Thursday, May 21, 2015

Forced Prenuptial Agreements: Australian Cases

Jeremy D. Morley

Courts around the world generally reserve the right to invalidate prenuptial agreements that were entered into under duress.

The meaning of “duress” can be extremely hard to determine in specific cases.

Can there be duress when a young impecunious foreign woman moves to another country to marry a rich man who then demands that she sign a “take it or leave it” prenuptial agreement?

Yes, says an Australian court in a very recent decision in Brisbane, Australia.

Can there be duress when the man gives a prenuptial agreement to his wife-to-be just three days before the wedding, after all the wedding arrangement are made, that their relationship will end if she does not sign the one-sided agreement forthwith?

"Yes" said another Australian court last year.

The specific facts of the case of the most recent included the following:

The woman knew that there would be no wedding if she didn’t sign the agreement. The husband’s position about that was plain.  

The husband did not negotiate on the terms of the agreement as to matters relating to property adjustment or spousal maintenance. He did not offer to negotiate. He did not create any opportunities to negotiate. The agreement, as it was, was to be signed or there would be no wedding and no further relationship. Indeed, the judge stated that, “I am satisfied that when [the man] said there would be no wedding, that meant that the relationship would be at an end.”

The applicant wanted a wedding. She loved the man, and wanted a child with him. She had changed her life to be with him.  

She was in Australia only in furtherance of their relationship. She had left behind her life and minimal possessions in her own country. She brought no assets of substance to the relationship. If the relationship ended, she would have nothing. No job, no visa, no home, no place, no community. The consequences of the relationship being at an end would have significant and serious consequences to her. She would not be entitled to remain in Australia and she had nothing to return to anywhere else in the world.

Every bargaining chip and every power was in the man’s hands. Either the document, as it was, was signed, or the relationship was at an end.

The woman consulted a lawyer but he told her, before signing the prenup: “It is the worst contract I have ever seen. Don’t sign.’’

The man knew that the woman wanted to marry him. For her to do that, she needed to sign the document. He knew that she would do that. He didn’t need to open up negotiations. He didn’t need to consider offering something different, or more favorable to her. If she wanted to marry him, which he knew her to want, she must sign. That situation was something much more than inequality of financial position. The woman’s powerlessness arose not only from her lack of financial equality, but also from her lack of permanent status in Australia at the time, her reliance on the man for all things, her emotional connectedness to their relationship and the prospect of motherhood, her emotional preparation for marriage, and the publicness of her upcoming marriage.

In those circumstances, the wife signed the first agreement under duress. It was “duress borne of inequality of bargaining power where there was no outcome available to her that was fair or reasonable.”

In another case, an Australian court ruled in 2014 that there had been duress when a man asked his bride-to-be to sign an “unfair” pre-nuptial agreement just three days before their wedding. The groom told the bride that the wedding would be off if she did not sign, although they had been together for six years and engaged for 11 months.

All the arrangements were made, all the guests had been invited, and the wedding reception had been paid for by the wife’s parents. The wife was in a position of “special disadvantage”. If she did not sign the prenup not only would the wedding be cancelled but the judge found that “the likely result of such a traumatic event would be that the wife’s relationship with the husband would be over. This after six years and an 11 month engagement.

The judge ruled that:

“The wife says she considered that she had no choice. She was clearly in a position of special disadvantage and the husband knew so. The prenuptial  agreement was not to the wife’s advantage. It gave her no rights at all in the future to any of the husband’s property. She knew that it was to her disadvantage because her lawyer told her so. Nevertheless, she signed it because she considered she had no choice.

The husband knew that the wife was in a position of special disadvantage. The only inference from his late production of a completed and signed agreement is that he wanted to give the wife no choice and he knew that if it was presented to her days away from the wedding she would have no choice. I infer that the husband considered there was no risk that the wife would refuse to sign the binding financial agreement and cancel the wedding.
The wife’s consent to the agreement was not independent and voluntary because it was overborne thus she was subject to duress and undue influence by the husband.”

Wednesday, May 20, 2015

Latest U.S. Hague Abduction Convention Compliance Report

The U.S. Department of State Office of Children’s Issues has issued its annual report on International Parental Child Abduction which covers compliance with the Hague Convention on the Civil Aspects of International Child Abduction (the reporting cycle for statistics is January 1, 2014 through December 31, 2014). 

             Some notable points are as follows:

            -In 2014, 781 abduction and access cases were resolved, 273 involving Mexico, 33 cases involving Canada, 25 cases involving the United Kingdom, 25 cases involving Germany, and the remaining 425 cases involving various countries.  The term “Resolved Cases” generally refers to matters where a child is returned to his or her place of habitual residence via the Hague Abduction Convention, the left-behind parent reaches an voluntary agreement with the taking parent, the left-behind parent submits a written request to withdraw their application, or when the left-behind parent cannot be located/contacted for a period of one year.

