Monday, February 01, 2016

Law-Shopping & Forum-Shopping in International Prenuptial Agreements


By Jeremy D. Morley*

Drafting prenuptial agreements is always challenging but the complexities are greatly magnified when the clients are international, whether in their citizenship, the location of assets, their employment or their residency, or because such international connections are anticipated or reasonably on the horizon.

In such situations lawyers have a responsibility to consider the impact of the different laws of the various jurisdictions with which the parties are connected or are likely to become connected. To do so they work with international counsel who have sophistication and experience in handling international prenuptial agreements and who can bring in appropriate  local counsel in selected jurisdictions relevant to the issues that the clients has raised or should have raised.

It is often sensible for counsel to propose a "home" for the prenuptial agreement that is not the jurisdiction in which the lawyer practices. In some cases such advice to a client is absolutely essential.

"Choice of law" clauses are common in the United States and they are usually upheld there, provided the parties had a significant connection with the chosen jurisdiction and provided also that the outcome does not violate the public policy of the forum state.

"Choice of court" clauses are also a common feature of US prenuptial agreements. While they can usually not oust a court's jurisdiction they may be useful in persuading a court that it should accept a case that is brought in the jurisdiction selected by the parties or that it should decline a case brought in another jurisdiction.

"Shopping" for a suitable law and forum is not only appropriate but it may well be good practice - and some might argue that it is even an essential practice - whenever one represents an internationally-connected client with significant current or anticipated assets who wants to maximize the chances that such an agreement will enforced and/or who wants to include terms that might fall foul of a fairness test but which would more likely survive a test based on unconscionability.

Lawyers cannot guarantee the enforceability of pre- or post-nuptial agreements to clients, but they should steer clients to jurisdictions that are more likely to satisfy their goals.

For example, New York's public policy is to promote the resolution of issues between spouses by means of prenuptial and postnuptial agreements. That policy is reflected in a host of decisions from the New York courts upholding such agreements, including agreements that might well not be enforced in other jurisdictions.

For that reason counsel representing a client who has (or whose spouse-to-be has) a New York connection - whether based on current, prior or contemplated residency, current, prior or contemplated employment or other factors - should consider recommending that the parties make an express choice of New York law to govern their agreement.

Indeed, if such a choice is made, counsel might perhaps suggest that such a client should enhance the connections with New York by signing the agreement in that state and/or entering into the civil marriage there (even if the marriage festivity occurs elsewhere).

Since an English court might not enforce such an agreement, although very many jurisdictions around the world would do so, one might recommend that the parties should enter into two separate prenuptial agreements. One would be drafted with a view to English law and would apply only if the "stronger" foreign-oriented agreement were invalidated, either in whole or in significant part. Alternatively the agreements could provide that the "weaker" agreement would apply only if the financial issues were resolved in England while the "stronger" agreement would have priority if the financial issues were resolved elsewhere.

It is all too easy to refuse to look beyond one's own borders in these matters but international clients now expect us to do so.
 
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Jeremy D. Morley consults on international family law matters with clients globally, always working with local counsel as appropriate. He may be reached at +1- 212-372-3425 and through his website, www.international-divorce.com. Jeremy has handled hundreds of child custody and abduction cases and has written the leading treatises on international family law.

Friday, January 29, 2016

Will The Philippines Accede to the Hague Abduction Convention?


Jeremy D. Morley
The Philippines is currently determining whether to accede to the Hague Abduction Convention.
The Philippines’ Senate’s Foreign Relations Committee has created a special Subcommittee on the Hague Convention on International Child Abduction.
The Chair of the Subcommittee, Senator Loren Legarda, has reported that her subcommittee supported the accession to the treaty. She said that:
-"The Convention will provide administrative and judicial avenue to parents and children affected by international parental child abduction, or those parents who need help preventing their children from being abducted from their country of habitual residence."
-The benefit of acceding to the Convention is undeniable especially for the millions of overseas Filipino workers.
-"The country's accession to this Convention will make a difference in resolving child custody disputes, especially in helping the left-behind parent because in the current scenario, there is almost nothing that can be done except to pursue a criminal case.”
In the last reporting period 29 cases of international child abduction from the United States to the Philippines were open in calendar year 2014 and only one case was closed during that period.

Monday, January 25, 2016

Australian Court Allows Visit to Russia


Jeremy D. Morley
An Australian court has ordered the Russian mother of an Australian child may take the child for annual visits to Russia despite the objections of the Australian father who asserted that although the Federation of Russia is a state party to the Hague Abduction Convention there are practical difficulties associated with its enforcement of the Convention. The court conditioned the visits on the mother’s delivery of security in the form of a Transfer of Land in registrable form having a specified minimum value. Jarrard & Jarrard [2015] FamCA 1143 (18 December 2015).
The court commendably outlined the fundamental issue as follows: “The issues around international travel for the child in this case require a balancing of the best interests of the child in being immersed in his Russian heritage which includes culture, language and relationships with extended family, including the maternal grandparents and extended family, residing in Russia, with the risk of him failing to return to Australia, being separated from the father and prevented from having a meaningful relationship with him.” Based on the evidence before him, the judge ruled that the facts favored authorizing the visits.
However, what is notable about the case is that, as in so many such cases of potential international child abduction, the extremely serious issue of the potentially left-behind parent’s claims concerning the lack of compliance by the foreign country with the terms of the Hague Convention, and the delays and expenses that might arise in such a case, were entirely unsupported by expert evidence.

