What is Arbitration in Family Law?

Family arbitration is a voluntary process, commenced either by agreement of the parties or upon direct referral from the Family Court. At arbitration, the parties each present arguments and evidence before a Family Arbitrator – much like they would in court before a judge.

In the Australian family law landscape, arbitration operates as an alternative and supplement to formal legal proceedings – and, to this extent, a means of entirely or partially bypassing the clogged-up Family Court, where parties may have to wait upwards of 2 years for a court date.

The role of the arbitrator, a seasoned legal practitioner with expertise in family law and specialist arbitration training, is to ensure that the process is procedurally fair and that both parties have an equal opportunity to be heard and to put their cases.

The arbitrator also makes a final decision, delivering an “arbitral award” within 28 days. The parties can then apply to have the award registered. Once registered, the award is legally binding, having the same force and effect as a court order.  

What matters can be dealt with via arbitration? 

Arbitration is not available in respect of all family law matters. Only financial proceedings under the Family Law Act can be arbitrated. This means that while property settlements, financial agreements, and disputes to do with spousal maintenance can be arbitrated, parenting matters cannot. 

What are the advantages and disadvantages of family arbitration?

Arbitration is by no means the way to go in every case. A different mode of family dispute resolution, such as mediation (a more informal process, with greater scope for the parties to come to a resolution on their own terms, with the assistance of a mediator) may be preferable.

On the other hand, the parties may be firm in their wish to have the matter dealt with by a judge, in court, once and for all. In deciding which route to go down, the parties should be alive to the advantages and disadvantages of family arbitration. 

Advantages of using Arbitration

Control over the process

In arbitration, the parties are able to exercise some level of control over the process. While they don’t necessarily get to negotiate and decide on the outcome for themselves, they can jointly select, for instance, the date, time and general location of the arbitral proceedings, as well as the specific decision-maker (from a list of arbitrators maintained by the Law Council of Australia).

Convenience

As noted above, the arbitral proceedings take place at an agreed time and location that is convenient to the parties. By contrast, court proceedings occur on a date and at a place assigned to the parties. The hearing may be fixed for a date 2 years or more into the future due to delays in the Family Court. 

Privacy

The outcome of arbitration (that is, the award handed down by the arbitrator) is not published or accessible by the public. At arbitration, too, the parties’ concerns and issues are ventilated more privately, instead of in open court – so there’s less of a sense of airing one’s dirty laundry in public.

Reduced cost

Because a determination can be secured far more quickly via arbitration than via litigation – in a matter of weeks or months, as opposed to only after a long, drawn-out process spanning years – the expenses incurred by the parties are likely to be significantly less. To the extent that the parties, in arbitrating instead of litigating, can cut down the period over which they need to pay legal fees, any depletion of the pool of marital assets can be minimised.

Reduced emotional cost

A further advantage is the reduced emotional and social cost of proceedings: the dispute resolution process is over sooner, meaning that the parties are in a better position to move on with their lives, rather than remaining embroiled in conflict with their former partner. 

Finality

The endpoint of arbitration is an arbitral award, which – like a court order – is final and only subject to review in limited circumstances. A determination on a final basis, by an impartial decision-maker, is usually what people seek when they go to court. Arbitration gives parties the opportunity to obtain this same outcome, minus the costly formalities of litigation. 

Flexibility 

The parties can determine how arbitration is to proceed. The parties can also choose whether the whole or only part of the financial dispute is to be resolved through arbitration. While arbitration is typically used to resolve a dispute in its entirety, there is some flexibility – for instance, arbitration can be used to determine one aspect of the controversy, while leaving the remainder to be dealt with via mediation. The parties may also engage in arbitration as a step preliminary to court proceedings or in lieu of court proceedings.

Disadvantages of using Arbitration

Limited availability of review

The downside of an arbitral award’s finality is that it is only reviewable in limited circumstances. This does not mean that having an award reversed or varied is impossible – it just means that certain grounds must be present before a party can so apply. If the award has been registered with the Court but one party disagrees with the terms of the award, that party can apply to the Court and give reasons why the agreement should not be registered. This must be done within 28 days of the award’s registration.

The Court may accept reasons such as the parties’ lack of consent to arbitration or the arbitrator’s lack of necessary qualifications. Where a reversal or variation of the award is sought, the party seeking that outcome will need to establish some error of law. An error of law may be appear where, for instance, the award: 

• was obtained by fraud;
• is void, voidable or unenforceable;
• was affected by bias or lack of procedural fairness;
• was properly obtained through arbitration, but circumstances have now changed such that the award is impracticable.

Complex matters

While arbitration is well-adapted to the resolution of most simple matters, more complex financial disputes involving large asset pools may be better suited for determination in the Family Court, by a judge with greater knowledge and experience.

This is especially so if the legal questions raised by the case are particularly difficult or novel. In such a situation, the Family Court should have the opportunity to consider the individual matter as well as suggest guidelines for how similar disputes should be approached in the future. 

Key takeaways

• Arbitration is a voluntary alternative dispute resolution method available in financial matters.
• Family arbitration can operate as a preliminary step to court proceedings, or as a cost-effective alternative to litigation. 
• The advantages of arbitration include reduced cost, greater privacy, convenience, flexibility, finality and control over the process.

When it comes to disputes between separating or divorcing couples, going to court is not the only option – in fact it is often used as a last option. There are other methods of dispute resolution which can be availed of prior to, in addition to, or instead of litigation.

It may be in the parties’ interests, in family law matters, to explore alternative dispute resolution processes such as arbitration, not least because these processes tend to offer a quicker, cheaper means of achieving a just outcome.

If you want to know more about arbitration and other alternative methods dispute resolution, or are seeking legal advice or representation in any family law matter, please get in touch with our friendly team.