Can I attend Arbitration to deal with finances on divorce?

On the run up to the festive period, BLM's Private Wealth practice is sharing a series of blogs demystifying elements of the legal process impacting individuals and families seeking legal remedies.

In #12DaysOfChristmas #12DaysOfFamilyLaw series, we’ve discussed the cost of divorce, but as it’s the season of goodwill, it’s worth flagging that there are alternatives to court proceedings.

Maybe it’s time to consider whether arbitration might be suitable for you and your spouse to deal with finances on divorce?

England and Wales

What is Arbitration? 
Arbitration is an alternative dispute resolution procedure that can be used instead of, or alongside, court proceedings to deal with finances on divorce. It is a relatively new concept in family law, having been launched by the Institute of Family Law Arbitrators (IFLA) in February 2012.

Starting Arbitration
You and your spouse would need to enter into an official agreement to arbitrate. This agreement would be binding, meaning that, once the agreement is in place, you cannot back out of the arbitration unless both parties agree to that.

Appointing an Arbitrator
You and your spouse would need to appoint an arbitrator and, in particular, one who has experience of dealing with finances on divorce. You could appoint an arbitrator with niche specialism in accordance with your case, for example an arbitrator with experience in dealing with multiple and substantial pension pots or an arbitrator who has experience in dealing with international businesses and business assets. If you and your spouse are unsure who to appoint, your respective solicitors can recommend arbitrators they have used before or who have been recommended to them. If you and your spouse still cannot agree on an arbitrator, the IFLA will nominate an appropriate arbitrator from their panel.

Putting a stay on court proceedings
If court proceedings have been started when parties agree to arbitrate, the respective solicitors would need to write to the court seeking permission to “stay” (freeze or put on hold) the proceedings pending the outcome of arbitration. They would need to send the signed arbitration agreement to the court and also a document known as a consent order. The court would then grant a stay.

Procedure
At the outset, the arbitrator would make clear what has to happen before a final decision can be made. The arbitrator would ask you to provide each other and them with information or documents in a specified manner within a specified time. For example, the arbitrator would ask you to complete a statement of your financial position using a document called a “Form E”. After these forms are exchanged, the arbitrator would ask you to draft a questionnaire raising any questions you would like your spouse to answer and requesting any relevant documents you require. After the exchange of questionnaires, the arbitrator would consider which questions should be answered. The arbitrator would also consider whether any properties, pensions, businesses and so forth need to be valued and the logistics of getting this done.

Award
An arbitrator’s final decision is called an “award”. Once the arbitrator has all of the necessary information to make an award, he or she will do so within a reasonable time. An arbitrator’s award binds the parties and is intended to be final. Following an award, your respective solicitors should place the terms of that in a consent order and send this to the court for approval. Having a court order provides an extra level of security, making enforcement easier if it comes to that.

Advantages of Arbitration
Among other advantages, arbitration is flexible and can be tailored to your needs and availability. The key dates and times for the arbitration could be chosen by you, unlike in court proceedings where a court sets the date and time documents are to be exchanged and hearings are to take place. Further, the chosen arbitrator remains with the case throughout the entire process, unlike in court proceedings where you cannot choose what judge you will get on the day and the sitting judge often changes from hearing to hearing. Similarly, you and your spouse could choose a specialist arbitrator who has experience in dealing with finances on divorce, unlike in court proceedings where there is no guarantee that the judge you will get on the day will have the same niche level of knowledge or experience. The arbitrator’s award is binding and there are very limited grounds for a challenge or appeal. Arbitration is also often quicker than court proceedings, especially given the delays and backlog the court is presently dealing with. The more streamlined and quicker the process, the more likely it is that you would save costs.

Scotland

The position in Scotland on arbitration to deal with finances, or particular financial matters, on divorce is very similar to the outline for England & Wales given above. Our experience in Scotland has also shown that arbitration tends to be quicker, cheaper and that it brings more client satisfaction than having a court determine the financial matters. Litigation is inherently risky, prone to delay and its adversarial nature often polarises the parties’ positions. Certain specific points on arbitration in Scotland in this area include:

  • There is a specific body involved with Scottish family law arbitrations, the Family Law Arbitration Group Scotland (FLAGS).
  • Arbitration is possible for a specific, or discrete, matter within the divorce.
  • Court proceedings can be “sisted” (the Scottish word for a stay, meaning to freeze or put on hold) pending the outcome of the arbitration but if only a specific or discrete matter has been remitted to an arbitrator then the court proceedings could continue alongside the arbitration though the court would not be able to deal with the matter remitted.
  • Unlike in England & Wales, parties do not need to send to the court a signed arbitration agreement before making a request for the proceedings to be sisted.
  • There is no direct Scottish equivalent to the “consent order” for England & Wales.
  • Once the arbitrator’s award is available, parties normally simply ask the court to grant a court order in terms of that award.

Overall, UK Wide

Overall, throughout the UK, arbitration is something that should be considered as a method of alternative dispute resolution in many family law cases and something that we are ready and able to speak with clients and potential clients about.

To read the previous blogs in our 12 Days of Christmas series, please click on the links below:

Day 1: Self-care tips during a divorce

Day 2: Why you need a Will

Day 3: Full financial disclosure: England & WalesScotland

Day 4:Are pre-nuptial agreements legally binding?

Day 5:Christmas bubbles and childcare arrangements during the COVID-19 crisis: Scotland

Day 6: How much does a divorce cost? England & Wales; Scotland

Day 7: What happens to my inheritance if I divorce?

Day 8: Top 10 divorce pitfalls

Disclaimer: This content does not present a complete or comprehensive statement of law, nor does it constitute legal advice. It is intended only to highlight issues that may be of interest to clients of BLM. Specialist legal advice should always be sought in any particular case.

Who to contact

Caroline
Gillespie

Partner and Head of Family Law, Scotland , Glasgow

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