The delays in the family court system particularly as a result of the pandemic have encouraged parties and their lawyers to consider whether an out of court process would be preferable. Arbitration is one of those processes with the potential advantage that once the process has been agreed and the arbitrator appointed, and unlike mediation, the process does not depend on the parties' agreement. The parties are agreeing that a third party ie the arbitrator, can make a decision for them. Given that it is likely that one of the parties (if not both of them) will not be wholly happy with the result, the question is what remedy is there to depart from the arbitrator's decision.
Although parties can agree to arbitrate as an alternative to the court process, in family matters the court will still be asked to make an order which is expected to go through unamended by consent.
What happens if one of the parties is dissatisfied by the award? This issue was dealt with in the recent case of Haley v Haley [2020] EWCA Civ 1369. Mr and Mrs Haley had a final hearing listed for 19 September 2019. A week before the hearing, the parties were told that there was no judge available to hear their case and so they were faced with the choice of waiting for an unspecified date, or to resolve the case in another way. They chose arbitration but the husband was unhappy with the award. He made an application to the court in order to challenge the award, but was unsuccessful and the matter was heard by the Court of Appeal.
The main issue before the court was if a party is dissatisfied with an arbitral award either:
1. a party had to satisfy the stringent requirements of the Arbitration Act 1996, which they had in effect accepted by entering into the arbitration process. These requirements are that the arbitrator lacked jurisdiction, there was serious irregularity or that the award was wrong on a question of law.
"Fairness as a concept has no place in a challenge to an arbitral award; arbitration being a procedure designed to provide certainty across the international commercial world".
2. a party had to satisfy the less restrictive test as in family appeals. A party has to show that the order was wrong or unjust because of a serious procedural or other irregularity. Accordingly, the court is looking at fairness.
The Court of Appeal held that the same principles apply as in family appeals.
Issues to consider:
a. Will this make arbitration more attractive to parties? One of the reasons for parties not to arbitrate was the concern about the previously held position that appeals were very limited.
b. Will parties be concerned about lack of finality and certainty? Reference in Hayley was made to a previous comment : "when parties agree arbitration they buy the right to get the wrong answer".
c. Will parties be concerned about the loss of privacy if they are able to appeal? They may be but given that the alternative is that they enter the court system if they cannot agree, they are not losing anything by arbitrating and it is likely that in the majority of cases, the arbitral award will be made into an order.
Family judges are under a statutory obligation to make an order which is fair, taking into account all the relevant factors. Given that family orders are difficult to appeal in any event, it is likely that this decision will encourage more parties to choose arbitration as a speedier way of resolving their disputes if they cannot reach agreement themselves.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
