Arbitration of Family Law Property and Maintenance Disputes

Written by Martin Bartfeld QC- Family Law Arbitrator

Family law arbitration is, like all other forms of arbitration, sources its jurisdiction from the Family Law Act, the Family Law Regulations and the Family Law Rules. The jurisdiction can be exercised by an arbitrator appointed by agreement of the parties. Because the Australian Constitution requires that the judicial power of the Commonwealth to be exercised by Judges appointed under Chapter III, a court cannot order the parties to commit to an arbitration unless they agree.

For an exposition of the difference between the exercise of judicial power and arbitration read this High Court case

A family law arbitration may either be court ordered or privately agreed. In either case, the parties must agree to arbitrate. A court ordered arbitration limits the matters to be arbitrated to Part VIII (property and spousal maintenance) proceedings, or Part VIIIAB (de facto property or spousal maintenance) proceedings (other than proceedings relating to a Part VIIIAB de facto financial agreement).

Private arbitration extends matters to include Part VIII proceedings, Part VIIIA proceedings, Part VIIIAB proceedings, Part VIIIB proceedings or section 106A proceedings; or

(ii) any part of such proceedings; or

(iii) any matter arising in such proceedings; or

(iv) a dispute about a matter with respect to which such proceedings could be        instituted.

In effect, a private arbitration extends to superannuation splitting, setting aside Financial Agreements which are (or are alleged) to be binding on the parties and making an order for the execution of documents by a Registrar or other officer of the Court to give effect to an order.

Who Can be an Arbitrator

Unlike the Commercial Arbitration regime established by State and Federal legislation, to be an arbitrator for family law purposes, a person has to be qualified. The qualification requirements are specified in the regulations and they require specialised practical experience in family law and the completion of a prescriber course.

Upon qualification, a person’s name is entered on a list maintained by AIFLAM (Australian Institute of Family Law Mediators and Arbitrators) and only persons whose name appears on that list can accept appointment as an arbitrator under the Family Law Act.

Conduct of an Arbitration

Parties who have agreed to arbitrate usually enter into an arbitration agreement with each other and the arbitrator. The agreement is formulated at a preliminary meeting between the parties and the arbitrator and it must contain all of the details specified here.

In addition the parties and the arbitrator design the arbitration and that design is also incorporated in the arbitration agreement. Matters which need to be agreed are;

  • Whether the arbitration will be on the papers, partly on the papers and partly on oral cross examination or a full hearing as if in court or any combination thereof;
  • Whether the rules of evidence are to apply. The parties can agree to exclude the operation of the rules of evidence and permit the arbitrator to inform himself or herself of any matter in any way he/she sees fit;
  • How the evidence is to be presented;
  • What if any technology is to be used in the course of the arbitration;
  • Where, when and if a hearing is to take place;
  • Matters of discovery and disclosure of information;
  • Whether a preliminary issue (e.g. valuation) should be heard and determined first with a view to eliminating a full hearing and facilitating settlement;
  • Lay out a timetable for completion of preparation;
  • Make directions to prepare for a hearing.
  • Lay out a timetable for delivery of an award;

The arbitration then proceeds. At the conclusion, unless the matter resolves, the arbitrator must deliver an award, the contents of which are prescribed by the regulations.

An award can be registered by either party. Registration is subject to a right of objection. Once registered, an award can be enforced as if it were an order of the court.

Registered awards can be reviewed by a single judge of the Family Court or the Federal Circuit Court on a question of law. In effect this is similar to an appeal from a decision of a single judge hearing the same type of matter. Awards can also be set aside on by a court on grounds similar to those contained in s. 79A (which applies to property orders made by a court).

Designing a Fair Arbitration Procedure

Unlike commercial litigants who resolve their disputes in courts or arbitrations, for family law litigants legal fees and disbursements are not usually tax deductible. Nor do family law litigants have legal budgets and the commercial infrastructure to conduct litigation.

In family law financial disputes, property is not created, it is only divided. While a successful commercial litigation can result in damages or other compensation which may increase the company’s wealth, in a family situation a limited pool of assets (irrespective of how wealthy the family may be) is going to be divided. Nobody’s wealth actually increases as a by-product of the litigation process.

If family law arbitration is to find acceptance in the community, the additional cost of meeting the arbitrator’s fee has to be economically justifiable.

Matters of speedy decision making, choice of arbitrator and bypassing the public nature of court hearings are all important. However, the most significant advantage, in my opinion, is the ability to design a process which is more efficient and deals with matters in a more sympathetic, albeit conclusive way.

