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Prenups can be 'decisive', Supreme Court rules

20 October 2010

Prenuptial agreements can be given “decisive weight” by the courts when dividing assets on divorce, the Supreme Court has ruled.

Given the leading judgment this morning in Radmacher v Granatino [2010] UKSC 42, Lord Phillips, president of the Supreme Court, said: “As we have shown the courts have recently been according weight, sometimes even decisive weight, to ante-nuptial agreements and this judgment will confirm that they are right to do so.

“Thus in future it will be natural to infer that parties who enter into an ante-nuptial agreement to which English law is likely to be applied intend that effect should be given to it.”

Eight Supreme Court justices dismissed an appeal by Nicolas Granatino, who signed a prenup with his former wife, Katrin Radmacher, before they got married in Germany.

The Court of Appeal, giving “due weight” to the prenup, reduced Granatino’s payout from £5.8m to around a fifth of that amount in its ruling last year.

Lords Phillips, Hope, Rodger, Walker, Brown, Mance, Collins and Kerr rejected his appeal. Lady Hale dissented.

Lord Phillips said: “What is important is that each party should have all the information that is material to his or her decision, and that each party should intend that the agreement should govern the financial consequences of the marriage coming to an end.”

He said courts could take into account a party’s emotional state and any pressures he or she was under, but this could not be considered “in isolation from what would have happened had he or she not been under those pressures”.

Lord Phillips went on: “The circumstances of the parties at the time of the agreement will be relevant. Those will include such matters as their age and maturity, whether either or both had been married or been in long-term relationships before. What may not be easily foreseeable for less mature couples may well be in contemplation of more mature couples.

“Another important factor may be whether the marriage would have gone ahead without an agreement, or without the terms which had been agreed. This may cut either way.”

Lord Phillips said that in the case of agreements made in recent times “and, a fortiori, any agreement made after this judgment” the question of whether the parties intended their agreement to take effect was unlikely to be an issue, so foreign law would not need to be considered.

He said a prenup “cannot be allowed to prejudice the reasonable requirements of any children of the family”.

The president said courts should give weight to agreements out of “respect for individual autonomy”.

He concluded: “This dispute raises the question of whether, as a result of his marriage, the husband should be entitled to a portion of the wealth that his wife has received from her family, in part before the marriage and in part during, but quite independently of it. When he married her he agreed that he should have no such entitlement.

“Our conclusion is that in the circumstances of this case it is fair that he should be held to that agreement and that it would be unfair to depart from it. We detect no error of principle on the part of the Court of Appeal. For these reasons we would dismiss this appeal.”

Michael Gouriet, partner at Withers, commented afterwards: “People often ask whether valid prenups are worth the paper they are written on, as there is a common misconception that they are not binding in this country. This decision confirms that they most definitely are.

“It would have been incredibly difficult and politically embarrassing for the English Supreme Court to dismiss a valid European prenuptial agreement out of hand, in effect saying that the English law knew better than the German.”

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