Last month, the Office for National Statistics released figures showing that the second largest family type in the UK is the ‘cohabiting couple family’ at 3.3 million families. It is also the second fastest growing family type. As the law in England and Wales, and many other countries, does not bestow the same rights upon cohabitees as it does married couples, cohabiting couples are left at risk should their relationship come to an end. Many of those couples may be unaware of the potential race ahead of them.

While the numbers of cohabiting couples increase, the world has become smaller, with a greater number of couples owning property internationally. This means that upon the breakdown of a relationship, these cohabiting couples are seeking advice about their rights when it comes to their foreign property, either in isolation or in addition to a domestic property in England and Wales. Conversely, couples abroad may have a dispute over a property situated in England and Wales. As with all family law cases, the advice given will be fact-specific, but this article aims to provide some general guidance as to the processes to be considered and followed when advice is required in relation to foreign assets.

Jurisdiction

All EU member states, including Denmark as well as Iceland, Norway and Switzerland have exclusive jurisdiction in cases which relate to a right in rem connected with land situated in that country (under Article 24 of the Recast Brussels Regulation, Article 22 of the 2001 Brussels Regulation, and Article 22 of the 2007 Lugano Convention), regardless of the parties' domicile. Where there is no express jurisdiction, other factors will need to be considered and weighted.

Careful thought must be given to the actual issue requiring resolution. While jurisdiction may appear clear, for example where the property is situated in England and Wales, and therefore governed by Article 22 of the 2001 Brussels Regulation, the issue itself must relate to in rem rights over that immovable property. Exclusive jurisdiction only applies to actions which seek to determine extent, content, ownership or possession of immovable property or the existence of other rights in rem (Webb v Webb [1994] 3 All ER 911).

Where exclusive jurisdiction does not apply, further considerations include, but are not limited to:

  • the domicile of the parties;
  • where the immovable property is situated;
  • if there is a jurisdiction agreement nominating the jurisdiction of a particular country (although it should be noted that such an agreement cannot oust the express jurisdiction of a country); and
  • whether proceedings are already pending in a particular country (whether about the specific property or in a related case).

Working closely with a local specialist lawyer in the other possible jurisdiction(s) at an early stage will be important when analysing the appropriate jurisdiction in light of the facts of the case, or if more than one country may have jurisdiction, in selecting the most favourable one. For example, if a cohabiting couple has separated and both parties are domiciled abroad, but have a dispute as to the extent of their respective beneficial interests in a property situated in England, then the courts of England and Wales will have exclusive jurisdiction to hear the case. If proceedings have already been issued in breach of the jurisdiction of England and Wales, then the foreign court should decline jurisdiction of its own motion (Article 25, Recast Brussels Regulation).

Seizing jurisdiction

Generally, the country which is 'first seized' of the proceedings has priority, but it may subsequently decline jurisdiction. If more than one country may have jurisdiction, then deciding on the best jurisdiction for a client will require the advice of a local lawyer regarding the client's potential to succeed, and to what extent, under the foreign law. The issue of the enforceability of a foreign order against the asset in the alternative jurisdiction(s) should always be considered at the outset.

Negative declarations and the jurisdictional consequences

When advising a potential defendant, it will be appropriate to consider whether a negative declaration of liability should be sought. This is an application made before proceedings are issued by the other party in which the court is asked to make a declaration as to the rights of the parties, the existence of facts, or a principle of law (Financial Services Authority v Rourke [2001] All ER (D) 266 (Oct)).

A party may be inclined to make such a pre-emptive application because by initiating proceedings for a negative declaration of liability, that party may seize the jurisdiction of that court and retain control over the proceedings. To do so will require swift action as an application must be made before the potential applicant commences proceedings in their chosen jurisdiction.

When deciding whether that court can entertain such an application, it will consider, in addition to other factors, whether it:

  • has a real and present dispute between the parties as to whether one party has any rights over the property. It cannot be a hypothetical issue between the parties. Evidence will be required to support the case that a dispute is live;
  • affects both parties by the determination of the issue; and
  • will be an effective way of determining the issues between the parties (Rolls-Royce plc v Unite the Union [2009] EWCA Civ 387).

However, practitioners should be aware that the courts are very conscious of tactical forum shopping and will be careful when considering an application for a negative declaration so as not to allow jurisdiction to be seized for this sole purpose (TJB v RJB (Financial Order: Declaration) [2016] EWHC 1171 (Fam)).

Contesting jurisdiction

Once served with proceedings, the defendant must act very quickly in deciding whether to accept the jurisdiction in which the proceedings have been started, or whether to contest the proceedings (in England, within 14 days of filing the acknowledgment of service (CPR 11(4))). Their right to contest proceedings may be waived or lost if they 'take a step' in the proceedings which is to do anything substantive other than to dispute the jurisdiction (Article 26, Recast Brussels Regulation). An act within those proceedings could later prove fatal as it may be seen as the defendant submitting to that court's jurisdiction.

This does not apply where there is a country that has exclusive jurisdiction. Taking a step in proceedings which have been issued in a country, but where another country has exclusive jurisdiction, will not secure the jurisdiction of the first seized country, as that country must decline jurisdiction in any event (Article 26(1), Recast Brussels Regulation).

The court first seized will retain jurisdiction if the defendant takes a step in those proceedings and does not immediately contest jurisdiction, even if there is a valid and binding jurisdiction agreement in favour of another court (Article 31(2), Recast Brussels Regulation and Taser International Inc v SC Gate 4 Business SRL [2016] ETMR 28).

Again, working with a local specialist lawyer in the other possible jurisdiction(s) will be necessary when advising on what steps would be considered as submitting to the jurisdiction as it will be determined by the local law. For example, if a defendant seeks to dispute the jurisdiction of the courts of England and Wales, they must first state so on the acknowledgement of service (within 14 days of being served), and only once that challenge has been unsuccessful would a submission of a second acknowledgment of service be considered as entering an appearance in those proceedings (CPR 11.8).

Connecting claims

It may also be worth considering whether jurisdiction is more appropriate elsewhere due to a 'connecting claim' in that country. For example, where a couple owns more than one property, it may be that the resolution of a dispute over one property in country A's jurisdiction could be resolved in such a way that it would risk a potentially conflicting judgment in country B.

Complex ownership structures

In some cases, the potential defendant may actually be a company or a trust. In which case, jurisdiction considerations are further complicated. Except where a country has exclusive jurisdiction, jurisdiction may be argued based on the company's domicile, which is not always clear. For example, this could be based on the company's statutory seat (in England this could be the registered address of the company or where the company was incorporated), and not the address of the immovable property in question. By having a company owned property in dispute, it may mean more than one country could have jurisdiction as a company could have more than one domicile at one time (Ministry of Defence and Support of the armed Forces for Iran v Faz Aviation Ltd and Al-Zayat [2007] EWHC 1042 (Comm)).

Conclusion

All of the above means that cohabitee rights in respect of international property are far from straightforward, and individual cases often involve multiple factors to be considered before proceedings are started. Time is of the essence where an international unmarried couple and / or assets are concerned, and having an international network that can be called upon quickly will be necessary to place a client in the best possible position. Both the potential claimant and the potential defendant will consider jurisdiction and the race is on to either secure that jurisdiction or to dispute it.

This article was published in New Law Journal in December 2017.