International marriage settlement agreements and choice of law clauses – some points to consider

26.10.2020 — International couples considering entering into a marriage settlement agreement often contact our law firm. Situations vary; there are Finnish couples living permanently abroad, foreign couples living in Finland, couples of different nationalities living in Finland and couples of different nationalities – one of them being of Finnish nationality – living either in Finland or abroad.

The first question to consider is: is it wise to draft the marriage settlement agreement in Finland? A Finnish marriage settlement agreement is made according to Finnish law, so it is important to ensure that Finnish law also applies to the spouses’ marital property regime. Enforcing a Finnish marriage settlement agreement may be difficult if the law applicable to the marital property regime is that of another state. This is why an international marriage settlement agreement drafted in Finland usually includes a clause according to which the spouses designate the Finnish law as the law applicable to their marital property regime. Finland applies EU Regulation 2016/1103 on matrimonial property regimes, and according to Article 22 of the regulation, spouses can choose one of the following laws to be applied to their matrimonial property regime: 1) the law of the state where spouses, or one of them, is habitually resident at the time of the agreement is concluded or 2) the law of the state of nationality of either spouse.

From a practical perspective, it is usually easier if the law applicable to the spouses’ marital property regime is the law of the same state that has jurisdiction in case of a dissolution of marriage either in the event of the death of the other spouse or in the case of a divorce. Problems may arise if spouses have designated Finnish law as the law applicable to their marital property regime and Finnish courts don’t have jurisdiction over their matter. Such a situation might lead to practical difficulties as foreign courts would need to apply Finnish legislation. There is also always the risk that a foreign court would apply its own law in such a situation despite a concluded marriage settlement agreement. Fortunately, EU regulations and harmonisation of private international law rules within Europe have increased legal certainty in this respect.

The main rule according to EU Succession Regulation 650/2012 is that the courts of the state in which a deceased person had his or her habitual residence at the time of death has jurisdiction to rule on questions concerning succession and also that the law of said state shall be applied to the succession as a whole. Furthermore, Article 4 of EU Regulation on matrimonial property regimes stipulates that where a court of a Member State is seised in matters of the succession of a spouse pursuant to EU Succession Regulation, the courts of that state shall have jurisdiction to rule on matters of the matrimonial property regime arising in connection with that succession case. Inheritance legislation and legislation governing marital property regimes are usually closely connected, at least in Finland. Therefore, if a marriage is dissolved because of the death of one of the spouses, it is highly recommended that the law of the same state applies both to succession and the matrimonial property regime. According to EU Succession Regulation a person may choose as the law to govern his succession the law of the state whose nationality he possesses at the time of making the choice or at the time of death. We might recommend that international couples who enter into a marriage settlement agreement in Finland also make a last will and testament where they designate the Finnish as the law applicable to their succession.

Quite often, Finnish nationals living permanently abroad and without having any plans to move back to Finland contact us and wish to make a marriage settlement agreement in Finland. If the majority of the spouses’ property is located abroad, I would most likely recommend drafting the marriage settlement agreement in their home country because it is a lot easier to handle legal cases in the country in which the spouses have the closest connections to. Of course, if the spouses have strong connections to two or more countries, it is usually wise to compare the different legislations and evaluate the situation as a whole in order to determine which law the spouses want to be applicable. When drafting legal documents in cross-border situations that have connections to two or more countries, it might be worth consulting a lawyer in both countries in order to make sure that the documents made in one country are valid in the other country as well. Our firm is a member of Cyrus Ross International, a European group of law firms, which makes it easy for our clients to get consultation from a foreign lawyer when needed.