Fundamental to the process is the need for fairness. In litigation terms, procedural fairness or natural justice was described in the context of court hearings in the following way;

  1. As the authorities show, it is a fundamental general principle of natural justice that a party to litigation has a prima facie entitlement to have the proceedings heard in the party’s presence and to be given an opportunity to be heard before an order affecting some right, interest, entitlement or privilege of the party is made. The opportunity to be heard usually includes the right to know the case advanced against the party; the opportunity to answer that case; the opportunity to dispute an opponent’s case by cross-examination of the opponent’s witnesses; and the right to adduce evidence in support of the party’s own case and to make submissions, before an order is made. 
  1. However, those same authorities show that both the content, and application of, the rules of natural justice are flexible requiring fairness to all parties in the circumstances of the particular case. Those circumstances include, without being exhaustive: 
  1. a) The nature of the proceedings;
  2. b) The nature or content of the right, interest, entitlement or privilege of the aggrieved party;
  3. c) The nature of the power exercised and the statutory provisions governing its exercise;
  4. d) The facts of the particular case relevant to any of the above and relevant to the requirement of fairness to all parties in all of the circumstances of the case. (emphasis added)

An award can only be reversed for bias or lack of procedural fairness if the court finds that;

“..the arbitration was affected by bias, or there was a lack of procedural fairness in the way in which the arbitration process, as agreed between the parties and the arbitrator, was conducted”. (emphasis added).

What is clear from that section and from Rules which permit agreement about the conduct of the arbitration and for the rules of evidence not to apply is that a family law arbitration need not be conducted as a private court hearing with all of the processes and procedures which apply to court hearing (and which are both necessary and appropriate for that purpose).

A well designed arbitration process will accommodate the special needs of family law clients. Some of the matters to be considered are;

  1. Not all parties can afford the long and drawn out processes of a traditional trial. It is time consuming and engages a number of expensive professionals for lengthy periods.
  2. Arbitration can be a useful adjunct to mediation. Not all issues are contested and need to be litigated. If there is an impediment to settlement, the disagreement can be quickly and cheaply resolved.
  3. The resources of courts are strained with the consequent waiting times for hearing and judgment. A simpler process produces quicker results.
  4. Interim or discrete questions can easily be determined at a preliminary stage. This may help resolve the dispute overall.
  5. Not all parties do well in cross examination. Why should the more confident and articulate party succeed because their former partner does not match their wit and skills?
  6. Not all lawyers cover everything they need to cover in cross examination. It may be good forensic fun to point out that there was no cross examination on a point, does it really provide the decision maker with the information needed to make a just decision?
  7. The confrontational approach with its warfare terminology is not conducive to building a post litigation relationship for parties who will need to raise children with some semblance of co-operation.
  8. An arbitrator does not have the coercive power of a judge. The arbitrator cannot charge anyone with contempt, and the most he or she can do is terminate the arbitration. Therefore, a process must be devised to minimise confrontation and the “fight” “win” “lose” mentality of litigation.
  9. The absence of a public element in an arbitration, in the sense that courts are open to the scrutiny of the public, means a less formal approach can and should be adopted.

It is possible to attain a just outcome without doing things as they have been done before. It requires practitioners to think outside the square and to bring their clients along with them.

Conclusion

Forty years ago mediation was thought of as a waste of time by a majority of the legal profession. Today, it is hard to imagine any case in any court (except the most urgent) being afforded any court time before a mediation takes place.

There is no reason why the lessons learned in the implementation of mediation in family law (where the Family Court of Australia led the way) should not have equal application to financial arbitration.

The Australian Law Reform Commission in its ReportFamily Law for the Future — An Inquiry into the Family Law System”  saw sufficient advantage in the continuation of a private arbitration system in family law to recommend expanding the jurisdiction to some parenting disputes. Recommendations were also made to clarify the process of family law arbitration.

Chief Justice Alstergren is an enthusiastic supporter of family law arbitration. His Honour is used to conducting commercial arbitrations and he recognises that parties are advantaged by this type of dispute resolution. As Chief Justice of the Family Court and Chief Judge of the Federal Circuit Court, his Honour also appreciates that moving cases out of the overcrowded lists will free up the resources of the courts and enable them to manage their lists more effectively. His Honour has, on many public occasions, promised support from the Courts for private arbitrations.

This support is welcome and should be embraced by all who practice in the jurisdiction. It means that any issues which need to be resolved by a court in arbitrations (such as the issue of subpoenae or the facilitation of discovery) will be dealt with expeditiously.

 

Martin Bartfeld QC

Owen Dixon Chambers East

15 June 2019

1 thought on “Arbitration of Family Law Property and Maintenance Disputes

  1. Arbitration like mediation is judge driven. To date and since July 2016 not less than 118 cases have been referred to arbitration by the Judges of the Federal Circuit Court. If regard is had to the cases referred it is apparent that NSW is the hub of family law arbitration with 90% of all family law cases sent to arbitration being from there and 80% from Parramatta. Interesting not a single case has been referred to arbitration in Victoria.

    Similarly, the Federal Circuit Court, as opposed to the Family Court, is the basis of private FDR in Australia. Sadly, the FCC is ignored in this discussion yet the Court which deals with 90% of all family law matters and which is responsible for the major support of the ADR sector is the major Court driving the field.

    The support of Parramatta and other FCC judges for arbitration is the only reason family law arbitration exists in Australian

    Like

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