There is no power for the courts in England and Wales to make a pension sharing order in respect of an offshore pension scheme. 

That was the decision in the recent Court of Appeal case of Goyal v. Goyal (No. 2) [2016].

In that particular case, the only asset was the husband's Indian pension worth £73,000.

You may find it surprising that it has taken the courts until now to decide what is, I would say, a pretty fundamental point. Particularly given that pension sharing orders have been around for so long. Has this really not cropped up before now?

There is not a lot more to say on the matter really. The Court of Appeal says no! The case did, however, provide some useful guidance on making financial orders in relation to overseas property or assets. There is a general presumption against giving extra-territorial effect to legislation, so the laws made in England and Wales are only applicable in this jurisdiction.

Therefore, where property or assets are located overseas, orders should be made against the person ("in personam"), rather than against the property or asset ("in rem"). The order would then be enforceable against the person wherever he/she is.

This does not, unfortunately, apply to many overseas pensions because they are either simply not capable of being shared or cannot be shared other than by court order in that jurisdiction.

What was interesting in this case, is the way in which the Court sought to get round the problem. The Court could not make an order sharing the pension because it was based overseas, and the husband could not be ordered to share his pension as it was not capable of being shared by him. The court therefore made an order requiring the husband to pay the wife periodical payments ("maintenance") referable to the payments received from the Indian pension and to grant an in personam injunction requiring the husband to draw the maximum from the fund.

This was a pretty unique case, in that the only available asset was an overseas pension. In most cases there will be other assets and the Court can then offset the overseas pension against these assets. This is often preferable, as it enables there to be a clean break; a full and final settlement. Alternatively, if there is agreement between the parties, it may be possible to obtain an order reciting agreements and/or undertaking to share the overseas pension and then obtain a pension sharing order in that jurisdiction.

The court is extremely resourceful and has an impressive array of orders up its sleeves. There mere fact that the only asset was located overseas and could not be shared did not prevent the court from making fair financial provision to the wife.

 

For further advice on divorce or financial matters, please contact

Up next Can I have a “Quickie Divorce” please? Read now