The application of different conflict-of-law rules depending on the competent jurisdiction may lead to divergent outcomes regarding the matrimonial property regime in cases involving real estate property investments abroad or changes of habitual residence. In this context, a preventive approach combining matrimonial property regime agreements with a choice-of-law clause (typical of Civil Law systems) and prenuptial agreements (common in Common Law jurisdictions) is advisable.
The matrimonial property regime (“MPR”) refers to the set of rules governing the financial relations between spouses, namely, how spouses acquire and manage assets during marriage and the financial consequences upon dissolution of the marriage by divorce or death. Each jurisdiction has its own Private International Law rules to determine the law applicable to the MPR, and these rules are not harmonised across jurisdictions. As a result, different conclusions may be reached depending on the country in which the issue is raised.
In comparative Law, two main approaches to conflict-of-law rules for determining the MPR can be observed: (1) on the one hand, legal systems that follow the criterion of common nationality, such as the domestic conflict-of-law rules of Spain, Italy, and Portugal; and (2) on the other hand, legal systems that follow the criterion of the spouses’ residence or domicile (lex domicilii), such as Common Law jurisdictions (the United Kingdom and the United States) and certain Latin American countries belonging to the Civil Law tradition (e.g. Mexico, Argentina, and Brazil).
This plurality of connecting factors in cross-border legal situations is also reflected in Spanish Law, where the applicable conflict-of-law rule for determining the MPR depends on the date of the marriage.
Specifically, Spanish authorities will apply the domestic conflict-of-law rule set out in Article 9.2 of the Spanish Civil Code to marriages celebrated before 29 January 2019. Under this provision, in the absence of an express agreement, the law applicable to the effects of the marriage will be that of the spouses’ common nationality at the time of the celebration of the marriage, and, failing that, the law of their first common habitual residence immediately after the celebration of the marriage.
By contrast, for marriages celebrated on or after 29 January 2019, Regulation (EU) 2016/1103 applies, which harmonised the conflict-of-law rules concerning matrimonial property regimes. According to the Regulation, the law applicable to the MPR shall be that of the spouses’ first habitual residence after the marriage; failing that, the law of their common nationality at the time of the marriage; and, in the absence of both, the law of the country with which the spouses had the closest connection at the time of the marriage. The Regulation also allows the spouses to choose the law applicable to their MPR, provided it is the law of the nationality or habitual residence of either spouse.
The application of different conflict-of-law rules can lead to inconsistent outcomes, generating significant legal uncertainty for couples with interests in multiple jurisdictions, either due to a change of residence or the acquisition of real estate property abroad. Thus, a married couple who assume to be married in separation of property may find that the local authority in their new residence or place where they acquire assets considers them to be in community of property and vice versa, with the tax consequences that may arise therefrom.
Entering into a matrimonial property agreement enhances legal certainty, as the choice of MPR contained therein will generally be accepted across legal systems, preventing foreign authorities from reaching divergent conclusions based on their own conflict-of-law rules.
However, matrimonial property agreements are generally not effective in the United Kingdom. This is because the concept of an MPR is foreign to Common Law systems, where marriage does not automatically affect the ownership, management, or disposal of the spouses’ assets. Instead, this absence is addressed through a mechanism of property division upon divorce (ancillary relief), which broadly aims to equalise the spouses’ finances post-divorce. Given the wide discretion granted to judges in this area, Common Law countries have developed a robust prenuptial agreement industry, intended to regulate the spouses’ financial relations and determine the financial consequences of a potential matrimonial breakdown.
Accordingly, a couple that have entered into a matrimonial property agreement under a Civil Law jurisdiction and later move to the UK should consider executing a postnuptial agreement compliant with the requirements established by English courts (e.g. consent, independent legal advice, fairness, etc.).
Similarly, a couple residing in a Common Law jurisdiction who acquire interests in a Civil Law country, either through investment in assets located there or by relocating, may choose to execute a confirmatory matrimonial property agreement to confirm their MPR before the relevant foreign authorities.
By Andrea Fernández, associate, LLM Amsterdam; and Álvaro Checa, Partner of KINSHIP.
