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At CFLP we are big fans of keeping people out of court if it is practicable to do so. Courts aren’t fun places to be, and although there are some circumstances when it is impossible to avoid court, generally we encourage our clients to try to take advantage of other options for the resolution of family disputes. You can read more about these alternative options here.

Family arbitration is still regarded as the new kid on the block in terms of family dispute resolution, but its advantages are becoming more widely known and its use is growing. It works by both people involved in a financial dispute on divorce agreeing that an arbitrator – usually a senior, experienced lawyer with specialist training – should make the decision, and they will both abide by it by subsequently asking the court to make an order by consent in the terms decided.

Of course, just like when a court makes a decision, in arbitration there are always going to be some people who feel hard done by for some reason and wish to challenge the outcome. This was the situation in a recent case where the wife was refusing to stick to the award made by the arbitrator because she said there had been a mistake about the valuation of a property, which meant that she got less money than was intended, and the outcome (‘award’) should be changed as a result.

The first thing the court had to consider was whether it had the power to override the arbitrator’s award, if it wanted to do so. The agreement that these two people had signed included a provision that the finality of an award would be subject to ‘ … any changes which the court making the order may require […] [and] [w]e understand that the court has a discretion as to whether, and it what terms to make an order and we will take all reasonably necessary steps to see that such an order is made’.  The court felt that this reflected the basic legal position that the court does have a discretion whether or not to make a binding order in the terms set out. This in turn means it is clear that each side does retain the right to set out their case to the court as to why they don’t feel it should make and award, if they wish to do so.

Arbitration operates in all spheres of law. There are specific grounds of correction, challenge and appeal in respect of arbitrated awards set out in the law that governs the arbitration process. The family court, however, will also allow a court order to be set aside or reviewed in certain other circumstances: if a mistake has been made, or if something has happened since the making of the order that undermines the basis on which the order was made (a ‘supervening event’). Should the same be available for the challenge of arbitrated awards? This was the second question the court had to answer in this case.

It decided that these safeguards should indeed operate on an arbitrated award as they would operate on a court-ordered settlement.

With that in mind, the court examined the wife’s claim that the arbitrator’s assessment of a high valuation of a property she retained was incorrect, because it was now understood that she would not be able to sell it. The court found that this could not conceivably be considered a mistake that it would correct, because the wife and her legal team could have found out the true circumstances before the award was made if they had made the correct enquiries. There was no supervening event that made it unfair – the circumstances existed at the time of the arbitrator’s consideration. This made her claim ineligible on its merits: the situation was the wife’s fault.

Even if it had been eligible, the court said that it would have declined to interfere with the arbitrator’s award. The arbitrator had built in a ‘safety net’ for the wife so that if she found herself in hardship she could ask the court to extend her maintenance. Therefore, whether or not the arbitrator had got the property value wrong or it had been devalued since, any adverse effect on the wife would be mitigated because she could ask for more money at a later date. So the court felt that arbitrator’s agreement should stand, regardless of any mistake or supervening event, although, in fact, there hadn’t been one anyway.

This judgment underlines the security of an arbitrated award, and reiterates the family court’s intention to uphold them in all but extraordinary circumstances. The bar for subsequent interference with an award is set very high. Arbitration is a good way of getting a full settlement, decided by a third party, that will stick, without going to court. For those who have not been able to agree between themselves in mediation or collaborative law, or through their solicitors in negotiations and round-table meetings, arbitration can be a timely and cost-effective way of sorting things out once and for all.

Up until now, family arbitration has been confined to financial cases, but this April sees the beginning of the extension of the scheme to children cases too with the training of the first tranche of specialist children’s arbitrators. Our Simon Bethel, Chair of Resolution’s Children Committee, will be one of those first to be trained. We are all in favour of increasing the options for those in disputes about the future arrangements for their families, and also of keeping them away from court wherever possible, so we celebrate the introduction of this new scheme and look forward to its implementation.

If you have any questions about arbitration or any other family law matter, please do call us on 01223 443333 and make an appointment to speak to Gail, Sue, Simon, Adam or Tricia.

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