Up to the challenge?: BC v BG [2019] EWFC 7

June 17, 2019 Posted by:

The judgment in BC v BG reminds users of the IFLA scheme that arbitration is a distinct – and also complete scheme focused on efficiency, with its own systems for ‘appeal’ ratification and enforcement. In an article from Resolution’s Review, reprinted by permission, James Pirrie discusses some of the immediate implications.

At the end of January, family lawyers took a shot across the bows from Clare Ambrose, who sat as a deputy High Court judge and brought her academic prowess and long experience of commercial arbitration to bear on our fledgling family version. In a nutshell: family lawyers need to become clearer with their clients that IFLA arbitration is not just “the court with the wait taken out” or “BUPA-law” and, in short, arbitrators had ruddy better get it right.

Yet again and perhaps fortunately for our arbitration industry, it was the safe hands of Gavin Smith in the spotlight. This case is the new manual if your arbitration case has gone off the rails – and is a “should read” if you are guiding clients towards this non-court option.

What the judge reminded us is that arbitration is not just a privatised district judge function but a completely different system. The district judge’s judgment is couched in a full range of structure and rules… but the arbitrator’s award is different:

  • Arbitration was always intended to be about short, sharp conclusions.
  • So when clients buy into that process they don’t have all the same options as to setting aside and appeal that they might have had emerging (with the same level of dissatisfaction) from a district judge.
  • They are assumed to buy into the fundamentals of arbitration – and so when we help our clients into this scheme we had better be very clear about what they are getting into.
  • Importantly, the arbitration award is not just akin to the signing of a consent order – the next part of the passage to an award by consent by a district judge at the family court. The arbitral award has immediate and binding effect between the parties (even if it might not bind third parties) and thus it is enforceable even before the court order is made. As the judge made clear (at 42) “specific legislation on arbitration takes effect if parties arbitrate family law disputes…” and (at 43): “a court order under s25 of… MCA 73… is not a precondition for the binding effect of an award as between the parties to that arbitration”. The arbitrator’s award then is only “subject to the supervision of the court” in the most limited of ways.
  • In short, the reassuring words of the then President, Sir James Munby, in S v S [2014] 1 EWHC 7 probably understates just how immediately binding is the nature of an award.
  • In consequence, we may well all need to make ourselves more familiar with the Arbitration Act 1996, reminding ourselves what an award is and the limits to the options that exist once one has been handed down.

Challenging awards

Generally, to challenge an award, you ask the arbitrator to correct the award or make an additional award under s57 of the Arbitration Act 1996 (AA 1996). Unless the scheme provides otherwise, this must be done within 28 days.

Then you must appeal within 28 days (s70(3) AA 1996) of the conclusion of that process.

The judge paints a compelling case at para 34 onwards that whilst the court’s jurisdiction can’t be ousted, the court should recognise the parties’ adoption of this process and should infer and be led by their agreement that the court’s intervention was intended to be limited to:

  • substantive jurisdiction: s67 AA 1996 (ie that the arbitrator strayed into areas that were outside what had been agreed by the parties);
  • serious irregularity: s68 AA 1996; or
  • a question of law: (but only with agreement of the parties or leave of the court, note) s69 AA 1996.

And then you have the “family court options”:

  • the unforeseen supervening event (Barder [1988] AC 20); or
  • mistake (see the analysis by Mostyn J in DB v DLJ [2016] EWHC 324 at 57.

The right procedural approach (see paras 58-63) is generally an application by the disgruntled party to the Family Division of the High Court (not the family court) under part 62 of the CPR. The idea that it is the party seeking to uphold the award who applies for a notice to show cause is likely to be wrong. The disgruntled applicant will have in mind that delay and falling beyond the 28-day deadline is likely to be fatal: they may find themselves thrown back on the application to the family court, but this judgment suggests that such an application should be given short shrift.

And the “no order as to costs” assumption in r28(3) of the Family Proceedings Rules will not apply!

So what do we tell our clients? I would suggest we emphasise that arbitration is not necessarily just a way of fast tracking/queue jumping at a price, to get what the court would give (though it may turn out to feel like this). And I would stress that the text of the ARB1FS that we sign really matters.

Does this change everything? Well, no. For the most part, it will be business as usual. We will help our clients to look at the delays in court and the opportunities to reduce costs by stepping into arbitration – particularly in cases where the assets are not extensive and where real damage will be done to their futures if they have to go to a contested hearing. We will help them to choose their arbitrator from one of the wide field of real experts on offer and in consequence will feel relatively reassured that, given judicial continuity and the greater time that the arbitrator has (than their colleague managing a pressed court list) all will be fine. Usually it will be (fine). We had just better be ready to move quickly and also ensure that we can show that our guidance was clearly given to the client if, when we unzip that award, it is not.