An alternative to litigation?

In April 2014, the Ministry of Justice introduced the new, single Family Court, with the aim of improving an already burdened court system. It aspires to make access to justice simpler for those who use the courts, and is particularly aimed at improving arrangements for child related cases.

Coupled with cost saving exercises and proposals to significantly reduce the court estate, resulting in fewer court buildings, many family law clients, especially those with financial cases, are facing increasing delays with less court time available to resolve their issues.

Is arbitration, rather than traditional litigation through the court system, now an increasingly attractive alternative?

On 23 November 2015, Sir James Munby, President of the Family Division, ‎issued practice guidance on arbitration in the family court. Arbitration has been a cornerstone of commercial dispute resolution for many years and the Arbitration Act 1996 codifies the principles relating to arbitration and its relationship with the courts.

The Institute of Family Law Arbitrators (the IFLA) however is still in its infancy, only just approaching its fourth anniversary. Its establishment is surprisingly recent considering the focus that has gone into developing alternative dispute resolution options such as mediation and collaborative law, in an area where the delay and formality of the court system is not necessarily conducive to resolving the domestic issues at stake.

Munby's guidance should provide consistency for practitioners as to what to expect from the family court, if seeking to either ratify or challenge an arbitral award. The real questions are; why is family arbitration gaining favour now and why should Sir James Munby's on-going endorsement assist family law arbitration in gaining momentum?

Confidentiality, control and flexibility

Stakeholders in family law arbitration will cite the degree of choice and flexibility available to the parties, from choosing their own arbitrator to their input in the focus of the arbitration and the key issues to be addressed. Parties have the ability to agree a timetable rather than being constrained by the diary of an over burdened court system.

The degree of autonomy over the process is not reflected in any control over the award, unlike mediation in which the parties retain control by seeking to reach an agreement. Arbitration acknowledges that there are individuals who prefer the idea of a third party decision. A further benefit is the confidentiality of the process which will appeal to public figures and those anxious about disclosing commercially sensitive information.

One draw back to arbitration is a fear that it may be more costly than litigation. You do not pay for a judge's time through the court system but parties do share the cost of the arbitrator. Overall this may work out cheaper than a fully contested court hearing, but without legal aid, individuals with limited resources may consider the cost prohibitive.

Further concerns have focused on public policy and the fear of binding awards being handed down by institutions which assess disputes using vastly differing criteria to the law of England and Wales.

The guidance does not condone this and arbitration does not oust the jurisdiction of the family court which provides a safety net to protect vulnerable individuals. An award, at least in relation to financial remedy on divorce, should still be incorporated into a court order sought by consent, and an award imposed by an arbitrator will require court recognition to enforce it.

The effectiveness of arbitration is dependent on the perception of its binding nature and the court's support is required. In the case of Re AI and MT [2013] EWHC 100 (Fam), Mr Justice Baker endorsed arbitration of a family dispute through the New York Beth Din, indicating the outcome would 'likely to carry considerable weight with the court'.

In S v S [2014] EWHC 7 (Fam) when considering approving an application for a consent order based on an arbitral award, Sir James Munby went further, stating: "The judge will not need to play the detective unless something leaps off the page to indicate that something has gone so seriously wrong in the arbitral process as fundamentally to vitiate the arbitral award'.

His guidance compounds his view. The Law Commission report on Matrimonial Property, Needs and Agreements, advocates holding parties to agreements they have freely entered into subject to safeguards. Munby makes it clear in S v S that he saw an agreement to be bound by an award as conceptually the same as the parties reaching a final agreement between themselves.

The establishment of the IFLA, recent case law and the general move toward upholding agreements, makes Munby's guidance timely. It provides reassurance that the court will promote the intended binding nature of an award unless it gives rise to serious concern.

Recognition of the benefits of arbitration in family law has been slow but the speed and flexibility arbitration offers makes it an attractive family dispute resolution tool.

Lottie Tyler is an associate family law solicitor at national law firm Weightmans LLP