UK Supreme Court upholds pre nuptial agreement

Ezane Chong provides a commentary on Radmacher (formerly Granatino) (Respondent) v Granatino (Appellant)

 

 

The Supreme Court of the United Kingdom, the highest appeal court in England and Wales, set new precedent recently when it ruled that prenuptial or antenuptial agreements, namely written contracts entered into between a bride and groom-to-be prior to their marriage which purports to make arrangements regarding the settlement of their financial affairs in the event of their divorce, should have decisive or compelling weight in divorce proceedings.

 

In a judgment delivered on 20 October 2010, the Supreme Court in Radmacher (formerly Granatino) (Respondent) v Granatino (Appellant) [2010] UKSC 42 held, by a majority of 8 justices to 1, that a prenuptial agreement entered into between German heiress, Katrin Radmacher, and her French ex-husband, Nicolas Granatino, seeking to protect her fortune, estimated to be worth over £100 million, was binding in England.

 

Ms. Radmacher, a paper industry heiress, and Mr. Granatino, an investment banker turned academic, married in 1998 after signing a prenuptial agreement months before their wedding whereby they each waived their rights to make any claim against the other’s wealth during the marriage or on its termination.

 

The couple lived in England and divorced in 2007, after 8 years of marriage. Mr. Granatino sought, and failed, to obtain a much bigger share of his ex-wife’s multi-million pound fortune. Although Mr. Granatino was awarded £1 million and the use of a £2.5 million home until the couple’s youngest daughter attained age 22, this was the result of provision made to him for his role as father of the two children of the marriage and not for his own long term needs.

 

This landmark ruling gives new validity to prenuptial agreements in England. Unlike most European countries and the United States where prenuptial agreements are commonplace, English law had not, until recent years, generally recognised prenuptial agreements as being enforceable. Prenuptial agreements were traditionally considered invalid in England as being contrary to public policy – marriage is intended to be a union of two persons, for life.

 

That no longer appears to be the case. In recent years, the courts in England have been according weight, sometimes decisive weight, to prenuptial agreements and the decision in Radmacher v Granatino confirms that they were not wrong in doing so.

 

In delivering the judgment, Court President Lord Phillips said:

 

“… in future it will be natural to infer that parties who enter in to an ante-nuptial agreement to which English law is likely to be applied intend that effect should be given to it.”

 

 

The Supreme Court then advanced the following proposition:

The court should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to their agreement.”

 

The justices did not however lay down any guidelines regarding when it would not be fair to hold the parties to their agreement although it was mentioned that a nuptial agreement should not be allowed to prejudice the reasonable requirements of any children of the family.

 

Despite this landmark ruling suggesting that prenuptial agreements can now stand up in court, the Supreme Court was quick to emphasise that the courts still have the final word, stressing that “under English law it is the court that is the arbiter of the financial arrangements between the parties when it brings a marriage to an end.”

 

The Supreme Court also stressed that the fairness of the agreements will be considered on a case-by-case basis. It therefore follows that prenuptial agreements in England are still not legally binding in itself and that in order for them to be accorded full contractual status per se, Parliament must enact the necessary laws.

 

The Law Commission is due to report in 2012 on whether a change in the law should be made to allow couples, either before or during their marriage, to make written agreements dealing with their financial affairs which would be legally binding on divorce.

 

 

THE POSITION IN MALAYSIA

The law governing civil marriages and divorces in Malaysia is predominantly contained in the Law Reform (Marriage and Divorce) Act 1976 (“LRA”).

 

The LRA provides for the importation of English principles when deciding matrimonial cases in Malaysia. Thus when there are no express provisions in the LRA, English law currently prevailing on a matter may be applicable, subject to the LRA and Malaysian common law.

 

The LRA contains provisions that lay down certain criteria to assist the court in making orders for the division of matrimonial assets and payment of maintenance in divorce proceedings.

 

For example, where assets are acquired through the joint effort of the parties, the court is required to give regard to various factors, such as the extent of the contribution of the parties and the needs of any minor children of the marriage, but should incline towards equality of division.

 

On the other hand, assets acquired through the sole effort of one party should be divided in a proportion which the court deems reasonable, taking into consideration factors such as the contribution of the other party towards the caring of the family and the needs of any minor children of the marriage.

 

In determining the amount of maintenance to be paid to a former spouse, the LRA requires the court to base its assessment primarily on the means and needs of the parties regardless of the proportion such maintenance bears to the income of a party and to take into consideration the degree of responsibility which it apportions to each party for the breakdown of the marriage.

 

As at the date of writing, the Malaysian courts have not yet had the opportunity to make a ruling on prenuptial agreements. So although English cases may have persuasive effect, it remains to be seen as to whether or not the Malaysian courts will be receptive to upholding a prenuptial agreement executed between the parties to divorce proceedings before it.

 

It is likely that even if the Malaysian courts accept prenuptial agreements as evidence of how the parties wish to regulate their financial affairs if the marriage breaks down, the terms of such agreements must still satisfy the criteria laid down in the LRA for the division of matrimonial assets and maintenance and require the divorce court’s approval.

 

 

 

EZANE CHONG ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it )

Ezane, a graduate from the University of Leeds, is a Partner in the Dispute Resolution Division of SKRINE. Her main practice areas are commercial litigation and family law.

 
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