Judicial Supervision and Support for Arbitration

Family arbitration through the IFLA scheme has been considered and approved by the senior judiciary in a number of cases:

• In S v S [2014] EWHC 7 (Fam) the then President of the Family Division, Sir James Munby, dealt with the approval of a final consent order to implement the terms of an arbitrator’s award. In the course of doing so he gave approval to the process of arbitration as an alternative to the court determining claims for financial remedies on divorce. He also gave general guidance as to how an order flowing from an arbitrator’s award should be put before the court, and the limited role the court would need to play in approving such an award.  This guidance does now have to be read in the light of the decision of the Court of Appeal in Haley v Haley (below), where the analogy between an arbitrator’s award in financial remedy proceedings and an agreement reached between the parties was disapproved (see Haley at paragraphs 67 to 70).
• Sir James Munby followed up his decision in S v S with Arbitration Practice Guidance in November 2015.
• Following the introduction of children arbitration within the IFLA scheme the President of the Family Division issued Guidance as to the interface between arbitration and the role of the court.
• In 2018 the President of the Family Division issued new standard forms of order to be used in the context of court orders in support of a family arbitration (the precedents can be found here).
• In CM v CM [2019] EWFC 16 Mr Justice Moor encouraged parties to use family arbitration as the means to resolve a dispute as to the wording of a letter of instruction to an expert in financial remedy proceedings which were ongoing in the Family Court so that the matter could be resolved more quickly and cheaply than it would be by a High Court judge.

Appeals and Challenges to An Award

• A number of cases have considered how a dissatisfied party could challenge or appeal a decision of an arbitrator in financial remedies proceedings.  In  DB v DLG [2016] EWHC 324 (Fam) Mr Justice Mostyn stated that there were limited grounds on which an arbitrator’s award could be challenged. The judge also gave guidance as to the procedure to be followed when a party to an arbitration refused to agree to an order being made in the terms of the arbitrator’s award.
• In BC v BG [2019] EWFC 7  and in H v W [2019] EWHC 1897 Ms Clare Ambrose sitting as a Deputy High Court judge gave guidance as to the relationship between family arbitration and the Arbitration Act 1996, noting that the 1996 Act gave an arbitration award a binding effect and so it strictly limited the role of the court in the event of a party seeking to challenge the outcome of the arbitration. She held that such challenge was limited by the Arbitration Act 1996.  She also gave further guidance as to the scope for an arbitrator to amend an award pursuant to s57 of the Arbitration Act 1996.
• However, those cases have now been overtaken by the judgment of the Court of Appeal in the case of Haley v Haley [2020] EWCA Civ 1369. The Court considered whether an appeal against a family arbitrator’s award was limited to the limited grounds which arise under the Arbitration Act 1996 (or where there has been a supervening event or mistake) or whether the same appeals test which applies in the case of a judicial decision pursuant to the Matrimonial Causes Act 1973.  The Court carried out a thorough review of the relevant jurisprudence and reached the following important conclusions on challenges to a family arbitrators award in financial remedy proceedings:
  • An arbitral award is not comparable to an agreement reached by the parties in settlement of their dispute (paragraphs 65-67).
  • In financial remedy cases the court can decline to make the order where there are good and substantial grounds for concluding that an injustice will be done if an order is made in the terms of the arbitral award (paragraph 69).
  • Accordingly, the earlier cases (above) were wrong to speak of challenges to arbitral awards being limited to the statutory challenges found under the AA 1996 or mistake or supervening event (paragraph 70);
  • There is no requirement for the discontented party first to make an application under the Arbitration Act 1996 before asking the Family Court to decline to make an order in the terms of the arbitral award (paragraph 71);
  • The court will decide whether to decline to make an order in the terms of the award by reference to the appeal procedure and the approach found in the FPR 2010. In other words, the court will only substitute its own order if the judge decides that the arbitrator’s award was wrong; not seriously, or obviously wrong, or so wrong that it leaps off the page, but just wrong (paragraphs 73 -74).
  • When presented with a refusal on the part of one party to agree to the conversion of an arbitral award into a consent order, the process to be adopted is as follows (paragraph 73):
    • Initially, the court will ‘triage’ the case with the reluctant party having to ‘show cause’ on paper why an order should not be made in the terms of the arbitral award.
    • This is approach is similar to the permission to appeal filter found at FPR rule 30(7) where the trial has taken place under the MCA 1973.
    • If the judge is of the view that there is a real prospect of the objecting party succeeding in demonstrating that the arbitral award is wrong, then the matter can be set down for a hearing.
    • The full hearing will, as with an appeal, be confined to a review and will not be a rehearing, subject to any case management directions which the judge may make in relation to updating or other evidence and subject to, as under FPR 30.12(1)(b), the court considering that “it would be in the interests of justice to hold a re-hearing”.

• Accordingly, in the light of the decision in Haley v Haley there is now no material difference between an appeal from a judicial decision and a challenge to an arbitrator’s decision in financial remedy proceedings.
• It is important to note that the decision in Haley v Haley applies specifically to arbitral awards in financial remedy proceedings pursuant to the Matrimonial Causes Act 1973.  By analogy, the same approach is likely to apply in arbitrations of claims pursuant to the Civil Partnership Act 2004 or Schedule 1 of the Children Act 1989.  It is expected that a similar approach will be take by the court in the context of arbitration of children disputes, where the court has a statutory duty to consider the welfare of the child.
• It is also important to note that the decision in Haley v Haley does not apply to arbitrations of disputes within the IFLA scheme which are pure civil cases rather than discretionary financial remedy cases or child welfare disputes.  So where an arbitral award determines a purely civil dispute, such as a property claim pursuant to the Trusts of Land and Appointment of Trustees Act 1996, a challenge to the award must be made within the confines of the Arbitration Act 1996.  In this context please Click to Download an extract from a paper given by Karen Gough of 39 Essex Street, a Past President of the Chartered Institute of Arbitrators, which is reproduced with her kind permission. It describes how the court has applied Arbitration Act 1996 provisions in both supervising and supporting civil and commercial arbitrations.
• Mr Justice Mostyn has given important guidance on the procedural conduct of challenges to arbitration awards, in A v A (arbitration guidance) [2021] EWHC 1889 (Fam): see the blog piece here.