Summary
- Matrimonial regimes exist in civil law jurisdictions but not common law jurisdictions.
- Both spouses should appoint an expert to help them determine the distribution of assets applicable to their situation.
A “hot topic” that came up recently at the International Family Law Committee brown bag lunch was the division of property on divorce, with an emphasis on the concept of ‘matrimonial regimes’. This is a concept which is adopted by civil law jurisdictions, but not by common law jurisdictions. ‘Matrimonial regimes’ are broadly defined as a set of rules that govern financial matters between spouses and third parties (e.g. creditors) during the marriage, on divorce and/or on death. Given that they do not exist in every jurisdiction, this is a topic that requires delicate consideration when dealing with cross-border family and matrimonial matters as, on divorce, a judge will distribute assets according to the laws and rules that exist in the country in which the divorce is taking place. The brown bag lunch provided a comparison review between the principles in France, Mexico and England and Wales on this subject matter.
In France, upon divorce, a French judge will review (1) the liquidation of the matrimonial regime and (2) the payment of a compensatory allowance to the spouse who is in a financially weaker position.
Applicable law
Firstly, it is important to determine whether the parties have signed a prenuptial agreement. If the prenuptial agreement is valid, a French judge will apply the law chosen by the spouses in respect of the matrimonial regime to proceed to the distribution of the assets. In the absence of a prenuptial agreement, or a choice of applicable law and in the presence of a cross-border case, the judge will have to determine the applicable law based on International Private rules:
For marriages entered into before 1992: the French case law of Gouthertz is the precedent that applies, and it establishes that the applicable law that governs the division of assets is the law chosen by the spouses or their presumptive will.
For marriages entered into between 1992 and 2019: the Hague Convention of 14 March 1978 on the Law Applicable to Matrimonial Property Regimes determines that the applicable law is the law of the habitual residence of the spouses right after the marriage.
For marriages entered into from 2019: the Council Regulation (EU) 2016/1103 of 24 June 2016 implementing enhanced cooperation in the area of jurisdiction, applicable law and the recognition and enforcement of decisions in matters of matrimonial property regimes states that the spouses can choose to designate one of the following laws:
“(1) the law of any State of which either spouse is a national at the time of designation;
(2) the law of the State in which either spouse has his habitual residence at the time of designation;
(3) the law of the first State where one of the spouses establishes a new habitual residence after marriage.”
If French law is deemed applicable, the distribution of assets will be based on one of the four French matrimonial regimes that exist.
Legal community property regime.
Under the French Civil Code, the legal community is the default matrimonial regime that applies where the spouses did not sign a prenuptial agreement before getting married.
The legal community is basically made up of three types of property: marital property and each spouse’s personal property.
Marital property consists first of the acquired property from the spouse’s personal revenue such as the assets acquired during the marriage.
The spouse's personal property falls into four types:
Separate property regime.
Under this regime, each spouse owns his/her personal property. There is no marital property. This means that spouses must prove what they own in their sole name. For the determination of personal property, each spouse, who buys a property after marriage, owns the respective financing of the operation.
Universal community property regime.
The universal community consists of having a single property entity. All the movable and immovable properties - no matter whether they are present or future - will belong to the community. All gifts and legacies, however, as well as the movable properties which have a personal nature (clothes, jewelry etc.), belong to the spouse, unless it has been stated elsewhere.
This matrimonial regime is rarely used. But, where it is used, this regime is often adopted by older spouses when they change their matrimonial regime or during a remarriage. For this reason, this regime is often combined with a full attribution clause to the surviving spouse, enabling him/her to collect the entire community, not just half of the assets.
Community property of acquisitions regime.
This type of matrimonial regime is not very common - although it has become more popular – and from my experience more so among legal professionals.
During the marriage, the system operates as a separate property regime. At the time of its dissolution, however, each spouse is required to participate in the enrichment of the other one through the so-called “debt participation”. For example, if one spouse was enriched thanks to his/her job and/or real estate, it is considered that he/she has been so thanks to the other one who helped and supported him/her. The other spouse will then be able to claim a financial benefit as if they were married under the legal regime.
Compensatory allowance.
After having liquidated the matrimonial regime of the spouses, a French judge will consider the respective situation of the parties (income, assets, ages, health, career evolution etc.) in order to decide whether a compensatory allowance should be awarded to the spouse who is in the weaker financial situation. This mechanism intends to reduce the inequalities between the spouses upon divorce. There are, however, no clear tables or calculations to determine the amount that should be awarded. It is possible to estimate a rough bulk sum based on different calculation methods but it remains in the French judge’s sole discretion.
Application of Foreign Law (E.g.: qualification of the principle of equitable distribution in France).
The difficulty arises when a French judge has to apply the division of asset as per a foreign law as it is not always straightforward. A French legal professional will try to make an analogy with one of the matrimonial regimes. Although community property states are quite similar to the legal community property regime, the equitable distribution principle is more complex to categorize. One tends to make an analogy with a separate property regime while it is actually quite different and more similar to a community property regime with the consideration of different factors. This is the reason why it is important for both spouses to appoint an expert to help them determine the distribution of assets applicable in their situation.