13 September 2013

Legal reform of prenuptial agreements may be on the cards

The question of whether nuptial agreements should be legally enforceable in England has been debated for many years – the difficult balance between respecting autonomy and protecting the vulnerable makes it an interesting but complex question. However, it seems that we are now edging ever closer to some clarification from Parliament.

The Law Commission has been conducting research and consultations on this subject since October 2009. Their first consultation paper was published in January 2011, later than expected, as the Commission wanted to hear what the Supreme Court decided in Radmacher v Granatino. In that case, the Court went as far as it could, without legislative reform, to recognise the significance of the parties' agreement.

Professor Elizabeth Cooke, the Law Commissioner leading the project, has said:

‘Prenuptial agreements are a topical issue. Under the current law the starting point for the resolution of financial division on divorce is the discretion of the court. Some feel that where couples have reached agreement, the courts should not be involved; yet the courts' approach is primarily protective, and some feel that they should not be wholly excluded.'

The Commission subsequently decided to expand the remit of their initial consultation and published a supplementary consultation paper in September 2012, encompassing the question of whether there should be a statutory definition of a party's ‘need for financial resources' on divorce and to clarify the treatment of the law relating to ‘non-matrimonial' property (assets acquired before the marriage/civil partnership or by way of gift or inheritance during it). Most family law practitioners would agree that these are both areas that would benefit from legislative clarification. There was an opportunity for interested parties to respond to the paper, and the Law Commission is now in the process of reviewing those responses.

The final report (which it is hoped will include a draft bill for proposed law reform) is expected to be released soon, and, therefore, we will hopefully be in a position to provide more information in our next newsletter. There are unlikely to be any formal legislative changes until at least 2014, and only if there is political will, as not all Law Commission recommendations are accepted by government (as demonstrated for example in relation to the side-lining of recommended reform of cohabitation law).

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