By Helen Jane Arnold

Pre-nuptial agreements (PNAs), in which a couple set the financial terms of their divorce before they get married, have held legal sway in America and much of Europe for some years. In England & Wales, however, PNAs are not enforceable and, until recently, couples could not rely on the courts holding a couple to the terms of the PNA.

However, in a so-called landmark decision earlier this month, three Appeal Court judges set aside an award against one of Europe’s richest women that she should pay £5.8m to her former husband because of a contract they signed before their wedding. German heiress Katrin Radmacher will, instead, pay maintenance to French-born Nicolas Granatino and repay his debts of £700,000, after the judges agreed to take into account the PNA the couple signed.

In a statement after the case, Ms Radmacher said: “I am delighted that the agreement Nicolas and I entered into as intelligent adults before our marriage should be honoured.”

This appears to be the key to this ruling – that courts in this country are now more inclined to treat divorcing couples as intelligent adults whose decision to enter into a legal agreement can define the financial result on divorce.

Although hailed as a landmark decision, the Radmacher ruling is a consolidation of courts’ decisions in previous cases. In recent years, the courts have paid increasing notice to PNAs. Unless reliance on the terms of a PNA results in unfairness, courts are often minded to endorse the agreement which the couple entered into before the marriage.

What factors does the court take into account in deciding whether to endorse a PNA?

· Whether the parties have had the opportunity to take legal advice prior to signing the PNA

· Whether advice was available in a timely way - that is, not on the eve of the wedding or the day itself, resulting in pressure on one of the parties

· Whether the terms of the PNA impose an unacceptably unfair result on one party - for example there is no provision for children of the marriage

In what situation should a PNA be entered into?

· Where there is an equality of capital going in to the marriage and one party needs to protect, say, a sizeable inheritance

· Where there is a complex and substantial financial scenario which needs to be clarified and regulated

· Where existing or first family members need to be provided for

· Where one or both parties wish to know where they stand in the future in the event of divorce.

· Where parties wish to minimise the potential costs of litigation by agreeing the financial outcome on divorce

· Where parties wish to retain control over their future affairs

· Where a couple wishes to establish a financial foundation and a structure to their joint life together

Until Parliament legislates to enforce PNAs, courts will retain discretion to decide as to whether the terms of a PNA are to dictate the financial settlement on divorce.

The Radmacher case will be subject to appeal to the House of Lords.

Helen Jane is a partner at Benussi & Co, specialising in complex high net worth, international and pensions cases