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Divorce here or abroad: is arbitration the best way?

Date:3 APR 2014

Andrzej BojarskiIs ‘private judging' by way of arbitration to become the preferred route for resolving financial disputes on divorce and separation? The Financial Times suggested as much in an article back on 28 October 2013 when reporting that the Young v Young divorce dispute starting in the London High Court on that day could be the last big money divorce in the courts as wealthy separating parties turned towards arbitration rather than the courts.  In one of the first family law decisions of 2014 (S v S (Financial Remedies: Arbitral Award) [2014] EWHC 7 (Fam), [2014] 2 FLR (forthcoming)) the President of the Family Division, Sir James Munby, gave family arbitration a ringing endorsement by declaring that the courts would give an arbitrator's award the same status as a settlement agreement reached between the parties. As this article explains, family arbitration is not just for the super wealthy and it has particular advantages for those who are living outside England or who have demands on their time which make conventional litigation through the courts very inconvenient.

In many areas of business and commerce the default method for resolving disputes is arbitration.  Why?  It allows the parties to control the process of dispute resolution in a way which the ‘one size fits all' court system does not usually allow.  There are many reasons why businesses choose arbitration in preference to the courts.  They include:

  • Dealing with disputes disrupts the ongoing business so a quick resolution is desirable. The courts can be slow and inconvenient but an arbitration can be arranged and conducted at the time, the place and the speed the parties demand.
  • The judge allocated to the case by the court may not have the expertise required to resolve often very technical and nuanced complexities.  An arbitrator can be appointed by the parties who is an expert in the subject matter of the dispute.
  • The courts are very public and the parties are unlikely to want to air their dispute where the media and public can report it.  Arbitration is entirely private and confidential.

Family disputes, whether arising from divorce or the breakdown of an unmarried relationship, are no less complex than those which arise in the commercial world. Untangling complex financial affairs, often involving companies, trusts and a web of international property and investments, is a complex task requiring highly specialist skills and experience on the part of the lawyers. This is compounded where cultural or religious factors specific to the parties also come into the equation. When a hearing comes before the court there is no guarantee that the judge allocated will have the necessary experience.  Furthermore, in many courts in England and Wales the delays in waiting for a court hearing in even a relatively simple case can run to a year or more. In the meantime the parties legal costs rise and neither is able to move forward with their life.

In 2012 came a significant development. In a joint venture between the world renowned Chartered Institute of Arbitrators, the Family Law Bar Association and Resolution, the Institute of Family Law Arbitrators was formed.  IFLA trains family lawyers to become arbitrators. Further information about the scope of the IFLA arbitration scheme, the applicable rules and a list of qualified arbitrators can be found at www.ifla.org.uk.

In simple terms, the IFLA scheme operates on the basis that once the parties agree to refer their dispute to arbitration they select their arbitrator (or ask IFLA to appoint one in the event they cannot agree).  The parties then sign an arbitration agreement which sets out the issue or issues for the arbitrator to decide.  The parties may wish their whole dispute to be arbitrator or they may only wish the arbitrator to determine a single issue.  Once the agreement with the arbitrator is signed the arbitration commences.  The arbitration follows the procedure the parties have agreed upon and this may be quite different from the normal court process.  Once the arbitration is heard the arbitrator makes his or her decision, called the Award, in writing.  The parties having agreed to be bound by the decision of the arbitrator then submit an order to the court in the terms of the Award (to the extent that a court order is required to finalise matters between them).

Once the parties choose their arbitrator there is considerable scope to customise the procedure for the arbitration to suit the parties and the particular subject matter of he dispute.  The hearings can be conducted in whatever way the parties and arbitrator agree.  Where distance is an issue hearings can be dealt with by way of telephone conference call, video-conferencing, Skype or FaceTime.  The parties can choose the date when the arbitration will be heard, according to the arbitrator's availability, rather than having a hearing date imposed as the courts do.  The arbitration hearing can take place anywhere in the world which is convenient to the parties. Where the issues permit it, the arbitration can be conducted entirely on paper without any face to face hearing.  This flexibility and ability to tailor the procedure to the needs of the parties is unique to the arbitration process.  This flexibility is likely to be particularly attractive for parties who are living abroad but having their proceedings dealt with in England or Wales.  It saves on the need to travel to England for hearings (hearings which are often cancelled at short notice in any event).  The arbitrator can even travel to where the parties are and hear the arbitration there.

Mediation and arbitration are increasingly seen as the better option compared to going to the courts. These options lie in a broad spectrum. At 36Family we have nine family mediators and three family arbitrators (the author amongst them).  We also have a team of 11 CEDR accredited mediators able to conduct mediations with the parties' lawyers present, whether the dispute concerns a family matter or a civil dispute.  For those who are looking for a non-binding neutral evaluation of their dispute several of the team offer private FDRs and other neutral evaluation.    

Andrzej Bojarski is a family law barrister specialising in the financial aspects of family relationship breakdown, particularly in high-value, complex and international cases.  He has written a number of books and articles, including Unlocking Matrimonial Assets on Divoce (see here for further examples), and is acknowledged as an expert in his field.

Andrezej acts in cases throughout England and Wales, and instructed both by solicitors and by clients directly. His advice is also frequently sought on international jurisdiction and enforcement issues by lawyers and individuals based overseas. 

As well as working as a lawyer advising and representing individuals going through divorce and separation he also acts in an independent capacity to assist them resolve their disputes through Alternative Dispute Resolution ('ADR').   Please see his Dispute Resolution page for more details.

This article was originally published on the author's website and has been reproduced here with permission of the copyright owner.

The views expressed by contributing authors are not necessarily those of Family Law or Jordan Publishing and should not be considered as legal advice.