In today’s interconnected world, individuals are increasingly transcending borders, pursuing education, careers, and relationships across continents. Global mobility brings with it a unique set of challenges, particularly when it comes to planning for the financial future of a de-facto relationship or marriage in the event of separation.

In Australia, Financial Agreements entered into in contemplation of a marriage or de-facto relationship (often colloquially referred to as “prenuptial agreements” or “pre-nups”), can help provide clarity with respect to financial arrangements on separation. They can set out the maintenance obligation of the parties and the division of the parties assets, liabilities and resources.

However, when couples with Australian connections enter into Financial Agreements overseas, or when separation occurs while parties to an Australian Financial Agreement are residing in another country, the complexities of international family law can emerge. 

This article examines Financial Agreements in Australia and other countries, and also flags issues for consideration for those contemplating entering into an Australian Financial Agreement where there is a tie between Australia and the property of the parties or residence / domicile of the parties internationally.

Agreements Entered into in Australia

Entering into an Australian Financial Agreement is a means of regulating financial matters between de-facto or married couples, and which could otherwise be subject to being determined by an Australian Family Court.

 

There are, broadly, two types of financial orders Australian Family Courts may make in relation to persons in a de facto relationship or marriage, namely:

• orders for maintenance; and
• orders for the alteration of property interests.

A Financial Agreement can oust Australian Family Courts’ jurisdiction to make orders with respect to the financial matters referred to above.

To be considered valid and enforceable, Australian Financial Agreements must meet several legislative requirements. Those requirements are set out in the Family Court Act 1997 (WA) for Financial Agreements being entered into by Western Australian couples who are contemplating or are in a de-facto relationship.   Commonwealth legislation, being the Family Law Act 1975 (Cth), set out the requirements for Financial Agreements entered into between married couples and de-facto couples other than Western Australian de-facto couples.

If a Financial Agreement entered into by a couple is not binding under Australian legislation, then there is a risk that the property of the marriage or relationship (which is located both in Australia and overseas) will be subject to orders for the alteration of property interests by Family Courts in Australia.

Agreements Entered into Overseas  

The legal status and nature of agreements entered into before or during a marriage or a de-facto relationship differ greatly world-wide.

In some civil law countries couples can select which rules will apply to their property.  In countries which have a community property regime, spouses can use a pre-nuptial agreement to opt out of the pooling of assets.

These pre-nuptial agreements are different to those pre-nuptial agreements entered into in jurisdictions that are governed by common law, such as Australia, New York, Singapore or England. In these common law jurisdictions, the outcome of a property settlement matter is not dictated by a formula or a property regime that mandates automatic division of property, but rather is determined by a Judge who makes a discretionary decision as to what is a fair division.

For example, in Singapore (which has a common law system), pre-nuptial agreements are not binding as of right, but may be upheld by a Singapore Court depending on the facts of the case. Courts in Singapore have given weight to pre-nuptial agreements entered into between foreigners that are validly governed by foreign law if those agreements are not contrary to public policy.

Some countries still consider pre-nuptial agreements to be contrary to public policy and therefore not enforceable. For example, in France, prenuptial agreements (which deal with how property and maintenance are to be dealt with on separation) which are entered into under French law will be found not to be valid or enforceable by a French Court as they are considered to be contrary to public policy.

Matters to Consider

The ability to start proceedings in a Court for property settlement or maintenance is generally based on either residence or domicile/nationality. Therefore, couples who wish to enter into a pre-nuptial agreement should contemplate the following questions:  

• Are one or both of the parties’ Australian citizens/ residents or foreign citizens or foreign residents?
• Is there a potential for one or both parties to work or live overseas during the relationship or post separation?
• At the time of executing the agreement, is either party employed in Australia or overseas or do they intend to be during the relationship?
• Are there overseas assets?
• Is there an expectation that the parties may acquire assets overseas during the de-facto relationship or marriage?
• Should the agreement contain a provision that nominates the parties’ choice of jurisdiction, and if so, will that nomination be enforceable in Australia or that overseas jurisdiction?

 

One Agreement or Parallel Agreements?

Whether a Financial Agreement is enforceable in another country will depend on that country’s assessment of its validity.

It is not possible to draft a Financial Agreement that can be enforced globally. 

An overseas agreement which does not meet the legislative requirements under Australian law dealing with Financial Agreements will not be enforceable in Australia.  

It is possible to draft one agreement which meets the Australian legislative requirements of Financial Agreements as well as the requirements of another country.  However, in some circumstances it may not be possible to enter into one agreement as the one agreement may not be compliant with the requirements of both Australia and the other country.  In that case, it may be possible to prepare two or more separate agreements to ensure the legislative requirements of each country are complied with and so the agreement is enforceable.

It is essential that Australian Financial Agreements are carefully drafted mindful of the specific circumstances of a couple, and that consideration is given to nationalities, residency plans, as well as the location of their assets currently and the potential location in future.  

We’re Here to Help

Family law matters can be difficult and complex. If you require any assistance with a family law matter, always contact a legal practitioner who will be able to help.

O’Sullivan Davies has practitioners experienced in dealing with all family law issues, including practitioners who have specific experience dealing with matters that have international elements. 

Disclaimer

This article is not legal advice and the views and comments are of a general nature only. This article is not to be relied upon in substitution for detailed legal advice.

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