Marital Agreements In Malaysia: Are They Valid?

Very recently, on 15 April 2024, the High Court delivered its decision in the case of HLC v PTL & GEN [2024] 10 MLJ 640. This case pertained to the terms of a post-nuptial agreement entered into by a husband and wife. The High Court held that while the post-nuptial agreement was entered into voluntarily, voluntariness alone does not guarantee the validity of all its terms. It was “incumbent upon the court to meticulously scrutinise each term to ensure its compliance with legal standards.”

In this article, we will look at the differences between 3 types of marital agreements in Malaysia and answer the question as to whether they are valid.

PRE-NUPTIAL AGREEMENTS (“Prenup”) are entered into before parties are legally married. According to the High Court in Loo Pang Kee v Anna Jacqueline Ching Lling [2019] MLJU 72, pre-nuptial agreements are not valid agreements in Malaysia. This is due to the fact that voluntariness may be compromised in pre-nuptial agreements as one party can leverage the prenup as a condition for marriage. Now, while the court is not bound to follow the terms of a prenup, nothing prevents the court from observing (by looking at the prenup) how parties treated their relationship and infer whether the marriage was a marriage of convenience. This in turn may affect the decision of the court in relation to maintenance etc.

POST-NUPTIAL AGREEMENTS are entered into after parties’ marriage is registered (but before the deterioration of the relationship or separation, if any). Unlike prenups, post-nuptial agreements are not automatically invalid. The terms contained in a post-nuptial agreement may be enforced by the court. However, it must be noted that the court is not bound to follow every term. It was held in the case of HLC v PTL & GEN [2024] 10 MLJ 640, that each term will be scrutinised by the court to see whether it meets the legal standards. It can be said with certainty that any term found to be inequitable, unreasonable, or unfair will not be upheld. 

SEPARATION AGREEMENTS are entered into after parties’ marriage relationship has deteriorated. Similar to post-nuptial agreements, separation agreements are not automatically void. Further, none of the terms contained can oust the power of the court to ascertain the validity of each term.

As noted earlier, the fact that parties voluntarily sign and assent to the terms of the agreement does not guarantee the validity of all the terms in a post-nuptial agreement or separation agreement. The court has the discretion to assess the fairness, reasonableness, and legality of each term and this discretion cannot be ousted.

For example, parents cannot make an agreement to oust the protective jurisdiction of the Court over their children in matters of custody and maintenance. Pursuant to the Law Reform (Marriage and Divorce) Act 1976, the welfare of the child is the court’s paramount consideration. Should the terms of a marital agreement fail to align with what the court finds to be in the best interest of the child, the term will not be upheld.

What value is there in entering into a marital agreement?

Parties are able to refer the court to a document that shows their common intention in the event of a divorce (showing their agreement in relation to asset distribution, maintenance allocations, child custody and access arrangements etc.) From this document, the court can see how parties intended to arrange their affairs. This, in turn, directly affects how the court decides on the matters in dispute.

In situations where parties are preparing to divorce but are just not ready to file a petition (joint or single), a separation agreement helps parties to continue their lives with some stability and certainty. The terms of the separation agreement can also be easily converted into the terms of the joint petition to be filed in court, saving both time and costs for both parties.

To conclude, if there is no violation of any law, parties to a marriage have the right to make decisions about their own relationships and lifestyle preferences according to their unique needs and circumstances. There is value in entering marital agreements, even if not all the terms are upheld by the court. It helps parties to think through their arrangements and even though they may not be binding, these arrangements can be shown to the court to assist the court in the event a matrimonial dispute arises.