An article explaining Arbitration, written by Jonathan James, Lead Arbitrator at National Family Arbitration Service.
What is arbitration?
People who are divorcing and have not agreed a financial arrangement appoint an independent expert to decide what the arrangement should be.
Who are arbitrators?
Family law arbitrators need to be qualified lawyers. Many of them are also part time judges and have therefore been through the very rigorous selection procedure by which judges are appointed. Many arbitrators are also members of the Chartered Institute of Arbitrators but this is not essential and it is more important that they should be recognised specialists in family finance litigation.
If I arbitrate, will I need to go to court?
The arbitrator’s decision is final and binding. However, to make it enforceable it has to be approved by the court. The procedure for doing this is exactly the same as if agreement had been reached without arbitration. In other words, it is much the same as what happens after mediation. Because the parties have agreed to arbitration, the order is a consent order which reflects the decision which the arbitrator has reached. Wikivorce provides a service at a fixed price for producing the appropriate order and submitting it to court for approval.
How does the arbitrator reach a decision?
The arbitrator applies exactly the same law as a judge would use in court. This means that the arbitrator will refer to the list of factors set out in section 25 of the Matrimonial Causes Act 1973 and any relevant case law, in just the same way as a judge would.
The arbitration can be decided in the most straightforward cases simply on the basis of written documents without anybody needing to attend a hearing at all.
In more complicated cases, there can be as many live discussions with the arbitrator as are needed and for as long as is necessary. The arbitrator will decide what hearings are necessary, in discussion with the parties and/or their representatives.
What are the advantages of using arbitration instead of going to court?
Arbitration can be much quicker. You are not bound to follow a court timetable but the two of you, with the arbitrator, can agree your own timetable.
You do not have to follow the court procedure in terms of how many hearings take place or what happens at them.
In simple cases, it would even be possible to agree with the arbitrator that the decision is taken after reviewing the paperwork only, with no need for anybody to be present.
In any court application there is an immediate 12 week delay before a judge even looks at the paperwork. Once an arbitrator is appointed, unlike a judge, he/she can get to work immediately, making the whole process much quicker.
If a hearing or hearings are needed, they can take place somewhere convenient to all the parties rather than at a busy court centre with other people present and limited facilities. They could even take place by video conferencing.
In arbitration you can agree what documents and information are actually needed rather than being bound to produce all the documents which the Court rules require, even though many of them are not necessary.
What sort of cases are best suited to arbitration?
Where parties have engaged in mediation but have not reached an agreement. Within the mediation they will have completed financial disclosure and narrowed the issues that have to be decided. It is usually quite straightforward to put this to a decision maker for a quick resolution of whatever could not be agreed. Court proceedings, by contrast, take months to begin and require the repetition of disclosure. The hard work done in mediation is largely wasted.
Where parties remain on quite good terms but feel that they want an independent professional to take the decision about what their financial arrangements should be after separation. This is particularly helpful where there are children involved as the parents will be dealing with each other for years to come and their relationship will not have been soured by stressful negotiations concerning money.
When people are able to agree on most things but there are one or two issues that they have not been able to resolve, either between themselves or with the help of solicitors. They do not need the full court enquiry, simply a prompt decision on those few things that have not yet been agreed.
What sort of cases cannot be resolved by arbitration?
Where parties are in major disagreement, it may be impossible to agree the identity of a suitable arbitrator and/or the terms on which the arbitration will operate.
Where one or other party does not trust the other to disclose properly all the financial information which is needed to produce a fair decision, the case will have to go to court because the court has powers, Including imprisonment, to force people to provide disclosure.
What will I gain by arbitrating instead of going to court?
Especially after mediation, arbitration can save a great deal of money for both parties because the work that has already been done does not need to be duplicated or brought up-to-date.
Where parties have used solicitors to provide financial disclosure and attempt to negotiate settlement, there can be a huge cost saving by going to arbitration rather than court because a greatly simplified procedure can be followed.
The dispute can be resolved far more quickly because an arbitrator can be available very soon after the parties have agreed their identity. The arbitration can proceed at the parties’ pace rather than at the court’s pace. With the reduction in the Ministry of Justice’s budget, court delays will almost certainly increase in the foreseeable future, especially given the number of people who are now have to represent themselves.
If you need to have hearings to reach a financial decision, these will take place in a suitable private location. You will save cost because the arbitrator will be dealing with your case and your case alone on that occasion. If you are using a lawyer to assist you, you will not be having to pay them to wait around for your hearing to start.
In potentially high profile disputes, the terms of arbitration include complete confidentiality and your financial negotiations and terms of settlement cannot become public knowledge.
How are the costs met?
The normal rule is that each party pays half of the arbitrator’s charges. Depending on how complicated and therefore costly the charges are, there can be the option of stage payments. However, all the arbitrator’s charges need to be paid before the arbitration decision is given to the parties. In effect, the parties are paying half the cost of using an experienced professional to decide their disagreement. At the same time, they are avoiding the legal expense of unnecessary paperwork and court hearings.
The parties are entirely free to decide between themselves some other apportionment of costs if they think it appropriate.
The arbitrator has the power to order one party to pay the other party’s costs but as in all family finance cases, this will be extremely rare.
How much does it cost?
The cost varies depending on how complicated the decision making process is and how much time the arbitrator spends on it. For a simple arbitration, where the decision is taken based on the documents provided by the parties only and with no need for any kind of hearing, the cost will be in hundreds of pounds. The only other charges which might arise would be the cost of room hire and any travel expenses of the arbitrator. Again, these are divided equally between the parties.
Do I need to use a solicitor for an arbitration?
You do not need to have a solicitor or barrister. However, in more complicated cases they can make the process a lot quicker and easier and may prove to be money well spent. If you find discussing your case stressful, especially if your opponent is present, having your own lawyer may prove to be invaluable. Because the arbitrator is deciding the case by reference to legal principles, an expert lawyer may well be a significant advantage in helping you present your case to the arbitrator.
Just as in court proceedings, you can make use of an unqualified friend or advisor. Because the arbitrator sets all the rules for the arbitration, it may be possible for your advisor to undertake more of the work than would be possible in court proceedings if the arbitrator permits.