The Supreme Court has made a final ruling in the well publicised case of Radmacher v Granatoni giving a decisive view as to how effective pre-nuptial agreements are when assessed by the Courts in divorce proceedings.

The case saw the establishment of a clear test by which th e agreements should be judged but, unsurprisingly, they have not ordered that they are to be binding in every case. The general findings are that the Court should give effect to an agreement that is freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to that agreement.

The case itself concerned a German prenuptial agreement executed by the couple stating that neither would claim financial provisions from the other should the marriage end in divorce. Despite the agreement the husband bought proceedings for ancillary relief when they ivorced in 2007. The High Court awarded the husband a sum of £5.5 million giving very little weight to the agreement. The wife appealed and the Court of Appeal stated that more weight should have been given to the pre-nup and were of the view that provision should be made for the husband’s role as father to the couple’s two children but that he should receive nothing for his own long term needs.

The husband appealed to the Supreme Court who subsequently dismissed his appeal in the recent judgment. This has led to the conclusion that pre-nuptial agreements will be binding as long as they are ‘fair’. The judgment also recorded that the fact that a couple had not taken independent legal advice would not mean the agreement should not be considered binding as long as the parties are clearly aware of the implications of entering into the agreement and are not acting under pressure or undue influence.

Significant changes following this decision are likely with more couples looking to make the agreements now they have been given more legal standing. This will not be the final word on the agreements however as the Law Commission has already started its research into the topic with the view of publishing a consultation paper in 2011.

This is likely to result in a draft Bill and legislation is likely to follow.