Tomorrow the Law Commission of England & Wales will publish its long-awaited recommendations into the reform of pre-nuptial agreements.
The Commission is expected to recommend that the law give greater recognition to private pre-nuptial (or post-nuptial) agreements, which have been growing in popularity despite the fact that they are not currently legally binding. That is all well and good for English agreements for English couples, who will benefit from greater economic certainty and protection against the discretionary powers of the English courts should their marriage break down – statistically a one in three chance.
But these reforms, should they be enacted, will not even begin to meet the needs of the growing number of European and international couples who reside in the UK, or indeed UK citizens who move abroad many of whom will have pre- or post-nuptial agreements in place.
Despite at least 350,000 bi-national marriages in the EU each year, there is no pan-European standard for pre-nuptial agreements. Each country continues to legislate and reform in this area on an individual and piecemeal basis, yet the movement of intermarriage EU citizens continues apace.
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Married couples who move abroad face difficult choices if they want to protect their assets in the event of a split. They can:
> Hope that the court of residence at the time of separation will apply the historic marital agreement of the country where they married. Many couples mistakenly believe the law of their country of marriage will automatically apply if they are living in a different country when they divorce.
But this is often not the case – for example in England, Ireland and Denmark, the law of those countries will apply, rather than foreign law (although this is subject to change under new case law and interpretations). Yet in Spain, France, Germany and Italy the foreign law of the country of marriage can be applied.
> Negotiate a post-nuptial agreement upon arrival in their new country of residence. This can be very attractive for the wealthier spouse if they move to a ‘generous’ jurisdiction, but it can be a hard sell to the other spouse because it could imply the asking spouse is contemplating divorce.
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> Take out a second agreement, thereby keeping the old one from the jurisdiction of origin and seeking to replicate it – although this can create complications such as the priority of agreements, conflicting clauses, and of course cost.
> Do nothing and simply hope for the best.
EU countries are at different stages in recognising foreign pre-nuptial agreements either partially or in their entirety. In England, for example, many foreigners have found out to their cost that a pre- or post-nuptial agreement will not be applied, while the reverse happened in the celebrated Radmacher case in 2010 where a foreign agreement in Germany was applied to give nil outright capital to a French husband divorcing his German heiress wife in London.
A French agreement was to a great extent ignored in the High Court two years ago in a case with assets of £15 million. Last week, again in the High Court, a Dutch agreement involving a London magic circle law firm partner was upheld although the agreement was more modest in its ambitions. In both cases the families had spent the great majority of the marriage in the foreign country not London.
The picture abroad is not straightforward either: some jurisdictions allow maintenance clauses like England and some do not.
Given this patchwork of laws across Europe, couples would be well advised to consider jurisdiction clauses as to where and how they want their marital agreement to be recognised in the future.
Until the EU can agree pan-European standards for nuptial agreements there can be little guarantee of the outcome. It is high time that EU marital law kept pace with the continued rise in cross-border and internationally mobile relationships.
William Healing is a partner in the International Families practice at Kingsley Napley LLP
