As many couples are now choosing to adopt out of court methods to resolve financial settlements within the context of a divorce, they can feel concerned about whether there is definitely an end in sight if they do not manage to reach an overall agreement when there is no court timetable in place.

Ultimately, unless both parties are keen to progress matters to a conclusion, a court timetable remains the only way to guarantee a determination will happen at a final hearing if they can’t reach an agreement sooner.

The most popular way to achieve some judicial input without the delay associated with a court process is to have a private FDR where an experienced barrister or retired judge is appointed jointly by the parties (and funded equally) to give an indication of what a court might order having heard representations from their respective barristers about proposals to settle the case. At a private FDR, just like the court-based FDR, the “judge” is unable to impose an outcome on the parties and its success very much depends on the willingness of both parties to compromise and reach an agreement.

Couples arrange private FDRs (for speed and to control who their judge is) both within and outside of a court process. The court can direct the parties to attend a private FDR if they agree to do that in place of a court-based FDR and are encouraged to support that.

What if the private FDR doesn’t work outside of a court application?

If they don’t manage to settle at a private FDR and have no court timetable in place, there is another alternative method to finalise the divorce settlement. That is arbitration whereby, again, a barrister or retired judge is appointed by the parties – but this time, to actually decide their case.

What is involved in arbitration?

The parties complete a form confirming the issues that remain in dispute and what is agreed and sign up to have the arbitrator determine those issues for them. Arrangements are made for a mutually convenient time for all parties and the arbitrator and sufficient time to deal with the case is set aside.

A detailed arbitration agreement is then drawn up by the arbitrator and approved by both parties’ solicitors setting out the detailed rules under which the arbitration will be carried out and confirming that the couple agree to be bound by the arbitrator’s award. They are then asked to sign that so that it is contractually binding on them.

The arbitration itself is carried out much in the same way as a final hearing would be in a Court process:

  • Both parties give evidence orally (in addition to detailed written statements that have already been prepared on their behalf setting out their respective cases).
  • The barristers appointed by both parties make closing oral arguments (in addition to their written skeleton arguments presented before the arbitration hearing starts).
  • The arbitrator makes a decision which will either be delivered orally at the end of the hearing if there is time or confirmed in writing after the date, just as is the case within a court process.
  • The parties then have to incorporate the terms of the arbitrator’s award (after clarifying any queries they have with the arbitrator) into the form of a consent order which is then submitted to the court for approval in the usual way. Whilst it adds a step of having to apply to the court, that is a very minor administrative exercise and not one that adds significant cost for the parties.
  • There is the usual right to appeal within 21 days.

What are the advantages of arbitration as opposed to a court-based final hearing?

Arbitration is more flexible than a court process because the parties and their advisors can agree the rules under which the arbitrator will determine the case. For example, whilst the costs rules in family finance cases now are that generally both parties should expect to pay their own costs and will not be held responsible for costs incurred by each other except where there has been litigation misconduct by one party. In an arbitration, they could agree that those rules will not apply and that if one of them has made an offer to settle the case which is achieved in the final arbitration award, or even improved upon by the award, that they should have a proportion of their costs paid by the other spouse.

That flexibility also means you are not stuck with the rigid restrictions the court would impose on the size of the bundles of documents placed before the judge.

As with a private FDR, the arbitrator will have reviewed the bundle of relevant documents put together by the parties’ solicitors in detail in advance of the arbitration hearing and will be fully prepared and devoted to their case (which, sadly, is not always the case in a court process when judges often are not given the papers until the time of the hearing and might have other cases they need to squeeze into the day).

It ensures that arrangements for the timing of the hearing can be mutually convenient, in a venue which is comfortable for the parties and their legal teams and entirely private. With the move towards greater transparency in family courts and a move towards allowing press and bloggers access to family hearings, the knowledge that an arbitration is conducted privately is very appealing to some people.

In our experience, the costs saved by the speed at which an arbitration can be concluded in comparison with a court process more than compensates both parties for the modest additional cost associated with paying the arbitrator’s fees. Those costs are usually in the region of £4,000-£8,000 depending on whether the arbitration would take place over one or two days and the barrister/judge appointed. That will be driven by the complexity of the assets involved and the level of dispute between the parties.

This move towards private adjudication is on the increase with delays and consequently costs associated with the Court process continuing to grow.

For more information do seek specialist advice from our Family Law team.