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A short guide to the status of pre-nuptial and post-nuptial Agreements in Gibraltar

16.11.2021 Publications

By Charles Simpson and Joanna Baglietto, Dispute Resolution Team.

Triay We are often asked about the extent to which prenuptial agreements and other financial agreements between spouses are enforceable. In short, the local Matrimonial Causes Act 1962 (Gibraltar) ( “MCA”) contains express statutory provision enabling spouses or future spouses to enter into a financial agreement either before, during, or after marriage.

This article considers the requirements for and the status of financial agreements locally.

To what extent are pre- and post-nuptial agreements binding in Gibraltar?

Under Part VIA of the MCA, pre- and post-nuptial agreements are binding in Gibraltar as financial agreements. An agreement will constitute a financial agreement under the MCA if all of the following apply:

• It is expressed as a financial agreement.

• The spouses or the parties contemplating marriage make a written agreement regarding how finances should be dealt with in the event of marital breakdown, provision for spousal maintenance during marriage and/or divorce, as well as other matters incidental or ancillary to the treatment of finances and maintenance.

• At the time of the agreement, the parties are not bound by any other agreement regarding the matters provided above.

What are the requirements for a financial agreement to be binding?

For a financial agreement to be binding under the MCA, it must:

• Be signed by all the parties.

• Contain a certificate of independent legal advice signed by the lawyer concerned which records that the party has been advised as to the effect of the financial agreement on the rights of that party, and the advantages and disadvantages at the time that the advice was provided, to the party of making the financial agreement. Necessarily each party must therefore be separately and independently represented.

Pre-nuptial agreements

Unlike the position in England and Wales where pre-nuptial agreements are only persuasive, pre-nuptial agreements are binding in Gibraltar subject to compliance with and the terms of the MCA.

The terms of of a pre-nuptial should be negotiated and concluded in a reasonable period before the date of any marriage (e.g. negotiations to commence no later than 3 months prior to the wedding and concluded no later than 1 month in advance, to allow for an appropriate ‘cooling-off’ period in advance of the wedding). The negotiation will usually include the disclosure of the respective parties’ assets, income, and financial interests in order to ensure that both the weaker and the stronger financial parties can each be independently advised and negotiate terms on a transparent basis.

The advantages of entering into a pre-nuptial agreement include:

• Clarity and certainty – the future spouses can agree at the outset of their marriage how their finances will be distributed in the event of marital breakdown. This can include how their assets should be treated as well as provision for spousal maintenance. Such agreed terms should save the spouses the time and expense of litigating over financial matters in the event of separation or divorce.

• Transparency – the spouses will be given the opportunity to provide financial disclosure of their respective assets and income whilst negotiating the terms of a pre-nuptial agreement so that the parties are fully aware of their respective financial positions at the outset of the marriage.

• Protection of assets – it is possible to “ring-fence” assets from the claims of the other party in the event of divorce or separation e.g. inherited assets, gifts, or assets acquired prior to the marriage.

The disadvantages of entering into a pre-nuptial agreement include:

• It can be considered “unromantic” - sometimes parties to a future marriage are concerned or hurt by the other party raising the issue of entering into a pre-nuptial agreement in advance of marriage. It is therefore a sensitive subject. In our experience, there are often good reasons for such agreements (e.g. the wealth of one party and the need to try to ring fence pre-marital assets; the fact that one party has been married before and been through an acrimonious divorce/ contested financial proceedings. These examples are not exhaustive).

• Review/change of circumstances – It is recommended that the terms of a financial agreement are subject to review (e.g. in circumstances where the parties have children or there is some major financial change or in accordance with any review provision contained in the agreement). This means that the review itself can provide a degree of future uncertainty depending on what the review relates to.

• Financial agreements can be set aside under the MCA – a financial agreement (including a pre-nuptial agreement) can be challenged by one of the spouses and set aside by the Court in the circumstances as explained below.

Can financial agreements be set aside or terminated?

Yes, financial agreements can be set by the Supreme Court of Court if it is satisfied that:

• The agreement was obtained by fraud.

• A party to the agreement entered into the agreement to defraud or defeat a creditor(s) or with reckless disregard of the interests of a creditor(s).

• The agreement is void, voidable or unenforceable.

• There has been a change in circumstances since the agreement was made, making it impracticable for the agreement or part of the agreement to be carried out.

• There has been a material change of circumstances since the agreement relating to the welfare and development of a child of the family.

• A party to the agreement engaged in conduct that was in all circumstances unconscionable.

In any case, the parties can also terminate any existing agreement by entering into a new financial agreement or a termination agreement.

Overall there is therefore a balance to be struck in ensuring that the terms of any financial agreement can be viewed independently as being reasonable and fair.

Disclaimer:
This document has been issued on the 16th Nov 2021 by Triay Lawyers Limited, trading as Triay Lawyers, a Gibraltar private company limited by shares with registered office at 28 Irish Town, Gibraltar, GX11 1AA and with incorporation number 112599. The information in this document is for general information purposes only and does not constitute professional advice, legal or otherwise and does not intend to be comprehensive. Triay Lawyers does not accept responsibility for any loss that may arise from accessing or relying upon the information contained in this document.

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