Hong Kong Court of Final Appeal Upholds Landmark Forum Case Involving Nuptial Agreements

On 9 June, the Court of Final Appeal unanimously decided to uphold the Court of Appeal’s decision in the case of SPH v SA. The case was primarily concerned with forum but also looked specifically at what weight should be given to the parties’ election in their pre-nuptial or post-nuptial agreements to have their marriage governed by the laws of a particular country, in this case, Germany. The case is very much a landmark decision in terms of how Family Courts in Hong Kong are likely to consider pre-nuptial agreements in other cases.

The profession has been waiting for a suitable case in which the Hong Kong court would be able to consider the leading English case of Radmacher v Granatino. The Court of Final Appeal recognised that the issues before the court had a wide significance involving the impact of agreements to vary the parties’ matrimonial property rights under foreign law and separation agreements which purported to restrict the wife’s rights to claim maintenance. As the Court said, “this is an opportune occasion to consider whether Radmacher … represents the law in Hong Kong.” The court unanimously decided that it did.

Radmacher gave clear guidance as to how the English court would deal with pre-nuptial and post-nuptial agreements. It was held that the court should give effect to an agreement which is freely entered into by both parties with a full understanding of its implications unless in the circumstances it would not be fair to hold the parties to their agreement. Previously, in Hong Kong, such agreements were not enforceable, but could be taken into account as one of the circumstances of the case. Now it is likely that such agreements, where the parties are fully aware of the implications, will be upheld here in Hong Kong.

The Judge at First Instance held that Germany was clearly and distinctly the more natural and appropriate forum for the case. In reaching his decision, the Judge placed considerable weight on the pre-nuptial and post-separation agreements executed by the parties. He concluded that the balance of fairness would be achieved by staying the proceedings in favour of Germany, but without prejudice to the wife’s right to apply for financial provision in Hong Kong following a divorce in Germany. The Court of Appeal allowed the wife’s appeal on the ground that the husband failed to meet the burden of proving that Germany was distinctly the more suitable and appropriate forum in which to hear the case. The Court of Final Appeal agreed. However, it qualified its position with respect to agreements reached in some civil law countries: the agreement may only be to adjust the matrimonial property regime in a civil law country rather than made in anticipation of divorce. The Court of Final Appeal said that, although a Radmacher-type of pre-nuptial agreement should be upheld in Hong Kong, not all pre-nuptial agreements will be if they involve an adjustment to a contractual matrimonial property regime. It concluded by saying that this remained a grey area both in England and Hong Kong.

Given the truly international nature of Hong Kong, it is anticipated that there will be a growing number of “forum shopping” cases in the region and, inevitably, these will often involve both pre- and post-nuptial agreements as they become increasingly used and recognised around the world. This is certainly an area family practitioners will need to be on top of in order to advise clients looking to make their own arrangements so that costly divorce battles can later be avoided.

The wife in this case was represented by Sharon Ser and Sindy Wong of Withers.

By Sharon Ser and Sindy Wong, Withers