Prenuptial Agreements: US Law, Thailand Law and EU Law Compared
By Jonathan W. Leeds*
Prenuptial agreements are not an exclusively American institution. In fact, many foreign nations recognize, regulate, and enforce prenuptial agreements.1 The U.S. courts have long recognized the validity of foreign marital proceedings. Thus, many couples mistakenly believe that their duly executed prenuptial agreement will also be recognized by U.S. courts. Currently, the U.S. state courts do not consistently recognize or enforce prenuptial agreements executed in foreign nations (here after referred to as an international prenuptial agreement). The United States does not have consistent statutory law or a uniform common law approach for the treatment of international prenuptial agreements.2 International prenuptial agreements pose a series of conflict-of-law questions for U.S. courts. For example, does the foreign nation’s or the forum state’s law govern the validity of the prenuptial agreement? Which law determines the enforceability of the agreement? And which law will govern the construction of the prenuptial agreement? The U.S. state courts are divided on the answers to these important outcome determinative questions and unfortunately, U.S. state statutory law has done little to clarify these issues.
The lack of a clear and uniform approach is detrimental to the interests of the contracting parties, foreign nations, and the U.S. courts. First, it subverts the contracting spouses’ freedom to contract and the couple’s joint expectation that the prenuptial agreement would be binding. Secondly, the inconsistent enforcement of these prenuptial agreements may violate foreign nations’ legitimate sovereignty interests in prenuptial agreements executed within their borders. Thirdly, the continued lack of a uniform approach within the United States will result in an unnecessary drain on judicial resources. Courts must expend time and effort on the repeated re-litigation of the same legal questions.
The treatment of international prenuptial agreements in the U.S. state courts is highly unpredictable. Some U.S. courts reviewing international prenuptial agreements will reject the application of a foreign nation’s laws and instead apply the forum state’s laws.3 This approach may threaten a foreign nation’s sovereignty over the prenuptial agreements signed within the country. Other courts will defer to the foreign nation’s control and apply the foreign nation’s laws to the prenuptial agreement.4 This approach can violate the forum state’s policy goals. A uniform predictable approach to international prenuptial agreements is necessary to ensure a parties’ freedom to contract, protect the forum state’s public policy interests, and conserve judicial resources.
Unfortunately, a parties’ inclusion of a choice of law provision offers more problems than it does solutions. State courts significantly differ in their treatment of a choice of law provisions in a prenuptial agreement. Some jurisdictions will apply the parties’ choice of law to the entire prenuptial agreement5 while other jurisdictions will apply it only to the construction of the agreement.6 Confronted with this unpredictable treatment, domestic and international family law practitioners are in a difficult position. What advice should they provide to clients interested in executing a prenuptial agreement in another state or another country? Should the marital parties include a choice of law provision that would indicate the parties’ intention? Which state or country’s procedural requirements must be fulfilled? These questions beg for unambiguous and uniform answers.
This article offers an international perspective to the conflict of laws and choice of law issues which plague the enforcement of international prenuptial agreements. The article is broken into six sections that address separate topics affecting international prenuptial agreements. Section II examines the current conflict and choice of law approaches utilized by U.S. courts. Section III discusses the Uniform Prenuptial Agreement Act and its failings. Section IV will present two international approaches to the prenuptial conflicts of law issues: the Hague Convention on the Law Applicable to Matrimonial Property Regimes and Thailand’s Act on Conflict of laws. Section V discusses the need for a uniform U.S. court approach to interstate and international prenuptial agreements which balances the expectations of the marital parties, the foreign nation’s sovereignty interests, and comity concerns. Section VI offers some conclusory statements.
- United States Conflict of laws: The First Restatement vs. Second Restatement Approach
At first glance, U.S. state courts appear to apply one of either two conflict of laws approaches to prenuptial agreements signed in a different state or nation: the First Restatement on Conflict of Laws7 and the Second Restatement on Conflict of Laws8. However, as will be discussed later in detail, there is considerable inconsistency within the U.S. state courts’ application of both approaches.
1. General Introduction to the Two Approaches
The First Restatement on Conflicts of Law requires that the law of the “place where the last act occurred that was necessary to complete the cause of action”.9 This approach is often referred to as the lex loci (Latin for “the law of the place”)approach. However, courts can refuse to apply the other jurisdiction’s laws if to do so would violate a forum state’s public policy.10
Conversely, courts which follow the Second Restatement on Conflicts of Laws approach apply the laws of the jurisdiction with the most significant relationship to the couple’s prenuptial agreement.11 When the court applies the significant relationship approach, the courts balances the seven enumerated public policy goals:
- the needs of the interstate and international systems
- the relevant policies of the forum
- the relevant policies of other interested states and the relative interests of those states in the determination of a particular issue
- the protection of justified expectations
- the basic policies underlying the particular field of law
- certainty, predictability, and uniformity of result, and
- ease in the determination and application of the law to be applied12
The Restatement Second, unlike the First Restatement, contains a special section which addresses the treatment of a couple’s choice of law provision.