The case of Roderick Macleod versus Maria Macleod, two US nationals, was heard by the judicial committee of the Privy Council, which is the final court of appeal for UK overseas territories, UK Crown dependencies and certain Commonwealth member countries. The Macleod case was recently heard in the appeal court of the Isle of Man. Mr Macleod lost that case. 

Divorce law in the Isle of Man is identical to England & Wales so any decision would have been binding and followed in England and Wales. In Scotland and Northern Ireland, different legal considerations apply to pre-nuptial agreements.

The Privy Council has ruled that pre-nups are not binding or enforceable in the courts but that post-nups can be binding.

Divorce law and the different rules that operate within the UK and other jurisdictions have become an important wealth planning issue, given some of the big sums argued over in recent divorce cases. For example, motor racing tycoon Bernie Ecclestone is to split from his wife of 24 years, Slavica. Mr Ecclestone – who owns Formula 1 Holdings which operates the global motor racing franchise – is reputed, along with Mrs Ecclestone, to be worth about £2.4 billion. A divorce could result in the largest ever payout to an ex-wife in legal history.

The wealth management industry is keeping a close eye on such cases due to issues such as whether funds can be kept out of divorce settlements via offshore trusts or through pre- or post-nups.

Commenting on the Privy Council ruling, law firm Mishcon de Reya said: “The decision has wide-ranging significance for all married couples, those planning to marry and anyone who is contemplating getting divorced in England and Wales,” the law firm Mishcon de Reya, said.

In a comment on the Privy Council’s ruling, Baroness Hale, a Law Lord, said it was not for the institution to reverse a long-standing view that pre-nups are contrary to public policy.

“So, English Courts are still not obliged to uphold pre-nuptial agreements.  However the existence of a pre-nuptial agreement is still one of the factors to which judges may have regard and in some cases the courts will be guided by the terms of a pre-nuptial agreement when deciding on the division of the couple's assets on divorce,” Mishcon de Reya said.

Until the issue is resolved by legislation in the UK parliament, people entering pre-nup agreements are “in limbo” if they later divorce, the law firm said.

“The Privy Council has deferred the issue of pre-nuptial agreements  to Parliament because they felt they had to but has opened the door to post-nuptial agreements,” said Sandra Davis, head of family law at Mishcon de Reya.

“Hopefully this will put an end to long, acrimonious and costly litigation.  Agreements reached at the best of times will now be binding at the worst of times,” she said

Meanwhile, Meredith Thompson, a solicitor at law firm Mills & Reeve, said: "With the increasing popularity of pre-nups it is a shame that the Privy Council has declined to add its weight to the recent judicial movement towards them being given more weight. They have batted the issue back to Government for legislative change if necessary. However it is good news that they have confirmed the enforceability of post-nups. Although with judicial recognition of post-nups comes an ability for the court to vary the agreement in certain circumstances. It may lead to post-nups becoming more popular with couples trying to regulate what happens on divorce mid-marriage."

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