Arbitration: Alternative dispute resolution for all

Arbitration is a relatively recent addition to the available ways of resolving family law disputes out of court (collectively known as ‘Alternative Dispute Resolution’, or ‘ADR’ for short). It first became available for resolving financial remedy cases in 2012, and has since also become available for dealing with disputes over arrangements for children.

But the take up of arbitration may have been affected by its reputation for being expensive, and therefore only really available for better-off couples. However, that reputation is no longer justified, as the Court of Appeal made clear in a case last week. Whilst it is true that arbitration involves the payment of a fee for the arbitrator’s services, that fee is not as much as may be thought, and should not deter couples with more modest means from using arbitration to resolve their dispute.

But before we look at what the Court of Appeal had to say, first a brief explanation of what exactly arbitration is, for the benefit of those who don’t know.

 

What is arbitration?

If you are unable to resolve your family dispute by agreement then obviously you are going to have to ask someone to decide the matter for you, and that usually of course means the court. But there is an alternative.

Under arbitration, instead of asking the court to decide the matter, you ask an arbitrator instead. The arbitrator will be a highly experienced family lawyer, who has undergone arbitration training. They will charge a fee for the service, which is usually shared between the parties.

Arbitration is purely voluntary, and can only be used if both parties agree.

The arbitrator will hear the case, and make a decision, which will usually be binding upon the parties. The decision will subsequently be made into a court order.

At this point you may be thinking: why use arbitration, when you can get the court to decide the case, without incurring the arbitrator’s fee? Well, there are several possible reasons, but perhaps the main ones are that it is normally much quicker than using the court, and that it is completely confidential, unlike court proceedings.

 

A common misconception

Last week the Court of Appeal heard an appeal by a husband against an order giving effect to an award made by an arbitrator, as he believed that the award was unfair.

In the course of her judgment Lady Justice King said this:

“There is a common misconception that the use of arbitration, as an alternative to the court process in financial remedy cases, is the purview only of the rich who seek privacy away from the courts and the eyes of the media. If that was ever the position, it is no more. The court was told during the course of argument, that it is widely anticipated that parties in modest asset cases (including litigants in person) will increasingly use the arbitration process in the aftermath of the Covid-19 crisis as the courts cope with the backlog of cases, which is the inevitable consequence of “lockdown”.”

Arbitration is not just for the wealthy. It is for everyone, and it is a useful way of bringing a family dispute to a swift conclusion, especially where the court has a backlog of cases.

 

What did the case decide?

There is not room here to explain the technical details of what the Court of Appeal decided. However, a clue comes in what Lady Justice King said next:

“It goes without saying that it is of the utmost importance that potential users of the arbitration process are not deterred from using this valuable service; either, on the one hand, because the outcome is not seen as sufficiently certain or, on the other, because arbitration is regarded as providing no adequate remedy in circumstances where one of the parties believes there to have been an unjust outcome.”

The case was about the latter point: arbitrators, like judges, can get things wrong sometimes. Obviously, when that happens an aggrieved party should not be ‘stuck’ with an unfair arbitration award. They should be able to appeal against the award, just as an aggrieved party can appeal against an order of the court. The Court of Appeal essentially decided that this is exactly what they can do, and in this case they allowed the husband’s appeal, so that the case should now be decided by the court instead.

It should be made clear, however, that this case does not ‘weaken’ the arbitration system. Just as orders made by the court are intended to be final, awards made by an arbitrator will still in the vast majority of cases be upheld by the court.

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Ian Walker Family Law and Mediation Solicitors offer an arbitration service, for both financial remedy claims and disputes over arrangements for children. For further information see this page.