Thursday, January 21, 2016

Some Guidelines for Negotiating and Drafting Prenuptial Agreements for Parties with a U.S. Connection


by Jeremy D. Morley*
1.  Disclosure, disclosure, disclosure. Disclosure cures many sins – but certainly not all.

2.  Independent representation. Cures many more sins, and is absolutely required in some – but not most – states. 

3.  Time gap prior to marriage. Usually not legally required (but see California, for example) but it is good practice. 

4.  Voluntariness. 

In a Massachusetts case, there was no coercion or duress when a pregnant single mother was shown the prenuptial agreement shortly before scheduled wedding date and was told that if she did not sign it there would be no wedding. She was given enough review time, she was represented by counsel whose opinion that she should not sign the agreement she rejected, and she informed a notary that signing the agreement was her "free act and deed." Biliouris v. Biliouris, 67 Mass. App. Ct. 149, 852 N.E.2d 687 (2006).

Contrast an Ohio case holding that a prenuptial agreement was unenforceable when H and W cohabited before marriage, W began breast cancer treatment 3 months before marriage, they met H’s lawyer jointly 4 days before the wedding and signed the prenup then. Overreaching was defined as one party outwitting or cheating the other “by artifice or cunning, or by exploiting a significant disparity in understanding the nature of the transaction.” There was insufficient disclosure and the court accepted W’s testimony that she “would have signed anything in order to make [H] happy and to ensure the marriage.” Grimm v. Grimm, 2003 WL 103429 (Ohio App. 12 Dist. 2003). 

5.  Specific execution requirements.  

These vary from state to state. E.g. New York – must be “in writing, subscribed by the parties, and acknowledged or proven in the manner required to entitle a deed to be recorded” ( Domestic Relations Law § 236[B][3]).

6.  Some specific issues:

a.  Retirement waivers. Many cases hold that only a “spouse” can waive an interest in pension plans covered by federal law. Hurwitz v. Sher, 982 F.2d 778 (2d Cir. 1993). Waiver of interest in an ERISA pension plan in a prenuptial agreement may not suffice. Separate waiver required after the marriage.

b.  Religious issues. Prenuptial agreements relating to the religious upbringing of the children are most likely unconstitutionally unenforceable.

c.  Regulation of conduct during marriage. The Uniform Act authorizes parties to contract as to all matters not in violation of public policy or a criminal statute. Possible examples: faithfulness, religious observance, exercise and weight gain, choice of place of residency, freedom to pursue career opportunities. But most personal obligation provisions have not been upheld. A “mother-in-law can live with us” provision was against public policy. Koch v. Koch, 232 A.2d 157 (N.J. Super. Ct. 1967). A frequency of sex provision is also unenforceable. Favrot, 332 So. 2d 873 (La. Ct. App. 1976). Distinction between financial and other issues. But provisions about sharing expenses in a defined way during marriage might violate obligation of mutual support inherent in marriage. In re Mathiasen, 268 Cal. Rptr. 895 (Cal. Ct. App. 1990).

Note that some such provisions in a prenup might indicate overreaching, which could threaten the entire agreement.

d.  Change of domicile provisions. Probably unenforceable.

e.  Recitals. Recitals are customarily included to reflect the situation of the parties upon execution of the agreement and to confirm specifically that each element of a valid and enforceable premarital agreement has been met.  

f.  Pre-Marital Transfers. Transfers before the marriage pursuant to a premarital agreement are not protected by the federal gift marital tax deduction.  

7.  Identify current & future separate property.

Since the economic elements of most (but not all) U.S. state divorce laws are based upon a distinction between separate and marital property this distinction should generally be the basis upon which prenuptial agreements intended to be effective in the U.S. should be structured, i.e. identify separate property and perhaps expand the definition beyond that which is called for by the default provisions of state law.

It is customary to identify separate property in detail in a schedule and then to add provisions to include specified types of assets of assets to be acquired in the future.

Examples of items invariably included within a broad definition of separate property would be passive increases in value of specified items and the fruits of specified items.

Note that many U.S. states provide that the increased post-marriage value of “active assets” is marital property, while premarital “passive assets” are not divided; so that great care must be taken to handle this if appropriate.

Particular care should be applied to businesses that might change their form in the future, so as to include new business activities, reinvestments, conversions, other potential uses of business assets, etc.

Consider a provision regulating what will occur if one spouse contributes separate property to the other’s business.

Consider a provision acknowledging that reinvest into a business has been done in the past, may be done in the future and may adversely affect family income.

Specify an expected inheritance if likely to be significant. 

8.  No-commingling provisions.

These can be critical based on laws in U.S. states that convert separate property into marital property if there is commingling.

Perhaps specify particular events that will not (or will) constitute transmutation, e.g. the filing of a joint tax return or designating a spouse as a beneficiary of other's estate or episodic use of separate property.

9.  Licenses & qualifications.

Since New York (unlike other states, with limited exceptions) includes these, if obtained during the marriage, as assets to be valued based on their projected future income stream (“enhanced earning capacity”), these items should be considered in any U.S. prenuptial agreement.

10.  Income. 

In specifying whether earnings during marriage will be separate or marital remember to consider (a) Social Security income paid after retirement from premarital contributions; (b) income to be used to support children and / or a spouse from a prior marriage; (c) a spouse’s compensation might include an array of benefits, deferred compensation plans and schemes not yet invented.

