Arbitration – back to the future?

Remember this 1985 classic? I am sure some of you will remember it coming out. I do (although I was still trying to figure out why I was in a law library and not on a golf course at that time).

As the exchange goes:

Doc: Well, good luck for both of our sakes. See you in the future.
Marty: You mean the past.
Doc: Exactly!

Let’s unpick this with reference to the Family Court.

Before the current Covid-19 crisis the Family Court was struggling. Family finances cases didn’t seem to be the priority. Cases which had been listed many months before were being adjourned to ‘dates to be fixed’ due to the issues over ‘judicial availability’.

Money issues need to be sorted out for our clients – we know money issues can cause tensions. Those tensions can feed into how issues in relation to children are dealt with. We are told money and children need to be treated as discrete issues. Tell that to many parents who need and (generally) want to be able to get on with their lives. Homes need to be found, maintenance needs to be fixed and children and their parents need to be able to settle into the next phase of their live with as much certainty as possible. These are not unreasonable expectations, are they?

So, going back to the exchange between Doc and Marty, is our future the past? For your sake – as clients – I certainly hope not.

Let me explain my thoughts. If we take as a general proposition that the court can’t resolve financial issues quickly, wouldn’t you want to look at a process that can? Assuming you answer yes to this question, what can we do? For the moment I shall assume talking (e.g. kitchen table/roundtable/mediation/collaboration/co-operation) about family finances in relation to your separation have not worked. There is an issue where you and your partner (or is it your respective lawyers?!) can’t agree and someone needs to make a decision for you.

Before I go on, let me pause for a second and ask you to consider what I have just said. You are asking someone you are likely to have never met before and who you are unlikely ever to meet again to decide what happens with your futures. If that is not an incentive to explore the other methods I mentioned above, then I do not know what is.

So, let’s assume you are in that space where you are allowing someone to dictate you and your partner’s futures. If it is not the Family Court, then what? The answer may be Arbitration. After all, it may assist you in reaching a conclusion to a process which can cause so much stress, uncertainty and expense.

What is Family Law Arbitration?

Arbitration is a process that can be used when you have a dispute that can’t be resolved between you and your spouse or partner. You can appoint an accredited Arbitrator who will give you a fair and impartial decision on the issue you would like to resolve. A legally binding outcome (an ‘Award’) is then made.

What type of work is covered?

The Institute of Family Law Arbitrators (IFLA) Financial Scheme covers financial and property disputes arising from:

1. a marriage and its breakdown (including financial provision);
2. a civil partnership and its breakdown;
3. cohabitation and the ending of cohabitation;
4. parenting or those sharing parental responsibility; and
5. provision for dependants from the estate of the deceased.

The scope of what the arbitrator is asked to determine is recorded in a document called ARB 1FS: e.g. Mutual financial remedy claims (income, capital and pension) arising from the breakdown of the parties’ marriage.

You can see what it looks like here: http://ifla.org.uk/divi/wp-content/uploads/ARB1FS.pdf

The Family Court – a comfort blanket?

Before looking at arbitration, let’s look at some issues surrounding the familiar (but itchy) comfort blanket of the Family Court.

What’s not to like? After all, it’s free. Well for a start:

• Time – it’s incredibly slow and hearings can be adjourned and not re-listed for months. A year to 18 months if you are lucky!
• Cost – it’s an incredibly expensive process with costs running into tens and sometimes hundreds of thousands of pounds. That’s your hard-earned money being spent on lawyers instead of your family.
• Adjournments – and often at the last minute!
• Lack of judicial time – judges work incredibly hard, but with busy lists is there really the time to fully focus on your case with files of a similar size to plough through and masses of information to assimilate?
• Prescriptive rules – one example is the need for bundles which follow set rules (did you know that your life will generally be confined to 350 pages – just look at how many of those pages will be taken up by your and your partner’s Form E!).
• Lack of privacy – do you really want conversations overheard in corridors because you can’t find an interview room or risk the press having access to your hearing?
• The lack of facilities – if you have ever been to a busy court you will know exactly what I mean and with present security measures, you can’t even bring hot drinks into the court building.

So why on earth would family lawyers recommend it. Don’t forget your solicitor has to act in your best interests – that principle is very clear. Well, some of the reasons you may be funnelled into the Family Court and not Arbitration might include:

• It’s familiar – we all like the comfort of knowing the environment we are operating in, don’t we?
• Lawyers know the procedure – there are lots of rules but at least lawyers are comfortable with them.
• Lawyers can’t be held to account for a ‘maverick’ judge.
• It’s free! Once the £255 fee is paid there are no further court costs (and the respondent pays nothing in court fees).
• You can appeal – but ask your lawyer how many appeals their firm dealt with in the last 10 years and how easy it is to appeal?
• We can enforce – Arbitration Awards can be enforced once they are made into court orders.
• Some lawyers like doing their own advocacy from time to time – and Arbitration is new and for some, scary as they do not know the process.
• It generates high fees (which the lawyers won’t complain about, but you might)!

