Sunday, November 26, 2006

Mirror International Prenuptial Agreements

We frequently recommend mirror prenuptial agreements for people with international domiciles, citizenship or businesses.

Love doesn’t always last but the consequences of failed marriages can endure for a lifetime.

The problems can be multiplied when the people and/or the assets are international.

In the context of international prenuptial agreements, a mirror agreement is one that is drafted in one jurisdiction to follow the terms of an agreement that applies in another jurisdiction.

The purpose is to maximize the chances of enforcement of the agreed terms in multiple jurisdictions.

Thus if H and W live in London but one of them has a New York domicile, they must be advised that prenuptial agreements are not enforceable in England.

An English prenuptial agreement will be given some weight – sometimes a lot, sometimes a little -- in an English court, but that’s all. Whether an English agreement will be enforced in the U.S. is uncertain, since an American court may well determine that its validity is governed by English law since it was negotiated in England and that is where the parties were most closely connected at the time of execution.

A New York prenuptial agreement may not be enforced in the U.K., Singapore, Hong Kong or some other jurisdictions.

If H and W believe that they might move to the U.S. in the future, it makes sense to have two agreements, one under English law and the other under the law of the American state with which they are most closely connected.

Another benefit of having a New York agreement in these circumstances is that New York is among the toughest jurisdictions in the world for enforceability. New York lawyers will insist that there be full disclosure of assets; that the terms be fair to both parties; and that both sides be represented by independent counsel. This means that a well-drafted New York agreement may well survive in any American state and in many other jurisdictions around the world.

Since international people can surely not predict with any certainty where they will live in the future, this provides significant benefits.

Of course, to provide greater security to the party whose assets are being protected it is advisable to seek advice from matrimonial counsel in every jurisdiction in which a client says that he might live in the future. In one case involving a famous international globetrotter we fput together a global team of divorce lawyers to cover as many bases as possible.

It is important to provide for one of the agreements to be superior to the other. The primary agreement should normally be the one that is the jurisdiction which provides the greater chance of enforceability. Thus, between an English and a New York agreement, it is normally preferable to provide that the New York agreement will have priority. The English agreement should provide that it will come into play only if the New York agreement is for any reason unenforceable.