11.  Tax planning.

It might be appropriate to make provision for future gifts in light of tax code provisions. It is also appropriate to specify whether the parties will file joint U.S. tax returns and to cover such matters as allocation of tax liabilities. Also consider whether there should be an apportionment of capital gains tax if, for example, a spouse’s premarital residence is sold upon the marriage.

12.  Specifically define marital property. 

Since US states are most accustomed to the distinction between separate and marital property, it is usually good practice for a prenuptial agreement to expressly define what will constitute marital property and what will constitute separate property. This may be more beneficial to the party seeking protection than merely defining separate property and then stating that everything else is marital property.

Identifying – and using -- a joint household account is often a useful and respectful way to provide spouses with appropriate access to funds for day-to-day needs without exposing accounts with large assets to such activities; but here is one area where it is important not just to make provision for such accounts but also to use them.

13.  Assets acquired during cohabitation.

Generally, US states do not provide for any asset-sharing resulting from premarital cohabitation, in the absence of a contract. Therefore when there has been such cohabitation it might be appropriate to make an express reference to that fact.

14.  Marital residence.

It is customary to include extensive provisions regarding ownership of a marital residence and such matters as credits for premarital (or post-marital) contributions upon a divorce.

There are a myriad of possible provisions including: (a) a provision for a transfer of ownership of a defined percentage at certain intervals; (b) a provision for reimbursement of the down payment; (c) a provision for disproportionate contributions to and ownership interests in a future residence; (d) one formula for divorce and one for a spouse’s death; (e) a provision that the house will not be used as collateral; (f) a provision that the other spouse may remain in the house for a specified period of time, perhaps at one party’s expense; (g) a provision that one spouse will buy out the other in accordance with a defined formula and subject to the house being vacated by a specified time; (h) and a provision that a house of a certain value or quality will be purchased upon divorce for the other spouse.

15.  Medical issues.

Since there is no public medical program in the U.S. and since health issues may be the kind of unanticipated event that might cause a court to override a prenuptial agreement, it is highly recommended that consideration be given to health insurance and health care expenses when drafting a prenuptial agreement. Consider a “catastrophic illness” provision.

16.  Spousal support. 

Consider (a) ignoring this factor since it is the area most likely to be challenged or because the exposure is limited in the state in which the parties plan to reside; or (b) precluding spousal support if the marriage does not survive a designated period; or limiting the spousal support to a spouse’s needs that might be defined to exclude certain “needs” such as plastic surgery or round-the-world trips.

Other typical permutations are: (a) a schedule based upon the length of the marriage; (b) a schedule based upon a share of the family income; (c) a lump-sum plus designated periodic payments; and (d) a lump-sum that will vary depending on specified circumstances such as whether the spouse is to remain in the marital residence or is gainfully employed at the end of the marriage or is the primary care-provider to the parties’ children..

17.  Provisions to enhance “fairness”.

Such provisions might include: (a) allowing less wealthy spouse’s earnings during marriage to be excluded from division; (b) creating a fund sufficient to maintain the spouse for a period of time or in a set amount for each year the marriage survives; (c) providing for spousal support at an amount set by the court but for a period longer than likely to be ordered in the state in question; (d) each party agreeing to be gainfully employed during the marriage; (e) one party expressly explaining why he or she will not work after marriage, e.g. expressly acknowledging the other spouse is and will remain retired or that the other spouse is well qualified to work but freely chooses not to do so; (f) a wealthier party expressly assuming a financial obligation towards the pre-existing children of the other spouse or the parents of the other spouse; (g) one party assuming the debts of the other party; (h) special provisions in the event children are born; (i) a provision for inflation; and (j) a “sunset” provision.

18.  Define marriage termination.  

Prenuptial agreements in the U.S. usually specify when the marriage is to be deemed ended for the purpose of the agreement upon a physical separation, upon a written notice from one party to the other, upon the filing of a divorce or upon the issuance of a divorce judgment?

19.  Death provisions.  

It is customary to include specific provisions to deal with the potential death of either spouse such as a waiver of inheritance rights upon the initiation of a divorce or separation case or a provision for payment of a specified amount if a death occurs during the marriage or a provision requiring that a certain amount of life insurance be funded during the marriage. Often such provisions begin with a complete and express mutual waiver of all rights to a share in the other’s property upon death and then an express designation of the specific rights that each will be entitled to.

20.  Publicity. 

It is probably appropriate to provide “famous” people with a provision barring publicity of private matters and authorizing strong remedies for a violation of such provision.

21.  International relocation. 

If one spouse is relocating or has recently relocated internationally, consider some provisions to handle the consequences. Possibilities include: (a) a provision that if the marriage ends and if a spouse wishes to “return home” the other spouse will fund such a return; (b) a provision that the parties will relocate to the other country within a designated period of time (Note: This can create enormous problems, not only with enforceability but also with “fairness” since if the relocation does not occur an unfairness claim might be enhanced).


*Jeremy D. Morley consults on international family law matters with clients globally, always working with local counsel as appropriate. He may be reached at +1- 212-372-3425 and through his website, www.international-divorce.com. Jeremy has handled hundreds of child custody and abduction cases and has written the leading treatises on international family law.

Tuesday, January 19, 2016

Prenuptial Agreements: Choice of Court Clauses


by Jeremy D. Morley*

A “choice of court” clause allows the parties to select the forum whose courts will have jurisdiction to interpret and implement the agreement. This can be extremely useful, because the parties know in advance which court is supposed to handle their case. It also enhances the choice of law clause since the chosen court will usually be located in the jurisdiction that applies the chosen law.

