The concept of a pre-nup is different in France (and Germany) to England. In France, marital agreements are legally valid and binding. They divide assets and the “enrichment” of those assets during the marriage, but don’t provide for the element of “fairness” that an English pre-nup would include in order to try to prevent the divorce court from making an order for financial provision if the marriage ends. The divorce judge keeps a free hand in this respect, but should take the provisions of the pre-nup into account. Had Granatino v. Radmacher been decided in France under French divorce law, the Judge would have upheld the German pre-nup, i.e. granted the husband a “prestation compensatoire” in capital to “offset the differences in standard of living”.
In England, pre-nups are essentially linked to divorce and avoiding the application of the principles of sharing and compensation purportedly to achieve “fairness”. The application of these principles in English law may result otherwise in an equal, or close to equal, division of all the parties’ wealth. Under French law, it isn’t possible to exclude the right to a “compensatory payment” on divorce, whereas in German law it can be waived (as in Granatino). So, the enforcement of the English pre-nup in France was not certain.
The practical example of the case of Alan and Marie illustrates the problems at hand, and how the French Judge took into account the consequences of the existence of an English pre-nup.
The context
After a few years of romantic involvement, Alan, an English businessman, wanted to marry his French girlfriend, Marie. He was many years older than she, and he had health problems. Both had been previously married and had children. She lived and had a clerical job in France. He hoped she could adapt to living in England. He also wanted to protect his wealth for his children from his first marriage if things did not work out. He had a few million, from the sale of a business, and she had virtually nothing.
Jeremy Posnansky Q.C., Alison Bull/Nigel Shepherd at Mills & Reeve (Manchester) and Alain Cornec from Villard Cornec (Paris) advised Alan in 2005 on the putting in place of an English pre-nuptial agreement.
The contract provided for English law to apply, since it was envisaged that the couple would be living in England and to seek to protect the assets in England as effectively as possible. In case of the breakdown of the marriage, each spouse would keep his or her assets and Marie would get £50,000 (index-linked) for each year of marriage (up until the filing of a divorce petition). There would otherwise be a clean break between them. At the time of marriage, Alan also bought Marie a flat in her name in France, then worth about £300,000.
The divorce case
Things did not work out well. The same legal team at Mills & Reeve and Villard advised Alan.
Under European rules, the divorce petition could be filed in England, where Alan had resided all his life, and where most of the assets were. France also had jurisdiction as Marie effectively lived there. Had French divorce law applied, the separation of assets could not have been set aside, but the limitation of the “equitable” element at £50,000 per annum would not have bound the judge. Effectively, by French standards, the amount provided in the pre-nup was very generous. But one of the key reasons for issuing proceedings in France was that French courts have recognised and enforced foreign pre- and post-nuptial agreements for a long time.
Alan filed for divorce in France because the pre-nuptial agreement was more likely to be recognised there, though divorce proceedings could be substantially longer than in England.
At the initial “conciliation” hearing, Alan offered to pay Marie the full amount if she agreed to divorce by consent, which could have been done there and then, with all issues being solved immediately. Marie refused and asked for maintenance to which “she was entitled under French public policy”. Her chances of getting a larger “equitable” amount than the pre-nup were small, but she might get maintenance in addition. The Family Judge initially awarded Marie £4,000 monthly maintenance for the duration of the case and £3,000 as an advance towards her legal costs. Whether the maintenance pending suit and the advance on costs would be offset against the capital agreed under the pre-nuptial agreement was left to be decided later at trial, which took place a year later.
The amount of £50,000 per annum was not disputed by either spouse. It was far more anyway than Marie would have obtained from the French court in the absence of a pre-nup, especially added to the gift of a flat, then worth about 450,000€.
The decision
The decision of the French Court was handed down earlier this year and upheld all the terms of the English pre-nup:
- Marie will get what had been agreed in the pre-nuptial agreement;
- the interim maintenance and the provision for costs will be offset against the total amount due;
- the rate of exchange £/€ is that at the date of the decision (meaning that the amount Marie receives will be worth very much less to her now than if she had accepted the position at the initial hearing).
Despite Marie’s initial statement that she would appeal the judgement, her appeal has been withdrawn, and the decision is now final. One relevant factor is that maintenance is charged to income tax in France, whilst capital received on divorce is tax free.
It remains to be seen what the Supreme Court’s decision in the Radmacher v Granatino case will be (and the judgement is unlikely to be handed down for several months): but for now the inexorable movement towards English pre-nuptial agreements being legally binding in England and recognised abroad continues.
Alison Bull and Alain Cornec