            -A total of 66 countries had 5 or more pending abduction cases involving the United States in some capacity during 2014.  The report notes a number of recommendations that the U.S. Central Authority (USCA) suggests to improve resolutions to cases.  The USCA most often recommended the promotion of public diplomacy and outreach activities through local embassies, consulate public affairs units, and consular sections to assist with resolution. 

            -In 2014, a total of 374 abducted children were returned to the United States from around the world.  571 International Parental Child Abduction cases were resolved in all countries and areas without the child’s return to the United States during the same reporting year (this total includes countries who are treaty partners with the United States under the Convention, bilateral procedures countries, countries that have other procedures for resolving International Parental Child Abductions, and countries that have no protocol for resolving International Parental Child Abductions). 

            -On April 1, 2014, the Convention entered into force between the United States and Japan.  However, there are still more than 50 non-Convention cases of abduction to Japan, all of which predate Japan’s ratification of the Convention.  As of December 31, 2014, U.S. left-behind parents have filed 31 Convention access applications.  None have resulted in meaningful parental access or the return of a child to date. 

            -A “pattern of non-compliance” is defined as the persistent failure of a country to implement and abide by provisions of the Convention, the failure of a non-Convention country to abide by bilateral procedures between such a country and the U.S., or of a non-Convention country to work with the USCA to resolve abduction cases. Countries demonstrating patterns of non-compliance in 2014 include: Argentina, Brazil, Colombia, Costa Rica, Dominican Republic, Ecuador, Egypt, Guatemala, Honduras, India, Jordan, Lebanon, Nicaragua, Oman, Pakistan, Peru, Poland, Romania, Saudi Arabia, Slovakia, The Bahamas, and Tunisia

                 -The USCA reported on 18 countries where applications for return or access had remained open for more than one year after the date of filing. They are: Argentina (four cases), Brazil (fourteen cases), Canada (one case), Colombia (one case), Costa Rica (two cases), Dominican Republic (two cases), Ecuador (one case), France (one case) Honduras (one case), Israel (one case), Italy (two cases), Mexico (fifty eight cases), Peru (nine cases), Poland (one case), The Bahamas (two cases), Turkey (three cases), Ukraine (one case), and The United Kingdom (one case).
       The full report can be found here:

Monday, May 18, 2015

Hague Abduction Case Dismissed: Child Taken from Greece to New York

Jeremy D. Morley

The United States District Court for the Eastern District of New York (Judge Pamela Chen) in Adamis v. Lampropoulou (decision dated May 14, 2015) dismissed the petition brought under the Hague Abduction Convention by the Greek father of a 12 year old boy who was habitually resident in Greece and was taken to and retained in New York by the respondent mother. My office represented the respondent mother.
This case raised difficult issues of consent and of the age and maturity exception, which ultimately the judge sensibly determined on the basis of the credibility of the parties and on a lengthy interview with the child.
The Court found the child to be an exceptionally bright, thoughtful, sociable and well-adjusted adolescent; that his reasons for wanting to remain in the United States were rational and well-considered: (1) superior educational opportunities, especially in his areas of interest, i.e., science and computer science; (2) the chance to participate in a wide range of extracurricular activities; (3) an abundance of relatives with whom he was very close; and (4) more and better friendships; and that the sincerity and rationality of his motivations and desires was corroborated by testimony of his family members.
The Court also found that the credible evidence established, by a preponderance, that, the petitioner had consented to the child moving with his mother and sister from Greece to the United States. The evidence included the testimony of the mother, the child and the child’s adult half-sister “as corroborated by” an audio recording of the petitioner stating that he had given permission for them to move.
One legal issue that arose was that of the burden of proof of consent. The International Child Abduction Remedies Act (“ICARA”) provides, 42 U.S.C. 11603(e)(1), that the petitioner “shall establish by a preponderance of the evidence … that the child has been wrongfully removed or retained within the meaning of the Convention.” This appears to place the burden of proof of the lack of consent to a removal on the petitioner.
On the other hand, Article 13 of the Convention provides that a child need not be returned if the petitioner “had consented to or subsequently acquiesced in the removal or retention” and ICARA provides (42 U.S.C. 11603(e)(2)), that “a respondent who opposes the return of the child has the burden of establishing … (B) by a preponderance of the evidence that any other exception set forth in article 12 or 13 of the Convention applies.
Judge Chen ruled on this issue that that the burden of proof of consent lays upon a respondent. She explained that, “As other courts have recognized, there is an inherent tension between deeming, for purposes of Petitioner's prima facie case, that D.A.'s removal from Greece was "wrongful," and then determining that Petitioner ultimately consented to D.A.'s move. See, e.g., In re Kim, 404 F.Supp.2d 495, 515 n.38 (S.D.N.Y. 2005) (citing Paul R. Beaumont & Peter E. McEleavy, The Hague Convention on International Child Abduction 131 (P.B. Cartered 1999) ("`[I]f a custodian consents to a removal or retention, can those acts be described as wrongful?'")). The Court agrees with the In re Kim court in viewing this issue as "one of burden" and consent as a defense once a prima facie case of wrongful removal is established. Id.

