The author of this article considers a recent case of a Russian oligarch and his former wife, and what that means for HNW divorce cases decided in England and Wales.

The recent legal case of a woman divorced from her “oligarch” husband, a man valued as having $19.4 billion in wealth, is the kind of case that triggers the usual salivating attention of the mainstream press. Even at the rather more sober end of the commentariat, however, are those who look at such cases to find out what lessons to draw. London’s courts have, of course, long been a venue of choice for couples from the former Soviet Union seeking to get what they think are the best likely outcomes. 

In this article, Jonathan Day, a solicitor at Stowe Family Law, runs through the case’s details and ponders its implications for the future. The editors of this news service are pleased to share these opinions. We do not necessarily endorse all contributors’ views and urge readers who wish to do so to respond. Email tom.burroughes@wealthbriefing.com and jackie.bennion@clearviewpublishing.com

It is understood that Ms Potanina is seeking financial relief in England, following a divorce from her oligarch husband, Vladimir Potanin. The parties divorced in Russia in 2014 after a 29-year relationship. Although the financial settlement she received is not public knowledge, it is generally accepted to be considerably less than the sum she would have received if the divorce had taken place in England and Wales.

Having previously worked on the Russian desk of a private bank in London, I am now regularly instructed by Russian clients. I have met with a number of Russian wives in London and unfortunately, the position that Ms Potanina finds herself in is not uncommon. 

Mr Potanin is recognised as being one of Russia’s wealthiest oligarchs, with Forbes valuing his wealth at $19.4 billion. The starting point, were Ms Potanina to divorce her husband in England and Wales, would have been a 50 per cent share of Mr Potanin’s considerable wealth. Of course, the actual settlement is likely to be less than a full $9.7 billion, but still it would have been a very large award. 

It is likely that Mr Potanin would have been advised on the risks of a divorce taking place in London and this is probably why he would have wanted the divorce to be rushed through in Russia. If Ms Potanina is now able to show that her divorce in Russia was “unfair” and if she is able to show that she has a “real connection” to England, then she may be able to apply for a “top up” financial settlement in England pursuant to Part III of the Matrimonial and Family Proceedings Act 1984. 
 

If Ms Potanina is able to successfully satisfy the court that her settlement was unfair and that she has a true connection to England - then she may still have a long road ahead of her - before she is able to receive any assets from Mr Potanin.

Having previously represented Russian wives within Part III proceedings following a divorce in Russia from an oligarch, I know better than most how difficult it can be to get your client’s hands on an oligarch’s assets. 

Oligarchs will often instruct leading lawyers and financial planners in multiple jurisdictions around the world to tie their assets up in sophisticated structures. These plans are often centred around obscuring their true ownership. If Mr Potanin has instructed lawyers to obscure the true ownership of his assets, then it may be very difficult for Ms Potanina to persuade a court to transfer those assets to her. In addition to it being legally challenging, it may also be expensive, with these types of proceedings often lasting many years at considerable expense. Although Ms Potanina will undoubtedly be a wealthy lady, it is likely that her wealth will be controlled by her husband who may therefore make it difficult for Ms Potanina to pay the legal fees that she will incur in pursuing a “top up” claim in England.

Michelle Young, ex-wife of the late Scot Young, is an example of how expensive court proceedings can be, with her divorce costs understood to be £5 million ($6.15 million). Ms Potanina will certainly not want there to be many comparisons between her case and that of Mrs Young - with Mrs Young receiving a piece of paper stating that she is entitled to £20 million - but no money. Mrs Young was never able to find Mr Young’s assets and so, in spite of being ordered to make payment to her, she never actually received her settlement. 

Fortunately for Ms Potanina, there are a number of very sophisticated lawyers in London who are experienced in claims like hers. Indeed, whilst Mr Potanin may have sophisticated advisors around the world, the judges in England and Wales are equally sophisticated and experienced in helping people like her. In my experience, the real test will be meeting the considerable legal fees and proving her husband’s ownership in assets. This will require specialist advice and financial planning. 

Part III proceedings are only for the very wealthy and Ms Potanina will need a great deal of emotional and financial support throughout what may be many years of litigation.