Arbitration under collaboration

Bernadette Hoy presented a session at PLO day 2019 looking at the quasi-judicial clause in the participation agreement and asked if it prevented clients and/or solicitors adopting the collaborative process.

Sandy Edwards, from Shropshire Collaborative Lawyers Group, wrote up this report.

Bernadette introduces herself as a collaborative lawyer and mediator. The question for the floor is whether the quasi-judicial clause in the participation agreement is preventing clients and/or solicitors adopting the collaborative process. Bernadette asked those currently engaging in “collaborative light” working would be more inclined to sign a Participation Agreement if it were amended to remove the clause which reads “ …they will not pursue any judicial or quasi-judicial process…” which could then open the door for the parties to consider a referral to arbitration.

Clare Thornton, an arbitrator, commented that the ARB1 form could be completed in a very narrow way so that she would only be dealing with the discreet issue and, as such, she wouldn’t require information in respect of the rest of the case. Clare makes the point that, of course, arbitration is part of the dispute resolution process. It is also cost-effective.

Bernadette advised that she herself has had a collaborative case whereby, at the outset, her collaborative counterpart had suggested that the clause be deleted so that, in the event that a discreet issue arose, it could be referred to arbitration. She had concerns as to the impact this might have on the without prejudice status of the collaborative process and whether it was considered to be a problem that the arbitrated award would be binding with the collaborative discussions remaining on a without prejudice status and therefore not binding.

From the discussion it was suggested that it could be problematic referring just discreet issues with the majority expressing that it would be better to refer all issues (those that are agreed and any outstanding issues) to arbitration so that the arbitrator could make an award on all issues which would be binding.

There is a suggestion from the floor that the agreement could be amended so that arbitration takes place if there was an impasse rather than if the process broke down so that the referral to arbitration could be part of the collaborative process rather than a process after the withdrawal from the agreement.

Ian Hawkins IFA and Co-Chair suggests an alternative way forward might be to instruct a collaborative Barrister. The use of financial neutrals, family consultants and collaboration counsel was raised several times during the day’s discussions and was a useful reminder of their roles in the process. There are concerns, however, that problems may arise if Counsel gives an opinion which one or the other parties doesn’t like as, it would not be binding or alternatively, if Counsel is not able to give a definitive answer in which case the impasse may remain. The view is that if Counsel is to be instructed then both parties must agree that the opinion of the Barrister is final on the particular point.

Private FDR’s are also discussed but may well be more expensive than, a discrete issue being determined on paper with an arbitrator. In addition, the parties do not get a decision as they still have to agree it.

In conclusion, there was a consensus that, if the majority of issues can be resolved, leaving one discreet issue then, it would be useful to be able to refer that particular issue to arbitration. On that basis, there is an argument that either, the Participation Agreement should be amended or alternatively, that collaborative lawyers, anticipating potential discreet issues at the outset, should be able to remove the clause provided that clients fully understand the implications of doing so. The consensus seems to be that more clients and or solicitors would be willing to commit to the participation agreement if they had the option to refer an impasse to arbitration.