Partner Claire Dyer, in our leading Family Law team, explains the differences between arbitration and litigation (Court proceedings) in divorce cases.
It is well documented that family courts across England and Wales are struggling under the pressure of the volume of cases being brought before them. The latest statistics released by the Ministry of Justice show that in April to June 2019, 64,813 new cases started in family courts across England and Wales with 10,335 of these being financial remedy applications. This is actually a decrease on the equivalent quarter in 2018 but our experience is that wait times and delays within the court system only continue to increase indicating that the courts are not equipped to cope with the demand.
It is not uncommon for financial remedy hearings to take between 3-6 months to be listed but these timescales can vary quite significantly between courts around the country. Even when a hearing date (whether it is for a First Appointment, Financial Dispute Resolution or Final hearing) has been listed by the court, it is becoming alarmingly frequent for the hearing to be cancelled with very short notice (cancellation on the Friday for a hearing listed on the Monday, for example) due to a lack of resources including available Judges and insufficient time to hear over-subscribed listings. This is not only hugely unsettling, disappointing and frustrating for clients but it can have financial implications if preparatory work for the hearing has been carried out by solicitors and barristers.
Where appropriate, we actively encourage our clients to consider alternative methods of resolving their dispute including mediation, collaborative law and arbitration. These methods can assist in containing costs and also prevent matters from becoming unnecessarily protracted and acrimonious. Whilst court proceedings are necessary in some cases, we feel it is important to explore whether other options may be more appropriate first. Indeed it is now a requirement for applicants to prove that they have considered mediation in the first instance before making an application to the Family Court. However, mediation is not appropriate or effective in all cases so if progress cannot be made in reaching a fair settlement, consideration must be given to alternative options.
What is arbitration?
Arbitration is one method of private dispute resolution and it is gaining popularity as an effective alternative to court proceedings. Arbitration can be used to resolve financial disputes (and separately, issues relating to children) at any stage but particularly when parties have been unable to come to a mutual decision through mediation, direct discussions or negotiations between lawyers.
In order to proceed with arbitration, both parties must agree (unlike court proceedings) to enter into the process and ideally they will select and appoint an arbitrator jointly. If they are not able to come to agreement it is possible for them to elect the Institute of Family Law Arbitrators (IFLA) to select one for them. The IFLA has over two hundred arbitrators on their panel who are all family specialists. Arbitrators are often retired or practicing barristers/solicitors or retired court Judges.
Family arbitration is similar to court proceedings in that the arbitrator will listen to both parties’ positions and consider the evidence available before making a decision – this decision is known as an award in financial cases. When the parties enter the process they will be required to sign an agreement which will include confirmation that they accept and agree to be bound by the reasoned decision made by the arbitrator.
Although challenges to an award made by an arbitrator are rarely successful due to the nature of agreement entered into by the parties at the start of the process, it is generally advisable for the award to be converted into a court order. There is an accelerated procedure for doing this so orders are usually approved very quickly by the court.
The cost of entering into the arbitration process will vary depending on the arbitrator appointed, the range of issues to be considered and dealt with, the complexity of the matter and the cooperation of the parties.
What are the benefits of arbitration?
- Choice – Both parties need to consent to the process and with that also comes the benefit of being able to discuss and decide upon the appointment of an arbitrator. This is in contrast to the judicial system where parties have no say on the Judge allocated to their case. As well as selecting the arbitrator, the parties will also be in control of when and where the arbitration takes place -this is often in barristers’ chambers, a solicitors’ office or a neutral meeting/conference area. It is a bespoke process so there is also the choice of using an arbitrator to decide all issues or, if there is a level of agreement about some areas, to ask them just to decide one or two outstanding matters. It can be done in the style of a ‘hearing’ with or without oral evidence from the parties. Alternatively, it can be done ‘on paper’ which means that the parties’ and their lawyers make written submissions to the arbitrator who then decides the issues based on these, without needing to see anyone in person. There is also the option of using the process to obtain what is known as an ‘early neutral evaluation’ which is essentially an early non-binding view on all or part of the issues in dispute. This is usually done on paper and can often assist the parties in negotiating a settlement without further recourse to the arbitrator.
- Speed – As mentioned above, there are currently long delays in the court system both at the start of proceedings and throughout the process. In addition to the delays, there is always the risk of having a case ‘bumped’ by a more urgent hearing or there being a shortage of Judges available to hear the matters listed. Arbitration has therefore been referred to as the ‘Bupa option’, enabling parties to avoid the delays of the court system by essentially going down a private route and seeking an arbitrator’s award within a timescale largely determined by the them.
- Cost – The parties will need to pay for the instruction of an arbitrator and potentially the cost of any venue hired. However, the process is generally a lot quicker and more streamlined than court proceedings so parties can quite often contain their costs effectively as matters are resolved more swiftly.
- Confidentiality – The entire process takes place in private and is strictly confidential meaning that the details of the case cannot be reported compared to elements of the court process which could in theory be reported by the press.
Is arbitration the way forward?
Arbitration certainly has the potential to offer a quicker, more flexible and cost effective route if an agreement cannot be reached between the parties. It does however rely on a degree of cooperation between the parties and the necessary funds being available to instruct an arbitrator. With this in mind there will still be a number of cases where arbitration is not appropriate but it is certainly worthy of consideration for many.
If you have any questions about arbitration or other methods of resolving your family matters, please do contact a member of our specialist Family Law team.
For further information or legal advice, please contact law@blandy.co.uk or call 0118 951 6800.
This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.