Thursday, May 14, 2015

Lifestyle Clauses in International Prenuptial Agreements

Jeremy D. Morley
Clients sometimes propose all kinds of provisions for prenuptial agreements that are intended to control their beloved’s future activities. These so-called “lifestyle” terms may state that they’ll have some sex, lots of sex, no sex or kinky sex. They might give a “bonus” for losing weight, staying faithful, or being nice to a mother-in-law or they could include a penalty for adultery, or for not doing the dishes.
Such terms in U.S. prenuptial agreements might very well not be upheld. In prenups for international people they might also create danger.
Merely by way of example, lifestyle provisions are probably invalid in Australia, in most but perhaps not all Canadian provinces, in New Zealand, and probably in the civil countries of Europe and South America.
And in international prenuptial agreement situations it is not merely a matter of ensuring that a chosen law would likely uphold such a provision. These issues are generally considered to be matters of public policy, such that even if a lifestyle clause could pass muster under the law that the parties choose to govern their agreement, it would be necessary to consider whether the public policy of the forum state would be violated by such a term.
Lifestyle clauses must always be accompanied by provisions that the invalidity of one term should not invalidate the entire agreement.
A danger that arises from a lifestyle clause is that it might be indicative of extreme one-sidedness, and that it would therefore provide substantial support for a subsequent claim that the agreement is unfair or unconscionable or was involuntarily entered into.
The place where lifestyle clauses seem to be most sought-after is California, where movie stars want control. However California has clearly ruled that clauses that penalize a spouse’s drug-taking or sexual infidelity will not be enforced.
When parties are contemplating a prenuptial agreement that might need to be enforced in foreign jurisdictions, lifestyle terms should not be included unless their potential reception in such jurisdictions is first carefully researched, and the impact of a provision that the balance of an agreement will survive the invalidity of one term is also considered.
All too often the international enforceability of prenuptial agreements is not adequately considered by clients and family lawyers.

Friday, May 01, 2015

English Suspicion of Prenuptial Agreements

Jeremy D. Morley

The legal status of prenuptial agreements in England remains far from clear.
In the leading case, Radmacher v. Granatino, the U.K. Supreme Court in 2010 upheld the terms of a German marriage contract but it very carefully scrutinized the terms and the consequences of the agreement to determine whether or not they comported with the principle of “fairness.”  

Baroness Hale, the deputy president of the Supreme Court and the senior judge on family law cases in England who has almost single-handedly changed the English law on the division of divorcing spouses’ assets, issued a dissenting judgment in the Radmacher case.
Now, in a newspaper interview just a few days ago, Baroness Hale is reported to have stated as follows:

“I am very suspicious of prenuptial agreements” as they are designed “almost always to give someone less than they would otherwise be entitled to.”
In her dissent in Radmacher, the judge stated as follows:

 “Marriage is, of course, a contract, in the sense that each party must agree to enter into it and once entered both are bound by its legal consequences. But it is also a status. This means two things. First, the parties are not entirely free to determine all its legal consequences for themselves. They contract into the package which the law of the land lays down. Secondly, their marriage also has legal consequences for other people and for the state. Nowadays there is considerable freedom and flexibility within the marital package but there is an irreducible minimum. This includes a couple’s mutual duty to support one another and their children. We have now arrived at a position where the differing roles which either may adopt within the relationship are entitled to equal esteem. The question for us is how far individual couples should be free to rewrite that essential feature of the marital relationship as they choose.
Radmacher v. Granatino, [2010] UKSC 42, Para. 132 (emphasis added).

The U.K. Law Commission has recommended legislation that would introduce “qualifying nuptial agreements” as enforceable contracts which would enable couples to make binding arrangements for the financial consequences of divorce or dissolution. These agreements, which would have to meet certain requirements, would not be subject to the court’s assessment of fairness,” but they would be subordinated to an obligation not to contract out of providing for the “financial needs” of the weaker party.
The “financial needs” exception might appear at first blush to be innocuous and sensible. In fact, however, it would create a gaping chasm of uncertainty that would undermine the basic goals of predictability, simplicity and autonomy. The proposed exception is so broad and its terms are so vague that no one will really know how it might be applied to the facts of any particular case.

The Law Commission has proposed some kind of non-binding “guidance” about “needs” to assist decision-makers in their task of interpreting that term in specific cases, which serves to underscore the fact that there will be substantial uncertainty under its proposal as to what the exception will include and how it will be applied.
The bottom line is that the most recent remarks of Baroness Hale serve to underscore the fact that the enforceability of prenuptial agreements under English law remains “iffy”.

In my field of international family law, a marrying person with significant assets should still be most wary of the English courts’ potential interference in any prenuptial agreement.
It should also be noted that in the Radmacher case, the English courts also awarded the less wealthy husband a far greater financial award for his “needs” as a father to the parties’ child than I believe he would have received in any other courts anywhere else in the world.