The Supreme Court rules in favour of Pre-nuptial Agreements

The Supreme Court has ruled in favour of pre-nuptial agreements and although they are still not legally binding, the highest court in the land has agreed that in the right case such an agreement can be decisive and even compelling.  There will however need to be a change of law to make pre-nuptial agreements fully enforceable and the Law Commission is due to report on this in 2012.

The judgement in Radmacher and Granatino was handed down by a majority of 8 to 1 in the Supreme Court on the 20th October 2010.  This was an appeal by the husband, Mr Granatino, against the Court of Appeal decision to reduce the amount he was to receive in the divorce settlement.

Ms Radmacher was a paper company heiress and Mr Granatino was a French investment banker who later took a substantial reduction in his income to become an Oxford University researcher.  The parties signed a prenuptial agreement in Germany in 1998 and spent most of their married life living together in Chelsea, until their divorce in 2007.

The agreement provided that Mr Granatino would not make any claim on his wife's fortune if they split up, but was initially awarded £5.85m by the High Court in 2008.

Ms Radmacher challenged this in the Court of Appeal and it was agreed that the couple's pre-nuptial contract should have been taken into account and the award was reduced from £5m to £1m, Mr Granatino also received a £2.5m fund for a house, which would return to Ms Radmacher when the younger of their two daughters reached 22.  Ms Radmacher is reportedly worth in the region of £100m.

Pre-nuptials are not just for the rich but can allow you to ring-fence part of your wealth prior to marriage and this may be particularly important for second marriages where a person wishes to protect their wealth for the benefit of their children.

It therefore appears that the Court will now up hold pre-nuptial agreements if they are fair and if they are entered into without duress and with both parties being fully aware of all the relevant financial information and the consequences of signing the agreement.  The Court will however still have the discretion to waive the agreement especially if it is unfair to any children of the marriage.

This case now brings us more in line with other European countries where such agreements are enforceable.  There is however a concern that the financially weaker party may lose out on a considerable part of the couple's wealth.

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