Marriage contracts, pre-nuptial or pre-marital agreements

Marriage contracts, pre-nuptial or pre-marital agreements, whatever we choose to call them, what are their implications?

The recently reported judgment in Y v Y (Financial Remedy- Marriage Contract) [2014] EWHC 2920 (Fam) related to a long marriage of some 22 years where the parties had had two children in their early 20’s and one who was at the time of the judgment aged 15.

The parties were both French nationals. The husband was 50 and the wife 49. They initially lived together in Paris before moving to London at the end of 1991.  They had remained in London since that time.

The parties married in France in June 1991, shortly before their move to London.  Before they married they entered into what is termed in the judgment as a “marriage contract” in France which sought to determine the financial issues between them upon divorce. The circumstances in which this contract was signed were an area of dispute between the parties in the case with the husband saying that there were ongoing discussions about it for some time before it was signed. By contrast the wife said that there was no direct discussion between the two of them about financial consequences as they were both earning well and money was not a problem. Her recollection is that the séparation de biens regime did not come up for discussion until the week or 10 days before the wedding. The wife was at this time preparing for the wedding and she was also pregnant with the parties’ eldest child.

The wife’s original divorce petition was issued in England in 2007.  There were some attempts to repair the marriage but ultimately the wife issued a financial application.

One of the key questions in the case was the relevance of the “marriage contract” and the family court needed to consider how this should impact on any financial settlement. If the parties were held to the terms of the “marriage contract” the wife would receive a share of the assets which was short of equality. The husband argued that the marriage contract should be given central and magnetic prominence in determining the division of the assets whereas the wife sought a full share of the marital acquest of over £12 million.

The family court found that on the facts of the case the wife did not have all of the information which was likely to have been material to her decision when she signed the agreement. In a review of the authorities including Radmacher v Granatino [2010] UKSC 42 the court considered that it was difficult to see how a full appreciation of the agreement’s implications would not involve a full understanding by both parties as to the nature and the effect of the terms and the circumstances in which its implementation in a jurisdiction other than the one in which it was made (i.e. France in this case) may affect the scope of any award or remedy. Whilst this seems to be a high bar the court did say that this does not mean that the parties would need to seek advice on all permutations as this would be “plainly absurd”.

So what does this mean?  The existence of any foreign marriage contact, prenuptial agreement, premarital agreement or contract will always be a circumstance of the case but the family courts in England and Wales, at present at least, retain discretion as to how far this is taken into account in any financial settlement on divorce.   In this case they did not feel that the contract should be enforced in full but some weight was attached to it in that the court said it would give “full recognition” to the principle that, subject to any arguments about needs the non- matrimonial property should be excluded from any settlement.  It is unclear whether in reality this led to a significantly different outcome to that where no contract or agreement had been signed.

There is likely to be a change in the law at some point in the future although the exact details of this cannot be yet known. It is likely that English pre- nuptial/ pre-marital agreement will become enforceable subject to various conditions including the necessity for financial disclosure, independent legal advice and an agreement to be signed and finalised with sufficient time ahead of any marriage.  The position with foreign agreements may well remain unclear as they are likely to have been executed in line with the requirements of the country in which they were signed.