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Analysis: no longer the divorce capital of the world

July 3, 2009 The Times

Pre-nuptial contracts have won the clear backing of the English courts after years of suspicion and even hostility.

The landmark ruling by the Court of Appeal sends a clear message that in future courts will regard pre-nuptial agreements made by a couple before they wed as decisive when splitting their assets on divorce.

The presumption will be in favour of the contract, unless there are compelling reasons why it should be discounted — such as a lack of independent legal advice, or a failure by one side to disclose his or her true assets.

The ruling comes in a case involving one of Germany’s wealthiest women and her student husband. But, as Lord Justice Thorpe made clear, pre-nuptial contracts are not just for the rich.

“There are many instances in which mature couples, perhaps each contemplating a second marriage, wish to regulate the future enjoyment of their assets and perhaps to protect the interests of the children of their earlier marriages upon dissolution of a second marriage,” he said.

“They may not unreasonably seek that clarity before making the commitment to a second marriage.”

Why have the judges today resoundingly backed pre-nuptial contracts?

There has been growing pressure for such agreements to be given statutory force. But despite proposals to that effect in 1998 from the Government’s law reform watchdog, the Law Commission, responses were split — and ministers retreated.

The issue was kicked back to the Law Commission who plan a fresh review, to report in late 2012.

Meanwhile, judges themselves have increasingly been giving greater weight to such contracts, provided there was no obvious abuse or “manifest unfairness”.

But yesterday Lord Justice Thorpe was clearly influenced by the stark contrast with Europe. In Germany, the contract agreed between Katrin Radmacher and Nicolas Granatino, would have been accepted and enforced — as it would also in his native France.

In such countries, pre-nuptial contracts are standard practice. It would seem unfair if people could avoid the effects of a contract just by coming to England,

He added that to say in England that such contracts were void seemed “increasingly unrealistic” and to “reflect the laws and morals of earlier generations”.

That view does not sufficiently recognise the rights of autonomous adults to order their own future financial relationships in an age when “marriage is not generally regarded as a sacrament and divorce is a statistical commonplace”.

And, he added, “as a society we should be seeking to reduce and not to maintain rules of law that divide us from the majority of member states of Europe”; while warning of the danger of “isolation” beyond Europe, in the common law world, if “we do not give greater force and effect to ante-nuptial contracts”.

Another of the judges, Lord Justice Wilson noted that in 1998, most judges believed “only slightly greater prominence” should be given to a pre-nuptial contract with courts only “having regard” to them.

He too expressed concern about the present law’s lack of clarity as well as the contrast between Britain and other countries. The underlying assumptions of our approach, he added, were “patronising, in particular to women”.

The ruling may now go to the House of Lords for a final decision by the highest court, which could yet decide that only Parliament can re-write the law.

Meanwhile, lawyers hailed the judgment as ground-breaking and a signal that London could no longer be seen as “the divorce capital of the world".

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