The laws of divorce in Scotland and England differ in a number of ways and none more significantly than in the way matrimonial property is dealt with. In Scotland, what is considered to be part of the matrimonial pot is only that property which has been acquired during the marriage, i.e. from the date of marriage to the date of separation. As a general rule, anything you owned prior to marriage and anything you have received by way of inheritance or gift are not included and therefore should not be taken into consideration in any financial settlement. In sharp contrast, under English law all property owned by the husband and wife, either individually or jointly, is considered to be matrimonial property, regardless of when it was acquired. This is perhaps why, until now, prenuptial agreements have been generally acceptable in Scotland but not in England.
This discrepancy appeared to lessen with a Supreme Court ruling back in 2010 (the case of Radmacher v Granatino), where the court decided that a prenuptial agreement was binding in the case of a German wife and French husband who were living together in England. It was decided by the Supreme Court at that time that such an agreement should be given “decisive weight” in any divorce settlement but that the court should still have discretion to waive any pre or post marital contract particularly where it was unfair to any children of the marriage.
In most cases, prenuptial agreements clarify what each party is taking into the marriage and the fact that, if things don’t work out they expect to walk away with their premarital property (or at least it’s value if it has been converted into something else) irrespective of anything the couple have accumulated during the marriage. Provided the parties both took legal advice and the agreement was fair and reasonable at the time it was entered into, such an agreement is likely to be upheld in Scotland. Notwithstanding the decision in the Radmacher case, while couples in England are free to enter into such agreements they are not currently considered to be legally binding. To ensure that the terms of such an agreement are enforceable, it is necessary to ask the court to make orders that reflect the terms specifically and even then the courts have discretion as to whether or not they do so.
This may be set to change however, if the recommendations set out by the (English) Law Commission in their report “Matrimonial Property, Needs and Agreements” are taken on board. The report recommends that the law in England should be changed to ensure pre-nuptial agreements are enforceable.In a draft bill, the Law Commission outlines plans that would allow married couples and civil partners to make a qualifying nuptial agreement about how their assets will be dealt with in the event that their relationship breaks down. The proposed reform would give couples greater autonomy and control over their finances, providing greater financial certainty in the event of separation. If the proposals are implemented, both parties of the relationship will require to seek independent legal advice and offer full financial disclosure as part of the process to ensure that the agreement is enforceable.
In the meantime, the courts are likely to deal with each agreement on a case by case basis and so only time will tell. In any event, it is to be hoped that the shift in attitude by the English courts will help to align the way matrimonial property is dealt with by the two jurisdictions and prevent some parties from potentially manipulating the situation and using whichever jurisdiction is more favourable to them where they have a choice.