THE BOTTOM LINE
- Foreign Contract Clauses Can Be Voided: Dutch courts will not enforce clauses in international marriage contracts that violate Dutch public policy, such as those assigning financial penalties based on “fault” in a divorce.
- Courts Must Follow Foreign Law, Not Re-Interpret It: When a Dutch court applies foreign law, it must adhere to expert evidence on that law. It cannot substitute its own judgment about the “spirit” or “purpose” of the foreign legal rule, a crucial lesson in contract certainty.
- Formalities Are Non-Negotiable: Changing the law applicable to your assets during a divorce proceeding in the Netherlands requires a formal notarial deed. A simple agreement recorded in a court transcript is not enough to be valid.
THE DETAILS
This case, decided by the Dutch Supreme Court, involved a couple married in Iran who later relocated to and divorced in the Netherlands. Their Iranian marriage contract included a common clause: the wife would receive half of the assets accumulated by the husband during the marriage, but only if the divorce was not her wish and she had not engaged in “immoral conduct.” The lower Court of Appeal correctly identified that this “fault-based” condition was fundamentally incompatible with Dutch public policy, which has long abandoned the concept of fault in divorce proceedings. The critical question for the courts then became: what happens to the rest of the agreement once the offending clause is removed?
The Court of Appeal’s decision to invalidate the entire property-sharing agreement was overturned by the Supreme Court as “incomprehensible.” The lower court had commissioned an expert report on Iranian law, which concluded that if the fault-based condition was nullified, the core agreement—the 50/50 split of assets—would remain valid. The Court of Appeal, however, disregarded this expert advice. It reasoned that the original purpose of the clause was to protect a blameless, dependent wife. Since that purpose was no longer relevant (the wife was a successful professional), the court felt the entire clause should be voided, reverting the couple to the default Iranian system of complete separation of property. The Supreme Court firmly rejected this approach, ruling that a court must apply foreign law as it is, not as the court thinks it should be.
The Supreme Court also provided critical guidance on two other points. It confirmed that the public policy exception is a matter of such fundamental importance that a court must apply it on its own initiative, even if not specifically raised by the parties in an appeal. Secondly, it shut down an argument that the parties had informally agreed in court to switch to Dutch law. For matrimonial property regimes, any change in the choice of law made in the Netherlands must be formalized through a notarial deed to be legally binding. This ruling serves as a stark reminder for international couples, executives, and their legal counsel that while Dutch courts respect foreign legal arrangements, this respect ends where fundamental principles of Dutch law begin, and procedural rules must always be strictly followed.
SOURCE
Source: Supreme Court of the Netherlands (Hoge Raad der Nederlanden)
