Pre-nups going global…
Pre-nuptial and post-nuptial style agreements have, for many years been an alterative option for couples to settle their property settlement in Australia rather than resorting to litigation. In the current climate, financial agreements, as they are now called, are highly regulated and governed by stringent legislation set out in the Family Law Act of Australia 1975 (“the Act”). The Act provides for financial agreements to be drawn in relation to both married couples and de facto couples (including same sex couples), as well as for varying circumstances including as a pre-nuptial style and post-nuptial style agreements.
Financial agreements are a complex area of family law and are highly technical documents which require strict compliance with the provisions of the Act. With a high level of judicial scrutiny in recent years, their popularity has waxed and waned with solicitors and clients alike.
Adding a further layer of complexity to this vexed area within the family law sphere in Australia, are the questions of financial agreements drawn in other countries and how they are treated in Australia and financial agreements which attempt to cover multiple jurisdictions in answer to the demand of an ever expanding and transient global society.
Many foreign countries allow, within their regulatory framework, for couples to enter into financial agreements as an alternative to judicial determination of dividing matrimonial or relationship property. In circumstances where parties enter into such an agreement and then for myriad reasons find themselves living in Australia at the time of separation, it is natural for all parties to look to the foreign agreement in relation to the division of their property. The difficulty arises where an Australian Court is asked to enforce a foreign agreement. Irrespective of whether the Court is dealing with an agreement drawn in a foreign jurisdiction or a poorly drawn agreement in Australia, where such document falls short of the requirements set out in the Act, that agreement is not going to be considered binding upon the parties in this country and is unlikely to act as a bar to a property settlement being judicially determined in the Family Court of Australia.
While agreements which fall short of the Australian legislation do not prohibit the Court from determining the matter, such agreements are certainly admissible as evidence in relation to the parties’ intensions with regard to the division of their property at the time they entered into the agreement. Such evidence can be very persuasive in certain circumstances, although as the legislation with respect to property settlements arising out of a matrimonial and/or de facto relationship in Australia discretionary, the weight placed by the court on such foreign agreements can vary significantly in the circumstances of each matter.
So what happens when we try and draft an agreement, which binds parties in relation to their property settlement in multiple jurisdictions? Obviously, this scenario for solicitors and clients alike is going to make the task more complicated in terms of ensuring compliance with the regulations in this country but also in potentially more than one other jurisdiction.
Imagine, for example, a couple where each party was born in a different country and may in fact hold assets in their country of birth. Subsequently they meet and form a relationship in a third country and ultimately emigrate together to Australia where they plan to marry and settle. This couple may plausibly hold interests in property in four different countries. A prenuptial style financial agreement contemplated at the time they marry in Australia will not only have to comply with the strict regulations set out in the Act, but will also need to be drafted in conjunction with legal advice obtained in all of the other jurisdictions in which the parties wish to be bound. This obviously necessitates a high level of collaboration with multiple specialist family law practitioners in the various jurisdictions ensuring that the proposed agreement meets the requirements for each jurisdiction. In such circumstances the parties might consider a one agreement, which attempts to comply with the regulations of each jurisdiction or they might consider mirror style agreements in each jurisdiction. As a third alternative, they may consider a master agreement setting out the substantive agreement with respect to the division of property formalised by way of sub-agreements in each jurisdiction.
Australian financial agreements may also be considered by foreign jurisdictions where parties who entered into an agreement in this country have since moved to another country. While the provisions set out in the Act are exacting and the Family Court of Australia requires strict compliance for financial agreements to be enforceable in this country, there is no guarantee that such agreements will be upheld by a court of a foreign jurisdiction. It will depend entirely on the domestic law of the foreign country in relation to family law as to whether an agreement drawn in Australia will be upheld.
The take home point in relation to this issue is that a financial agreement which attempts to bind parties in multiple countries is going to be a challenging document to draw and will require carefully consider legal advice in all of the relevant jurisdictions.