Peace and love: family arbitration

Arbitration as a medium of alternate dispute resolution (ADR) has, over the years, gained immense popularity among commercial parties and business houses.

However, it was not until very recently that arbitration was conceived as an appropriate method of resolving disputes between individuals entangled in non-commercial disputes. Traditionally, the civil courts have always enjoyed jurisdiction over such disputes. But one is inclined to ponder that, if arbitration has been immensely successful in the commercial world, what reason could there be for it not to be introduced in non-commercial disputes?

Family ties

For instance, in family proceedings, although mediation was not uncommon, arbitration was perhaps not thought of as an ADR.

Now, arbitration is favoured in family proceedings as well. There is a growing trend of settling family disputes by way of arbitration. This can be done either by choosing arbitration as a method to settle a dispute or by inserting a mandatory arbitration clause in pre- and post-nuptial agreements.

There has been a significant rise in family disputes, including abduction cases, being dealt by the English courts in recent times. According to a report published in the Financial Times, the cases have actually doubled in the last two years.

Family disputes not only affect the relationship between two divorcing individuals, but also affects the lives of the people connected to those individuals or to the subject matter of the dispute. Every so often, the cases are filed by way of retribution for an act done by another in the past rather than to obtain justice. This may result into a lengthy legal battle and making the relationship to deteriorate further.

A new scheme has been launched by the Institute of Family Law Arbitrators (IFLA), created by the Chartered Institute of Arbitrators (CIArb), the Family Law Bar Association and the family lawyers’ group Resolution in association with the Centre for Child and Family Law.

IFLA is a non-profit association established to encourage individuals (whether they are married, unmarried or are in a civil relationship) to settle their family disputes relating to property including ownership disputes; inheritance claims; financial claims including maintenance and other claims arising from marriage breakdown by way of arbitration.

The IFLA has its own rules and procedure to conduct the arbitration, which is in conformity with the English Arbitration Act 1996. All the disputes referred to the IFLA are settled in accordance with the rules and regulations applicable in England and Wales.

Arbitrating parties are at liberty to appoint their own arbitrator or can mutually agree to appoint a sole arbitrator. In case of any disagreement, IFLA can appoint one of its own members to act as a sole arbitrator.

Advantage arbitration

There are many advantages of opting for the family law arbitration to settle a dispute rather than going to court.

Going to court can be both expensive and time consuming. The other side may force you to incur significant legal costs by abusing appropriate court rules and procedures. There are very limited procedures that parties have to comply with in arbitration that can be altered by a mutual agreement between the parties. This will save significant costs and time.

After a divorce application is filed, the other side has the right to object to the jurisdiction of the court or file their defence submissions. There can be a preliminary hearing to decide an issue raised by any party. It may take a long time to obtain a hearing date to decide any preliminary issue and there is a possibility that the losing side may appeal the decision. This could be time consuming.

On the other hand, an arbitrator will decide what issues are to be decided and the procedure to follow to reach a decision, keeping in mind the costs involved in any such process. Further, it will take a long time to get a court hearing date even to decide a preliminary issue; in contrast, there is more likelihood to get an instant hearing before an arbitrator.

The losing side will have to obtain the court’s permission to appeal an arbitrator’s decision and the grounds available to do so are very limited. Therefore, it is more likely that the permission to appeal will not be given by the court and the arbitrator’s decision will be final and binding.

At the moment, one can obtain legal aid for a majority of family-related matters, including divorce, domestic violence, care proceedings, injunction applications, and issues regarding finances and children. As the UK government has already filed its proposals to cancel legal aid for family disputes, from April 2013, one can only obtain legal aid for injunction applications, children’s issues where there is domestic violence and public law care proceedings.

Therefore, unless one can obtain legal aid to decide one of the issues, it may be more economical to opt for arbitration to decide straightforward divorce or issues regarding finances and children.

Arbitration disadvantages

An arbitrator may refer to a previous court case dealing with the same issue; however, he is not at all bound to follow the judgment of any court to decide a matter. He is independent to decide an issue on his good judgment, which may not be based on set principles and laws.

This may result in having different decisions on the same issues which may not be appealed as the arbitrator’s decision can only be appealed on very limited grounds.

IFLA will only follow the laws applicable in England and Wales to decide an issue. It is arguable that there is a fundamental flaw in this scheme.

Arbitration by its very nature should allow parties to resolve disputes in a flexible manner. Moreover, one would have expected that the levels of flexibility would be higher in family dispute arbitrations when personal laws of parties makes them subject to their respective customs and practices.

Having such a restriction would bind parties to a standard uniform code which may conflict with religious customs and beliefs.

The IFLA scheme does not cover issues of child welfare, jurisdiction and recognition of a foreign marriage or divorce. Therefore, one cannot opt for this method to decide any of these issues and instead it will have to be decided by the appropriate court.

Further, in cases where the IFLA has the jurisdiction, but the subject matter of the award requires a party to comply with an order for a certain period, such as regular payments for maintenance, visitation and property rights, the other party can get a court order in similar terms as awarded by the arbitrator which will supersede the existing arbitral award.

Specialist help

Setting up a specialist arbitration centre such as IFLA will no doubt encourage parties to choose the IFLA to resolve their family disputes by way of arbitration. It will also encourage celebrities and rich individuals to keep their financial information confidential and away from the public eye.

Individuals who want the arbitrator to decide a specific issue without a hearing and who consider it to be more economical to pay an arbitrator rather than wasting their time on lengthy court litigation will certainly choose arbitration to settle their differences.

In the recent decision of Radmacher (formerly Granatino) v Granatino [2010] UKSC 42, the UK Supreme Court held that the court should give appropriate weight to a nuptial agreement which is freely entered into by each party, knowing that it will have certain binding legal implications, unless the circumstances prevailing it would not be fair to hold the parties to their agreement.

This judgment will certainly help the IFLA, as the parties willing to enter into an arbitration agreement to resolve all or specific disputes by an arbitrator and the award made by the arbitrator will have legal enforceability.

However, for this scheme to work without any hitches it would be recommended that the government introduces legislation in support of this scheme or amend the Arbitration Act to allow the IFLA to decide the issues presently not covered by it.

Saurabh Bhagotra is a lawyer at Zaiwalla & Co www.zaiwalla.co.uk

---