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David Hodson on the international implications of Radmacher

Date:21 OCT 2010

Marital agreements after Radmacher for international families

David HodsonThe Supreme Court decision in Radmacher on 20 October 2010 was always going to have significant impact in the international family community. And so it has proven. The decision brings England and Wales much closer to the law and practice of many other countries. It gives much greater confidence to foreign lawyers and their clients that a foreign marital (including premarital) agreement, especially after independent advice, will be upheld on an English divorce. England will look more at foreign law to determine the effect the parties intended when entering into a foreign agreement. England will still only apply local law, English law, not applicable law, but this is what occurs in many other countries with which England is close, even if not the preference of the Euro bureaucrats. Of course it does not make marital agreements binding in law - only Parliament can do so and probably will in the next four years following Law Commission proposals expected early 2011. But this is as close to binding as judge made law could provide.

This decision is good for the international family lawyers community and good for international families

The decision in Radmacher was par excellence in an international family; a French husband, a German wife, German inheritances, German pre-marriage agreement binding under both German and French law, choice of law clause, separation of assets in classic community of property regime, awareness that other countries may ultimately deal with the divorce, and then the divorce occurring in a country which applied only local law. Apart from the curiosity of the husband being the applicant, and the level of the assets, this was a quite frequent international occurrence.

It is a familiar situation for international family lawyers in many countries. So it was very appropriate case for England's highest court and the decision is an excellent one to help international families.

In short summary the position now in law in England of marital including premarital agreements is set out in paragraph 75 of the judgement namely: 

"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."

Fairness is found in the circumstances of the case and although this is still discretionary, the Supreme Court gave good guidance. Certainly it will be appropriate not to give effect to the agreement when, and to the extent, there is inadequate provision for the children (maintenance and capital). Otherwise spousal needs (Brussels I maintenance) at the time of the divorce may not overcome the intent of the parties in the agreement for no ongoing support or other provision for needs. The Court of Appeal in Radmacher gave financial provision to one parent for the minority of the children and then to revert back to the other spouse: this may become a preferred model in such cases. The court considering fairness will want to ensure that there has been an absence of duress, and often legal representation and disclosure. However where a party is aware of their rights in law and/or the probable level of disclosure and therefore does not seek legal advice or make disclosure enquiries, they will be unable to set aside the agreement, the very facts of Radmacher itself.

The reference by the Supreme Court to fairness in the context of otherwise holding the parties to their agreement is not intended as a general overview of the preferred fairness outcome of the court at the time of any subsequent divorce. The fairness is primarily intended to go to the circumstances in which the agreement was entered into such as lack of duress, knowledge of disclosure and being able to negotiate freely and fairly through independent legal representation.

The (autonomous) intent of the parties to be bound by the agreement was crucial for the Supreme Court. They recorded that in past years, parties in England may have entered into these agreements knowing that ultimately they were not binding etc. From this time of the Supreme Court decision onwards, and probably from the past few years when the English courts have given much greater weight to these agreements, it will not be possible for a party to say that they did not intend to create a binding commitment. This will be of particular importance for foreign marital agreements where, under the law of the country in which they were then entered into, they were intended to have binding impact. The English court is now likely to hold those parties to that agreement.

Foreign law will be considered by the English courts looking at these agreements to the extent it is necessary to ascertain what, under the relevant foreign law of the country of the agreement, was the impact and status of the agreement and the intent that the parties would be bound (see paras 74 and 96-102 of the judgement). It is likely that English lawyers will be consulting foreign lawyers for advice about this particular aspect.

The whole question of applicable law of marital agreements was anticipated to be dealt with by the Supreme Court, especially as eight of the nine judges were first and foremost civil litigation judges, not family court judges, and therefore familiar with the application of the laws of another country within England. Strikingly, the Supreme Court, including the dissenting judgement of Baroness Hale, was clear that English divorce courts looking at the terms of a foreign marital agreement should only apply English law, local law. It referred to the UK policy decision not to participate in EU and Hague Conference attempts to apply uniform rules private international law. The UK will not be bound by the 2007 Hague protocol on the law applicable to maintenance obligations. The Supreme Court held the issues in the case, and of any other foreign marital agreement considered in England on an English divorce, were governed exclusively by English law. The relevance of German law and German choice of law clause was they clearly demonstrated the intention of the parties that the marital agreement should be binding on them.

