by Jeremy D. Morley
You are asked to prepare a prenuptial agreement between spouses of different nationalities, who have different prior countries of residency, assets in various international locations and future plans to relocate to one or more countries. Where do you start? And how do you protect yourself?
It is difficult enough preparing a prenuptial agreement for wealthy or potentially wealthy people when you only have to take into account the law of one jurisdiction. It is far harder and riskier when multiple jurisdictions come into play.
The following are some basic principles that the author has developed from handling a large variety of international prenuptial agreements over many years:
- This is a highly specialized area. There is much more risk for the family law practitioner who agrees to handle an international agreement than is the case with conventional prenuptial agreements. These matters are tricky, and they require great care. Do not handle international prenuptial agreement matters unless you have experience or are collaborating with an international family lawyer who handles them regularly.
- Ensure that one lawyer is both the “general” in charge of the entire process, the chief coordinator among the various lawyers in different jurisdictions that will be working on the prenuptial project, and the primary (or sometimes the sole) liaison with the client. If one lawyer is not clearly in charge there will probably be great confusion, lawyers will be tempted to jostle for a larger role than might be appropriate, the client will receive conflicting advice and important issues might never be addressed.
- Do not take on the process of drafting an international prenuptial agreement unless you are prepared to work with foreign counsel, to understand foreign law, to become familiar with different legal concepts as they may apply to your client's circumstances and to work in an environment in which there are no clear-cut rules or procedures in which you may often feel compelled to consult your malpractice policy.
- Make it clear to the client that, for example, you are admitted to practice only in Jurisdiction A (or perhaps A and B); that while you may have a little familiarity with Jurisdiction C, you are not admitted to practice there; that anything that you might say about the law of that jurisdiction is strictly subject to the client's confirmation with local counsel; that you have no familiarity with the laws of Jurisdictions D, E, and F; and that you will endeavor to find out what you can about the laws in those jurisdictions but you will need to rely on local counsel and that it is local counsel's advice upon whom the client will ultimately be relying. Back this up with a letter to the client and notes to your file.
- Obtain written authorization from the client to engage the services of local family lawyers in other jurisdictions for the purposes of advising as to the laws and procedures of their own jurisdictions.
- Be clear on client confidentiality when you hire a foreign lawyer. The rules vary considerably.
- Secure funding to cover all of the anticipated legal charges. It is critical to know that you may be responsible for the legal fees of lawyers you ask for help in foreign jurisdictions.
- Find out what fees each lawyer charges and how the lawyer expects to be paid. In some countries, fees are fixed by local law. You should establish a workable billing schedule. Foreign lawyers may not be accustomed to including a description of work performed in connection with billing. Some foreign attorneys may expect to be paid in advance. Others may demand payment periodically and refuse to continue until they are paid. Request an estimate of the total hours and costs of doing the work. Be clear who will be involved in the work and the fees charged by each participant.
- When reviewing foreign law, be careful to understand the terms that your foreign local lawyers use. For example, foreign terms might be translated into English as “marital property,” “custody,” “ownership,” and “commingled” but the terms might well have completely or even subtly different meanings in the foreign jurisdiction which could seriously impact the way that a contract is interpreted. Become familiar not only with the law as it is written in the foreign jurisdiction but the law as it is actually applied and as it might apply to your particular client if the prenuptial agreement were brought before the courts in that jurisdiction. In this regard, it is critical to determine how much discretion is afforded to a judge in the foreign jurisdiction to rewrite specific provisions or to take any action other than strictly applying the law concerning prenuptial agreements.
- Check out the conflict of laws issues. Be alert to the fact that a contract executed in one jurisdiction might in any particular jurisdiction be governed by another jurisdiction's law. You may even need to consider “renvoi” rules (perhaps for the first time since cramming in law school for a Conflicts exam) insofar as another court that applies its own law to a prenuptial agreement might include its laws on the conflict of laws, which might require the court to apply the laws of another jurisdiction.
- Make it clear to the client that you are not an oracle and that you cannot predict the future. Therefore, you do not know what the law will be in any particular jurisdiction, even including your own, in the future and how it might be applied by the courts in any such jurisdiction. Likewise, you cannot possibly advise as to how a judge in any part of the world, even in your home jurisdiction, will interpret such loose terms as “fair,” “unfair,” “unconscionable,” and “needs [of a spouse]” as they are used in governing legislation in many jurisdictions and sometimes in the body of specific agreements. Furthermore, you should point out that courts might apply nebulous theories of “public policy” with which to judge prenuptial agreements. Consequently, you are unable to guarantee that the prenuptial agreement will be enforceable at the time in the future when a court in your own jurisdiction or in a foreign jurisdiction might look at it.
- Inform the client that you do not know where the client and his or her spouse might reside in the future, where their children, if any, might be located and where either or both of them may in the future have assets or do business. All of these factors may have an enormously significant bearing on the enforceability of their prenuptial agreement.
- Some jurisdictions still do not enforce prenuptial agreements. England traditionally held them to be against public policy, but now provides that they will normally be afforded great respect (whatever that might mean!). Other jurisdictions have rules that make it easy for a court to invalidate a prenuptial agreement. In some such situations, it is also good practice to consider whether the parties should sign so-called “mirror agreements” that contain essentially the same terms as the primary agreement but are executed in accordance with the local law and are to come into effect only if the primary agreement is not recognized by a local court.
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We work globally, always in collaboration with local counsel as appropriate.