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Pre-nuptial agreements approved in Hong Kong…?

Pre-nuptial agreements approved in Hong Kong…?

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Pre-nuptial agreements approved in Hong Kong…?

Monday, 22 September 2014 12:31

By Stephen Peaker, Partner and Head of Family Law Department and Kenneth Yung, Associate

An update to our previous article - English Supreme Court rules that Pre-nuptial agreements can now be binding. Will Hong Kong follow suit?

Historically, pre-nuptial and separation agreements were not enforceable in common law jurisdictions including Hong Kong. These agreements were considered to be contrary to public policy as they sought to oust the jurisdiction of the court to grant financial relief to the divorcing parties by the Hong Kong Courts in deciding the financial relief to be given to the parties and their children having regard to the various factors identified in sections 4, 5, 6 and 7 of the Matrimonial Proceedings and Property Ordinance “MPPO” (Cap. 192) and the relevant case law most relevantly LKW v DD (2010) 13 HKCFAR 537.

In the UK, the case of White v White in 1999 had significantly impacted financial division cases towards a more 50:50 asset division approach. However, as the society’s view and attitude towards public policy evolves, the English Supreme Court gave a judgment on 20th October 2010 in the case of Radmacher v Granatino [2010] UKSC 42, [2011] 1 A.C. 534 that pre-nuptial and/or separation agreements entered into by a couple to regulate their financial affairs in the event of their separation and/or divorce are no longer contrary to public policy, and even if such agreements provided for substantial departures from equality (which is almost always the case) 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”.

On 9th June 2014, the Court of Final Appeal of Hong Kong confirmed in its judgment in SPH v SA (formerly known as SA), FACV 22 of 2013 that “the principles enunciated in Radmacher v Granatino should also be regarded as the law in Hong Kong” – this effectively creates a Hong Kong authority that a pre-nuptial and/or separation agreement will be binding subject to the following factors:-

1. The agreement is "freely entered into" – that the agreement was not signed by either party under any pressure, duress, or undue influence, but was entered into by the party's own free will with sufficient time and opportunities for the parties to consider and to negotiate the terms of the agreement.

2. Each party has "a full appreciation of its implications" – each party should have the opportunity and means to obtain independent legal advice, and that there should be mutual full and frank disclosure as to the financial positions of both parties. Satisfying this criteria will assist in justifying that the agreement was entered into willingly.

Although the Court of Final Appeal accepted the principles set in Radmacher v Granatino, the Court expressly gave a qualification in relation to two different types of pre-nuptial agreement – the one that frequently happens in the UK which are designed primarily for the consequences of divorce such as waiving or restricting claims for financial provision on divorce and provide for a significant departure from equality, as in the case of Radmacher v Granatino, are more likely to be upheld; and the other type that more often occurs in civil law countries in Europe which are primarily concerned with the effect of the marriage on the parties’ property rights, made for the purpose of adjusting the default matrimonial property regime rather than made in anticipation of divorce, remains questionable if not doubtful in terms of enforceability. As the Court of Final Appeal put it in its judgment: “It is not yet settled what effect matrimonial property regime agreements in the strict sense have in the case of matrimonial proceedings in Hong Kong (or England)”.

Click here for the full Court of Final Appeal judgment of SPH v SA (formerly known as SA), FACV 22 of 2013.

This article is for information purposes only. Its contents do not constitute legal advice and readers should not regard this article as a substitute for detailed advice in individual instances.