Arbitration

Whilst there was no legal impediment to the use of Arbitration as a means of resolving Matrimonial Property Disputes, reservations about how the arbitral decision would fit within the Court’s over-arching discretion led most Parties to reject it as a viable alternative to formal litigation before the Courts. Those reservations have now been powerfully addressed by the timely decision of Mr Justice Munby, the President of the Family Division, in the landmark decision in S v S [2014] EWHC 7. In his Judgement, the President provides a ringing endorsement for the use of arbitration in Ancillary Relief claims. The Judgement provides strong judicial support for the use of arbitration and paves the way for it to take centre stage in resolving financial disputes between former spouses or Civil Partners. In the absence of very compelling countervailing factors, the award by an arbitrator will provide “the single magnetic factor of determinative importance”. In simple terms, where the parties submit their dispute to arbitration and an arbitral award is made the Court will approve the financial provision made in the exercise of its discretion save where the usual exceptions apply ,e.g. material non-disclosure . That initial judicial endorsement has been further consolidated in the terms of the “Arbitration in the Family Court: President’s Guidance” issued on 24 November 2015.

Arbitration provides a very attractive, bespoke alternative to formal litigation before the Court. Arbitration provides a streamlined process in which parties agree to a dispute being referred to an arbitrator of their choice for determination. The process is extremely flexible allowing the parties to choose whether the entirety of the dispute or only discreet issues are to be determined by the arbitrator. Furthermore, the parties can agree to a determination being made on the Papers and without an oral hearing or agree on a full Oral Hearing with the strict rules of Evidence applying . Where the parties have formally agreed to be bound by the arbitration process the decision which ultimately follows is both legally binding upon and enforceable against each party. The law of Arbitration was codified in the Arbitration Act 1996 which extends to Northern Ireland and is an exemplar of coherent and clear modern drafting.

Arbitration has significant advantages over formal litigation in Court. These include:

 


Speed and the elimination of delay.

 Most Disputants do not want to spend a long period of months or in some instances years “stuck” in a litigation battle. Most clients want certainty of outcome and finality sooner rather than later. Arbitration is a process in which the parties and the arbitrator can agree a much shorter timetable for completion of Disclosure of documents, and the filing of statements either sworn or unsworn with the result that parties can move smoothly and quickly to a much earlier date for adjudication. Typically, the preliminary steps can be completed within a short period of weeks and once completed an adjudication can be made within a period of 28 days thereafter. This compares very favourably to the average wait time of 55 weeks from issue of proceedings to disposal of Ancillary Relief proceedings by way of litigation [see Table B.33 of the Judicial Statistics for Northern Ireland 2014].

 


Flexibility

The Court process broadly adopts a “one size fits all” approach. Whilst in theory it might be possible to confine a hearing to a number of discreet issues without the full evidential picture being set out in formal Affidavits and in testimony, in practice, the entirety of the relevant facts and the full evidential picture are set out in detail. By contrast, the procedure in arbitration is sufficiently flexible to allow the parties to identify the single issue or issues which are forming obstacles to a resolution, refer those alone to arbitration and to quickly obtain a binding determination. In many matrimonial financial disputes there are one or two key issues which can form insurmountable obstacles to a resolution through negotiation. For example, one party may contend for open-ended spousal maintenance whilst the other contends for a Clean- break approach. One party may contend for a Pension Sharing Order whilst the other seeks a Set-off arrangement. It may be that the parties have very different views about the Open Market Value of businesses, property or farmland. If these issues can be determined in a binding decision it is much more likely that the case can be speedily resolved through negotiation without the time and expense of a formal Court Hearing.

 


Privacy and Confidentiality

Most right-thinking people want to keep their personal and financial affairs private. Albeit formal proceedings before the Court take place “In Chambers”, the parties’ names will appear on a public Court List each time their case is listed in Court whether for a full hearing or a simple adjournment. In practice a case, and the names of the Parties , can appear in the Ancillary Relief list many times before the case is concluded . Sitting on the Public Benches waiting outside a Divorce Court deprives the parties of any real sense of privacy. By contrast, arbitration can take place at a completely private and confidential venue at a time and date to suit the parties. Formal litigation before the Court, requires the entirety of the relevant documents, which can include commercially sensitive or personally embarrassing documentation to be filed in the Court office. The documentation will be processed and filed in that office for later use in Court. By contrast, the documentation generated in an arbitration is confidential to the parties and the arbitrator.

 


Cost Effectiveness

It is an inviolable rule of litigation that the longer a case drags on the more it will inevitably cost. The longer a case drags on the greater the loss of momentum and the greater the effort required to make even small steps forward. It is not unknown for clients in high conflict cases to express the view that trying to move forward in litigation is like trying to run in a bath of treacle. The distance from end to end may be short but the effort required to get there is exhausting. Arbitration allows momentum to be maintained and allows the parties to exercise a large measure of control over costs.

 


Freedom of Choice

It’s trite to say that no party to litigation can chose or select the Judge to hear their case. The case may be heard by a Judge with many years of experience in legal practice in the area of law forming the subject matter of the dispute. But that is not always the case. One of the key advantages of arbitration is that the parties can chose an arbitrator with real expertise and many years of experience in the area of law which forms the subject matter of the dispute.

The parties can also choose whether or not to be legally represented by a solicitor or by Counsel if an oral hearing is required before an arbitrator.

In summary, arbitration can provide a fast, flexible and cost effective pathway to a binding determination and a final resolution of the dispute.

 

 

Links:

England and Wales High Court (Family Division) Decisions

NIgel Martin profile: IFLA

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If you would like to discuss Mediation as an Alternative to Court Proceedings, please telephone me on 07921 57 6336 to arrange an early Consultation.