Arbitration offers significant advantages, and some downsides, in comparison to the England and Wales court system in family law matters, as Isobel Rarok of Edwards Family Law explains.
Many are aware of the significant presence of arbitration in the corporate and commercial spheres but may not appreciate that this form of alternative dispute resolution (ADR) is also available within the family law setting. Since 2012, arbitration has offered an alternative to court proceedings in financial remedy cases and, since 2016, has also been available in relation to child arrangements and relocation matters.
“Arbitration differs from other forms of ADR, which are designed to guide but not bind parties.”
Arbitration has increased in popularity due to the ongoing backlog faced by the court system; statistics released by the Law Society in December 2022 (covering the period from July to September 2022) show that the family courts continue to face significant delays and issues with judicial capacity. According to these statistics, all types of cases (save for consent order applications) are taking longer to dispose of than during the same period in 2021. These delays often lead to additional legal costs for both parties and can add to animosity. While many parties endeavour to resolve their cases voluntarily, this is not always possible, and many assume that there is no alternative to court proceedings. Could arbitration be the answer?
What is Arbitration?
Arbitration is a form of ADR and takes place outside of court proceedings. Parties enter into an agreement to appoint an arbitrator, by whose determination (known as the “award”) they agree to be bound. The arbitrator will take the role of the “judge”, hearing and then determining the application. The arbitrator’s determination is equivalent to a final judgment and will be binding upon the parties. The arbitration award is then drafted into an order, which is sent to the court in the usual way to be approved and sealed by the court.
It is important to understand that arbitration differs from other forms of ADR, such as mediation and private financial dispute resolution hearings that are designed to guide parties, but not bind them.
The court will not vary the terms of the arbitrator’s determination when it makes the formal order, which means that the process effectively replaces court proceedings. The court retains a residual power to overturn or vary the arbitrator’s award if it is not deemed to accord with the relevant statutes, but given that family law is inherently discretionary, such a situation will be rare; only occurring in exceptional circumstances.
“Agreeing to arbitration can be very useful if one party is concerned about details of their financial and personal affairs ending up in the public domain.”
Further, following the case of Haley v Haley ( EWCA Civ 1369), it is now possible to appeal an arbitral award. Again, this is likely to be the exception, rather than the rule.
Notwithstanding the above, arbitration is one of the most effective means to promote certainty and a swift resolution in family proceedings.
One of the main advantages of proceeding by way of arbitration is timing. There are a number of arbitrators in England and Wales who are qualified and recognised to hear family law disputes. The arbitrators have control over their own workload and so typically do not have the significant backlogs faced by publicly funded courts and judges. Due to the number of practitioners qualified to arbitrate matters, there will almost always be someone available to take on the case, even at short notice.
Further, the arbitrator is privately funded, by the parties, which enables them to dedicate more time to considering the issues, the documentation and evidence placed before them, than a publicly funded court judge could. This can be particularly valuable to the parties if the case has additional complexities, such as international or offshore wealth structures. The costs of the arbitrator can be met by one or both of the parties, but the avoidance of the lengthy delays often faced in the public courts system means that the benefits often outweigh the costs of arbitration.
Parties also have additional control over the process. The parties will agree on which arbitrator to select, and can opt for an experienced family law practitioner, in many cases with expertise in the issues specific to their case. This is something that cannot be guaranteed in the court process, where parties have no influence or control over which judge will hear their case.
There can also be fewer procedural requirements. The parties and their solicitors can, in conjunction with the arbitrator, elect what directions they consider necessary to resolve the dispute, allowing them to build a more tailored approach. Timeframes can be led by the parties, subject to the arbitrator’s availability.
The arbitration process, including the documents and evidence produced, remains confidential to the parties and their advisors. The same is not always true of family law cases; increasingly so as, while family law cases are heard in private, the family court “Transparency Pilot” launched in January 2023.
This Pilot has given rise to a presumption that accredited journalists and legal bloggers are permitted to attend family court hearings, report on what they see and hear, and are allowed access to certain documentation (see further details here). Whilst anyone reporting on a case must ensure children cannot be identified, more cases are likely to be reported and details made public, as a result of this new approach.
The guarantee of confidentiality within the arbitration process makes it an attractive alternative to court proceedings in many cases. This can also help to promote full transparency from parties to facilitate candid negotiations. Agreeing to arbitration can also be a good form of leverage if one party is particularly concerned about details of their financial and personal affairs ending up in the public domain.
Any appeal of an arbitration award would take place openly and removes this confidential protection, but as set out above, most awards will be made by experts in their field after significant consideration, so appeals are infrequent.
And the Downsides?
Parties should be aware that there are limitations to what arbitration can achieve, certain orders cannot be made by an arbitrator, such as third-party disclosure orders or certain interim orders, such as injunctions.
It is always best to seek specialist legal advice to ascertain whether a case is suitable for arbitration and what the options are more generally in relation to all the ADR processes potentially available.