Lyn Brisley looks at the new Supreme Court ruling on pre nuptial agreements

Pre-nuptial agreements allow people to ringfence part of their wealth at the outset of a marriage. They are enforceable in many countries but they have never been binding in England and Wales

However, the Supreme Court has ruled that a pre-nuptial agreement is binding in the case of a German paper company heiress.

Katrin Radmacher's ex-husband Nicolas Granatino went to the Supreme Court after appeal judges slashed his divorce settlement from more than £5m to £1m.

The Supreme Court said it agreed that in the right case pre nuptial agreements can have decisive or compelling weight.

The case was seen by lawyers as a test of whether “pre-nup” agreements were applicable in law in England and Wales.

The judges deciding the case said "it will be natural to infer that parties entering into agreements will intend that effect be given to them".

In effect, therefore, these agreements are now binding unless they are unfair. So if the parties enter into a "pre-nup" freely, are fully informed of all the relevant financial and other information, and the implications of the agreement, then the courts will generally uphold the terms of that agreement.

The president of the Supreme Court made it clear, though, that courts would still have the discretion to waive or vary any pre nuptial (or post nuptial) agreement especially in cases where the terms of such agreement would have an adverse effect on any children of the family.

The ruling has been hailed as a judgement for a modern society, but there are some who believe it will significantly damage the financially weaker party in divorce. If that party, normally the wife, is held to the terms of a pre-nup she may be deprived of a considerable chunk of the couple's wealth.

The Law Commission is due to report in 2012 on whether a change in the law should be made to ensure pre-nuptial agreements are fully enforceable.

If you, or anyone you know, needs advice on any pre nuptial agreement then please give Lyn a call on 01733 888841.

James Maxey, head of Dispute Resolution says....

The Sunday Times this week seemed to hit the right note with an article on page 9 of the Business Section headed "Try not to see your customers in court".

For the relatively small claims which make up most of the county court claims issued, the main difficulty lawyers have is delivering a cost effective solution. Factor in the wasted management time and the risk, whatever it may be, of losing, and you quickly see how suing on a modest dispute is often bad news even if you win.

A face to face meeting to try to resolve the dispute consensually is usually the best way forward, says the Times. Quite right. And if that does not work, whether or not litigation follows, consider mediation as a serious option. Yes, it may mean sharing the baby, but if you factor in the savings in risk, costs and time it usually offers a viable outcome.

And if you are a defendant reading this blog, does it mean things have gone soft and you can exploit opportunities to avoid paying? Not really. With the jittery economy we have today, more and more emphasis is being placed credit scoring and so forcing your opponent into suing and ending up with a judgment against you is seriously bad for your financial health. So even if your antics meant you got away without paying your debts on this occasion, was it really worth ruining your personal and business reputations for years to come?

Think about that next time you need to talk to your bank. So either everyone loses, or everyone wins.

I know which I would prefer.