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English Supreme Court rule that Pre-nuptial agreements can now be binding. Will Hong Kong follow suit?

English Supreme Court rule that Pre-nuptial agreements can now be binding. Will Hong Kong follow suit?

English Supreme Court rule that Pre-nuptial agreements can now be binding. Will Hong Kong follow suit?

Wednesday, 03 November 2010 20:31

By Kenneth Yung, Associate

An update to our previous article - Prenuptial Agreements cannot be disregarded by Paul Firmin, Partner

After months of speculation and anticipation, nine highly respected judges from the English Supreme Court gave their judgment in Radmacher v Granatino on 20th October 2010. By a majority of eight to one, they upheld the Court of Appeal's decision, holding the husband Nicholas Granatino to the pre-nuptial agreement he signed before he married Katrin Radmacher, a German heiress who worth approximately £100 million.

Previously and until the delivery of this judgment, pre-nuptial agreements were only regarded by the English Courts as a factor for consideration or at most persuasive. Now any pre-nuptial agreement "properly entered into' will be given far greater weight. The principle established in this controversial appeal is set out in paragraph [75] of the judgment, 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."

While this principle certainly boosts the importance of a pre-nuptial agreement in England and Wales, it does not make any pre-nuptial agreement ironclad. Instead effectively creates a rebuttable presumption that a pre-nuptial, as well as post-nuptial 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. Ideally, a pre-nuptial agreement should be signed as long as possible before the wedding, so as to ensure that it was not entered into under pressure, and to allow more time for the parties 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 certainly assist in showing and justifying that the agreement was entered into willingly.

The above will certainly serve as important guidelines for creating a nuptial agreement that is likely to be binding on the parties upon divorce. However, the fact that the terms and effect of the agreement should be "fair" is arguably the most difficult question to tackle. As their Lordships put it in paragraph [76] of their judgment: "This will necessarily depend on the facts of the particular case, and it would not be desirable to lay down rules that would fetter the flexibility that the court requires to reach a fair result".

It must also be noted the English Supreme Court once again stressed that the welfare of any minor children of the family is of paramount importance and that any pre-nuptial (and post-nuptial) agreement must not be allowed to prejudice the reasonable requirements of any children of the family.

Impact on Hong Kong Courts
As discussed previously in our article "Prenuptial Agreements cannot be disregarded", decisions of the English Courts are no longer binding on the Courts of Hong Kong, although English authorities are still regarded as highly persuasive. It is anticipated therefore that the judgment of the English Supreme Court in Radmacher v Granatino will be given significant weight when the Hong Kong Courts are faced with a case involving a pre-nuptial agreement.

Click here for the full Supreme Court judgment of Radmacher v Granatino.



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.