Making the case for arbitration

For some time, family law judges and practitioners have acknowledged the suitability of arbitration for various types of family law disputes and encouraged its use. The need to consider non-court dispute resolution (DR) is enshrined in the Family Procedure Rules at rule 3.3, and the President of the Family Division, Sir Andrew McFarlane, has made clear that “in all family cases, regard should always be had to alternative means of dispute resolution” (“The Family Court and Covid-19: The Road Ahead”, 9 June 2020). Equally, in a 24 July 2022 interview on BBC Radio 4, the President reiterated that he feels at least 20% of all cases within the Family Court system currently would be better determined elsewhere and are not suitable for determination by the Family Court. The inference here is that these disputes would be better determined by some form of DR.

Why arbitrate?

There are various benefits of engaging in arbitration over court proceedings. The list below is not exhaustive, and the value of the benefit will vary on a case-by-case basis.

Speed

In straightforward disputes a determination can be made within 4-8 weeks of an arbitrator’s appointment, and if the arbitration is to deal with a relatively discrete point the timescales may be even shorter.

In contrast, the pace at which the Family Court works is often a surprise and source of frustration to lay clients. The report of the Family Solutions Group, a sub-group of the Private Law Working Group convened by Mr Justice Cobb, described the Family Justice System as “in crisis”, noting the unmanageable number of applications and that the court is stretched beyond limits.[1] While the word crisis and the reasons behind the strain on the Family Court can be debated, it is certain that delay is an unavoidable feature of the system.

In September 2021 a committee led by HHJ Farquhar published its report on the Financial Remedies Courts, “The Financial Remedies Court – The Way Forward”. The report recorded that, on average:

• it took 55 weeks from issue of Form A to reach FDR;
• it took two years from issue of Form A to reach final hearing, and
• in London the time from Form A to final hearing was even longer, just over three years.

Similar statistics are not available for privately funded children law proceedings. But, anecdotally, delays of a year or longer for a first effective administrative hearing are not unheard of, and delay was one of the strongest themes expressed in responses to the Private Law Working Group when compiling their report.

Structure: collaboration, flexibility and control

The procedural flexibility that arbitration affords to the parties, as well as the manner in which arbitrations are typically conducted, are arguably the greatest benefits to choosing to arbitrate and can lead to improved outcomes in a faster timescale.

The adversarial nature and language of the Family Court can be unhelpful, serving to further exacerbate pre-existing tension. This is of significant importance where the relationship must survive after the point of determination, as is the case in most children cases. Again, delay is a further exacerbating feature. At its lowest, delay may cause a point of tension to grow over time as parties’ positions become entrenched or intractable. At its highest, delay may obstruct or permanently affect a child’s relationship with one party altogether.

Collaboration

Arbitration is essentially collaborative in nature. Even though an arbitrator will adjudicate the dispute, the parties must agree to use arbitration, and can agree the arbitrator as well as aspects of the process. Alongside the speed at which the resolution is reached, the collaborative aspects of the process can reduce conflict.

The collaboration inherent in the arbitration process allows parties a moment to re-frame and re-centre the dispute. The focus is on resolving the issue(s) being adjudicated, rather than “fighting” each other. This is particularly helpful when the case centres on a child or children.

Flexibility

The procedure of arbitration is flexible and can be tailored to the needs of the individuals and their legal representatives. Parties can decide how the arbitration is to be conducted, whether this is on paper, in person, remote, or a hybrid scheme. The formality of the process is, again, controlled by the parties, and a mutually convenient time and date can be arranged. The result is a feeling of control and mutual participation, rather than of imposition and powerlessness.

This is complimented by the fact the arbitration is private and confidential, often taking place at the arbitrator’s place of work or another agreed venue. A neutral, private, and comfortable setting can reduce the stresses associated with attending court felt not just by lay clients, but also solicitors and advocates.

Control: arbitrator and issues

Arbitration is a bespoke process, allowing both control of the issues and the arbitrator.

In CM v CM [2019] EWFC 16 the application before the court was to determine the wording of a letter of instruction to an expert in financial remedy proceedings. Mr Justice Moor noted that the Family Court is tremendously busy, and its function is not to decide what may be conceived as relatively minor issues such as that. As Moor J made clear, these are exactly the sorts of matters that can be and should be referred to an arbitrator. Indeed, arbitration is perfectly suited to adjudicate discrete points which are ancillary to, or arise from, substantive court proceedings in a timely manner.

