Prenups - could they ensure fairness on divorce?

Leading family law expert, Baroness Deech is expected to call for a reform of current divorce law in a public speech delivered today.  She will argue that both prenuptial and postnuptial agreements should be made legally binding, which will bring the courts of England and Wales in line with the European system.

The enforceability of prenuptial agreements in this country hit the headlines earlier this year when German heiress, Ms Radmacher’s financial settlement was considered by the Court of Appeal. She and her husband had entered into a prenuptial agreement when they lived together in Germany, where such a contract was binding. The couple later moved to the UK where they divorced.

The Matrimonial Causes Act 1973 is the legislation that provides guidance to a court that is faced with dividing a couple’s assets on divorce.  The Act states that all the circumstances of the case need to be taken into consideration, and provides a non-exhaustive list of factors that should be looked at.  The Court of Appeal in Ms Radmacher’s case determined that the prenuptial agreement that Ms Radmacher and her husband had entered into was such a factor to be considered, and importantly that it should be given decisive weight.

However, it remains the case that prenuptial agreements are not automatically binding upon a couple when they divorce.  In Ms Radmacher’s divorce it was important to the Court that she and her husband had both “willingly and knowingly” entered into the agreement.  It was also influential that they had entered into it believing that it would be binding upon them under German law.  Accordingly the decision has not been heralded as a guarantee that prenuptial agreements will be followed by the family courts.

In her much publicised speech last month (James Brown examined this in detail in his blog of 17th September), Baroness Deech argued that divorce laws are out of date, and have in effect developed to the extent that they can be unfair to men and degrading to women. She suggested that there is increasingly an assumption that the couple’s assets should be divided equally upon divorce regardless as to the length of the marriage.  In her speech today she will suggest that by making prenuptial agreements enforceable it is less likely that marriage to a wealthy man (or woman) will be seen as an alternative to a career.

The legal status of prenuptial agreements is currently being considered by the Law Commission. Their decision is due in 2012.  Whilst they consider making prenuptial agreements enforceable and until parliament introduces reforms to the current legislation, the matter remains within the discretion of the Courts. However, following the decision of the Court of Appeal in Ms Radmacher’s case, couples who are currently engaged may be best advised to consider entering a prenuptial agreement - however unromantic this may seem.