What is Arbitration in Family Law?
Family law arbitration is a private proceeding in which a neutral third party – an arbitrator – is chosen with the consent of all involved to make decisions regarding the resolution of family law issues outside of court. An arbitrator is typically an attorney or an accountant with experience in family law. While similar to mediation, which is another form of enhanced negotiation, arbitration is not a form of negotiation at all. Once the parties and the arbitrator agree on the terms of the agreement, the arbitrator makes a binding decision on the matter(s) presented. The arbitrator presides over the hearing and may request the presentation of witnesses, experts, and other evidence just as if the proceeding was in court with a judge overseeing the proceedings .
This is the key distinction between arbitration and court proceedings. The parties to an arbitration may present themselves – or agree to represented by an attorney – in the proceeding, but the arbitrator is the one who is ultimately granted the authority to decide the outcome of the case. In contrast, a court may dismiss a proceeding entirely, or if it hears the matter, may issue any order it believes necessary which may be contrary to the wishes of one or both of the parties. Since in arbitration the parties consent to be bound by the decision of the arbitrator, they are protected by state or province law from any non-consensual order of their arbitrator. Once the arbitrator has made his or her decision on issues that were submitted, it is a final order, not subject to appeal or any opportunity for re-litigation.
Advantages of Family Law Arbitration
As an alternative dispute resolution process, family law arbitration offers several key benefits for parties. High among them are privacy, speed, cost-effectiveness, and flexibility.
Privacy – A major benefit of family law arbitration is that the process is confidential and private. Unlike traditional litigation, in which proceedings are held in a public court setting, family law arbitrations are confidential. For many parties, this is one of the main reasons for choosing this process. When it comes to sensitive issues, including financial affairs and child custody, privacy is often very important. Not only do a lot of people want to keep their business out of court, but the idea of public records often makes people uncomfortable. Confidentiality is a key reason why a lot of couples and divorcing spouses choose arbitration over litigation.
Speed – Many family law arbitrations are able to conclude in just a few hours, which helps to reduce the stress and anxiety surrounding the matter. Litigation can take months or even years, which can be extremely taxing for both adults and children. While extremely expedited arbitrations do depend on the specific nature of the case, it is not uncommon for matters to be wrapped up within six months. Without judges’ schedules to consider and the typical procedures associated with family court, the process can be tailor-made to fit the unique needs of the individuals involved.
Cost-Effectiveness – It goes without saying that the costs associated with litigation can be exorbitant. Between filing fees, attorney’s fees, and the stress that often accompanies high-stakes devastation, there’s no doubt that most people would like to find a more affordable way of reaching a resolution.
This is one of the biggest benefits of arbitration. Because the procedure is shorter, more streamlined, and more private, it dramatically reduces the cost. While exact costs do vary, arbitration is typically less expensive than litigation.
Flexibility – Family law arbitrators have the advantage of flexibility. While it is the agreed upon authority of the parties to appoint a neutral party, the two parties mutually determine what rules the arbitrator should follow. In fact, it’s not uncommon for both parties to agree that a decision will be binding or non-binding — a feature that isn’t available in traditional litigation.
The Process of Family Law Arbitration
The arbitration process typically begins with the parties signing a pre-arbitration agreement. The arbitrator must be chosen and agreed upon by both parties. The parties may agree to an expedited proceeding or a lengthy one. As stated previously, the parties are free to choose the arbitrator and the rules that will apply. The rules can mirror those applied by the court in probate, family, or circuit court. There are also rules promulgated to be used when parties choose arbitration by the American Arbitration Association, which includes timing, discovery, awards, and other related issues regarding the arbitration process that mimics aspects of civil court proceedings.
Both parties will present their position to the arbitrator. After considering each party’s position, the arbitrator will render a decision that is usually final and binding. The parties can only seek review to the Court for questions of law or to remove the arbitrator on grounds that the arbitrator disclosed information that was not disclosed to all parties or the arbitrator had an undisclosed relationship to one of the parties. The parties usually do not have the right to appeal an decision by the arbitrator.
Family Law Matters Ideal for Arbitration
Family law arbitration can be used to resolve a variety of disputes, but is most commonly used to settle divorce settlements, disputes with respect to child custody and parenting time, allodial rights, property division, matters of spousal support, and child support. Aside from those issues, parties may request that arbitration can also be used to settle issues relating to domestic violence, child relocation, valuation and transfer of assets, and financial disclosure.
