companies or other business entities held by nominees in trusts or corporate vehicles.

Natalia Potanina claims he is really worth about USD20 billion, and has been pursuing litigation to receive a larger share: specifically another USD6 billion. She claims the Russian award 'does not even begin to meet my reasonable needs' and suggests the Russian judiciary has been influenced by her former husband, in order to defeat her claim.

She has issued proceedings in Russia, Cyprus, and several US states to pursue her claim, so England is the fourth jurisdiction she has tried, having taken up residence in London under an investor visa in June 2014.

However, Cohen J in the EWHC also rejected her application for leave to bring a claim under Part III of the Matrimonial and Family Proceedings Act 1984. 'It seems clear to me that in every instance the Russian courts have consistently and properly applied Russian law', he said, noting that Russian law does not recognise the common-law concept of property owned beneficially but not legally.

He described Mrs Potanina as a spouse whose background and married life was firmly fixed in her home country with no connection to England either by presence or by assets or business activities. Rather, he said, she had sought after the breakdown of the marriage to 'take advantage of what is a more generous approach to her claims than she had been able to achieve in her home country after the fullest possible use of its legal system...Simply because [she] has suffered what she regards as a very significant injustice in that other country and has come to England after the breakdown of the marriage does not in itself make the case appropriate for determination in England and Wales'.

If the claim were allowed to proceed, said Cohen, there would be effectively no limit to 'divorce tourism'. Accordingly, he dismissed her application (Potanin v Potanina, 2019 EWHC 2956 Fam).

Sources