Family Law Arbitration – A First-Hand Perspective

By Charles Letts
Senior Associate, Feeney Family Law

With the increase in family law practitioners who are nationally accredited arbitrators it is not unusual to see articles or social media posts from those arbitrators spruiking the benefits of arbitration in a family law context.

If I were being cynical, I’d suggest it was an attempt to drum up business rather than a public service announcement but having recently assisted a client through an arbitration process, there really are many things that arbitration offers that can be of significant value to the right client.

One thing that I don’t think gets discussed enough when talking about arbitration in the family law context is how much control the clients have over the process.

In my experience, arbitration is often described and viewed in very similar terms to a “standard” family law litigation experience, with the big difference being that the parties have “hired a decision maker” and so don’t have to wait as long as they would in a normal litigation process.

Whilst the lack of waiting is certainly a big part of the allure of arbitration, something that should be discussed and considered more is the way that there are so many options available to focus the arbitration on what is important to the clients and the actual resolution of the matter.

For example, if most of the historical facts of the relationship are agreed, then the use of a statement of agreed facts and a list of issues in dispute can significantly limit the length of final affidavits and assist in focusing them on what is actually important, along with limiting the time necessary for cross-examination.

Likewise, if the parties decide that there really aren’t any relevant factual issues remaining in dispute, the arbitration can be done on the papers or without any cross-examination at all.

In relation to the costs of arbitration, while the up-front cost of the arbitrator is certainly more than Court filing and hearing fees, the arbitration costs are likely to be a very small portion of the total legal fees.

I would expect that most parties could expect to see significant cost savings from being able to constrain the process to what is actually necessary to appropriately determine the matter. This includes not having to continually update financial positions, review new material and attend at the many procedural mentions and/or interim hearings that are generally necessary prior to finally getting a result.

In addition, if circumstances change such that the arbitration needs to be re-scheduled, it is far simpler to do so than trying to get new trial dates.

For our client, who had a complex financial matter with a significant legal question that needed to be resolved and some timing issues that related to that legal question, arbitration was absolutely a better option than waiting for a property only trial in the Federal Circuit Court or Family Court.

The arbitration process allowed the parties to engage an arbitrator who had the confidence of everyone involved, limit the extent of the material necessary for trial through a statement of agreed facts and list of issues in dispute and resolve a matter that hadn’t been able to be settled. When it became clear that it was going to be necessary to wait until a particular financial situation outside of the parties’ control was resolved before proceeding to have the matter determined, it was simple to adjourn the arbitration for as long as was necessary (but no longer) before jumping straight back into the process.

In addition, the parties were guaranteed to have the Award delivered, and subsequently registered, in a timeframe known to everyone in advance. The process of having the Award registered was simple and very user friendly, and it appears that the Court is strongly supporting the process by ensuring sufficient resourcing is available.

Whilst it is impossible to know for sure, I expect that the arbitration process ensured an outcome for our client at least 12 months earlier that if it had to go to a trial in the Court process.

So, what characteristics would a matter usually have before I would recommend arbitration as an option? As I see it, there are three main things I would look for:

  • A client who reasonably trusts the other party to “play by the rules”.

If this level of trust is not present then it is likely that, irrespective of what process is used, the matter is going to require active case management to ensure that the pre-hearing steps are dealt with appropriately. Significant levels of dispute relating to preparing the matter for finalisation (such as valuations, disclosure, and other such issues) is going to materially reduce, if not eliminate, the time and cost benefits of the arbitration process as opposed to a traditional Court process.

  • A generally uncontroversial factual background where neither party has major credit issues.

I don’t mean that the matter needs to be simple, or that both parties necessarily have exactly the same recollection of all events, but I would suggest that the more factual issues in dispute or credit issues that exist the less likely a client is going to benefit from an arbitration process.

Whilst a full-blown arbitration process can provide for a similar level of cross-examination and fact-finding enquiry as a trial, matters where the outcome of the case was likely to turn on the factual findings or findings of credit in relation to one or other of the parties are less likely to be appropriate for arbitration given the constrained appeal rights compared to a traditional Court process.

  • A situation where it is unlikely that a negotiated outcome can be reached.

This seems to mostly come up in circumstances where the best offer from the other party doesn’t even reach the lowest end of what you consider to be the range of appropriate outcomes.

A common example of this (combined with point 2) is where the parties simply cannot agree on what percentage adjustments should be made for the respective contributions and s75(2) factors, even though there are no major factual disputes about what was actually done and/or what the future likely holds.

It may also occur in circumstances where there is a “win/lose” point that neither party can reasonably concede because the benefits to “winning” that point are so great.

Something to keep in mind when in an arbitration process is that there is always the option of reaching a negotiated outcome, which can either be documented in the usual way through Consent Orders, or alternatively through a consent Award that is subsequently registered.

In summary, if you get a matter you aren’t able to resolve but where you trust the lawyers on the other side, the factual background to the matter is clear and both parties are generally willing to comply with their disclosure obligations, I am of the view that an arbitration is often going to provide a much better client experience than slugging it out through the Courts.