In What Circumstances Will Parties Be Held To Marital Agreements

The well known case of Granatino v Radmacher [2010] UKSC 42 established that 'the court should give effect to a nuptial agreement that is freely entered into by each party with the full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to their agreement.' This article looks at how this principle has been applied by the English courts in recent cases.

Independent legal advice and disclosure are key factors the Court should consider, when deciding whether a party can be taken to have freely entered into a marital agreement with a full appreciation of its implications. Indeed, the provisional proposals of the Law Commission, in its consultation on marital property agreements, are that both parties should be required to take legal advice and the party seeking to enforce the agreement must have made full and frank disclosure of his/her financial situation. Unless these proposals result in a reform of the current law, they are amongst the many factors the Court must consider.

Granatino v Radmacher made clear that independent legal advice and full disclosure were not preconditions to fairness, which underlines the English Court's overall approach to the treatment of marital agreements. The issue of non-disclosure of assets was considered in the recent case of Kremen v Agrest [2012] EWHC 45 (Fam), which concerned a post-nuptial agreement between a wealthy Russian financier and his wife. In this case, material non-disclosure (considered to be of many millions of pounds) by the husband, was highly influential in Mr Justice Mostyn's judgment as were the issues of lack of independent advice and the presence of duress. These findings resulted in it being determined that the wife did not enter into the agreement with a full appreciation of its implications. The result was that the wife received an award of £12.5m (of which £8.3m was constituted maintenance, her needs having been generously assessed) out of total assets in the region of between £20m–£30m.

In contrast, in Z v Z [2011] EWHC 2878 (Fam), which concerned a French couple who entered into a French marriage contract (known as 'separation de biens') in accordance with French law, the agreement was upheld by the English Court in relation to the exclusion of the sharing principle to the assets. This was in spite of the lack of independent legal advice and full disclosure when

the marriage contract was executed. Mr Justice Moor commented...