Arbitration: Resolving family disputes, lessening family acrimony

WHAT IS ARBITRATION?

Arbitration provides another means of resolving family law disputes relating to finance or property outside of the formal court process. The parties enter into an agreement under which they appoint a suitably qualified person, an arbitrator, to adjudicate disputes and make a decision using the law that applies in England and Wales.

The arbitrator’s decision will be final and binding between the parties. It is strongly recommended that each party takes legal advice before entering into the arbitration agreement in order to understand the implications and effect of the arbitration process.

WHAT ARE THE BENEFITS OF ARBITRATION?

  • Unlike the Court process the same arbitrator will deal with all stages of the case from start to finish affording greater continuity.
  • The arbitrator can be chosen by the parties, rather than a judge being arbitrarily chosen to hear a case.
  • There are no fixed procedures. The procedure for each case is developed according to its requirements. In addition, the parties will have the major say in how the proceedings run. For example, by deciding how they are going to deal with financial disclosure and where and when any hearing will take place. Within the court process it is the judge who determines these matters.
  • Arbitration enables parties to have more autonomy.
  • Arbitration is also more likely to resolve financial disputes more quickly, confidentially and in a more flexible and less formal setting than a courtroom.
  • Matters are likely to be resolved more quickly than under the current court procedures and this may allow costs to be saved in comparison to the court process.

WHAT ARE THE COSTS INVOLVED?

There are two main types of costs. The first are the arbitrator’s fees and expenses which will be agreed with the parties (usually on an hourly or daily rate) at the outset of the arbitration. The usual arrangement would be for the parties to pay the arbitrator’s fees and expenses in equal shares. However the arbitrator has discretion to order a party to pay more than half, up to the full amount, if that is deemed appropriate because of the conduct of that party in relation to the arbitration.

The other costs are the legal and general costs of the parties. These are the costs incurred by each party in engaging lawyers to prepare for and represent them at the arbitration as well as costs such as the hire of a venue for a hearing. The usual arrangement will be for each party to bear their own legal costs but the cost of the venue and other incidental costs will usually be borne equally. However again the arbitrator has discretion to order a party to pay all or some of the legal or other costs of the other party if that is deemed appropriate for the same reason set out above.

SCOPE

The parties can ask the arbitrator to deal with all of the financial issues or alternatively limit his or her involvement to one or two specific aspects. This flexibility, and the fact that the parties will have a final decision more quickly, can make arbitration more cost-effective than the court route.

There are some situations where arbitration may not be suitable, for example, if a party needs to obtain evidence from third parties such as trustees or business associates. An arbitrator has no power to compel third parties to produce documents or give evidence. Arbitration may not be suitable if there is a risk that one party might try to hide assets: an arbitrator cannot grant injunctions.

CONTACT US

For further information about arbitration agreements please contact:

Nicola Harries – Partner and Head of Family
Tel: 01483 401262 Email: nicola.harries@stevens-bolton.com

Caroline Gordon-Smith – Partner, Family
Tel: 01483 401215 Email: caroline.gordon-smith@stevens-bolton.com

 

The information contained in this article is designed to provide, for guidance purposes only, a general introductory summary of the subject matters covered. It does not purport to be exhaustive nor to provide legal advice nor should be used as a substitute for such advice.

© Stevens & Bolton LLP 2015

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Caroline Gordon-Smith, Nicola Harries

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