Prenuptial Agreements and Choice-of-Law Clauses
November 12, 2024
Choice-of-law clauses began appearing in prenuptial agreements long before they showed up in most other types of contracts. As early as 1874, Isabella Robinson and John Warner selected the law of Illinois to govern their prenup. The popularity of such clauses in this context is easy to understand. When the bride is domiciled in one jurisdiction, the groom is domiciled in a second, and the wedding is to be performed in a third, it is sensible to write a choice-of-law clause into any prenuptial agreement to avoid later confusion about the governing law.
If the marriage should ultimately founder, however, and if the chosen law should prove disadvantageous to one of the parties, that party is likely to challenge the enforceability of the clause. This is precisely what happened in Koivu v. Koivu, a case decided by the Minnesota Court of Appeals in October 2024. In this post, I first review the facts of Koivu. I then consider (1) whether the Finnish choice-of-law clause in the prenuptial agreement is enforceable as a matter of Minnesota law, and (2) whether it sweeps broadly enough to cover the soon-to-be-ex wife’s claims for attorney’s fees. Additional commentary by Melissa Kucinski can be found here.
Koivu v. Koivu
Mikko Sakari Koivu (“Mikko”) is a citizen of Finland and a professional ice hockey player. He played for the Minnesota Wild from 2005 to 2020 and was the captain of the Finnish national team when it won the gold medal at the world championships in 2011. In 2012, Mikko met Helena Koivu (“Helena”), a citizen of Estonia living in Finland, and they began a romantic relationship. Helena relocated from Finland to Minnesota to be with Mikko in late 2012. Mikko proposed to Helena in 2013. She said yes.
In 2014, they traveled from Minnesota to Finland to celebrate their wedding. Several days before the ceremony, Mikko retained a Finnish attorney to prepare a prenuptial agreement. He and Helena both signed the agreement on the eve of the wedding. The couple returned to Minnesota after they were wed. Over the next five years, they welcomed three children. They separated in 2019. Helena petitioned for a divorce in Minnesota state court in 2020.
In response to Helena’s divorce petition, Mikko moved to enforce the prenuptial agreement. It contained three key provisions. First, it stipulated that in the event of the divorce, neither spouse would be entitled to the other spouse’s property, regardless of whether the property was acquired before or during the marriage. Second, it stated that if the marriage were to end for any reason other than Mikko’s death, Mikko would (1) purchase an apartment for Helena at a price of not less than €500,000, and (2) pay Helena €500,000 in cash, adjusted for inflation, in lieu of spousal support. Third, the agreement contained the following choice-of-law clause: “We agree that the Finnish law will be applicable to our matrimonial property rights, regardless of where our habitual residence or domicile at the time is.”
As the divorce case wound its way through the Minnesota courts, the choice-of-law clause proved vitally important. If the clause was enforceable—as Mikko argued—then the agreement was valid and Helena was only entitled to €1 million in spousal support. If the clause was unenforceable—as Helena argued—then the status of the agreement was unclear and Helena could potentially receive more than €1 million in spousal support.
The trial court held that the clause was enforceable, that Finnish law governed the contract, and that the prenuptial agreement was valid under Finnish law. Helena appealed from this part of the decision. The trial court also held that Finnish law did not govern Helena’s claim for need-based attorney’s fees because this claim did not fall within the scope of the choice-of-law clause. Applying Minnesota law to this issue, the court ordered Mikko to pay $830,000 to Helena’s attorneys. Mikko appealed from this part of the decision.
Was the Clause Enforceable?
Although most U.S. states look to Section 187 of the Restatement (Second) of Conflict of Laws to determine whether a choice-of-law clause should be given effect, Minnesota has adopted a different test. Under Minnesota law, a choice-of-law clause is enforceable if the parties (1) acted in good faith, and (2) without an intent to evade Minnesota law. The party challenging the enforceability of the clause bears the burden of proving that it should not be given effect.
On the facts presented, the Minnesota Court of Appeals affirmed the trial court’s holding that Helena had failed to carry her burden. There was ample reason to choose Finnish law—the agreement was drafted and signed in Finland, the marriage took place in Finland, and the groom was a citizen of Finland—and so its selection was not made in bad faith. And the Finnish attorney who drafted the agreement submitted an affidavit explaining that, given the nature of Mikko’s status as a professional athlete, it was sensible to write a choice-of-law clause into the agreement because it was difficult to predict where he might live in the future. This explanation made clear that the law of Finland was not chosen to evade the law of Minnesota.
As a matter of Minnesota law, the court’s decision was clearly correct. The Minnesota test for enforceability is, however, highly idiosyncratic. To prevail, Helena would have had to have shown that the attorney in Finland had purposefully selected the law of Finland to harm her interests or that he had purposefully tried to evade the law of Minnesota. It is the rare case where such evidence will be forthcoming. Most attorneys (rationally) decline to do any research into the laws of other jurisdictions when drafting a contract. If this research is not done, then the plaintiff will never be able to carry its burden of proving the clause should not be given effect, which makes for some tough sledding in Minnesota for anyone seeking to invalidate a choice-of-law clause.
Did the Clause Cover a Claim for Need-Based Attorney’s Fees?
The trial court also held that because the choice-of-law clause merely selected Finnish law to govern “matrimonial property rights,” Helena’s claims for attorney’s fees fell outside of its scope. After performing a choice-of-law analysis using the “better law” approach followed by the Minnesota courts, the trial court held that the issue of attorney’s fees was governed by the laws of Minnesota. It then applied that law and ordered Mikko to pay $830,000 to Helena’s attorneys.
On appeal, Mikko conceded that Minnesota law would apply if the choice-of-law clause did not govern the issue. He argued, however, that the choice-of-law clause should be read to cover Helena’s claim for attorney’s fees and that, under Finnish law, this claim must fail. In support of this argument, Nikko argued that Minnesota law generally requires that choice-of-law clauses be interpreted to cover non-contractual claims that are “closely related” to the contract. The Minnesota Court of Appeals rejected this argument. Even assuming that this was an accurate statement of Minnesota law, the court reasoned, Helena’s request for need-based attorney fees was not “closely related” to her contractual right to spousal support. The court concluded that “the facts relevant to Mikko’s contractual obligation to pay spousal support under the antenuptial agreement (which are few and undisputed) are distinct from the facts relevant to Helena’s requests for need-based attorney fees.”
In reading the opinion, I was not entirely persuaded by the court’s reasoning. In my view, the court could easily have concluded that Helena’s claim for attorney’s fees was “closely related” to the underlying claims for breach of the agreement because they were incurred in the course of an action seeking to dissolve the marriage. In light of the specific language used in the clause, however, I have no quarrel with the outcome reached by the court. It is difficult to read a choice-of-law clause stating that Finnish law shall govern “matrimonial property rights” to say that Finnish law shall also cover claims for attorney’s fees. In the absence of some contract language specifically addressing this issue, the court reasonably held that the claims for fees fell outside the scope of the clause.