Haley v Haley: Successful appeal against arbitration award

Image:  Aurelien Guichard, licensed under CC BY 2.0.

OK, technically this was a successful appeal against the dismissal of an appeal against an arbitration award, the refusal to interfere with the award, and the making of an order in the terms of the award, but the above makes a rather snappier title.

Until now challenging an arbitration award has been an uphill task - see, for example, the case R v K, which I wrote about back in April. The Court of Appeal’s decision in Haley v Haley, however, suggests that the slope is not so steep after all.

The background to the arbitration award was the same as we have heard before: the parties were expecting a final hearing of the wife's financial remedies application, only to be told a week before that no judge was available to hear the case, and that the matter would have to be listed for an unspecified date in the future. Eager to bring matters to a conclusion, the parties therefore agreed to go to arbitration, which took place on the same days as had been set aside for the hearing.

The husband believed that the arbitral award was unfair. He therefore made the following applications to the court:

i) For an order setting aside the award for serious irregularity under s68 Arbitration Act 1996 (Challenging the award: serious irregularity);

ii) For permission to appeal under s69 AA 1996 (Appeal on a point of law); and

iii) For an order that the award should not be made into a final order by the court.

The correct test to apply

Giving the leading judgment of the Court of Appeal, Lady Justice King takes up the story:

"The judge dismissed the applications under s68 and s69 AA 1996. No further appeal was made in relation to s68 AA 1996, and it is common ground that, after the judge refused the application under s69 AA 1996, the Court of Appeal had no jurisdiction to grant permission to appeal from that refusal.

"The judge held that the test to be applied in determining whether to refuse, in the exercise of her discretion, to make an order in the terms of the arbitral award, was akin to the test under s68 and s69 AA 1996. Further, she held that if she was wrong as to the correct test to be applied, the award made by the arbitrator was "not wrong."

"This appeal is limited, therefore, to a consideration as to the test to be applied where one party declines to consent to or challenges the making of an order under the MCA 1973 in the terms of the arbitral award following family arbitration under the IFLA Scheme. The questions to be determined are as follows:

i) Did the judge apply the wrong test, namely one which was akin to that applied under the AA 1996?

ii) If so, is the correct test that which was characterised by Counsel as the 'appeals test' applicable under the MCA 1973?

iii) If the appeals test is the appropriate test, then if properly applied is there a real prospect that the first instance court would have concluded that the arbitral award was wrong;

iv) If so, should the matter be remitted to a first instance court or is this court able to substitute its own order?"

After reviewing the relevant law Lady Justice King found that the judge had applied the wrong test, and that the proper test is the appeals test. She concluded:

"A substantial part of the submissions of [counsel for the husband] Mr Ewins were occupied with his detailed arguments to the effect that on the facts of the case, the arbitrator's award was wrong. Mr Ewins submitted that the judge was in error in assessing in particular: the housing budget for each of the parties and the realistic ability of the husband to rehouse himself to an acceptable standard, the distribution of the parties' pensions and the quantum of periodical payments made to the wife by virtue of the award.

"[Counsel for the wife] Mr Walden-Smith, for his part, adopted the approach of the judge; namely that, whilst another judge may have been more generous to the husband, the award made was within the discretionary bracket and the court should not, therefore, interfere.

"In my judgment in applying the appeals test, I am satisfied that the husband would have a real prospect of succeeding in an appeal against the award made for the reasons submitted by Mr Ewins. In order to avoid appearing to express any view as to outcome, I do not intend to elaborate further or even to set out the facts and terms of the order, given that, in my judgment, the inevitable consequence of my view is that the matter must now be remitted to a circuit judge."

Accordingly, the appeal was allowed and the matter remitted for a case management hearing before a circuit judge ticketed "to determine the form and extent of the hearing required to determine these proceedings."

You can read the full judgment here.