Law on marriage and divorce in Malaysia
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:
- Provide clarity and certainty regarding the division of assets and liabilities in the event of divorce
- Avoid lengthy and costly legal battles
- Protect assets acquired before the marriage, such as property, investments, and business.
- Protect future assets such as inheritances or gifts from family members
- Address issues related to spousal support or alimony, including the amount and duration of payments
- Provide peace of mind and reduce stress, as both parties have already discussed important financial matters before entering into marriage.
Power of court to order on maintenance and division of matrimonial assets
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.
- Section 76 of LRA governs the division of matrimonial property in Malaysia.
In exercising discretion, the court must consider the factors in Sec 76. Since the 2018 amendments, these factors include:
- Each party’s monetary, property, or work contributions to the family’s assets or expenses.
- The contributions of the non-earning spouse towards family welfare by looking after the home or caring for the family.
- Any debts owing by either spouse which were contracted for their joint benefit.
- The needs of the minor children, if any, of the marriage.
- The duration of the marriage.
- Sections 77 and 78 states the court’s ability to issue maintenance orders. It will base its assessment on the parties’ means and needs and regard each side’s responsibility for the marriage’s demise.
- Section 88 outlines the court’s power to make orders regarding the children – the welfare of the children is the paramount consideration.
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.
Prenups in England
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:
- Were the parties adequately advised as to its terms?
- Did the parties sign the agreement willingly, without pressure?
- Was there full disclosure regarding assets?
- Did either party exploit their dominant financial position?
- The length of the marriage.
- A party’s contributions to the marriage to the other party’s wealth.
- Did any unexpected issues from the agreement make it unfair to enforce it?
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.
Prenups in Australia
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.
Prenups in Singapore
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.
Position of Prenups in Malaysia
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.
Section 56 of the LRA
Sec 56 states that:
- parties may refer the court to any agreement made between them which relates to the proceedings for divorce;
- to enable the court to express an opinion on the reasonableness of the agreement; and
- the court may give such directions on the matter as it thinks fit
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.
Should you enter into a prenuptial agreement?
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.
In short:
- You must enter the agreement freely and voluntarily, without pressure or threats.
- Both parties must make full disclosure of all their assets and liabilities.
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.
Conclusion
- In conclusion, nothing in Malaysian law makes a prenup illegal.
- It can effectively persuade the court to consider your wishes and intentions for the property division if it is consistent with the LRA.
- An experienced lawyer can assist you in drafting a prenuptial agreement that captures your intentions and provides valuable evidence to the court when dealing with your divorce.
- LRA will prevail over the prenups, but still, signing a prenup may support your post-divorce battle in court
