Monday, April 09, 2012

Is arbitration only for the mega-rich?


I've seen it suggested in a number of places that the new family law arbitration scheme is likely to be a method of dispute resolution that is primarily for the wealthy. It is a point that I have raised before. This morning, I came across two linked newspaper headlines that support the hypothesis.

Firstly, the Financial Times (a paper obviously written for those with wealth) ran a piece yesterday entitled "Super-rich drawn to new divorce arbitration". I have not read more than the first few words of this story and will not provide a link to it as it is behind the great paywall of Murdoch, but it seems to suggest that one of the big attractions of arbitration is that it "holds out the prospect of super-rich divorcing spouses squabbling over their wealth in private rather than in the full glare of the media" - a point to which I will return shortly.

The FT piece is referred to in the other story, which appears in today's Telegraph and is entitled "Wealthy couples turning to arbitration to settle divorce disputes". Obviously, the FT piece may be the sole source for this story, which uses similar language. It tells us that in the short period since they have been available, reports suggest that: "An increasing number of wealthy couples are turning to new arbitration schemes to settle divorce disputes rather than squabbling in public through the courts", and goes on to say that: "Lawyers say the scheme is likely to attract “super-rich” couples bickering over “big money” divorce settlements who want negotiations carried out discreetly".

One of those lawyers is my fellow blogger and one of the first tranche of trained family law arbitrators Marilyn Stowe. She is quoted as saying (in the FT) that one of the two groups of people that she thinks will find the scheme attractive are: "Those who are in big money cases who can circumvent the waiting period in the courts and also are prepared to pay the fees of the arbitrator to have the benefit of privacy." Obviously, one should add the words "and able" after the word "prepared".

All of this adds to the depressing prospect of a three-tier family justice system for those who are unable to agree their matters. At the top we will have those who can afford either litigation or arbitration, which will give them the added benefit of privacy, not available to lesser mortals. In the middle will be those who can afford litigation but not the expense of arbitrators' fees, and at the bottom, once legal aid is removed, it will be "fend for yourself".

I'm not saying that the extra option of arbitration is a bad thing, but it is sad that it is an option only available to those with money, and possibly only those with a lot of money.

4 comments:

  1. Hi John
    Thanks for bringing this to my attention. I did give quite a long telephone interview to Jane Croft who contacted me after reading about family financial arbitration on my blog. Most of it wasn't published!
    Arbitration is a preferred method by many parties to international and national commercial disputes who wish to resolve their disputes quickly and in private. Furthermore, the divorcing super rich have been enjoying 'private ' FDRs here and all over the world for some time, even in some cases flying out entire teams of English lawyers, to assist in settling mega cases swiftly and in complete privacy. I have written before about the advantages of private FDRs in certain cases in my blog for some cases.  Family financial arbitration is an extension of that process. In her interview Jane concentrated on the advantages and benefits of family financial arbitration in England and Wales, for the benefit of her readers, the financial big hitters in this country and worldwide who read the FT. 
    I did not deviate however from the points I made in my blog about the other groups of people who may find family financial arbitration attractive. The potentially largest group are in fact all those couples who may decide to save money, that rather than paying two sets of fees to their individual lawyers they will share just one arbitration fee, at a predetermined figure they jointly agree to pay to an experienced arbitrator who knows not only what should be done but is not hindered by a 'one size fits all' court process. The family financial arbitration process will then be specifically streamlined to each of their own cases and could well do away with the need for the lengthy disclosure process and interim hearings. In fact in some cases there may be no oral hearing at all.  
    Family financial arbitration does not aim to replace the court but is an alternative service, like mediation, which is complementary to it. I agree ideally it should be available on legal aid, as is mediation. The court will however remain the primary provider of justice not least because the main advantage is that litigants in court need only ever pay a single court fee (or for those with lower incomes, a reduced fee or for the very poorest, no fee at all) to have the entire services of the court at their disposal for as long as it takes to secure an outcome.
    Regards,
    Marilyn.

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    1. Thanks for that, Marilyn. It seems that arbitration will definitely be an option for the well-off, will possibly be an option for those in the middle, but will definitely not be an option for the less well off. I just wish we could have a system of equal justice for all, but unfortunately with the impending legal aid cuts we seem to be moving further away from that. A sad state of affairs.

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  2. Call me a cynic if you like, but I'm always deeply suspicious of headlines which talk of "increasing numbers" doing more or less anything. As often as not, no actual figures are quoted. I remember collaborative law being the great white hope for improving the divorce process. From my conversations with collaborative lawyers, however, it seems to be minimally taken up, apart from in some isolated pockets. Family law arbitration has just been launched so serious efforts will now be made to promote it. I'll be more convinced of its merits when there are statistics about take up.

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    1. Yes, I did make the point that it has only been a very short period since the scheme was launched.

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