 On the other hand, there is no guarantee that courts in all countries will respect this kind of clause. For example, if the parties have established strong roots in a country, it might be extremely inappropriate and unfair if one party could drag the other into court in what has become a far-away location, merely because the prenuptial agreement so provides. A local court might well be tempted to ignore the choice of court clause.

 A New York case concerned a prenuptial agreement with a clause that selected New York law as the law to govern the agreement and the Supreme Court of New York County (Manhattan) as the exclusive forum. Steiner v. Steiner, 3/5/1997 N.Y.L.J. 25, col. 5 (Sup.Ct., N.Y. Cty.).

 Ten years later, the wife brought an action for divorce in England, doubtless hoping to have the English courts invalidate the agreement in accordance with English public policy. The husband promptly brought suit in New York. The New York court granted the husband's application to declare that New York had exclusive jurisdiction to determine all matters pertaining to the subject matter of the prenuptial agreement. It held that “forum selection clauses are prima facie valid” and should not be set aside except in the event of fraud or overreaching or where the enforcement of the clause would be so unreasonable and unjust that a trial in the selected forum would be “so gravely difficult and inconvenient that the challenging party would for all practical purposes, be deprived of his or her day in Court.”

In a case in which a wife sued in New York for a declaration of rights under a prenuptial agreement which provided that it was governed by New York law, the New York court dismissed the case on the ground of forum non conveniens because the parties already had separate divorce actions pending in France, the wife was a French citizen, the husband was a domiciliary of Puerto Rico, the agreement was signed in France in anticipation of a French wedding, the courts of France were an adequate alternative forum and there was no local interest in the litigation. Alamir v. Callen, --- F.Supp.2d ----, 2010 WL 4608790 (SDNY 2010).

 Furthermore, the parties cannot create jurisdiction by contract in a court whose rules do not confer jurisdiction in the particular case. In the U.S., states generally require minimum periods of residency (or domicile) before one can file for divorce. They also require that for in personam jurisdiction, sufficient to enable the court to deal with the financial consequences of a divorce, there must either be personal service in the defendant while he or she is present in the state or that there currently be significant connections between the defendant and the state sufficient to render it not unfair to haul the defendant into the state to deal with the case.  Thus, if the parties are not living in the chosen forum at the time the marriage breaks down, the choice of court provision might not be enforceable (or if it were enforced it might unfairly block reasonable access to divorce).

In addition, matters relating to children will invariably be triable in the place where the children habitually reside.

Nevertheless, a choice of court clause should generally be included in prenuptial agreements.


*Jeremy D. Morley consults on international family law matters with clients globally, always working with local counsel as appropriate. He may be reached at +1- 212-372-3425 and through his website, www.international-divorce.com. Jeremy has handled hundreds of child custody and abduction cases and has written the leading treatises on international family law.

Friday, January 15, 2016

Which Law Governs a Prenuptial Agreement in a U.S. Court?


by Jeremy D. Morley*

Which law governs a prenuptial agreement in a U.S. court? That simple and critically important question unfortunately has no simple answer.  Is it the law selected by the parties? The law of the forum? The law of the place where the agreement was negotiated and/or executed? The law of the place that had the most significant connection with the agreement, or with the parties, at the time the contract was signed? The law of the place that currently has the most significant connection to the parties (or that has the most interest in the case)? The decisions of U.S. courts follow no consistent pattern. Case law may be cited for any of the above and for other theories as well.

 The confusion stems from the following:

   1. There is surprising dearth of useful authority.

   2. Conflict of laws has been substantially influenced by academic writings and different views have been fashionable from time to time.

   3. Academic views are often impracticable.

   4. The entire issue has been clouded by the fact that many of the decisions cases have concerned religious agreements, which raise unique issues. E.g., In re Marriage of Shaban, 88 Cal. App. 4th 398, 105 Cal. Rptr. 2d 863 (4th Dist. 2001).

   5. Litigants have often failed to submit adequate proof of foreign law, thus forcing courts to apply the law of the forum.

   6. Courts have often used their own views on public policy to trump foreign law.

   7. Courts have seemed reluctant to spell out governing principals and instead have often decided cases on an ad hoc basis.

   8. Courts have often reached different results depending on whether they are considering the law that governs the validity of a prenuptial agreement, the law governing the enforceability of an agreement or the law governing the construction of the specific terms of an agreement.

The New York courts have dealt with more cases concerning the enforceability of foreign prenuptial agreements than other states. In Stein-Sapir v. Stein-Sapir, 52 A.D.2d 115, 382 N.Y.S.2d 799 (1st Dep't 1976), the Appellate Division held that a prenuptial agreement entered into in Mexico between two Americans who married there would be enforced in New York even though it was written in Spanish and the husband claimed that he did not understand it.

In Stawski v. Stawski, 43 A.D.3d 776, 843 N.Y.S.2d 544 (1st Dep't 2007), the courts had to determine whether to enforce a prenuptial agreement prepared and signed in Germany between a German man and an American woman. German law required that a government official explain the document to the parties, which was done. Thirty years later the agreement was offered to bar equitable distribution of the marital assets. The Appellate Division focused on the defense that the wife had not understood what she signed and rejected that argument on the evidence before it and pursuant to the principle that prenuptial agreements should generally be enforced. Neither the majority nor the dissenting opinion referred to the issue of which law would govern the agreement, applying New York law without explanation.

