The role of arbitration in family proceedings25 Mar 2019
Arbitration can be a useful avenue for couples who wish to avoid the cost and acrimony of court proceedings or for couples who are embroiled in financial proceedings but where there is an irresolvable issue which prevents the parties from being able to reach a settlement, for example.
Arbitration Act 1996
The framework for the arbitration process is set out in The Arbitration Act 1996. Section 1 of the Arbitration Act 1996 provides that arbitration is based on three principles as a dispute resolution process.
Another fundamental provision is section 33 of the Act which sets out the general duties of an Arbitrator.
Finally, section 40 of the Act sets out the duties of the parties as ‘to do all things necessary for the proper and expeditious conduct of the arbitral proceedings’.
Advantages in using the process
The parties are able to select an arbitrator themselves which is something that cannot be done with judges in court proceedings. One arbitrator will be available to a couple throughout the process whereas in court proceedings, numerous judges may be involved at different stages. Having one person involved as opposed to numerous different people will mean that the arbitrator’s knowledge about the case and the parties is likely to be more in depth. Also, arbitration hearings can be listed at short notice and via conference call or Skype for example, which will save time and which could assist in making the entire process a lot more efficient. Parties can also retain their lawyers throughout the arbitration process and their lawyers can assist with advice, preparation and representation at hearings. This is an advantage compared to mediation, for example, where the client is somewhat cut off from their lawyer. Arbitration is likely to take less time and consequently cost less than court proceedings which can be lengthy and protracted. The arbitration process is also completely private so there is no possibility of the media gaining access during arbitration hearings.
The arbitration process
In order to begin the process of arbitration, the parties will need to complete Form ARB1. In completing the form, the parties can either request an appointment with a chosen arbitrator or request the IFLA to select an arbitrator for them. A list of accredited arbitrators can be found at www.ifla.org.uk/directory.
By completing and signing this form, the parties will expressly agree to be bound by the arbitrator’s written decision or award. At paragraph 6.3 of the form, the parties expressly declare and agree that they have read and will fully abide by the rules and that they understand their obligation to comply with the decisions, directions and orders of the arbitrator and the requirement, where needed, to make full and frank financial disclosure. It is important that practitioners clearly and fully explain to their clients what the meaning and implication of this declaration means before the client signs up to the process.
What if the parties have already started down the road of court proceedings but wish to try and resolve matters through the arbitration process? It is possible, in such circumstances to stay the legal proceedings on application to the court where the proceedings are being brought under section 9 of the Act.
In signing Form ARB1, the parties also agree that they will not issue proceedings at court and that they will not continue with any subsisting application relating to the same subject matter that they intend to arbitrate on. The parties are, however, able to make application in support of the arbitration process or seek remedies that are not available through arbitration.
An application for the adjournment of existing proceedings should be sent to the court together with an explanation that the parties wish to arbitrate. Practitioners should expect the court to encourage and support the process of arbitration in accordance with Part 3 of the FPR 2010 which sets out the court’s obligations and powers in this respect.
Once an arbitrator has been appointed he or she will give procedural directions at the beginning of the arbitration process. The parties will be required to complete and exchange a checklist of suggested topics prior to the first ‘directions’ meeting. This checklist, a copy of the ARB1 form and other useful information about the arbitration process can be obtained from www.familyarbitrator.com.
All communications between the parties and the arbitrator, whether by letter, telephone or email must include both parties.
The procedure adopted for the process will depend on the issues at hand and on the requirements and specific needs of the parties involved and so the process of arbitration is much more tailored to the individual wishes of parties than the court process. For example, a decision can be sought from the arbitrator on papers alone or at the conclusion of a full hearing with oral evidence and submissions, for instance. Articles 10 and 12 provide for alternative default procedural options between which the parties can choose unless they are able to agree on an alternative process of their own.
How can the court assist with arbitration?
It is possible for the parties to make applications to the court for orders which cannot be made by the arbitrator in order to assist with the arbitration process. These are known as ‘arbitration claims’ and are defined by CPR 1998, rule 62.2.
Such applications would be made on an Arbitration Claim Form (N8) and it is likely that the court, under section 105 of the Act and rule 62.3 CPR 1998 and paragraph 2 of the PD to Part 62, will list the matter before a civil tribunal with little knowledge of family proceedings. It is hoped that this situation will be addressed and remedied in the near future, however in the meantime it would be advisable to apply to transfer your application to the Family Division.
The award must be provided to the parties in writing and must include the arbitrator’s reasons in reaching the decisions contained therein.
Generally, each party will be responsible for half of the costs of the arbitration. However, the arbitrator has the power, under Article 14.5, to make costs orders which would take into account any litigation or arbitration conduct.
Implementing the award
For financial remedies and relief under the ambit of the IFLA Scheme, the parties will apply for an order from the court reflecting the terms of the award by submitting an agreed Consent Order for the court’s consideration and approval.
Where the court has no discretionary responsibility for the order made, for example in such cases where the dispute being arbitrated on is limited to a declaratory property claim between an unmarried couple then the award could be enforced with leave of the court as if an order or judgment under the ambit of section 66(1) of the Act.
There may also be situations where the award can be implemented without any need for recourse to the court.
Appealing under the Act
The grounds and procedure for appeal are set out in sections 67 to 71 of the Act. This enables the High Court to set aside, vary, confirm in whole or in part or remit for further consideration an arbitration award.
The Arbitration process in family financial proceedings is still very new and there remain some grey areas. However, arbitration should be explained to clients and considered seriously in all cases alongside mediation and the collaborative process as an effective way and potentially cheaper way of concluding a dispute between parties in respect of their finances.
Mark Freedman, Bridget Thompson and Lisa Pepper are all trained mediators and can assist you in resolving a family issue through the mediation process. Lisa Pepper is also a collaborative lawyer. To speak to a solicitor in the family law department please call us or fill in our online enquiry form.