INTERNATIONAL RELATIONS

As the world gets ever smaller, the number of people choosing foreign partners gets ever larger. From a legal point of view, marrying is the easy bit. The difficulty comes with divorce, and the possibility of international disputes about child custody and/or the division of financial and property assets.

Which makes last week's judgment by the U.K.'s Supreme Court in Radmacher (formerly Granatino) v. Granatino an interesting read. Ms. Radmacher was, and is, a very wealthy German. She fell in love with Mr. Granatino, a Frenchman who, although an investment banker, was not in the same financial league. One of the conditions for her inheriting more of the family estate was that the future husband sign a pre-nuptial agreement under German law, waiving any claims to the wife's assets if things went wrong; which he duly did. After marrying, they settled in the U.K. , and subsequently had two children. He got fed up with investment banking, and enrolled as a postgraduate research student at Oxford University. However, after 8 years, the marriage fell apart, and Ms. Radmacher went to live abroad with the children. In the divorce proceedings in the U.K., Mr. Granatino asked for more money than simply enough in order to support (his share of) the costs of raising the children, essentially asking the High Court to disregard the pre-nuptial agreement. The Court did this, and awarded him £5.5m. Ms. Radmacher appealed to the Court of Appeal and won. Mr Granatino in turn appealed to the Supreme Court, asking for the original verdict to be reinstated. Sitting as a 9-man court (instead of the more usual 5) in view of the seriousness of the issues involved, the Supreme Court essentially decided 8-1 that the pre-nuptial agreement should be upheld.

Pre-nuptial agreements are common (and valid) in many Continental jurisdictions and elsewhere (eg in some U.S. states); most people seem to agree that if the Granatino's had divorced in Germany, then the pre-nuptial agreement would have been legally binding. The problem for the Supreme Court was first, that the U.K. has chosen not to sign the relevant legal convention which resolves documentary disputes under the law of that document (in this case, German law). And secondly, that the common law of England and Wales evolved from a very different starting point. Historically, when a husband and wife got married, they became one person, and that person was the husband. Wives lost control of their property, which was unilaterally managed by the husband, and they could not contract with third parties, let alone with their husband. Although, beginning in the late 19th century, Parliamentary legislation began to eat into this essentially paternalistic starting point, it remained a rule of public policy that pre-marital agreements which envisaged married couples getting divorced were null and void. This was on the grounds that they might be seen as "encouraging" couples to avoid the legal duties involved in marriage, such as living together. One result of this was that loveless couples rarely divorced, but merely lived apart, if they could afford to do so. If they could not, they usually had to just grin and bear it.

With the move to "no-fault" divorce and other things, the Supreme Court clearly felt that these historical principles were out of date, and time to go. Whereas a pre-nuptial agreement will not be totally definitive, neither will it be null and void, as was previously the case. If it was freely negotiated and entered into, with a clear understanding of the consequences, then the starting point is that it should be upheld, providing that there are no extenuating circumstances (eg financial penury for the children). In short, it will be a valid contract like any other properly drafted contract.

So, a welcome modernisation of English family law that puts it on a par with other countries? Well, maybe. The most interesting part of the case was the lone dissent, interesting because it came from Lady Hale, the only woman involved in the decision and the only woman ever to have been appointed to the House of Lords/Supreme Court. She pointed out that pre-nuptial agreements are often used to favour the economically more powerful partner at the expense of the weaker. Although, in this particular case, that more powerful partner happened to be a woman, in general it would be a man. Secondly, she said that overturning long-standing principles should not be done in this way, through the decision of a single case, but through Parliamentary legislation (as, indeed, the changes to the law of divorce itself were made). Everybody agreed that the law of marital and divorce agreements was in a mess, the Law Commission were reviewing this whole area, and it would be better to await their proposals, and then get them enshrined in legislation.

It strikes me that Lady Hale's worries have more than a little merit. The Granatino's are, by any definition, wealthy people who can afford the vast expense of having their personal, private dispute handled by hotshot lawyers and settled by the highest court in the land. That they are also both foreigners merely makes it more complicated and more expensive. But the majority of people divorcing, whether within or across borders, are not like that. They need simple, clear, strightforward rules that the average local solicitor can understand, and then advise their client accordingly. It is a moot question whether the Coalition Government, obsessed with deficits and other financial matters, will find the time to address something which might well end up affecting around half of all married couples. But like Lady Hale, I think they should.

Walter Blotscher