Previously in English law jurisdiction clauses in marital agreements were curiously given much greater weight and strength than marital agreements generally, especially in forum disputes. With much stronger efficacy of marital agreements following the Supreme Court decision, it is likely that the jurisdiction clauses will be treated as equally strongly as the other clauses. Choice of law clauses are likely to continue to be treated by the English courts as jurisdiction clauses.

The Supreme Court stated that agreements entered into after the date of the marriage had the same status and position in English law as premarital agreements, overturning the decision of the Privy Council in MacLeod [2008] UKPC 64. This will give much comfort to a number of parties who had entered into premarital agreements abroad and had previously been advised by English lawyers then to enter into a marital agreement a short time after the marriage on the basis that it had greater weight. The Supreme Court has ended this practice and helped foreign lawyers to know agreements entered into a couple of months before or a couple of months after the marriage are of equal status.

In looking at whether an agreement is fair in the circumstances of the case, the Supreme Court looked back at certain recommended pre-conditions from the UK Government in a Consultation Paper in 1998 referring to the importance of independent legal advice. In Radmacher itself, the lack of independent advice was not a basis for setting aside the agreement as the husband had been aware of his general legal rights. However this outcome in this case should be treated as exceptional. Most English courts will expect to see the opportunity provided and taken of independent legal advice. However separate representation of each spouse or fiancee is a distinctively "common law" professional attribute. Across much of the civil law world, it is conventional on entering into such an agreement for the parties to have joint advice from only one lawyer such as a notary. This causes concern and alarm for common law practitioners. It gives rise to doubts about the independence of the advice and the opportunity to take a meaningful part in changing the terms and being fully represented. It may well be that English courts will treat more sceptically (less likely to be fair) agreements reached without true independent legal advice. This may create consternation in civil law jurisdictions. Common law and civil law regimes have much to learn sympathetically and tolerably from each other. Perhaps the importance of independent legal advice to overcome duress and unfair agreements could be one aspect usefully exported from the common law world.

Baroness Hale, the only family court judge amongst the nine Supreme Court justices, gave the dissenting judgement. Her Ladyship expressed real anxiety about the impact on women of making these agreements, in effect, presumptively binding. She stated that very often it was the woman who was the weaker party in the negotiations and lost out as far as the outcome was concerned in contrast to what would occur on divorce. Baroness Hale's remarks will be echoed in the experiences of almost all international family lawyers across many jurisdictions. They are a timely and salutary reminder that these agreements are efforts, invariably by men, to avoid what would otherwise be an outcome of the divorce court more favourable to the weaker party, invariably the woman. The gender dimension of these agreements across the world cannot be ignored.

Therefore whilst many practitioners in England and elsewhere welcome the considerably greater certainty and predictability the Supreme Court has now given to marital agreements with respect for personal autonomy and commitments, international family law practitioners must always regard our calling to do fairness and justice including for the weaker and more vulnerable party. Experience sadly is that at the door of the wedding chapel or (already married) in the marital bed, many are reluctant to say no. This is one reason why pre-marriage agreements should be entered into well in advance of the wedding to overcome any suggestion of unfairness through duress by being last-minute. It is one reason why there should be independent legal representation. It emphasises the importance for international family lawyers to explain clearly and carefully the impact of signing such marital documents and to do our best to protect our more vulnerable and economically weaker clients.

Many lawyers across the common law world rejoice in the discretionary basis which allows flexibility of fair outcomes. Nevertheless there is the constant cry for help by practitioners for more guidance and certainty. The UK Supreme Court has provided this certainty in a very clear manner. For the international family law community the message is now very clear. Whereas previously there was a very great risk that foreign marital agreements might well be simply ignored on any English divorce, there is now reason for considerable confidence that they will be followed if fair including without duress, with legal representation and disclosure and on the basis that it is the intent of the parties to be bound by them. The Supreme Court is to be congratulated on a clear, fair and certain decision.

David Hodson is a Consultant at The International Family Law Group. He acts in complex family law cases, often with an international element.  

He is an English specialist accredited solicitor, mediator, family arbitrator, Deputy District Judge at the Principal Registry of the Family Division, High Court, London and also an Australian qualified solicitor, barrister and mediator. He is a Fellow of the International Academy of Matrimonial Lawyers and author of A Practical Guide to International Family Law (Jordan Publishing, 2008). He is chair of the Family Law Review Group of the Centre for Social Justice. He can be contacted on dh@davidhodson.com

The views expressed by contributing authors are not necessarily those of Family Law or Jordan Publishing and should not be considered as legal advice.

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