In light of the broad scope of family law issues that can be settled through arbitration, litigants in family law matters have the ability to expedite their litigation process, reach an outcome that is beneficial to their personal situation, and maintain control over their case by being able to choose an arbitrator, the place in which the arbitration will be held and the manner in which the arbitration proceeding will be conducted.
How to Select an Arbitrator
When an arbitration clause is included in a marital settlement agreement or post-judgment stipulation, the parties must find an arbitrator to resolve any disputed issues that may arise after the dispute was filed with the court. If the arbitration is not part of the marital settlement agreement then the parties have to agree on whom will be the arbitrator or they can use the following process.
If the parties cannot agree upon an arbitrator, any party may seek to have the court appoint one for them. The Superior Court Clerk’s Office in the county where the judgment (the divorce decree) was entered maintains a list of arbitrators , which is available on the website of the Superior Court of New Jersey. The list may be viewed at no cost online. When the arbitration appointment process is requested it is typically pursuant to the terms of the Agreement.
The parties are free to choose anyone to be the arbitrator. However, it is suggested that general fees be determined in advance. The parties or their attorneys should not select an arbitrator who lacks experience or knowledge in the family law area that is in dispute. This is particularly important because in New Jersey, there is no appeal from the decision of the arbitrator. Once the decision is made it is final. As such, you want to be sure that the arbitrator selected is experienced in the area of law being arbitrated so that they do not render a decision that is somehow contrary to public policy or has no basis under law or equity.
Laws Regulating Arbitration in Family Matters
Family law arbitration in Canada is governed under Part 2 of the Arbitration Act, 1991, SO 1991, c 17. Section 9(2) identifies the provisions of the Act that "apply with necessary modifications". These provisions include: sections 2 (interpretation), 10 (arbitration agreements), 14-19 (making of arbitral award), 23-25 (correction and clarification of arbitral award), 30-34 (arbitral awards and arbitral tribunal), and 38 and 39 (enforcement of Canadian arbitral awards).
Ethan Lipton notes that the Supreme Court of Canada has broadened the scope of judicial intervention in arbitration significantly. In Seidel v Telus Communications Inc, 2011 SCC 15 at paragraph 36, "the Supreme Court recognized that courts have an inherent jurisdiction to protect their own processes, meaning that courts can intervene in private arbitration proceedings if it is necessary to protect the integrity of the judicial system," so long as the Canadian Charter of Rights and Freedoms is not engaged. In Sattva Capital Corp v Creston Moly Corp, 2017 SCC 50 at paragraph 43, the Court stated that "a court will be entitled to correct those errors that cannot be categorized as any kind of error in the application of the law". However, at paragraph 62 the court cautioned against "judicial intervention… based on context-independent conceptions of unreasonableness" and at paragraph 64 said: The legal framework for family law arbitration must be built not on generalities but on the context of the Family Relations Act. "Reasonableness" must be assessed in light of the statutory interpretation principles set out in Creston.
Marvin Zuker in Family Law Arbitration in Canada states that certain provisions of the Arbitration Act, 1991 mandate to arbitration, such as: section 3(1) (A party to a dispute in respect of a matter mentioned in subsection (2) may refer the matter to arbitration in accordance with this Act), and section 2(1) [definition of "arbitration agreement" which states], " ‘arbitration’ means any arbitration whether or not administered by a permanent arbitral institution".
Where the Family Relations Act, RSBC 1996, c 128, s 24(4) stipulates the enforcement of a support order "if made by way of arbitration, [to] be enforced as if it were an agreement made by a spouse," and does not provide an enforcement mechanism, Marvin Zuker recommends the appointment of an arbitrator (see section 24(2)(b)) rather than an arbitrator such as an arbitrator appointed by the provincial court division of the Supreme Court of British Columbia under s 8 of the Arbitration Act, 1996.
The Family Law Act, RSBC 2011, c 25, was adopted in March 2012 and the new Child Support Guidelines were adopted in April 2013, both defining their terms.
Possible Hurdles and Drawbacks
While family law arbitration offers a host of benefits, it also presents some challenges that those seeking a resolution through arbitration must be aware of. These include ensuring the enforceability of arbitration agreements and decisions and the limited scope of appeals.
