Prenups were not common in Malaysia. This is due to cultural and religious beliefs prioritising marriage’s sanctity. Prenups were viewed as a lack of trust or commitment, but things are changing. More and more Malaysian couples are considering prenuptial or premarital agreements before they tie the knot.
In jurisdictions where prenuptial agreements are recognised, the wealthy traditionally use them to protect their assets and ensure the wealth “stays and circulates in the family” in the event of a divorce. These days, more couples draw up prenuptial agreements to make arrangements for the division of marital property, maintenance, and the care and custody of the children in case of divorce.
The Law Reform (Marriage and Divorce) Act 1976 governs marriage and divorce in Malaysia. (“LRA”). However, LRA does not explicitly deal with prenuptial agreements. Despite this, we cannot jump to a conclusion and assume that prenuptial agreements are invalid and cannot be enforced in Malaysia.
Understanding Prenups
A prenuptial agreement, or a prenup, is a legal contract a couple enters into before marriage. It sets out their liabilities and responsibilities towards each other and the children should they divorce.
Why sign a prenup?
By signing a prenup, couples can:
Most prenups contain arrangements for the maintenance and division of matrimonial property. Even with these arrangements spelt out in the prenups, if a divorce occurs, the power to issue orders on the division of matrimonial assets, maintenance and child custody rests in High Court.
In exercising discretion, the court must consider the factors in Sec 76. Since the 2018 amendments, these factors include:
LRA is silent on the prenuptial agreements
None of the above provisions mentions prenuptial agreements as a factor to consider. Does that mean the court cannot take it into account? Does the Malaysian court acknowledge the existence of prenups in deciding the above matters?
Unfortunately, we do not yet have specific case law on prenuptial agreements. To date, there is no decision on the issue of the validity of prenups in Malaysia.
So, to explore the validity and enforceability of prenups in our country, we must look at other common law jurisdictions and section 56 of LRA.
On the face of it, prenuptial agreements are considered unenforceable based on public policy. Prenups are said to violate the Matrimonial Causes Act 1973. The argument is that it restricts and intervenes in the court’s powers when dealing with the division of matrimonial property.
However, some cases indicate that prenuptial agreements might be relevant as a guide to the court.
In K v K (2003) 1 FLR 120, the court stated that injustice might be done by not considering the prenuptial agreement. The court continued determining which requirements must be met when considering whether the prenup is binding.
These factors are:
In another case, Crossley v Crossley [2008] 1 FCR 323, the court affirmed they would consider prenuptial agreements important when deciding on property division.
Radmacher v Granation [2010] UKSC 42 held that a prenup does not bind the court. The parties cannot defeat the court’s jurisdiction by their agreements. However, the court continued to say that if the parties agreed freely with a full appreciation of its implications, the court should give effect to such an agreement unless it would not be fair to hold the parties to the agreement in the current circumstances.
In a 2015 case, WW v HW [2015] EWHC 1844, the court gave substantial weight to a prenuptial agreement.
So, looking at these cases, it can be argued that the English courts are open to prenuptial agreements.
In 2020, the Australian Family Law Act was amended to enable parties to enter into binding financial agreements before, during, or after the marriage. If the contract complies with all the requirements, it supersedes the court’s jurisdiction.
Under section 112 of the Woman’s Charter in Singapore, the court has absolute power to divide assets justly and equitably. This means prenuptial agreements will not bind the court, and the court has the discretion to decide whether it wants to enforce a prenuptial agreement.
The Singapore Court of Appeal has held that prenups aren’t inherently wrong or against public policy. In TQ v TR [2009] SGCA, the court enforced a prenuptial agreement made 16 years before.
Sec 47 of the LRA allows for importing English law principles in matrimonial proceedings if it is not contrary to the LRA.
Based on English case law, we can argue that prenuptial agreements may be enforceable in Malaysia if it is not against anything in the LRA. Until the Malaysian courts provide some guidance on the matter, we can rely on English case law to argue that the courts should consider prenups when dealing with property division.
In Malaysia, the legal status of prenuptial agreements remains a topic of intense debate. Unlike some Western countries where such agreements are legally binding and enforceable, Malaysia’s situation could be clearer. The primary reason for this ambiguity is that Malaysia’s legal framework must explicitly recognise prenuptial agreements.
This doesn’t mean prenuptial agreements are completely unenforceable in Malaysia. Ultimately, it will be up to the court whether the agreement is enforceable. The court can decide what is reasonable and fair.
The court can examine factors such as the parties’ bargaining powers and conduct when entering into the agreement.
It is further argued that section 56 of the LRA allows Malaysian courts to consider a prenuptial agreement. The court can vary the terms and conditions to comply with the LRA and align with what the court thinks is fair and just.
Sec 56 states that:
Hence, parties can bring the prenup to the court to determine the division of matrimonial property. The extent to which the court will enforce the prenup is up to the court. It will depend on whether it is reasonable and fair.
Whether you should enter a prenup or not depends on your circumstances. Although no lawyer can guarantee that the courts will enforce your prenuptial agreement, it is useful evidence of your intentions.
If your agreement is fair and not contrary to anything in the LRA, there is no reason why the court will not consider it. Prenups are not binding on the court in the event of a divorce. Rather, the court has the discretion to consider the agreement as a factor in dividing matrimonial assets. Ultimately the court will decide based on what is fair and equitable for both parties.
Before you sign, take note of the following…
There is no specific legislation in Malaysia that governs prenups. Following the guidelines in the English case of K v K above will be good practice if you enter into a prenuptial agreement.
You should consult with a lawyer to ensure both parties understand their rights and the agreement’s implications (This will count in your favour if you later want the court to enforce the agreement.) A lawyer will also ensure that nothing in the agreement contradicts the LRA.
This content was written and reviewed by a lawyer but it does not constitute legal advice. We always recommend engaging a lawyer before taking any legal action.
