Prenuptial Agreements And The Hong Kong Special Administrative Region

Prenuptial Agreements in Hong Kong

Introduction To Prenuptial Agreements

A prenuptial agreement or an ante nuptial agreement is a signed and written contract entered into by parties to a prospective marriage. The contents of the agreement stipulate the terms that are to govern the future rights between the couple if the marriage is later dissolved. A prenuptial agreement may also contain provisions for directing a party to the marriage in the event of death or terminal illness (however it is important that the provisions are consistent with the terms of a living will).

The terms in the agreement will usually cover ownership and distribution of future and past assets, treatment of future and past earnings and financial provision for the spouse. The agreement may also specify the financial and custodial arrangements for children of the marriage or the religious beliefs they are to be taught. However, the jurisdiction of the court in respect of children can never be ousted.

Contrary to popular conception, the benefits of a prenuptial agreement are not solely for the protection of the assets of a wealthy spouse. Statistical surveys indicate that the divorce rate in Hong Kong is increasingly on the rise. The advantage of a prenuptial agreement is that both parties to the prospective marriage enter an agreement with clearly defined and honest expectations, facilitating a smooth future.

Enforceability Of Prenuptial Agreements In Hong Kong

Whilst English authorities are highly persuasive they are not binding on the Courts in Hong Kong. Nevertheless, the Hong Kong Courts generally follow English law in relation to family law and matrimonial proceeding. It is likely that Hong Kong Courts will give substantial consideration to recent developments in the law relating to prenuptial agreements in England.

The English courts were traditionally reserved on prenuptial agreements. Although over the years the English courts have accepted prenuptial agreements as a factor for consideration albeit only when determining the division of matrimonial assets, the relative weight to be attached to such agreements was unclear.

However, following the recent English Supreme Court decision in Radmacher v Granatino [2010] UKSC 42 on 20th October 2011 the position seems to have significantly changed. Although not binding, the persuasive effect will be felt by the Courts in Hong Kong.

In Granatino, the Supreme Court, by a majority of eight to one, ruled that it was not unfair to hold the parties to the prenuptial agreement signed almost 10 years earlier. The overriding criteria to be established in ancillary relief proceedings (where an application is made by a spouse for financial relief) was that of fairness. In assessing what is fair and just a reasonable prenuptial agreement was held to be of paramount importance.

A prenuptial agreement, made in the appropriate manner will now be given far greater weight unless in the circumstances it is unfair to do so.

Reasonable Prenuptial Agreement

Although, what is reasonable will depend on the individual circumstances of each case, the English Supreme Court in Radmacher v Granatino has given general guidelines as to what constitutes a reasonable prenuptial agreement capable of determining fairness. A prenuptial agreement is generally reasonable if it is procedurally fair and substantively fair.

Procedural fairness refers to matters between the parties such as consent, free will and the obtaining of independent legal advice. The Agreement must not be signed by either party under pressure, duress or undue influence and should be signed within a reasonable time before the marriage. There should be an interval between the making of the agreement and the marriage so that neither party is pressurized as to the agreement and to the consequences of calling off the marriage at a late stage.

Substantive fairness relates to matter such as provision for the children of the family, provision for the spouse, provision for unforeseen circumstances that may arise (although this may be difficult to contemplate) and provision for a complete disclosure of all assets.

Provided such fairness measures are adopted into the prenuptial agreement, the next step would be to assess whether the circumstances are such that would render the prenuptial agreement unfair.

An example of unfair circumstances that would negate the weight attached to an otherwise reasonable prenuptial agreement is where one of the spouse or the children of the family is unfairly prejudiced by the operation of the prenuptial agreement.

Jurisdiction of the Hong Kong Courts in Divorce Proceedings

The courts in Hong Kong have jurisdiction in divorce proceedings (where a prenuptial agreement will be a factor to be considered by the courts) if either party to the marriage satisfies the three main criteria specified in Section 3 of the Matrimonial Causes Ordinance (Cap 179).

The three criteria to be satisfied are:-

-one of the parties was domiciled in Hong Kong on the date of the petition for divorce

OR

-one of the parties was habitually resident in Hong Kong throughout a three year period immediately before filing the petition for divorce.

OR

-one of the parties has a substantial connection with Hong Kong at the date of filing the petition for divorce.

Although exceptions exist, a petition for divorce in Hong Kong will not be accepted until one year from the date of the marriage has passed.

It does not matter where the marriage took place provided the validity of the marriage is not in doubt. Likely, it matters not where the prenuptial agreement was signed provided the validity of the agreement is not in doubt.

By:
Someir Siraj
Legal Advisor, David Ravenscroft & Co., Solicitors and Notaries
L.L.B (Hons), The University of Buckingham
Postgraduate Diploma in Professional Legal Skills, City University London