Debating Family Law Arbitration
I mentioned the launching of the new family law arbitration scheme by the Institute of Family Law Arbitrators ('IFLA') in this post on Wednesday. Family Law Week now reports that the launch has provoked a debate about the enforceability of arbitration awards.
In particular, Carl Gardner of the Head of Legal blog has written a piece in The Guardian in which he asks What's legal about family arbitration? Commenting on that piece, Gillian Douglas, Professor of Law at Cardiff Law School, takes the view that arbitration awards cannot be binding, and that they "will have to be incorporated into consent orders, in line both with the Supreme Court's approach in Radmacher and the terms of s 34 of the Matrimonial Causes Act 1973".
What does the IFLA say? Well, at the time that I'm writing this the FAQS page on their website doesn't seem to be working properly, but looking at the source code for that page one can see the answers to the stated questions, which include: Is an award final and binding?, to which the answer is:
"Yes, it is agreed to be binding between the parties. Currently family law does not permit parties to make their own arrangements for financial and/or property issues on divorce or separation simply by agreement, without the possibility of court review. The Rules in relation to awards acknowledge this: if the subject matter of the award makes it necessary, the parties are bound to apply to the court for an order in the same or similar terms as the award (see paragraph 6.5 of ARB1). This will usually be necessary.
Following recent rulings by the courts on pre- and post-nuptial agreements, it is expected that the Courts will generally uphold awards made under the Scheme. An award will be the outcome of an impartial adjudication following a recognised process – supported by the Arbitration Act – whose object is to achieve a fair result. It is expected that Courts will enforce awards made under the Scheme.""If the subject matter of the award makes it necessary" (see also Article 13 of the Scheme's Rules): The Family Law Week article quotes Grant Howell, one of the first group of family lawyers to qualify as an arbitrator, in which he gives two examples of when a court order would be required, i.e. when future claims are to be dismissed (which is likely to be in most cases) and to share a pension (which is likely to be very common). This suggests that he believes that orders will not be required for most other matters (which actually might be quite few in number), but I'm not so sure.
For what it's worth, I'm with Gillian Douglas. I think an arbitration award will not be binding until it is incorporated into a consent order, as with an agreement. This means, of course, that the award must meet with the approval of the court, and that no order will be made (making the award unenforceable) if it does not. Having said that, I agree that the courts are likely to uphold awards.
Moving on, when I first heard about family arbitration I wondered about the cost - in particular, whether it will just be something for the better-off (with the likely abolition of legal aid, it would be very timely if it were available for all). The IFLA FAQ has this to say on the subject of the arbitrator's fees and expenses:
"The arbitrator and the parties will set the level of the arbitrator’s fees (usually on an hourly or daily basis) by agreement at the outset of the arbitration.
The usual arrangement will be for the parties to bear the arbitrator’s fees and expenses (as well as IFLA’s fees and expenses) in equal shares. However, the arbitrator has a discretion under the Rules to order a party to pay more than an equal share (even up to the full amount) if that is appropriate because of the conduct of that party in relation to the arbitration."All very well, but how much are the arbitrator's fees? Well, the only indication that I've found was in this article in The Telegraph yesterday, which suggests that they may be up to £5,000 a day. There is no indication of the source of this figure, but if it is any where near typical then it is very disappointing, although not surprising, given the calibre of the first crop of arbitrators. It may not be much for the well-off, but I doubt whether many couples of moderate means would be prepared to agree to such a sum, even if a contested financial dispute application might cost considerably more. Perhaps when substantially more than the present 35 arbitrators are trained, including people from the less exalted echelons of the profession, we may see fees dropping to more affordable sums.