Prenuptial agreements are contracts that specify the rights and duties of the spouses that accrue generally in the event of the dissolution of marriage either by death or divorce. These agreements are entered by the couples before they get married. In today’s world, the client’s relationships and wealth are not just confined to a single nation and thus, it makes the concept of cross-border prenuptial agreements significantly important.
For instance, in the United States, the matrimonial laws vary across all the states, and that results in non-uniform laws that apply throughout the land making it more complex to navigate the application of prenuptial agreements in a single nation let alone the case of cross-border marriages. The cases relating to cross-border marriages are more complex because of foreign laws and the issue of multi-jurisdiction. There are multiple reasons why clients feel the need to consider international prenuptial agreements.
Some of them are owning properties and assets in different countries, marrying a person from different countries, having multiple nationalities and residences, or having their business spread over different countries, etc. It is now quite usual for couples from different nations to be married, own property abroad, and reside somewhere other than either of their home nations.
As it is the prenuptial agreements may not be interpreted or enforced in the way that one or both spouses would have expected due to several factors concerning the terms and enforceability. Each nation has its unique methods and legal principles to resolve a couple’s property, marital, and inheritance rights as matrimonial laws are administered locally in each nation. As a result, different jurisdictions have different requirements for enforcement.
Furthermore, while some nations have prenuptial agreement rules that are well-developed, others do not, and it is for the judicial positions on the handling and enforceability of prenuptial agreements differ between jurisdictions. For instance, the law governing prenuptial agreements in the United Kingdom is still up in the air and most of the cases heavily rely on Radmacher v. Granatino, a landmark ruling given by the Supreme Court of U.K. in the year 2010, which stated that although a prenuptial agreement is not legally binding, the courts will take it into consideration. However, civil law countries like Brazil tend to have more well-developed marital law systems.
Prenuptial Agreements Around the World
There are certain stipulations connected, as well as variations in the scope of enforcement of agreements across various countries globally. For instance:
India:
The Indian Contract Act of 1872 clearly specifies in Section 23 that an agreement is deemed to lack a valid goal if it is in conflict with public policy. A deal cannot be a valid contract if it lacks a legitimate purpose. Also, marriage in Hindu law is considered sacred hence, the agreements are deemed to be invalid. Prenuptial agreements are, nevertheless, regarded as legally binding under Muslim law and the Special Marriage Act of 1954 if a marriage is solemnised and all declaration documents are properly registered at the Registrar’s Office.
England:
Very Recently, the Law Commission of England has made a proposal on prenuptial agreements, noting that they should be made legally binding and subject to protections against their use as a means of imposing hardship on either partner or evading parental responsibilities.
Singapore:
Prenuptial agreements are not enforceable in Singapore or Hong Kong. However, while evaluating a case, such an agreement is considered depending upon the degree of importance. An expatriate couple’s prenuptial agreement was maintained in Singapore because it would be enforceable in their home country, and the court said the same was their rationale for its judgment. In a more recent decision, the Court of Appeal determined that the agreement would be admissible if the applicant could show that the parties intended for it to “exhaustively govern the division of marital assets on divorce, whenever that might actually happen”.
Australia, Canada and New Zealand:
Prenuptial agreements are generally enforceable in Australia, Canada, and New Zealand. In Canada, As long as there has been complete disclosure and independent legal counsel, the agreements are enforceable. Although, if the clause regarding the distribution of property is unjust, the courts may step in. In Australia, prenuptial agreements are legally binding under the terms outlined in the country’s Family Law Act. In New Zealand, prenups are enforceable unless a judge determines that doing so would result in “serious injustice”.
China:
Prenuptial agreements in China are enforceable under the Marriage Law, allowing for specified property ownership arrangements to be signed before marriage.
Indonesia:
Unless the agreement is contrary to the law in place, religion, or morality an agreement signed by mutual consent, in writing, and that is legally acknowledged by the registrar of marriage, is binding on the parties.
UAE:
There are no particular prenuptial agreement laws in the United Arab Emirates. Such a deal would be seen as a civil contract between two persons, unrelated to marriage and divorce particularly. Post-nuptial agreements that have been properly completed can be enforced unless they violate Sharia law, public morality, or both.
Vietnam:
Vietnam lacks any explicit prenuptial agreement rules. However, there is a provision in the Law on Marriage and Family that allows a couple to split their assets through a written Property Division Agreement that must be signed by both parties, attested, and include comprehensive information on the assets and the grounds for the division.
Prenuptial agreements should be carefully drafted and implemented because if they are not, they may be a major source of litigation, which runs counter to the notion that doing so will reduce the likelihood of prolonged legal disputes. It should be evident that both parties entered into the arrangement knowing it would be enforceable in the event of dissolution of the marriage. As a result, both parties should seek separate legal counsel, and there should be no indication of coercion or miscommunication. In most jurisdictions, full transparency and adequate assistance for the weaker party and the children are also prerequisites.
Challenges in Enforcing Prenuptial Agreements Across Borders
It is pertinent to keep in mind that all the different jurisdictions treat these agreements in different ways. Prenuptial agreements must be carefully crafted to ensure that they are upheld by the courts and comply with the laws of the jurisdiction in which the parties and/or the assets are situated.
