Introduction
The Australian family law system is currently undergoing many changes, leading to a highly politicised and uncertain environment that has only exacerbated issues with the court system. While it may seem that governments and lawyers alike are the only beneficiaries of the inefficiencies of the family law jurisdiction, one form of alternative dispute resolution is on the verge of making a great resurgence that may make clients the real winner.
Arbitration is the flavour of month – yet, rather than being just a passing fad, it has the potential to revolutionise the adversarial nature of the family law system.
What is Arbitration?
Arbitration is a form of alternative dispute resolution whereby parties present arguments and evidence to an independent third party (‘Arbitrator’), who is vested with the powers of the court and makes a binding determination in a case. The Arbitrator can decide a specific legal or factual issue in the case or make an overall ruling that results in the entire settlement of a matter. It is generally a more formal, structured and powerful process than mediation or conciliation as it results in a binding decision. However, it is much more informal, flexible and efficient than a Final Hearing. In the family law jurisdiction, the Arbitrator must be accredited by the Australian Institute of Family Law Arbitrators and Mediators to preside over a court-ordered arbitration.
When is Arbitration suitable?
Arbitration is ideally suited for cases where mediation or conciliation has not led to an agreement, yet the parties do not want to incur the delays and financial and emotional costs of a Final Hearing (which can take up to 2-4 years). Arbitration is cheaper and quicker than going to court and therefore where parties are in an intractable dispute involving a nominal or modest-sized asset pool, it may enable the parties to obtain a binding decision in a cheaper and quicker manner than contested court proceedings.
Alternatively, Arbitration may be suitable where the parties are moving towards settlement yet are unable to agree on a discrete issue or require determination of a particular legal question (such as the weight of contributions or future needs, or the treatment of a business/trust structure). Arbitration may also be helpful where the matter is not a novel case that requires judicial determination and would be unlikely to result in new family law precedent.
The Chief Justice of the Family Court of Australia and the Federal Circuit Court of Australia, who is likely to oversee the merger of the two courts if this occurs, has gone out in public support of Arbitration. In November 2018, Chief Justice Alstergren stated:
"Private arbitration in appropriate property cases is an extremely efficient way for parties to quickly obtain a determination and resolution of their dispute, rather than waiting for a trial date. It may be for a preliminary issue or to determine the entire matter.
Arbitration was utilised during the Federal Circuit Court’s national call overs of family law matters and we will continue to work with the profession to ensure that the family law courts have the capacity to expeditiously deal with issues that may arise during the course of an arbitration which includes fast tracking applications seeking a review of arbitral awards."
Having received the Chief Justice’s stamp of approval, Arbitration may take on a new form of significance and be the subject of a judicial push through 2019.
Case Study: Smith (pseudonym)
In the pseudonymised matter of Smith & Smith, the matter was referred to Arbitration by the court with consent of the parties. The matter was ripe for Arbitration as it involved a small asset pool, a bitter and intractable dispute between two parties who had polar opposite views as to their entitlements, and a need to resolve the dispute in a just, quick and cheap manner without resorting to Final Hearing.
The parties prepared for the Arbitration to proceed as if it were Final Hearing, including preparation of documents and preparation for examination-in-chief and cross-examination of the parties. However, the fluid state of various issues such as the lack of an agreed business valuation (being one of the main assets of the non-superannuation pool), the lack of definitive parenting arrangements (in circumstances where this was the main s 75(2) factor to be determined), and the late service of evidence as to the parties’ health-related future needs meant the matter was not suitable for an arbitral determination as any binding decision would likely be an appellable minefield in the absence of fundamental, definitive evidence.
After the Arbitrator identified issues pertaining to the Joint Balance Sheet and other issues that required resolution before any determination could be made, the parties spend the remainder of the day negotiating and reached an overall property settlement inclusive of a Binding Child Support Agreement. The Arbitrator provided significant assistance in liaising with judicial chambers to ensure the expeditious making of sealed Orders, which were released the following day and enabled all orders to be executed within a 72-hour period from settlement.
Conclusion
With the costs and delays of family law litigation only increasing, Arbitration may be the circuit-breaker needed to bring about a resolution to intractable disputes that do not require the expertise of the Court or have little precedential value. With solid preparation and collaboration between the Arbitrator and the parties, Arbitration has strong prospects of bringing about an overall settlement that gets parties out of the toxic court system and leads to the just and equitable resolution of their family law matter. Whether or not it is subject of a judicial push in 2019, practitioners should strongly consider Arbitration and encourage their clients to participate in the process in appropriate matters that require an informal, flexible, quick and cost-effective resolution for the benefit of all involved.
This is not legal advice.
