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20 June 2019
Where should a nuptial agreement be drawn up?
Benefits of an English agreement
Will an English nuptial agreement be upheld abroad?
Will a foreign nuptial agreement be upheld by the English courts?
When one or both parties to a marriage have a connection with another country in addition to England and Wales, there are international considerations and implications to take into account when considering a nuptial agreement. This could be because of where they live, their domicile or nationality or where their assets are based.(1)
For international couples, many of whom divide their time between two or more countries, this question requires careful thought. It is commonplace for an agreement to be drawn up in one country and then reflected in another by entering into a mirror agreement in the other country to ensure that the agreement would be upheld in accordance with that country's laws.
However, in practice, this can be fraught with difficulty because it can be difficult to translate legal principles from one country to the next. The most logical country in which to root a nuptial agreement is the one in which the couple intend to spend the early years of their marriage and to review this as necessary if the couple later relocate.
That said, there are enormous merits in drafting a nuptial agreement in accordance with English law. Although not completely binding, a nuptial agreement that is properly constituted carries the twin benefits of being extremely likely to be upheld and providing certainty to both parties. This can mean certainty for the financially stronger spouse that their wealth will not be shared on divorce and confidence for the financially weaker party that their needs on divorce will be met.
In order to be properly constituted, an agreement must:
This is not the case in all countries.
It is important for couples to consider how their English nuptial agreement will fare in another country if there is a possibility that another country may have the power to hear any future divorce. The other country may have such power at the same time as England and Wales or have sole jurisdiction, because, at the time of divorce, the couple no longer meet the jurisdictional requirements to divorce in England.
Couples should take advice at an early stage from lawyers in the other countries which may be relevant in the future to ascertain the view that the local foreign court would take of an English nuptial agreement.
The best advice to the party seeking to uphold the agreement is not to leave England or let the English courts lose power to oversee a divorce without reviewing the agreement in the light of the advice from the other country and, if necessary, entering a nuptial agreement in that other country.
It is often a surprise to couples divorcing in England that their nuptial agreement may not be binding on the English family court, particularly if their agreement would have been binding in another country. Whereas other countries can apply English law, in England, the court will apply only English law, which means that whether a foreign nuptial agreement will be upheld depends on the circumstances of the case and, importantly, whether the terms of the foreign agreement are fair from an English legal perspective.
Therefore, where an agreement provides that, for example, Spanish law will govern the couple's nuptial agreement, the English court will not be constrained by a nuptial agreement and will apply English law. Under English law, a nuptial agreement is most likely to be upheld if it is fair and meets the other criteria that the English court looks to when weighing up the relevance of a nuptial agreement to the outcome of a case (eg, it is entered into freely and with full and frank disclosure of the other's financial position). If in the eyes of an English family court judge, the agreement would lead to unfairness or leave one party in a predicament of real need, it is unlikely to be upheld or might be upheld only in part.
However, the very fact of its existence may carry evidential weight. For instance, if one party agrees not to share the other's assets on divorce in a nuptial agreement, the English judge may abide by that principle while varying the agreement to ensure that the financially weaker party's reasonable financial needs for housing and income are met. This could be by the provision of capital being paid on trust, to revert to the payer at some point in the future. This achieves the twin goals of meeting the financially weaker party's needs for a period of time, but also ensuring that the principles of an agreement which might have been intended to protect family wealth from claims on divorce are, ultimately, upheld.
For further information on this topic please contact Joanne Edwards, Rosie Schumm, Amanda Sandys or Simon Blain at Forsters LLP by telephone (+44 20 7863 8333) or email (firstname.lastname@example.org, email@example.com, firstname.lastname@example.org or email@example.com). The Forsters LLP website can be accessed at www.forsters.co.uk.
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