Finance Orders in Divorce - Trouble in Spain

Many people who have gone through a divorce will be familiar with the concept of a finance order, whereby they either agree with each other or the court imposes an order sorting out who will own properties, if they are to be sold, lump sum and maintenance payments and any calving up of pensions. In these days it is not uncommon for couples to own or have an interest in a property in Spain. If they are living in England, and the divorce is in England, the English court will approve whatever order the parties agree. Often this is an agreement for the parties to sell the Spanish property or an agreement for one of the parties to transfer their interest in it to the other.

However, where matters do not run smoothly and one party either refuses or simply ignores the request to deal with the Spanish property, this can cause real headache and increase of legal fees.

The legal position

The legal position is that the Judge in the court in England can sign the necessary documents to transfer any property interest in the UK if there is a party who is not co-operating with the court order. However, he cannot sign the documents necessary to deal with the property in Spain because he cannot make an order against a foreign property (en rem); he can only make an order against a party asking them or obliging them to do something (en personam). Where that party is refusing or ignoring that request, it becomes very difficult as to what can be done. We could go back to the Judge in the English court and ask that punitive restrictions are put on the party ignoring the order; such as asking them to sign the documents and if they do not sending them to prison. However this is unlikely and also does not give us what we want. However, in the same way, as the order does not say that the property has to be sold rather than the parties have to do what it takes to sell the property, it is unclear what a Spanish Judge would do. It is likely in this instance that there would have to be separate proceedings in Spain after the order has been translated and then recognised by a Spanish court. This is complicated by the UK no longer being part of the European Community and therefore it does not have the right for an order made here to be automatically recognised in Spain.

Therefore, the parties may end up with an order on paper which is not easily capable of being implemented causing real headache.

The Answer?

Javier Jurado, Head of our International Team, advises that a simple practical measure could avoid this. At the time when the parties are agreeing their financial order in the English proceedings, if one of the parties has to do something in Spain with a Spanish property,at that point to oblige them to enter into a Power of Attorney which would be drawn up by a Spanish Abogado and would give specific powers to a named professional individual(s). These powers could include all steps for placing the property on the market orsigning any necessary transfer documentation so that the ownership is transferred or the property is sold. If that Power of Attorney is entered into at the same stage as the finance agreement in England and the finance agreement is not sealed and perfected by the court until the Power of Attorney has been completed, then if a party chooses not to co-operate with the implementation of the law relating to the property in Spain, the Power of Attorney can be implemented. In any event it may have to be implemented if the parties do not want to go out to Spain to deal with the property issue themselves.

What does this involve?

Entering into a Power of Attorney involves identifying the powers to be transferred, drafting them up and naming appropriate individuals or companies in Spain who would be able to implement them. This may be necessary in any event, if the person who is dealing with the property does not really want to have to go out to Spain and attend in front of the Notary. Once the Power is drawn up, it will need to be notarised and then sent to the Foreign and Commonwealth Office for the apostille to be affixed under the Hague Convention. It is a little bit of extra work done but if done before the finance order is actually approved by the Court it can be exhibited to the finance order when we ask the court to seal, it and it avoids the need for any difficulties occurring afterwards.

It is possible that if they really change their mind a person could choose to revoke the order but in those circumstances as the order has been referred to in the finance order made by the Judge in England they would be unpicking the whole financial settlement. If they choose to ignore any part of the transactions that oblige them to sign papers in order to implement the order then the person named in the Power of Attorney can do it on their behalf.

This would give some comfort to those people who find themselves in the position where they have gone through the battle of agreeing a finance order only to find that further down the line their ex-spouse is unwilling to implement it and they have a nightmare scenario of trying to enforce.

If anybody needs any more information please contact Lynn Cowley or Javier Jurado.