Marital Agreements and Private Autonomy in a Comparative Perspective
Introduction
The issue of premarital agreements was discussed by academics and practitioners at an international conference at Cambridge University on 26 and 27 June. Unlike other countries, England and Wales has no matrimonial property regime and pre-marital agreements are not binding. The presentations provided an excellent overview of the different matrimonial property regimes and marital agreements which exist in other countries. This article summarises the matrimonial property law regimes and marital agreements presented and the conclusions reached.
England and Wales
Mark Harper, of Withers LLP, described pre-nuptial agreements as a nightmare because they are made at the time of marriage, when clients are deeply in love. If not made in good time, they could lead to a marriage being called off. They are difficult to prepare because entitlement is likely to depend on factors which often cannot be predicted at the time of marriage. He forecast that there would be negligence actions. Jo Miles, lecturer at Trinity College, Cambridge, explained that although pre-nuptial agreements are void, weight can be ascribed to the pre-nuptial agreement, but this is entirely fact sensitive. For example, in Crossley, the pre-nuptial agreement was found to be of magnetic importance, when there was a short marriage, no children, the parties had independent legal advice, and the finances were high value. The only route to certainty and finality in English law is to obtain a consent order as part of the divorce under S33A, MCA 1973
Scotland
Kenneth Norrie, from the University of Strathclyde, described a more certain system in which property is kept separate during the marriage, but on divorce, there is effectively a deferred community of property. Matrimonial property excluding property owned pre-marriage is shared equally, subject to various checks and balances, with the economic burden of child care shared equally. Maintenance is limited to a term of three years, irrespective of circumstances. It is a system of low discretion but high certainty. Pre-nuptial agreements are enforceable but rare. Separation agreements are more common, but can be set aside if, for example, the agreement was not procedurally fair.
Belgium and France
Walter Pintens, Professor at the University of Leuven outlined the régime primaire, under which the family home cannot be sold by one spouse without the other’s consent. Under a statutory matrimonial property regime, each spouse is seen as sharing in the other spouse’s property gained during the marriage, ignoring the tasks they undertook during the marriage, because the gain resulted from both spouses’ achievements. Maintenance is dealt with completely separate to property. Spouses are free to enter into pre nuptial and post nuptial agreements and are fair provided they comply with formal procedure.
Spain
Josep Ferrer I Riba, based at the Universitat Pompeu Fabra in Barcelona, described an increasingly liberal regime in Spain. In Catalonia, property is kept separate, but with a right to compensation for household work or unremunerated work if there is a significant inequality in the property acquired by both spouses during the marriage. Over the last 15 years, pre nuptial and post nuptial agreements have become more common. They are normally valid in Catalonia, so long as they are in a deed overseen by a notary. A judge can set aside such agreements if adverse to the children or seriously detrimental to one of the spouses.
Germany
Anatol Dutta, of the Max Planck Institute, explained that there is no legal distinction in German family law between pre or post nuptial agreements and separation agreements. On divorce, the spouses mutually share in the gain obtained during the marriage. Pension rights have to be adjusted. Maintenance looks towards a clean break. Spouses are free to alter the matrimonial property regime by excluding or suspending the default matrimonial property regime. The German courts adopted a relative laissez faire attitude towards such agreements until two spectacular decisions in 2001. Since then, marital agreements have in certain circumstances been reviewed and if necessary revised, to address, for example, an unequal bargaining position between the spouses. They will be found void if they violate public policy.
Sweden
Jantera Jareborg, based at Uppsala University, explained that throughout the marriage, each spouse continues solely to own all of his or her property. On dissolution of the marriage, the net value of the marital property is shared equally. Pre-nuptial agreements are common in Sweden. To be binding, the matrimonial agreement is drawn up in writing and signed by both spouses and then registered with a district court. No disclosure or legal advice is required. There is very little willingness by the Swedish courts to adjust or set aside terms of marital property agreements, even in “deserving” cases where there are young children and the wife has little income of her own due to her primary responsibility for the household.
