Arbitration in financial dispute resolution: the final step to reconstructing the default(s) and exception(s)?

Abstract

In this article, I argue for caution in embracing family arbitration as a new form of private ordering for resolving parties' financial disputes. I explain that family arbitration may be more successful than other forms of private ordering and final court hearings in enabling certain types of parties to resolve certain types of disputes. I consider why family arbitration may not become numerically significant despite its potential benefits, but may be much more important in normative terms. Lawyer-led negotiations remain the most common form of out-of-court resolution and constitute the de facto default form of bargaining in the shadow of the normative regime framed by ss 23–25 Matrimonial Causes Act 1973. Together with the transformation in approach to nuptial agreements, family arbitration may mark a normative shift towards autonomy and private ordering. I question whether this is a desirable step for family law, at least before we have resolved the underlying policy debate.

Keywords:

• family arbitration
• alternative dispute resolution
• nuptial agreements
• ss 23–25 Matrimonial Causes Act 1973
• autonomy
• fairness

Acknowledgements

Thanks to both Mavis Maclean and John Eekelaar for constructive advice and discussion. Any errors that remain are mine alone.

Notes

 1. Dingwall (2010) provides an excellent overview of the earlier and more recent attempts to embed mediation in family law dispute resolution.

 2. The stakeholders in the new not-for-profit Institute for Family Law Arbitrators (IFLA) are Resolution, the Family Law Bar Association, and the Chartered Institute of Arbitrators. The IFLA is also working together with the Centre for Child and Family Law Reform, London Metropolitan University.

 3. Stowe (2011), a leading practitioner in this area, reasons as follows: ‘… I think the fascination with [mediation and collaborative law] now mostly rests with the professionals who conduct it. ADR has singularly failed to capture the imagination of the public, because there are so many perceived disadvantages which simply cannot be surmounted, no matter how hard one may try or attempt to gloss them over …’ In this regard, it is also interesting to note that the 2012 scheme is the second attempt at launching family arbitration. Burton (2012, p. 117) explains that ‘… several years ago, [the Chartered Institute of Arbitrators] and Resolution experimented in Family arbitration, which was them not taken forward’.

 4. Resolution (n.d.) reports that over 90% of cases handled by its lawyers are resolved without the need for a final hearing in court. See also Roberts (2008, p. 14).

 5. But Malik (2012) found that there was very little empirical evidence of empirical councils asserting jurisdiction in this way. See also Douglas et al. (2012, p. 156); Eekelaar (2011, p. 1209).

 6. Lord Bishop (HL Deb 19 October 2012, col. 1693) explicitly expresses concern about the impact of this provision on the IFLA scheme.

 7. Clause 4 is proposed to be amended as follows: ‘(2) Any agreement using religious laws concerning matters in this section shall have no effect.’

 8. Currently, parties who present an agreement to court to be recognised in a Consent order do not have to declare the basis upon which the agreement was reached, i.e. who officiated the arbitration. Without a precondition that the parties declare the basis, the court could not know whether reasonable agreements were either religious or non-religious. Ahmed and Calderwood Norton (2012, p. 370) note that the government has considered introducing this requirement.

 9. In his judgment in Lykiardopulo, Thorpe LJ ([36]) provides a good list of the ways in which family court proceedings are special.

10. Dingwall (2010) provides an insightful analysis of the relationship between the assumption made about the family court system and the policy drive for expanding the use of mediation.

11. Sir Peter Singer (2012a, 2012b) provides an excellent outline of the IFLA scheme, particularly in terms of the detailed rules of procedure envisaged to apply and connect the IFLA scheme to the AA 1996, the FPR 2010 and the Civil Procedure Rules 1998 (CPR 1998).

12. By comparison, the new Scottish arbitration scheme envisages certain children issues. The Family Law Arbitration Group (Scotland), FLAG(S), was established shortly after the general Arbitration (Scotland) Act 2010 (asp 1) was enacted. It is interesting to note that there is no procedural requirement similar to Practice Direction 3A in Scotland. Crandles and Loudon (2012) outline the current role of arbitration in the family law context. See also Note 23 below.

13. Taxonomic uncertainty might be one interpretation of Dingwall and Greatbatch's suggestion of the increasing multiplicity of mediators' objectives (2000, p. 251).

14. Fisher (2006) notes that Boulle now substitutes ‘transformative’ for ‘therapeutic.’ Fisher (2006, p. 2) also suggests that the term ‘transformative’ may not have an agreed meaning, noting that Bush and Folger, for example, define it as a process that qualitatively changes the nature of conflict.

15. Roberts (2008, p. 7) notes that ‘[t]he terms ‘mediation’ and ‘conciliation’ were often used interchangeably in Britain in the context of family disputes’. Herring (2011, p. 138) refers to this as ‘in-court mediation’ and discusses the debate over its status.

16. Similarly with nuptial agreements, the detail of the agreement may greatly affect where on such a sliding scale it would belong. One might compare an agreement reached between the parties that is simply formally drafted by a solicitor, an agreement that is the result of protracted negotiations between two parties and their solicitors, and a more flexible agreement that specifically includes an arbitration clause to authorise post-separation arbitration to finalise financial matters.

17. Dingwall (2010, p. 113) discusses ‘case triage’ by court staff in the mediation context, but we might consider extending the idea to referrals to a range of ADR options.

18. Barlow et al.'s (2012–15) ongoing ESRC-funded evaluates three overlapping methods: solicitor-led negotiation, collaborative law, and mediation.

19. The other two core characteristics Roberts (2008) proposes are confidentiality and procedural flexibility.

20. Dingwall and Greatbatch (2001), for example, argue that mediation has changed from focusing on parties' relationships and empowerment to focusing on managing settlements.

21. Pendlebury Cox (2012) explains that ‘[i]ncreasing costs and cuts in public funding are just two of the factors leading to an escalation of the numbers of Litigants in Persons or Self Represented Litigants …’. The Ministry of Justice's literature review (Williams 2011) notes that the precise numbers involved are uncertain.

22. Such an expedited process would be similar to that adopted by Coleridge J in relation to draft consent orders that result from a collaborative law process: S v. P (Settlement by Collaborative Law Process) (Fam Div) [2008] 2 FLR 2040 ‘… to provide as much encouragement as possible to people to resolve their difficulties in this civilised and sensible way’ ([5]).

23. Interestingly, whilst the Scottish approach is also currently confined to financial disputes, subsequent roll-out to children cases is also envisaged. Wise (quoted in Nicholson 2010) reasons: ‘Why not? Just as people can resolve disputes about children without involving the courts at all, in principle there is no reason why you couldn't arbitrate. But the focus of our group is on financial provision cases.’

24. In the Scottish context (governed by the Arbitration (Scotland) Act 2010), Jones (2012) assumes that arbitration is binding, and implies that is one of the key benefits, reasoning that ‘[i]n family matters, arbitration is the only alternative to litigation that allows for a final, legally binding determination to be made by an impartial decision maker’.

25. Their comments closely reflect those of the IFLA in its scheme FAQs, which also state that the object of the scheme ‘… is to achieve a fair result’ (IFLA 2012c).