Yesterday’s decision of the Supreme Court of England and Wales in the divorce of German heiress Katrin Radmacher and Frenchman Nicolas Granatino has attracted an unusual amount of interest over the last year, as it has become a test case for the validity of pre-nuptial agreements in England and Wales.
Mr Granatino was initially awarded a settlement of £5.8m when the couple divorced in 2006. This was disputed by Ms Radmacher and was reduced by the Court of Appeal, to £1m plus maintenance. Ms Radmacher's grounds for appeal were that the couple had entered in to a pre-nuptial agreement in Germany, under German law, four months prior to their 1998 wedding in which they agreed that neither of them would make a claim against the other in the event the marriage failed. The couple lived in the UK when married.
Although this is a decision of the UK Supreme Court, it is clearly a decision made under English law, and as such does not change the law of Scotland; it does, however, carry some weight in Scotland and may be taken into consideration by Scottish courts in divorce actions.
In Scotland, pre-nuptial agreements are generally enforceable, provided they are not fraudulent, and are not signed under duress or without proper legal advice. A pre-nuptial agreement was successfully relied upon in Scotland in the 1981 case of Thomson v Thomson [1981 S.C. 344]. The position in England and Wales was that pre-nuptial agreements were viewed as being against public policy and were therefore unenforceable. Nevertheless, in the Radmacher case, the justices, by a majority of eight to one, dismissed Mr Granatino's appeal, stating that "it will be natural to infer that parties entering into agreements will intend that effect be given to them".
The justices agreed with the earlier decision of the Court of Appeal that under the correct circumstances, having a pre-nuptial agreement in place can be influential on their decision. The courts retained the discretion to waive any pre-nuptial or post-nuptial agreement, deemed prejudicial to any children of the marriage.
Pre-nuptial agreements have been branded as a commodity for wealthy individuals to ensure that if their marriage fails, they remain wealthy individuals. What people do not realise is that a pre-nuptial is also a useful tool for people, perhaps entering into a second marriage, to make provision for their children by safeguarding their assets.
Although there are no current plans to review the position in Scotland, the Law Commission for England and Wales are entering into a review of the legal position of pre-nuptial agreements throughout England and Wales in 2012. The resulting recommendations will undoubtedly make interesting reading.