Wife's pre-nup enforceable - UK Supreme Court

The UK Supreme Court has ruled that pre-nuptial agreements may be enforced in law, in appropriate cases.

Katrin Radmacher and her husband, Nicolas Granatino married in 1998. They have two young daughters. At the time of the marriage, they agreed that, if the marriage failed, they would not seek financial support from each other. Radmacher, heiress to a German paper company, is reputed to be worth E120 million. Her husband, by contrast, gave up a lucrative post in an investment bank in 2006 for a more modest post as a researcher.

Ms. Radmacher claimed that the agreement was made at the insistence of her father, who wished to protect her inheritance. She felt that the agreement also underlined that the couple were marrying for love and not for financial gain.

For his part, Mr. Granatino claimed that at the time of the marriage, he was not aware of the extent of his wife's wealth. He asserted also that he had signed the agreement (which was in German) without the benefit of either a translation or independent legal advice. Nonetheless, the court upheld the agreement.

Traditionally, at common law, pre-nuptial agreements were considered void and unenforceable as they were deemed to infringe public policy. While a married couple could make an agreement for immediate separation, the courts traditionally would not enforce an agreement contemplating the possibility of a future separation. The reasoning behind this stance appeared to be that agreements for future separation potentially destabilise marriage. The concern was that a pre-nuptial agreement might indeed encourage parties to separate.

The UK Supreme Court has now affirmed that, in appropriate cases, such agreements may be enforced. This does not necessarily mean that they will be enforced in all cases. The Court reserved the right to sidestep an agreement if it was considered to be unfair, particularly if it did not serve the best interests of the parties' children. The courts may also decline to enforce an agreement where it is the result of compulsion or misrepresentation. Nonetheless, in appropriate cases, such agreements may attract 'decisive or compelling weight' in divorce proceedings.

Notably, Baroness Hale dissented, arguing that this was a change in the law, which, if it was to be made, should be made by Parliament rather than the Courts. She also felt that a pre-nup should not have decisive weight, that it was only one of a number of factors that a court should consider in determining a divorce suit.

Pre-nups are routinely enforced in many European countries and in some US states. Their status in Ireland, by contrast, remains uncertain, though an excellent 2007 report commissioned by the Department of Justice suggested that such agreements may be (or at least should be) enforceable in appropriate cases. The Family Law (Divorce) Act 1996 allows a court, in divorce proceedings, to have regard to ante-nuptial agreements relating to land, though the traditional legal position in relation to pre-nups generally is less clear. Even if such agreements were to be enforced in Ireland, they are unlikely to displace the overriding obligation of spousal support. The constitutional requirement that proper provision be made for both spouses on divorce means that a court in Ireland more than likely would not uphold a pre-nuptial agreement unless it was satisfied that it reasonably served the interests of both spouses and children.

Such agreements may nonetheless have their merits. Like taking out insurance, there may be some advantages in agreeing in advance what will happen if a couple breaks up. Pre-nups have the benefit of clarifying the consequences of marital breakdown for couples, providing predictability and certainty. Such agreements may be considered unromantic, even mercenary, though they provide some peace of mind for wealthy spouses who fear that their partners are only marrying them for their money. the fear that such agreement might destabilise a marriage seems misplaced. Even with the best will in the world, relationships often end. It makes sense to provide for this contingency. There is also the added benefit of empowering the couple to chart their own destiny, entrusting to them the responsibility as mature adults of deciding what should happen in a case of marital breakdown.

On the other hand, some consider such agreements as potentially divesting economically weaker spouses of important protections on the breakdown of a relationship. As Ajmal Azam has perceptively observed, "There is a legitimate concern that the more vulnerable and financially weaker party will feel compelled to sign up to a prenup, drawn on the other party's terms." While the pre-nup in this case ring-fenced the wealth of an heiress, the reality is that most pre-nups serve to protect male wealth. Such agreements serve to sidestep the spousal maintenance requirements implicitly accepted and legally imposed on marriage ('for richer or poorer, 'til death do us part'?) The danger is that such agreements may divert the responsibility for maintaining a spouse from rich ex-husbands, absolving them of a core responsibility of marriage.

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