Singapore
Wai Kim Leong,of the National University of Singapore, explained that marital agreements are generally lawful, if contractually valid but are always subject to scrutiny by the courts. This is affirmed by the recent decision in TQ v TR. A valid prenuptial agreement forms only one factor for consideration by the court in resolving the division of property on divorce. The law of maintenance, however, in Singapore remains one sided. A court may only order an able husband, to maintain his dependent wife, not vice versa, during the subsistence of the marriage and after its termination.
Australia
Owen Jessep,of the University of New South Wales, explained that the court’s power to divide and redistribute property depends on statutory criteria, including the contributions made during the relationship and the economic circumstances of each spouse at the time of hearing and in the future. Since 2000, financial agreements can deal with the property or financial resources of either spouse in the event of breakdown of the marriage and also deal with issues of spousal maintenance. For the agreement to be binding, each party is required to obtain independent legal advice, and certificates have to be signed by the lawyers concerned and attached to the agreement. A binding agreement can be set aside in certain circumstances including fraud or if circumstances since the making of the agreement make it impracticable for the agreement to be carried out. The public and the legal profession have been cautious about use of the agreements. It was felt that the requirements as to the giving of advice were too onerous. Safeguards have since been put into place to protect against the improper or fraudulent use of financial agreements. The most popular option remains the use of consent orders following separation to get the court’s sanction, and may remain so for the foreseeable future.
United States
Ira Mark Ellman, of the Arizona State University explained that in the community property states, including California, on divorce, all property is divided into shares equal in value although not necessarily identical in kind. In nearly all the other states, the divorce court distributes the spouses’ property between them through “equitable distribution”, which means replacing the separate ownership of property on divorce with community of property on divorce. However, in New York, a portion of a spouse’s expected future earnings are treated as if they were property, to be valued and then divided at divorce. Premarital agreements generally have to be in writing and traditionally cannot bind a court in deciding child support or child custody matters. Agreements must be voluntary to be enforceable. Disclosure of assets and the presence of independent legal advice are considered when deciding whether the agreement was entered into voluntarily.
Concluding remarks
Jens Scherpe, of the University of Cambridge, contrasted the position whereby agreements are binding on the continent but are not followed if unfair, whereas in England and Wales, agreements are not binding but are followed, if fair. Perhaps the position is not that different. However, if an agreement is presumed to be fair, it will have an impact, since in order to get out of the agreement, you would need to show why it is unfair.
The conference took place just a few days before the Court of Appeal Judgment in Radmacher v Granatino. Lord Justice Wilson commented that one of the issues in that case was the lack of advice obtained by the husband on the terms of the pre-nuptial contract. In Australia, by contrast, obtaining legal advice is compulsory, and desirable in Scotland. Where there is disclosure of assets and the agreement regulates what happens to the spouses, what is wrong with a prenuptial contact when it reflects what they agreed to do?
On the continent, pre-nuptial agreements and matrimonial property regimes are recognised. However, the legal route to determining property and maintenance are very different. In Scotland, maintenance ends after 3 years, while in Holland, it ends after 12 years. Can the termination of maintenance be fair to a 55 year old woman with no means of making up for the lost years of deprived earning capacity when she was looking after the children?
Many countries have grafted pre nuptial agreements on to their legal systems, but England and Wales remains behind, despite the increasing presence and movement of foreign nationals. The European Union now has tight rules as to jurisdiction which can force a divorce forum race. English law however is boxed in by statute law and case law is unlikely to provide pre nuptial agreements with decisive effect.
S25 of the Matrimonial Causes Act could be reformed to recognise pre-nuptial agreements. As the Law Commission’s project into marital property agreements gets under way, it will need to grapple with the very different matrimonial property regimes and attitudes towards private autonomy of other countries from the presentations made at this conference.
For further information on the above issues, please contact:
Graeme Fraser
Associate, Family department
graemefraser@cumberlandellis.com
tel: 020 7242 0422
