As the authors of this article explain, nuptial agreements are not automatically binding in the English jurisdiction; instead they are only one factor for the Family Court to consider, among many others, when exercising its broad discretion in search of a fair financial outcome in each case.

As regular readers know, divorce, marital disputes and the steps that couples can take to mitigate – if possible – some of the potential problems are subjects that are covered frequently in this publication.

The legal picture in England and Wales (the legal system in Scotland differs) continues to evolve, and recent court judgments raise new considerations. Wealth managers and private client advisors need to know that clients’ marital/partnership status must be considered as relevant to the overall conversation.

In this article, James Ferguson, partner at Boodle Hatfield, and Katie Male, associate, write about the issues. 

The editors of this news service are pleased to share these views and invite reader feedback. The usual disclaimers apply about the views of external contributors. Email tom.burroughes@wealthbriefing.com

In its recent judgment, reported under the citation CMX v EJX [2022] EWFC 136, the Family Division of the High Court was tasked with assessing the impact of a French marriage contract, signed in France by two French parties before their marriage, on their financial claims against one another arising out of their divorce in England 26 years later.

Nuptial agreements are not automatically binding in the English jurisdiction; instead they are only one factor for the Family Court to consider, among many others, when exercising its broad discretion in search of a fair financial outcome in each case.  If the provision made in a nuptial agreement is not within the range of what "fairness" dictates at the time of the relationship breakdown, the court retains the ultimate power to override the agreement.

The law in relation to nuptial agreements in this jurisdiction is set out in the 2010 Supreme Court decision in the landmark case of Radmacher v Granatino, which concerned a German nuptial agreement.  It was held that:

The court should give effect to a nuptial agreement that 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.

And so, in addition to passing the "fairness" test, for a divorcing spouse to be held to their bargain, it must be shown that they signed the agreement in absence of duress or undue pressure and with a full understanding of the nature and effect of the document and what they might be giving up by signing it.

Parties entering into English nuptial agreements tend to demonstrate the requisite understanding by each party providing financial disclosure to the other and receiving independent legal advice before the agreement is signed.  However, when the English Family Court comes to consider foreign nuptial agreements, it will have regard to what would be considered standard practice in the foreign jurisdiction where it was signed, and the absence of financial disclosure or independent legal advice will not necessarily be fatal to the effectiveness of the agreement (for example the Swedish pre-marital agreement featuring in the 2018 Court of Appeal decision in Versteegh v Versteegh).

In the present case, the parties married in France when the wife, who had already embarked upon a career in marketing, was 26 and the husband, a student, was 28. Two weeks before their civil wedding ceremony they signed a marriage contract electing the "séparation de biens" marital property regime, by virtue of which (broadly speaking) only assets held in joint names are divided on divorce, while assets held solely by one party or the other are retained by that party.