New family arbitration scheme is no alternative to litigation

The new family arbitration scheme announced last week vouches to bring the advantages of arbitration '“ quicker, cheaper and more discrete than court-based litigation '“ to divorce proceedings. Much as this is a positive development in an area prone to protracted, emotional litigation, serious obstacles stand in its way.

The scheme, which some lawyers have already said could 'revolutionise' the settlement of family disputes (see Solicitors Journal 156/8, 28 February 2012, 'Arbitration could 'revolutionise' family disputes'), was set up by the Institute of Family Law Arbitrators, a new not-for-profit organisation created by the Chartered Institute of Arbitrators (CIArb) with the backing of Resolution, the former Solicitors Family Law Association, and the Family Law Bar Association, in association with the Centre for Child and Family Law Reform.

Parties to a matrimonial dispute will be able to appoint an arbitrator from a panel of barristers and solicitors and avoid costly and protracted court litigation. With the media now allowed as a matter of course to sit in and report on hearings in the family courts, celebrities and the fabulously wealthy will appreciate the added advantage that arbitration is conducted in absolute privacy. The availability of alternatives to traditional litigation in the family law arena is to be welcomed. Relationship breakdown affects countless numbers of people each year but there simply aren't enough courts and judges to deal with the number of disputes that are litigated in the family courts. The results are families often left in limbo while their cases move at a glacial pace; it takes 18 months on average for a financial dispute following divorce to come on for trial. In addition to the emotional cost that results from family litigation, the legal costs can be significant; 18 months of lawyers' bills will be a strain for all but the wealthiest.

Validation by the court

But the family law arbitration scheme isn't without significant problems. One difficulty is that the rules governing the scheme have been drawn up not by a parliamentary or regulatory body but by the organisations behind it '“ family lawyers and alternative dispute resolution specialists.

In common with the principles generally applicable to arbitration agreements, the parties agree that the arbitrator's award is binding on them, but, without primary legislation, it is doubtful whether any award made in arbitration can be fully binding.

Whether or not the award is contractually binding it will still need to be subsequently approved by a judge before it can be converted into an enforceable order of the court. Especially where there are children involved, there is a real risk that the courts will have to intervene following an arbitration, particularly if the award fails to take into account the financial needs of the children and their primary carer.

Another concern is that arbitrations will be conducted by specialist barristers, solicitors and part-time or retired judges. The appointment and conduct of the arbitrators is likely to be regulated by the institute. However, unlike the judiciary, the scheme offers no independent organisation that is mandated to investigate complaints about the arbitrators' appointments process or where allegations are made concerning the arbitrators' conduct.

But the most significant issue is whether there will be much of an uptake for arbitration as an alternative to litigation.

In the commercial sphere, where arbitration has been particularly successful, parties will contract into arbitration when they negotiate the terms by which they are conducting business. With divorce, the only opportunity to agree to an arbitral resolution in advance is through a prenuptial agreement. At this stage it is far from being a given that many couples will be prepared to agree in advance to contract into arbitration. This is unlikely to happen until it has become firmly embedded in the culture of family law.

Add to this that the vast majority of couples do no have a prenuptial agreement to start with and you get a sense of the scale of the challenge. These couples will have to agree at the point of separation to resolve their dispute in arbitration.

In the absence of both a statutory regime that makes arbitration binding and a proper regulatory scheme for assessment, appointment and ongoing training for family arbitrators, would any lawyer advise their client to arbitrate rather than litigate? Probably not.

Opportunities to avoid litigation should always be encouraged and arbitration may prove to have a significant part to play in the resolution of family dispute. For this to succeed, careful management and proper regulation will be essential.