Agreements to arbitrate – looking to the future

February 20, 2018 Posted by:

The arbitration agreements most often encountered by family practitioners are the IFLA Scheme’s ARB1FS (money and property disputes) and ARB1CS (private law children disputes). The purpose of these ARB1 agreements is to provide for arbitration of a present dispute. Agreements to arbitrate future disputes are of course commonplace in the commercial and other civil fields. Indeed, an arbitration agreement is defined by section 6(1) of the Arbitration Act 1996 as ‘an agreement to submit to arbitration present or future disputes (whether they are contractual or not).’ [Emphasis supplied.]

In S v S [2014] EWHC 7 (Fam) the President, Sir James Munby, gave a strong judicial endorsement to arbitration under the IFLA Scheme as a means of out of court dispute resolution. The dispute with which he was concerned was a present dispute. I suggest however that the principles in S v S apply with equal force to agreements to arbitrate future disputes. Anecdotally, it seems that such ‘future dispute’ agreements, whether contained in court orders or nuptial agreements, are becoming increasingly common. That is unsurprising, as it is clear that the arbitration process offers the same benefits irrespective of whether the dispute is present or future.

What specific future disputes might be suited to arbitration? In a financial case where there has been a final order, parties could, by a recital, agree to refer to arbitration any issue arising as to the implementation of the order, either specifically (such as in relation to the mechanics of an order for sale) or generally. Where there are orders for spousal or child maintenance parties could agree that any future variation application is arbitrated rather than litigated. They could agree to submit to arbitration the division of chattels (in the event that the issue remains unresolved by agreement by a certain date). Alternatively, and more generally, the recital could simply record the parties’ agreement that any dispute arising out of or in connection with the order be referred to arbitration.

What form should a ‘future dispute’ agreement take? The Arbitration Act simply states that arbitration agreements under the Act (and thus under the IFLA scheme) should be in writing (section 5). The following is offered as a sample recital to a court order in a financial remedy case:

Agreement to refer to arbitration

The parties agree to refer to arbitration any future dispute between them [which arises out of or is in connection with this order] [in relation to the implementation of [paragraph X of] this order] [in relation to the variation of paragraph Y of this order] [in relation to chattels] and which falls within the scope of the IFLA Financial Arbitration Scheme.

The following provisions shall apply:

(a) The arbitration shall be conducted under and the parties shall be bound by the IFLA Financial Scheme Rules in force at the date of the commencement of the arbitration;

(b) The arbitrator to be appointed shall be [AB if available] [agreed if possible];

(c) If within fourteen days after one party has served on the other party a written request to agree to the appointment of an arbitrator the parties fail to reach agreement on the appointment, the arbitrator shall be appointed by IFLA under rule 4.3.3 of the IFLA Financial Scheme Rules (5th edition 2016, or the corresponding provision then in force);

(d) This agreement is an arbitration agreement for the purpose of section 6, Arbitration Act 1996.

Future FamilyArbitrator blog pieces will consider the use of arbitration clauses in nuptial agreements (whether prenuptial, post-nuptial or separation) and agreements to arbitrate future private law children disputes.

The views expressed in this blog piece are those of the author acting in a personal capacity. They do not constitute legal advice.