In Van Kipnis v. Van Kipnis, 11 N.Y.3d 573, 872 N.Y.S.2d 426, 900 N.E.2d 977 (2008), the New York Court of Appeals upheld and enforced a French prenuptial agreement signed 40 years earlier. The parties married in France where the wife, a Canadian citizen from Quebec, was studying. The husband was a U.S. citizen. The wife had a ‘contrat de marriage’ drafted under the French Civil Code and she arranged for legal counsel to explain its terms in English to the husband. The agreement specified that the parties chose the regime of separation of estates. After their marriage they moved to New York where they resided continuously for the 38 years of their married life. The New York court ruled that prenuptial agreements that addressed the ownership, division, or distribution of property must be read in conjunction with New York's Domestic Relations Law provisions concerning equitable distribution and the validity of a prenuptial agreement. The governing statute provides that a prenuptial agreement is valid and enforceable if it is “in writing, subscribed by the parties, and acknowledged or proven in the manner required to entitle a deed to be recorded.” The Court found that the French contract was a prenuptial agreement within the meaning of the New York statute.

Unfortunately, the New York court did not address the issue of which law should be applied. It apparently made the simple assumption that New York law should apply but it gave no indication as to whether this was because New York was the jurisdiction that had the most substantial connection with the contract or because it had the most interest in the contract or simply because it was the forum that the parties had chosen.

Also unfortunate is the fact that the court did not address the issue of whether the French contract was acknowledged or proven in the manner required to entitle a deed to be recorded. That language requires both an oral acknowledgment before an authorized officer and a written certificate of acknowledgement. It seems most unlikely that the requisite process was undergone at the time the contract was signed in Paris but this issue is not discussed by the Court of Appeals.

In Crowther v. Crowther, 27 Misc.3d 1211(A), 910 N.Y.S.2d 404 (Table) (N.Y.Sup.2010)

W, a Dutch citizen, and H, a UK citizen, were married at the Dutch Embassy in Ghana. They lived in New York before the marriage and throughout the duration of the marriage. At the suggestion of W’s Dutch parents they signed a pre-nuptial agreement, which was drafted in the Netherlands, by an attorney friend of the parents as a wedding gift and by a notary engaged by that lawyer. They signed the documents in New York before a notary, including a power of attorney and a notarial deed which both stated that they were subject to Dutch law. The court accepted that the agreement was governed by Dutch law. Plaintiff’s status as a Dutch citizen, the parties' Dutch civil marriage ceremony at the Dutch embassy in Ghana, and the fact that the pre-nuptial agreement was drafted by a Dutch attorney in the Netherlands, and executed by the parties' agents in the Netherlands, provide a sufficient nexus for the application of Dutch law. The court accepted a sworn legal opinion from Dutch counsel that the documents were executed with the formalities required by Dutch law, even though they did not comply with the execution requirements of New York law. Nor would the application of Dutch law violate any strong public policy of the State of New York.

The most significant conclusion that may be drawn from the New York cases is that the result of each case was that the foreign agreement was upheld, even though the facts in each case created substantial sympathy for the party who opposed enforcement.

Notwithstanding the confusion, the following general principles may serve as a useless starting point:

   1. Unlike the principle in most areas of family law that U.S. courts will apply the law of the forum only, U.S. courts may apply choice of law rules to prenuptial agreements.

   2. When a U.S. court applies choice of law rules to prenuptial agreements, the starting point is the choice of law rule that is applied in the forum jurisdiction to contracts in general.

   3. Accordingly, a prenuptial agreement will generally be governed by the law of a place of its execution or the law of the place with which it has the closest connection.

   4. The parties may select the law that will govern their prenuptial agreement and their choice will generally be upheld.

   5. If the terms of the agreement are contrary to the public policy of the forum state, its courts will not enforce the agreement.

   6. These principles apply to agreements executed in overseas jurisdictions just as much as they apply to agreements executed in sister states.

   7. The rules and customs concerning prenuptial agreements vary enormously around the world. U.S. courts should respect those differences when considering the effect of foreign prenuptial agreements.

A choice of law clause should be drafted broadly. In one case a court in Oregon applied the law chosen by the prenuptial agreement--California law--only as to the construction of the agreement, but did not apply California property law because the choice of law clause was limited to construction issues. Marriage of Proctor, 203 Or. App. 499, 125 P.3d 801 (2005). Choice of law clauses should provide for both the application of both substantive and procedural law of the foreign jurisdiction to be effective.
 
*Jeremy D. Morley consults on international family law matters with clients globally, always working with local counsel as appropriate. He may be reached at +1- 212-372-3425 and through his website, www.international-divorce.com. Jeremy has handled hundreds of child custody and abduction cases and has written the leading treatises on international family law.

Thursday, January 14, 2016

U.S. Prenuptial Agreements: Two basic standards - Fairness & Unconscionability?


by Jeremy D. Morley*

1.  Unconscionability

New York is an example of an unconscionability state.

“Considering all the provisions of the pre-nuptial agreement, the court also cannot say that it is so unfair ‘as to shock the conscience and confound the judgment of any [person] of common sense.’” Crowther v. Crowther, 27 Misc.3d 1211(A), 910 N.Y.S.2d 404 (Table) (N.Y.Sup.2010).

A party seeking to rescind a prenuptial agreement “bears the very high burden of showing that it is manifestly unfair and that this unfairness was the result of overreaching” on the part of the other party to the agreement. Bronfman v. Bronfman, 229 A.D.2d 314, 645 N.Y.S.2d 20 (1st Dep't 1996).

