Tuesday, March 15, 2011
Law-Shopping & Forum-Shopping in International Prenuptial Agreements
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.http://www.familylaw.co.uk/articles/JeremyDMorley21022011
Jeremy D. Morley is a New York lawyer of English origin who concentrates on international family law. His law firm in New York handles many international prenuptial and postnuptial agreements, working with local counsel throughout the world. Jeremy is the author of International Family Law Practice, the leading treatise on the topic in the US and is a Fellow of the International Academy of Matrimonial Lawyers. He has taught in law schools in England, Canada and the United States. He maintains the www.international-divorce.com website and may be reached at firstname.lastname@example.org.