UK: Supreme Court Rules in Favour of Prenuptials Agreements

Last Updated: 9 November 2010
Article by Zoë Bloom

The highest Court in England & Wales, the Supreme Court, handed down its decision in the case of Radmacher v Grantino on 20 October. In a majority decision, the judges ruled in favour of German heiress Katrin Radmacher (W). They decided that her wealth should be protected from her ex husband, Nicolas Granatino (H) and that financial settlement should follow the prenuptial agreement.

The case is of particular relevance to parties with international background, although it is applicable to anyone seeking to enforce or considering making a prenuptial agreement in England.

Background to the case

W is a very wealthy heiress, who in 1998 married H, a banker. They married in London although the prenuptial agreement was signed in Germany. Under the terms of this agreement, H waived his rights to any of W's wealth in the event of divorce.

The relationship broke down after 8 years, during which time the couple had two children. H applied to the English Court for financial relief and to depart from the prenuptial agreement.

Thereafter the case moved through the Courts, resting finally with the Supreme Court to make their judgement. They ruled in favour of W and gave effect to the prenuptial agreement.

Enforceability of prenuptials

Are they enforceable?

The question of enforceability arises only during a divorce, where one party seeks a Court ruling on financial relief. In these circumstances, if there is a prenuptial agreement in place, the Court may rule that the agreement is to be upheld. Where in the past the prenuptial would be guidance to the Court, now the fact of the agreement may alter the outcome and be the deciding factor in the Court's decision.

This may sound inconclusive but it is a significant step towards the more European approach which gives complete enforceability to prenuptial agreements.

Procedure

It would have been agreeable if the Supreme Court had set out a clear list of 'Steps to be taken' in order for a prenuptial to be enforceable. Sadly they haven't. Instead, they stated:

"The court should give effect to a nuptial agreement which 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"

In effect, this means that those entering into a prenuptial agreement that they intend to be enforceable in England should do so because they want to and do so with a clear understanding of what it means to sign the agreement.

To assist in this endeavour and to be more able to provide evidence that this was the case, it would be sensible to ensure that the parties had available to them all the material facts and information which is relevant to the decision making process. Further, independent legal advice for each party would help to persuade a Court that there was no undue influence and that each party had a clear understanding of the implications of signing the agreement.

Finally, it should be the clear intention of each party to the agreement that the agreement will have effect in the event of the breakdown of marriage. As such, any party entering a prenuptial agreement now, after the decision made in Radmacher v Granatino, is more likely to be able to demonstrate that intention.

A note on postnuptial agreements

MacLeod v MacLeod gave us the Privy Council decision that post nuptial agreements were distinct from penuptials in that they were capable of being enforced by the Courts. This has been upheld by the decision in Radmacher v Granatino.

What now?

We do not have a simple 'yes' to the question of whether pre or postnuptial agreements are enforceable. What we do have is a good indication that where a couple enter into a pre or postnuptial agreement freely, with all the material facts at their disposal and with the clear intention that the agreement will hold in the event of divorce, the English Court will be ready to give it appropriate weight.

We must now wait for the outcome of the Law Commissioners Report due in 2012 which might have the effect of changing the law through legislation.

Should I enter into a pre or postnuptial agreement?

Probably.

This is stated with the caution that each party must seek independent legal advice before signing any agreement. However, now we have an indication that the agreement is more likely to be effective, a prenuptial agreement should help to avoid unnecessary legal and emotional costs in the event of a divorce. Even where assets are insubstantial, coming to a reasonable agreement during good times, will help each party move on freely and quickly in the event the marriage ends.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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