“The public policy of this State favors ‘individuals ordering and deciding their own interests through contractual arrangements.'” Van Kipnis v. Van Kipnis, 43 A.D.3d 71, 76-77 [2007],  

Duly executed prenuptial agreements, including agreements executed in a foreign country, are accorded the same presumption of legality as any other contract. Greschler v. Greschler, 51 N.Y.2d 368 (1980).

“An unconscionable bargain has been regarded as one such as no [person] in his [or her] senses and not under delusion would make on the one hand, and as no honest and fair [person] would accept on the other.” Hardenburgh v. Hardenburgh, 158 A.D.2d 585 (1990).

The doctrine of unconscionability has no application to property settlement provisions of separation agreements where there is no fraud, duress, overreaching or incompetence. Christian v. Christian, 42 N.Y.2d 63 (1977).

“[A]n agreement is not unconscionable merely because, in retrospect, some of its provisions were improvident or one-sided, and simply alleging an unequal division of assets is not sufficient to establish unconscionability.”Schultz v. Schultz, 58 A.D.3d 616, 616 (2009).

2.  Fairness

Washington State is an example of a fairness state.

Factors to consider in Washington State:

(1) Proportional benefit between the parties,

(2) Restrictions on the creation of community property,

(3) Prohibitions on the distribution of separate property upon dissolution,

(4) Economic means of each spouse,

(5) Preclusion of common law and statutory rights to both community and separate property upon dissolution,

(6) Limitations on inheritance,

(7) Prohibitions on awards of maintenance, and

(8) Limitations on the accumulation of separate property.

A prenup that is “disproportionate to the respective means of each spouse, which also limits the accumulation of one spouse's separate property while precluding any claim to the other spouse's separate property” is substantively unfair. Bernard, 165 Wash.2d at 905, 204 P.3d 907 . 

 A prenup was “grossly disproportionate” where all value, income, and earnings from separate property would remain separate upon dissolution. In re Marriage of Matson, 107 Wash.2d 479, 486, 730 P.2d 668 (1986). 

A prenup which waived any claim of right to separate property in the event of death or dissolution and effectively prohibited the growth of community property was substantively unfair. In re Marriage of Foran, 67 Wash.App. 242, 249-51, 834 P.2d 1081 (1992).

Other issues:

·         The agreement cannot “promote” divorce. Does an escalator clause (property or support to increase upon reaching specified marriage milestones) do so? Probably not.

·         Agreements cannot violate state’s public policy, e.g. An agreement that “contemplates forbearance from having children” was held void as being contrary to the essence of a marriage.
Height v. Height, 187 N.Y.S.2d 260 (Sup.Ct.1959)
*Jeremy D. Morley consults on international family law matters with clients globally, always working with local counsel as appropriate. He may be reached at +1- 212-372-3425 and through his website, www.international-divorce.com. Jeremy has handled hundreds of child custody and abduction cases and has written the leading treatises on international family law.

Tuesday, January 12, 2016

Passport for Abducted U.S. Children Overseas; Exigent or Special Family Circumstances


Jeremy D. Morley*

Parents of children who are abducted to a foreign country, or who are being retained in a foreign country, often do not have their children’s passports that are needed to enable them to bring the children back to the United States.

As part of our work in helping parents to get their kids back home, we are often required to assist such parents in the process of obtaining a new U.S. passport for the children.  

It frequently happens that the passports are being held by the other parent. U.S. law basically provides that either parent, whether a U.S. citizen or not, may apply for a U.S. passport on behalf of a minor child and that the minor must appear in person when applying for the passport, but the so-called “Two-Parent Consent Law” also requires that both parents have consented to the passport application.

One of the exceptions to this rule is the provision that a passport may be issued when only one parent executes the application, in cases of “exigent or special family circumstances.”

The key term of “exigent family circumstances is defined as “time-sensitive circumstances in which the inability of the minor to obtain a passport would jeopardize the health and safety or welfare of the minor or would result in the minor being separated from the rest of his or her traveling party.”

The term “time sensitive” is then defined to generally mean that there is not enough time before the minor's emergency travel to obtain either the required consent of both parents (or legal guardians) or documentation reflecting a sole parent's or legal guardian's custody rights.

The alternative key term of “special family circumstances” comprises:

·        circumstances in which the minor's family situation makes it exceptionally difficult for one or both of the parents to execute the passport application; and / or

·        compelling humanitarian circumstances where the minor's lack of a passport would jeopardize the health, safety, or welfare of the minor; and / or

·        circumstances in which return of a minor to the jurisdiction of his or her home state or habitual residence is necessary to permit a court of competent jurisdiction to adjudicate or enforce a custody determination.
 
The applicable law also provides that a passport issued due to such special family circumstances may be limited for direct return to the United States.
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Jeremy D. Morley consults on international family law matters with clients globally, always working with local counsel as appropriate. He may be reached at +1- 212-372-3425 and through his website, www.international-divorce.com. Jeremy has handled hundreds of child custody and abduction cases and has written the leading treatises on international family law.

Monday, January 11, 2016

Washington State Ruling: Egyptian Child Custody Law Violates Human Rights


Jeremy D. Morley
www.international-divorce.com

There is “clear and convincing evidence that Egyptian child custody laws violate fundamental principles of human rights.” Therefore, Washington State should not treat Egypt as a “state” for purposes of the Uniform Child Custody & Jurisdiction Act.

