English and French considerations
“Regards croisés sur les contrats de marriage entre la France et l’Angleterre”
Law applicable in France
In France the question of matrimonial regime is regulated. The European Regulation (UE) 2016/1103 dated 24 June 2016 came into force on 29 January 2019. For any couple getting married post January 2019, this UE regulation is the framework.
For couple married between 1992 and 2019, we refer to The Hague convention on law applicable to matrimonial regimes dated 14 March 1978.
In France, it is possible to opt to the English law in a marital contract. Article 26 of the said regulation allows to choose the law of the nationality of one spouse or to choose the law of the habitual residence of one spouse.
And in England?
In England the concept of matrimonial regime does not exist. The marriage does not change in any way how the couple will acquire, hold, and dispose of their assets. The spouses remain two separate individuals. There is no joint tax declaration in England. The spouses can decide to buy assets jointly in two ways:
- Joint tenancy: both spouses acquire together. They jointly own 100% of the asset. If one spouse dies the other spouse has all the asset.
- Tenancy in common: each spouse has a share of the asset; it can be 50% if there is nothing specified. If the parties want to record their different ownership and contributions, this is possible and is noted in a Deed of Trust.
In England there is a protection of the matrimonial home that belongs solely to one of the spouses. The non-owner spouse can register his or her rights for free at the Land Registry and the other spouse will not be able to sell his asset as there will be a notice of “home rights” mentioned on the title deed.
If there is no matrimonial regime in England, how can we divide assets upon divorce? The English courts use two or three concepts:
- Sharing
- Needs
- Compensation
The sharing principle means that all matrimonial property will be shared equally between the parties. The needs principle will come into the division to make sure that the needs of the financially weaker party are satisfied. This is the reason why sometimes we have division of 60% for the wife and 40% for the husband or different percentages. The third principle is very rarely applied. It is used by the English court to compensate the loss of earnings in a situation where one party scarified his or her very successful career to become the homemaker. Some judges plea for this concept to be abandoned completely.
Marital contracts in France?
If a couple marry in England and settle in England, the French lawyers, notaires and judges will consider that the matrimonial regime applicable to this couple is the equivalent of the French regime of separation of assets. It might be wise for French couple living in England and marrying in England to record their intentions and wishes as to the law applicable to their matrimonial regime in a marital contract.
The French court recognises the foreign marital contracts provided they comply with the formalities required by the law of the spouses’ habitual residence.
Marital contracts in England?
For a very long time in England, marital contracts were illegal. One could not opt out the discretionary power of the judge. The concept of autonomy of the parties grew in the family Courts and marital contracts were being seen in Courts rooms in the 70s. At the time the judges considered them as one factor amongst other factors to decide upon the division of assets upon divorce. The existence of a marital contract was one of the many factors of the section 25 of the Matrimonial Causes Act 1973.
Marital contracts are more often nowadays. They are signed to protect wealth. They are also signed in case of second marriages. Finally, they are signed when there are international factors for example French nationals living in England.
Contents of marital contracts
In France the marital contract will relate how the parties will hold their assets, how they will contribute to the family expenditure, what would happen in case of death. The law applicable to the matrimonial regime can be a foreign law. The French law has four matrimonial regimes. The regime by law if there is no election, no choice is the community of acquests. By contract the spouses can choose the regime of separation of assets or the regime of universal community or the regime of participation to acquests.
In England, and post Brexit, because the UE regulations not apply, the applicable law to the marital contract is always the English law. In a marital contract the parties regulate whether assets will remain separate or whether they will be jointly owned. It is also possible to organise in advance what would happen in case of permanent breakdown of the relationship and to define in advance the quantum of lump sum payment due depending of the duration of the marriage.
The land mark case in England that changes enormously how the courts consider marital contracts is Supreme Court 20 October 2010 Granatino v Radmacher. https://www.supremecourt.uk/cases/docs/uksc-2009-0031-judgment.pdf
The court decided that judges should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to their agreement. The Supreme court explained that there is no material distinction between an ante-nuptial and a post-nuptial agreement. It is important that each party should have all the information that is material to his or her decision and that each party should intend that the agreement should govern the financial consequences of the marriage coming to an end.
Requirements for English marital contracts
– Independent legal advice or evidence that the spouse was aware he or she could take legal advice and has refused.
– Financial disclosure of the parties’ assets and income.
– Signature 28 days before the celebration of the marriage.
Since the date of the Supreme Court, judges noted that the period of 28 days means that the parties must have sufficient time to negotiate the terms of the contract. The court gave weight to contracts that were signed on the day of the celebration of the marriage. For instance in the case of HD v WB the court upheld a pre-marital contract that was signed on the day of the marriage. https://www.bailii.org/ew/cases/EWFC/HCJ/2023/2.pdf
Conclusion
The marital agreements are binding in France. They are not legally binding in England but the Court will give weight to a contract that has no vitiating factor. The huge difference is that the English court will use the concept of financial needs to vary the terms of marital agreements.
A recent example of a case between France and England is the case of CMX v EJX dated 2 November 2022.4
https://www.bailii.org/ew/cases/EWFC/HCJ/2022/136.pdf
The parties had a French marital contract which was upheld by the English courts. The judge considered that marital contracts were frequent in France, that there was no vitiating factor on the contract the parties had signed and that he should not interfere with the principle of separation of assets the spouses had chosen in their French contract. When applying the division of assets in accordance with the marital contract, the wife retained £2.7 M and the husband retained £13M. The judge used the concept of financial needs to allow a lump sum of £9.4M.
In 2014 the English law commission made a report on “qualifying nuptial agreements” in order to enforce marital contracts as contracts. It is hoped that the Parliament looks at this draft law soon…