Enforceability of arbitration agreements. As a creature of contract, the enforceability of an arbitration agreement is essential to ensure that the arbitration process can be completed. This presents challenges in at least two ways. First, an arbitration agreement must be validly entered into. If it is not, the arbitration court may lack jurisdiction to hear the matter. For example, courts applying the old rules have set aside arbitration agreements where they did not reflect the intention of the parties to settle their dispute in this way. In one such case, Justice Moshidi of the High Court, Pretoria, found that the respondent to court proceedings had signed a written consent paper submitting the dispute to the arbitrator merely to assist the other party to a pending application (which had been deemed urgent) and not because he actually opted for the process in the consent paper. Because the consent paper was prima facie invalid it was set aside and held not to count as a reference to arbitration.
Second, the agreement to arbitrate must be entered into voluntarily by all parties. In at least two cases, however, the courts have found that an imbalance of power within the parties to the arbitration agreement (usually as a result of a history of domestic violence between the parties) has resulted in the party alleging domestic violence entering into the agreement under duress. In those cases, the arbitration agreement was set aside. Thus, it is clear that an arbitration agreement needs to be carefully drafted to ensure that it will be deemed valid later on.
Enforceability of arbitration decisions. In certain circumstances, the arbitration award must be reviewed by the courts before it can become binding. The Arbitration Act provides (in section 33(1)) that a court may be asked by any party to set aside an arbitration award or to enforce it. Furthermore, a party can appeal an arbitration award in the High Court on various grounds. In section 69 of the Arbitration Act, the grounds on which an appeal may be taken against an award are closely set out. However, there is ample authority to show that the grounds for review of an arbitration award as set out in section 33 of the Arbitration Act remain available and that they, too, can be used to set arbitration awards aside. More particularly, a court may review an arbitration award for a number of reasons, including that the arbitrator was biased, that the award induced an unreasonable error or was obtained through corruption, fraud or undue influence, that the arbitrator failed to apply his or her mind to issues, that the arbitrator made a ruling not referred to him or her for determination, that there was a misconduct or irregularity affecting the award, or that the award was beyond the authority of the arbitrator.
Clearly, the grounds on which the courts are required or allowed to set aside arbitration awards are wider than the grounds for appeal of arbitration awards. This must be borne in mind by parties and their legal advisors who, when seeking a resolution, may prefer the more flexible procedures of court set out in the Magistrates’ Courts Rules and the Uniform Rules of Court.
Getting Ready for Family Law Arbitration
The first step in preparing for arbitration is to determine whether arbitration is indeed the most effective and desired form of dispute resolution given some or all of the various considerations set out above. When arbitration has a suggested suitability, the process of preparing for arbitration is less involved than that of other dispute resolution forums in family law. The main determining factors are the specific items which should be submitted to the arbitrator.
Unlike family law litigation where the entire controversy is usually subject to the court’s jurisdiction, arbitration is limited to the specific issues submitted. These issues are either agreed upon by the parties or determined by the arbitrator in the event of a disagreement as to the items to be heard prior to the start of the arbitration hearing. With those specific issues determined, the parties prepare and submit documentary materials to the arbitrator for consideration and, generally speaking in most cases, hearing.
For example if one of the items to be heard at the arbitration is child support, the parties may be directed by the arbitrator to prepare and submit to the arbitrator an income statement budget, child support guideline worksheet, Arrears statement, child care information from the providers and a few other documents or statements (e.g., medical expenses, etc.). Unless there is a special circumstance, these materials are often submitted by fax or e-mail one to two days before the actual hearing. These submissions are not served on the other party and the attorney representing the party submitting the documents may be present when the documents are reviewed and considered by the arbitrator . The attorney is responsible for ensuring that during the review process there is no improper oral or written communication between the other side and the arbitrator. Familiarity with the evidentiary ruling requirements, and the development of a full and accurate record for purposes of appeal are just two more reasons why having legal counsel is of vital importance. A failure to have competent legal counsel can result in haphazard preparation which may ultimately defeat any appeal.
In most family law arbitrations, there will be no oral testimony. Unless there is an issue of credibility, most arbitrators have no interest in hearing oral testimony at arbitration; nonetheless, there are always exceptions. The process for addressing these issues is far from ordinary and the practitioner needs to be able to make a quick assessment as to whether or not a request is appropriate and, if so, whether or not it is practical and/or necessary. The request for live testimony is made to the arbitrator prior to or at the arbitration hearing. If the arbitrator is inclined to honor the request, those witnesses deemed appropriate are usually offered live testimony (unless the parties agree that live testimony is not necessary) followed by cross-examination and further testimony in rebuttal. At the same time, the parties can offer video deposition testimony when allowed by the arbitrator or when agreed to by the parties. For the mandatory child support guideline proceedings, oral testimony is rarely, if ever, allowed.