So ruled the Superior Court of Washington for King County yesterday based on the expert evidence of international family lawyer Jeremy D. Morley and another expert.
The Washington court found, inter alia, that Egyptian family courts apply specific Sharia law rules to child custody cases, under which a Muslim mother is disqualified from custody if she does not raise the child as a Muslim and / or if she does not comply with Muslim religious requirements or if she remarries or moves away from the father’s domicile. It also found that Sharia child custody law in Egypt does not adequately take into account acts of domestic violence perpetrated by the husband against his wife and that a husband is entitled there to use physical force against a “disobedient” wife.

For this reason the Washington court found that the Egyptian courts had no child custody jurisdiction, even though the parties and their son had lived in Egypt at all relevant times until the mother, without the husband’s consent, left for the United States with the child, and even though the husband filed a case for custody in Egypt within six months thereafter.
 
The so-called “escape clause” in the UCCJEA has not been much used thus far.  A key reason for this is that there has often been a failure to offer effective expert evidence concerning the laws and procedures of the foreign country. The new Washington case demonstrates the value that such evidence may provide.

Thursday, January 07, 2016

Look Before You Leap


Jeremy D. Morley*

I feel the need to stress – yet again – that a parent or would-be parent who travels for an extended period of time overseas with a spouse or partner should think first about the possibility of your kids being required to stay overseas against your wishes in the event you have a disagreement with the other parent.
It is very often absolutely essential to speak first to a truly knowledgeable and experienced international family lawyer about the consequences of your actions and any ways to reduce the risk.
In many respects the laws that govern these issues are counter-intuitive. For example, I get numerous calls in which American parents insist that, as U.S. nationals, they “know” that a U.S. court will never send their child back to another country just because that is where the other parent is living. Unfortunately for such parents their belief is absolutely wrong.
Likewise, parents often tell me that, simply because they made a deal with the other parent that they would stay away for just a year or two before going ”back home,” their custody case must be brought in their home country and cannot be brought in the place of their temporary residence. Again, such a claim is often dead wrong.
And some parents tell me that because they are not Muslims they “know” that a Sharia law country will be unable to rule on their case.
Each of these claims has been proven wrong, time after time, in cases that have crossed my desk.
There are extremely serious civil law and criminal law issues that such cases often raise and there is a powerful international treaty that may have a hugely significant impact.
Moreover, the laws concerning child custody jurisdiction that apply in every U.S. state are most unusual in that they require the courts in each U.S. state to give far more deference to the jurisdiction of foreign courts in custody matters than the courts in most other countries will give to the jurisdiction of U.S. courts.
When it comes to international child custody issues, the adage “look before you leap” means that you need to talk to me, or to another experienced international family lawyer, first, before you take off on your sabbatical in Oxford, your 2-year post in Hong Kong, or your indefinite gig in Rio. The consequences of not doing so can be absolutely heartbreaking.
* Jeremy D. Morley consults on international family law matters with clients globally, always working with local counsel as appropriate. He may be reached at +1- 212-372-3425 and through his website, www.international-divorce.com. Jeremy has handled hundreds of child custody and abduction cases and has written the leading treatises on international family law.

Wednesday, January 06, 2016

Collaboration with Lawyers Globally

Thank you to so many of my colleagues in jurisdictions around the world for the great collaboration that we enjoyed throughout the past year in working together to handle interesting and important legal matters for appreciative clients. 
 
Together we prevented numerous international child abductions, recovered many internationally abducted children, protected children and parents in international crises, created strong international prenuptial agreements, strategized to solve important financial issues for internationally divorcing clients, and handled many dozens of other significant issues in this fascinating and challenging field of international family law. 
 
I enjoyed acting as an expert witness concerning international child custody issues in courts in many American states as well as in Australia, Canada and Hong Kong concerning the family laws of India, Egypt, Malaysia, Japan, Turkey and other countries. It was a privilege to orchestrate the drafting of international prenuptial agreements concerning as many as eight different international jurisdictions. It was fun to confer with lawyers and their clients in Japan, Panama, Brazil, Turkey, Canada, UAE, Egypt and so many European countries, as well as in so many U.S. states and numerous other jurisdictions, and to  brainstorm together a host of tricky family law issues. 
 
I look forward to working collaboratively with many of my old and with new colleagues in 2016. 