For instance, in one well-known English case, the wife was a German heiress with global holdings and the husband was French. The couple had been married and were residing in London. It was decided that England should not be the proper venue to decide the asset distribution because prenuptial agreements there were not enforceable prior to the outcome of this case. This specific contract featured a German law clause and was concluded in Germany. Prenuptial agreements are often closely complied with in Germany, as they are throughout the majority of Europe. Finally, the Supreme Court of England determined that because the arrangement had been voluntarily engaged upon, it was just to hold both parties accountable. The German prenuptial agreement was upheld by the court, and as a result, the husband was only permitted restricted access to his ex-wife’s family money.
The jurisdiction to decide on a prenuptial agreement is rather difficult. It may be the jurisdiction where either spouse currently resides, domiciles conduct business or is nationalized, or it may be the jurisdiction where either spouse previously resided, domiciled, conducted business, or was nationalized, depending on the facts and circumstances of each case. It is also quite unpredictable at the time of drafting whether a particular jurisdiction’s legal system would result in a decision that favours one spouse over the other. Family attorneys must thus handle a difficult and sensitive matter during what ought to be a happy pre-marriage phase.
The uncomfortableness of discussing the subject may be the largest obstacle for attorneys and clients considering these legal matters. Many couples nowadays would find it awkward to even bring up the issue, much less think about the potential legal ramifications of such contracts. Thus, they do not put forward their notions unambiguously toward the forming of the legal terms of the agreements
Choice of Jurisdiction
Deciding upon the jurisdiction that will oversee the agreement is a crucial decision when establishing a prenuptial agreement. The couple’s primary jurisdiction, which is based on where they have the strongest ties, should be considered while drafting a prenuptial agreement. The location of the couple’s assets, their domicile, their links to the corporate world, and their present or future abode are all variables that might significantly affect whether the prenuptial agreement can be enforced.
To ensure that a prenuptial agreement with international components is drafted in conformity with the laws of all relevant countries, it is essential for both parties to get independent foreign counsel before discussions on the jurisdiction and other matters begin. This makes it simpler to guarantee that any inconsistencies in applying certain foreign laws relating to the handling of separate, married, and community property or that of the trusts and inherited assets of the couple, are effectively resolved.
It should also be considered to have the agreement prepared in many different languages to ensure that it is in each party’s native tongue. The ultimate goal is to sign a contract that will be enforceable in any country where the couple may have assets or be residing at the time of death or divorce.
Ensuring Enforceability
The contents of a prenuptial agreement are more likely to be upheld by a foreign jurisdiction if they do not seem to significantly benefit one spouse, maybe the one who is less educated. Some foreign courts will also defer to the couples’ choices, such as a choice of law clause. The legitimacy of a prenuptial agreement will be more likely to be upheld by a jurisdiction if it is prepared in both the languages that each spouse is proficient in and the languages of the various jurisdictions, however, each nation will differ.
In a case, in the U.S. it was held that the prenuptial agreement must have been formally signed and entered into in the foreign jurisdiction in order for U.S. courts to uphold its prenuptial legislation. The spouse who is seeking to have the prenuptial agreement enforced must demonstrate that it was “freely negotiated.” Other factors supporting the enforceability of the prenuptial agreement, such as in which country the marriage ceremony took place or whether enforcement of that country’s marital laws, if applied would be inappropriate for one spouse (for example, if he or she is not a citizen of that country), may, however, be given varying consideration by the courts.
Even though both parties can communicate in English, a prenuptial agreement should not be written, signed, and executed in English solely if one of the spouses is from a non-English speaking nation. The best method to guarantee that prenuptial agreements may be enforced internationally is to collaborate with foreign counsel. Although having legal representation for both parties throughout the prenuptial agreement discussion is not always necessary, an attorney should provide both spouses the option of doing so. The attorney shall certify that each spouse had the ability and opportunity to seek legal advice from a lawyer who is fluent in their respective native tongues while doing this. In addition to just giving specific legal advice, lawyers who work in this area must eventually understand any cultural differences that can lead to disputes between the two spouses.
Conclusion
It is seen that the countries that even remotely believe in the concept of prenuptial agreements, the international prenuptial agreements are recognized by their courts upon request, and they often do so unless they deem the contract unjust or otherwise in violation of public policy. Globally speaking, certain courts will be more likely to uphold a prenuptial agreement if it is drafted in the native tongues of both spouses. Having said that, there is no such thing as a “globally enforceable” prenuptial agreement, therefore there is no guarantee that the agreement will be upheld by a judge in the event of further legal disputes.
As a result, a belt-and-suspenders strategy typically helps customers secure their assets the greatest. Premarital asset protection trusts and overseas grantor trust planning are two additional asset protection strategies that are frequently taken into consideration in addition to a prenuptial agreement.
This article is written and submitted by Ananya Singh during her course of internship at B&B Associates LLP. Ananya is a 5th year, BA LLB(Hons) student at Rajiv Gandhi National University of Law, Punjab.