So, what’s holding some lawyers back from recommending Arbitration? Some of the things said (and unsaid) might include:

• ‘It’s a new process’ for which, perhaps, you might want to read ‘I’m nervous – I’ve not done it before and I’m not familiar with the procedure and paperwork’. How do you cope with any change without trying it?
• ‘It might be difficult to find an arbitrator we can agree on? for which you may want to read ‘I am also worried I might end up choosing a financial ‘executioner’. The reality is that there is a process with Arbitration which is available to identify someone who is neutral and arbitrators have professional reputations to maintain!
• ‘It’s only for big money cases’ – which probably means they have not really understood how the process can help everyone.
• ‘Why should you pay when the Judge is free’ – although the Judge is free and you pay an arbitrator, your legal fees are likely to be less as the process is more streamlined and tailor-made to your situation
• ‘I don’t recommend it because you can’t appeal’ – as I have said, ask how many appeals your family lawyer have dealt with, what the process for appeal is and what is needed to succeed?
• ‘If we don’t use the court we miss the chance of an Financial Dispute Resolution Hearing‘ it’s a fair point, but a private hearing where you get indication from an experienced lawyer – who has had the time to read your case – of the likely outcome, and where they will take the time to understand the issues, to absorb all the nuances in a setting other than within the confines of a busy court building (social distancing permitting!) is also available to you.
• ‘We won’t be able to agree a venue’ – in the scheme of things I’m sure that will be the least of your issues and why not ask the arbitrator to host as part of the fee.

Summary of the key benefits of Arbitration

Looking at some of the benefits of the arbitral process these would include:

• Speed – the timetable is specific to you and your partner. In a case where expert evidence is not required e.g. they may just be an issue over the level of maintenance or how the proceeds of sale of a house should be divided can literally be dealt with in a few weeks rather than many, many months.
• Venue – it will be one which is convenient to all at a time convenient to all. It will be comfortable, you will have rooms to break out into. In theory, you could arbitrate on a Saturday if everyone agreed.
• Privacy – you will have absolute privacy in the process.
• You chose your tribunal – you can identify someone with the right skill set for the issues that need to be dealt with. Some may require an experienced QC (senior barrister), others won’t.
• You can agree the scope of what is to be decided – you only ask for a decision on the parts you can’t agree on. In the court process everything tends to be an issue. You can go to trial because you might be a hundred pounds apart on maintenance even though every other issue has been resolved, subject to that one outstanding issue. Tens of thousands of pounds are then spent litigating all the issues.
• The process is bespoke to the issues in your case with evidence tailored accordingly – at an early stage the issues are identified and you make sure the evidence is focused.
• The arbitrator has time and will have fully prepare and read all the papers – they would have fully absorbed the paperwork.
• Bundles – which suit you rather than the court-based rules!
• Explanation – the Award is in writing and needs to be shared within a reasonable time.
• Discrete issues – e.g. the appointment of an expert can be dealt with in days not weeks and months (i.e. because you are waiting for a hearing)
• There is limited ability to appeal = certainty – but bear in mind a Court of Appeal judge responded to someone who had moaned about losing an Arbitration by saying “Remember, when parties agree Arbitration they buy the right to get the wrong answer”. i.e. one you don’t want, just as you may get that same ‘wrong’ answer from a Judge in the Family Court
• You can agree to costs being an issue for determination – if you or your partner are so confident about your case then why not back it by saying that if you have it wrong you may have to pay costs

When could Arbitration work for you?

1. When disclosure (i.e. sharing relevant financial information, whether voluntary or as part of the court process) has been completed and the parties are satisfied all is in order, but no agreement has been reached and you need a decision on an issue{s};
2. There are limited issues which are not agreed, e.g. the amount of and duration of spousal maintenance;
3. It would be disproportionate costs wise (and take time) for a trial under the Family Court rules and procedures and the case is suitable to be dealt with on paper, e.g. a dispute about which party should take a particular chattel;
4. Where privacy is relevant;
5. When you need a quick hearing;
6. Where you want a recognised specialist to determine an issue;
7. Where you want to avoid going back to the old normal and want something which works for you,

When might Arbitration not work for you?

1. There are issues about whether full, frank and clear disclosure has been made and/or applications for disclosure might be necessary;
2. The court process might be necessary to ensure compliance; or
3. There is a novel point of law in issue which may require the case to be appealed.

How do you get the process started?

• At any stage you can enter Arbitration (even if the proceedings are in the Family Court);
• You need to agree the principle of Arbitration, the arbitrator – suggest names, invite comment or alternatives, agree or ask IFLA to make the choice or make the nomination and you need to agree the terms of reference;
• Get an idea of costs and who pays (could one pay up front and recover from the other as part of the settlement – think about the concept of feeling the pain of paying and how and what can influence settlement);
• Think about and try and agree on what the issues are that need to be resolved;
• What can you agree needs to be done and where might help be required e.g. is a business valuation required, what can you use which has already been obtained e.g. voluntary disclosure, how can disclosure be focussed. If you cannot agree the arbitrator will decide for you;
• Agree the terms of the ARBFS1, sign it and send it to IFLA;
• Once the arbitrator agrees to take the case, your lawyers can arrange a call with the arbitrator to work out what needs to be done, by whom and when, leading to the hearing or to enable a determination on the papers;
• The hearing is then followed by the arbitrator making his written decision (the Award), you then pay the arbitrator’s fee and the Award is then shared. Once the arbitrator makes an Award (a decision), the parties will be bound by that decision (save for exceptional circumstances).
• What will it cost – I suspect less than you think, but you will need to ask the arbitrator to estimate their fees based on the likely time needed to be spent.
• To complete matters you then seek an order from the Family Court in the terms of the Award.

Finally.

Ask yourself what is the best process for you and your family. Challenge what you are told. Ask your lawyer to justify their advice and don’t just accept because it was always done in a certain way that has to be the ‘normal’. Henry Ford once said ‘if you always do what you’ve always done , you’ll always get what you’ve always got!’ Is that really good enough? I don’t think so.

Let’s embrace the possibility that our future need not be our past. Doc would be proud if we do!

Robert Williams is a Solicitor, Collaborative Lawyer and Director of Family Law Partners. Robert is a Member of the Chartered Institute of Arbitrators and since 2010 has sat as a Deputy District Judge in the Family Court and County Court.? He can be contacted on (01273) 646903 or by email at [email protected]