US citizens moving to the UK part 7: Will my US prenuptial agreement be binding in England and Wales?
min readKey takeaways
- Prenuptial and postnuptial agreements (“nuptial agreements”) are not automatically binding in England and Wales – the position is the same regardless of the jurisdiction in which such an agreement was entered into.
- English courts will give significant weight to a nuptial agreement if three conditions are met: (i) it was freely entered into; (ii) both parties had a full appreciation of the implications of the agreement; and (iii) it is fair to uphold it.
- Whether a nuptial agreement will be upheld therefore turns upon fairness and the factual position at the time it was entered into.
- To give an existing, foreign nuptial agreement the greatest chance of being upheld by the English court, parties are best advised to take specialist advice in England prior to any relocation.
What is the legal status of nuptial agreements in England and Wales?
Unlike many other jurisdictions, nuptial agreements are not automatically legally binding in England and Wales; they do not have contractual effect.
In all circumstances the court retains jurisdiction to make sure both parties are properly provided for and that fairness is achieved.
The key test was established in the landmark 2010 Supreme Court decision of Radmacher v Granatino which provides 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.”
A fair result may require a nuptial agreement to be upheld in full. Equally, fairness may require a nuptial agreement to be set aside entirely. There is also scope for a third, middle ground, under which the court will substantially honour the agreement but make limited adjustments to ensure a fair outcome.
Breaking down the three-part test
The law is judge-made. There are no formal requirements, but inevitably there are some elements which, if present, can help support an argument that fairness requires such an agreement to be upheld.
It is helpful to look more closely at each of the three elements of the Radmacher test in turn, although in practice there is some overlap:
- Was the agreement freely entered into?
There must be an absence of duress, undue influence, fraud, or misrepresentation. What is most important is the reality of the circumstances at the time, but in practice English lawyers will aim to conclude an agreement at least 28 days prior to the wedding date to help reduce scope for argument that either party felt pressurised to reach agreement. Other factors too can give flavour to the prevailing dynamic and can similarly inform whether the agreement was entered into freely or not (such as each party’s personal circumstances at the time or their relative bargaining position).
- Did the parties have a full understanding of the agreement and its implications?
Both parties should provide full financial disclosure. This serves a dual purpose: it creates a clear record of what each party brought to the marriage, which can help to identify and protect those assets as "non-matrimonial property," and it also demonstrates that the other party had a full appreciation of the circumstances, which is important to satisfy the second element of the Radmacher test.
Each party should receive independent legal advice to demonstrate that they have each understood the agreement and its implications.
- Would it now be fair to hold the parties to the agreement?
The procedural aspects considered above feed into the ‘fairness’ criteria and, critically, it is also important to ensure a party’s financial needs have been met. It is plain that a nuptial agreement need not necessarily replicate the financial provision that a court would make if no such agreement had been entered into. However, it is equally clear that the impact of an agreement must not leave one party in a position of real financial need. This can be particularly important to consider where there are children or where it has been a long marriage.
Provided each of these elements is carefully and sensitively addressed, the court should give weight to the agreement. To the extent the court might consider it appropriate to deviate from what was agreed, it is likely to do so to the minimal extent possible to achieve fairness and meet needs.
What approach will the English courts give to a foreign nuptial agreement?
If the English court has jurisdiction to deal with the financial arrangements on divorce – which in turn depends upon habitual residence and domicile - it will only ever apply English law. So the question is, if the English court has jurisdiction, what weight will a foreign agreement attract under English law?
The simple answer is that the same test will apply. There is also a more complicated answer.
The Radmacher test will be engaged, but the circumstances in which the agreement was entered into and the provision made in the agreement may differ from the established convention under English law. That is not necessarily fatal; indeed the Radmacher case itself concerned a German agreement with a German law clause executed by a French husband and a German wife. There was no financial disclosure, no negotiation of terms, no translation of the agreement and no independent legal advice and yet the Supreme Court considered it fair to hold the husband to the agreement.
So too in other cases the English court has given weight to nuptial agreements entered into by parties in other jurisdictions. Sometimes, the fact that parties may have a greater cultural acceptance and understanding of such agreements can boost the sense of ‘fairness’ in upholding its terms. Similarly, if parties have operated their finances during the marriage in keeping with the terms of an agreement, that can help indicate an understanding and acceptance between the parties of how they wish to approach their finances and add weight to a sense of fairness in upholding its terms – or not if the contrary is shown. However, foreign matrimonial property approaches do not always map easily onto the English law approach.
So far, so good. Possibly. But on matters of such potential significance, the question of whether or not weight would be attributed to a nuptial agreement should not be left to chance or interpretation by the court. Often one of the main purposes behind such agreements is to lend certainty, clarity and autonomy to the position. Anybody making an international move that potentially brings them within the purview of the English divorce court would be well-advised to take specialist advice before making such a move – and sufficiently in advance to allow time to address the consequences properly. This will allow the parties’ specific circumstances and the specific terms of their agreement to be considered through an English law lens in advance.
It is likely to be wise in such circumstances to prepare a confirmatory post-nuptial agreement and/or to update the agreement a little to bolster any procedural or substantive element that would be lacking under the English law approach. If that step is not taken, there is a risk the English courts may consider it lacking procedurally or substantively and it may not be upheld.
What about a new agreement for a US citizen living in England?
Alternatively, for a US citizen already living in England who wishes to enter into a nuptial agreement, it will be important to ensure a coordinated approach between English and US lawyers in the relevant state (or states) to ensure any such agreement is compliant with the form and substance required in each jurisdiction so it would be upheld should proceedings subsequently take place in either location. This is particularly important for an internationally mobile family who may move between countries during the marriage.
Postscript: It is important to add that this article reflects the current approach to nuptial agreements under English law. However, the government is actively consulting on proposals to introduce qualifying nuptial agreements with binding effect, subject to safeguards (which broadly reflect those already established and referenced above). The outline provided here reflects the current judge-made approach under which there are no strict requirements of form, only established principles. If the position changes in the future to give qualifying nuptial agreements binding effect (subject to safeguards), it would be even more important to take advice in advance of any move and ensure adherence to such requirements.