An interesting example of how arbitration can sit alongside, or within, court proceedings is provided by ARQ v YAQ [2022] EWFC 128. Although the husband’s Form A was issued by the court in April 2020, the parties agreed that the First Directions Appointment should go through the arbitration process. The arbitration took place in September 2020. The arbitrator narrowed the issues and various directions were made before a private FDR in early 2021 and a final hearing in the High Court in May 2022.

People may choose to resolve their dispute through arbitration entirely, avoiding the court process altogether. The parties define the scope of the dispute they wish to be adjudicated, and any agreed issues can be included in the determination/award to ensure an outcome that is binding on all points.

Importantly, the parties can choose the arbitrator. In so doing, parties are able to select an individual with the specialist knowledge and level of expertise suitable for the particular issues in their case.

The arbitrator is privately engaged by the parties. This has a number of connected benefits:

1. The arbitrator will be consistent, dealing with the dispute from start to finish.
2. The arbitrator will have knowledge of the history and development of the issues and arguments.
3. The arbitrator can deal with any applications or issues promptly, as they arise.
4. Parties can be confident that the arbitrator has set aside time to appropriately prepare for the arbitration, and give appropriate consideration and a detailed judgment after the hearing.
5. Finally, there is real benefit to liaising with one arbitrator directly, rather than a centralised listing or court office.

Cost

Lady Justice King made it clear in Haley v Haley [2020] EWCA Civ 1369 that arbitration is not the exclusive purview of the rich and famous. Rather, arbitration should be seen as a real, cost-efficient alternative to court proceedings. The ability to streamline the procedure (and limit disclosure) will usually lead to significant cost savings.

The arbitrator’s fees are fixed at the outset and shared. Further, there is no risk that the hearing will be removed at short notice and re-listed (leading to an additional brief fee), as is becoming increasingly common within the Family Court.

Certainty

By agreeing to arbitrate the parties agree that the arbitrator’s determination/award will be final and binding (this is expressed in the agreement to arbitrate form signed by the parties at the outset).

However, Haley, alongside the helpful guidance in A v A (Arbitration: Guidance) [2021] EWHC 1889, confirms both that:

1. the test for appealing an arbitral award is no different from the test that applies when challenging a court-based judgment, in other words the test is that the award is “just wrong”; and
2. to challenge an arbitral award, there is no need for an application under s68 or s69 of the Arbitration Act 1996, and any application to appeal/dispute an arbitrator’s financial award should be made by way of Form D11.

While the appeal in Haley arose from a financial arbitration, it is sensible to assume that the same principles apply to challenges to determinations under the Children Scheme.

Paragraph 14.13 of Practice Direction 12B outlines that “where agreement is reached at any hearing or submitted in writing to the court, no order will be made without scrutiny of the court”. In addition, the Children Act 1989 necessitates that the court’s paramount consideration is the child’s welfare, and that the court has regard to the welfare checklist before making any order. When the above is taken in conjunction, the natural conclusion is the guidance in Haley is equally applicable to children cases.

While it may seem that the decision in Haley makes it easier to challenge an arbitrator’s award, opening the door to more uncertainty, paradoxically it may be seen to have the opposite effect; it provides greater certainty, but of a different kind.

Parties can now safely enter into arbitration with the knowledge that the court retains a supervisory jurisdiction, under which it can correct an unjust outcome. Moreover, as the threshold to appeal an arbitral award/determination is the same as for an appeal of a court-based judgment, there is no prejudice to entering into arbitration over court proceedings.

When can I arbitrate?

The Family Law Arbitration Scheme is divided into two strands: (1) the Financial Scheme; and (2) the Children Scheme. Each scheme has its own rules, and both are governed by the Arbitration Act 1996. Article 2 of the rules to each scheme provides which disputes are, and are not, covered by the respective scheme, and therefore outlines whether the dispute is suitable for arbitration.

Children Scheme

Under the Children Scheme, absent safeguarding concerns, it is possible to arbitrate any issue between parents (or any other person with sufficient interest in a child’s welfare) relating to the exercise of parental responsibility or the welfare of the child.

