With court resources in crisis and clients waiting three to five years in the family court system, many lawyers are seeking to offer alternative dispute resolution (ADR) methods to clients. Other ADR processes such as mediation may have been exhausted and collaborative law may or may not have been tried.
While a trial may seem like the only way to end a dispute, that is not always so. For spouses who can’t agree on disputes, but both nevertheless want to ‘exit’ the Court system, they can consider arbitration to resolve a financial dispute.
What is arbitration?
Arbitration is essentially ‘decision-making for hire’ – clients pay to have a ‘private’ trial conducted. Clients and lawyers can choose an arbitrator to make a final decision in their case about property and financial issues.
The arbitrator is often a retired Family Court Judge, or senior family lawyer (barrister from the family law bar, or senior solicitor). Clients will jointly instruct that person to determine their case, and to issue a written decision to bring it to an end.
Jones Mitchell senior partner Warwick (Rick) Jones is one of few qualified arbitrators in Australia. He has completed specialist arbitration training and is an approved practitioner acknowledged by the Law Council of Australia.
Why is it emerging now?
And while arbitration has been taught in universities around as a resolution option for family law disputes, there has been few specialist arbitration course modules. This has meant that many practitioners (outside ADR specialists) may have little or no understanding of arbitration law and practice.
It is only now with the court system in crisis that it is emerging as a more popular dispute resolution option.
How do arbitrations work?
For arbitrations in complex matters, they usually run just like a trial would run in Court. Written evidence is filed beforehand. There is oral examination of the spouses, and their witnesses, under oath. Parties are often represented by barristers, and their solicitor instructs the barrister at the arbitration. The lawyers deliver their arguments to the arbitrator at the conclusion of the evidence. The proceedings are tape recorded (so that a transcript can be prepared if necessary).
Some parties, in cases where the resources are limited, or where the issues in dispute are less complex, even decide to have the arbitrator determine the matter on the written evidence, and accompanying submissions, only, and without a formal trial. Similarly, where parties have been able to agree on all aspects, save for 1 or 2 ‘sticking points’, they can have a limited arbitration, where the arbitrator determines the contentious issues only, allowing them to then move forward with their agreed outcome.
Once the arbitrator is selected, he or she will work with the family lawyers for each party to deal with the procedural matters necessary to prepare for the arbitration – what evidence will be required; how many witnesses there will be; whether there are any objections to evidence or other preliminary evidentiary matters; the length of the arbitration and the sequence of witnesses. If the pre-arbitration steps run into difficulty, the arbitrator can conduct further hearings to get things back on track, and ensure that the case is ready to be arbitrated on the agreed day.
The Rules of Court specifically provide that, if the two parties are already engaged in litigation, they can effectively agree to suspend that litigation and participate in arbitration. Further, once the arbitrator’s decision has been delivered, those Rules provide a mechanism for it to be registered in Court, so that it has the same effect as an Order of the Court, and is therefore binding on and enforceable by the parties.
Absent agreement in other terms, the costs of arbitration (the arbitrator’s fee, and the cost of hiring the venue for the arbitration) are shared between the parties, even if those fees are paid by one party in the first instance. For an experienced arbitrator, the fee will depend on the time required to determine the arbitration and prepare written reasons. However, that cost is usually significantly less than the cost of a trial, particularly when the ‘hidden’ costs of delay until the trial are taken into account.
For those who disagree with the arbitrator’s decision, it can be appealed in the same way as an Order made after a trial. However, that appeal can only be filed on the basis that the arbitrator incorrectly applied the law (whereas Court Orders can additionally be appealed on the basis of asserted errors of fact). Some see this as an advantage – the decision of an arbitrator is arguably harder to overturn than a decision of a Judge, making the arbitration process more ‘final’.
In all respects, therefore, the arbitration looks like a trial would, save that the clients have ‘hired’ the Judge (the arbitrator), and the trial is being conducted, and paid for, privately.
Many clients say “But my former partner will never go for it”. Certainly, there will be cases when an adversary is immovable, and wants their day in Court, no matter what. But most people are not like that – they are stressed by the litigation, they are worried about the impact of conflict on any children, and payment of the legal costs of the process is a subject keeping them up at night. Even those who have not had to pay any legal costs to that point (because their lawyer has deferred their fees) will have in the back of their mind that their lawyer will require payment out of their ultimate settlement.
The best way to illuminate the real impact of arbitration is to extend an invitation to the other party to participate, setting out a table containing the following key information:
|Est. time to hearing||Est. time to publication of decision||Legal costs|
|Litigation||Not less than [22 months]*||Approx. 6 months||[$120,000]*|
|Arbitration||Approx. 4 months||Up to 2 weeks||[$60,000]*|
* THIS INFORMATION WILL NATRUALLY VARY FROM CASE TO CASE, AND IS FOR ILLUSTRATION ONLY
As the client’s family lawyer, you will be able to help with the data to be inserted into this table, but the difference between the two options is usually compelling. There are not many people who can ignore such significant savings in time and money. When cast in the following way to an adversary – youcould be out the other side of this dispute in less than five months from now – arbitration becomes an attractive proposition for most people.
For those litigants who are languishing in the system, their children getting older, their businesses under duress, and the stress of that situation eating away at them day after day, arbitration can be the breakthrough they have needed. With the help of their family lawyer, they can get ready for, and have, arbitration, a decision of that arbitrator giving them a final outcome in a matter of months, and at a fraction of the cost of waiting for a trial.
If your client has reached the point of ‘break down or break through’, take hope. Arbitration may be the ‘exit’ your client is looking for.
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