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Overview

Arbitration is a type of private dispute resolution, in which the parties select an independent and impartial arbitrator to resolve their dispute. Crucially, they agree in advance that the arbitrator’s decision will be binding on them (subject to specified but limited rights of appeal or challenge and, in some cases, subject to the court’s supervisory role).

Arbitration has had a long and successful history in commercial and other civil cases. However, it is only since 2012 that it has been available for the resolution of financial and property disputes with a family background, under a scheme established by the Institute of Family Law Arbitrators (IFLA), a body formed by the Chartered Institute of Arbitrators, the Family Law Bar Association, Resolution (representing specialist family law barristers and solicitors respectively) and the Centre for Child and Family Law Reform.

A parallel IFLA scheme for the resolution of ‘private law’ children disputes was launched on 18 July 2016.

The family arbitration schemes are governed by the Arbitration Act 1996 and two sets of IFLA rules: the Financial Arbitration Rules (2016, 5th edition) and the Children Arbitration Rules (2016, 1st edition). A summary of family arbitration procedure may be viewed here. The application forms requesting appointment of an arbitrator are called ARB1FS (for financial disputes) and ARB1CS (for children disputes). They may be completed and printed out in a word-programmable format.

Most people experiencing relationship breakdown wish their dispute to be dealt with as swiftly, cheaply, privately, and with as little acrimony, as possible. For those who wish their dispute to be resolved by an independent third party, yet seek to have as much ‘ownership’ of the process as possible, opting for family arbitration can have a number of distinct advantages compared with going to court:

  • Choice of arbitrator: a key feature of arbitration is that the parties themselves, guided by their lawyers if they have them, are able to select the person whom they wish to arbitrate their dispute. By contrast, in the court process judges are allocated to cases and it is not possible for the parties to request a particular judge. Also, while in the court system a number of different judges are likely to be involved at different stages of a case, in an arbitration the appointed arbitrator alone will deal with the dispute from start to finish.
  • Another factor is that increasing pressures on the court system have had the result that judges often do not have time to prepare for hearings in advance, and that parties come to court not knowing whether their case will start or finish on time, or will be reached at all. In an arbitration, however, the arbitrator’s continuous involvement means that he or she will set aside time to read the papers and to prepare thoroughly for hearings, and will be available to deal promptly with applications for directions and other issues that may arise in the course of the arbitration.
  • Selection of issues to be arbitrated: arbitration is a very versatile process. In a financial case the parties may decide to appoint an arbitrator to arbitrate one or more specific issues such as, for example, which of them should keep a particular property or whether there should be a ‘clean break’. Claims for child maintenance which fall outside the confines of the child support regime, and variation of maintenance applications, are examples of disputes for which arbitration may be particularly beneficial. At the other end of the scale, the arbitrator may be appointed to deal with a full financial remedy claim resulting from divorce or civil partnership dissolution.  In a children dispute, the parties will likewise agree on the issues to be decided. These may range from relatively narrow questions such as holiday contact or the venue for handover to wider issues such as with whom a child should live and / or should have contact, or issues as to schooling or routine medical treatment.
  • Speed of the process: from start to finish the arbitration process will take substantially less time than contested court proceedings, and the timetable can more easily be tailored to suit the parties’ convenience. A particular advantage is that parties who proceed direct to arbitration avoid the MIAMs requirement.
  • Keeping the lawyers: if (as is recommended) the parties have instructed lawyers, they retain them throughout the arbitration process for advice, preparatory work and representation at hearings. There is nothing to stop parties representing themselves in an arbitration, but, if they do, it is strongly recommended that they take legal advice beforehand.
  • Control of the procedure: the parties ’own’ the procedure to a far greater extent than in court proceedings. For instance, they can agree that the arbitrator should make his or her ‘award’ (as the decision is called in financial disputes) or ‘determination’ (in children disputes) based on consideration of the paperwork alone (which may be suitable where the issues are narrow) or that there should be a court-style hearing. If they opt for a hearing, they can decide in advance whether the arbitrator is to hear oral evidence or just submissions. This ability to streamline the procedure may well lead to significant savings of time and costs.
  • Complete confidentiality: the arbitration process is completely private. Hearings take place at a venue of the parties’ choice, and there is no possibility of media access at any stage. Papers are held securely in the arbitrator’s office.

How the arbitrator’s decision is implemented will vary, depending on the nature of the dispute.

In a financial dispute, where the court has a supervisory role (as it does, for instance, in financial remedy cases on divorce and on claims for financial provision for children), the parties will generally apply to the court for an order confirming the terms of the award. Following the landmark case of S v S (see below), only in very rare cases will it be appropriate for a judge make a different order, given the parties’ agreement at the outset to be bound by the award. Where on other hand the court does not have a supervisory role (as for instance where the dispute involves property claims between unmarried couples) the award may be enforced, with leave of the court, as though it were a court judgment or order.

Similarly, in a children dispute, the parties’ arbitration agreement binds them, in advance, to apply if necessary for a consent court order to reflect the arbitrator’s determination.

The scope of the family arbitration schemes is wide. The financial scheme applies to financial and property disputes arising from: marriage and its breakdown (including financial provision on divorce, judicial separation or nullity); civil partnership and its breakdown; co-habitation and the ending of co-habitation; parenting or those sharing parental responsibility; and provision for dependants from the estate of the deceased. The scheme includes (but is not limited to) claims which would come within the following statutes: Married Women’s Property Act 1882, section 17; Matrimonial Causes Act 1973, Part II; Inheritance (Provision for Family and Dependants) Act 1975; Matrimonial and Family Proceedings Act 1984, section 12 (financial relief after overseas divorce); Children Act 1989, Sched 1; Trusts of Land and Appointment of Trustees Act 1996; and Civil Partnership Act 2004 Sched 5, or Sched 7, Part 1, para 2 (financial relief after overseas dissolution).

The children arbitration scheme encompasses issues relating to the exercise of parental responsibility or the present or future welfare of children, including upbringing, present or future living arrangements, contact and education. The scheme applies but is not limited to matters which could be the subject of an application to the Family Court under section 8 of the Children Act 1989.

The IFLA financial scheme has received powerful endorsement from the High Court in two leading cases, and it is considered that the principles that they establish will apply with equal force to arbitrations under the children scheme.

In his judgment in the case of S v S in 2014 Sir James Munby, the President of the Family Division, stressed the importance of upholding a couple’s ‘autonomous decision’ to settle their dispute privately and by agreement. He ruled that the fact that the couple have themselves decided to submit to arbitration should be seen as the ‘magnetic factor’ in such cases, and that ‘in the absence of very compelling countervailing factor(s) the arbitral award should be determinative of the order the court makes’. Sir James went on to give useful guidance to judges who are presented with applications for financial consent orders arising from arbitration. He stated that, while the role of a judge is not to be a ‘rubber stamp’, only in the rarest of cases will it be appropriate for the judge to do other than approve the order that the parties are seeking, based on the arbitration award. Likewise, in cases where one party is dissatisfied with the award and refuses to apply for a consent order, he warned that the court will take an appropriately robust approach. It can thus be assumed that, following S v S, an order will be made in the terms of the award unless one of the parties can show very strong reasons indeed why the award should not be upheld. This approach was endorsed more recently in the High Court case of DB v DLJ.

 

This is intended as a guide only and is general in nature. It is no substitute for professional advice. FamilyArbitrator accepts no responsibility for the consequences of any action taken or refrained from as a result of this overview.