This document is about private arbitration and its value as an alternate dispute resolution option in family law matters. This document attempts to briefly inform you of what private arbitration means and briefly summarises some of the advantages and disadvantages of arbitration.
What is family arbitration?
Arbitration is a fast track private tribunal based approach to conflict or dispute resolution running parallel with the existing publicly funded court system which allows those who prefer privacy to publicity, simplicity to complexity and speed to delay the option of choosing their own decision maker and procedural rules.
Family Court arbitration can only be ordered by the Court with the consent of both parties.
Disputing parties who have not filed an application in Court however can agree to arbitrate both or either financial matters or mixed children and financial matters without Court sanction.
Popular models of arbitration:
There are three major kinds of arbitration:
- a fully contested hearing much like a private court;
- a modified defended hearing based on less adversarial procedures but forensic in nature; and
- an arbitration “on the papers” where a decision is made based on agreed or uncontested facts or documents without hearing witnesses.
Some of the advantages of arbitration:
- they ensure complete privacy;
- usually save time and money through abbreviated pre hearing procedures and provided the right arbitrator is chosen a private arbitration would in most cases overall be cheaper, faster, simpler and easier than Court hearings;
- there is greater accessibility, flexibility and convenience with a private arbitrator;
- a private arbitration can limit the issues and provide a speedy determination of the real issues circumventing needless traditional processes or steps such as pleadings and public disclosure and offering more flexible methods and procedures to resolve the matter; and
- an arbitration is normally less technical and less formal than a Court hearing.
Some of the disadvantages of arbitration:
- a private arbitration is funded by the parties whereas a Court hearing is funded by the government;
- a Court decision is made by a judge or other judicial officer appointed by the government and some people feel the need to have a decision made by a totally independent judicial officer rather than through a privately hired arbitrator;
- unless the parties want to resolve the matter and unless the correct arbitrator is chosen and the procedure is streamlined, there is a perceived benefit in proceeding through the Court process so that the Court and the judicial officer hearing the matter has at their disposal substantial enforcement procedures including contempt of court and other remedies;
- some arbitrations “mimic Court proceedings with all their attendant costs and delays”. If this occurs, some arbitration processes can become longer and almost as expensive if not just as complex as a traditional trial in Court;
- parties may overuse or misuse discovery procedures and require investigation of numerous documents. In this case, such a matter may better be served by being heard by a Court;
- if the arbitrator’s award needs to be reviewed, then there will potentially be a re-hearing which will increase costs and reduce the attractions of arbitration;
- some clients are reluctant to pay for something, namely private arbitration, when the Court can determine their matter for free;
- an arbitrator’s award is only subject to Court review for a legal error; and
- at this point in time, the government has not granted rollover relief for capital gains tax issues or duty issues arising under an arbitrator’s award. This is the biggest drawback to private arbitration if the value of the pool of assets is substantial in which case capital gains tax and revenue implications may well be a major issue.
What makes an arbitration work?
- A successful arbitration largely depends on the ability of and the level of the party’s confidence in the arbitrator chosen. The single most important decision therefore is the choice of an arbitrator. In this regard an arbitrator’s name must also be on the list of currently maintained arbitrators by the Law Council of Australia.
- Arbitrators are obliged by law to provide accessible and affordable justice. Their role, powers, duties and functions as well as the way the hearing process is to be conducted are all governed by agreement between the parties and not by rules and regulations of Court.
- While the same law of proof and rules of evidence are applied in arbitrations as a Court hearing, they can be customised or simplified on a case by case basis by agreement between the parties.
- Pursuant to the provisions of section 13F of the Family Law Act, the Family Court can make appropriate orders “to facilitate the effective conduct of arbitration” so that the private arbitrator has recourse and the parties have recourse to the Court to enforce arbitration procedures.
- The arbitrator or either party to the arbitration may refer a question of law to the Court for determination.
- There is an overlapping and complementary role of the Court in relation to arbitration of disputes to give arbitration an effective outcome.
The contents of this paper are not intended to be a complete statement of the law on any subject and should not be used as a substitute for legal advice in specific fact situations. HopgoodGanim Lawyers cannot accept any liability or responsibility for loss occurring as a result of anyone acting or refraining from acting in reliance on any material contained in this paper.