These include issues concerning living arrangements; contact; holidays; education; any section 8 Children Act 1989 orders; relocation within the jurisdiction; and relocation to a 1980 or 1996 Hague Convention Country/a member of the EU where Brussels IIa applies (for as long as the UK remains bound by it).

Financial Scheme

Likewise, under the Financial Scheme it is possible to arbitrate all claims that would be heard within the Family Court, save any disputes directly concerning the liberty of individuals; the status of individuals and/or their relationship; bankruptcy/insolvency; any person/organisation not a party to the arbitration.

The process

A unique and valuable aspect of arbitration is the flexibility that it offers, meaning that each arbitration will have a bespoke process to meet its needs. While this makes it impossible to outline a prescriptive arbitration “scheme” that all cases will follow, generally there are five key stages. It is best to consider this as an overarching framework, within which the procedure can be simplified, made more detailed, or expedited.

1. Commencement: parties must first agree to arbitrate, select an arbitrator, and submit the agreement to arbitrate form. The Children and Financial Schemes have unique forms, these are Form ARB1CS (Children Scheme) or Form ARB1FS (Financial Scheme).
2. Appointment: the nominated arbitrator considers the agreement to arbitrate and sends a formal letter of acceptance, at which point the parties and arbitrator agree the terms of the arbitration.
3. Procedural management: the arbitration can follow either the General Procedure (as set out in the relevant Scheme) or adopt an Alternative Procedure. It may be appropriate to conduct one/multiple case management or directions meetings. Equally, the parties may opt for a paper-only arbitration.
4. Final hearing/meeting: where parties have not opted for a paper-only arbitration, a final hearing will take place.
5. Determination (children cases)/Award (financial cases): the arbitrator will set out a detailed judgment in writing, and send the judgment to the parties. The parties can then apply to the court to have the award/determination converted into an order.

In addition to the above, the Children Scheme includes integrated features for safeguarding and ascertaining the child’s wishes and feelings.

The rules to the Children Scheme provide that safeguarding checks take place at the outset of the arbitration and place the parties under an ongoing duty to disclose, ensuring any issues concerning safeguarding are disclosed if they arise throughout the lifecycle of the arbitration. In respect of a child’s wishes and feelings, arbitrators must have regard to the welfare checklist at section 1(3) of the Children Act 1989. Typically these are ascertained through an independent social worker (ISW). Notably, the rules to the Children Scheme prevent the child(ren) from meeting with the arbitrator, but there is nothing in the rules that prevents the child(ren) writing to the arbitrator, or vice-versa.

Conclusions

Too often the Family Court is seen as the first port of call, rather than the last resort. There is a tendency for people to seek court intervention where it is either unnecessary or, even worse, unhelpful. This is particularly true of parents who come to court to discuss disputes about their children where, importantly, there are no significant issues regarding domestic abuse, safeguarding, or protection. The same can be said for some individuals who come to the Family Court to seek determination of financial disputes post-separation.

The problem is often not a legal one but one that is rooted in the parties’ relationship.

Arbitration is a cost-efficient, bespoke, and expedient solution, which can be applied to nearly any issue that could be determined by the Family Court. What’s more, the capacity for flexibility, privacy, and control that arbitration offers means that its procedure lends itself to collaboration, increasing the likelihood of a speedy resolution without further straining (or creating) tensions between the parties.

There is, then, a strong case for arguing that, for many of our clients, DR is not only a viable option, but a better option.

My experience

Arbitration is becoming an increasingly common aspect of my own practice and, more generally, within my chambers at 4PB. At present, 11 members of 4PB are qualified to sit as arbitrators under the IFLA scheme. 4PB hosts experienced practitioners and KCs who are able to sit as arbitrators under both the Financial and Children Schemes. Of the 11 arbitrators in chambers, seven are silks and six sit as judges – Deputy High Court judges, Recorders and Deputy District Judges.

Our arbitrators are: Alex Verdan KC, Michael Sternberg KC, Catherine Wood KC, Charles Hale KC, Christopher Hames KC, Ruth Kirby KC, Stephen Lyon, Rebecca Foulkes, Francesca Dowse, Michael Edwards and myself.

For further information, please contact Jamie Byrne, our dedicated arbitration clerk, on clerks@4pb.com

[1] ‘“What about me?”: Reframing Support for Families following Parental Separation’, Report of the Family Solutions Group (subgroup of the Private Law Working Group), 12 November 2020.