Tuesday, December 15, 2015

Habitual Residence: Hong Kong Rejects the Mozes/Gitter Rule


Jeremy D. Morley*
We have often pointed out that the majority U.S. interpretation of “habitual residence,” the key term in the Hague Abduction Convention, is out of line with the international consensus.
Most but not all U.S. circuits follow the rulings in the key cases of Mozes and Gitter. Those cases hold that a change of habitual residence normally requires proof that the parents’ last shared intention was to abandon a prior habitual residence in favor of a new one. There is an exception to this rule if the child has become acclimatized to the new location but it is normally restricted to situations where the acclimatization is both exceptional and unequivocal, and where the child does not retain significant contacts with the prior place of residency.
In JEK v LCYP [2015] CACV 125/2015(decision dated August 27, 2015), the Hong Kong Court of Appeal was faced with the question of whether to follow the U.S. or the U.K. authorities.  (Note – I advised one of the parties).
The facts as outlined by the court were that the parents had lived for the first 16 years of their marriage in New Jersey, where their two children were born and raised. The wife then moved with the children to Hong Kong, her country of origin, pursuant to what the husband believed was an agreement with his wife that the children would remain there on a limited, temporary basis not to exceed 1 to 2 years. After 8 months in Hong Kong the wife, having discovered that the husband was having an affair, petitioned for divorce in Hong Kong and sought to retain the children there. The husband then sought the return of the children under the Hague Convention.
The lower court in Hong Kong ruled that the children’s habitual residence was in the U.S. not only because their home and their roots was there and they were to return there during school holidays, but there was insufficient evidence of a settled purpose either for the children not to return to New Jersey after 1-2 years or to abandon New Jersey as their residence and to take up long-term residence instead in Hong Kong. The judge stated that, “As I have mentioned earlier, the Mother only changed her mind in early August 2013, about one month after she and the Children arrived in Hong Kong. I have also found that there was no sufficient evidence that the Father had after the 06.08.13 Email accepted or agreed to the Children living in Hong Kong beyond two years.”
The trial judge concluded that, “I do not find that there was sufficient evidence that there was a shared intention to abandon the Children’s place of habitual residence of New Jersey, nor a settled intention on the part of both parents to change the Children’s habitual residence to Hong Kong by the time of the retention.”
That decision was in line with the older English cases, which cases had been followed in the Mozes case and its progeny, and with the majority U.S. approach.
On appeal, the Hong Kong Court of Appeal overruled the lower court on this issue. In particular, it noted that “there has been development both locally and also in the Hague Convention jurisprudence on habitual residence which compels this Court to take cognizance of the development since Hong Kong is a contracting state of the Hague Convention.” It found that “impetus for change” first came from the Court of Justice of the European Union in Proceedings brought by A (Case C-523/07) [2010] Fam 42 and Mercredi v Chaffe (Case C-497/10PPU) [2012] Fam 22.
The Court of Appeal examined the recent case law from the UK Supreme Court, and in particular AR v RN [2015] UKSC 35, which had followed the European case law and had abandoned the prior interpretation of habitual residence. In AR v RN  the U.K. Supreme Court held that, for habitual residence,
·        It is the stability of the residence that is important, not whether it is of a permanent character;

·       There is no requirement that the child should have been resident in the new country for a particular period of time or that one or both parents intended to reside there permanently or indefinitely;

·        The focus must be upon the situation of the child;

·        The intentions of the parents are merely one of the relevant factors;

·        There is no rule that one parent cannot unilaterally change the habitual residence of a child; and

·        It is necessary to assess the degree of the integration of the child (or, in the case of an infant or young child, the degree of integration of those on whom the child is dependent) into a social and family environment in the new country.
Applying these principles the UK Supreme Court in AR v RN  found that the habitual residence of the children had shifted from France, where they were born and raised, to Scotland, where they gone pursuant to an agreement with the children’s father that they would return to France after one year. After just four months in Scotland, the mother had brought a custody case in Scotland seeking an interdict against the father removing them from Scotland. The father had promptly bought a Hague case.  The UK Supreme Court found that the absence of a joint parental intention to live permanently in Scotland was not decisive, nor was an intention to live in a country for a limited period inconsistent with becoming habitually resident there. The important question was whether the residence had the necessary quality of stability, not whether it was necessarily intended to be permanent. Following the children’s move with their mother to Scotland, their life there had the necessary quality of stability. For the time being, their home was Scotland. Their social life and much of their family life was there. The longer time went on, the more deeply integrated they had become into their environment in Scotland. Accordingly their habitual residence had shifted to Scotland.
The Hong Kong court followed AR v RN in JEK v LCYP and adopted the above-stated principles of the UK court. It applied those principles by making the following determinations:
·         The couple was experiencing marital problems when the Wife left New Jersey with the children. She was coming back to Hong Kong which was her home before she joined the husband in the USA after the marriage.

·         The wife had entered into a fixed term lease for two years as the residence of her and the children in Hong Kong. A family car was purchased by the husband for the use of the wife and the children and the wife had purchased an uncompleted property in Hong Kong for investment purpose which was funded by the husband.

·         Although the original agreement between the parties was that the move to Hong Kong was intended to be a temporary one, the wife had, before the agreed time expired, changed her mind and decided to stay in Hong Kong.
 
·         Looking at the position of the children, they have integrated into Hong Kong for nearly two years in terms of their full time studies here and their social activities.

·         Although the children’s move to Hong Kong was intended to be for a temporary period of not more than two years, Hong Kong has been their home for the past 24 months. It has all the hallmarks of a stable residence.

·         The absence of the joint parental intention to live permanently in Hong Kong is by no means decisive.

·         Based on the evidence, the children’s habitual residence is in Hong Kong and no longer in New Jersey, hence the Hague Convention was not engaged in the first place.
Thus, the Hong Kong courts have revised their rules concerning the interpretation of habitual residence to follow the interpretation of the entire European Union, the UK, Canada and most of the rest of the world. The contrast between the majority U.S. rule and the international consensus is clear. The Convention and the International Child Abduction Remedies Act require U.S. courts to pursue a uniform international interpretation of the treaty. Thus far, U.S. courts have failed to do so. In particular it is most unfortunate that the U.S. Supreme Court has declined multiple opportunities to resolve the issue.
*  Jeremy D. Morley, author of The Hague Abduction Convention: Practical Issues and Procedures for Family Lawyers, published by the American Bar Association, liaises with lawyers and clients (always with local counsel as appropriate) around the world on international child abduction and custody issues.