According to data from the Ministry of Justice, the number of divorce settlements contested in the courts has hit its highest level in 15 years. Many believe the current financial uncertainty is the reason behind the surge in divorce settlements being fought in court.
The Ministry of Justice has reported that 10,300 financial remedy orders were contested in the family courts in 2024. This is an increase of 66% on the 6,191 contested in 2023. It is the highest number since 10,905 were contested in 2008, itself a year of economic uncertainty following the start of the credit crunch in 2007.
Why does economic uncertainty drive a surge in the number of divorce settlements contested in court?
Rising living costs and uncertainty over the country’s economic future understandably make people less certain about their financial futures and what the future may hold in terms of future employment and, therefore, earning opportunities. Meanwhile, drops in the value of residential property across the UK and the ongoing disputes over international trade tariffs have done little to reduce financial worries.
There had also been complex changes as regards the legal regimes around wealth management and tax.
Firstly, tighter rules on non-domiciled residents’ tax liabilities have led to more divorces among high-net-worth individuals with international assets. This has increased litigation on both a domestic and multi-jurisdictional basis. More complex asset portfolios are also more common and this means more divorces involve shares, overseas property business interests, cryptocurrency and other digital assets. These will all add to the complexity of reaching an outcome.
With all these factors causing more and more consternation about how our financial futures could look, it is hardly surprising that more couples are prepared to heighten disputes over the division of their assets during divorce settlement proceedings. However, can all the blame for the current surge in divorce settlements contested in court be explained by the current economic conditions? Perhaps not. There may also be more legal and regulatory factors at play.
Firstly, the delays in the family courts continue with child disputes now taking an average of 47 weeks. This has pushed parties into more contested hearings. Legal Aid cuts are also continuing to have an effect. With Legal Aid all but withdrawn, more people are having to represent themselves in court. This has made it more common for judges to reject unqualified proposals thus prolonging litigation.
The introduction of ‘no‑fault’ divorce could also be having an impact. ‘No fault’ divorce does not extend to finances. Although it has largely help to reduce conflict, ‘no fault’ divorce has not simplified financial claims. This means it can still be a major battleground as couples look to find a financial settlement.
The move towards encouraging wealthier couples to seek private routes to resolve their financial disputes quickly and confidentially could also be skewing figures by leaving court cases concentrated among those who lack the means to pursue private resolution.
Sat somewhere between the economic and legal aspects is the rise in economic abuse. A recent report found that economic abuse isn’t being handled well during financial remedy. This means more victims may now be seeking contested hearings to better protect their interests.
Is the exodus of high-net-worth individuals with complex asset portfolios also contributing to the surge in divorce settlement contested in court?
The exodus of high-net-worth individuals (HNWIs) is almost certainly contributing to an increase in disputes involving complex asset portfolios.
As wealthy individuals move to different jurisdictions for tax, political, or lifestyle reasons, their global assets – their real estate, private equity, trusts, family businesses, and crypto assets – move from the governance of the laws of England and Wales and become subject to multi-jurisdictional laws.
This immediately creates conflicts over which country’s law applies in a divorce and how the other party can challenge how judgments made during the divorce will be enforced. This can force one party’s hand in terms of beginning divorce proceedings as they attempt to reach a settlement with more favourable terms under the laws of England and Wales while their spouse is still domiciled in the UK.
However, this is also adding to the intricacy and length of the negotiations as courts in the UK, particularly the High Court, are having to negotiate a number of factors including:
- Delays in disclosure
- Increased scrutiny around hidden or shielded assets, especially those held offshore or in trusts
- Longer marriages among HNWIs which strengthen the presumption of and case for equal sharing
- Greater use of forensic accountants and financial experts, which not only prolongs the litigation but also escalates costs
Our experienced family team includes many barristers who specialise in matrimonial finances and financial remedy. If you or one of your clients are involved in reaching a more involved financial settlement and would like assistance in reaching the best possible outcome, please contact us today.